<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 2, 2000.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM 10/A
AMENDMENT NO. 1
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
IMPERIAL PARKING CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 31-1534011
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
</TABLE>
<TABLE>
<S> <C>
601 West Cordova Street, Suite 300 V6B 1G1
Vancouver, BC Canada
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (604) 681-7311
Securities to be registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
------------------- ------------------------------
<S> <C>
Common Stock, American Stock Exchange
par value $.01 per share
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act:
None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
IMPERIAL PARKING CORPORATION
INFORMATION INCLUDED IN INFORMATION STATEMENT
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10
<TABLE>
<CAPTION>
ITEM FORM 10 ITEM CAPTION CAPTION IN INFORMATION STATEMENT
- ---- -------------------- --------------------------------
<C> <S> <C>
1. Business................................... Summary -- Background and Reasons for the
Distribution, Pre-Distribution
Transactions, Impark, Management of
Impark, Summary Financial Data; The
Distribution -- Pre-Distribution
Transactions; Historical Selected
Financial Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Business
2. Financial Information...................... Summary -- Summary Financial Data;
Capitalization; Historical Selected
Financial Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Index to Financial
Statements
3. Properties................................. Business -- Parking Facilities and Surface
Lots
4. Security Ownership of Certain Beneficial
Owners and Management...................... Security Ownership of Certain Beneficial
Owners and Management
5. Directors and Executive Officers........... Management -- Executive Officers and
Directors
6. Executive Compensation..................... Management -- Executive Compensation
7. Certain Relationship and Related
Transactions............................... Summary -- Background and Reasons for the
Distribution; Pre-Distribution
Transactions, Trading Market; The
Distribution -- Reasons for the
Distribution, Pre-Distribution
Transactions; Listing and Trading of
Impark Common Stock; Certain Transactions
8. Legal Proceedings.......................... Business -- Litigation
9. Market Price of and Dividends on the
Registrant's Common Equity and Related
Shareholder Matters........................ Summary -- Distribution Ratio and
Mechanics, Trading Market,
Post-Distribution Dividend Policy; Risk
Factors -- Market Risks Associated with
New Public Companies; Listing and Trading
of Impark Common Stock, Description of
Capital Stock
10. Recent Sales of Unregistered Securities.... Not Applicable
11. Description of Registrant's Securities to
be Registered.............................. Description of Capital Stock
12. Indemnification of Directors and
Officers................................... Indemnification of Directors and Officers
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM FORM 10 ITEM CAPTION CAPTION IN INFORMATION STATEMENT
- ---- -------------------- --------------------------------
<C> <S> <C>
13. Financial Statements and Supplementary
Data....................................... Index to Financial Statements
14. Changes in and Disagreements With
Accountants on Accounting and Financial
Disclosure................................. Not Applicable
15. Financial Statements and Exhibits.......... F-1; A-1
</TABLE>
<PAGE> 4
[FIRST UNION CORPORATION AND IMPARK LETTERHEAD]
------------------------------------
March 27, 2000
Dear Shareholder:
First Union Real Estate Equity and Mortgage Investments is making a special
distribution of our subsidiary, Imperial Parking Corporation, known as Impark.
You are receiving one share of Impark common stock for every 20 shares of First
Union you own on March 20, 2000. Immediately following consummation of the
distribution, Impark will be owned by its shareholders in the same proportions
as those shareholders own First Union shares.
First Union is a real estate investment trust whose primary business has
been to manage and own retail, apartment, office and parking properties
throughout the United States. In 1997, First Union acquired the parking
properties of Impark Holdings, Inc. and our affiliate First Union Management,
Inc. acquired the parking services and ancillary businesses of Impark Holdings,
Inc. As a result of tax legislation enacted in 1998, our ability to grow these
businesses was substantially curtailed. Additionally, we believe the investment
characteristics of Impark and First Union are substantially different. First
Union's board of trustees has therefore unanimously approved the distribution as
being in the best interests of First Union's shareholders.
We have applied to list Impark's shares on the American Stock Exchange
under the symbol "IPK." The distribution of Impark's shares is the first public
distribution of those shares. Accordingly, we can provide no assurance to you as
to what their market price may be.
The enclosed Information Statement provides important information regarding
the distribution and Impark's organization, business, properties and historical
and pro forma financial information. Shareholders are encouraged to read this
material carefully.
First Union shareholders on the record date for the distribution are not
required to take any action to participate in the distribution. Shareholder
approval of the distribution is not required, and First Union is therefore not
soliciting your proxy. On behalf of First Union, we thank you for your continued
support. On behalf of Impark, we welcome you as a new shareholder.
Sincerely,
/s/ DANIEL P. FRIEDMAN
--------------------------------------
DANIEL P. FRIEDMAN
President and Chief Executive Officer
of First Union
/s/ CHARLES E. HUNTZINGER
--------------------------------------
CHARLES E. HUNTZINGER
President and Chief Executive Officer
of Impark
<PAGE> 5
SUBJECT TO COMPLETION DATED MARCH 2, 2000
INFORMATION STATEMENT
IMPERIAL PARKING LOGO
IMPERIAL PARKING CORPORATION
DISTRIBUTION OF COMMON STOCK
We are furnishing you with this Information Statement in connection with
the distribution by First Union Real Estate Equity and Mortgage Investments, an
Ohio business trust known as First Union, of all of the outstanding shares of
common stock, $.01 par value per share, of Imperial Parking Corporation, a
Delaware corporation owned by First Union, to the shareholders of First Union.
We generally refer to Imperial Parking Corporation in this Information Statement
as Impark.
First Union is distributing the shares of Impark's common stock to holders
of First Union shares on the basis of one share of Impark common stock for every
20 First Union shares held on March 20, 2000. No consideration will be payable
by First Union shareholders for the Impark shares, nor will they be required to
surrender or exchange shares of First Union, or take any other action in order
to receive the Impark common stock.
There is currently no public market for shares of Impark, although it is
expected that a "when issued" trading market may develop prior to the time of
the Distribution. We have applied to have our common stock listed on the
American Stock Exchange under the symbol "IPK." See "Listing and Trading of
Impark Common Stock."
IN REVIEWING THIS INFORMATION STATEMENT, YOU SHOULD CAREFULLY CONSIDER THE
MATTERS DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 18.
------------------------------------
NO VOTE OF SHAREHOLDERS IS REQUIRED IN CONNECTION WITH THE
DISTRIBUTION. WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
------------------------------------
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 INFORMATION STATEMENT AND REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------------
THE DATE OF THIS INFORMATION STATEMENT IS , 2000.
1
<PAGE> 6
No person is authorized to give any information or to make any
representations other than those contained in this Information Statement, and if
given or made, such information or representations must not be relied upon as
having been authorized. This Information Statement does not constitute an offer
to sell or a solicitation of any offer to buy any securities. This Information
Statement presents information concerning Impark believed by Impark to be
accurate as of the date set forth on the cover hereof. This Information
Statement presents information concerning First Union believed by First Union to
be accurate as of the date set forth on the cover hereof. Changes may occur in
the presented information after that date. Neither Impark nor First Union plans
to update said information except in the course of fulfilling their respective
normal public reporting and disclosure obligations.
Certain statements in this Information Statement constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects," "intends" and similar
expressions are intended to identify forward-looking statements. There are a
number of important factors that could cause the results of Impark to differ
materially from those indicated by such forward-looking statements, including
among others, those set forth in this Information Statement under the heading
"Risk Factors."
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---- ----
<S> <C>
SUMMARY..................................................... 3
THE DISTRIBUTION............................................ 9
RISK FACTORS................................................ 18
LISTING AND TRADING OF IMPARK COMMON STOCK.................. 22
CAPITALIZATION.............................................. 23
HISTORICAL SELECTED FINANCIAL DATA.......................... 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 27
BUSINESS.................................................... 32
MANAGEMENT.................................................. 42
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 47
CERTAIN TRANSACTIONS........................................ 49
DESCRIPTION OF CAPITAL STOCK................................ 50
INDEMNIFICATION OF DIRECTORS AND OFFICERS................... 52
AVAILABLE INFORMATION....................................... 52
INDEX TO FINANCIAL STATEMENTS............................... F-1
</TABLE>
2
<PAGE> 7
SUMMARY
This summary highlights information contained elsewhere in this document.
You should read the entire document carefully. This document contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth under "Risk
Factors" and elsewhere in this document.
THE DISTRIBUTION
Background and Reasons for
the Distribution........... First Union Real Estate Equity and Mortgage
Investments, which we refer to as First Union, is a
real estate investment trust. It manages and owns
real estate. First Union has an affiliate, First
Union Management, Inc., which we refer to as FUMI.
FUMI, through its subsidiaries, is an operating
company primarily engaged in managing real estate
through management contracts and leases. A trust
holds all of the shares of FUMI for the sole
benefit of the shareholders of First Union. This
type of arrangement is commonly referred to as a
stapled REIT. In April 1997, as part of a strategy
to grow its management business and to assist First
Union in managing parking properties which it
owned, FUMI acquired the parking services and
ancillary businesses of Impark Holdings, Inc.,
which, through its operating subsidiaries, was a
major provider of parking services in Canada as
well as an owner of parking properties. After FUMI
acquired these businesses, First Union purchased
the parking properties of Impark Holdings.
In July 1998 the United States enacted tax
legislation which posed certain limitations on the
activities of stapled REITs with respect to
properties acquired or committed to be acquired
after March 26, 1998. As a result of this
development, the trustees of First Union reviewed
the advisability of having FUMI continue to own its
parking services business. The First Union trustees
concluded that it would be in the best interests of
First Union's shareholders to combine the parking
services and ancillary businesses operated by FUMI
with the parking properties business in Canada
owned by First Union, and then distribute the stock
of that corporation to the shareholders of First
Union. In this Information Statement we refer to
this distribution of stock as the Distribution. The
new company will be a Delaware corporation named
Imperial Parking Corporation, which we refer to as
Impark.
The First Union board believes that the
Distribution will benefit both First Union and
Impark by:
- Improving each company's access to capital;
- Improving the focus of management and employees
of each company on the performance of their
respective businesses; and
- Providing management incentives linked to the
objective performance of each company's shares
in the public markets.
The estimated cost of planning and implementing the
Distribution and its antecedent transactions is
approximately $2.5 million. First Union will be
responsible for paying these costs.
