<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1998.
REGISTRATION NO. 333-50437
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
APCOA/STANDARD PARKING, INC.*
(FORMERLY KNOWN AS APCOA, INC.)
(EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7521 16-1171179
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
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)
------------------------
<TABLE>
<S> <C>
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)
</TABLE>
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.
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- --------------------------------------------------------------------------------
<PAGE> 2
*TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION OF PRIMARY STANDARD I.R.S. EMPLOYER
INCORPORATION OR INDUSTRY IDENTIFICATION
NAME, ADDRESS AND TELEPHONE NUMBER ORGANIZATION CLASSIFICATION NUMBER NUMBER
---------------------------------- ---------------- --------------------- ----------------
<S> <C> <C> <C>
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
</TABLE>
- ---------------
(1) The address and telephone number of these additional registrants is the same
as that of APCOA/ Standard Parking, 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. 2 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 has completed such transactions as
of the date hereof.
<PAGE> 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 JULY 15, 1998
[APCOA/STANDARD PARKING 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 July
6, 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)
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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. In connection with the Combination,
the Company recorded a $14.5 million restructuring charge in the first quarter
of 1998. This 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. See "The
Transactions -- The Combination" and "Management's Discussion and Analysis of
Financial Condition and Results of APCOA."
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
<PAGE> 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 Historical and 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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 7,
1998, the Company completed a reorganization of
certain of its wholly owned subsidiaries pursuant
to which, among other things, one such subsidiary
was dissolved and certain other 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. Separate financial
statements for the Subsidiary Guarantors are not
presented herein because, in the opinion of
management, such financial statements are not
material to investors.
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
13
<PAGE> 16
transactions with affiliates or related persons.
See "Description of New Notes--Certain Covenants."
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
<PAGE> 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, excluding Century Parking and Sentry
Parking, as if they had occurred at the beginning of the period presented. The
acquisition of Century Parking and Sentry Parking was not material to the
Company and is not reflected in the unaudited pro forma financial statements of
the Company. 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.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1997 MARCH 31, 1998
---------------------- ----------------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
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)
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------------------- AT
AT DECEMBER 31, AT MARCH 31, MARCH 31,
1997 1998 1998
--------------- ------------ ---------
<S> <C> <C> <C>
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)
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1997 MARCH 31, 1998
---------------------- ----------------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
OTHER DATA:
Gross customer collections...................... $476,183 $948,612 $128,591 $250,256
EBITDA(2)....................................... 9,330 19,868 (12,732) (10,433)
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
</TABLE>
- ------------------------------
(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.
Historical and pro forma EBITDA for the three months ended March 31, 1998
have been reduced by a one-time restructuring charge of $14,500 taken by the
Company in connection with the Combination.
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.
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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.
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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
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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
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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
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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.
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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.
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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.
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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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<S> <C> <C>
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
</TABLE>
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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<S> <C>
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
======
</TABLE>
32
<PAGE> 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."
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
---------------------
ACTUAL PRO FORMA
-------- ---------
<S> <C> <C>
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
======== ========
</TABLE>
- ------------------------------
(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
<PAGE> 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.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
34
<PAGE> 37
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
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)
</TABLE>
(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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MARCH 31,
--------------------- ----------------
1995 1996 1997 1997 1998
<S> <C> <C> <C> <C> <C>
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
</TABLE>
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:
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MARCH 31,
-------------------------------- --------------------
1995 1996 1997 1997 1998
<S> <C> <C> <C> <C> <C>
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
</TABLE>
37
<PAGE> 40
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MARCH 31,
-------------------------------- --------------------
1995 1996 1997 1997 1998
<S> <C> <C> <C> <C> <C>
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)
======== ======== ======== ======== ========
</TABLE>
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
<PAGE> 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 (A) $5.0 million of relocation costs in connection with the
relocation and consolidation of the headquarters of the Company, the relocation
of two other offices, moving the families of 20 Cleveland headquarters staff
members to Chicago and the relocation of one individual from Columbus to
Houston, (B) $5.8 million in severance costs consisting of cash compensation to
54 people whose employment was terminated, (C) the write-off of $2.4 million of
assets that will no longer be used in the business consisting of capitalized
organization and software development costs and (D) $1.3 million of other
restructuring costs, the largest component of which was a $1.0 million increase
in insurance reserves resulting from a planned buyout of the insurance program
of APCOA in connection with the combination of the APCOA and Standard insurance
programs. The $12.1 million cash component of this restructuring charge is
expected to be disbursed by the third quarter of 1998.
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.
39
<PAGE> 42
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 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
<PAGE> 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
<PAGE> 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
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<PAGE> 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.
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<PAGE> 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.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
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
</TABLE>
- ------------------------------
(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.
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<PAGE> 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:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1995 1996 1997
<S> <C> <C> <C>
Managed facilities......................................... 233 295 344
Leased facilities.......................................... 32 32 35
--- --- ---
Total facilities (end of period)........................... 265 327 379
Contract retention rate.................................... 97% 97% 96%
</TABLE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, Standard's
results of operations expressed in thousands of dollars:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1995 1996 1997
<S> <C> <C> <C>
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
======== ======== ========
</TABLE>
Standard does not incur any net expenses in providing services for
management contracts. The facility owner pays all of the property-level
expenses. Any costs advanced by Standard as agent on behalf of the facility
owner are fully reimbursed. 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
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<PAGE> 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.
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<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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.
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<PAGE> 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.
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<PAGE> 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.
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<PAGE> 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:
<TABLE>
<CAPTION>
NUMBER OF LOCATIONS NUMBER OF SPACES
------------------------- -----------------------------
STATES/PROVINCES AIRPORTS AND URBAN CITIES AIRPORT URBAN TOTAL AIRPORT URBAN TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
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
=== ===== ===== ======= ======= =======
</TABLE>
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."
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<PAGE> 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.
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<PAGE> 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.
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<PAGE> 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:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
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
Patrick J. Meara............... 35 Director
Gunnar E. Klintberg............ 49 Director, Vice President
A. Petter Ostberg.............. 36 Vice President
</TABLE>
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
<PAGE> 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.
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 $1 billion operation in the U.S., headquartered in New York
City, from 1979 to 1983. Mr. Klintberg received his undergraduate degree from
Dartmouth College in 1972 and a degree in Business Administration and Economics
from the University of Uppsala, Sweden in 1974.
A. Petter Ostberg. Mr. Ostberg joined Holberg in 1994 and was appointed
Chief Financial Officer of Holberg in 1997. Mr. Ostberg is currently a Vice
President of APCOA. Prior to joining Holberg, Mr. Ostberg held various finance
positions from 1990 to 1994 with New York Cruise Lines, Inc., including Group
Vice
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<PAGE> 60
President, Treasurer and Secretary. Prior to joining New York Cruise Lines,
Inc., Mr. Ostberg was General Manager of Planter Technology Ltd. in Mountain
View, California, and from 1985 to 1987, Mr. Ostberg was a Financial Analyst
with Prudential Securities, Inc. in New York. Mr. Ostberg received a B.A. in
International Relations and Economics from Tufts University in 1985, and an
M.B.A. from Stanford University Graduate School of Business in 1989.
EXECUTIVE COMPENSATION
The following table sets forth information for 1995, 1996 and 1997 with
regard to compensation for services rendered in all capacities (a) to APCOA by
the Chief Executive Officer and the other four most highly compensated executive
officers of APCOA and (b) to Standard by two executive officers of Standard for
each of whom disclosure would have been provided but for the fact that he was
not serving as an executive officer of APCOA at the end of the last completed
fiscal year (collectively, the "Named Executive Officers"). Except as otherwise
noted, information set forth in the table reflects compensation earned by such
individuals for services with APCOA or its respective subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER
ANNUAL ALL OTHER
COMPEN- COMPEN-
FISCAL SALARY BONUS SATION SATION
NAME AND PRINCIPAL POSITION YEAR ($) $ $ ($)
--------------------------- ------ ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
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.(4).................. 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(5)..................... 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(6)..................... 1997 98,265 -- 41,229(7) 42,102(8)
Chief Executive Officer and 1996 53,290 -- 28,795(7) 41,630(8)
President of Standard 1995 37,950 -- 18,740(7) 46,169(8)
Michael K. Wolf(6)........................ 1997 376,400 -- -- --
Executive Vice President and 1996 313,800 -- -- --
General Counsel of Standard 1995 254,800 -- -- --
</TABLE>
- ---------------
(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 March 30, 1998, Mr. LaRocco is no longer an executive officer of the
Company.
(5) As of February 26, 1998, Mr. Van Horn is no longer an employee of the
Company.
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<PAGE> 61
(6) All compensation information set forth in the table for this individual
reflects compensation earned for services with Standard or its respective
subsidiaries.
(7) The amount shown includes car allowances, club dues, health insurance
premiums and legal fees related to estate planning paid by Standard.
(8) 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 employment agreement with the Company was terminated
effective March 30, 1998, in connection with the Combination. Effective April 1,
1998, the Company and Mr. LaRocco entered into a transition employment agreement
for an eighteen-month term, scheduled to end on September 30, 1999. This
agreement provides for annual payments of not less than $190,000, plus other
payments in the following amounts: $157,872, paid on April 10, 1998, $66,500
payable on September 30, 1998, $76,000 payable in April 1999 and up to $76,000
payable in April 2000, as well as certain other benefits. Mr. LaRocco has agreed
not disclose confidential information for any reason whatsoever. During the term
of the agreement, and for one year after its termination if the agreement is
terminated other than without Cause (as defined in the
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<PAGE> 62
agreement), Mr. LaRocco shall not render services to, or have any ownership
interest in, any business which is competitive with the Company. The agreement
does not contain change of control provisions.
If the agreement is terminated by reason of Mr. LaRocco's 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 payment 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 other payments due for the year of termination and
(iii) certain other benefits. The parties intended that all payments under the
agreement represent severance payments in recognition of Mr. LaRocco's 35 years
of service to the Company.
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
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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
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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
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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.
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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.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OUTSTANDING
---------------- ----------------------- -----------
<S> <C> <C>
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)
</TABLE>
- ------------------------------
* 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.
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(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.
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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,
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(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 the AP Holdings common stock held by Delaware North, and, as noted
above, AP Holdings has exercised such option. The Put/Call Agreement provides
that upon the exercise of such option, 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. The parties are currently in
negotiations as to whether a mutually agreeable purchase price can be reached in
lieu of such valuation procedure.
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,
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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.
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CONSULTING AGREEMENT WITH SIDNEY WARSHAUER
Consummation of the Combination was conditioned by Standard, among other
things, upon the execution of a Consulting Agreement (the "Agreement") between
the Company and Sidney Warshauer, the father of Myron C. Warshauer. Sidney
Warshauer is 83 years old.
The 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.
Sidney Warshauer will receive, during such period, annual payments of $552,000
along with certain other benefits.
The 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 Agreement with respect to non-disclosure of Company
confidential information or his obligation to refrain from engaging in
competition with the Company. The parties intended that all payments under the
Agreement represent additional purchase price in the form of supplemental
retirement benefits in recognition of Sidney Warshauer's significant
contributions to Standard.
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."
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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.
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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 7, 1998, the Company completed a
reorganization of certain of its wholly owned subsidiaries pursuant to which,
among other things, Standard Parking of Canada, L.P. was dissolved and Standard
Parking, L.P., Standard Parking Corporation MW, Standard/Wabash Parking
Corporation, Standard Parking I, L.L.C. and Standard Parking II, L.L.C. were
merged with and into Standard Parking Corporation. Following such dissolution
and 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. Separate
financial statements for the Subsidiary Guarantors are not presented herein
because, in the opinion of management, such financial statements are not
material to investors.
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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 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.
In connection with the Exchange Offer, the Company has obtained an opinion
of counsel as to the enforceability of the New Notes and the New Note Guarantees
against the Company and/or the Subsidiary Guarantors, as the case may be. The
Company's counsel expresses no opinion with respect to the lawfulness or
enforceability of provisions of the Indenture with respect to:
(1) delay or omission of enforcement of rights or remedies, waivers of
defenses, or waivers of benefits of any usury, appraisement, valuation,
stay, extension, moratorium, redemption, statutes of limitation, or
other non-waivable benefits bestowed by operation of law;
(2) exculpation, releases of unmatured claims, the purported waiver of
immaterial rights, severability, and other provisions similar to the
foregoing; and
(3) indemnification or contribution, to the extent such provisions purport
to relate to liabilities from or based upon negligence or any violation
of, or relate to rights of contribution or indemnification that are
violative of, any law, rule or regulation of the public policy
underlying any law, rule or regulation (including any federal, state or
foreign securities law, rule or regulation).
Such counsel is of the opinion that although certain remedial provisions
and waivers with respect to the New Notes or the New Note Guarantees contained
in the Indenture may be unenforceable in whole or in part, the inclusion of such
provisions does not affect the validity of the New Notes or the New Note
Guarantees and the New Notes and the New Note Guarantees, taken as a whole,
together with the laws of the State of New York, contain adequate provision for
the practical realization of the benefits of the obligations created thereby.
Moreover, such counsel expresses no opinion as to the effects on the Indenture,
the New Notes, the New Note Guarantees, or on the opinions expressed in such
opinion of counsel, of any provisions of law relating to fraudulent conveyances,
including those of the State of New York and those contained in the United
States Bankruptcy Code.
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.
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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 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
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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."
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
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applicable redemption date, if redeemed during the twelve-month period beginning
on March 15 of the years indicated below:
<TABLE>
<CAPTION>
PERCENTAGE
----------
<S> <C>
2003.................................................... 104.625%
2004.................................................... 103.083%
2005.................................................... 101.542%
2006 and thereafter..................................... 100.000%
</TABLE>
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.
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
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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 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
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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 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
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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 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
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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 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
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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, 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.
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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
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
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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 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
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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 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.
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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 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
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"-- 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 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.
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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
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
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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"), (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
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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 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
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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 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
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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.
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
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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 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
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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 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
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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).
"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
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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.
"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.
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"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 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.
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"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 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).
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"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 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
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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 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.
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"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 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.
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"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 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.
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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
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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
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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
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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
<PAGE> 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
<PAGE> 108
INDEX OF CERTAIN DEFINED TERMS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
ADA............................... 20
Affiliate Transaction............. 82
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.................. 95
Cause............................. 63
Century Parking................... 6
Certificate of Incorporation...... 20
Certificated New Notes............ 90
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............... 86
Cutoff Date....................... 63
Delaware North.................... 64
Depositary........................ 3
Depositor......................... 27
Disability........................ 63
DLJ............................... 3
Dosher............................ 66
DTC............................... 3
Effectiveness Target Date......... 91
Eligible Institution.............. 25
Employment Period................. 62
EPI............................... 6
Excess Proceeds................... 77
Exchange Act...................... 4
Exchange Agent.................... 2
Exchange Offer.................... 1
</TABLE>
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Expiration Date................... 2
Financial Institution............. 103
Financing......................... 31
First Chicago..................... 3
Global New Note Registered
Owner........................... 88
Global New Notes.................. 88
Good Reason....................... 63
Holberg........................... 20
incur............................. 79
Indenture......................... 1
Indirect Participants............. 88
Initial Purchasers................ 3
IRS............................... 30
Legal Defeasance.................. 86
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................... 85
Payment Notice.................... 73
Permitted Debt.................... 79
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
</TABLE>
106
<PAGE> 109
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
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
</TABLE>
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Subsidiary Guarantors............. 1
Tax Sharing Agreement............. 67
TIN............................... 103
Transactions...................... 31
Transfer Restricted Securities.... 91
Tremont Facility.................. 68
Trustee........................... 1
Trust Indenture Act............... 71
U.S. Alien Holder................. 101
U.S. Holder....................... 101
Warshauer Employment Agreement.... 62
</TABLE>
107
<PAGE> 110
APCOA/STANDARD PARKING, INC.
INDEX TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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
</TABLE>
P-1
<PAGE> 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
<PAGE> 112
APCOA/STANDARD PARKING, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS
------------------ FOR EPI COMBINED
APCOA EPI ACQUISITION(1) PRO FORMA
-------- ------ --------------- ---------
<S> <C> <C> <C> <C>
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
======== ====== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated balance sheet.
P-3
<PAGE> 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):
<TABLE>
<S> <C>
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
=======
</TABLE>
P-4
<PAGE> 114
APCOA/STANDARD PARKING, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
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
-------- -------- --------------- ------------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
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)
======== ======= ====== ======= ======== ======= ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated statements of
operations.
P-5
<PAGE> 115
APCOA/STANDARD PARKING, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
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
-------- -------- --------------- ------------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
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)
======== ======= ====== ======= ======== ======= ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated statements of
operations.
P-6
<PAGE> 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:
<TABLE>
<CAPTION>
FISCAL THREE MONTHS
1997 1998
------ ------------
<S> <C> <C>
Payroll reductions for the elimination of duplicative
administrative and operations personnel (33
positions).......................................... $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 of
Standard for outsourcing of payroll and accounts
receivable processing which will be run on the APCOA
systems after the Combination....................... 387 97
------ ----
$2,987 $575
====== ====
</TABLE>
In addition, there are $3,289 of anticipated annual cost savings ($1,883
represents personnel reduction savings at APCOA due to the elimination of
18 positions 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:
<TABLE>
<CAPTION>
FISCAL THREE MONTHS
1997 1998
------ ------------
<S> <C> <C>
Payroll reductions for the elimination of duplicative
administrative and operations personnel (10
positions):
EPI............................................ $ 331 $ 83
Other Acquisitions............................. 428 12
Reduction in salaries of certain EPI executives
pursuant to post-acquisition employment
agreements.......................................... 577 144
Reduction in management fees to former owners of
acquired businesses which will not be paid after
acquisition......................................... 583 21
------ ----
$1,919 $260
====== ====
</TABLE>
P-7
<PAGE> 117
APCOA/STANDARD PARKING, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS--(CONTINUED)
(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 amortization has been increased to reflect each
acquisition as if it had occurred on January 1, 1997 as follows:
<TABLE>
<CAPTION>
FISCAL THREE MONTHS
1997 1998
------ ------------
<S> <C> <C>
Amortization of cost of parking contracts ($6,853)
acquired from Standard.............................. $1,014 $254
Amortization of cost of parking contracts ($2,084)
acquired from the Other Acquisitions................ 347 51
Net reduction in depreciation of property and
equipment acquired from Standard.................... (59) (15)
------ ----
$1,302 $290
====== ====
</TABLE>
(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:
<TABLE>
<CAPTION>
FISCAL THREE MONTHS
1997 1998
------ ------------
<S> <C> <C>
Amortization of excess cost over fair value of net
assets acquired
($74,162) for Standard................................ $1,854 $464
Amortization of excess cost over fair value of net
assets acquired ($11,549) for the Other
Acquisitions.......................................... 289 47
------ ----
$2,143 $511
====== ====
</TABLE>
(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:
<TABLE>
<CAPTION>
INCREMENTAL INTEREST EXPENSE
-------------------------------
PRINCIPAL FISCAL THREE MONTHS
AMOUNT RATE 1997 1998
--------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
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
====== ======
</TABLE>
(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
<PAGE> 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:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FISCAL THREE MONTHS
OF DEBT 1997 1998
--------- ----------- ------------
<S> <C> <C> <C>
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
======= ======
</TABLE>
P-9
<PAGE> 119
INDEX TO HISTORICAL FINANCIAL STATEMENTS
<TABLE>
<S> <C>
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
</TABLE>
F-1
<PAGE> 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
<PAGE> 121
APCOA, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31
------------------ MARCH 31,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
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
======= ======= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE> 122
APCOA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31 ENDED MARCH 31
-------------------------------- -------------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
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)
Preferred stock dividend............. (715) (796) (887) (222) --
-------- -------- -------- ------- --------
Net income (loss) available for
common stockholders................ $ (3,832) $ 143 $ 972 $ (665) $(17,664)
======== ======== ======== ======= ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE> 123
APCOA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
------------------ ADDITIONAL
NUMBER PAR PAID-IN ACCUMULATED
OF SHARES VALUE CAPITAL DEFICIT TOTAL
--------- ----- ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
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)
===== == ======= ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE> 124
APCOA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31 ENDED MARCH 31,
------------------------------ -------------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
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
======= ======== ======= ======= ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE> 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--Legal and other organization costs incurred to acquire
certain parking businesses and establish parking joint ventures ($616 at
December 31, 1997) are being amortized on a straight-line basis over seven
years, the estimated life of the underlying parking contracts. Legal and
start-up costs incurred in connection with the Company's planned expansion into
international markets aggregated $680 at December 31, 1997. These amounts were
expensed in the first quarter of 1998 due to a change in business plans as a
result of the combination with Standard. Implementation of SOP 98-5, "Reporting
on the Costs of Start-Up Activities," on January 1, 1999, will not have a
material impact on the Company's financial position or
F-7
<PAGE> 126
APCOA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
results of operations. Debt issuance costs of $900 and $775 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, including the $14,500
restructuring charge during the three months ended March 31, 1998 (See Note L),
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:
<TABLE>
<CAPTION>
AMOUNT OUTSTANDING
DECEMBER 31
INTEREST DUE ------------------
RATE(S) DATE 1996 1997
<S> <C> <C> <C> <C>
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
======= =======
</TABLE>
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
<PAGE> 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:
<TABLE>
<S> <C>
1998............................................... $ 4,102
1999............................................... 4,849
2000............................................... 11,162
2001............................................... 4,466
2002............................................... 4,587
2003 and thereafter................................ 9,117
-------
$38,283
=======
</TABLE>
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:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
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
===== ===== =====
</TABLE>
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
<PAGE> 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:
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
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
======= =======
</TABLE>
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:
<TABLE>
<S> <C>
1998............................................... $28,036
1999............................................... 16,117
2000............................................... 12,301
2001............................................... 7,925
2002............................................... 6,443
2003 and thereafter................................ 25,216
-------
$96,038
=======
</TABLE>
F-10
<PAGE> 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.
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
Parking revenue........................................ $142,091 $116,935
Net income............................................. 1,454 2,025
</TABLE>
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
<PAGE> 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.
<TABLE>
<S> <C>
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 ($1.6 million cash, $0.4 million
non-cash)................................................. (2,000)
Long-term retirement liabilities............................ (5,000)
Other liabilities........................................... (1,170)
-------
$77,630
=======
</TABLE>
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 plan. These costs include software modifications of $868,
re-branding costs of $510 and estimated severance costs for 33 positions of
$622.
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
F-12
<PAGE> 131
APCOA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
preferred stock contribution were used by the Company to fund the cash portion
of the consideration for the 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:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
1997 1998
------------ ---------------
<S> <C> <C>
Net sales................................................ $186,078 $ 44,769
Loss before extraordinary item........................... (2,824) (16,134)
</TABLE>
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 (expenses are cash unless otherwise stated):
<TABLE>
<S> <C>
Employee severance costs.................................... $ 5,800
Employee relocation costs................................... 5,000
Impairment of assets that will no longer be used (non-cash
expense).................................................. 2,400
Other restructuring costs................................... 1,300
-------
$14,500
=======
</TABLE>
The $5.8 million of employee severance costs consists of cash compensation
to 54 people whose employment was terminated. The $5.0 million of employee
relocation costs are in connection with the relocation and consolidation of the
headquarters of the Company, the relocation of two other offices, moving the
families of 20 Cleveland headquarters staff members to Chicago and the
relocation of one individual from Columbus to Houston. The impairment of assets
that will no longer be used refers to the write-off of $2.4 million of
capitalized organization and software development costs. The $1.3 million of
other restructuring costs consists largely of a $1.0 million increase in
insurance reserves resulting from a planned buyout of the insurance program of
the Company in connection with the combination of the Company and Standard
insurance programs. The $12.1 million cash component of this restructuring
charge is expected to be disbursed by the third quarter of 1998.
F-13
<PAGE> 132
APCOA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
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.
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:
<TABLE>
<CAPTION>
APCOA, GUARANTOR NON-GUARANTOR
INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
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
</TABLE>
F-14
<PAGE> 133
APCOA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
APCOA, GUARANTOR NON-GUARANTOR
INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
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)
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
</TABLE>
F-15
<PAGE> 134
APCOA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
APCOA, GUARANTOR NON-GUARANTOR
INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
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)
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
</TABLE>
F-16
<PAGE> 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.
<TABLE>
<CAPTION>
APCOA, GUARANTOR NON-GUARANTOR
INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
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)
</TABLE>
F-17
<PAGE> 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
<PAGE> 137
STANDARD PARKING
BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
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
====== =======
</TABLE>
The accompanying notes are an integral part of this statement.
F-19
<PAGE> 138
STANDARD PARKING
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997
<S> <C> <C> <C>
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
======= ======= =======
</TABLE>
The accompanying notes are an integral part of this statement.
F-20
<PAGE> 139
STANDARD PARKING
STATEMENTS OF CHANGES IN EQUITY
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
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
=======
</TABLE>
The accompanying notes are an integral part of this statement.
F-21
<PAGE> 140
STANDARD PARKING
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997
<S> <C> <C> <C>
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
======= ======= =======
</TABLE>
The accompanying notes are an integral part of this statement.
F-22
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1996 1997
<S> <C> <C> <C>
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
====== ======
</TABLE>
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
<PAGE> 143
STANDARD PARKING
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3--NOTES RECEIVABLE:
Notes receivable at December 31, 1996 and 1997 were as follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
(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
==== ====
</TABLE>
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:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
Customer receivables........................................ $ 165 $ 588
Insurance receivables....................................... 715 885
Other accounts receivable................................... 263 568
------ ------
$1,143 $2,041
====== ======
</TABLE>
NOTE 5--ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses at December 31, 1996 and 1997 were as
follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
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
====== ======
</TABLE>
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
<PAGE> 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:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
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
====== ======
</TABLE>
Amounts due to related parties were as follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
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
==== ====
</TABLE>
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
<PAGE> 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:
<TABLE>
<S> <C>
1998............................................... $23,326
1999............................................... 5,555
2000............................................... 997
2001............................................... 413
2002............................................... 333
Thereafter......................................... 1,887
-------
$32,511
=======
</TABLE>
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:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
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
==== ====
</TABLE>
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
<PAGE> 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
<PAGE> 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
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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
</TABLE>
---------------------------------------------------------
- ---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
$140,000,000
APCOA, INC.
---------------------------------------------
OFFER TO EXCHANGE
---------------------------------------------
9 1/4% NEW SENIOR SUBORDINATED
NOTES DUE 2008
, 1998
---------------------------------------------------------
- ---------------------------------------------------------
<PAGE> 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.
<TABLE>
<C> <S>
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.*
</TABLE>
II-1
<PAGE> 149
<TABLE>
<C> <S>
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 July 6,
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.*
</TABLE>
II-2
<PAGE> 150
<TABLE>
<C> <S>
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.*
</TABLE>
- ---------------
* Previously filed.
** 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
<PAGE> 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
<PAGE> 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 July 15, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* 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
</TABLE>
II-5
<PAGE> 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 July 15, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* 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
</TABLE>
II-6
<PAGE> 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 July 15, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* 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
</TABLE>
II-7
<PAGE> 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 July 15, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* 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
</TABLE>
II-8
<PAGE> 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 July 15, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* 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
</TABLE>
II-9
<PAGE> 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 July 15, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* 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
</TABLE>
II-10
<PAGE> 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 July 15, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* 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
</TABLE>
II-11
<PAGE> 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 July 15, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* President and Director
- ----------------------------------------------------- (Principal Executive Officer)
Myron C. Warshauer
* Assistant Treasurer
- ----------------------------------------------------- (Principal Financial and Accounting Officer)
Michael J. Celebrezze
*By: /s/ ROBERT N. SACKS
-----------------------------------------------
Robert N. Sacks
Attorney-in-Fact
</TABLE>
II-12
<PAGE> 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 July 15, 1998.