3
<PAGE> 8
Pre-Distribution
Transactions............... Prior to the Distribution, Impark's parking
services and related business were owned by FUMI
and its parking properties were owned by First
Union. In preparation for the Distribution, First
Union and FUMI have taken, or will take, a number
of actions to organize Impark and to establish
Impark on a sound financial footing with the
capacity to grow. These actions include:
- Hiring a new chief executive officer and senior
vice president, operations to lead Impark;
- Disposing of some of the ancillary businesses of
FUMI and one of the parking businesses of FUMI;
- Combining the parking services and related
business of FUMI with the parking properties in
Canada owned by First Union; and
- Providing working capital to Impark in the form
of both contributions of cash and debt.
Please see "The Distribution -- Pre-Distribution
Transactions" for a more detailed description of
these transactions.
Impark..................... Following the Distribution, Impark will be a
leading provider of parking services in North
America. From our base in Vancouver and our
regional offices in Calgary, Edmonton, Toronto,
Winnipeg and Minneapolis, we employ more than 2,000
employees in both Canada and the United States. As
of December 31, 1999, we managed, leased or owned
over 1,400 parking facilities and lots in Canada
and the United States, containing more than 250,000
parking spaces, making us the largest parking
provider in Canada and one of the four largest in
North America. We also provide parking lot
patrolling, ticketing and collection services for
our own lots and for those operated by other
parties.
Management of Impark....... The current executive officers of Impark will
continue to serve as such following the
Distribution. They are Charles E. Huntzinger,
president and chief executive officer, J. Bruce
Newsome, senior vice president and chief financial
officer, and Bryan L. Wallner, senior vice
president of operations. In addition, two executive
officers of First Union, Daniel P. Friedman and
David Schonberger, will also be employed by Impark
on a part-time basis. Messrs. Huntzinger, Newsome
and Wallner have over 45 years of combined
experience in the parking industry. They have
operated major parking operations throughout the
United States and Canada and have been involved in
numerous acquisitions.
Shares to be distributed... First Union will distribute approximately 2.1
million shares of Impark common stock, representing
100% of the total outstanding shares of Impark
common stock. This number will be reduced to the
extent that cash payments are made in lieu of the
issuance of fractional shares of Impark common
stock.
Distribution Ratio and
Mechanics.................. One share of Impark common stock will be
distributed for every 20 First Union shares held at
the close of business on March 20, 2000. No
fractional shares of Impark common stock will be
issued in connection with the Distribution. Instead
of fractional shares, our distribution agent will
(a) aggregate all fractional shares of common
4
<PAGE> 9
stock which would otherwise be issuable in
connection with the Distribution, (b) sell those
shares in the open market for cash and (c) mail to
each First Union shareholder, in lieu of the
fractional share the shareholder would otherwise
receive, a check in an amount equal to the
shareholder's pro rata share in the aggregate
amount received for such shares. First Union will
not require or accept any payment from the holders
of its shares for the Impark common stock to be
received by them in the Distribution. Furthermore,
First Union beneficiaries will not be required to
surrender or exchange First Union shares in order
to receive Impark common stock in the Distribution.
Risk factors............... The shares of Impark common stock that First Union
will distribute involve a high degree of risk.
Shareholders should consider and read carefully the
factors discussed under "Risk Factors."
Federal income tax
consequences of the
Distribution............. As a result of the Distribution, each shareholder
will be treated for federal income tax purposes as
having received a distribution from First Union in
an amount equal to the fair market value of the
Impark shares received by the beneficiary. In
general, the distribution will be taxable as a
dividend to the extent of First Union's current or
accumulated earnings and profits. Any excess will
be treated as a return of the shareholder's
investment in his First Union shares and then as
gain from the sale of such shares. A portion of the
Distribution received by a shareholder otherwise
taxable as a dividend may be characterized as a
capital gain dividend to the extent that First
Union has capital gains for the year of the
Distribution and elects to so characterize a
portion of the Distribution. The taxable value of
the Distribution will be determined with reference
to all relevant facts and circumstances at the time
of the Distribution. If the Impark shares are
immediately tradable, the most relevant fact for
establishing their value will likely be their
trading price immediately following the
Distribution.
Anti-takeover provisions... Provisions of Impark's charter and bylaws and
Delaware corporate law will have the effect of
making more difficult a change of control of Impark
in a transaction not approved by the Impark board
of directors.
Distribution agent......... National City Bank will be the distribution agent
for the Distribution of the Impark common stock.
Record date................ March 20, 2000.
Distribution effective
date....................... March 27, 2000. Shortly after the Distribution of
the Impark common stock, the distribution agent
will begin mailing certificates for Impark common
stock to First Union shareholder as of the record
date. First Union shareholders will not be required
to make any payment or to take any other action in
order to receive the Impark common stock to which
they are entitled in the Distribution.
Trading market............. There is currently no public market for the Impark
common stock. We have applied to list the Impark
common stock on the American Stock Exchange under
the symbol "IPK."
5
<PAGE> 10
Post-Distribution dividend
policy..................... Following the Distribution, Impark intends to
retain earnings, if any, to fund the development
and growth of its business. Therefore, we do not
anticipate the payment of any dividends on Impark
common stock in the foreseeable future.
Information about Impark... The principal executive office of Impark is located
at 601 West Cordova Street, Suite 300, Vancouver,
BC Canada V6B 1G1 and its telephone number is (604)
681-7311.
6
<PAGE> 11
SUMMARY FINANCIAL DATA
The financial data presented below is based on the consolidated and
combined financial statements of Impark. Adjusted pro forma information for the
year ended December 31, 1999 has been extracted from pro forma financial
statements included elsewhere in this Information Statement. The adjusted pro
forma financial data reflects the historical actual operating results for the
periods presented adjusted to give effect to the transactions that will result
in the formation of Impark as well as the elimination of the revenues and
expenses associated with businesses sold in 1999 which do not meet the
definition of a discontinued operation for accounting purposes. Please see note
3 to the adjusted pro forma financial statements to see how the adjustment was
done. For a description of the transactions that have been taken into account by
the pro forma financial statements see note 2 to the pro forma financial
statements.
This summary financial data should be read in conjunction with the pro
forma consolidated and combined financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in this Information Statement.
<TABLE>
<CAPTION>
ADJUSTED PRO
FORMA
NINE MONTHS YEARS ENDED YEAR ENDED
ENDED DECEMBER 31, DECEMBER 31,
DECEMBER 31, ------------------------------ ------------
1996 1997 1998 1999 1999
------------ -------- -------- -------- ------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues............................. $ 35,755 $ 50,775 $ 54,087 $ 60,145 $ 56,354
Direct costs......................... 25,209 37,076 39,196 44,359 42,210
-------- -------- -------- -------- --------
Gross margin......................... 10,546 13,699 14,891 15,786 14,144
General and administrative
expenses........................... 7,568 11,073 14,972 10,236 11,585
Depreciation and amortization........ 2,567 4,951 5,443 5,027 4,984
-------- -------- -------- -------- --------
Operating income (loss).............. 411 (2,325) (5,524) 523 (2,425)
Other income (expense)............... 87 (4,311) (21,458) (5,163) (282)
-------- -------- -------- -------- --------
Income (loss) from continuing
operations......................... $ 498 $ (6,636) $(26,982) $ (4,640) $ (2,707)
======== ======== ======== ======== ========
BALANCE SHEET DATA
(DECEMBER 31, 1999)
Cash................................. $ 3,378 $ 7,680
Working capital...................... (30,144) (4,779)
Fixed assets......................... 13,705 13,320
Goodwill............................. 43,344 43,498
Total assets......................... 76,176 76,662
Total liabilities.................... 84,407 18,012
Total stockholders' equity
(deficiency)....................... (8,230) 58,650
OTHER
Cash provided by (used in)
Operating activities............... $ 297 $ (762) $ (5,610) $ 4,478 $ 3,225
Financing activities............... 45,360 35,248 18,943 666 --
Investing activities............... (45,040) (34,228) (13,135) (2,863) (3,262)
Gross collections.................... 126,458 172,729 173,925 177,833 172,670
EBITDA............................... 2,978 2,626 (81) 5,550 2,559
</TABLE>
Other income (expense) principally includes gains or losses on the sale or
write-downs of assets, other interest expense and income taxes. In the year
ended December 31, 1998, other income (expense) included a write-down of
goodwill of $15.0 million. Please see "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
7
<PAGE> 12
The gross collections amount represents the aggregate cash collected from
the revenue generating activities of our operations that will be continuing
subsequent to the Distribution for the periods presented. It includes revenues
reported under generally accepted accounting principles as well as collections
made on parking facilities for which we have management contracts. Gross
collections are not a measure under generally accepted accounting principles and
are not an alternative to revenues or cash flows. Gross collections are
significant to an understanding of the operations of the predecessor entities to
Impark because:
- Management uses gross collections as a key indicator of its business
opportunities;
- Gross collections demonstrates the magnitude of our historical business
activities;
- Management contract revenues are partly based on the level of gross
collections; and
- Management decisions on the allocation of resources among its business
activities is in part based on the level of gross collections.
EBITDA equals operating income as shown in the table above, plus
depreciation and amortization expense. EBITDA is included because management
believes that it is a useful tool for measuring our ability to generate cash
flow from operations. EBITDA does not represent cash flow from operations, is
not a measure under generally accepted accounting principles and should be
considered together with the other financial information included in this table
and presented elsewhere in this Information Statement. EBITDA measures as
presented may not be comparable to similarly titled measures of other entities.
The adjusted pro forma financial data does not give effect to any
additional costs that we may incur due to being a public company or a registrant
with the SEC.
8
<PAGE> 13
THE DISTRIBUTION
INTRODUCTION
On March 7, 2000 (the "Declaration Date"), the First Union board of
trustees declared a dividend of one share of Impark common stock for every 20
First Union shares held of record on March 20, 2000. On March 27, 2000, First
Union will effect the Distribution by delivering all of the issued and
outstanding shares of Impark common stock to the distribution agent for transfer
and distribution to the holders of record of First Union shares on March 20,
2000. We expect that certificates representing shares of Impark common stock
will be mailed to First Union shareholders on or about March 27, 2000. As a
result of the Distribution, 100% of the outstanding shares of Impark common
stock will be distributed to First Union shareholders.
First Union shareholders of record with inquiries relating to the
Distribution should contact the distribution agent, by telephone at (800)
622-6757 or First Union in writing at First Union Real Estate Equity and
Mortgage Investments, 551 Fifth Avenue, Suite 1416, New York, NY 10176-1499,
Attention: Brenda Mixson, Chief Financial Officer.
REASONS FOR THE DISTRIBUTION
First Union is a real estate investment trust, or REIT. It manages and owns
real estate. First Union's affiliate, FUMI, through its subsidiaries, is an
operating company primarily engaged in managing real estate through management
contracts and leases. Adolph Posnik, one of FUMI's three directors, is the
trustee of the trust that holds all of the shares of FUMI for the sole benefit
of the First Union shareholders. This type of arrangement is commonly referred
to as a stapled REIT. In April 1997, as part of a strategy to grow its
management business and to assist First Union in managing parking properties
which it owned, FUMI acquired the parking services and ancillary businesses of
Impark Holdings, Inc. Impark Holdings, through its operating subsidiaries, was a
major provider of parking services in Canada as well as an owner of parking
properties. After FUMI acquired the parking services businesses of Impark
Holdings, First Union purchased the parking properties of Impark Holdings.
In July 1998 the United States enacted tax legislation which posed certain
limitations on the activities of stapled REITs with respect to properties
acquired or committed to be acquired after March 26, 1998. The new legislation
made it likely that the income from new lease transactions and new capital
investments made by FUMI would be non-qualified income attributed to First
Union. First Union will not be able to maintain its tax status as a REIT if it
has exceeded a prescribed percentage of non-qualified income. If First Union
does not qualify as a REIT, it could be subject to substantial additional
taxation. The First Union board of trustees and management were concerned about
the new legislation at the time it was enacted. They did not immediately take
action with respect to the legislation for several reasons. First, the current
trustees of First Union were appointed only a brief time before the enactment of
the new legislation and the newly appointed senior executives of First Union
were not in place until November 1998. In addition, this new team operating
First Union concentrated their efforts during the period from mid-1998 to
mid-1999 on restructuring existing debt of First Union, selling a number of
properties and conducting a rights offering.
After completing those important tasks, they turned their attention to
determining what, if any, steps should be taken to address the effects of the
new legislation, as well as to the more general strategic question of whether
First Union should maintain its investment in the Imperial Parking business.
First Union hired several brokers to explore the potential sale of various
assets. This process resulted in the sale of a number of individual assets of
First Union, primarily shopping malls, office buildings and apartment complexes.
With the approval of the FUMI board, the Impark assets were marketed for sale as
part of this sales program. The marketing effort did not produce a sales
proposal acceptable to management and the Impark assets were not sold at that
time.
In the fall of 1999 the First Union board directed management to prepare a
feasibility study with respect to the possible liquidation of the assets of
First Union and the spin-off to shareholders of an entity
9
<PAGE> 14
owning the Imperial Parking assets. The board of FUMI acknowledged the
advisability of restructuring the relationship with First Union as respects the
Imperial Parking assets and approved the feasibility study with respect to the
Imperial Parking assets. First Union and FUMI engaged a financial advisor to
assist in this examination. The feasibility study took the following factors,
among others, into account:
- the amount and nature of distributions to shareholders;
- tax and REIT qualification considerations; and
- other relevant legal and business considerations.
Management then presented two alternatives to the boards:
- adoption by First Union, FUMI and other affiliated companies of plans of
settlement and reorganization which would result in a single entity
owning the Imperial Parking assets of First Union and FUMI, the shares
of which would be distributed to the shareholders of First Union; or
- transferring the real estate assets of First Union to a separate
company, the shares of which would be distributed to the First Union
shareholders (under this alternative, the Imperial Parking assets would
be consolidated in First Union, which would ultimately be converted from
a REIT to a subchapter "C" corporation).
After consideration of the various factors involved, including the
importance of the maintenance of the REIT status of First Union and the federal
tax effects of transferring the real estate assets of First Union, and after
consultation with its professional advisors, the First Union board concluded
that it would be in the best interests of First Union's shareholders to combine
the parking services business operated by FUMI with the parking properties in
Canada owned by First Union and then distribute the stock of that corporation to
the beneficiaries of First Union. The FUMI board determined that it would be in
the best interests of the FUMI shareholders to approve the plan adopted by the
First Union board and approved such plan.
The First Union board believes that the Distribution will benefit both
First Union and Impark in several ways:
- It will improve each company's access to capital. With respect to First
Union, REIT investors generally prefer to invest in real estate assets,
and the parking management business is inconsistent with this
preference. Imperial Parking will benefit in two ways. As a subchapter
"C" corporation it will not be constrained by REIT rules requiring that
95% of its annual income be distributed to shareholders and, therefore,
will be able to provide capital for operations and future growth in part
from internally generated funds. Also, as an independent entity it is
able to provide a clear, uncomplicated business plan to prospective
investors.
- It will focus the management and employees of each company on the
performance of their respective businesses.
- It will provide management incentives linked to the objective
performance of each company's shares in the public markets.
PRE-DISTRIBUTION TRANSACTIONS
While considering the possibility of the Distribution, First Union and FUMI
developed a plan for the organization and funding of Impark as an independent
company. The goal of the plan was to create a parking services company with a
sound financial footing and the capacity to grow. The key aspects of this plan
are described below.
Hire New Management Team. In early 1999, Charles E. Huntzinger was hired
to be president and chief executive officer of the businesses that would become
Impark and Bryan L. Wallner was hired to serve those businesses as senior
vice-president for operations. These individuals have substantial experience in
the parking services industry. They, along with chief financial officer J. Bruce
Newsome, have had key
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roles in planning the organization of Impark, including the dispositions of
businesses and the provision of financing resources described below.
Dispose of Businesses. While planning Impark's organization, the new
management team determined that it was necessary to streamline the company's
operations by disposing of entities that were not part of its core business.
This included the disposal of the security business, equipment business and the
non-North American parking operations. In addition, Robbins Parking Service,
Ltd. was sold as part of the termination settlement with the former President
and CEO of Impark.
- Inner-Tec Security Consultants Ltd., a security business, was sold in
June 1999. The sale was made to a former executive officer of Impark's
predecessor and formed part of the terms of the settlement of severance
obligations. In the financial information in this Information Statement
results of operations of Inner-Tec have been recorded as discontinued
operations in the FUMI Parking Business for all periods presented.
Please see "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for a description of the FUMI Parking
Business. Inner-Tec was recorded as a discontinued operation in the FUMI
Parking Business and therefore no revenue has been recorded. Inner-Tec
earned net income of $0.2 million for 1999 and $0.1 million for 1998.
- Imperial Parking (Asia) Ltd., an Asian parking business, was sold in
September 1999. The sale was to an unrelated party. The financial
condition and operating results of this business have been eliminated
from the Pro Forma Consolidated and Combined Financial Statements as
part of "Businesses sold" to form the Adjusted Pro Forma Combined
Statement of Operations. Asia represented 3.3% of revenues for 1999 and
4.3% for 1998 and represented 0.2% of net loss for 1999 and 0.3% for
1998 in the FUMI Parking Business Financial Statements.
- VenTek International, Inc., a parking equipment distributorship, was a
subsidiary of one of Impark's predecessors. That Impark predecessor was
an indirect subsidiary of FUMI. The Impark predecessor is selling VenTek
to FUMI prior to the Distribution. VenTek was recorded as a discontinued
operation in the FUMI Parking Business and therefore no revenue has been
recorded. VenTek represented 25.8% of net loss for 1999 and 6.5% for
1998 in the FUMI Parking Business Financial Statements.
- Robbins Parking Services Ltd., a parking subsidiary, was sold in April
1999. The sale was made to the former president and chief executive
officer of one of Impark's predecessors and formed an important part of
the settlement of severance obligations. As Robbins did not meet
generally accepted accounting principles requirements to be a
discontinued operation, its results are included in the FUMI Parking
Business in all periods presented. The operating results of Robbins were
eliminated for all periods from the Pro Forma Combined Statement of
Operations as part of "Businesses sold" to form the Adjusted Pro Forma
Combined Statement of Operations. Robbins represented 1.2% of revenue in
1999 and 4.1% in 1998, and its operations and related adjustments
contributed to the FUMI Parking Business net income in the amount of
$1.9 million in 1999 and represented 8.1% of the net loss in 1998
disclosed in the FUMI Parking Business Financial Statements.
Combine First Union Properties in Canada with FUMI Parking and Other
Businesses. Immediately prior to the Distribution, First Union and FUMI will
implement a series of transactions which will result in the parking services and
other business of FUMI being combined with the parking properties in Canada
owned by First Union. These assets will be held in Impark or its subsidiaries.
Impark will be a wholly-owned subsidiary of First Union until the Distribution.
Eliminate Debt and Provide Working Capital. In order to place Impark on
sound financial footing, First Union and FUMI will take a number of actions
prior to the Distribution, as follows:
- A subsidiary of First Union will purchase the credit facilities of
entities within the FUMI Parking Business with HSBC Bank Canada and
Deutsche Bank Canada for cash consideration. The cash will be
contributed to the First Union subsidiary by First Union in
consideration for common
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shares. The credit facilities are estimated to have a balance of
approximately $23.5 million at closing. The common shares to be given as
consideration for the repayment will be of a predecessor of Impark.
Through the plan of reorganization and distribution those shares will
become part of the approximately 2.1 million shares of Impark being
distributed pursuant to this Information Statement. The repayment and
issuance of shares have been recorded in the Pro Forma Consolidated
Balance Sheet and the related interest on long-term debt and bank
indebtedness has been eliminated from the Pro Forma Combined Statement of
Operations.
- Since the acquisition of the parking properties and business of Impark
Holdings, Inc. by First Union and FUMI, there have been a series of
loans and transactions between First Union, FUMI, the FUMI Parking
Business and the FUR Parking Business. Please see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" for a description of the FUR Parking Business. The loans and
the other amounts of approximately $40.0 million are to be extinguished
as part of the combination of the FUMI Parking Business and the FUR
Parking Business. The debt extinguished and common shares issued have
been recorded in the Pro Forma Combined Balance Sheet. The common shares
to be given as consideration for the extinguishing of loans and other
amounts will be of a predecessor of Impark. Through the plan of
reorganization and distribution those shares will become part of the
approximately 2.1 million shares of Impark being distributed pursuant to
this Information Statement. The interest expense and income between
related parties have been eliminated from the Pro Forma Combined
Statement of Operations. In addition, management fee income earned by
Impark on U.S. properties leased to FUMI by First Union has been
eliminated from the Pro Forma Combined Statement of Operations for all
periods as this fee will not continue to be earned subsequent to the
Distribution.