STANDARD PARKING CORPORATION IL
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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* President and Director
- ----------------------------------------------------- (Principal Executive Officer)
Myron C. Warshauer
* Assistant Treasurer
- ----------------------------------------------------- (Principal Financial and Accounting Officer)
Michael J. Celebrezze
*By: /s/ ROBERT N. SACKS
------------------------------------------------
Robert N. Sacks
Attorney-in-Fact
</TABLE>
II-13
<PAGE> 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 July 15, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* President and Director
- ----------------------------------------------------- (Principal Executive Officer)
Myron C. Warshauer
* Assistant Treasurer
- ----------------------------------------------------- (Principal Financial and Accounting Officer)
Michael J. Celebrezze
*By: /s/ ROBERT N. SACKS
-----------------------------------------------
Robert N. Sacks
Attorney-in-Fact
</TABLE>
II-14
<PAGE> 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 July 15, 1998.
S&S PARKING, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* Chief Executive Officer and Director
- ----------------------------------------------------- (Principal Executive Officer)
Myron C. Warshauer
* Vice President and Treasurer
- ----------------------------------------------------- (Principal Financial and Accounting Officer)
Michael J. Celebrezze
*By: /s/ ROBERT N. SACKS
- -----------------------------------------------------
Robert N. Sacks
Attorney-in-Fact
</TABLE>
II-15
<PAGE> 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 July 15, 1998.
CENTURY PARKING, 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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* Chief Executive Officer and Director
- ----------------------------------------------------- (Principal Executive Officer)
Myron C. Warshauer
* Vice President and Treasurer
- ----------------------------------------------------- (Principal Financial and Accounting Officer)
Michael J. Celebrezze
*By: /s/ ROBERT N. SACKS
--------------------------------------------------
Robert N. Sacks
Attorney-in-Fact
</TABLE>
II-16
<PAGE> 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 July 15, 1998.
SENTRY PARKING CORPORATION
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 July 15, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
* Chief Executive Officer and Director
- ----------------------------------------------------- (Principal Executive Officer)
Myron C. Warshauer
* Vice President and Treasurer
- ----------------------------------------------------- (Principal Financial and Accounting Officer)
Michael J. Celebrezze
*By: /s/ ROBERT N. SACKS
--------------------------------------------------
Robert N. Sacks
Attorney-in-Fact
</TABLE>
II-17
<PAGE> 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
<PAGE> 166
SCHEDULE II
APCOA, INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS(1) OF YEAR
----------- ---------- ---------- ---------- ------------- -------
<S> <C> <C> <C> <C> <C>
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
==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) Represents uncollectible accounts written off, net of recoveries.
II-19
<PAGE> 167
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
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 July 6,
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.*
</TABLE>
<PAGE> 168
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
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.*
</TABLE>
- ---------------
* Previously filed.
** Filed herewith.
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
APCOA, INC.
Pursuant to Section 242 of the General Corporation Law of the State
of Delaware, APCOA, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That by unanimous written consent of the members of the Board
of Directors of the Corporation, filed with the minutes of the Board,
resolutions were duly adopted setting forth a proposed amendment of the Amended
and Restated Certificate of Incorporation of the Corporation and declaring said
amendment to be advisable. The resolution setting forth the proposed amendment
is as follows:
RESOLVED, that the Board of Directors determines that it is
advisable that the Corporation's Amended and Restated Certificate of
Incorporation be amended, upon stockholder approval, and in accordance
with Section 242 of the General Corporation Law of the State of Delaware,
to change the corporate name of the Corporation to "APCOA/Standard
Parking, Inc."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders of the Corporation have given unanimous written consent to said
amendment and said amendment was duly adopted in accordance with the applicable
provisions of Sections 242 and 228 of the General Corporation Law of the State
of Delaware.
THIRD: Therefore, in accordance with the foregoing, Article I of
the Amended and Restated Certificate of Incorporation of the Corporation is
amended to read in its entirety as follows:
Article I
The name of the corporation (which is hereinafter referred to
as the "Corporation") is:
APCOA/Standard Parking, Inc.
FOURTH: That the capital of the Corporation shall not be reduced
under or by reason of said amendment.
<PAGE> 2
IN WITNESS WHEREOF, said APCOA, Inc. has caused this certificate to be
signed by G. Walter Stuelpe, Jr., its President, this 30th day of June, 1998.
APCOA, INC.
By: /s/
----------------------------------
Name: G. Walter Stuelpe, Jr.
Title: President
<PAGE> 3
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
APCOA, INC.
(Originally incorporated on September 24, 1981, under the name of
120 OAKLAND PLACE, INC.)
APCOA, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation, has duly
adopted resolutions setting forth a proposed amendment and restatement of the
Certificate of Incorporation of the Corporation and declaring said amendment and
restatement to be advisable. The resolution setting forth the proposed amendment
and restatement is as follows:
RESOLVED, that the Corporation's Certificate of Incorporation be
amended in accordance with Section 242 of the General Corporation Law of
the State of Delaware to effect certain changes in said Certificate of
Incorporation, and that the Amended and Restated Certificate of
Incorporation attached hereto be adopted, in accordance with Sections 242
and 245 of the General Corporation Law of the State of Delaware, as the
Amended and Restated Certificate of Incorporation of the Corporation.
SECOND: That in lieu of a meeting and vote of stockholders, both of
the stockholders of the Corporation have given their written consent to said
amendment and restatement was duly adopted in accordance with the applicable
provisions of Sections 242, 245 and 228 of the General Corporation Law of the
State of Delaware.
THIRD: That the capital of the Corporation shall not be reduced
under or by reason of said amendment and restatement.
<PAGE> 4
IN WITNESS WHEREOF, said APCOA, Inc. has caused this certificate to
be signed by its President, and attested by its Assistant Secretary, this 24th
day of February, 1994.
By: /s/ G. Walter Stuelpe, Jr.
--------------------------------------
Name: G. Walter Stuelpe, Jr.
Title: President
ATTEST:
By: /s/ William J. Montis
--------------------------------
Name: William J. Montis
Assistant Secretary
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<PAGE> 5
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
APCOA, INC.
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
APCOA, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act
or activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE> 6
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 5,000 shares of capital
stock, of which 3000 shares shall be shares of Common Stock, $1.00 par value
("Common Stock"), and 2000 shares shall be shares of Preferred Stock, $.01 par
value ("Preferred Stock").
Section 2. Shares of Preferred Stock may be issued from time to time
in one or more series. The Board of Directors of the Corporation (hereinafter
referred to as the "Board") is hereby authorized to fix the voting rights, if
any, designations, powers, preferences and the relative, participation, optional
or other rights, if any, and the qualifications, limitations or restrictions
thereof, of any unissued series of Preferred Stock; and to fix the number of
shares constituting such series, and to increase or decrease the number of
shares of any such series (but not below the number of shares thereof then
outstanding).
Section 3. Except as otherwise provided by law or by the resolution
or resolutions adopted by the Board designating the rights, power and
preferences of any series of Preferred Stock, the Common Stock shall have the
exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
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<PAGE> 7
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board is expressly authorized and empowered to make, alter and repeal the
By-Laws of the Corporation by a majority vote at any regular or special meeting
of the Board or by written consent, subject to the power of the stockholders of
the Corporation to alter or repeal any By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions
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<PAGE> 8
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding'), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith and
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<PAGE> 9
such indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of his or
her heirs, executors and administrators; provided, however, that, except as
provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board. The right to indemnification conferred in this Section
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of the State of Delaware requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of the Board, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim
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<PAGE> 10
has been received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall be entitled to be
paid also the expense of prosecuting such claim. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior the commencement of such action
that indemnification of the claimant is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in the General
Corporation Law of the State of Delaware, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any
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<PAGE> 11
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
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<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED
BY-LAWS
OF
APCOA/STANDARD PARKING, INC.
ARTICLE I
Meetings of Stockholders
Section 1 . Annual Meeting. The annual meeting of stockholders of the
corporation for the election of directors and for the transaction of other
business shall be held at such time and such place within or without the State
of Delaware as shall be determined by the Board of Directors or the President
and stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2 . Special Meetings. A special meeting of stockholders may be
called by the Board of Directors or the President, and shall be called by the
President, the Secretary or an Assistant Secretary at the request in writing of
a majority of the Board of Directors, or at the request in writing of the
holders of record of a majority of the outstanding shares of the stock of the
corporation entitled to vote at the meeting. Each special meeting of
stockholders shall be held at such time and place within or without the State of
Delaware as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof. Business transacted at any special meeting of
stockholders shall be limited to the purpose or purposes stated in the notice of
the meeting.
Section 3. Notice and Purpose of Meetings. Written notice of every
meeting of stockholders stating the place, date and hour of the meeting and, in
the case of a special meet-
<PAGE> 2
ing, in general terms, the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the meeting to
each stockholder of record entitled to vote at the meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
with first-class postage thereon prepaid, directed to each stockholder at his
address as it appears on the records of the corporation.
Section 4. List of Stockholders. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares of the stock of the corporation
registered in the name of each stockholder. Such list shall be open to
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 5. Quorum. Except as otherwise required by law or the
certificate of incorporation, a quorum at all meetings of stockholders shall
consist of the holders of record of not less than a majority of the outstanding
shares of the stock of the corporation entitled to vote at the meeting, present
in person or by proxy, except when the stockholders are required to vote by
class, in which event the holders of record of not less than a majority of the
outstanding shares of the appropriate class shall be present in person or by
proxy.
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<PAGE> 3
Section 6. Adjournments. The stockholders entitled to vote who are
present in person or by proxy at any meeting of stockholders, whether or not a
quorum shall be present at the meeting, shall have power by a majority of the
votes cast to adjourn the meeting from time to time without notice other than
announcement at the meeting of the time and place to which the meeting is
adjourned. At any adjourned meeting held without notice at which a quorum shall
be present any business may be transacted that might have been transacted on the
original date of the meeting. If the adjournment is for more than thirty days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the adjourned meeting.
Section 7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder of record shall be entitled at
every meeting of stockholders to one vote for each share of the stock of the
corporation standing in his name on the record of stockholders on the record
date fixed for the meeting or, if no record date for the meeting was fixed, on
the date of the meeting. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may act in person or may authorize another person to act for
him by proxy, but no proxy shall be voted or acted upon after three years from
its date unless it provides for a longer period.
Directors elected at any meeting of stockholders shall, except as
otherwise required by law, be elected by a plurality of the votes cast. All
other corporate action to be taken by vote of stockholders shall, except as
otherwise required by law or the certificate of incorporation, be authorized by
a majority of the votes cast. Unless otherwise provided in the certificate of
incorporation, the vote for directors shall be by ballot, but the vote upon any
other question be-
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<PAGE> 4
fore a meeting of stockholders shall not be by ballot unless required by law or
unless the person presiding at such meeting shall so direct or unless any
stockholder present in person or by proxy and entitled to vote thereon shall so
demand.
Section 8. Consent of Stockholders in Lieu of Meeting. Unless otherwise
provided in the certificate of incorporation, any action required to be taken at
any annual or special meeting of stockholders, or any action (including, without
limitation, adoption, amendment or repeal of by-laws) which may be taken at any
annual or special meeting of stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding shares of the
stock of the corporation 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. Notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
Section 9. Waiver of Notice. Whenever notice is required by law or
these by-laws to be given to any stockholder, a written waiver thereof, signed
by such stockholder in person or by proxy, whether before or after the time
stated therein, shall be deemed equivalent to notice. The attendance of any
stockholder at a meeting in person or by proxy shall constitute a waiver of
notice of such meeting, except where the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the pur-
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<PAGE> 5
pose of, any annual or special meeting of the stockholders need be specified in
any written waiver of notice.
Section 10. Inspectors of Election. The Board of Directors may, in
advance of any meeting of the stockholders, appoint one or more inspectors to
act at the meeting or any adjournment thereof. If inspectors are not so
appointed in advance of the meeting, the person presiding at such meeting may,
and on the request of any stockholder entitled to vote thereat shall, appoint
one or more inspectors. In case any inspector appointed fails to appear or act,
the vacancy may be filled by appointment made by the Board of Directors in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. No person who is a
candidate for the office of director of the corporation shall act as an
inspector at any meeting of the stockholders at which directors are elected.
Section 11. Duties of Inspectors of Election. Whenever one or more
inspectors of election may be appointed as provided in these by-laws, he or they
shall determine the number of shares outstanding and entitled to vote, the
shares represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots, or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders.
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<PAGE> 6
ARTICLE II
Directors
Section 1. General Powers. The property, business and affairs of the
corporation shall be managed by or under the direction of its Board of
Directors.
Section 2. Number and Qualifications. The Board of Directors shall
consist of one or more members. The exact number of directors shall be fixed
from time to time by action of the stockholders or by vote of a majority of the
entire Board of Directors.
Section 3. Election and Term of Office. Except as otherwise required by
law or these by-laws, each director shall be elected at the annual meeting of
stockholders of the corporation and shall hold office until the next annual
meeting of stockholders and until his successor has been elected and qualified,
or until his earlier death, resignation or removal.
Section 4. Resignation. Any director may resign at any time by giving
written notice to the corporation. Such resignation shall take effect at the
time specified therein; unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 5 . Removal of Directors. Except as otherwise provided by law,
any director or the entire Board of Directors may be removed, with or without
cause, by the holders of a majority of the shares of the stock of the
corporation then entitled to vote at an election of directors.
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<PAGE> 7
Section 6. Vacancies. Newly created directorships and vacancies in the
Board of Directors, including vacancies resulting from the resignation of
directors effective immediately or at a future date or from the removal of
directors, with or without cause, may be filled by vote of the stockholders, by
vote of a majority of the directors then in office (including directors whose
resignations are effective at a future date), although less than a quorum, or by
the sole remaining director. Each director so chosen shall hold office until the
next annual meeting of stockholders and until his successor has been elected and
qualified, or until his earlier death, resignation or removal. A vote to fill a
vacancy or vacancies created by the resignation or resignations of a director or
directors effective at a future date shall take effect when the resignation or
resignations become effective.
Section 7. First Meeting of Newly Elected Directors. The first meeting
of the newly elected Board of Directors may be held immediately after the annual
meeting of stockholders and at the same place as the annual meeting of
stockholders, provided a quorum be present, and no notice of the meeting shall
be necessary. In the event the first meeting of the newly elected Board of
Directors is not held at said time and place, it shall be held as provided in
Section 8 or 9 of this Article II.
Section 8. Regular Meetings of Directors. Regular meetings of the Board
of Directors may be held without notice at such time and such place within or
without the State of Delaware as may be fixed from time to time by resolution of
the Board of Directors. If any day fixed for a regular meeting shall be a legal
holiday at a place where the meeting is to be held, then the meeting which would
otherwise be held on that day shall be held at the same hour on the next
succeeding business day.
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<PAGE> 8
Section 9. Special Meetings of Directors. A special meeting of the
Board of Directors may be called by the Chairman of the Board of Directors or
the President, or, in the absence or disability of the President, any Vice
President, or by any two directors or if there is only one director, by that one
director. Each special meeting of the Board of Directors may be held at such
time and such place within or without the State of Delaware as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 10. Notice of Special Meetings. Notice of each special meeting
of the Board of Directors, stating the time and place thereof, shall be given by
the President, any Vice President, the Secretary, any Assistant Secretary or any
member of the Board of Directors, to each member of the Board of Directors (a)
not less than three days before the meeting by depositing the notice in the
United States mail, with first-class postage thereon prepaid, directed to each
member of the Board of Directors at the address designated by him for such
purpose (or, if none is designated, at his last known address), or (b) not less
than twenty-four hours before the meeting by either (i) delivering the same to
each member of the Board of Directors personally, (ii) sending the same by
telephone, telegraph, cable or wireless to address designated by him for such
purposes (or, if none is designated, to his last known address) or (iii)
delivering the notice to the address designated by him for such purpose (or, if
none is designated, to his last known address). The notice of any meeting of the
Board of Directors need not specify the purpose or purposes for which the
meeting is called, except as otherwise required by law or these by-laws.
Section 11. Quorum and Action by the Board. At all meetings of the
Board of Directors, except as otherwise required by law or these by-laws, a
quorum shall be required for the transaction of business and shall consist of
not less than a majority of the entire Board of Di-
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<PAGE> 9
rectors, and the vote of a majority of the directors present shall decide any
question that may come before the meeting. A majority of the directors present,
whether or not a quorum is present, may adjourn any meeting to another time or
place without notice other than announcement at the meeting of the time and
place to which the meeting is adjourned.
Section 12. Procedure. The order of business and all other matters of
procedure at every meeting of directors may be determined by the person
presiding at the meeting.
Section 13. Committees of Directors. The Board of Directors may, by
resolution adopted by vote of a majority of the entire Board of Directors
designate one or more committees, each committee to consist of one or more of
the directors of the corporation. The Board may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member or alternate member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member or alternate member. Any such committee, to the extent
provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the property, business and affairs of the corporation, and may
authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority of the Board
of Directors in reference to amending the certificate of incorporation, adopting
an agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the corporation's
property and assets, recommending to the stock-
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<PAGE> 10
holders a dissolution of the corporation or a revocation of a dissolution,
amending the by-laws of the corporation, declaring a dividend or authorizing the
issuance of stock. Each such committee shall keep regular minutes of its
proceedings and report the same to the Board of Directors when required. A
majority vote of all the members of any such committee may fix its rules or
procedure, determine its actions and fix the time and place within or without
the State of Delaware for its meetings and specify the number of members
required to constitute a quorum and what notice thereof, if any, shall be given,
unless the Board of Directors shall otherwise provide. The Board of Directors
may at any time fill vacancies in, change the membership of or discharge any
such committee.
Section 14. Compensation of Directors. The Board of Directors shall
have the authority to fix the compensation of directors. The directors may be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of committees of the Board of Directors
may be allowed like compensation for attending committee meetings.
Section 15. Action Without a Meeting. Any action required or permitted
to be taken by the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board of Directors or the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents thereto by the members of the Board of
Directors or committee shall be filed with the minutes of the proceedings of the
Board of Directors or committee.
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<PAGE> 11
Section 16. Presence at Meeting by Telephone. Members of the Board of
Directors or any committee thereof may participate in a meeting of the Board of
Directors or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting by such means shall
constitute presence in person at the meeting.
Section 17. Waiver of Notice. Whenever notice is required by law or
these by-laws to be given to any director, a written waiver thereof, signed by
such director, whether before or after the time stated therein, shall be deemed
equivalent to notice.
ARTICLE III
Officers
Section 1. Officers; Term of Office. The Board of Directors shall
annually, at the first meeting of the Board of Directors after the annual
meeting of stockholders, elect a Chairman of the Board, a President, one or more
Vice Presidents, a Secretary, and a Treasurer. The Board of Directors may from
time to time elect or appoint such additional officers as it may determine. Such
additional officers shall have such authority and perform such duties as the
Board of Directors may from time to time prescribe.
The Chairman of the Board, the President, each Vice-President, the
Secretary and the Treasurer shall each, unless otherwise determined by the Board
of Directors, hold office until the first meeting of the Board of Directors
following the next annual meeting of stockholders and until his successor has
been elected and qualified, or until his earlier death, resignation or removal.
Each additional officer appointed or elected by the Board of Directors shall
hold office
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<PAGE> 12
for such term as shall be determined from time to time by the Board of Directors
and until his successor has been elected or appointed and qualified, or until
his earlier death, resignation or removal.
Section 2. Removal. Any officer may be removed or have his authority
suspended by the Board of Directors at any time, with or without cause.
Section 3. Resignation. Any officer may resign at any time by giving
written notice to the corporation. Such resignation shall take effect at the
time specified therein; unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 4. Vacancies. A vacancy in any office arising for any reason
may be filled by the Board of Directors.
Section 5. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of stockholders and of the Board of Directors and shall
be entitled to vote upon all questions.
Section 6. The President. The President shall be the chief executive
officer of the corporation. In the absence of the Chairman of the Board, the
President preside at all meetings of stockholders and of the Board of Directors.
He shall have the powers and duties of immediate supervision and management of
the corporation which usually pertain to his office, and shall perform all such
other duties as are properly required of him by the Board of Directors.
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<PAGE> 13
Section 7. The Vice Presidents. The Vice Presidents may be designated
by such title or titles as the Board of Directors may determine, and each Vice
President in such order of seniority as may be determined by the Board of
Directors shall, in the absence or disability of the President, or at his
request, perform the duties and exercise the powers of the President. Each of
the Vice Presidents also shall have such powers as usually pertain to his office
and shall perform such duties as usually pertain to his office or as are
properly required of him by the Board of Directors.
Section 8. The Secretary and Assistant Secretaries. The Secretary shall
issue notices of all meetings of stockholders and of the Board of Directors
where notices of such meetings are required by law or these by-laws. He shall
attend meetings of stockholders and of the Board of Directors and keep the
minutes thereof in a book or books to be provided for that purpose. He shall
affix the corporate seal to and sign such instruments as require the seal and
his signature and shall perform such other duties as usually pertain to his
office or as are properly required of him by the Board of Directors.
Section 9. The Treasurer and Assistant Treasurers. The Treasurer shall
have the care and custody of all the moneys and securities of the corporation.
He shall cause to be entered in books of the corporation to be kept for that
purpose full and accurate accounts of all moneys received by him and paid by him
on account of the corporation. He shall make and sign such reports, statements
and instruments as may be required of him by the Board of Directors or by the
laws of the United States or of any state, country or other jurisdiction in
which the corporation transacts business, and shall perform such other duties as
usually pertain to his office or as are properly required of him by the Board of
Directors.
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<PAGE> 14
Section 10. Officers Holding Two or More Offices. Any two or more
offices may be held by the same person but no officer shall execute, acknowledge
or verify any instrument in more than one capacity if such instrument be
required by law or otherwise to be executed or verified by two or more officers.
Section 11. Duties of Officers May be Delegated. In case of the absence
or disability of any officer of the corporation, or in case of a vacancy in any
office or for any other reason that the Board of Directors may deem sufficient,
the Board of Directors, except as otherwise provided by law, may temporarily
delegate the powers or duties of any officer to any other officer or to any
director.
Section 12. Compensation. The compensation of all officers shall be
determined by the Board of Directors. The compensation of all other employees
shall be fixed by the President within such limits as may be prescribed by the
Board of Directors.
Section 13. Security. The corporation may secure the fidelity of any or
all of its officers or agents by bond or otherwise, as may be required from time
to time by the Board of Directors.
ARTICLE IV
Indemnification of Officers and Directors
Section 1. Right of Indemnification. Every person now or hereafter
serving as a director or officer of the corporation and every such director or
officer serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, shall be indemnified by the corporation in accordance with
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<PAGE> 15
and to the fullest extent permitted by law for the defense of, or in connection
with, any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative.
Section 2. Expenses. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
of Directors in the specific case upon receipt of an undertaking by or on behalf
of the director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation as
authorized in this Article IV.
Section 3. Other Rights of Indemnification. The right of
indemnification herein provided shall not be deemed exclusive of any other
rights to which any such director or officer may now or hereafter be entitled
under any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE V
Shares and Their Transfer
Section 1. Certificates. Every stockholder of the corporation shall be
entitled to a certificate or certificates, to be in such form as the Board of
Directors shall prescribe, certifying the number of shares of the stock of the
corporation owned by him.
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<PAGE> 16
Section 2. Issuance of Certificates. Certificates representing shares
of stock of the corporation shall be numbered in the order in which they are
issued and shall be signed by the President or any Vice President and the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the corporation. Any of or all the signatures on the certificate may be a
facsimile. In case any officer or officers of the corporation who shall have
signed, or whose facsimile signature or signatures shall have been used on, any
such certificate shall have ceased to be such officer or officers before such
certificate is issued, such certificate may nevertheless be issued as though the
person or persons who signed such certificate, or whose facsimile signature or
signatures shall have been affixed thereto, had not ceased to be such officer or
officers.
Section 3. More Than One Class of Stock. If the corporation shall be
authorized to issue more than one class of stock or more than one series of any
class, the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualification, limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarized on the face or back of the certificate
which the corporation shall issue to represent such class or series of stock,
provided that, except for restrictions on transfer of stock (as provided in
section 202 of the General Corporation Law of Delaware), in lieu of the
foregoing requirements, there may be set forth on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
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<PAGE> 17
Section 4. Stock Ledger. A record shall be kept by the Secretary,
transfer agent or by any other officer, employee or agent designated by the
Board of Directors of the name of the individual, firm or corporation holding
the shares of the stock of the corporation represented by each certificate, the
number of shares represented by such certificate, the date of issue thereof and,
in case of cancellation, the date of cancellation thereof.
Section 5. Transfer of Shares. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate representing shares of the
stock of the corporation 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. Whenever any
transfer of shares shall be made for collateral security, and not absolutely, it
shall be so expressed in the entry of the transfer if, when the certificates are
presented to the corporation for transfer, both the transferor and transferee
request the corporation to do so.
Section 6. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares of the stock of the corporation to receive dividends, and to
vote as such owner, and to hold liable for call and assessments a person
registered on its books as the owner of such shares, and shall not be bound to
recognize any equitable or other claim to or interest in such 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 Delaware.
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<PAGE> 18
Section 7. Regulations. The Board of Directors may make such rules and
regulations as it may deem expedient, not inconsistent with law, the certificate
of incorporation or these by-laws, concerning the issue, transfer and
registration of certificates representing shares of the stock of the
corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents or one or more
registrars, and may require all such certificates to bear the signature or
signatures of any of them.
Section 8. Lost, Stolen and Destroyed Certificates. The Board of
Directors may in its discretion cause a new certificate representing shares of
the stock of the corporation to be issued in place of any certificate
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon satisfactory proof of that fact by the person claiming the
certificate to have been lost, stolen or destroyed; but the Board of Directors
may in its discretion refuse to issue a new certificate except upon the order of
a court having jurisdiction in such matters. When authorizing such issue of a
new certificate, the Board of Directors may, in its discretion, and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 9. Fixing of Record Date. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect to any change, conversion or exchange of shares
of the stock
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<PAGE> 19
of the corporation, or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
or less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. Only such stockholders as shall be stockholders of
record on the date so fixed shall be entitled to notice of, and to vote at such
meeting of stockholders and any adjournment thereof, or to receive payment of
such dividend or such other distribution or such allotment of rights, or to
exercise such rights in respect to any such change, conversion or exchange of
shares of the stock of the corporation, or to participate in such other action,
or to give such consent, as the case may be, notwithstanding any transfer of any
shares of the stock of the corporation on the books of the corporation after any
such record date so fixed. A determination of stockholders of record entitled to
notice of or to vote at any meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
If no record date is fixed by the Board of Directors, (a) the record
date for determining stockholders entitled to notice of or to vote at any
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given or, if notice is waived, at the close
of business on the day next preceding the day on which the meeting is held, (b)
the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is necessary, shall be the day on which the first written consent
is expressed, and (c) the record date for determining stockholders 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.
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<PAGE> 20
ARTICLE VI
Finances
Section 1. Corporate Funds. The funds of the corporation shall be
deposited in its name with such banks, trust companies or other depositories as
the Board of Directors may from time to time designate. All checks, notes,
drafts and other negotiable instruments of the corporation shall be signed by
such officer or officers, employee or employees, agent or agents as the Board of
Directors may from time to time designate. No officers, employees or agents of
the corporation, alone or with others, shall have power to make any checks,
notes, drafts or other negotiable instruments in the name of the corporation or
to bind the corporation thereby, except as provided in this Section 1.
Section 2. Fiscal Year. The fiscal year of the corporation shall be the
calendar year unless otherwise provided by the Board of Directors.
Section 3. Dividends; Reserves. Dividends upon the stock of the
corporation, payable out of funds legally available therefor, may be declared by
the Board of Directors at any regular or special meeting. Dividends may be paid
in cash, in property, or in shares of the stock of the corporation. Before
declaring any dividend, the Board of Directors may set aside out of any funds of
the corporation legally available for dividends such sum or sums as the Board of
Directors from time to time in its discretion shall deem proper as a reserve for
working capital, for contingencies, for equalizing dividends or for such other
purpose or purposes as the Board of Directors shall deem conducive to the
interests of the corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
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<PAGE> 21
Section 4. Loans to Employees and Officers. The corporation may lend
money to or guarantee any obligation of, or otherwise assist any officer or
other employee of the corporation, including any officer or employee who is also
a director of the corporation, whenever in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest, and may be unsecured or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation.
ARTICLE VII
Corporate Seal
Section 1. Form of Seal. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its incorporation and the words
"Corporate Seal" and "Delaware", and shall otherwise be in such form as shall be
prescribed from time to time by the Board of Directors.
Section 2. Use of Seal. The corporate seal may be used by causing it or
a facsimile thereof to be impressed or affixed or reproduced in any manner.
ARTICLE VIII
Amendments
Section 1. Procedure For Amending By-Laws. By-laws of the corporation
may be adopted, amended or repealed (a) at any meeting of stockholders, notice
of which shall have referred to the proposed action, by the holders of a
majority of the shares of the corporation then entitled to vote at an election
of directors, or (b), if the power to adopt, amend or repeal by-
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<PAGE> 22
laws shall have been conferred upon the directors in the certificate of
incorporation, at any meeting of the Board of Directors, notice of which shall
have referred to the proposed action, by the vote of a majority of the entire
Board of Directors.
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<PAGE> 1
Exhibit 4.1
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated
as of July 6, 1998, among S&S Parking, Inc., Century Parking, Inc. and Sentry
Parking Corporation (collectively, the "New Subsidiary Guarantors"), each a
California corporation and wholly owned subsidiary of APCOA/Standard Parking,
Inc., a Delaware corporation (the "Company"), the Company and State Street Bank
and Trust Company, as trustee under the indenture referred to below (the
"Trustee"). Capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Indenture (as defined below).
WITNESSETH
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of March 30, 1998, providing
for the issuance of an aggregate principal amount of $140,000,000 of 9 1/4%
Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes");
WHEREAS, Section 11.5 of the Indenture provides that under certain
circumstances the Company may cause, and Section 11.3 of the Indenture provides
that under certain circumstances the Company must cause, certain of its
subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such subsidiaries shall unconditionally guarantee all of the
Company's Obligations under the Senior Subordinated Notes pursuant to a Note
Guarantee on the terms and conditions set forth herein; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Senior Subordinated Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall
have the meanings assigned to them in the Indenture.
2. AGREEMENT TO NOTE GUARANTEE. The New Subsidiary Guarantors hereby agree,
jointly and severally with all other Subsidiary Guarantors, to guarantee the
Company's Obligations under the Senior Subordinated Notes and the Indenture on
the terms and subject to the conditions set forth in Article 11 of the Indenture
and to be bound by all other applicable provisions of the Indenture.
3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer,
employee, incorporator, shareholder or agent of any Subsidiary Guarantor, as
such, shall have any liability for any obligations of the Company or any
Subsidiary Guarantor under the Senior Subordinated Notes, any Note Guarantees,
the Indenture or this Supplemental Indenture or for any claim based
<PAGE> 2
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Senior Subordinated Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Senior Subordinated Notes.
4. NEW YORK LAW TO GOVERN. The internal law of the State of New York shall
govern and be used to construe this Supplemental Indenture.
5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and
shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Supplemental Indenture
or for or in respect of the correctness of the recitals of fact contained
herein, all of which recitals are made solely by the New Subsidiary Guarantors.
[SIGNATURE PAGES FOLLOW]
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<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated as of July 6, 1998
APCOA/STANDARD PARKING, INC.
By: /s/
---------------------------------------
Name: Michael J. Celebrezze
Title: Executive Vice President and
Chief Financial Officer
S&S PARKING, INC.
By: /s/
---------------------------------------
Name: Michael J. Celebrezze
Title: Vice President and Treasurer
CENTURY PARKING, INC.
By: /s/
---------------------------------------
Name: Michael J. Celebrezz1e
Title: Vice President and Treasurer
SENTRY PARKING CORPORATION
By: /s/
---------------------------------------
Name: Michael J. Celebrezze
Title: Vice President and Treasurer
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<PAGE> 4
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/
---------------------------------------
Name:
Title:
-4-
<PAGE> 5
EXECUTION COPY
================================================================================
APCOA, Inc.
----------------------------------------
$140,000,000
9 1/4% SENIOR SUBORDINATED NOTES DUE 2008
----------------------------------------
------------------------------
INDENTURE
DATED AS OF MARCH 30, 1998
------------------------------
State Street Bank and Trust Company
Trustee
================================================================================
<PAGE> 6
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) NA.
(a)(4)N.A.
(a)(5) 7.10
(b) 7.03; 7.10
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.05
(b)13.03
(c) 13.03
313(a) 7.06
(b)(1) 7.06
(b)(2) 7.06; 7.07
(c) 7.06;13.02
(d)7.06
314(a) 4.03;13.05
(b) N.A.
(c)(1) 13.04
(c)(2) 13.04
(c)(3) N.A.
(d)N.A.
(e) 13.05
(f)N.A.
315 (a)7.0l
(b)7.05,13.02
(c) 7.01
(d)7.01
(e)6.1 1
316 (a)(last sentence) 2.09
(a)( 1 )(A)6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 2.13
317 (a)(1) 6.08
(a)(2)6.09
<PAGE> 7
(b) 2.04
318(a) 13.01
(b) N.A.
(c)13.01
N.A. means not applicable.
* This Cross-Reference Table is not part of the Indenture.
<PAGE> 8
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.....................1
Section 1.1 Definitions..............................................1
Section 1.2. Other Definitions.......................................18
Section 1.3 Incorporation by Reference of Trust Indenture Act.......18
Section 1.4 Rules of Construction...................................19
ARTICLE 2. THE NOTES.....................................................19
Section 2.1 Form and Dating.........................................19
Section 2.2 Execution and Authentication............................21
Section 2.3 Registrar and Paying Agent..............................22
Section 2.4 Paying Agent to Hold Money in Trust.....................22
Section 2.5 Holder Lists............................................23
Section 2.6 Transfer and Exchange...................................23
Section 2.7 Replacement Notes.......................................31
Section 2.8 Outstanding Notes.......................................32
Section 2.9 Treasury Notes..........................................32
Section 2.10 Temporary Notes.........................................32
Section 2.11 Cancellation............................................33
Section 2.12 Defaulted Interest......................................33
Section 2.13 Record Date.............................................33
Section 2.14 Computation of Interest.................................33
Section 2.15 CUSIP Number............................................34
ARTICLE 3. REDEMPTION AND PREPAYMENT.....................................34
Section 3.1 Notices to Trustee......................................34
Section 3.2 Selection of Notes to be Redeemed or Purchased..........34
Section 3.3 Notice of Redemption....................................35
Section 3.4 Effect of Notice of Redemption..........................36
Section 3.5 Deposit of Redemption or Purchase Price.................36
Section 3.6 Notes Redeemed in Part..................................36
Section 3.7 Optional Redemption.....................................36
Section 3.8 Mandatory Redemption....................................36
Section 3.9 Repurchase Offers.......................................37
ARTICLE 4. COVENANTS.....................................................39
Section 4.1 Payment of Notes........................................39
Section 4.2 Maintenance of Office or Agency.........................39
Section 4.3 Commission Reports......................................40
Section 4.4 Compliance Certificate..................................40
Section 4.5 Taxes...................................................41
Section 4.6 Stay, Extension and Usury Laws..........................41
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Section 4.7 Restricted Payments.....................................42
Section 4.8 Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries.................................44
Section 4.9 Incurrence of Indebtedness and Issuance of
Preferred Stock.........................................45
Section 4.10 Assets Sales............................................48
Section 4.11 Transactions with Affiliates............................48
Section 4.12 Liens...................................................50
Section 4.13 Sale and Leaseback Transactions.........................50
Section 4.14 Offer to Purchase Upon Change of Control................50
Section 4.15 Corporate Existence.....................................51
Section 4.16 Limitation on Issuances of Capital Stock of Wholly
Owned Restricted Subsidiaries...........................51
Section 4.17 Limitations on Issuances of Guarantees of
Indebtedness............................................52
Section 4.18 Business Activities.....................................52
Section 4.19 Additional Guarantees...................................52
Section 4.20 Payment for Consents....................................53
Section 4.21 Anti-Layering...........................................53
ARTICLE 5. SUCCESSORS....................................................53
Section 5.1 Merger, Consolidation of Sale of Assets.................53
Section 5.2 Successor Corporation Substituted.......................54
ARTICLE 6. DEFAULTS AND REMEDIES.........................................54
Section 6.1 Events of Default.......................................54
Section 6.2 Acceleration............................................56
Section 6.3 Other Remedies..........................................57
Section 6.4 Waiver of Past Defaults.................................57
Section 6.5 Control by Majority.....................................57
Section 6.6 Limitation on Suits.....................................58
Section 6.7 Rights of Holders of Notes to Receive Payment...........58
Section 6.8 Collection Suit by Trustee..............................58
Section 6.9 Trustee May File Proofs of Claim........................58
Section 6.10 Priorities..............................................59
Section 6.11 Undertaking for Costs...................................59
ARTICLE 7. TRUSTEE.......................................................60
Section 7.1 Duties of Trustee.......................................60
Section 7.2 Rights of Trustee.......................................61
Section 7.3 Individual Rights of Trustee............................62
Section 7.4 Trustee's Disclaimer....................................62
Section 7.5 Notice of Defaults......................................62
Section 7.6 Reports by Trustee to Holders of the Notes..............62
Section 7.7 Compensation And Indemnity..............................63
Section 7.8 Replacement of Trustee..................................64
Section 7.9 Successor Trustee by Merger, etc........................65
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Section 7.10 Eligibility; Disqualification...........................65
Section 7.11 Preferential Collection of Claims Against The
Company.................................................65
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE......................65
Section 8.1 Option to Effect Legal Defeasance or Covenant
Defeasance..............................................65
Section 8.2 Legal Defeasance and Discharge..........................65
Section 8.3 Covenant Defeasance.....................................66
Section 8.4 Conditions to Legal or Covenant Defeasance..............66
Section 8.5 Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions...........68
Section 8.6 Repayment to The Company................................68
Section 8.7 Reinstatement...........................................69
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER..............................69
Section 9.1 Without Consent of Holders of the Notes.................69
Section 9.2 With Consent of Holders of Notes........................70
Section 9.3 Compliance with Trust Indenture Act.....................71
Section 9.4 Revocation and Effect of Consents.......................71
Section 9.5 Notation on or Exchange of Notes........................72
Section 9.6 Trustee to Sign Amendments, etc.........................72
ARTICLE 10. SUBORDINATION.................................................72
Section 10.1 Agreement to Subordinate................................72
Section 10.2 Liquidation; Dissolution; Bankruptcy....................72
Section 10.3 Default on Designated Senior Debt.......................73
Section 10.4 Acceleration of Notes...................................74
Section 10.5 When Distribution Must Be Paid Over.....................74
Section 10.6 Notice by the Company...................................74
Section 10.7 Subrogation.............................................74
Section 10.8 Relative Rights.........................................75
Section 10.9 Subordination May Not Be Impaired by the Company........75
Section 10.10 Distribution or Notice to Representative................76
Section 10.11 Rights of Trustee and Paying Agent......................76
Section 10.12 Authorization to Effect Subordination...................77
Section 10.13 Amendments..............................................77
ARTICLE 11. GUARANTEE OF NOTES............................................77
Section 11.1 Note Guarantee..........................................77
Section 11.2 Execution and Delivery of Note Guarantee................78
Section 11.3 Subsidiary Guarantors May Consolidate, etc., on
Certain Terms...........................................79
Section 11.4 Releases Following Sale of Assets, Merger, Sale of
Capital Stock Etc.......................................80
Section 11.5 Additional Subsidiary Guarantors........................80
Section 11.6 Limitation on Subsidiary Guarantor Liability............80
Section 11.7 "Trustee" to Include Paying Agent.......................81
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<PAGE> 11
ARTICLE 12. SUBORDINATION OF NOTE GUARANTEE...............................81
Section 12.1 Agreement to Subordinate................................81
Section 12.2 Liquidation; Dissolution; Bankruptcy....................81
Section 12.3 Default on Designated Guarantor Senior Debt.............82
Section 12.4 Acceleration of Note Guarantees.........................82
Section 12.5 When Distribution Must Be Paid Over.....................83
Section 12.6 Notice by Subsidiary Guarantor..........................83
Section 12.7 Subrogation.............................................83
Section 12.8 Relative Rights.........................................84
Section 12.9 Subordination May Not Be Impaired by Subsidiary
Guarantor...............................................84
Section 12.10 Distribution or Notice to Representative................85
Section 12.11 Rights of Trustee and Paying Agent......................85
Section 12.12 Authorization to Effect Subordination...................86
Section 12.13 Amendments..............................................86
ARTICLE 13. MISCELLANEOUS.................................................86
Section 13.1 Trust Indenture Act Controls............................86
Section 13.2 Notices.................................................86
Section 13.3 Communication by Holders of Notes with Other
Holders of Notes........................................87
Section 13.4 Certificate and Opinion as to Conditions Precedent......88
Section 13.5 Statements Required in Certificate or Opinion...........88
Section 13.6 Rules by Trustee and Agents.............................88
Section 13.7 No Personal Liability of Directors, Officers,
Employees and Stockholders..............................88
Section 13.8 Governing Law...........................................89
Section 13.9 No Adverse Interpretation of Other Agreements...........89
Section 13.10 Successors..............................................89
Section 13.11 Severability............................................89
Section 13.12 Counterpart Originals...................................89
Section 13.13 Table of Contents, Headings, etc........................89
EXHIBITS
Exhibit A FORM OF NOTE....................................................
Exhibit B FORM OF CERTIFICATE OF TRANSFEROR...............................
Exhibit C FORM OF CERTIFICATE FROM ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR...............................
Exhibit D FORM OF NOTE GUARANTEE..........................................
Exhibit E FORM OF SUPPLEMENTAL INDENTURE..................................
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Indenture, dated as of March 30, 1998, among APCOA, Inc., a Delaware
corporation (the "Company"), Tower Parking, Inc., a Ohio corporation, Graelic,
Inc. a 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, L.P., a Delaware limited partnership, Standard
Parking Corporation, 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 State Street Bank and Trust Company, as trustee (the "Trustee").
The Company, the Subsidiary Guarantors and the Trustee agree as
follows for the benefit of each other and for the equal and ratable benefit of
the holders of the Company's 9 1/4% Senior Subordinated Notes due 2008 (the
"Senior Subordinated Notes") and the new 9 1/4% Senior Subordinated Notes due
2008 (the "New Senior Subordinated Notes" and, together with the Senior
Subordinated Notes, the "Notes"):
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ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.
"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.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial interests in a Global Note, the rules and procedures of
the Depositary that apply to such transfer and exchange.
"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 Interests by a Wholly Owned Restricted Subsidiary to the
Company or to another Wholly Owned Restricted
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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).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company or
any authorized committee of such board of directors.
"Business Day" means any day other than a Legal Holiday.
"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.
"Cedel" means Cedel Bank, societe anonyme.
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"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).
"Commission" means the Securities and Exchange Commission.
"Company" means APCOA, Inc., a Delaware corporation.
"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
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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 dividend 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."
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than
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Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of such preferred
stock, less (x) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such business)
subsequent to the date of the Indenture in the book value of any asset owned by
such Person or a consolidated Subsidiary of such Person, (y) all investments as
of such date in unconsolidated Subsidiaries and in Persons that are not
Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"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.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 13.2 hereof or such other address as to which
the Trustee may give notice to the Company.
"Credit Agent" means The First National Bank of Chicago, in its
capacity as 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.
"Definitive Notes" means Notes that are in the form of EXHIBIT A-1
attached hereto (but without including the text referred to in footnotes 1 and 3
thereto).
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to Section 2.6 of this Indenture, and,
thereafter, "Depositary" shall mean or include such successor.
"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
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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 Section 4.14 hereof.
"DLJ" means Donaldson, Lufkin & Jenrette Securities Corporation.
"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).
"Euroclear" means Morgan Guaranty Trust Company of New York, the
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the offer by the Company to Holders to
exchange Senior Subordinated Notes for New Senior Subordinated Notes.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"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.
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"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 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 Unites 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.
"Global Notes" means the Rule 144A Global Notes, the Regulation S
Temporary Global Notes and the Regulation S Permanent Global Notes.
"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
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(including, without limitation, letters of credit and reimbursement agreements
in respect thereof), of all or any part of any Indebtedness.
"Guarantor Senior Debt" means Senior Debt of a Subsidiary Guarantor.
"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.
"Holberg" means Holberg Industries, Inc., a Delaware corporation,
the indirect parent of the Company.
"Holder" means a Person in whose name a Note is registered.
"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.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds an interest through
a Participant.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation and First Chicago Capital Markets, Inc.
"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
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assignment for the benefit of creditors or any other marshalling of assets and
liabilities of the Company.
"Institutional Accredited Investor" means an "accredited investor"
as defined in Rule 501(a)(l), (2), (3) or (7) under the Securities Act.
"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 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."
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the city in which the principal Corporate
Trust Office of the Trustee is located or at a place of payment are authorized
by law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment shall be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"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).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"AP Holdings" means AP Holdings, Inc., a Delaware corporation, the
parent of the Company.
"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
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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.
"New Senior Subordinated Notes" means the Company's 9 1/4% Senior
Subordinated Notes due 2008, which will be issued in exchange for the Company's
Senior Subordinated Notes.
"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 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.
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"Note Custodian" means the Trustee, when serving as custodian for
the Depositary with respect to the Notes in global form, or any successor entity
thereto.
"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.
"Offering" means the offer and sale of the Senior Subordinated Notes
as contemplated by the Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum, dated March 25,
1998, relating to the Company's offering and placement of the Senior
Subordinated Notes.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 13.5 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.5 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"payment in full" (together with any correlative phrases e.g. "paid
in full" and "pay in full") means (i) with respect to any Senior Debt other than
Senior Debt under or in respect of the New Credit Facility, payment in full
thereof or due provision for payment thereof (x) in accordance with the terms of
the agreement or instrument pursuant to which such Senior Debt was issued or is
governed or (y) otherwise to the reasonable satisfaction of the holders of such
Senior Debt, which shall include, in any Insolvency or Liquidation Proceeding,
approval by such holders individually or as a class, of the provision for
payment thereof, and (ii) with respect to Senior Debt under or in respect of the
New Credit Facility, payment in full thereof in cash or Cash Equivalents.
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"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
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<PAGE> 25
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 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.
"Person" means 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.
"Principals" means Holberg Industries, Inc., John V. Holten or, in
the case of the Company, Holdings.
"Private Placement Legend" means the legend initially set forth on
the Senior Subordinated Notes in the form set forth in Section 2.6(f) hereof.
"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.
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"QIB" means a "qualified institutional buyer" as defined in Rule
144A under the Securities Act.
"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.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, by and among the Company, the Subsidiary
Guarantors and the Initial Purchasers.
"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 do not contain the paragraphs referred to in footnote 1 to the form
of the Note attached hereto as EXHIBIT A-2, and 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 contain the paragraphs referred to in footnote 1 to the form of the
Note attached hereto as EXHIBIT A-2, and 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 or partner, 80% (or more) owned Subsidiary, or spouse or
immediate family member (in the case of an individual) of such Principal or (B)
any trust, corporation, partnership, limited liability company or other entity,
the beneficiaries, stockholders, partners, members, owners or Persons
beneficially holding an 80% or more controlling interest of which consist of
such Principal and/or such other Persons referred to in the immediately
preceding clause (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,
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<PAGE> 27
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.
"Responsible Officer" when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Beneficial Interest" means any beneficial interest of a
Participant or Indirect Participant in the Rule 144A Global Note or the
Regulation S Global Note.
"Restricted Broker Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Restricted Global Notes" means the Rule 144A Global Notes and the
Regulation S Global Notes, all of which shall bear the Private Placement Legend.
"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 Notes" means the permanent global notes that
contain the paragraph referred to in footnote 1 and the additional schedule
referred to in footnote 3 to the form of the Note attached hereto as EXHIBIT
A-1, and 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.
"Securities Act" means the Securities Act of 1933, as amended.
"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
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<PAGE> 28
Subsidiaries or other Affiliates, (y) any trade payables or (z) any Indebtedness
that is incurred in violation of the Indenture.
"Senior Subordinated Notes" means the Company's 9 1/4% Senior
Subordinated Notes due 2008.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"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 Subsidiaries of the Company that
execute a Note Guarantee of the Notes substantially in the form of EXHIBIT D
attached hereto.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb), as amended, as in effect on the date hereof.
"Transfer Restricted Securities" means Notes or beneficial interests
therein that bear or are required to bear the Private Placement Legend.
"Trustee" means State Street Bank and Trust Company until a
successor replaces it in accordance with the applicable provisions of this
Indenture, and thereafter means the successor.
"Unrestricted Global Notes" means one or more Global Notes that do
not and are not required to bear the Private Placement Legend.
"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
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<PAGE> 29
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; (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e)
has at least one director on its board of directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be 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 Section 4.7 hereof. 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 Section 4.9 hereof, 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 Section 4.9 hereof, 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.
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Section 1.2. Other Definitions.
Defined in
Term Section
"Affiliate Transaction".............................4.11
"Asset Sale Offer"..................................4.10
"Change of Control Offer"...........................4.14
"Change of Control Payment".........................4.14
"Change of Control Payment Date"....................4.14
"Covenant Defeasance"................................8.3
"Custodian"..........................................6.1
"DTC"................................................2.3
"Event of Default"...................................6.1
"Excess Proceeds"...................................4.10
"incur"..............................................4.9
"Legal Defeasance"...................................8.2
"Offer Amount".......................................3.9
"Offer Period".......................................3.9
"Paying Agent".......................................2.3
"Payment Default"....................................6.1
"Permitted Debt".....................................4.9
"Purchase Date"......................................3.9
"Registrar"..........................................2.3
"Repurchase Offer"...................................3.9
"Restricted Payments"................................4.7
Section 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, each Subsidiary Guarantor
and any successor obligor upon the Notes.
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<PAGE> 31
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by the Commission rule
under the TIA have the meanings so assigned to them therein.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) term has the meaning assigned to it herein;
(2) an accounting term not otherwise defined herein has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement or successor sections or
rules adopted by the Commission from time to time.
ARTICLE 2.
THE NOTES
Section 2.1. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of EXHIBIT A-1 or EXHIBIT A-2 attached hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its authentication.
The Notes initially shall be issued in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
(a) Global Notes. Notes offered and sold to QIBs in reliance on Rule
144A shall be issued initially in the form of Rule 144A Global Notes, which
shall be deposited on behalf of the purchasers of the Notes represented thereby
with a custodian of the Depositary, and registered in the name of the Depositary
or a nominee of the Depositary, duly executed by the Company and authenticated
by the Trustee as hereinafter provided. The aggregate principal amount of the
Rule 144A Global Notes may from time to time be increased or decreased by
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<PAGE> 32
adjustments made on the records of the Trustee and the Depositary or its nominee
as hereinafter provided.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The "40-day restricted
period" (as defined in Regulation S) shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Notes (except to the
extent of any beneficial owners thereof who acquired an interest therein
pursuant to another exemption from registration under the Securities Act and who
will take delivery of a beneficial ownership interest in a Rule 144A Global
Note, all as contemplated by Section 2.6(a)(ii) hereof), and (ii) an Officers'
Certificate from the Company certifying as to the same matters covered in clause
(i) above. Following the termination of the 40-day restricted period, beneficial
interests in the Regulation S Temporary Global Note shall be exchanged for
beneficial interests in Regulation S Permanent Global Notes pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary
Global Notes. The aggregate principal amount of the Regulation S Temporary
Global Notes and the Regulation S Permanent Global Notes may from time to time
be increased or decreased by adjustments made on the records of the Trustee and
the Depositary or its nominee, as the case may be, in connection with transfers
of interest as hereinafter provided.
Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions and transfers of interests. Any endorsement of a Global Note to
reflect the amount of any increase or decrease in the amount of outstanding
Notes represented thereby shall be made by the Trustee or the Note Custodian, at
the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.6 hereof.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations" and "Instructions to Participants" of Cedel shall be applicable to
interests in the Regulation S Temporary Global Notes and the Regulation S
Permanent Global Notes that are held by Participants through Euroclear or Cedel.
The Trustee shall have no obligation to notify Holders of any such procedures or
to monitor or enforce compliance with the same.
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Except as set forth in Section 2.6 hereof, the Global Notes may be
transferred, in whole and not in part, only to another nominee of the Depositary
or to a successor of the Depositary or its nominee.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to
Rule 144A Global Notes and Regulation S Permanent Global Notes deposited with or
on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b), authenticate and deliver the Global Notes that (i) shall be
registered in the name of the Depositary or the nominee of the Depositary and
(ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Participants shall have no rights either under this Indenture with
respect to any Global Note held on their behalf by the Depositary or by the Note
Custodian as custodian for the Depositary or under such Global Note, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Participants, the
operation of customary practices of such Depositary governing the exercise of
the rights of an owner of a beneficial interest in any Global Note.
(c) Definitive Notes. Notes issued in certificated form shall be
substantially in the form of EXHIBIT A-1 attached hereto (but without including
the text referred to in footnotes 1 and 3 thereto).
Section 2.2. Execution and Authentication.
An Officer shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially as
set forth in EXHIBIT A-1 or EXHIBIT A-2 hereto.
The Trustee shall, upon a written order of the Company signed by an
Officer directing the Trustee to authenticate the Notes, authenticate Notes for
original issue up to the aggregate principal amount stated in paragraph 4 of the
Notes. The Trustee shall, upon written order of the Company signed by an
Officer, authenticate New Senior Subordinated Notes for
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original issuance in exchange for a like principal amount of Senior Subordinated
Notes exchanged in the Exchange Offer or otherwise exchanged for New Senior
Subordinated Notes pursuant to the terms of the Registration Rights Agreement.
The aggregate principal amount of Notes outstanding at any time may not exceed
such amount except as provided in Section 2.7 hereof.