- First Union will contribute up to $7.0 million in cash in consideration
for common shares of Impark. Of this amount, $2.0 million will be
restricted cash to be utilized to repay a tax liability discussed in
note 16(c)(i) to the FUMI Parking Business Financial Statements. The
$7.0 million has been included in cash and stockholders' equity in the
Pro Forma Consolidated and Combined Financial Statements of Impark.
- First Union will provide a secured line of credit to Impark in the
amount of $8.0 million. See "Liquidity and Capital Resources" for more
information on the First Union line of credit.
- First Union will contribute its interest in a limited liability company,
the members of which are an entity within the FUMI Parking Business and
First Union, to develop approximately 4,900 parking spaces for the new
San Francisco Giants baseball park, "Pacific Bell Park" to Impark. The
First Union investment in the limited liability company will be up to
$6.7 million. In addition, the FUMI Parking Business expects to invest
$1.1 million in this limited liability company. At December 31, 1999,
$1.3 million was invested in the limited liability company by First
Union and is included in other assets in the Pro Forma Consolidated
Balance Sheet of Impark. Because operation of the lot commences in 2000,
no results from operations have been recorded in the Pro Forma Combined
Statement of Operations.
- First Union will indemnify Impark for any liability resulting from an
existing legal dispute regarding a software contract between an Impark
subsidiary and Oracle. The liabilities on the books of Impark relating
to this litigation have been eliminated from the Pro Forma Consolidated
and Combined Financial Statements of Impark.
- First Union will indemnify Impark for any liability which may arise from
$11.5 million of performance bonds for the manufacture and installation
of transit equipment as described in note 16(c)(ii) to the FUMI Parking
Business on page F-27.
Taken together, these pre-distribution transactions make up a complicated
series of steps and we may encounter difficulties in implementing them. For
example, the pre-distribution transactions will require coordinating the efforts
of many entities. Also, we will have to obtain approval from various Canadian
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regulatory bodies. Finally, there may be adverse tax consequences to First Union
in the event that we are unable to complete these transactions in a timely
manner.
MANNER OF EFFECTING THE DISTRIBUTION
We expect that the date of the Distribution will be March 27, 2000. At the
time of the Distribution, First Union will deliver share certificates for Impark
common stock to the distribution agent. The distribution agent will then begin
mailing the share certificates to holders of First Union shares as of the March
20, 2000 record date. The Distribution consists of one share of Impark common
stock for every 20 First Union shares held on the record date. We will not issue
certificates representing fractional shares of Impark common stock in connection
with the Distribution. Instead, the distribution agent will (a) aggregate all
fractional shares of common stock which would otherwise be issuable in
connection with the Distribution, (b) sell those shares in the open market for
cash and (c) mail to each First Union shareholder, in lieu of the fractional
share the shareholder would otherwise receive, a check in an amount equal to the
shareholder's pro rata share in the aggregate amount received for such shares.
Prior to the Distribution, inquiries relating to the Distribution should be
directed to the distribution agent at National City Bank, Corporate Trust
Operations, 3rd Floor, North Annex, Location 5352, 4100 West 150th Street,
Cleveland, Ohio 44135-1385, or by telephone at (800)622-6757, Monday through
Friday, 9:00 a.m. to 5:00 p.m. (Cleveland Time). After the Distribution,
inquiries may be directed to the distribution agent or Impark Investor
Relations, at Suite 300, The Station, 601 West Cordova Street, Vancouver,
British Columbia, VGB 1G1, (604) 681-7311, Attention: Mr. Bruce Newsome, Monday
through Friday, 9:00 a.m. to 5:00 p.m. (Vancouver Time).
NO HOLDER OF FIRST UNION SHARES WILL BE REQUIRED TO MAKE ANY PAYMENT FOR
THE SHARES OF IMPARK COMMON STOCK TO BE RECEIVED IN THE DISTRIBUTION OR TO
SURRENDER OR EXCHANGE FIRST UNION SHARES OR TO TAKE ANY OTHER ACTION IN ORDER TO
RECEIVE IMPARK COMMON STOCK TO WHICH SUCH HOLDER IS ENTITLED IN THE
DISTRIBUTION.
FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
Introduction. The following is a summary of the material U.S. federal
income tax considerations associated with the Distribution. This discussion is
based upon the laws, regulations and reported rulings and decisions in effect as
of the date of this Information Statement, all of which are subject to change,
retroactively or prospectively, and to possibly differing interpretations. This
discussion does not purport to deal with the federal income or other tax
consequences applicable to all investors in light of their particular
circumstances or to all categories of investors, some of whom may be subject to
special rules (including, for example, insurance companies, tax-exempt
organizations, financial institutions, broker-dealers, foreign corporations,
persons who are not citizens or residents of the United States, shareholders who
hold their shares as part of a hedge, appreciated financial position straddle or
conversion transaction and beneficiaries who do not own their shares as a
capital asset). In addition, this discussion does not address any state, local
or foreign considerations that may be relevant to particular investors. No
ruling on the federal, state or local tax considerations relevant to the
operation of First Union or Impark or to the Distribution is being requested
from the Internal Revenue Service or from any other tax authority.
ALL FIRST UNION SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS
TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION TO THEM, INCLUDING THE
APPLICATION OF STATE, LOCAL AND FOREIGN TAX LAWS.
Taxation of Impark. Impark will not seek to qualify for taxation as a real
estate investment trust. Accordingly, Impark will be taxed as a C corporation,
subject to regular corporate income tax rates.
Income Recognition by First Union as a Result of the Distribution. At the
time of the Distribution, First Union will recognize gain on the Distribution to
the extent that the value of the Impark common
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stock distributed by First Union exceeds the basis that First Union has in such
stock. The gain, if any, will increase First Union's earnings and profits. First
Union will realize loss on the Distribution to the extent that the value of the
Impark common stock distributed by First Union is less than the basis that First
Union has in such stock. Although no deduction would be allowable for any such
loss, First Union would be able to currently reduce its earnings and profits by
the amount of the loss. First Union will make a determination of the fair market
value of the Impark common stock as of the date of the Distribution with
reference to all relevant facts and circumstances at such time. If the Impark
common stock is immediately tradable, the most relevant fact for establishing
its value will likely be the trading price immediately following the
Distribution. There can be no assurance that the Internal Revenue Service or the
courts will agree with the value determined by First Union.
First Union's tax basis in the Impark common stock at the time of the
Distribution is expected to generally equal the sum of the fair market value of
the parking services and ancillary businesses acquired from FUMI and First
Union's tax basis in the parking properties that are contributed to Impark.
Recent appraisals of the parking properties indicate that they have an aggregate
value approximately equal to their aggregate tax basis. Accordingly, we expect
that the basis that First Union has in the Impark common stock at the time of
the Distribution will substantially equal the value of such stock so that little
gain or loss will be recognized by First Union on the Distribution. However, as
previously mentioned, the determination of the fair market value of assets or
businesses is dependant on all relevant facts and circumstances, and no
assurances can be given that the Internal Revenue Service will agree with the
values determined by First Union.
Taxation of Taxable Domestic Shareholders of First Union as a Result of the
Distribution. The Distribution will be treated as a distribution the amount of
which is equal to the value of the Impark common stock distributed plus any cash
in lieu of fractional shares.
Provided First Union qualifies as a REIT under Sections 856 through 860 of
the Internal Revenue Code in the year of the Distribution, the portion of the
Distribution made to First Union's taxable U.S. shareholders out of First
Union's current or accumulated earnings and profits (including earnings and
profits attributable to any gain realized by First Union as a result of the
Distribution as discussed above under "Income Recognition by First Union as a
Result of the Distribution") will be taken into account by such U.S.
shareholders as ordinary income except to the extent First Union designates a
portion of the dividend as a capital gain dividend under the applicable REIT
rules (not to exceed the amount of capital gains recognized by First Union
during 2000). For corporate shareholders, any dividend from First Union will not
be eligible for the dividends-received deduction. Any portion of the
Distribution in excess of current and accumulated earnings and profits allocable
to the Distribution will not be taxable to a First Union shareholder to the
extent that such portion does not exceed the adjusted basis of the shareholder's
First Union shares, but rather will reduce the shareholder's adjusted basis of
such shares. To the extent that the amount of the Distribution exceeds First
Union's current and accumulated earnings and profits and exceeds the adjusted
basis of a shareholder's First Union shares, the excess will be included in
income as capital gain (taxable at the short-term or long-term rates depending
on the period of time that the shareholder has held the shares) assuming the
shares are a capital asset in the hands of the shareholder.
To the extent that First Union designates a portion of the Distribution as
a capital gain dividend, such portion will be taxable to First Union
beneficiaries as gain from the sale of a capital asset held for more than one
year, without regard to the period for which the shareholder has held its First
Union common shares. U.S. beneficiaries that are corporations, however, may be
required to treat up to 20% of certain capital gain dividends as ordinary
income.
The REIT qualification requirements are complicated. Moreover, the
determination of whether an entity satisfies such requirements is made as of the
end of the entity's taxable year. Accordingly, the determination of whether
First Union will qualify as a REIT for 2000 cannot be made until December 31,
2000. In the event that First Union does not qualify as a REIT for 2000, the
portion of the Distribution made to First Union's taxable U.S. shareholders out
of First Union's current or accumulated earnings and
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profits (including any earnings and profits attributable to gain realized by
First Union as a result of the Distribution as discussed above under "Income
Recognition by First Union as a Result of the Distribution") will be taken into
account by each such U.S. shareholders as ordinary income, and, for corporate
shareholders, would be eligible for the dividends received deduction. Any
portion of the Distribution in excess of current and accumulated earnings and
profits will not be taxable to the shareholder to the extent that such portion
does not exceed the adjusted basis of the shareholders's First Union shares, but
rather will reduce the shareholders's adjusted basis in such shares. To the
extent that the amount of the Distribution exceeds First Union's current and
accumulated earnings and profits and exceeds the adjusted basis of a
shareholder's First Union shares, the excess will be included in income as
capital gain (taxed at the short-term or long-term rates depending on the period
of time that the beneficiary has held the shares) assuming the shares are a
capital asset in the hands of the shareholder.
First Union beneficiaries will receive a basis in Impark common stock equal
to the value thereof at the time of the Distribution. A First Union
beneficiary's holding period in the Impark common stock will not include any
period during which such stock was held by First Union.