The Trustee may (at the Company's expense) appoint an authenticating
agent acceptable to the Company to authenticate Notes. An authenticating agent
may authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
Section 2.3. Registrar and Paying Agent.
The Company shall maintain (i) an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and (ii)
an office or agency where Notes may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more additional paying agents. The term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and Paying
Agent with respect to the Definitive Notes.
Section 2.4. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
the
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occurrence of events specified in Section 6.1(vii) through (ix) hereof, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.5. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company and/or the Subsidiary Guarantors shall furnish to
the Trustee at least seven (7) Business Days before each interest payment date
and at such other times as the Trustee may request in writing, a list in such
form and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Company and the Subsidiary Guarantors
shall otherwise comply with TIA ss. 312(a).
Section 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act. Beneficial
interests in a Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same Global Note in
accordance with the transfer restrictions set forth in the legend in subsection
(g) of this Section 2.6. Transfers of beneficial interests in the Global Notes
to Persons required to take delivery thereof in the form of an interest in
another Global Note shall be permitted as follows:
(i) Rule 144A Global Note to Regulation S Global Note. If, at
any time, an owner of a beneficial interest in a Rule 144A Global Note deposited
with the Depositary (or the Trustee as custodian for the Depositary) wishes to
transfer its beneficial interest in such Rule 144A Global Note to a Person who
is required or permitted to take delivery thereof in the form of an interest in
a Regulation S Global Note, such owner shall, subject to the Applicable
Procedures, exchange or cause the exchange of such interest for an equivalent
beneficial interest in a Regulation S Global Note as provided in this Section
2.6(a)(i). Upon receipt by the Trustee of (1) instructions given in accordance
with the Applicable Procedures from a Participant directing the Trustee to
credit or cause to be credited a beneficial interest in the Regulation S Global
Note in an amount equal to the beneficial interest in the Rule 144A Global Note
to be exchanged, (2) a written order given in accordance with the Applicable
Procedures containing information regarding the Participant account of the
Depositary and the Euroclear or Cedel account to be credited with such increase,
and (3) a certificate in the form of EXHIBIT B-1 hereto given by the owner of
such beneficial interest stating that the transfer of such interest has been
made in compliance with the transfer restrictions applicable to the Global Notes
and pursuant to and in accordance with Rule 903 or Rule 904 of Regulation S,
then the Trustee, as Registrar, shall instruct the Depositary to reduce or cause
to be reduced the aggregate principal amount at maturity of the applicable Rule
144A Global Note and to increase or cause to be increased the aggregate
principal amount at maturity of the applicable Regulation S Global Note by the
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<PAGE> 36
principal amount at maturity of the beneficial interest in the Rule 144A Global
Note to be exchanged or transferred, to credit or cause to be credited to the
account of the Person specified in such instructions, a beneficial interest in
the Regulation S Global Note equal to the reduction in the aggregate principal
amount at maturity of the Rule 144A Global Note, and to debit, or cause to be
debited, from the account of the Person making such exchange or transfer the
beneficial interest in the Rule 144A Global Note that is being exchanged or
transferred.
(ii) Regulation S Global Note to Rule 144A Global Note. If, at
any time, after the expiration of the 40-day restricted period, an owner of a
beneficial interest in a Regulation S Global Note deposited with the Depositary
or with the Trustee as custodian for the Depositary wishes to transfer its
beneficial interest in such Regulation S Global Note to a Person who is required
or permitted to take delivery thereof in the form of an interest in a Rule 144A
Global Note, such owner shall, subject to the Applicable Procedures, exchange or
cause the exchange of such interest for an equivalent beneficial interest in a
Rule 144A Global Note as provided in this Section 2.6(a)(ii). Upon receipt by
the Trustee of (1) instructions from Euroclear or Cedel, if applicable, and the
Depositary, directing the Trustee, as Registrar, to credit or cause to be
credited a beneficial interest in the Rule 144A Global Note equal to the
beneficial interest in the Regulation S Global Note to be exchanged, such
instructions to contain information regarding the Participant account with the
Depositary to be credited with such increase, (2) a written order given in
accordance with the Applicable Procedures containing information regarding the
participant account of the Depositary and (3) a certificate in the form of
Exhibit B-2 attached hereto given by the owner of such beneficial interest
stating (A) if the transfer is pursuant to Rule 144A, that the Person
transferring such interest in a Regulation S Global Note reasonably believes
that the Person acquiring such interest in a Rule 144A Global Note is a QIB and
is obtaining such beneficial interest in a transaction meeting the requirements
of Rule 144A and any applicable blue sky or securities laws of any state of the
United States, (B) that the transfer complies with the requirements of Rule 144
under the Securities Act, (C) if the transfer is to an Institutional Accredited
Investor that such transfer is in compliance with the Securities Act and a
certificate in the form of Exhibit C attached hereto and, if such transfer is in
respect of an aggregate principal amount of less than $250,000, an Opinion of
Counsel acceptable to the Company that such transfer is in compliance with the
Securities Act or (D) if the transfer is pursuant to any other exemption from
the registration requirements of the Securities Act, that the transfer of such
interest has been made in compliance with the transfer restrictions applicable
to the Global Notes and pursuant to and in accordance with the requirements of
the exemption claimed, such statement to be supported by an Opinion of Counsel
from the transferee or the transferor in form reasonably acceptable to the
Company and to the Registrar and in each case, in accordance with any applicable
securities laws of any state of the United States or any other applicable
jurisdiction, then the Trustee, as Registrar, shall instruct the Depositary to
reduce or cause to be reduced the aggregate principal amount at maturity of such
Regulation S Global Note and to increase or cause to be increased the aggregate
principal amount at maturity of the applicable Rule 144A Global Note by the
principal amount at maturity of the beneficial interest in the Regulation S
Global Note to be exchanged or transferred, and the Trustee, as Registrar, shall
instruct the Depositary, concurrently with such reduction, to credit or cause to
be credited to the account of the Person specified in such instructions a
beneficial interest in the applicable Rule 144A Global Note equal to the
reduction in the aggregate principal amount at maturity of
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such Regulation S Global Note and to debit or cause to be debited from the
account of the Person making such transfer the beneficial interest in the
Regulation S Global Note that is being exchanged or transferred.
(b) Transfer and Exchange of Definitive Notes. When Definitive Notes
are presented by a Holder to the Registrar with a request to register the
transfer of the Definitive Notes or to exchange such Definitive Notes for an
equal principal amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested only
if the Definitive Notes are presented or surrendered for registration of
transfer or exchange, are endorsed and contain a signature guarantee or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney and contains a
signature guarantee, duly authorized in writing and the Registrar received the
following documentation (all of which may be submitted by facsimile):
(i) in the case of Definitive Notes that are Transfer
Restricted Securities, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the name of such
Holder, without transfer, or such Transfer Restricted Security is being
transferred to the Company or any of its Subsidiaries, a certification to that
effect from such Holder (in substantially the form of Exhibit B-3 hereto); or
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective registration statement under the
Securities Act, a certification to that effect from such Holder (in
substantially the form of EXHIBIT B-3 hereto); or
(C) if such Transfer Restricted Security is being
transferred to a Non-U.S. Person in an offshore transaction in accordance with
Rule 904 under the Securities Act, a certification to that effect from such
Holder (in substantially the form of EXHIBIT B-3 hereto);
(D) if such Transfer Restricted Security is being
transferred to an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than those listed
in subparagraphs (B) and (C) above, a certification to that effect from such
Holder (in substantially the form of EXHIBIT B-3 hereto), a certification
substantially in the form of EXHIBIT C hereto, and, if such transfer is in
respect of an aggregate principal amount of Notes of less than $250,000, an
Opinion of Counsel acceptable to the Company that such transfer is in compliance
with the Securities Act; or
(E) if such Transfer Restricted Security is being
transferred in reliance on any other exemption from the registration
requirements of the Securities Act, a certification to that effect from such
Holder (in substantially the form of EXHIBIT B-3 hereto) and
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<PAGE> 38
an Opinion of Counsel from such Holder or the transferee reasonably acceptable
to the Company and to the Registrar to the effect that such transfer is in
compliance with the Securities Act.
(c) Transfer of a Beneficial Interest in a Rule 144A Global Note or
Regulation S Permanent Global Note for a Definitive Note.
(i) Any Person having a beneficial interest in a Rule 144A
Global Note or Regulation S Permanent Global Note may upon request, subject to
the Applicable Procedures, exchange such beneficial interest for a Definitive
Note. Upon receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary (or Euroclear or Cedel, if
applicable), from the Depositary or its nominee on behalf of any Person having a
beneficial interest in a Rule 144A Global Note or Regulation S Permanent Global
Note, and, in the case of a Transfer Restricted Security, the following
additional information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depositary as being the beneficial owner, a
certification to that effect from such Person (in substantially the form of
EXHIBIT B-4 hereto);
(B) if such beneficial interest is being transferred to
a QIB in accordance with Rule 144A under the Securities Act or pursuant to an
exemption from registration in accordance with Rule 144 under the Securities Act
or pursuant to an effective registration statement under the Securities Act, a
certification to that effect from the transferor (in substantially the form of
EXHIBIT B-4 hereto);
(C) if such beneficial interest is being transferred to
an Institutional Accredited Investor, pursuant to a private placement exemption
from the registration requirements of the Securities Act (and based on an
opinion of counsel if the Company so requests), a certification to that effect
from such Holder (in substantially the form of EXHIBIT B-4 hereto) and a
certificate from the applicable transferee (in substantially the form of EXHIBIT
C hereto); or
(D) if such beneficial interest is being transferred in
reliance on any other exemption from the registration requirements of the
Securities Act, a certification to that effect from the transferor (in
substantially the form of EXHIBIT B-4 hereto) and an Opinion of Counsel from the
transferee or the transferor reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in compliance with the Securities
Act, in which case the Trustee or the Note Custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions and procedures
existing between the Depositary and the Note Custodian, cause the aggregate
principal amount of Rule 144A Global Notes or Regulation S Permanent Global
Notes, as applicable, to be reduced accordingly and, following such reduction,
the Company shall execute and, the Trustee shall authenticate and deliver to the
transferee a Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Rule 144A Global Note or Regulation S Permanent Global Note, as
applicable, pursuant to this
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Section 2.6(c) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
Indirect Participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Following any such issuance of Definitive Notes, the Trustee, as
Registrar, shall instruct the Depositary to reduce or cause to be reduced the
aggregate principal amount at maturity of the applicable Global Note to reflect
the transfer.
(d) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.6), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(e) Transfer and Exchange of a Definitive Note for a Beneficial
Interest in a Global Note. A definitive Note may not be transferred or exchanged
for a beneficial interest in a Global Note.
(f) Authentication of Definitive Notes in Absence of Depositary. If
at any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the Global Notes
and a successor Depositary for the Global Notes is not appointed by the Company
within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive Notes under this
Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Note certificate evidencing Global Notes and Definitive
Notes (and all Notes issued in exchange therefor or substitution thereof) shall
bear the legend (the "Private Placement Legend") in substantially the following
form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY
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EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (l)(a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR"), THAT PRIOR TO SUCH TRANSFER, FURNISHED THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES
LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND, IN THE CASE OF CLAUSE (b), (c), (d)
OR (e), BASED UPON AN OPINION OF COUNSEL IF THE COMPANY
SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY
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EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a Global
Note) pursuant to Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that
is a Definitive Note, the Registrar shall permit the Holder thereof to exchange
such Transfer Restricted Security for a Definitive Note that does not bear the
legend set forth in (i) above and rescind any restriction on the transfer of
such Transfer Restricted Security upon receipt of a certification from the
transferring holder substantially in the form of EXHIBIT B-4 hereto; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted Security shall not be
required to bear the legend set forth in (i) above, but shall continue to be
subject to the provisions of Section 2.6(a) and (b) hereof; provided, however,
that with respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a Definitive Note that does
not bear the legend set forth in (i) above, which request is made in reliance
upon Rule 144, the Holder thereof shall certify in writing to the Registrar that
such request is being made pursuant to Rule 144 (such certification to be
substantially in the form of EXHIBIT B-4 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a Global
Note) in reliance on any exemption from the registration requirements of the
Securities Act (other than exemptions pursuant to Rule 144A or Rule 144 under
the Securities Act) in which the Holder or the transferee provides an Opinion of
Counsel to the Company and the Registrar in form and substance reasonably
acceptable to the Company and the Registrar (which Opinion of Counsel shall also
state that the transfer restrictions contained in the legend are no longer
applicable):
(A) in the case of any Transfer Restricted Security that
is a Definitive Note, the Registrar shall permit the Holder thereof to exchange
such Transfer Restricted Security for a Definitive Note that does not bear the
legend set forth in (i) above and rescind any restriction on the transfer of
such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted Security shall not be
required to bear the legend set forth in (i) above, but shall continue to be
subject to the provisions of Section 2.6(a) and (b) hereof.
(iv) Notwithstanding the foregoing, upon the consummation of
the Exchange Offer in accordance with the Registration Rights Agreement, the
Company shall issue and, upon receipt of an authentication order in accordance
with Section 2.2 hereof, the Trustee shall authenticate (i) one or more
Unrestricted Global Notes in aggregate principal amount equal to the principal
amount of the Restricted Beneficial Interests tendered for acceptance by persons
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<PAGE> 42
that are not (x) broker-dealers, (y) Persons participating in the distribution
of the Notes or (z) Persons who are affiliates (as defined in Rule 144) of the
Company and accepted for exchange in the Exchange Offer and (ii) Definitive
Notes that do not bear the Private Placement Legend in an aggregate principal
amount equal to the principal amount of the Restricted Definitive Notes accepted
for exchange in the Exchange Offer. Concurrently with the issuance of such
Notes, the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Notes to be reduced accordingly and the Company shall execute
and the Trustee shall authenticate and deliver to the Persons designated by the
Holders of Definitive Notes so accepted Definitive Notes in the appropriate
principal amount.
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in Global Notes have been exchanged for Definitive
Notes, redeemed, repurchased or cancelled, all Global Notes shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Notes Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any stamp or transfer tax or similar governmental charge
payable in connection therewith (other than any such stamp or transfer taxes or
similar governmental charge payable upon exchange or transfer pursuant to
Sections 2.10, 3.6, 4.10, 4.14 and 9.5 hereto).
(iii) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes shall
be the valid obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Global Notes or Definitive
Notes surrendered upon such registration of transfer or exchange.
(iv) The Registrar shall not be required:(A) to issue, to
register the transfer of or to exchange Notes during a period beginning at the
opening of fifteen (15) Business Days before the day of any selection of Notes
for redemption under Section 3.2 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part, or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest payment
date.
(v) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and treat
the Person in whose name
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<PAGE> 43
any Note is registered as the absolute owner of such Note for the purpose of
receiving payment of principal of and interest on such Notes and for all other
purposes, and neither the Trustee, any Agent nor the Company shall be affected
by notice to the contrary.
(vi) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.2 hereof.
Section 2.7. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receives evidence to their satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by an Officer of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company and the Trustee may
charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section 2.8 as not outstanding. Except as set forth in Section 2.9 hereof, a
Note does not cease to be outstanding because the Company or any Subsidiary
Guarantor or an Affiliate of the Company or any Subsidiary Guarantor holds the
Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
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Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any Subsidiary Guarantor, or by any Affiliate of the Company or any
Subsidiary Guarantor shall be considered as though not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes shown on the
Trustee's register as being so owned shall be so disregarded. Notwithstanding
the foregoing, Notes that are to be acquired by the Company or any Subsidiary
Guarantor or an Affiliate of the Company or any Subsidiary Guarantor pursuant to
an exchange offer, tender offer or other agreement shall not be deemed to be
owned by such entity until legal title to such Notes passes to such entity.
Section 2.10. Temporary Notes.
Until Definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon a written order
of the Company signed by an Officer of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall upon receipt of a written order
of the Company signed by an Officer authenticate Definitive Notes in exchange
for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver to the Trustee for cancellation
any Notes previously authenticated and delivered hereunder or which the Company
may have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Trustee. All Notes surrendered for registration of
transfer, exchange or payment, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation. Subject to Section 2.7 hereof, the Company may not
issue new Notes to replace Notes that it has redeemed or paid or that have been
delivered to the Trustee for cancellation. All cancelled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
the Company, unless by a written order, signed by an Officer of the Company, the
Company shall direct that cancelled Notes be returned to it.
Section 2.12. Defaulted Interest.
If the Company or any Subsidiary Guarantor defaults in a payment of
interest on the Notes, it shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, which date shall be
at the earliest practicable date but in all events at least five (5)
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<PAGE> 45
Business Days prior to the payment date, in each case at the rate provided in
the Notes and in Section 4.1 hereof. The Company shall fix or cause to be fixed
each such special record date and payment date, and shall promptly thereafter,
notify the Trustee of any such date. At least fifteen (15) days before the
special record date, the Company (or the Trustee, in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
Section 2.13. Record Date.
The record date for purposes of determining the identity of Holders
of the Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA ss. 316 (c).
Section 2.14. Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
Section 2.15. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and if it
does so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders, provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.1. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at
least 45 days but not more than 60 days before a redemption date (unless a
shorter period is acceptable to the Trustee) an Officers' Certificate setting
forth (i) the Section of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
If the Company is required to make an offer to purchase Notes
pursuant to Section 4.10 or 4.14 hereof, it shall furnish to the Trustee, at
least 45 days before the scheduled purchase date, an Officers' Certificate
setting forth (i) the section of this Indenture pursuant to which the offer to
purchase shall occur, (ii) the terms of the offer, (iii) the principal amount of
Notes to be purchased, (iv) the purchase price, (v) the purchase date and (vi)
and further setting forth a statement to the effect that (a) the Company or one
its Subsidiaries has affected an Asset Sale
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<PAGE> 46
and there are Excess Proceeds aggregating more than $15.0 million or (b) a
Change of Control has occurred, as applicable.
Section 3.2. Selection of Notes to be Redeemed or Purchased.
If less than all of the Notes are to be redeemed at any time,
selection of 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 Notes are listed, or, if the 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 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 Notes to be redeemed at its
registered address. Notices of redemption may not be conditional. If any 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
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 Note. Notes
called for redemption become due on the date fixed for redemption. On and after
the redemption date, interest ceases to accrue on Notes or portions of them
called for redemption.
Section 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price for the Notes and accrued interest, and
Liquidated Damages, if any;
(3) if any Note is being redeemed in part, the portion of the
principal amount of such Notes to be redeemed and that, after the redemption
date, upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon surrender of the original Note;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest and Liquidated Damages, if any, on Notes called for redemption
ceases to accrue on and after the redemption date;
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<PAGE> 47
(7) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided,
however, that the Company shall have delivered to the Trustee, at least 45 days
prior to the redemption date (or such shorter period as shall be acceptable to
the Trustee), an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in the notice as provided
in the preceding paragraph. The notice mailed in the manner herein provided
shall be conclusively presumed to have been duly given whether or not the Holder
receives such notice. In any case, failure to give such notice by mail or any
defect in the notice to the Holder of any Note shall not affect the validity of
the proceeding for the redemption of any other Note.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price plus accrued and unpaid interest and
Liquidated Damages, if any, to such date. A notice of redemption may not be
conditional.
Section 3.5. Deposit of Redemption or Purchase Price.
On or before 10:00 a.m. (New York City time) on each redemption date
or the date on which Notes must be accepted for purchase pursuant to Section
4.10 or 4.14, the Company shall deposit with the Trustee or with the Paying
Agent money sufficient to pay the redemption price of and accrued and unpaid
interest and Liquidated Damages, if any, on all Notes to be redeemed or
purchased on that date. The Trustee or the Paying Agent shall promptly return to
the Company upon its written request any money deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of (including any applicable premium), accrued interest and
Liquidated Damages, if any, on all Notes to be redeemed or purchased.
If Notes called for redemption or tendered in an Asset Sale Offer or
Change of Control Offer are paid or if the Company has deposited with the
Trustee or Paying Agent money sufficient to pay the redemption or purchase price
of, unpaid and accrued interest and Liquidated Damages, if any, on all Notes to
be redeemed or purchased, on and after the redemption or purchase date interest
and Liquidated Damages, if any, shall cease to accrue on the Notes or the
portions of Notes called for redemption or tendered and not withdrawn in an
Asset Sale Offer or Change of Control Offer (regardless of whether certificates
for such securities are actually surrendered). If a Note is redeemed or
purchased on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest and Liquidated
Damages, if any, shall be paid to the Person in whose name such Note was
registered at the close of business on such record date. If any Note called for
redemption shall not be so paid upon
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<PAGE> 48
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal and
Liquidated Damages, if any, from the redemption or purchase date until such
principal and Liquidated Dames, if any, is paid, and to the extent lawful on any
interest not paid on such unpaid principal, in each case, at the rate provided
in the Notes and in Section 4.1 hereof.
Section 3.6. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.7. Optional Redemption.
(a) Except as set forth in the next paragraph, the Notes will not be
redeemable at the Company's option prior to March , 2003. Thereafter, the 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 the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2003..................................... 104.625%
2004..................................... 103.083%
2005..................................... 101.542%
2006 and thereafter...................... 100.000%
</TABLE>
(b) 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 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 Notes remains outstanding immediately after the occurrence of such
redemption; and provided, further, that such redemption shall occur within 45
days of the date of the closing of such Public Equity Offering.
Section 3.8. Mandatory Redemption.
Except as set forth under Sections 3.9, 4.10 and 4.14 hereof, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
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Section 3.9. Repurchase Offers.
In the event that the Company shall be required to commence an offer
to all Holders to repurchase Notes (a "Repurchase Offer") pursuant to Section
4.10 hereof, an "Excess Proceeds Offer," or pursuant to Section 4.14 hereof, a
"Change of Control Offer," the Company shall follow the procedures specified
below.
A Repurchase Offer shall commence no earlier than 30 days and no
later than 60 days after a Change of Control (unless the Company is not required
to make such offer pursuant to Section 4.14(c) hereof) or an Excess Proceeds
Offer Triggering Event (as defined below), as the case may be, and remain open
for a period of twenty (20) Business Days following its commencement and no
longer, except to the extent that a longer period is required by applicable law
(the "Offer Period"). No later than five (5) Business Days after the termination
of the Offer Period (the "Purchase Date"), the Company shall purchase the
principal amount of Notes required to be purchased pursuant to Section 4.10
hereof, in the case of an Excess Proceeds Offer, or 4.14 hereof, in the case of
a Change of Control Offer (the "Offer Amount") or, if less than the Offer Amount
has been tendered, all Notes tendered in response to the Repurchase Offer.
Payment for any Notes so purchased shall be made in the same manner as interest
payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest and
Liquidated Damages, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest or Liquidated Damages, if any, shall be payable to Holders who tender
Notes pursuant to the Repurchase Offer.
Upon the commencement of a Repurchase Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to such Repurchase
Offer. The Repurchase Offer shall be made to all Holders. The notice, which
shall govern the terms of the Repurchase Offer, shall describe the transaction
or transactions that constitute the Change of Control or Excess Proceeds Offer
Triggering Event, as the case may be and shall state:
(a) that the Repurchase Offer is being made pursuant to this Section
3.9 and Section 4.10 or 4.14 hereof, as the case may be, and the length of time
the Repurchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Repurchase Offer shall cease to accrue
interest and Liquidated Damages, if any, after the Purchase Date;
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(e) that Holders electing to have a Note purchased pursuant to a
Repurchase Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note, duly completed,
or transfer by book-entry transfer, to the Company, the Depositary, or the
Paying Agent at the address specified in the notice not later than the close of
business on the last day of the Offer Period;
(f) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(g) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before 10:00 a.m. (New York City time) on each Purchase Date,
the Company shall irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the Offer Amount, together with accrued and
unpaid interest and Liquidated Damages, if any, thereon, to be held for payment
in accordance with the terms of this Section 3.9. On the Purchase Date, the
Company shall, to the extent lawful, (i) accept for payment, on a pro rata basis
to the extent necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Repurchase Offer, or if less than the Offer Amount has been
tendered, all Notes tendered, (ii) deliver or cause the Paying Agent or
depository, as the case may be, to deliver to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.9. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than three (3)
Business Days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, plus any accrued and unpaid interest and
Liquidated Damages, if any, thereon, and the Company shall promptly issue a new
Note, and the Trustee, shall authenticate and mail or deliver such new Note, to
such Holder, equal in principal amount to any unpurchased portion of such
Holder's Notes surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce in a newspaper of general circulation or in a press release provided to
a nationally recognized financial wire service the results of the Repurchase
Offer on the Purchase Date.
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Other than as specifically provided in this Section 3.9, any
purchase pursuant to this Section 3.9 shall be made pursuant to the provisions
of Sections 3.1, 3.2, 3.5 and 3.6 hereof.
ARTICLE 4.
COVENANTS
Section 4.1. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. The Company shall pay all Liquidated Damages, if any, in the same manner
on the dates and in the amounts set forth in the Registration Rights Agreement.
Principal, premium and Liquidated Damages, if any, and interest, shall be
considered paid for all purposes hereunder on the date the Paying Agent if other
than the Company or a Subsidiary thereof holds, as of 10:00 a.m. (New York City
time) money deposited by the Company in immediately available funds and
designated for and sufficient to pay all such principal, premium and Liquidated
Damages, if any, and interest, then due.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful, it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.2. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of
New York an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee or Registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.3 hereof.
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Section 4.3. Commission Reports.
From and after the earlier of the effective date of the Exchange
Offer Registration Statement or the effective date of the Shelf Registration
Statement, whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company shall furnish to
the Holders of 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 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 shall file a copy of
all such information and reports with the Commission for public availability
(unless the Commission will not accept such a filing) within the time periods
that would have been applicable had the Company been subject to such rules and
regulations 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 Notes remain outstanding, it shall furnish to the Holders, 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. The Company shall at all times comply with TIA ss. 314(a).
The financial information to be distributed to Holders of Notes
shall be filed with the Trustee and mailed to the Holders at their addresses
appearing in the register of Notes maintained by the Registrar, within 90 days
after the end of the Company's fiscal years and within 45 days after the end of
each of the first three quarters of each such fiscal year.
The Company shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information and, if requested by
the Company, the Trustee will deliver such reports to the Holders under this
Section 4.3.
Section 4.4. Compliance Certificate.
The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether each has kept, observed, performed and fulfilled its
obligations under this Indenture (including, with respect to any Restricted
Payments made during such year, the basis upon which the calculations required
by Section 4.7 hereof were computed, which calculations may be based on the
Company's latest available financial statements), and further stating, as to
each such Officer signing such certificate, that, to the best of his or her
knowledge, each entity has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
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<PAGE> 53
that, to the best of his or her knowledge, no event has occurred and remains in
existence by reason of which payments on account of the principal of, premium or
Liquidated Damages, if any, or interest on the Notes is prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.
So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, in connection with the
year-end financial statements delivered pursuant to Section 4.3 hereof, the
Company shall use its best efforts to deliver a written statement of the
Company's independent public accountants (who shall be a firm of established
national reputation) that in making the examination necessary for certification
of such financial statements, nothing has come to their attention that would
lead them to believe that the Company has violated any provisions of Article
Four or Section 5.1 hereof or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation. In the event that such
written statement of the Company's independent public accountants cannot be
obtained, the Company shall deliver an Officers' Certificate certifying that it
has used its best efforts to obtain such statements and was unable to do so.
The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.5. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency all material taxes, assessments and governmental
levies, except such as are contested in good faith and by appropriate
proceedings and with respect to which appropriate reserves have been taken in
accordance with GAAP.
Section 4.6. Stay, Extension and Usury Laws.
The Company and each Subsidiary Guarantor covenants (to the extent
that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each Subsidiary Guarantor (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
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Section 4.7. Restricted Payments.
From and after the date hereof 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 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 Notes (other than 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 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
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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 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.
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
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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 designaiion 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 `tRestricted Paymentstt were computed, together with a copy of any
fairness opinion or appraisal required by the Indenture.
Section 4.8. Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (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 Notes, (d) any applicable law, rule, regulation or
order, (e) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets
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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 Q) restrictions on cash or other deposits or net worth imposed
by customers under contracts entered into in the ordinary course of business.
Section 4.9. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and 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 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 and to
permanently reduce the commitment thereunder pursuant to the covenant described
under Section 4.10;
(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 Notes and the Note Guarantees, respectively;
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(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
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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 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.
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Section 4.10. Assets Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (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 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 Notes (an "Asset Sale Offer") to purchase the
maximum principal amount of 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 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 Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the 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.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction,
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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
either 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 national
standing; provided that the following shall not be deemed Affiliate
Transactions: (q) the Company's lease on behalf of Holberg of a plane under
arrangements consistent with past practices, (r) the Company's payment of the
fees and expenses of the offering of Holdings' 11__% Senior Discount Notes
due 2008, (s) on or about the Effective Date, the Company's cancellation and
forgiveness of approximately $4.5 million of advances previously made to
Holberg, (t) 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, (u) transactions
between or among the Company and/or its Restricted Subsidiaries, (v) Permitted
Investments and Restricted Payments that are permitted by the provisions of
Section 4.7 hereof, (w) customary loans, advances, fees and compensation paid
to, and indemnity provided on behalf of, officers, directors, employees or
consultant of the Company or any of its Restricted Subsidiaries, (x) annual
management fees paid to Holberg not to exceed $5.0 million in any one year, (y)
transaction pursuant to any contract or agreement in effect on the date hereof
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 contract or agreement as in effect
on the Issue Date or is approved by a majority of the disinterested directors of
AP Holdings, Inc., (z) transactions between the Company or its Restricted
Subsidiaries on the one hand, and Holberg on the other hand, involving the
procuring on provision of financial or advisory services by Holberg; provided
that fees and expenses payable to Holberg do not exceed the usual and customary
fees and expenses for similar services, (aa) transactions between the Company or
its Restricted Subsidiaries on the one hand, and DLJ or its Affiliates on the
other hand, involving the provision of financial, advisory, lending, 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, (bb) the insurance
arrangements between AP Holdings, Inc. 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
(cc) payments under the tax sharing agreement among Holberg and other members of
the affiliated group of corporations of which it is the common parent.
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Section 4.12. Liens.
The Company shall not and shall 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 trade payables or Indebtedness
that does not constitute Senior Debt (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired.
Section 4.13. Sale and Leaseback Transactions.
The Company shall not, and shall 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 hereof under Section 4.10."
Section 4.14. Offer to Purchase Upon Change of Control.
Upon the occurrence of a Change of Control, each Holder of 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 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 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 Section 3.9 hereof and described in such notice. The Company shall
comply with the requirements of Rule 1 4e-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 Notes as a
result of a Change of Control.
On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all 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 Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control
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Payment for such Notes, and the Trustee will promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any;
provided that each such new Note will be in a principal amount of $1,000 or an
integral multiple thereof. Prior to complying with the provisions of this
Section 4.14, but in any event within 90 days following a Change of Control, the
Company shall 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 Notes required by this Section 4.14. The Company shall
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 this Indenture are applicable. Except as
described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The Company shall 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 herein applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
Section 4.15. Corporate Existence.
Subject to Section 4.14 and Article 5 hereof, as the case may be,
the Company and each Subsidiary Guarantor shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each of its
Subsidiaries in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
the rights (charter and statutory), licenses and franchises of the Company and
its Subsidiaries; provided that the Company shall not be required to preserve
any such right, license or franchise, or the corporate, partnership or other
existence of any of its Subsidiaries, if the Board of Directors of the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries, taken as a whole,
and that the loss thereof is not adverse in any material respect to the Holders
of the Notes.
Section 4.16. Limitation on Issuances of Capital Stock of Wholly Owned
Restricted Subsidiaries.
The Company (i) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Subsidiary of the
Company to any Person (other than the Company or a Wholly Owned Restricted
Subsidiary of the Company), unless (a) such transfer, conveyance, sale, lease or
other disposition is of all the Capital Stock of such Wholly Owned Restricted
Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with Section 4.10 hereof
and (ii) will not permit any
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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.
Section 4.17. Limitations on Issuances of Guarantees of Indebtedness.
The Company shall 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
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 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 hereof. The form and substance of such Guarantee
shall be substantially similar to EXHIBIT D hereto.
Section 4.18. Business Activities.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than Permitted Businesses, except to
such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
Section 4.19. Additional Guarantees.
If (i) the Company or any of its Restricted Subsidiaries shall,
after the date hereof, 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) 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) 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, (A) cause such transferee, acquired Restricted
Subsidiary or Restricted Subsidiary incurring Acquired Debt (if not then a
Subsidiary Guarantor) to execute a Note Guarantee of the Obligations of the
Company under the Notes in the form and substance substantially similar to
EXHIBIT D hereto and (B) deliver to the Trustee an Opinion of Counsel, in form
reasonably satisfactory to the Trustee, that such 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
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Restricted Investment in any Wholly Owned Restricted Subsidiary of the Company
without compliance with this Section 4.19, provided that such Restricted
Investment is permitted by Section 4.7 hereof.
Section 4.20. Payment for Consents.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions hereof or
the Notes unless such consideration is offered to be paid or is paid to all
Holders of the Notes that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
Section 4.21. Anti-Layering.
The Company shall 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. No Subsidiary Guarantor shall 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 the Section 4.9 hereof.
ARTICLE 5.
SUCCESSORS
Section 5.1 Merger, Consolidation of Sale of Assets.
The Company shall 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 Notes
and this Indenture pursuant to a supplemental indenture in a form substantially
similar to EXHIBIT E hereto; (iii) immediately after such transaction no Default
or Event of Default exists; (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,
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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 Section
4.9 hereof.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.1 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and shall exercise every
right and power of the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein; provided, that, (i)
solely for the purposes of computing Consolidated Net Income for purposes of
clause (b) of the first paragraph of Section 4.7 hereof, the Consolidated Net
Income of any person other than the Company and its Subsidiaries shall be
included only for periods subsequent to the effective time of such merger,
consolidation, combination or transfer of assets; and (ii) in the case of any
sale, assignment, transfer, lease, conveyance, or other disposition of less than
all of the assets of the predecessor Company, the predecessor Company shall not
be released or discharged from the obligation to pay the principal of or
interest and Liquidated Damages, if any, on the Notes.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.
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 Notes;
(ii) default in payment when due of principal of or premium,
if any, on the Notes;
(iii) failure by the Company to comply with the provisions
described under Sections 4.10 or 4.14 or Article 5 hereof;
(iv) failure by the Company for 30 days after notice from the
Trustee or at least 30% in principal amount of the Notes then outstanding to
comply with the provisions described under Sections 4.7 or 4.9 hereof;
(v) failure by the Company for 60 days after notice from the
Trustee or at least 25% in principal amount of the Notes then outstanding to
comply with any of its other agreement in this Indenture or the Notes;
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(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
hereof, 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;
(viii) the Company or any of its Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, pursuant to or within the meaning of Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(d) makes a general assignment for the benefit of its creditors, or
(e) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(f) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(g) appoints a Custodian of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially all of the
property of the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary;
or
(h) orders the liquidation of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; and the order or decree remains unstayed
and in effect for 60 consecutive days.
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The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
Section 6.2. Acceleration.
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 Notes may
declare all the 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 Notes or the
Trustee, all principal and interest under this Indenture shall be due and
payable upon the earlier of (x) the day 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 as described in (viii) and (ix) of Section 6.1
hereof, all outstanding Notes will become due and payable without further action
or notice. Holders of the Notes may not enforce this Indenture or the Notes
except as provided in this Indenture.
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 Notes pursuant to
the optional redemption provisions of Section 3.7(a) hereof, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the 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 Notes prior to March 15, 2003,
then the amount payable in respect of such Notes for purposes of this paragraph
for each of the twelve-month periods beginning on March 15 of the years
indicated below shall be set forth below, expressed as percentages of the
principal amount that would otherwise be due but for the provisions of this
sentence, plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of payment:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1998............................................109.250%
1999............................................108.325%
2000............................................107.400%
2001............................................106.475%
2002............................................105.550%
</TABLE>
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Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
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.
Section 6.4. Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under this Indenture (including any acceleration (other than an automatic
acceleration resulting from an Event of Default under clause (viii) or (ix) of
Section 6.1 hereof) except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes (other than as a result
of an acceleration), which shall require the consent of all of the Holders of
the Notes then outstanding.
Section 6.5. Control by Majority.
The Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust power conferred on it. However, (i) the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability, and (ii) the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction. 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. Notwithstanding any
provision to the contrary in this Indenture, the Trustee is under no obligation
to exercise any of its rights or powers under this Indenture at the request of
any Holder of Notes, unless such Holder shall offer to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
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Section 6.6. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this
Indenture, the Note Guarantees or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default or the Trustee receives such notice from the
Company;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
Section 6.7. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium, if any, interest,
and Liquidated Damages, if any, on the Note, on or after the respective due
dates expressed in the Note (including in connection with an offer to purchase),
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(i) or (ii) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.9. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings
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relative to the Company (or any other obligor upon the Notes), its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or other securities or property payable or deliverable upon
the conversion or exchange of the Notes or on any such claims and any Custodian
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, interest, and Liquidated Damages, if any,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium, if any, interest, and
Liquidated Damages, if any, respectively;
Third: without duplication, to the Holders for any other Obligations
owing to the Holders under this Indenture and the Notes; and
Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its
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discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply
to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.7
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing of which a
Responsible Officer of the Trustee has knowledge, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture and use the same
degree of care and skill in its exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture or the TIA and the Trustee need perform
only those duties that are specifically set forth in this Indenture or the TIA
and no others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section 7.1;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5 hereof.
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(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section 7.1.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.2. Rights of Trustee.
(a) The Trustee may conclusively rely on the truth of the statements
and correctness of the opinions contained in, and shall be protected from acting
or refraining from acting upon, any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. Prior to taking, suffering or
admitting any action, the Trustee may consult with counsel of the Trustee's own
choosing and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company or any Subsidiary
Guarantor shall be sufficient if signed by an Officer of the Company or
Subsidiary Guarantor, as applicable.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.
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Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner of Notes and may otherwise deal with the Company, the Subsidiary
Guarantors or any Affiliate of the Company or any Subsidiary Guarantor with the
same rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the Commission for permission to continue as Trustee or
resign. Any Agent may do the same with like rights and duties. The Trustee is
also subject to Sections 7.10 and 7.11 hereof.
Section 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture, the Note Guarantees or the
Notes, it shall not be accountable for the Company's use of the proceeds from
the Notes or any money paid to the Company or upon the Company's direction under
any provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it
is known to a Responsible Officer of the Trustee, the Trustee shall mail to
Holders of Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
on any Note pursuant to Section 6.1(i) or (ii) hereof, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders
of the Notes.
Section 7.6. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b). The Trustee shall also transmit by mail all reports as required by TIA
ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Company has informed the Trustee in writing the
Notes are listed in accordance with TIA ss. 313(d). The Company shall promptly
notify the Trustee when the Notes are listed on any stock exchange and of any
delisting thereof.
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Section 7.7. Compensation And Indemnity.
The Company and the Subsidiary Guarantors shall pay to the Trustee
from time to time reasonable compensation for its acceptance of this Indenture
and services hereunder. To the extent permitted by law, the Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee promptly upon request for
all reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Company and the Subsidiary Guarantors shall indemnify the
Trustee against any and all losses, liabilities or expenses incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against the Company and the Subsidiary Guarantors (including this
Section 7.7) and defending itself against any claim (whether asserted by the
Company, the Subsidiary Guarantors or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify the
Company and the Subsidiary Guarantors promptly of any claim for which it may
seek indemnity. Failure by the Trustee to so notify the Company and the
Subsidiary Guarantors shall not relieve the Company and the Subsidiary
Guarantors of its obligations hereunder. The Company and the Subsidiary
Guarantors shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Company and the
Subsidiary Guarantors shall pay the reasonable fees and expenses of such
counsel. The Company and the Subsidiary Guarantors need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
The obligations of the Company and the Subsidiary Guarantors under
this Section 7.7 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Subsidiary Guarantors' payment
obligations in this Section 7.7, the Trustee shall have a Lien prior to the
Notes on all money or property held or collected by the Trustee, except that
held in trust to pay principal, interest and Liquidated Damages, if any, on
particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture and the resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1 (viii) or (ix) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
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Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.8.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and the duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
that all sums owing to the Trustee hereunder have been paid and subject to the
Lien provided for in Section 7.7 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.8, the Company's obligations under Section
7.7 hereof shall continue for the benefit of the retiring Trustee.
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Section 7.9. Successor Trustee by Merger, etc.
If the Trustee or any Agent consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act shall be
the successor Trustee or any Agent, as applicable.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities. The Trustee and its direct parent shall at all
times have a combined capital surplus of at least $50.0 million as set forth in
its most recent annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
Section 7.11. Preferential Collection of Claims Against The Company.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company and the Subsidiary Guarantors may, at the option of
their respective Boards of Directors evidenced by a resolution set forth in an
Officers' Certificate, at any time, elect to have either Section 8.2 or 8.3
hereof be applied to all outstanding Notes and Note Guarantees upon compliance
with the conditions set forth below in this Article 8.
Section 8.2. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, the Company and each Subsidiary Guarantor shall,
subject to the satisfaction of the conditions set forth in Section 8.4 hereof,
be deemed to have been discharged from their respective obligations with respect
to all outstanding Notes and Note Guarantees on the date the conditions set
forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose,
Legal Defeasance means that the Company and each Subsidiary Guarantor shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes and Note Guarantees, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.5 hereof and the other Sections
of this Indenture referred to in (a) and (b) below, and to have satisfied all
their respective other obligations under such Notes and Note Guarantees and
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this Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
payments in respect of the principal of, premium, if any, and interest and
Liquidated Damages, if any, on such Notes when such payments are due from the
trust referred to in Section 8.4(a); (b) the Company's obligations with respect
to such Notes under Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.10 and 4.2 hereof;
(c) the rights, powers, trusts, duties and immunities of the Trustee including
without limitation thereunder Section 7.7, 8.5 and 8.7 hereof and the Company's
obligations in connection therewith and (d) the provisions of this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.2 notwithstanding the prior exercise of its option under
Section 8.3 hereof.
Section 8.3. Covenant Defeasance.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, the Company and each Subsidiary Guarantor shall,
subject to the satisfaction of the conditions set forth in Section 8.4 hereof,
be released from its obligations under the covenants contained in Sections 3.9,
4.5, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19,
5.1 and 11.1 hereof with respect to the outstanding Notes and Note Guarantees on
and after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes and Note Guarantees shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes and Note
Guarantees shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes
and Note Guarantees, the Company or any of its Subsidiaries may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.1 hereof, but, except as specified above, the remainder of this
Indenture and such Notes and Note Guarantees shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, subject to the satisfaction of the conditions
set forth in Section 8.4 hereof, Sections 6.1(iii) through 6.1(v) hereof shall
not constitute Events of Default.
Section 8.4. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Notes and Note Guarantees:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or
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a combination thereof, in such amounts as shall 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 Notes on the stated maturity or on the applicable redemption date,
as the case may be, and the Company must specify whether the Notes are being
defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.2 hereof, 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 hereof, 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 Notes
shall not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and shall 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;
(c) in the case of an election under Section 8.3 hereof, 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 Notes shall not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and shall 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;
(d) 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;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under any material agreement
or instrument (other than this 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;
(f) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the trust
funds shall not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and
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(h) the Company shall have delivered 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.
Section 8.5. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.6 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, interest and
Liquidated Damages, if any, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.4 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the written
request of the Company and be relieved of all liability with respect to any
money or non-callable Government Securities held by it as provided in Section
8.4 hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.4(a) hereof), are in
excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.6. Repayment to The Company.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, interest or Liquidated Damages, if any, on any Note and remaining unclaimed
for one year after such principal, and premium, if any, or interest or
Liquidated Damages, if any, has become due and payable shall be paid to the
Company on its written request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30
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days from the date of such notification or publication, any unclaimed balance of
such money then remaining shall be repaid to the Company.
Section 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or noncallable Government Securities in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations of the Company and the Subsidiary Guarantors
under this Indenture, the Notes and the Note Guarantees shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3
hereof until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.2 or 8.3 hereof, as the case may be;
provided, however, that, if the Company makes any payment of principal of,
premium, if any, interest or Liquidated Damages, if any, on any Note following
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of the Notes.
Notwithstanding Section 9.2 of this Indenture, without the consent
of any Holder of Notes the Company and the Trustee may amend or supplement this
Indenture, the Notes or the Note Guarantees:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(c) to provide for the assumption of the Company's or a Subsidiary
Guarantor's obligations to the Holders of the Notes in the case of a merger, or
consolidation pursuant to Article 5 or Article 11 hereof, as applicable;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Notes;
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA;
(f) to issue additional Notes hereunder; provided that the aggregate
principal amount of Notes issued hereunder shall not exceed $200 million; or
(g) to allow any Subsidiary to Guarantee the Notes.
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Upon the written request of the Company accompanied by a resolution
of its Board of Directors of the Company authorizing the execution of any such
amended or supplemental indenture, and upon receipt by the Trustee of the
documents described in Section 9.6 hereof, the Trustee shall join with the
Company and the Subsidiary Guarantors in the execution of any amended or
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2. With Consent of Holders of Notes.
Except as provided below in this Section 9.2, or as provided in
Section 10.13 or Section 12.13, this Indenture, the Notes or the Note Guarantees
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 Notes), and, any existing default or compliance with any
provision of this Indenture, the Notes or the Note Guarantees may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with or a tender
offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 9.6 hereof, the Trustee shall
join with the Company and the Subsidiary Guarantors in the execution of such
amended or supplemental indenture unless such amended or supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may, but shall not be obligated to, enter
into such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.2 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof. After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders of each Note affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
indenture or waiver.
Subject to Sections 6.2, 6.4, 6.7, 10.13 and 12.13 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may amend or waive compliance in a particular instance by the
Company or the Subsidiary Guarantors with any provision of this Indenture, the
Notes or the Note Guarantees. However, without the consent of each Holder
affected, an amendment, or waiver may not (with respect to any Note held by a
non-consenting Holder):
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(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to Sections 3.9, 4.10 and 4.14 hereof);
(c) reduce the rate of or change the time for payment of interest on
any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in Section 6.4 or 6.7 hereof;
(g) waive a redemption or repurchase payment with respect to any
Note (other than a payment required by Section 4.10 or 4.14 hereof); or
(h) make any change in the amendment and waiver provisions of this
Article 9.
Section 9.3. Compliance with Trust Indenture Act
Every amendment or supplement to this Indenture, the Note Guarantees
or the Notes shall be set forth in an amended or supplemental indenture that
complies with the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. When an amendment, supplement or waiver becomes effective in
accordance with its terms, it thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date
for determining which Holders of the Notes must consent to such amendment,
supplement or waiver. If the Company fixes a record date, the record date shall
be fixed at (i) the later of 30 days prior to the first solicitation of such
consent or the date of the most recent list of Holders of Notes furnished for
the Trustee prior to such solicitation pursuant to Section 2.5 hereof or (ii)
such other date as the Company shall designate.
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Section 9.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 9.6. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company and the Subsidiary Guarantors may not sign an amendment or
supplemental indenture until their respective Boards of Directors approve it. In
signing or refusing to sign any amended or supplemental indenture the Trustee
shall be entitled to receive and (subject to Section 7.1 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section 11.4
hereof, an Officers' Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is authorized or permitted
by this Indenture, that it is not inconsistent herewith, and that it will be
valid and binding upon the Company and the Subsidiary Guarantors in accordance
with its terms.
ARTICLE 10.
SUBORDINATION
Section 10.1. Agreement to Subordinate.
The Company agrees, and each Holder of Notes by accepting a Note
agrees, that the Indebtedness evidenced by the Note is subordinated in right of
payment, to the extent and in the manner provided in this Article, to the prior
payment in full of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Debt.
Section 10.2. Liquidation; Dissolution; Bankruptcy.
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 shall first be
paid in full in cash or cash equivalents before any payment is made on account
of the Notes and all other Obligations with respect thereto, except that the
Holders of 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 Notes or the Trustee
would be entitled shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
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distribution, or by the Holders of the 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.
Section 10.3. Default on Designated Senior Debt.
(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 shall have occurred and be continuing and shall 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 shall 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 payable prior to the date on which it would otherwise have become due and
payable, then no payment shall be made by or on behalf of the Company on account
of the Notes (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 shall have been cured or waived in writing in accordance with the
instruments governing such Senior Debt or such acceleration shall 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 and the Trustee receive written notice (a "Payment Notice")
of such event of default specifically referring to this Article 10 (which notice
shall be binding on the Trustee and the Holders of 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 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, stating that 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
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subsequent Payment Blockage Period unless such event of default is cured or
waived for a period of not less than 90 consecutive days.
Section 10.4. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
Section 10.5. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder of a Note receives any
payment of any Obligations with respect to the Notes at a time when such payment
is prohibited by Section 10.3 hereof, such payment shall be held by the Trustee
or such Holder, in trust for the benefit of, and shall be paid forthwith over
and delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such Obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
With respect to the holders of Senior Debt, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders of the Notes or
the Company or any other Person money or assets to which any holders of Senior
Debt shall be entitled by virtue of this Article 10, except if such payment is
made as a result of the willful misconduct or gross negligence of the Trustee.
Section 10.6. Notice by the Company.
The Company shall promptly notify the Trustee and the Paying Agent
of any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article, which notice shall
specifically refer to this Article 10, but failure to give such notice shall not
affect the subordination of the Notes to the Senior Debt as provided in this
Article.
Section 10.7. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid
in full, Holders of the Notes shall be subrogated (equally and ratably with all
other pari passu indebtedness) to the rights of holders of Senior Debt to
receive distributions applicable to Senior Debt to the extent that distributions
otherwise payable to the Holders of the Notes have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior Debt
that otherwise would have been made to Holders of the Notes is not, as between
the Company and Holders of the Notes, a payment by the Company on the Notes.
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Section 10.8. Relative Rights.
This Article defines the relative rights of Holders of the Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of the Notes, the
obligations of the Company, which are absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of the Notes and creditors
of the Company other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of the Notes from exercising
its available remedies upon a Default or Event of Default, subject to the rights
of holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders of the Notes.
If the Company fails because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
Section 10.9. Subordination May Not Be Impaired by the Company.
No right of any holder of Senior Debt to enforce the subordination
of the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Company or any Holder or by the failure of the Company or
any Holder to comply with this Indenture.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt, or any of them, may, at any time and from
time to time, without the consent of or notice to the Holders of the Notes,
without incurring any liabilities to any Holder of any Notes and without
impairing or releasing the subordination and other benefits provided in this
Indenture or the obligations of the Holders of the Notes to the holders of the
Senior Debt, even if any right of reimbursement or subrogation or other right or
remedy of any Holder of Notes is affected, impaired or extinguished thereby, do
any one or more of the following:
(1) change the manner, place or terms of payment or change or extend
the time of payment of, or renew, exchange, amend, increase or alter, the terms
of any Senior Debt, any security therefor or guaranty thereof or any liability
of any obligor thereon (including any guarantor) to such holder, or any
liability incurred directly or indirectly in respect thereof or otherwise amend,
renew, exchange, extend, modify, increase or supplement in any manner any Senior
Debt or any instrument evidencing or guaranteeing or securing the same or any
agreement under which Senior Debt is outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing
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Senior Debt or any liability of any obligor thereon, to such holder, or any
liability incurred directly or indirectly in respect thereof;
(3) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor or any
liability incurred directly or indirectly in respect thereof and apply any sums
by whomsoever paid and however realized to any liability (including, without
limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any
reason or for no reason, any lien or security interest securing Senior Debt by
whomsoever granted, exercise or delay in or refrain from exercising any right or
remedy against any obligor or any guarantor or any other person, elect any
remedy and otherwise deal freely with any obligor and any security for the
Senior Debt or any liability of any obligor to such holder or any liability
incurred directly or indirectly in respect thereof.
Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders
of Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred
to in this Article 10, the Trustee and the Holders of the Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of the Notes for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Debt and other Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 10.
Section 10.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least three Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article, which notice shall
specifically refer to this Article 10. Only the Company or a Representative may
give the notice. Nothing in this Article 10 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
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Section 10.12. Authorization to Effect Subordination.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes, including without limitation the timely filing of a
claim for the unpaid balance of the Notes held by such Holder in the form
required in any Insolvency or Liquidation Proceeding and causing such claim to
be approved. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.9 hereof at
least 30 days before the expiration of the time of such claim, the
Representatives of the Designated Senior Debt, including the Credit Agent, are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Notes.
Section 10.13. Amendments.
Any amendment to the provisions of this Article 10 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Notes.
ARTICLE 11.
GUARANTEE OF NOTES
Sectiuon 11.1 Note Guarantee.
Subject to Section 11.6 hereof, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes and the Obligations of the Company hereunder and
thereunder, that: (a) the principal of, premium, if any, interest and Liquidated
Damages, if any, on the Notes will be promptly paid in full when due, subject to
any applicable grace period, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal, premium, if any, (to the
extent permitted by law) interest on any interest, if any, and Liquidated
Damages, if any, on the Notes, and all other payment Obligations of the Company
to the Holders or the Trustee hereunder or thereunder will be promptly paid in
full and performed, all in accordance with the terms hereof and thereof, and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so guaranteed
for whatever reason the Subsidiary Guarantors will be jointly and severally
obligated to pay the same immediately. An Event of Default under this Indenture
or the Notes shall constitute an event of default under the Note Guarantees, and
shall entitle the Holders to accelerate the Obligations of the Subsidiary
Guarantors hereunder in the same manner and to the same extent as the
Obligations of the Company. The Subsidiary Guarantors hereby agree that their
Obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder
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with respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Subsidiary Guarantor. Each Subsidiary Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenants
that this Note Guarantee will not be discharged except by complete performance
of the Obligations contained in the Notes and this Indenture. If any Holder or
the Trustee is required by any court or otherwise to return to the Company, the
Subsidiary Guarantors, or any Note Custodian, Trustee, liquidator or other
similar official acting in relation to either the Company or the Subsidiary
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Subsidiary Guarantor agrees that it shall not be entitled
to, and hereby waives, any right of subrogation in relation to the Holders in
respect of any Obligations guaranteed hereby. Each Subsidiary Guarantor further
agrees that, as between the Subsidiary Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in Article 6 for the purposes
of this Note Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Subsidiary
Guarantors for the purpose of this Note Guarantee. The Subsidiary Guarantors
shall have the right to seek contribution from any non-paying Subsidiary
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Note Guarantees.
Section 11.2. Execution and Delivery of Note Guarantee.