Taxation of Tax-Exempt Shareholders of First Union as a Result of the
Distribution. Most tax-exempt employees' pension trusts are not subject to
federal income tax except to the extent of their receipt of "unrelated business
taxable income," or UBTI, as defined in Section 512(a) of the Internal Revenue
Code. The Distribution to a First Union shareholder that is a tax-exempt entity
should not constitute UBTI, provided that the tax-exempt entity has not financed
the acquisition of its First Union common shares with "acquisition indebtedness"
within the meaning of the Internal Revenue Code and the First Union common
shares are not otherwise used in an unrelated trade or business of the
tax-exempt entity. In addition, certain pension trusts that own more than 10% of
a "pension-held REIT" must report a portion of the dividends that they receive
from such a REIT as UBTI. First Union has not been and does not expect to be
treated as a pension-held REIT for purposes of this rule. In the event that
First Union does not qualify as a REIT for 2000, the tax consequences of the
Distribution to First Union's tax-exempt shareholders will be the same as
described above.
Taxation of Foreign Shareholders of First Union as a Result of the
Distribution. The rules governing U.S. federal income taxation of nonresident
alien individuals, foreign corporations, foreign partnerships and other foreign
shareholders, whom we refer to collectively as non-U.S. shareholders, are
complex, and no attempt will be made in this Information Statement to provide
more than a summary of such rules. Non-U.S. shareholders should consult with
their own tax advisors to determine the impact of federal, state, local and
foreign tax laws with regard to the Distribution, including any reporting
requirements. In general, as is the case with domestic taxable shareholders of
First Union, the Distribution is treated as a distribution the amount of which
is equal to the value of the Impark common stock distributed plus any cash in
lieu of fractional shares, and non-U.S. shareholders will receive a basis in
Impark common stock equal to the fair market value thereof at the time of the
Distribution.
The Distribution will be treated as an ordinary income dividend to the
extent that it is made out of current and accumulated earnings and profits of
First Union and is neither attributable to gain from sale or exchange by First
Union of U.S. real property interests nor designated by First Union as a capital
gain dividend. The portion of the Distribution that will be treated as an
ordinary income dividend ordinarily will be subject to a withholding tax equal
to 30% of the gross amount thereof, unless an applicable tax treaty reduces or
eliminates that tax. First Union expects to withhold U.S. income tax at the rate
of 30% on the gross amount of the Distribution made to a non-U.S. shareholder
unless (i) a lower treaty rate applies and the non-U.S. shareholder has filed
the required IRS Form 1001 with First Union or (ii) the non-U.S. shareholder
files an IRS Form 4224 with First Union claiming that the Distribution is
effectively connected with the non-U.S. shareholder's conduct of a U.S. trade or
business. The portion of the Distribution that is in excess of First Union's
current and accumulated earnings and profits allocable to the Distribution will
be subject to a 10% withholding requirement but will not be taxable to a
shareholder to the extent that such excess does not exceed the adjusted basis of
the shareholder's First Union common shares, but rather will reduce the adjusted
basis of such shares. To the extent that the portion of the
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Distribution in excess of current and accumulated earnings and profits allocable
to the Distribution exceeds the adjusted basis of a non-U.S. shareholder's
shares, the Distribution will give rise to tax liability if the non-U.S.
shareholder would otherwise be subject to tax on any gain from the sale or
disposition of the First Union common shares.
Provided that First Union is a "domestically-controlled REIT" for federal
income tax purposes, a non-U.S. shareholder would be subject to taxation on gain
from the sale or disposition of First Union common shares only if (i) the
investment in the First Union common shares were treated as effectively
connected with the non-U.S. shareholder's U.S. trade or business, in which case
the non-U.S. shareholder would be subject to the same treatment as U.S.
shareholders with respect to such gain, or (ii) the non-U.S. shareholder were a
nonresident alien individual who was present in the United States for 183 days
or more during the taxable year and either the individual has a "tax home" in
the United States or the gain is attributable to an office or other fixed place
of business maintained by the individual in the United States, in which case the
gain would be subject to a 30% tax. We believe that First Union is and will
continue to be a domestically-controlled REIT.
As First Union will not be able to determine, at the time that the
Distribution is made, the portion of the distribution, if any, that will be in
excess of the current and accumulated earnings and profits, the Distribution
will be subject to withholding as though the entire distribution (apart from any
portion designated as a capital gain dividend) were an ordinary income dividend.
However, a non-U.S. shareholder may seek a refund of such amounts from the
Internal Revenue Service if it is subsequently determined that a portion of the
distribution was, in fact, in excess of First Union's current and accumulated
earnings and profits.
It is possible that the Impark common stock may constitute a U.S. real
property interest if 50% or more of the fair market value of Impark's assets
constitute interests in real property located in the United States. To the
extent that a portion of the Distribution were to be treated as attributable to
gain upon the disposition of a U.S. real property interest, a non-U.S.
shareholder would be subject to tax on such portion as though it were gain that
was effectively connected with a United States trade or business of such
non-U.S. shareholder. Thus, non-U.S. shareholders would be taxed on such portion
of the Distribution at the normal capital gain rates applicable to U.S.
shareholders. First Union is required under applicable Treasury Regulations to
withhold 35% of any distribution to a non-U.S. shareholder that could be
designated by First Union as a capital gain dividend. The amount so withheld is
creditable against the non-U.S. shareholder's U.S. tax liability and the
non-U.S. shareholders may seek a refund to the extent the amount withheld
exceeds such non-U.S. shareholders U.S. tax liability.
In the event that First Union does not qualify as a REIT for 2000, the
Distribution will be treated as an ordinary income dividend to the non-U.S.
shareholder to the extent that it is made out of current and accumulated
earnings and profits of First Union. Any portion of the Distribution in excess
of First Union's current and accumulated earnings and profits will not be
taxable to the non-U.S. shareholder to the extent that such excess does not
exceed the adjusted basis of such beneficiary's First Union common shares, but
rather will reduce the adjusted basis of such shares. To the extent that the
portion of the Distribution in excess of current and accumulated earnings and
profits exceeds the adjusted basis of a non-U.S. shareholder's shares, the
Distribution will give rise to a tax liability if the non-U.S. shareholder would
otherwise be subject to tax on any gain from the sale or disposition of the
First Union common shares.
A non-U.S. shareholder would be subject to taxation on gain from the sale
or disposition of First Union common shares only if (i) the First Union common
shares were treated as a United States real property interest, (ii) the
investment in the First Union common shares were treated as effectively
connected with the non-U.S. shareholder's U.S. trade or business, in which case
the non-U.S. shareholder would be subject to the same treatment as U.S.
shareholder's with respect to such gain, or (iii) the non-U.S. shareholder were
a nonresident alien individual who was present in the United States for 183 or
more days during the taxable year and either the individual has a "tax home" in
the United States or the gain is attributable to an office or other fixed place
of business maintained by the individual in the United States,
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in which case the gain would be subject to a 30% tax. We believe that the First
Union common shares would be a United States real property interest. The
Distribution would be subject to withholding in the same manner as described
above.
Amounts required to be withheld from payments to non-U.S. shareholders will
be collected by converting a portion of the Impark common stock to be
distributed into cash.
LISTING AND TRADING OF IMPARK COMMON STOCK
There is currently no public market for Impark common stock. Although we
currently expect to list the Impark common stock on the American Stock Exchange
following the Distribution, there can be no assurance that a regular trading
market in Impark common stock will develop or, if a public market develops, will
be sustained or provide liquidity.
At the time of the Distribution, Impark will have approximately 9,000
stockholders, based on the number of beneficiaries of First Union shares on the
record date. The transfer agent and registrar for the Impark common stock will
be National City Bank.
SHARES AVAILABLE FOR FUTURE SALE
Impark common stock issued in the Distribution will be freely transferable,
except for securities received by persons who may be deemed to be "affiliates"
of Impark under the Securities Act. Persons who may be deemed to be affiliates
of Impark after the Distribution generally include individuals or entities that
control, are controlled by, or are under common control with Impark and include
directors and executive officers, as well as principal stockholders of Impark.
Persons who are affiliates of Impark will be permitted to sell their shares of
Impark common stock only pursuant to an effective registration statement under
the Securities Act or an exemption from the registration requirements of the
Securities Act. Impark is not able to predict whether substantial amounts of
Impark common stock will be sold in the open market following the Distribution.
Sale of substantial amounts of Impark common stock in the public market, or the
perception that such sales might occur, could adversely affect the market price
of Impark common stock.
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RISK FACTORS
You should carefully consider the risks described below and the other
information in this document, including our financial statements and related
notes. The risks and uncertainties described below are not the only ones we
face. Additional risks and uncertainties, including those not presently known to
us or that we currently deem immaterial, may also impair our business.
If any of the following risks actually occur, our business, financial
condition and future operating results could be adversely affected. The trading
price of Impark common stock could decline due to any of these risks, and you
could lose all or part of your investment. This document contains
forward-looking statements that involve risks, uncertainties and assumptions.
These statements relate to our beliefs, intentions, plans and strategies
regarding the future. These forward-looking statements are usually accompanied
by words such as "intends," "believes," "anticipates," "plans," "expects" and
similar expressions. Our actual results may differ materially from the results
discussed in the forward-looking statements because of factors discussed below
and elsewhere in this Information Statement.
WE HAVE A HISTORY OF LOSSES AND MAY NOT BE PROFITABLE IN THE FUTURE
We have incurred both historical and pro forma net losses in every fiscal
period since 1996. We cannot be certain when we will become profitable, if at
all. Failure to achieve profitability may adversely affect the market price of
our common stock. Even if we do achieve profitability, we cannot assure you that
we can sustain or increase profitability on a quarterly or annual basis.
WE MAY NOT BE ABLE TO RETAIN OUR MANAGEMENT CONTRACTS AND LEASES
Approximately 20 of our 1,405 management contracts and leases may be
cancelled by the owner in the event of a change of control. It is possible that
some of the third parties with whom we have management contracts and leases may
seek to characterize the Distribution as a change of control. If most or all of
the third parties with the right to terminate management contracts and leases in
the event of a change of control chose to terminate or renegotiate those
agreements and were successful in asserting that the Distribution is a change of
control, our business would be harmed.