To evidence its Note Guarantee set forth in Section 11.1, each
Subsidiary Guarantor hereby agrees that a notation of such Note Guarantee
substantially in the form of EXHIBIT D shall be endorsed by an Officer of such
Subsidiary Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Subsidiary Guarantor, by
manual or facsimile signature, by an Officer of such Subsidiary Guarantor.
Each Subsidiary Guarantor hereby agrees that its Note Guarantee set
forth in Section 11.1 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Subsidiary Guarantors.
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Section 11.3. Subsidiary Guarantors May Consolidate, etc., on Certain Terms.
(a) Except as set forth in Articles 4 and 5 hereof, nothing
contained in this Indenture shall prohibit a merger between a Subsidiary
Guarantor and another Subsidiary Guarantor or a merger between a Subsidiary
Guarantor and the Company.
(b) Subject to Section 11.4 hereof, 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 Notes and this Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) such Subsidiary
Guarantor, or any Person formed by or surviving any such consolidation or
merger, would have Consolidated Net Worth (immediately after giving effect to
such transaction), equal to or greater than the Consolidated Net Worth of such
Subsidiary Guarantor immediately preceding the transaction; and (iv) 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 first paragraph of Section 4.9. The requirements of clauses (iii)
and (iv) of this paragraph will not apply in the case of a consolidation with or
merger with or into any other Person if the acquisition of all of the Equity
Interests in such Person would have complied with the provisions of Sections 4.7
and 4.9 hereof.
(c) In the case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor Person, by supplemental
indenture, executed and delivered to the Trustee and substantially in the form
of EXHIBIT E hereto, of the Note Guarantee endorsed upon the Notes and the due
and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Subsidiary Guarantor, such successor Person
shall succeed to and be substituted for the Subsidiary Guarantor with the same
effect as if it had been named herein as a Subsidiary Guarantor; provided that,
solely for purposes of computing Consolidated Net Income for purposes of clause
(b) of the first paragraph of Section 4.7 hereof, the Consolidated Net Income of
any Person other than the Company and its Restricted Subsidiaries shall only be
included for periods subsequent to the effective time of such merger,
consolidation, combination or transfer of assets. Such successor Person
thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All of the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
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Section 11.4. Releases Following Sale of Assets, Merger, Sale of Capital Stock
Etc.
In the event (a) 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) 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) shall be released and relieved
of any obligations under its Note Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the provisions of
Section 4.10 and, if applicable, Section 4.14 hereof. 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 (i) of the Section 11.3(b) hereof, such Subsidiary
Guarantor shall be discharged from all further liability and obligation under
this Indenture. Upon delivery by the Company to the Trustee of an Officers'
Certificate to the effect of the foregoing, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Subsidiary
Guarantor from its Obligation under its Note Guarantee. Any Subsidiary Guarantor
not released from its Obligations under its Note Guarantee shall remain liable
for the full amount of principal of, premium, if any, interest and Liquidated
Damages, if any, on the Notes and for the other Obligations of such Subsidiary
Guarantor under the Indenture as provided in this Article 11.
Section 11.5. Additional Subsidiary Guarantors.
Any Person that was not a Subsidiary Guarantor on the date of this
Indenture may become a Subsidiary Guarantor by executing and delivering to the
Trustee (a) a supplemental indenture in substantially the form of EXHIBIT E, and
(b) an Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized and executed by such Person and constitutes the legal,
valid, binding and enforceable obligation of such Person (subject to such
customary exceptions concerning creditors rights', fraudulent transfers, public
policy and equitable principles as may be acceptable to the Trustee in its
discretion).
Section 11.6. Limitation on Subsidiary Guarantor Liability.
For purposes hereof, each Subsidiary Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Company under the Notes and this Indenture and (ii) the amount, if any, which
would not have (A) rendered such Subsidiary Guarantor insolvent" (as such term
is defined in the United States Bankruptcy Code and in the Debtor and Creditor
Law of the State of New York) or (B) left such Subsidiary Guarantor with
unreasonably small capital at the time its Note Guarantee of the Notes was
entered into; provided that, it will be a presumption in any lawsuit or other
proceeding in which a Subsidiary Guarantor is a party that the amount guaranteed
pursuant to the Note Guarantee is the amount set forth in clause (i) above
unless any creditor, or representative of creditors of such Subsidiary
Guarantor,
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or debtor in possession or trustee in bankruptcy of the Subsidiary Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of the
Subsidiary Guarantor is the amount set forth in clause (ii) above. In making any
determination as to solvency or sufficiency of capital of a Subsidiary Guarantor
in accordance with the previous sentence, the right of such Subsidiary Guarantor
to contribution from other Subsidiary Guarantors, and any other rights such
Subsidiary Guarantor may have, contractual or otherwise, shall be taken into
account.
Section 11.7. "Trustee" to Include Paying Agent.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in each case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully and for all intents and purposes as if such
Paying Agent were named in this Article 11 in place of the Trustee.
ARTICLE 12.
SUBORDINATION OF NOTE GUARANTEE
Section 12.1 Agreement to Subordinate.
The Subsidiary Guarantors agree, and each Holder by accepting a Note
agrees, that all Note Guarantee Obligations, shall be subordinated in right of
payment, to the extent and in the manner provided in this Article 12, to the
prior payment in full of all Guarantor Senior Debt, whether outstanding on the
date hereof or thereafter incurred and that the subordination is for the benefit
of the holders of Guarantor Senior Debt.
Section 12.2. Liquidation; Dissolution; Bankruptcy.
Upon any payment or distribution of assets of the Subsidiary
Guarantors of any kind or character, whether in cash, property or securities, to
creditors in any Insolvency or Liquidation Proceeding with respect to any
Subsidiary Guarantor all amounts due or to become due under or with respect to
all Guarantor Senior Debt shall first be paid in full in cash or cash
equivalents before any payment is made on account of the Note Guarantees and all
other Obligations with respect thereto, except that the Holders of Note
Guarantees may receive Reorganization Securities. Upon any such Insolvency or
Liquidation Proceeding, any payment or distribution of assets of any Subsidiary
Guarantor of any kind or character, whether in cash, property or securities
(other than Reorganization Securities), to which the Holders of the Note
Guarantees or the Trustee would be entitled shall be paid by the Subsidiary
Guarantors or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, or by the Holders of the
Note Guarantees or by the Trustee if received by them, directly to the holders
of Guarantor Senior Debt (0ro rata to such holders on the basis of the amounts
of Guarantor Senior Debt held by such holders) or their Representative or
Representatives, as their interests may appear, for application to the payment
of the Guarantor Senior Debt remaining unpaid until all such Guarantor Senior
Debt has been paid in full, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of Guarantor Senior
Debt.
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Section 12.3. Default on Designated Guarantor Senior Debt.
(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 Guarantor
Senior Debt, or any Obligation owing from time to time under or in respect of
Guarantor Senior Debt, or in the event that any event of default (other than a
payment default) with respect to any Guarantor Senior Debt shall have occurred
and be continuing and shall have resulted in such Guarantor 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 shall
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 payable prior to the date on which it would otherwise have
become due and payable, then no payment shall be made by or on behalf of any
Subsidiary Guarantor on account of the Note Guarantees (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 shall have been cured or
waived in writing in accordance with the instruments governing such Guarantor
Senior Debt or such acceleration shall 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 Subsidiary Guarantors
and the Trustee receive written notice (a "Payment Notice") of such event of
default specifically referring to this Article 12 (which notice shall be binding
on the Trustee and the Holders of Note Guarantees 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 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, stating that such Designated Senior Debt
to which such default relates is paid in full 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 Guarantor Senior Debt to
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.
Section 12.4. Acceleration of Note Guarantees.
If payment of the Note Guarantees is accelerated because of an Event
of Default, the Subsidiary Guarantor shall promptly notify such Representatives
of Guarantor Senior Debt of the acceleration.
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Section 12.5. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder of a Note Guarantee
receives any payment of any Obligations with respect to the Note Guarantees at a
time when such payment is prohibited by Section 12.3 hereof, such payment shall
be held by the Trustee or such Holder, in trust for the benefit of, and shall be
paid forthwith over and delivered, upon written request, to, the holders of
Guarantor Senior Debt as their interests may appear or their Representative
under the indenture or other agreement (if any) pursuant to which Guarantor
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Guarantor Senior
Debt remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Guarantor Senior Debt.
With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 12, and no implied covenants or
obligations with respect to the holders of Guarantor Senior Debt shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Guarantor Senior Debt, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders of the Note Guarantees or the Company or any other Person
money or assets to which any holders of Guarantor Senior Debt shall be entitled
by virtue of this Article 12, except if such payment is made as a result of the
willful misconduct or gross negligence of the Trustee.
Section 12.6. Notice by Subsidiary Guarantor.
The Subsidiary Guarantors shall promptly notify the Trustee and the
Paying Agent of any facts known to the Subsidiary Guarantors that would cause a
payment of any Obligations with respect to the Note Guarantees to violate this
Article, which notice shall specifically refer to this Article 12, but failure
to give such notice shall not affect the subordination of the Note Guarantees to
the Guarantor Senior Debt as provided in this Article.
Section 12.7. Subrogation.
After all Guarantor Senior Debt is paid in full and until the Notes
are paid in full, Holders of the Note Guarantees shall be subrogated (equally
and ratably with all pari passu indebtedness) to the rights of holders of
Guarantor Senior Debt to receive distributions applicable to Guarantor Senior
Debt to the extent that distributions otherwise payable to the Holders of the
Note Guarantees have been applied to the payment of Guarantor Senior Debt. A
distribution made under this Article to holders of Guarantor Senior Debt that
otherwise would have been made to Holders of the Note Guarantees is not, as
between the Subsidiary Guarantors and Holders of the Note Guarantees, a payment
by the Subsidiary Guarantors on the Note Guarantees.
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Section 12.8. Relative Rights.
This Article defines the relative rights of Holders of the Note
Guarantees and holders of Guarantor Senior Debt. Nothing in this Indenture
shall:
(i) impair, as between the Subsidiary Guarantors and Holders
of the Note Guarantees, the obligations of the Subsidiary Guarantors, which are
absolute and unconditional, to pay principal of and interest on the Notes in
accordance with the terms of the Note Guarantees;
(ii) affect the relative rights of Holders of the Note
Guarantees and creditors of the Subsidiary Guarantors other than their rights in
relation to holders of Guarantor Senior Debt; or
(iii) prevent the Trustee or any Holder of the Note Guarantees
from exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Guarantor Senior Debt to receive
distributions and payments otherwise payable to Holders of the Note Guarantees.
If the Subsidiary Guarantors fail because of this Article to pay
principal of or interest on a Note on the due date in accordance with the terms
of the Note Guarantees, the failure is still a Default or Event of Default.
Section 12.9. Subordination May Not Be Impaired by Subsidiary Guarantor.
No right of any holder of Guarantor Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Note Guarantees shall be
impaired by any act or failure to act by the Subsidiary Guarantors or any Holder
or by the failure of the Subsidiary Guarantors or any Holder to comply with this
Indenture.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Guarantor Senior Debt, or any of them, may, at any
time and from time to time, without the consent of or notice to the Holders of
the Note Guarantees, without incurring any liabilities to any Holder of any Note
Guarantees and without impairing or releasing the subordination and other
benefits provided in this Indenture or the obligations of the Holders of the
Note Guarantees to the holders of the Guarantor Senior Debt, even if any right
of reimbursement or subrogation or other right or remedy of any Holder of Note
Guarantees is affected, impaired or extinguished thereby, do any one or more of
the following:
(i) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase or alter, the
terms of any Guarantor Senior Debt, any security therefor or guaranty thereof or
any liability of any obligor thereon (including any guarantor) to such holder,
or any liability incurred directly or indirectly in respect thereof or otherwise
amend, renew, exchange, extend, modify, increase or supplement in any manner any
Guarantor Senior Debt or any instrument evidencing or guaranteeing or securing
the same or any agreement under which Guarantor Senior Debt is outstanding;
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(ii) sell, exchange, release, surrender, realize upon, enforce
or otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing Guarantor Senior Debt or any liability of any
obligor thereon, to such holder, or any liability incurred directly or
indirectly in respect thereof;
(iii) settle or compromise any Guarantor Senior Debt or any
other liability of any obligor of the Guarantor Senior Debt to such holder or
any security therefor or any liability incurred directly or indirectly in
respect thereof and apply any sums by whomsoever paid and however realized to
any liability (including, without limitation, Guarantor Senior Debt) in any
manner or order; and
(iv) fail to take or to record or to otherwise perfect, for
any reason or for no reason, any lien or security interest securing Guarantor
Senior Debt by whomsoever granted, exercise or delay in or refrain from
exercising any right or remedy against any obligor or any guarantor or any other
person, elect any remedy and otherwise deal freely with any obligor and any
security for the Guarantor Senior Debt or any liability of any obligor to such
holder or any liability incurred directly or indirectly in respect thereof.
Section 12.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders
of Guarantor Senior Debt, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of any Subsidiary
Guarantor referred to in this Article 12, the Trustee and the Holders of the
Note Guarantees shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction or upon any certificate of such Representative
or of the liquidating trustee or agent or other Person making any distribution
to the Trustee or to the Holders of the Note Guarantees for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Guarantor Senior Debt and other Indebtedness of the Company or
any Subsidiary Guarantor, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article 12.
Section 12.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 12 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes or the Note Guarantees, unless the Trustee shall
have received at its Corporate Trust Office at least three Business Days prior
to the date of such payment written notice of facts that would cause the payment
of any Obligations with respect to the Notes or the Note Guarantees to violate
this Article, which notice shall specifically refer to this Article 12. Only the
Company, the Subsidiary Guarantors or a Representative may give the notice.
Nothing in this Article 12 shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 7.7 hereof.
85
<PAGE> 98
The Trustee in its individual or any other capacity may hold
Guarantor Senior Debt with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.
Section 12.12. Authorization to Effect Subordination.
Each Holder of a Note Guarantee by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
this Article 12, and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes, including without limitation the
timely filing of a claim for the unpaid balance of the Notes held by such Holder
in the form required in any Insolvency or Liquidation Proceeding and causing
such claim to be approved. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.9 hereof at least 30 days before the expiration of the time of such claim, the
Representatives of the Designated Senior Debt, including the Credit Agent, are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Note Guarantees.
Section 12.13. Amendments
Any amendment to the provisions of this Article 12 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Note Guarantees.
ARTICLE 13.
MISCELLANEOUS
Section 13.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss.318(c), the imposed duties shall control.
Section 13.2. Notices.
Any notice or communication by the Company, the Subsidiary
Guarantors or the Trustee to the others is duly given if in writing and
delivered in Person or mailed by first class mail (registered or certified,
return receipt requested), telecopier or overnight air courier guaranteeing next
day delivery, to the others' address:
If to the Company or the Subsidiary Guarantors:
APCOA, Inc.
800 Superior Avenue
Cleveland, Ohio
Telecopier No.: (216) 523-8080
Attention: President
86
<PAGE> 99
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6188
Telecopier No.: (212) 403-2000
Attention: Adam O. Emmerich
If to the Trustee:
State Street Bank and Trust Company
225 Asylum Street
Hartford, Connecticut 06103
Telecopier No.: (860) 244-1897
Attention: Corporate Trust Department
The Company, the Subsidiary Guarantors or the Trustee, by notice to
the others may designate additional or different addresses for subsequent
notices or communications.
All notices and communications (other than those sent to Holders)
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 the
next Business Day after timely delivery to the courier, if sent by overnight air
courier promising next Business Day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail or by overnight air courier promising next Business Day delivery to
its address shown on the register kept by the Registrar. Any notice or
communication shall also be so mailed to any Person described in TIA ss. 313(c),
to the extent required by the TIA. Failure to mail a notice or communication to
a Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 13.3. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
87
<PAGE> 100
Section 13.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or the Subsidiary
Guarantors to the Trustee to take any action under this Indenture (other than
the initial issuance of the Senior Subordinated Notes), the Company or
Subsidiary Guarantor shall furnish to the Trustee upon request:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.5 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 13.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 13.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 13.7. 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 Notes, this
Indenture, the Note Guarantees or for any claim
88
<PAGE> 101
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Section 13.8. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.
Section 13.9. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
Section 13.10. Successors.
All agreements of the Company and the Subsidiary Guarantors in this
Indenture, the Notes and the Note Guarantees shall bind their respective
successors and assigns. All agreements of the Trustee in this Indenture shall
bind its successors and assigns.
Section 13.11. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 13.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 13.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
89
<PAGE> 102
SIGNATURES
Dated as of March 30, 1998
Very truly yours,
APCOA, INC.
By: /s/ W. Stuelpe Jr.
--------------------------------------
Name: G. Walter Stuelpe, Jr.
Title: President
TOWER PARKING, INC.
By: /s/ W. Stuelpe Jr.
--------------------------------------
Name: G. Walter Stuelpe, Jr.
Title: President
GRAELIC, INC.
By: /s/ W. Stuelpe Jr.
--------------------------------------
Name: G. Walter Stuelpe, Jr.
Title: Vice President
<PAGE> 103
APCOA CAPITAL CORPORATION
By: /s/ W. Stuelpe Jr.
--------------------------------------
Name: G. Walter Stuelpe, Jr.
Title: President
A-1 AUTO PARK, INC.
By: /s/ W. Stuelpe Jr.
--------------------------------------
Name: G. Walter Stuelpe, Jr.
Title: President
METROPOLITAN PARKING SYSTEM, INC.
By: /s/ W. Stuelpe Jr.
--------------------------------------
Name: G. Walter Stuelpe, Jr.
Title: Vice President
EVENTS PARKING, INC.
By: /s/ W. Stuelpe Jr.
--------------------------------------
Name: G. Walter Stuelpe, Jr.
Title: Vice President
2
<PAGE> 104
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
3
<PAGE> 105
STANDARD AUTO PARK
By: /s/ Myron C. Warshauer
--------------------------------------
Name: MYRON C. WARSHAUER
Title: PRESIDENT
STANDARD/WABASH PARKING CORPORATION
By: /s/ Myron C. Warshauer
--------------------------------------
Name: MYRON C. WARSHAUER
Title: PRESIDENT
STANDARD PARKING OF CANADA, L.P.
By: STANDARD PARKING CORPORATION,
its Managing Partner
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: STANDARD PARKING CORPORATION,
its Managing Partner
By: /s/ Myron C. Warshauer
--------------------------------------
Name: MYRON C. WARSHAUER
Title: PRESIDENT OF STANDARD
PARKING, MANAGING MEMBER OF
STANDARD PARKING I, L.L.C.
4
<PAGE> 106
STANDARD PARKING II, L.L.C.
By: STANDARD PARKING CORPORATION,
its Managing Partner
By: /s/ Myron C. Warshauer
--------------------------------------
Name: MYRON C. WARSHAUER
Title: PRESIDENT OF STANDARD
PARKING, MANAGING MEMBER OF
STANDARD PARKING II, L.L.C.
STATE STREET BANK AND TRUST COMPANY
as Trustee
By:
--------------------------------
Name: MICHAEL M. HOPKINS
Title: VICE PRESIDENT
5
<PAGE> 107
EXHIBIT A
(Face of Senior Subordinated Note)
9 1/4% Senior Subordinated Notes due 2008
No.____ $____________________
CUSIP NO.00185 WAA4
APCOA, Inc. promises to pay to ___________________ or registered
assigns, the principal sum of___________ Dollars on March 15, 2008.
Interest Payment Dates: March 15 and September 15 Record Dates:
March 1 and March 15
APCOA, INC.
By: ____________________________
Name:
Title:
This is one of the
Senior Subordinated Notes referred to in the
within-mentioned Indenture:
Dated: ____________
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: __________________________
(Back of Senior Subordinated Note)
9 1/4% Senior Subordinated Notes due 2008
[Unless and until it is exchanged in whole or in part for Senior
Subordinated Notes in definitive form, this Senior Subordinated Note may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary. Unless this certificate is presented by
an authorized representative of The Depository Trust Company (55 Water Street,
<PAGE> 108
New York, New York) ("DTC"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the registered owner hereof, Cede & Co., has an
interest herein.](1)
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
OF THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(l), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), THAT PRIOR TO SUCH TRANSFER, FURNISHED THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE OF CLAUSE (b),
(c), (d) or (e), BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS),
(2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
- ----------
(1) This paragraph should be included only if the Senior Subordinated Note
is issued in global form.
2
<PAGE> 109
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.](2)
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. APCOA, Inc., a Delaware corporation, or its successor
(the "Company"), promises to pay interest on the principal amount of this Senior
Subordinated Note at the rate of 9 1/4% per annum and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages, if any, in United States dollars (except as otherwise provided herein)
semi-annually in arrears on March 15 and September 15, commencing on September
15, 1998, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Senior
Subordinated Notes shall accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from the date of issuance; provided
that if there is no existing Default or Event of Default in the payment of
interest, and if this Senior Subordinated Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date,
except in the case of the original issuance of Senior Subordinated Notes, in
which case interest shall accrue from the date of authentication. The Company
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess
of the then applicable interest rate on the Senior Subordinated Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful. Interest shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Senior
Subordinated Notes (except defaulted interest) and Liquidated Damages, if any,
on the applicable Interest Payment Date to the Persons who are registered
Holders of Senior Subordinated Notes at the close of business on March 1 or
September 1 next preceding the Interest Payment Date, even if such Senior
Subordinated Notes are cancelled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The Senior Subordinated Notes shall be payable as
to principal, premium and Liquidated Damages, if any, and interest at the office
or agency of the Company maintained for such purpose within or without 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 at their
addresses set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds shall be required with respect to
principal of, premium and Liquidated Damages, if any, and interest on, all
Global Notes and all other Senior Subordinated Notes the Holders of which shall
have provided written wire transfer instructions to
- ----------
(2) This paragraph should be removed upon the exchange of Senior
Subordinated Notes for New Senior Subordinated Notes in the Exchange Offer or
upon the registration of the Senior Subordinated Notes pursuant to the terms of
the Registration Rights Agreement.
3
<PAGE> 110
the Company and the Paying Agent. Such payment shall be in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, shall act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Senior Subordinated Notes under
an Indenture dated as of March 30, 1998 ("Indenture") among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the Senior Subordinated
Notes include those stated in the Indenture and those made a part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ____ 77aaa-77bbbb) (the "TIA"). The Senior Subordinated Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. The Senior Subordinated Notes are general
unsecured Obligations of the Company limited to $200,000,000 in aggregate
principal amount, plus amounts, if any, sufficient to pay premium or Liquidated
Damages, if any, and interest on outstanding Senior Subordinated Notes as set
forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the Senior Subordinated
Notes shall not be redeemable at the Company's option prior to March 15, 2003.
Thereafter, the Senior Subordinated Notes shall be subject to redemption 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 together with accrued and unpaid interest and any
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on March 15 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003............................................104.625%
2004............................................103.083%
2005............................................101.542%
2006 and thereafter.............................100.000%
</TABLE>
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
Senior Subordinated Notes at a redemption price of 109.25% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
to the redemption date, with the net proceeds of a Public Equity Offering;
provided that at least 65% of the original aggregate principal amount of Senior
Subordinated Notes remains outstanding immediately after the occurrence of such
redemption; and provided, further, that such redemption shall occur within 45
days of the date of the closing of such Public Equity Offering.
4
<PAGE> 111
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Senior Subordinated Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior Subordinated 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 Senior Subordinated 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, if any, thereon, to the date of
purchase. 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 setting forth the procedures
governing the Change of Control Offer required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Company shall offer to all Holders of Senior Subordinated
Notes (an "Asset Sale Offer") to purchase the maximum principal amount of
Senior Subordinated Notes that may be purchased out of the Excess Proceeds
at an offer price in cash equal to 100% of 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 Senior Subordinated
Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for any
general corporate purposes. If the aggregate principal amount of Senior
Subordinated Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Senior Subordinated 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.
(c) Holders of the Senior Subordinated Notes that are the
subject of an offer to purchase will receive a Change of Control Offer or
Asset Sale Offer from the Company prior to any related purchase date and
may elect to have such Senior Subordinated Notes purchased by completing
the form titled "Option of Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Senior Subordinated Notes are to be redeemed at its registered
address. Senior Subordinated Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of the Senior
Subordinated Notes held by a Holder are to be redeemed. On and after the
redemption date, interest and Liquidated Damages, if any, ceases to accrue on
the Senior Subordinated Notes or portions thereof called for redemption.
5
<PAGE> 112
9. SUBORDINATION. The Notes are subordinated to Senior Debt, which
is all Indebtedness and other Obligations specified below payable directly or
indirectly the Company, or any of its Restricted Subsidiaries whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed by the Company or any of its Restricted Subsidiaries: (i) the principal
of, interest on and all other Obligations related to the New Credit Facility
(including without limitation all loans, letters of credit and other extensions
of credit under the New Credit Facility, and all expenses, fees, reimbursements,
indemnities and other amounts owing pursuant to the New Credit Facility); (ii)
amounts payable in respect of any Hedging Obligations; (iii) all Indebtedness
not prohibited by Section 4.9 hereof that is not expressly pari passu with or
subordinated to the Senior Subordinated Notes; and (iv) all permitted renewals,
extensions, refundings or refinancings thereof. All post-petition interest on
Senior Debt shall constitute Senior Debt. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (i) Indebtedness of the
Company or any of its Restricted Subsidiaries to any other Restricted
Subsidiaries which is not a Subsidiary Guarantor, (ii) any Indebtedness which by
the express terms of the agreement or instrument creating, evidencing or
governing the same is junior or subordinate in right of payment to any item of
Senior Debt, (iii) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business, or (iv)
Indebtedness incurred in violation of the Indenture. To the extent provided in
the Indenture, Senior Debt must be paid before the Notes may be paid. The
Company agrees and each Holder of Notes by accepting a Note consents and agrees
to the subordination provided in the Indenture and authorizes the Trustee to
give it effect.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes
are in registered form without coupons in initial denominations of $1,000 and
integral multiples of $1,000. The transfer of the Senior Subordinated Notes may
be registered and the Senior Subordinated Notes may be exchanged as provided in
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 need not exchange or register the
transfer of any Senior Subordinated Note or portion of a Senior Subordinated
Note selected for redemption, except for the unredeemed portion of any Senior
Subordinated Note being redeemed in part. Also, it need not exchange or register
the transfer of any Senior Subordinated Notes for a period of 15 days before a
selection of Senior Subordinated Notes to be redeemed or during the period
between a record date and the corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Senior
Subordinated Note may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture, the Senior Subordinated Notes and the Note Guarantees
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Senior Subordinated Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of or, tender offer or exchange offer for Senior Subordinated Notes), and any
existing Default or Event of Default or compliance with any provision of the
Indenture, the Senior Subordinated Notes or the Note Guarantees may be waived
6
<PAGE> 113
with the consent of the Holders of a majority in principal amount of the then
outstanding Senior Subordinated Notes (including consents obtained in connection
with a tender offer or exchange offer for Senior Subordinated Notes).