OUR GROWTH STRATEGY MAY NOT SUCCEED
As part of our business strategy, we intend to pursue acquisitions of other
parking operators. In executing our acquisition strategy, we may be unable to
identify suitable acquisition candidates. In addition, we expect to face
competition from other parking providers for acquisition candidates, making it
more difficult to acquire suitable companies on favorable terms. If we pursue
any acquisition, our management could spend a significant amount of time and
effort in identifying and completing the acquisition. If we complete an
acquisition, we may have to devote a significant amount of management resources
to integrating the acquired business with our existing business. An acquisition
might not produce the revenue or earnings that we anticipated, and an acquired
operation may not perform as expected. Accordingly, our acquisition efforts may
not succeed. In addition, from an accounting perspective, an acquisition may
result in non-recurring charges or involve amortization of significant amounts
of goodwill that could adversely affect our operating results.
To pay for an acquisition, we might use capital stock or cash.
Alternatively, we might borrow money from a bank or other lender. If we use
capital stock, our stockholders may experience dilution. If we use cash or debt
financing, our financial liquidity would be reduced. We cannot be certain that
we will have sufficient access to capital to permit us to implement our
acquisition strategies.
SEVERE WINTER WEATHER MAY ADVERSELY AFFECT OUR BUSINESS
The parking business depends on the free flow of vehicular traffic. Severe
winter weather conditions in Canada and the northern United States could close
or significantly slow roadways. This, in turn, may harm
18
<PAGE> 23
our business and adversely effect our cash flow by reducing the demand for
parking and increasing our snow removal costs.
OUR MANAGEMENT TEAM IS NEW AND MAY NOT BE ABLE TO PERFORM SUCCESSFULLY
The current management structure and the senior management team of Impark
have been in place for a relatively short time. Mr. Huntzinger, the president
and chief executive officer, began his employment in January 1999. Mr. Wallner,
the senior vice president, operations, began his employment in March 1999. These
individuals have not, therefore, been significantly involved in other than the
most recent operating history of Impark. Our future success depends in large
part on the successful and continued service of our key management personnel.
CHANGES IN PRIVACY LEGISLATION COULD HARM OUR BUSINESS BY MAKING COLLECTIONS
MORE DIFFICULT AND COSTLY
City Collections, an Impark subsidiary, identifies vehicle owners through
searches based on license plate numbers. The license plate data are maintained
by each province. Although most provinces have enacted privacy legislation
regulating access to such data, City Collections has entered into access
agreements with several provinces. Should more restrictive privacy legislation
be enacted it could adversely affect City Collections' business. In addition,
fees charged for searches of motor vehicle registration are also set by
provincial governments and any increase in these fees will have an adverse
effect on City Collections' business.
AN INCREASE IN THE COST OF INSURANCE CLAIMS COULD INCREASE OUR COSTS
We typically have a large number of small property or personal injury
claims. We have insurance to cover the cost of these claims, to the extent such
costs exceed a deductible. However, a major increase in the number and cost of
claims to the insurance company could significantly increase the amount that we
pay to insure against these claims.
CURRENCY FLUCTUATIONS COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS
While our consolidated financial statements are prepared in United States
dollars, most of our operations are conducted in Canadian dollars. Fluctuations
in exchange rates may have a material adverse effect on our financial results,
particularly our operating margins, and could also result in exchange losses. To
date we have not sought to hedge these risks, but may undertake hedging
transactions in the future. We cannot be certain, however, that any hedging
techniques would be successful in preventing or limiting the adverse financial
effects of exchange rate fluctuations.
WE FACE RISKS ASSOCIATED WITH ENVIRONMENTAL REGULATIONS
Various federal, state, provincial and local environmental laws and
regulations impose liabilities on a current or previous owner or operator of
real property for the cost of removal or remediation of hazardous or toxic
substances on the property. These laws typically impose liability without regard
to whether the owner or operator knew of, or was responsible for, the presence
of the hazardous or toxic substances. In connection with our ownership or
operation of parking facilities, we may be potentially liable for such costs.
Although we are currently not aware of any material environmental claims pending
or threatened against us or any of our owned or operated parking facilities, we
cannot give any assurance that a material environmental claim will not be
asserted against us or against our owned or operated parking facilities. We
could face significant costs in defending against claims of liability or in
remediating a contaminated property.
AN INCREASE IN GOVERNMENT REGULATION OR TAXATION COULD HARM OUR BUSINESS
The parking business is subject to a significant degree of government
regulation. The regulations include potentially costly matters such as requiring
improvements to meet civic by-laws, worker's
19
<PAGE> 24
compensation regulations and, labor standards, as well as environmental and
other potentially costly legislation. Any new or increased levels of regulation
could adversely impact our business.
The parking industry is also subject to increased taxation from the various
levels of government. Historically, it has been considered as an environmentally
unfriendly industry due to its primary purpose, which is to park automobiles
driven into downtown business districts. Consequently the parking industry has
been the subject of significant taxation including federal and provincial sales
taxes, property taxes, business taxes and federal and provincial/state income
taxes. Our business will be adversely affected by any significant new tax
legislation or increased levels of taxation.
Various other governmental regulations affect our operation of parking
facilities, both directly and indirectly, including air quality laws, licensing
laws and the Americans with Disabilities Act of 1990. 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 we
believe that the parking facilities we own and operate are in substantial
compliance with these requirements, a determination that we or the facility
owner is not in compliance with the ADA could result in the imposition of fines
or damage awards against us.
In addition, several provincial, state and local laws have been passed in
recent years that encourage car pooling and the use of mass transit, including,
for example, laws prohibiting employers from reimbursing employee parking
expenses. Laws and regulations that reduce the number of cars and vehicles being
driven could hurt our business.
WE HAVE SIGNIFICANT COMPETITION FROM A VARIETY OF SOURCES
The parking industry is highly competitive. Our competitors range from
small single-lot operators to large regional and national multi-facility
operators, and include municipal and other governmental entities. Some of our
present and potential competitors have or may obtain greater financial and
marketing resources than we have. Furthermore, we compete for qualified
management personnel with other parking facility operators, with property
management companies and with property owners. We may encounter increased
competition in the future. Among other things, increased construction of parking
facilities could limit our ability to attract customers, expand our business or
maintain profitable pricing levels and could decrease our market share. We
compete for acquisitions with other parking facility operators, real estate
developers and real estate investment trusts. We may encounter increased
competition for acquisitions in the future, and this competition could hurt our
ability to complete acquisitions or have the effect of increasing the prices we
must pay for acquisitions.
We believe that there will be rapid business consolidation in the parking
services industry. If this occurs and we are unable to participate successfully
in the business consolidation, our business and financial results could be
harmed.
YOU WILL HAVE A NUMBER OF MARKET RISKS TYPICALLY ASSOCIATED WITH NEW PUBLIC
COMPANIES
Before the Distribution, there has been no public market for our common
stock. Although we currently expect that our common stock will be listed on the
American Stock Exchange, an active trading market may not develop and be
sustained after this Distribution.
The stock market in general has recently experienced extreme price and
volume fluctuations. In particular, the market prices of shares in newly public
companies have been extremely volatile and have experienced fluctuations that
have often been unrelated or disproportionate to the operating performance of
such companies. The market price of our common stock could be highly volatile
and subject to wide fluctuations in response to many factors, including the
following:
- Quarterly variations in our operating results;
- Adverse business developments;
- Changes in financial estimates by securities analysts;
20
<PAGE> 25
- Investor perception of Impark; and
- General economic conditions both in Canada and the United States.
In the event of broad fluctuations in the market price of our common stock,
you may be unable to resell your shares at or above the fair market value at the
time of the Distribution.
PROVISIONS OF DELAWARE LAW AND OUR CHARTER AND BY-LAWS MAY MAKE A TAKEOVER OF
OUR COMPANY MORE DIFFICULT
Delaware corporate law and our certificate of incorporation and by-laws
contain certain provisions that could have the effect of delaying, deferring or
preventing a change in control of Impark or our management. These provisions
could discourage proxy contests and make it more difficult for you and other
stockholders to elect directors and take other corporate actions. These
provisions could also limit the price that certain investors might be willing to
pay in the future for shares of our common stock. Some of these provisions:
- Authorize the issuance of "blank check" preferred stock (preferred stock
that can be created and issued by our board of directors without prior
stockholders' approval) with rights senior to those of common stock;
- Provide for a staggered board of directors (so that it would take three
successive annual meetings to replace all directors);
- Prohibit stockholder action by written consent; and
- Establish advance notice requirements for submitting nominations for
election to the board of directors and for proposing matters that can be
acted upon by stockholders at a meeting.
A LABOR STRIKE COULD HURT OUR COMPETITIVENESS
A significant number of our employees are members of labor unions. As a
result there is a risk of work stoppages due to strikes which could potentially
be costly to us because increased labor costs could adversely affect our ability
to retain management contracts and to remain competitive in the marketplace.
21
<PAGE> 26
LISTING AND TRADING OF IMPARK COMMON STOCK
First Union presently owns 100% of the outstanding shares of Impark common
stock. No trading prices are available with respect to such shares. There can be
no assurance as to the price at which First Union shares or Impark common stock
may be traded after the Distribution or whether their initial combined price
will be higher or lower than the price of the First Union shares prior to the
Distribution. After the Distribution, approximately 2.1 million shares of Impark
common stock will be issued and outstanding. In addition, shortly following the
Distribution Date, it is anticipated that Impark will grant (i) options covering
an aggregate of 196,562 shares of Impark common stock to employees of Impark and
(ii) shares, in an amount to be determined, of Impark common stock to each of
its outside directors. See "Management -- Stock Plans" and "Management --
Director Compensation."
Impark has applied to list its common stock on the American Stock Exchange.
Based on the expected number of holders of First Union shares of record as of
the Record Date, Impark is expected initially to have approximately 9,000
shareholders of record on the Distribution Date. The transfer agent and
registrar for the Impark common stock will be National City Bank. There can be
no assurance that an active trading market in Impark common stock will develop
or, if a market does develop, at what prices Impark common stock will trade.
Although shares of Impark common stock will not trade on the American Stock
Exchange on a "when-issued" basis, it is expected that a "when-issued" trading
market in Impark common stock may develop prior to the Record Date. We cannot
predict where such a trading market will develop. A "when-issued" trading market
occurs when trading in shares begins after the declaration of the dividend, but
prior to the time stock certificates are actually available or issued.
Shares of Impark common stock distributed to First Union beneficiaries will
be freely transferable, except for shares received by persons who may be deemed
to be "affiliates" of Impark under the Securities Act. Persons who may be deemed
to be affiliates of Impark after the Distribution generally include individuals
or entities that control, are controlled by, or are under common control with
Impark, and will include: (a) the directors and executive officers of Impark and
(b) Gotham Partners, L.P., Gotham Partners International, Limited, Gotham
Partners III, L.P., Apollo Real Estate Investment Fund II, L.P. and Magten Asset
Management Corp. All of the shares of Impark common stock held by affiliates of
Impark may generally only be resold (i) in compliance with the applicable
provisions of Rule 144 under the Securities Act, (ii) under an effective
registration statement under the Securities Act or (iii) pursuant to an
exemption from the registration requirements of the Securities Act.
Under Rule 144, an affiliate is entitled to sell, within any three-month
period, a number of shares of Impark common stock that does not exceed the
greater of 1% of the then outstanding shares of Impark common stock
(approximately 21,000 shares immediately after the Distribution) or the average
weekly trading volume of the Impark common stock during the four calendar weeks
preceding the date on which notice of such sale was filed under Rule 144,
provided certain requirements concerning availability of public information,
manner of sale and notice of sale are satisfied.
Upon consummation of the Distribution, affiliates of Impark will hold
approximately 770,000 shares of Impark common stock. Following the Distribution
Date, Impark will file with the Commission a Registration Statement on Form S-8
to register under the Securities Act the 315,000 shares of Impark common stock
which have been reserved for issuance pursuant to the 2000 Stock Incentive Plan.
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<PAGE> 27
CAPITALIZATION
The following table sets forth the capitalization of Impark as of December
31, 1999:
- On an actual basis combining the FUR Parking Business and FUMI Parking
Business; and
- On a pro forma basis giving effect to the pro forma transactions
described in note 2 to the Pro Forma Financial Statements.
You should read the capitalization information set forth in the table below
in conjunction with the financial statements and notes appearing elsewhere in
this Information Statement.
<TABLE>
<CAPTION>
AS AT DECEMBER 31, 1999
-----------------------
ACTUAL PRO FORMA
-------- ----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Term facility (current portion)............................. $21,229 $ --
Advances payable to FUMI, unsecured, non-interest bearing
and having no specific terms of repayment................. 11,607 --
Promissory note payable to First Union, unsecured, bearing
interest at 11.875% per annum and maturing April 17,
2009...................................................... 28,061 --
Other....................................................... 356 --
------- -------
61,253 --
Stockholders' equity
Owners' deficiency.......................................... (8,230) --
Capital stock
Preferred Stock, $.01 par value per share; 2,000,000
shares authorized; no shares issued and outstanding.... -- --
Common Stock, $.01 par value per share; 10,000,000 shares
authorized; no shares issued and outstanding, actual;
2,100,000 shares issued and outstanding, pro forma..... -- 58,650
------- -------
$53,023 $58,650
======= =======
</TABLE>
First Union will repay the term facility prior to the Distribution. In
addition, FUMI will capitalize the advances payable and First Union will
capitalize the promissory note and other long-term debt prior to the
Distribution.
First Union will provide an $8.0 million line of credit to Impark prior to
the Distribution. Amounts drawn under this line of credit will bear interest at
LIBOR plus 4.5% per annum, be secured by real estate owned by Impark as well as
being full recourse to Impark. The line of credit will have a term of six months
from the date of issuance with two three-month extension options.
23
<PAGE> 28
HISTORICAL SELECTED FINANCIAL DATA
The historical selected financial data presented below has been calculated
by combining information in the combined financial statements of the FUR Parking
Business and the FUMI Parking Business and from the consolidated financial
statements of Impark Holdings Inc. These combined and consolidated financial
statements are included in this Information Statement. The selected financial
data for all periods has been extracted from audited financial statements.
The amounts presented below have been extracted from the historical
financial statements and are presented on a combined basis without giving effect
to any accounting adjustments that may be required to be given effect prior to
the completion of the plan of organization of Impark. As Impark's predecessor
changed its fiscal year end in 1996 from March 31st to December 31st to be
consistent with that of its then parent company, information for 1996 is
presented for nine months only.
This financial data should be read in conjunction with the consolidated and
combined financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
DECEMBER 31, ------------------------------
1996 1997 1998 1999
------------ -------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1),(2)
Revenues........................................ $ 35,755 $ 50,775 $ 54,087 $ 60,145
Direct costs.................................... 25,209 37,076 39,196 44,359
-------- -------- -------- --------
Gross margin.................................... 10,546 13,699 14,891 15,786
General and administrative expenses............. 7,568 11,073 14,972 10,236
Depreciation and amortization................... 2,567 4,951 5,443 5,027
-------- -------- -------- --------
Operating income (loss)......................... 411 (2,325) (5,524) 523
Interest expense................................ (587) (3,335) (5,574) (4,884)
Other income (expense)(3)....................... 674 (976) (15,884) (279)
-------- -------- -------- --------
Income (loss) from continuing operations........ $ 498 $ (6,636) $(26,982) $ (4,640)
======== ======== ======== ========
BALANCE SHEET DATA (END OF PERIOD)(1),(2)
Working capital................................. $ (7,833) $ (7,023) $ (8,181) (30,144)
Fixed assets.................................... 11,479 14,259 13,888 13,705
Goodwill........................................ 31,457 66,560 45,379 43,344
Total assets.................................... 69,499 99,423 74,923 76,176
Long-term liabilities........................... 26,351 52,365 55,219 40,024
Total liabilities............................... 44,472 84,656 77,720 84,407
Total owners' equity (deficiency)............... 25,027 14,767 (2,797) (8,230)
OTHER INFORMATION(1),(2)
Cash provided by (used in)
Operating activities.......................... $ 297 $ (762) $ (5,610) $ 4,478
Financing activities.......................... 45,360 35,248 18,943 666
Investing activities.......................... (45,040) (34,228) (13,135) (2,863)
Gross collections(4)............................ 126,458 172,729 173,925 177,833
EBITDA(5)....................................... 2,978 2,626 (81) 5,550
</TABLE>
- ---------------
(1) The amounts presented for the nine months ended December 31, 1996 have been
extracted from the consolidated financial statements of Impark Holdings
Inc., which, for accounting and SEC reporting purposes, represents a
predecessor entity to Impark.
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<PAGE> 29
(2) The amounts presented for these captions have been accumulated as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998
--------------------------------------------------- ----------------------------------------
IMPARK FUMI FUR ELIMINATION TOTAL FUMI FUR ELIMINATION TOTAL
------ -------- ------- ----------- ------- ------- ------ ----------- -------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues...................... 14,065 36,710 302 (302) 50,775 54,087 454 (454) 54,087
Direct costs.................. 11,724 25,654 -- (302) 37,076 39,638 12 (454) 39,196
------ -------- ------- ------- ------- ------ -------
Gross margin.................. 2,341 11,056 302 13,699 14,449 442 14,891
General and administrative
expenses.................... 3,547 7,526 -- -- 11,073 14,972 -- -- 14,972
Depreciation and
amortization................ 1,066 3,854 31 -- 4,951 5,398 45 -- 5,443
------ -------- ------- ------- ------- ------ -------
Operating income (loss)....... (2,272) (324) 271 (2,325) (5,921) 397 (5,524)
Interest expense.............. (453) (4,650) (904) 2,672 (3,335) (6,542) (2,757) 3,725 (5,574)
Other income (expense)........ 67 (370) 1,999 (2,672) (976) (15,492) 3,333 (3,725) (15,884)
------ -------- ------- ------- ------- ------ -------
Income (loss) from continuing
operations.................. (2,658) (5,344) 1,366 (6,636) (27,955) 973 (26,982)
BALANCE SHEET DATA (END OF
YEAR)
Working capital............... -- (7,375) 352 -- (7,023) (9,353) 1,172 -- (8,181)
Fixed assets.................. -- 5,158 9,101 -- 14,259 5,330 8,558 -- 13,888
Goodwill...................... 66,560 -- -- 66,560 45,379 -- -- 45,379
Total assets.................. -- 89,440 41,660 (31,677) 99,423 65,229 42,002 (32,308) 74,923
Long-term liabilities......... -- 60,768 22,977 (31,380) 52,365 63,052 23,759 (31,592) 55,219
Total liabilities............. -- 92,529 23,804 (31,677) 84,656 85,577 24,451 (32,308) 77,720
Total owners' equity
(deficiency)................ -- (3,089) 17,856 -- 14,767 (20,348) 17,551 -- (2,797)
OTHER
Cash provided by (used in)
Operating activities........ (182) (1,409) 829 -- (762) (5,734) 124 -- (5,610)
Financing activities........ (36) 34,482 31,144 (30,342) 35,248 18,610 333 -- 18,943
Investing activities........ (399) (33,095) (31,076) 30,342 (34,226) (12,994) (141) -- (13,135)
Gross collections............. 49,631 123,098 302 (302) 172,729 173,925 454 (454) 173,925
EBITDA........................ (1,206) 3,530 302 -- 2,626 (523) 442 -- (81)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-----------------------------------------
FUMI FUR ELIMINATION TOTAL
------- ------- ----------- -------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues.................................................... 60,145 582 (582) 60,145
Direct costs................................................ 44,939 2 (582) 44,359
------- ------- -------
Gross margin................................................ 15,206 580 15,786
General and administrative expenses......................... 10,236 -- -- 10,236
Depreciation and amortization............................... 4,984 43 -- 5,027
------- ------- -------
(14) 537 523
Interest expense............................................ (5,872) (3,044) 4,032 (4,884)
Other income (expense)...................................... (431) (14,816) 14,968 (279)
------- ------- -------
Income (loss) from continuing operations.................... (6,317) (17,323) (4,640)
BALANCE SHEET DATA (END OF YEAR)
Working capital............................................. (33,218) 3,074 -- (30,144)
Fixed assets................................................ 4,984 8,721 -- 13,705
Goodwill.................................................... 43,344 -- -- 43,344
Total assets................................................ 65,109 30,113 (19,046) 76,176
Long-term liabilities....................................... 48,292 28,061 (36,329) 40,024
Total liabilities........................................... 93,710 28,742 (38,045) 84,407
Total owners' equity (deficiency)........................... (28,601) 1,371 19,000 (8,230)
OTHER
Cash provided by (used in)
Operating activities...................................... 3,697 781 -- 4,478
Financing activities...................................... 677 (11) -- 666
Investing activities...................................... (2,858) (5) -- (2,863)
Gross collections........................................... 177,833 582 (582) 177,833
EBITDA...................................................... 4,970 580 -- 5,550
</TABLE>
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<PAGE> 30
(3) Other income (expense) principally includes gains or losses on the sale or
write-down of assets, other interest expense and income taxes. In the year
ended December 31, 1998, other income (expense) includes a write-down of
goodwill of $15.0 million. General and administrative expenses for 1998
include a severance provision of $2.4 million and for 1999 include a
recovery of previously overprovided amounts of $1.8 million. Please see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for additional information on this write-down.