Without the consent of any Holder of Senior Subordinated Notes, the
Company and the Trustee may amend or supplement the Indenture, the Note
Guarantees or the Senior Subordinated Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Senior Subordinated Notes in
addition to or in place of certificated Senior Subordinated Notes, to provide
for the assumption of the Company's or a Subsidiary Guarantor's obligations to
Holders of Senior Subordinated 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 Senior Subordinated Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the requirements
of the Commission in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act or to allow any Subsidiary to guarantee
the Senior Subordinated Notes. Any amendments with respect to subordination
provisions of the Notes or the Note Guarantees would require the consent of the
Holders of at least 75% in aggregate amount of Notes then outstanding if such
amendment would be adversely affect the rights of the Holders of Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on or Liquidated Damages, if
any, with respect to the Senior Subordinated Notes; (ii) default in payment when
due of the principal of or premium, if any, on the Senior Subordinated Notes;
(iii) failure by the Company or any Restricted Subsidiary to comply with the
provisions described in Sections 4.10, 4.14 or 5.1 of the Indenture; (iv)
failure by the Company or any Restricted Subsidiary for 30 days after notice
from the Trustee or at least 25% in principal amount of the Senior Subordinated
Notes to comply with the provisions described in Sections 4.7 and 4.9, of the
Indenture; (v) failure by the Company or any Subsidiary for 60 days after notice
from the Trustee or the Holders of at least 25% in principal amount of the
Senior Subordinated Notes then outstanding to comply with its other agreements
in the Indenture or the Senior Subordinated 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 their 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) (i) is caused by a failure to pay when due at final stated maturity
(giving effect to any grace period related thereto) any principal of or premium,
if any, or interest on such Indebtedness (a "Payment Default") or (ii) results
in the acceleration of such Indebtedness prior to its express maturity and (B)
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 within 60 days after their entry; and (viii)
certain events of bankruptcy or insolvency with respect to the Company, any of
its Significant Subsidiaries or any group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary.
7
<PAGE> 114
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 Senior
Subordinated Notes may declare all the Senior Subordinated 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 Senior Subordinated Notes or the Trustee, all
principal and interest under the Indenture shall be due and payable upon the
earlier of (x) the day 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 Significant Subsidiaries all outstanding Senior
Subordinated Notes will become due and payable without further action or notice.
Holders of the Senior Subordinated Notes may not enforce the Indenture or the
Senior Subordinated Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Senior Subordinated Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Senior
Subordinated Notes notice of any continuing Default or 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.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company, the Subsidiary Guarantors or their respective
Affiliates, and may otherwise deal with the Company, the Subsidiary Guarantors
or their respective Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder, of the Company or any Subsidiary Guarantor, as
such, shall have any liability for any obligations of the Company or any
Subsidiary Guarantor under the Senior Subordinated Notes, the Indenture or the
Note Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Senior Subordinated Notes by
accepting a Senior Subordinated Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Senior
Subordinated Notes and any Note Guarantee.
16. AUTHENTICATION. This Senior Subordinated Note shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the
8
<PAGE> 115
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES.
In addition to the rights provided to Holders of the Senior Subordinated Notes
under the Indenture, Holders of Transferred Restricted Securities (as defined in
the Registration Rights Agreement) shall have all the rights set forth in the
Registration Rights Agreement, dated as of the date hereof, among the Company,
the Subsidiary Guarantors and the Initial Purchaser (the "Registration Rights
Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Subordinated Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to the Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Senior Subordinated Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
APCOA, Inc.
800 Superior Avenue
Cleveland, Ohio
Telecopy: (216) 523-8080
Chief Financial Officer
9
<PAGE> 116
ASSIGNMENT FORM
To assign this Senior Subordinated Note, fill in the form below: (I)
or (we) assign and transfer this Senior Subordinated Note to (Insert assignee's
soc. sec. or tax I.D. no.) (Print or type assignee's name, address and zip code)
and irrevocably appoint to transfer this Senior Subordinated Note on the books
of the Company. The agent may substitute another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the face of this Senior Subordinated Note)
Signature Guarantee:
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Subordinated Note purchased
by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the box
below:
__Section 4.10 __Section 4.14
If you want to elect to have only part of the Senior Subordinated
Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the
Indenture, state the amount you elect to have purchased: $___________
Date:
Your Signature:
(Sign exactly as your name appears on the Senior Subordinated Note)
Tax Identification No.:
Signature Guarantee:
10
<PAGE> 117
SCHEDULE OF EXCHANGES OF SENIOR SUBORDINATED NOTES
The following exchanges of a part of this Global Note for other
Senior Subordinated Notes have been made:
Signature of
Amount of Principal authorized
Amount of increase in Amount of this officer of
decrease in Principal Global Note Trustee or
Principal Amount of following such Senior
Date of Amount of this this Global decrease (or Subordinated
Exchange Global Note Note increase) Note Custodian
11
<PAGE> 118
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
9 1/4% Senior Subordinated Notes due 2008
No. ____ $_________________
CIN NO. U00328AA9
APCOA, Inc. promises to pay to __________________ or registered
assigns, the principal sum of_________ Dollars on ___________, 2008.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
APCOA, INC.
By: _______________________________
Name:
Title:
This is one of the
Senior Subordinated Notes referred to in the
within-mentioned Indenture:
Dated: ____________________________
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:________________________________
12
<PAGE> 119
(Back of Regulation S Temporary Global Note)
9-1/4% Senior Subordinated Note due 2008
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR
SUBORDINATED NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) ("DTC"),TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
OF THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(l), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), THAT PRIOR TO SUCH TRANSFER, FURNISHED THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF
AN
<PAGE> 120
AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE OF CLAUSES
(b), (c), (d) or (e), BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE SENIOR
SUBORDINATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON
PRIOR TO THE EXCHANGE OF THIS SENIOR SUBORDINATED NOTE FOR A REGULATION S
TEMPORARY GLOBAL NOTE AS CONTEMPLATED BY THE INDENTURE.]3
Until this Regulation S Temporary Global Note is exchanged for
Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to
receive payments of interest or Liquidated Damages, if any, hereon although
interest and Liquidated Damages, if any, will continue to accrue; until so
exchanged in full, this Regulation S Temporary Global Note shall in all other
respects be entitled to the same benefits as other Senior Subordinated Notes
under the Indenture.
This Regulation S Temporary Global Note is exchangeable in whole or
in part for one or more Regulation S Permanent Global Notes or Rule 144A Global
Notes only (i) on or after the termination of the 40-day restricted period (as
defined in Regulation S) and (ii) upon presentation of certificates (accompanied
by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture.
Upon exchange of this Regulation S Temporary Global Note for one or more
Regulation S Permanent Global Notes or Rule 144A Global Notes, the Trustee shall
cancel this Regulation S Temporary Global Note.
This Regulation S Temporary Global Note shall not become valid or
obligatory until the certificate of authentication hereon shall have been duly
manually signed by the Trustee in accordance with the Indenture. This Regulation
S Temporary Global Note shall be governed by and construed in accordance with
the laws of the State of the New York. All references to
- ----------
(3) These paragraphs should be removed upon the exchange of Regulation S
Temporary Global Notes for Regulation S Permanent Global Notes pursuant to the
Indenture.
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<PAGE> 121
"$," "Dollars," "dollars" or "U.S. $" are to such coin or currency of the United
States of America as at the time shall be legal tender for the payment of public
and private debts therein.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. APCOA, Inc., a Delaware corporation, or its successor
(the "Company"), promises to pay interest on the principal amount of this Senior
Subordinated Note at the rate of 9 1/4% per annum and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages, if any, in United States dollars (except as otherwise provided herein)
semi-annually in arrears on March 15 and September 15, commencing on September
15, 1998, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Senior
Subordinated Notes shall accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from the date of issuance; provided
that if there is no existing Default or Event of Default in the payment of
interest, and if this Senior Subordinated Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date,
except in the case of the original issuance of Senior Subordinated Notes, in
which case interest shall accrue from the date of authentication. The Company
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess
of the then applicable interest rate on the Senior Subordinated Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful. Interest shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Senior
Subordinated Notes (except defaulted interest) and Liquidated Damages, if any,
on the applicable Interest Payment Date to the Persons who are registered
Holders of Senior Subordinated Notes at the close of business on the July 1 or
January 1 next preceding the Interest Payment Date, even if such Senior
Subordinated Notes are cancelled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The Senior Subordinated Notes shall be payable as
to principal, premium and Liquidated Damages, if any, and interest at the office
or agency of the Company maintained for such purpose within or without 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 at their
addresses set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds shall be required with respect to
principal of, premium and Liquidated Damages, if any, and interest on, all
Global Notes and all other Senior Subordinated Notes the Holders of which shall
have provided written wire transfer instructions to the Company and the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
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3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, shall act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Senior Subordinated Notes under
an Indenture dated as of July 11, 1997 ("Indenture") among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the Senior Subordinated
Notes include those stated in the Indenture and those made a part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Senior Subordinated Notes are subject
to all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Senior Subordinated Notes are general unsecured
Obligations of the Company limited to $200,000,000 in aggregate principal
amount, plus amounts, if any, sufficient to pay premium or Liquidated Damages,
if any, and interest on outstanding Senior Subordinated Notes as set forth in
Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the Senior Subordinated
Notes shall not be redeemable at the Company's option prior to March 15, 2003.
Thereafter, the Senior Subordinated Notes shall be subject to redemption 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 together with accrued and unpaid interest and any
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on March 15 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003............................................104.625%
2004............................................103.083%
2005............................................101.542%
2006 and thereafter.............................100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to March, 2001, the
Company may redeem up to 35% of the original aggregate principal amount of
Senior Subordinated Notes at a redemption price of 109.25% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
to the redemption date, with the net proceeds of a Public Equity Offering;
provided that at least 65% of the original aggregate principal amount of Senior
Subordinated Notes remains outstanding immediately after the occurrence of such
redemption; and provided, further, that such redemption shall occur within 45
days of the date of the closing of such Public Equity Offering.
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6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Senior Subordinated Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of Senior
Subordinated 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 Senior Subordinated 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, if any, thereon, to the date of
purchase. 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 setting forth the procedures
governing the Change of Control Offer required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Company shall offer to all Holders of Senior Subordinated
Notes (an "Asset Sale Offer") to purchase the maximum principal amount of
Senior Subordinated Notes that may be purchased out of the Excess Proceeds
at an offer price in cash equal to 100% of 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 Senior Subordinated
Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for any
general corporate purposes. If the aggregate principal amount of Senior
Subordinated Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Senior Subordinated 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.
(c) Holders of the Senior Subordinated Notes that are the
subject of an offer to purchase will receive a Change of Control Offer or
Asset Sale Offer from the Company prior to any related purchase date and
may elect to have such Senior Subordinated Notes purchased by completing
the form titled "Option of Holder to Elect Purchase" appearing below.
1. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Senior Subordinated Notes are to be redeemed at its registered
address. Senior Subordinated Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of the Senior
Subordinated Notes held by a Holder are to be redeemed. On and after the
redemption date, interest and Liquidated Damages, if any, ceases to accrue on
the Senior Subordinated Notes or portions thereof called for redemption.
5
<PAGE> 124
2. SUBORDINATION. The Notes are subordinated to Senior Debt, which
is all Indebtedness and other Obligations specified below payable directly or
indirectly the Company, or any of its Restricted Subsidiaries whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed by the Company or any of its Restricted Subsidiaries: (i) the principal
of, interest on and all other Obligations related to the New Credit Facility
(including without limitation all loans, letters of credit and other extensions
of credit under the New Credit Facility, and all expenses, fees, reimbursements,
indemnities and other amounts owing pursuant to the New Credit Facility); (ii)
amounts payable in respect of any Hedging Obligations; (iii) all Indebtedness
not prohibited by Section 4.9 hereof that is not expressly pari passu with or
subordinated to the Senior Subordinated Notes; and (iv) all permitted renewals,
extensions, refundings or refinancings thereof. All post-petition interest on
Senior Debt shall constitute Senior Debt. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (i) Indebtedness of the
Company or any of its Restricted Subsidiaries to any other Restricted
Subsidiaries which is not a Subsidiary Guarantor, (ii) any Indebtedness which by
the express terms of the agreement or instrument creating, evidencing or
governing the same is junior or subordinate in right of payment to any item of
Senior Debt, (iii) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business, or (iv)
Indebtedness incurred in violation of the Indenture. To the extent provided in
the Indenture, Senior Debt must be paid before the Notes may be paid. The
Company agrees and each Holder of Notes by accepting a Note consents and agrees
to the subordination provided in the Indenture and authorizes the Trustee to
give it effect.
3. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes
are in registered form without coupons in initial denominations of $1,000 and
integral multiples of $1,000. The transfer of the Senior Subordinated Notes may
be registered and the Senior Subordinated Notes may be exchanged as provided in
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 need not exchange or register the
transfer of any Senior Subordinated Note or portion of a Senior Subordinated
Note selected for redemption, except for the unredeemed portion of any Senior
Subordinated Note being redeemed in part. Also, it need not exchange or register
the transfer of any Senior Subordinated Notes for a period of 15 days before a
selection of Senior Subordinated Notes to be redeemed or during the period
between a record date and the corresponding Interest Payment Date.
4. PERSONS DEEMED OWNERS. The registered Holder of a Senior
Subordinated Note may be treated as its owner for all purposes.
5. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture, the Senior Subordinated Notes and the Note Guarantees
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Senior Subordinated Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of or, tender offer or exchange offer for Senior Subordinated Notes), and any
existing Default or Event of Default or compliance with any provision of the
Indenture, the Senior Subordinated Notes or the Note Guarantees may be waived
6
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with the consent of the Holders of a majority in principal amount of the then
outstanding Senior Subordinated Notes (including consents obtained in connection
with a tender offer or exchange offer for Senior Subordinated Notes).
Without the consent of any Holder of Senior Subordinated Notes, the
Company and the Trustee may amend or supplement the Indenture, the Note
Guarantees or the Senior Subordinated Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Senior Subordinated Notes in
addition to or in place of certificated Senior Subordinated Notes, to provide
for the assumption of the Company's or a Subsidiary Guarantor's obligations to
Holders of Senior Subordinated 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 Senior Subordinated Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the requirements
of the Commission in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act or to allow any Subsidiary to guarantee
the Senior Subordinated Notes. Any amendments with respect to subordination
provisions of the Notes or the Note Guarantees would require the consent of the
Holders of at least 75% in aggregate amount of Notes then outstanding if such
amendment would be adversely affect the rights of the Holders of Notes.
6. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest on or Liquidated Damages, if any,
with respect to the Senior Subordinated Notes; (ii) default in payment when due
of the principal of or premium, if any, on the Senior Subordinated Notes; (iii)
failure by the Company or any Restricted Subsidiary to comply with the
provisions described in Sections 4.10, 4.14 or 5.1 of the Indenture; (iv)
failure by the Company or any Restricted Subsidiary for 30 days after notice
from the Trustee or at least 25% in principal amount of the Senior Subordinated
Notes to comply with the provisions described in Sections 4.7 and 4.9, of the
Indenture; (v) failure by the Company or any Subsidiary for 60 days after notice
from the Trustee or the Holders of at least 25% in principal amount of the
Senior Subordinated Notes then outstanding to comply with its other agreements
in the Indenture or the Senior Subordinated 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 their 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) (i) is caused by a failure to pay when due at final stated maturity
(giving effect to any grace period related thereto) any principal of or premium,
if any, or interest on such Indebtedness (a "Payment Default") or (ii) results
in the acceleration of such Indebtedness prior to its express maturity and (B)
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 within 60 days after their entry; and (viii)
certain events of bankruptcy or insolvency with respect to the Company, any of
its Significant Subsidiaries or any group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary.
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<PAGE> 126
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 Senior
Subordinated Notes may declare all the Senior Subordinated 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 Senior Subordinated Notes or the Trustee, all
principal and interest under the Indenture shall be due and payable upon the
earlier of (x) the day 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 Significant Subsidiaries all outstanding Senior
Subordinated Notes will become due and payable without further action or notice.
Holders of the Senior Subordinated Notes may not enforce the Indenture or the
Senior Subordinated Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Senior Subordinated Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Senior
Subordinated Notes notice of any continuing Default or 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.
7. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company, the Subsidiary Guarantors or their respective
Affiliates, and may otherwise deal with the Company, the Subsidiary Guarantors
or their respective Affiliates, as if it were not the Trustee.
8. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder, of the Company or any Subsidiary Guarantor, as
such, shall have any liability for any obligations of the Company or any
Subsidiary Guarantor under the Senior Subordinated Notes, the Indenture or the
Note Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Senior Subordinated Notes by
accepting a Senior Subordinated Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Senior
Subordinated Notes and any Note Guarantee.
9. AUTHENTICATION. This Senior Subordinated Note shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
10. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the
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entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
11. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES.
In addition to the rights provided to Holders of the Senior Subordinated Notes
under the Indenture, Holders of Transferred Restricted Securities (as defined in
the Registration Rights Agreement) shall have all the rights set forth in the
Registration Rights Agreement, dated as of the date hereof, among the Company,
the Subsidiary Guarantors and the Initial Purchaser (the "Registration Rights
Agreement").
12. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Subordinated Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to the Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Senior Subordinated Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
APCOA, Inc.
800 Superior Avenue
Cleveland, Ohio 44114
Telecopy: (216) 523-8080
Chief Financial Officer
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SCHEDULE OF EXCHANGES FOR GLOBAL NOTES
The following exchanges of a part of this Regulation S Temporary
Global Note for other Global Notes have been made:
Amount of decrease Amount of increase Principal Amount of Signature
of
Signature of
Amount of Principal authorized
Amount of increase in Amount of this office of
decrease in Principal Global Note Trustee or
Principal Amount of following such Senior
Amount of this this Global decrease (or Subordinated
Date of Exchange Global Note Note increase) Note Custodian
- ---------------- --------------- -------------- --------------- --------------
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<PAGE> 129
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM RULE 144A
GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Pursuant to Section 2.6(a)(1) of the Indenture)
State Street Bank and Trust Company
225 Asylum Street
Hartford, Connecticut 06103
Re: 9__% Senior Subordinated Notes due 2008 of APCOA, Inc.
Reference is hereby made to the Indenture, dated as of March 30, 1998 (the
"Indenture"), among APCOA, Inc., a Delaware corporation (the "Company"), Tower
Parking, Inc., an Ohio corporation ("Tower"), Graelic, Inc., and Ohio
corporation ("Graelic"), APCOA Capital Corporation, a Delaware corporation
("APCOA Capital"), A-1 Auto Park, Inc., a Georgia corporation ("A-1 Auto"),
Metropolitan Parking System, Inc., a Massachusetts corporation ("Metropolitan"),
Events Parking Company, Inc., a Massachusetts corporation ("Events Parking"),
Standard Parking, L.P., a Delaware limited partnership ("SP"), Standard Parking
Corporation, an Illinois corporation ("SPC"), Standard Parking Corporation, IL,
an Illinois corporation ("SPC, IL"), Standard Parking Corporation, MW, an
Illinois corporation ("SPC, MW"), Standard Auto Park, Inc., an Illinois
corporation ("Standard Auto"), Standard/Wabash Parking Corporation, an Illinois
corporation ("S/W"), Standard Parking of Canada, L.P., a Illinois limited
partnership ("SP Canada"), Standard Parking I, L.L.C., a Delaware limited
liability company ("SPI"), Standard Parking II, L.L.C., a Delaware limited
liability company ("SPII"), (the "Subsidiary Guarantors") and State Street Bank
and Trust Company, as trustee (the "Trustee"). Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
This letter relates to $ ________________ principal amount of Senior
Subordinated Notes which are evidenced by one or more Rule 144A Global Notes and
held with the Depositary in the name of _________________________ (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Senior Subordinated Notes to a Person who will take delivery
thereof in the form of an equal principal amount of Senior Subordinated Notes
evidenced by one or more Regulation S Global Notes, which amount, immediately
after such transfer, is to be held with the Depositary through Euroclear or
Cedel or both.
In connection with such request and in respect of such Senior Subordinated
Notes, the Transferor hereby certifies that such transfer has been effected in
compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with Rule 903 or Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act"), and accordingly the
Transferor hereby further certifies that:
(1) The offer of the Senior Subordinated Notes was not made to a person in
the United States;
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<PAGE> 130
(2) either:
(a) at the time the buy order was originated, the transferee was outside
the United States or the Transferor and any person acting on its
behalf reasonably believed and believes that the transferee was
outside the United States; or
(b) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither the Transferor nor
any person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration provisions of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary through
Euroclear or Cedel or both.
Upon giving effect to this request to exchange a beneficial interest in a
Rule 144A Global Note for a beneficial interest in a Regulation S Global Note,
the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Regulation S Global Notes pursuant to the Indenture and
the Securities Act and, if such transfer occurs prior to the end of the 40-day
restricted period associated with the initial offering of Senior Subordinated
Notes, the additional restrictions applicable to transfers of interest in the
Regulation S Temporary Global Note.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation and First Chicago Capital Markets,
Inc., the initial purchasers of such Senior Subordinated Notes being
transferred. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:______________________________
Name:
Title:
Dated:
cc: APCOA, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
First Chicago Capital Markets, Inc.
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<PAGE> 131
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM REGULATION S
GLOBAL NOTE TO RULE 144A GLOBAL NOTE
(Pursuant to Section 2.6(a)(ii) of the Indenture)
State Street Bank and Trust Company
225 Superior Avenue
Hartford, Connecticut 06103
Re: 9 1/4% Senior Subordinated Notes due 2008 of APCOA, Inc.
Reference is hereby made to the Indenture, dated as of March 30, 1998 (the
"Indenture"), among APCOA, Inc., a Delaware corporation (the "Company"), Tower
Parking, Inc., an Ohio corporation ("Tower"), Graelic, Inc., and Ohio
corporation ("Graelic"), APCOA Capital Corporation, a Delaware corporation
("APCOA Capital"), A-1 Auto Park, Inc., a Georgia corporation ("A-1 Auto"),
Metropolitan Parking System, Inc., a Massachusetts corporation ("Metropolitan"),
Events Parking Company, Inc., a Massachusetts corporation ("Events Parking"),
Standard Parking, L.P., a Delaware limited partnership ("SP"), Standard Parking
Corporation, an Illinois corporation ("SPC"), Standard Parking Corporation, IL,
an Illinois corporation ("SPC, IL"), Standard Parking Corporation, MW, an
Illinois corporation ("SPC, MW"), Standard Auto Park, Inc., an Illinois
corporation ("Standard Auto"), Standard/Wabash Parking Corporation, an Illinois
corporation ("S/W"), Standard Parking of Canada, L.P., a Illinois limited
partnership ("SP Canada"), Standard Parking I, L.L.C., a Delaware limited
liability company ("SPI"), Standard Parking II, L.L.C., a Delaware limited
liability company ("SPII"), (the "Subsidiary Guarantors") and State Street Bank
and Trust Company, as trustee (the "Trustee"). Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
This letter relates to $__________ principal amount of Senior Subordinated
Notes which are evidenced by one or more Regulation S Global Notes and held with
the Depositary through Euroclear or Cedel in the name of
______________________________________ (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in the Senior Subordinated
Notes to a Person who will take delivery thereof in the form of an equal
principal amount of Senior Subordinated Notes evidenced by one or more Rule 144A
Global Notes, to be held with the Depositary.
In connection with such request and in respect of such Senior Subordinated
Notes, the Transferor hereby certifies that:
[CHECK ONE]
such transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred to a
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<PAGE> 132
Person that the Transferor reasonably believes is purchasing the Senior
Subordinated Notes for its own account, or for one or more accounts with respect
to which such Person exercises sole investment discretion, and such Person and
each such account is a "qualified institutional buyer" within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A;
or
such transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act,
or
such transfer is being effected pursuant to an exemption under the
Securities Act other than Rule 144A, Rule 144 or Rule 904 and the Transferor
further certifies that the Transfer complies with the transfer restrictions
applicable to beneficial interests in Global Notes and Definitive Senior
Subordinated Notes bearing the Private Placement Legend and the requirements of
the exemption claimed, which certification is supported by (x) if such transfer
is in respect of a principal amount of Senior Subordinated Notes at the time of
Transfer of $250,000 or more, a certificate executed by the Transferee in the
form of EXHIBIT C to the Indenture, or (y) if such Transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of transfer of less
than $250,000, (1) a certificate executed in the form of EXHIBIT C to the
Indenture and (2) an Opinion of Counsel provided by the Transferor or the
Transferee (a copy of which the Transferor has attached to this certification),
to the effect that (1) such Transfer is in compliance with the Securities Act
and (2) such Transfer complies with any applicable blue sky securities laws of
any state of the United States;
or
such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
or
such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or Rule
144, and the Transferor hereby further certifies that the Senior Subordinated
Notes are being transferred in compliance with the transfer restrictions
applicable to the Global Notes and in accordance with the requirements of the
exemption claimed, which certification is supported by an Opinion of Counsel,
provided by the transferor or the transferee (a copy of which the Transferor has
attached to this certification) in form reasonably acceptable to the Company and
to the Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and such Senior Subordinated Notes are being transferred in compliance
with any applicable blue sky securities laws of any state of the United States.
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<PAGE> 133
Upon giving effect to this request to exchange a beneficial interest in
Regulation S Global Notes for a beneficial interest in 144A Global Senior
Subordinated Notes, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Rule 144A Global Notes pursuant to the
Indenture and the Securities Act.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Company, the Subsidiary Guarantors and Donaldson, Lufkin
& Jenrette Securities Corporation, and First Chicago Capital Markets, Inc., the
initial purchasers of such Senior Subordinated Notes being transferred. Terms
used in this certificate and not otherwise defined in the Indenture have the
meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: ______________________________
Name:
Title:
Dated:
cc: APCOA, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
First Chicago Capital Markets, Inc.
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<PAGE> 134
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE SENIOR SUBORDINATED NOTES
(Pursuant to Section 2.6(b) of the Indenture)
State Street Bank and Trust Company
225 Asylum Avenue
Hartford, Connecticut 06103
Re: 9__% Senior Subordinated Notes due 2008 of APCOA, Inc.
Reference is hereby made to the Indenture, dated as of March 30, 1998 (the
"Indenture"), among APCOA, Inc., a Delaware corporation (the "Company"), Tower
Parking, Inc., an Ohio corporation ("Tower"), Graelic, Inc., and Ohio
corporation ("Graelic"), APCOA Capital Corporation, a Delaware corporation
("APCOA Capital"), A-1 Auto Park, Inc., a Georgia corporation ("A-1 Auto"),
Metropolitan Parking System, Inc., a Massachusetts corporation ("Metropolitan"),
Events Parking Company, Inc., a Massachusetts corporation ("Events Parking"),
Standard Parking, L.P., a Delaware limited partnership ("SP"), Standard Parking
Corporation, an Illinois corporation ("SPC"), Standard Parking Corporation, IL,
an Illinois corporation ("SPC, IL"), Standard Parking Corporation, MW, an
Illinois corporation ("SPC, MW"), Standard Auto Park, Inc., an Illinois
corporation ("Standard Auto"), Standard/Wabash Parking Corporation, an Illinois
corporation ("S/W"), Standard Parking of Canada, L.P., a Illinois limited
partnership ("SP Canada"), Standard Parking I, L.L.C., a Delaware limited
liability company ("SPI"), Standard Parking II, L.L.C., a Delaware limited
liability company ("SPII"), (the "Subsidiary Guarantors") and State Street Bank
and Trust Company, as trustee (the "Trustee"). Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
This relates to $ _________ principal amount of Senior Subordinated Notes
which are evidenced by one or more Definitive Senior Subordinated Notes in the
name of__________ (the "Transferor"). The Transferor has requested an exchange
or transfer of such Definitive Senior Subordinated Note(s) in the form of an
equal principal amount of Senior Subordinated Notes evidenced by one or more
Definitive Senior Subordinated Notes, to be delivered to the Transferor or, in
the case of a transfer of such Senior Subordinated Notes, to such Person as the
Transferor instructs the Trustee.
In connection with such request and in respect of the Senior Subordinated
Notes surrendered to the Trustee herewith for exchange (the "Surrendered Senior
Subordinated Notes"), the Holder of such Surrendered Senior Subordinated Notes
hereby certifies that:
[CHECK ONE]
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<PAGE> 135
the Surrendered Senior Subordinated Notes are being acquired for the
Transferor's own account, without transfer;
or
the Surrendered Senior Subordinated Notes are being transferred to the
Company;
or
the Surrendered Senior Subordinated Notes are being transferred pursuant
to and in accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby
further certifies that the Surrendered Senior Subordinated Notes are being
transferred to a Person that the Transferor reasonably believes is purchasing
the Surrendered Senior Subordinated Notes for its own account, or for one or
more accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a "qualified institutional
buyer" within the meaning of Rule 144A, in each case in a transaction meeting
the requirements of Rule 144A;
or
the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
the Surrendered Senior Subordinated Notes are being transferred pursuant
to an exemption under the Securities Act other than Rule 144A, Rule 144 or Rule
904 and the Transferor further certifies that the Transfer complies with the
transfer restrictions applicable to beneficial interests in Global Notes and
Definitive Senior Subordinated Notes bearing the Private Placement Legend and
the requirements of the exemption claimed, which certification is supported by
(x) if such transfer is in respect of a principal amount of Senior Subordinated
Notes at the time of Transfer of $250,000 or more, a certificate executed by the
Transferee in the form of EXHIBIT C to the Indenture, or (y) if such Transfer is
in respect of a principal amount of Senior Subordinated Notes at the time of
transfer of less than $250,000, (1) a certificate executed in the form of
EXHIBIT C to the Indenture and (2) an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that (I) such Transfer is in compliance with
the Securities Act and (2) such Transfer complies with any applicable blue sky
securities laws of any state of the United States;
or
the Surrendered Senior Subordinated Notes are being transferred pursuant
to an effective registration statement under the Securities Act; or
17
<PAGE> 136
such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or Rule
144, and the Transferor hereby further certifies that the Senior Subordinated
Notes are being transferred in compliance with the transfer restrictions
applicable to the Global Notes and in accordance with the requirements of the
exemption claimed, which certification is supported by an Opinion of Counsel,
provided by the transferor or the transferee (a copy of which the Transferor has
attached to this certification) in form reasonably acceptable to the Company and
to the Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation and First Chicago Capital Markets,
Inc., the initial purchasers of such Senior Subordinated Notes being
transferred. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: ____________________________
Name:
Title:
Dated:
cc: APCOA, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
First Chicago Capital Markets, Inc.
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE OR REGULATION S PERMANENT GLOBAL NOTE
TO DEFINITIVE SENIOR SUBORDINATED NOTE
(Pursuant to Section 2.6(c) of the Indenture)
State Street Bank and Trust Company
225 Asylum Street
Hartford, Connecticut 06103
Re: 9 1/4% Senior Subordinated Notes due 2008 of APCOA, Inc.
Reference is hereby made to the Indenture, dated as of March 30, 1998 (the
"Indenture"), among APCOA, Inc., a Delaware corporation (the "Company"), Tower
Parking, Inc., an Ohio
18
<PAGE> 137
corporation ("Tower"), Graelic, Inc., and Ohio corporation ("Graelic"), APCOA
Capital Corporation, a Delaware corporation ("APCOA Capital"), A-1 Auto Park,
Inc., a Georgia corporation ("A-1 Auto"), Metropolitan Parking System, Inc., a
Massachusetts corporation ("Metropolitan"), Events Parking Company, Inc., a
Massachusetts corporation ("Events Parking"), Standard Parking, L.P., a Delaware
limited partnership ("SP"), Standard Parking Corporation, an Illinois
corporation ("SPC"), Standard Parking Corporation, IL, an Illinois corporation
("SPC, IL"), Standard Parking Corporation, MW, an Illinois corporation ("SPC,
MW"), Standard Auto Park, Inc., an Illinois corporation ("Standard Auto"),
Standard/Wabash Parking Corporation, an Illinois corporation ("S/W"), Standard
Parking of Canada, L.P., a Illinois limited partnership ("SP Canada"), Standard
Parking I, L.L.C., a Delaware limited liability company ("SPI"), Standard
Parking II, L.L.C., a Delaware limited liability company ("SPII"), (the
"Subsidiary Guarantors") and State Street Bank and Trust Company, as trustee
(the "Trustee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
This letter relates to $___________ principal amount of Senior
Subordinated Notes which are evidenced by a beneficial interest in one or more
Rule 144A Global Notes or Regulation S Permanent Global Notes in the name of
______________ (the "Transferor"). The Transferor has requested an exchange or
transfer of such beneficial interest in the form of an equal principal amount of
Senior Subordinated Notes evidenced by one or more Definitive Senior
Subordinated Notes, to be delivered to the Transferor or, in the case of a
transfer of such Senior Subordinated Notes, to such Person as the Transferor
instructs the Trustee.
In connection with such request and in respect of the Senior Subordinated
Notes surrendered to the Trustee herewith for exchange (the "Surrendered Senior
Subordinated Notes"), the Holder of such Surrendered Senior Subordinated Notes
hereby certifies that:
[CHECK ONE]
the Surrendered Senior Subordinated Notes are being transferred to the
beneficial owner of such Senior Subordinated Notes;
or
the Surrendered Senior Subordinated Notes are being transferred pursuant
to and in accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby
further certifies that the Surrendered Senior Subordinated Notes are being
transferred to a Person that the Transferor reasonably believes is purchasing
the Surrendered Senior Subordinated Notes for its own account, or for one or
more accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a "qualified institutional
buyer" within the meaning of Rule 144A, in each case in a transaction meeting
they requirements of Rule 144A;
or
19
<PAGE> 138
the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
the Surrendered Senior Subordinated Notes are being transferred pursuant
to an effective registration statement under the Securities Act;
or
the Surrendered Senior Subordinated Notes are being transferred pursuant
to an exemption under the Securities Act other than Rule 144A, Rule 144 or Rule
904 and the Transferor further certifies that the Transfer complies with the
transfer restrictions applicable to beneficial interests in Global Notes and
Definitive Senior Subordinated Notes bearing the Private Placement Legend and
the requirements of the exemption claimed, which certification is supported by
(x) if such transfer is in respect of a principal amount of Senior Subordinated
Notes at the time of Transfer of $250,000 or more, a certificate executed by the
Transferee in the form of EXHIBIT C to the Indenture, or (y) if such Transfer is
in respect of a principal amount of Senior Subordinated Notes at the time of
transfer of less than $250,000, (1) a certificate executed in the form of
EXHIBIT C to the Indenture and (2) an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that (1) such Transfer is in compliance with
the Securities Act and (2) such Transfer complies with any applicable blue sky
securities laws of any state of the United States;
or
such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or Rule
144, and the Transferor hereby further certifies that the Senior Subordinated
Notes are being transferred in compliance with the transfer restrictions
applicable to the Global Notes and in accordance with the requirements of the
exemption claimed, which certification is supported by an Opinion of Counsel,
provided by the transferor or the transferee (a copy of which the Transferor has
attached to this certification) in form reasonably acceptable to the Company and
to the Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation, the initial purchaser of such Senior
Subordinated Notes being transferred. Terms used in this certificate and not
otherwise defined in the Indenture have the meanings set forth in Regulation S
under the Securities Act.
20
<PAGE> 139
[Insert Name of Transferor]
By:_____________________________
Name:
Title:
Dated:
cc: APCOA, Inc.
Donaldson, Lutkin & Jenrette Securities Corporation
First Chicago Capital Markets, Inc.
21
<PAGE> 140
EXHIBIT C
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
State Street Bank and Trust Company
225 Asylum Street
Hartford, Connecticut 06103
Re: 9-1/4% Senior Subordinated Notes due 2008 of APCOA, Inc.
Reference is hereby made to the Indenture, dated as of March 30, 1998 (the
"Indenture"), among APCOA, Inc., a Delaware corporation (the "Company"), Tower
Parking, Inc., an Ohio corporation ("Tower"), Graelic, Inc., and Ohio
corporation ("Graelic"), APCOA Capital Corporation, a Delaware corporation
("APCOA Capital"), A-1 Auto Park, Inc., a Georgia corporation ("A-1 Auto"),
Metropolitan Parking System, Inc., a Massachusetts corporation ("Metropolitan"),
Events Parking Company, Inc., a Massachusetts corporation ("Events Parking"),
Standard Parking, L.P., a Delaware limited partnership ("SP"), Standard Parking
Corporation, an Illinois corporation ("SPC"), Standard Parking Corporation, IL,
an Illinois corporation ("SPC, IL"), Standard Parking Corporation, MW, an
Illinois corporation ("SPC, MW"), Standard Auto Park, Inc., an Illinois
corporation ("Standard Auto"), Standard/Wabash Parking Corporation, an Illinois
corporation ("S/W"), Standard Parking of Canada, L.P., a Illinois limited
partnership ("SP Canada"), Standard Parking I, L.L.C., a Delaware limited
liability company ("SPI"), Standard Parking II, L.L.C., a Delaware limited
liability company ("SPII"), (the "Subsidiary Guarantors") and State Street Bank
and Trust Company, as trustee (the "Trustee"). Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $__________ aggregate
principal amount of:
(a)__Beneficial interests, or
(b)__Definitive Senior Subordinated Notes,
we confirm that:
1. We understand that any subsequent transfer of the Senior Subordinated
Notes of any interest therein is subject to certain restrictions and conditions
set forth in the Indenture and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Senior Subordinated Notes or any
interest therein except in compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the "Securities Act").
22
<PAGE> 141
2. We understand that the offer and sale of the Senior Subordinated Notes
have not been registered under the Securities Act, and that the Senior
Subordinated Notes and any interest therein may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that if we should
sell the Senior Subordinated Notes or any interest therein, (A) we will do so
only (1)(a) to a person who the Seller reasonably believes is a qualified
institutional buyer (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of 144A, (b) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (c) outside the United States
to a foreign person in a transaction meeting the requirements of Rule 904 of the
Securities Act, or (d) in accordance with another exemption from the
registration requirements of the Securities Act (and based upon an opinion of
counsel), (2) to the Company or any of its subsidiaries or (3) pursuant to an
effective registration statement and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction and (B) we will, and each subsequent holder will be
required to, notify any purchaser from it of the security evidenced hereby of
the resale restrictions set forth in (A) above."
3. We understand that, on any proposed resale of the Senior Subordinated
Notes or beneficial interests, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Senior Subordinated
Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Senior Subordinated
Notes, and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Senior Subordinated Notes or beneficial interests
therein purchased by us for our own account or for one or more accounts (each of
which is an institutional "accredited investor") as to each of which we exercise
sole investment discretion.
6. We are not acquiring the Senior Subordinated Notes with a view to any
distribution thereof that would violate the Securities Act or the securities
laws of any State of the United States.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
[Insert Name of Accredited Investor]
By: ______________________________
Name:
Title:
Dated:
23
<PAGE> 142
EXHIBIT D
Note Guarantee
Subject to Section 11.6 of the Indenture, each Subsidiary Guarantor
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Senior Subordinated Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Senior Subordinated Notes and the
Obligations of the Company under the Senior Subordinated Notes or under the
Indenture, that: (a) the principal of, premium, if any, interest and Liquidated
Damages, if any, on the Senior Subordinated Notes will be promptly paid in full
when due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, (to the extent permitted by law) interest on any interest, if
any, and Liquidated Damages, if any, on the Senior Subordinated Notes and all
other payment Obligations of the Company to the Holders or the Trustee under the
Indenture or under the Senior Subordinated Notes will be promptly paid in full
and performed, all in accordance with the terms thereof, and (b) in case of any
extension of time of payment or renewal of any Senior Subordinated Notes or any
of such other payment Obligations, the same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
subject to any applicable grace period, whether at stated maturity, by
acceleration, redemption or otherwise. Failing payment when so due of any amount
so guaranteed or any performance so guaranteed for whatever reason, the
Subsidiary Guarantors will be jointly and severally obligated to pay the same
immediately.
The obligations of the Subsidiary Guarantor to the Holders and to
the Trustee pursuant to this Note Guarantee and the Indenture are expressly set
forth in Article 11 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Note Guarantee. The terms of Article 11
of the Indenture are incorporated herein by reference. This Note Guarantee is
subject to release as and to the extent provided in Section 11.4 of the
Indenture.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon each Subsidiary Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Company's Obligations under the Senior Subordinated
Notes and the Indenture and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This is a Note Guarantee of payment and not a guarantee of collection.
This Note Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Senior Subordinated Note upon
which this Note Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized officers.
24
<PAGE> 143
For purposes hereof, each Subsidiary Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Company under the Senior Subordinated Notes and the Indenture and (ii) the
amount, if any, which would not have (A) rendered such Subsidiary Guarantor
"insolvent" (as such term is defined in the Bankruptcy Law and in the Debtor and
Creditor Law of the State of New York) or (B) left such Subsidiary Guarantor
with unreasonably small capital at the time its Note Guarantee of the Senior
Subordinated Notes was entered into; provided that, it will be a presumption in
any lawsuit or other proceeding in which a Subsidiary Guarantor is a party that
the amount guaranteed pursuant to the Note Guarantee is the amount set forth in
clause (i) above unless any creditor, or representative of creditors of such
Subsidiary Guarantor, or debtor in possession or trustee in bankruptcy of such
Subsidiary Guarantor, otherwise proves in such a lawsuit that the aggregate
liability of the Subsidiary Guarantor is limited to the amount set forth in
clause (ii) above. The Indenture provides that, in making any determination as
to the solvency or sufficiency of capital of a Subsidiary Guarantor in
accordance with the previous sentence, the right of such Subsidiary Guarantors
to contribution from other Subsidiary Guarantors and any other rights such
Subsidiary Guarantors may have, contractual or otherwise, shall be taken into
account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated as of___________ 1998
APCOA, INC.
By: __________________________
Name:
Title:
TOWER PARKING, INC.
By: __________________________
Name:
Title:
GRAELIC, INC.
By: __________________________
Name:
Title:
25
<PAGE> 144
APCOA CAPITAL CORPORATION
By: __________________________
Name:
Title:
A-1 AUTO PARK, INC.
By: _________________________
Name
Title:
METROPOLITAN PARKING SYSTEM, INC.
By: _________________________
Name:
Title:
EVENTS PARKING, INC.
By: __________________________
Name:
Title:
STANDARD PARKING, L.P.
By: ___________________________
Name:
Title:
STANDARD PARKING CORPORATION
By: ___________________________
Name:
Title:
26
<PAGE> 145
STANDARD PARKING CORPORATION, IL
By: ___________________________
Name:
Title:
STANDARD PARKING CORPORATION, MW
By: ___________________________
Name:
Title:
STANDARD AUTO PARK, INC.
By: ___________________________
Name:
Title:
STANDARD/WABASH PARKING CORPORATION
By: _____________________________
Name:
Title:
STANDARD PARKING OF CANADA
By: _____________________________
Name:
Title:
STANDARD PARKING I, L.L.C.
By: _____________________________
Name:
Title:
27
<PAGE> 146
STANDARD PARKING II, L.L.C.
By: _____________________________
Name:.
Title:
have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
For purposes hereof, each Subsidiary Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Company under the Senior Subordinated Notes and the Indenture and (ii) the
amount, if any, which would not have (A) rendered such Subsidiary Guarantor
"insolvent" (as such term is defined in the Bankruptcy Law and in the Debtor and
Creditor Law of the State of New York) or (B) left such Subsidiary Guarantor
with unreasonably small capital at the time its Note Guarantee of the Senior
Subordinated Notes was entered into; provided that, it will be a presumption in
any lawsuit or other proceeding in which a Subsidiary Guarantor is a party that
the amount guaranteed pursuant to the Note Guarantee is the amount set forth in
clause (i) above unless any creditor, or representative of creditors of such
Subsidiary Guarantor, or debtor in possession or trustee in bankruptcy of such
Subsidiary Guarantor, otherwise proves in such a lawsuit that the aggregate
liability of the Subsidiary Guarantor is limited to the amount set forth in
clause (ii) above. The Indenture provides that, in making any determination as
to the solvency or sufficiency of capital of a Subsidiary Guarantor in
accordance with the previous sentence, the right of such Subsidiary Guarantors
to contribution from other Subsidiary Guarantors and any other rights such
Subsidiary Guarantors may have, contractual or otherwise, shall be taken into
account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated as of ___________, 1998
APCOA, INC.
By: __________________________
Name:
Title:
TOWER PARKING, INC.
By: __________________________
Name:
Title:
28
<PAGE> 147
GRAELIC, INC.
By: __________________________
Name:
Title:
APCOA CAPITAL CORPORATION
By: __________________________
Name:
Title:
A-1 AUTO PARK, INC.
By: __________________________
Name
Title:
METROPOLITAN PARKING SYSTEM, INC.
By: __________________________
Name:
Title:
EVENTS PARKING, INC.
By: ___________________________
Name:
Title:
STANDARD PARKING, L.P.
By: __________________________
Name:
Title:
29
<PAGE> 148
STANDARD PARKING CORPORATION
By: ___________________________
Name:
Title:
STANDARD PARKING CORPORATION, IL
By: _____________________________
Name:
Title:
STANDARD PARKING CORPORATION, MW
By: _____________________________
Name:
Title:
STANDARD AUTO PARK, INC
By: _____________________________
Name:
Title:
STANDARD/WABASH PARKING CORPORATION
By: _____________________________
Name:
Title:
STANDARD PARKING OF CANADA
By: _____________________________
Name:
Title:
30
<PAGE> 149
STANDARD PARKING I, L.L.C.
By: _____________________________
Name:
Title:
STANDARD PARKING II, L.L.C.
By: _____________________________
Name:.
Title:
31
<PAGE> 150
Exhibit E
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
___________ between Subsidiary Guarantor (the "New Subsidiary Guarantor"), a
subsidiary of APCOA, Inc., a Delaware corporation (the "Company"), and State
Street Bank and Trust Company, as trustee under the indenture referred to below
(the "Trustee"). Capitalized terms used herein and not defined herein shall have
the meaning ascribed to them in the Indenture (as defined below).
WITNESSETH
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of March 30, 1998, providing
for the issuance of an aggregate principal amount of $110,000,000 of 9__%
Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes");
WHEREAS, Section 11.5 of the Indenture provides that under certain
circumstances the Company may cause, and Section 11.3 of the Indenture provides
that under certain circumstances the Company must cause, certain of its
subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such subsidiaries shall unconditionally guarantee all of the
Company's Obligations under the Senior Subordinated Notes pursuant to a Note
Guarantee on the terms and conditions set forth herein; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Senior Subordinated Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO NOTE GUARANTEE. The New Subsidiary Guarantor hereby
agrees, jointly and severally with all other Subsidiary Guarantors, to guarantee
the Company's Obligations under the Senior Subordinated Notes and the Indenture
on the terms and subject to the conditions set forth in Article 11 of the
Indenture and to be bound by all other applicable provisions of the Indenture.
3. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Subsidiary
Guarantor, as such, shall
32
<PAGE> 151
have any liability for any obligations of the Company or any Subsidiary
Guarantor under the Senior Subordinated Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Senior Subordinated Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Senior
Subordinated Notes.
4. NEW YORK LAW TO GOVERN. The internal law of the State of New York
shall govern and be used to construe this Supplemental Indenture.
5. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Subsidiary
Guarantor.
33
<PAGE> 152
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ___________________
[NAME OF NEW SUBSIDIARY GUARANTOR]
By: ______________________
Name:
Title:
34
<PAGE> 1
Exhibit 5.1
[LETTERHEAD OF WACHTELL, LIPTON, ROSEN & KATZ]
July 15, 1998
APCOA/Standard Parking, Inc. Standard Parking Corporation
Tower Parking, Inc. Standard Parking Corporation IL
Graelic, Inc. Standard Auto Park, Inc.
APCOA Capital Corporation Century Parking, Inc.
A-1 Auto Park, Inc. Sentry Parking Corporation
Metropolitan Parking System, Inc. 200 East Randolph Drive, Suite 4800
Events Parking Company, Inc. Chicago, Illinois 60601
S&S Parking, Inc.
800 Superior Avenue
Cleveland, Ohio 44114-2601
Ladies and Gentlemen:
We have acted as special counsel to APCOA/Standard Parking, Inc., a
Delaware corporation (the "Company"), in connection with the preparation of the
Company's Registration Statement on Form S-4, registration number 333-50437 (the
"Registration Statement"), under the Securities Act of 1933, as amended (the
"Securities Act"), first filed with the Securities and Exchange Commission on
April 17, 1998, and as amended on June 9, 1998 and July 15, 1998, relating to an
offer to exchange (the "Exchange Offer") the Company's 9 1/4% New Senior
Subordinated Notes due 2008 (the "New Notes") for an equal principal amount of
the Company's outstanding 9 1/4 % Senior Subordinated Notes due 2008 (the
"Notes"). The New Notes will be fully and unconditionally guaranteed on a senior
subordinated basis (the "New Note Guarantees") by, and will be joint and several
obligations of the following wholly owned
<PAGE> 2
APCOA/Standard Parking, Inc.
July 15, 1998
Page 2
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 above being referred to herein as the "Subsidiary
Guarantors").
The Notes were issued, and the New Notes will be issued, under an
Indenture (the "Indenture") dated as of March 30, 1998, as amended as of July 6,
1998, among the Company, the Subsidiary Guarantors, and State Street Bank and
Trust Company, as Trustee (the "Trustee").
In connection with this opinion, we have examined the Registration
Statement, the Indenture (included as Exhibit 4.1 to the Registration
Statement), the form of New Note (included as Exhibit 4.2 to the Registration
Statement), the form of New Note Guarantee (included as Exhibit 4.3 to the
Registration Statement) and originals or copies certified or otherwise
identified to our satisfaction of such other documents, corporate records and
other instruments as we have deemed necessary or appropriate for the purposes of
the opinion set forth herein.
We have, with your approval, assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to authentic original documents of all documents submitted to us as certified,
facsimile, conformed, electronic, or photostatic copies and the authenticity of
the originals of such copies, and we have assumed the legal capacity of all
individuals executing such documents. In addition, as to all questions of fact
material to this opinion that have not been independently established, we have
relied upon certificates or comparable documents, and oral and written
statements and representations of, officers and representatives of the Company
and the Subsidiary Guarantors. We have not independently verified such
information and assumptions. Capitalized terms used and not defined herein shall
have the meanings ascribed to such terms in the Purchase Agreement (included as
Exhibit 1.1 to the Registration Statement).
Based upon and subject to the foregoing, assuming that the Indenture
has been duly authorized, executed and delivered by, and represents the valid
and binding obligation of, the Trustee, and when the Registration Statement,
including any amendment thereto, shall have become effective under the
Securities Act and the Indenture shall have been duly qualified under the Trust
Indenture Act of 1939, as amended, and subject to the limitations and
qualifications set forth herein, we are of the opinion that:
(1) the New Notes, when duly executed and delivered by or on
behalf of the Company in the form contemplated by the
Indenture upon the terms set forth in
<PAGE> 3
APCOA/Standard Parking, Inc.
July 15, 1998
Page 3
the Exchange Offer and authenticated by the Trustee or an
authenticating agent appointed by the Trustee in accordance
with the terms of the Indenture, will constitute the legal,
valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms; and
(2) the New Note Guarantees, when duly executed and delivered by
or on behalf of the Subsidiary Guarantors in the form
contemplated by the Indenture upon the terms set forth in the
Exchange Offer, will constitute the legal, valid and binding
obligations of the Subsidiary Guarantors, enforceable against
the Subsidiary Guarantors in accordance with their terms;
subject, in each case, to (a) bankruptcy, insolvency, moratorium, reorganization
and other laws of general applicability, relating to or affecting creditors'
rights from time to time in effect; (b) application of general principles of
equity (regardless of whether considered in proceedings in equity or at law) and
the discretion of the court before which any proceeding therefor may be brought;
(c) standards of commercial reasonableness and the implied covenant of good
faith; and (d) public policy.
In addition, the opinions expressed herein are subject to the
following assumptions, exceptions, limitations, qualifications and comments:
A. We express no opinion as to the effect of the laws of any
jurisdiction other than the laws of the State of New York, and
the laws of the United States, wherein any holder of the New
Notes may be located which limit rates of interest that may be
charged or collected by such holder.
B. We express no opinion with respect to the lawfulness or
enforceability of:
(i) provisions relating to delay or omission of
enforcement of rights or remedies, waivers of
defenses, or waivers of benefits of any usury,
appraisement, valuation, stay, extension, moratorium,
redemption, statutes of limitation, or other
non-waivable benefits bestowed by operation of law;
(ii) exculpation provisions, provisions relating to
releases of unmatured claims, provisions purporting
to waive immaterial rights, severability provisions
and provisions similar in substance and nature to
those described in the foregoing clause (i) and this
clause (ii), insofar as any of the foregoing are
contained in the Indenture; and
(iii) indemnification or contribution provisions to the
extent they purport to relate to liabilities from or
based upon negligence or any violation of, or relate
to rights of contribution or indemnification that are
violative of, any law, rule or regulation of the
public policy underlying any law, rule or
<PAGE> 4
APCOA/Standard Parking, Inc.
July 15, 1998
Page 4
regulation (including any federal, state or
foreign securities law, rule or regulation).
C. Certain of the remedial provisions and waivers with respect to
the New Notes or the New Note Guarantees contained in the
Indenture may be unenforceable in whole or in part, but the
inclusion of such provisions does not affect the validity of
the New Notes or the New Note Guarantees, taken as a whole,
and the New Notes and the New Note Guarantees, taken as a
whole, together with the laws of the State of New York,
contain adequate provision for the practical realization of
the benefits of the obligations or guarantees created thereby.
D. We express no opinion as to the effect on the Indenture, the
New Notes, the New Note Guarantees or on the opinions
expressed herein, of any fraudulent conveyance laws. In
addition, we express no opinion as to the effects of either
(i) Section 548 of Title 11 of the United States Code or (ii)
Article 10 of the New York Debtor and Creditor Law, relating
to fraudulent transfers, on any obligation under the New Notes
or the New Note Guarantees.
We are admitted to practice only in the State of New York and
express no opinion as to the effect on the matters covered by this opinion of
the laws of any jurisdiction other than the laws of the State of New York and
the laws of the United States.
This opinion is rendered to you and is for your benefit in
connection with the Exchange Offer. This opinion may not be used or relied upon
by you for any other purpose, or furnished to, quoted to, or relied upon by any
other person, firm or corporation for any purpose, without our prior written
consent, except that we hereby consent (i) to the use of this opinion as an
Exhibit to the Registration Statement and to the reference to our firm under the
caption "Legal Matters" in the prospectus that is a part of the Registration
Statement and (ii) to your filing copies of this opinion as an Exhibit to the
Registration Statement with agencies of such states as you deem necessary in the
course of complying with the laws of such states regarding the Exchange Offer.
In giving any such consent, we do not hereby admit that we are in the category
of persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
<PAGE> 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. 2 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
July 15, 1998
<PAGE> 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. 2 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
July 15, 1998