(4) Gross collections represent the aggregate cash collected from the revenue
generating activities of our operations that will be continuing subsequent
to the Distribution for the periods presented. It includes revenues reported
under generally accepted accounting principles as well as collections made
on parking facilities for which we have a management contract. Gross
collections are not a measure under generally accepted accounting principles
and are not an alternative to revenues or cash flows. Gross collections are
significant to an understanding of the operations of the predecessor
entities to Impark because management uses gross collections as a key
indicator of its business opportunities, they demonstrate the magnitude of
our historical business activities, management contract revenues are partly
based on the level of gross collections and management's decisions on the
allocation of resources among its business activities are in part based on
the level of gross collections.
(5) EBITDA equals operating income as shown on the table above, plus
depreciation and amortization expense. EBITDA is included because management
believes it to be a useful tool for measuring our ability to generate cash
flow from operations. EBITDA does not represent cash flow from operations,
is not a measure under generally accepted accounting principles and should
be considered together with the other financial information included in the
table and presented elsewhere in this Information Statement. EBITDA measures
as presented may not be comparable to similarly titled measures of other
entities.
26
<PAGE> 31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR YEARS ENDED DECEMBER 31, 1999 AND 1998 AND
YEARS ENDED DECEMBER 31, 1998 AND 1997
The following discussion of Impark's historical results of operations and
financial condition should be read in conjunction with Historical Financial
Statements and the Summary Financial Data, which are included in this
Information Statement.
DESCRIPTION OF FINANCIAL INFORMATION
Impark is the corporation which will result from the combination of the
parking related businesses of FUMI and the Canadian parking facilities of First
Union. We have set out below a brief description of the operations of each
business being combined.
FUMI Parking Business. The FUMI Parking Business consists of the parking
services and related ancillary activities that will continue in Impark. Since
April 1997 subsidiaries of FUMI have carried on these activities. The continuing
operations of FUMI's indirect subsidiaries, Imperial Parking Limited and Impark
Services Ltd., consist of operating and managing parking facilities in Canada
and the United States and carrying on other parking related activities.
FUR Parking Business. The FUR Parking Business consists primarily of
owning 15 parking properties in Canada. Since April 1997 subsidiaries of First
Union have operated this business, including leasing the properties to FUMI for
operation and management.
Impark Holdings Inc. Impark Holdings Inc. acquired Imperial Parking
Limited from its shareholders in March 1996 and sold this business to First
Union and FUMI in April 1997. Impark Holdings operated and managed parking
facilities in Canada, the United States and Asia.
Periods Presented. The results of operations for the year ended December
31, 1997 combine the period from January 1, 1997 to April 16, 1997 of Impark
Holdings with that from April 17, 1997 to December 31, 1997 of the FUMI Parking
Business and the FUR Parking Business. The results of operations for the years
ended December 31, 1998 and 1999 combine the results of the FUMI Parking
Business and the FUR Parking Business.
During the three years ended December 31, 1999 our revenues have been
generated from the following sources:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------------- ----------------------------
1997 1998 % CHANGE 1998 1999 % CHANGE
------- ------- -------- ------- ------- --------
(THOUSANDS OF DOLLARS, EXCEPT PERCENTS)
<S> <C> <C> <C> <C> <C> <C>
Leased Facilities...................... $37,833 $42,045 11.1% $42,045 $48,771 16.0%
Managed Facilities..................... 7,752 7,967 2.8% 7,967 7,193 (9.7)%
Owned Facilities....................... 1,414 1,510 6.8% 1,510 1,676 11.0%
Other.................................. 3,776 2,565 (32.1)% 2,565 2,505 (2.3)%
------- ------- ------ ------- ------- ----
Total.................................. $50,775 $54,087 6.5% $54,087 $60,145 11.2%
======= ======= ====== ======= ======= ====
</TABLE>
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
Total Revenues. Total revenues increased $6.0 million, or 11.2%, to $60.1
million in the year ended December 31, 1999 compared to $54.1 million in the
year ended December 31, 1998. This increase was attributable to greater revenues
from parking services, as detailed below which was partially offset by lower
ancillary services revenues.
Parking revenues from leased facilities increased $6.8 million, or 16.0%,
to $48.8 million during the year ended December 31, 1999 as compared to $42.0
million in the year ended December 31, 1998. This increase was driven by new
business growth, primarily in Calgary, Alberta, Toronto, Ontario, Minneapolis,
27
<PAGE> 32
Minnesota and Milwaukee, Wisconsin where 15 major new leased facilities were
added during the period. Also, the parking revenues have been reduced in 1999
versus 1998 by $1.5 million as a result of the Robbins Parking Service Ltd. and
Imperial Parking (Asia) Ltd. businesses sold during the year.
Parking revenues from management contracts decreased $0.8 million, or 9.7%,
to $7.2 million in the year ended December 31, 1999 as compared to $8.0 million
in the year ended December 31, 1998. This decrease resulted primarily from FUMI
cancelling the agreements for Impark to manage its U.S. properties in October
1998. Also, the parking revenues have been reduced in 1999 versus 1998 by $0.4
million as a result of the Robbins Parking Service Ltd. and Imperial Parking
(Asia) Ltd. businesses sold during the year.
Parking revenues from owned facilities remained relatively stable,
increasing $0.2 million, or 11.0%, to $1.7 million during the year ended
December 31, 1999 as compared to $1.5 million in the year ended December 31,
1998.
Other revenue decreased by $0.1 million, or 2.3%, to $2.5 million for the
year ended December 31, 1999 from $2.6 million for the year ended December 31,
1998. The decrease was mainly attributable to lower equipment sales as we wound
down our equipment sales and installation division.
Direct costs increased $5.2 million, or 13.2%, to $44.4 million in the year
ended December 31, 1999 from $39.2 million in the year ended December 31, 1998.
This increase was due principally to increased rents of $4.8 million on the 15
major new lease facilities added during the year. The remaining increase was
primarily due to increased payroll cost of $0.5 million on the 15 new
facilities. Direct costs, as a percentage of total revenues, increased to 73.8%
in the year ended December 31, 1999 from 72.5% in the year ended December 31,
1998. The increase was primarily attributable to the 15 large new lease deals in
Calgary, Toronto, Minneapolis and Milwaukee. A number of these locations were
unprofitable or only marginally profitable in their first year. New lease
locations may require a few years to achieve their revenue and profit potential.
In order to maximize the financial performance of a new lease, we would make
physical and operational changes that include but are not limited to, providing
better lighting, developing new pricing and marketing policies, implementing new
safety and security procedures, upgrading signage and parking equipment and
redirecting traffic flow. Also, the direct costs have been reduced in 1999
versus 1998 by $1.5 million as a result of the Robbins Parking Service Ltd. and
Imperial Parking (Asia) Ltd. businesses sold during the year.
General and administrative expenses decreased by $4.8 million, or 31.6%, to
$10.2 million for the year ended December 31, 1999 from $15.0 million for the
year ended December 31, 1998. The decrease was primarily due to an employee
severance provision of $2.4 million in 1998. This provision was ultimately
determined to be over-accrued by $1.8 million which was reversed in 1999. This
reversal was partially offset by a severance provision in 1999 of $0.9 million.
Also, general and administrative expenses have been reduced in 1999 versus 1998
by $0.2 million as a result of the Robbins Parking Service Ltd. and Imperial
Parking (Asia) Ltd. businesses sold during the year. General and administrative
expenses, before taking into account severance, decreased as a percentage of
total revenue from 23.3% in 1998 to 18.5% in 1999. This was a result of
management efforts to reduce general and administrative expenses and the effect
of spreading general and administrative expenses over a greater revenue base.
Depreciation and amortization decreased from $5.4 million for the year
ended December 31, 1998 to $5.0 million for the year ended December 31, 1999, a
decrease of $0.4 million. The decrease was attributable to lower depreciation
and amortization on management contracts and agreements in 1999 than 1998 as
they became fully amortized during this period.
Interest expense totalled $4.9 million for the year ended December 31, 1999
compared to $5.6 million for the year ended December 31, 1998, a decrease of
$0.7 million. Interest on bank debt decreased $0.3 million as bank debt was
repaid during the period. Debt owing to a former shareholder was repaid in June
1998 resulting in a decrease in other interest of $0.6 million. These decreases
in interest were offset by an increase in interest to related parties of $0.2
million. With respect to credit facilities which represent
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substantially all of Impark's indebtedness, the weighted average balance
outstanding for the year ended December 31, 1999 was approximately $22.8 million
at a weighted average interest rate of 6.9%.
Other expenses in fiscal 1998 include a write-down in the value of goodwill
of $15.0 million at the fiscal year end. Goodwill was primarily created on the
push-down of the acquisition of the business of Impark Holdings by FUMI in April
1997. Due to the losses incurred in the FUMI Parking Business since its
acquisition, at December 31, 1998 the management of FUMI and of an Impark
predecessor assessed the recoverability of the net book value of goodwill. This
review was made by comparing the net book value to the estimates of future cash
flows from the FUMI Parking Businesses. As a result of this review, an
impairment charge in goodwill of $15.0 million was recorded.
Net loss decreased from $27.0 million for fiscal 1998 to $4.6 million for
fiscal 1999, a decrease of $22.4 million. The decrease is primarily due to
recording in 1998 the $15.0 million goodwill write-down combined with lower
general and administrative expenses of $4.8 million, lower interest costs of
$0.7 million, lower depreciation and amortization of $0.4 million, reduced other
expenses of $0.6 million, and increased gross margin of $0.9 million.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Total Revenues. Total revenues increased $3.3 million, or 6.5%, to $54.1
million in the year ended December 31, 1998 compared to $50.8 million in the
year ended December 31, 1997. This increase was attributable to increased
revenues in both parking services and ancillary services from new business
growth and the 41 facilities that were acquired in 1998.
Parking revenues from leased and owned facilities in fiscal 1998 increased
$4.4 million, or 11.0%, to $43.6 million from $39.2 million in fiscal 1997. The
increase was attributable to new business growth in Canada and the United States
combined with 41 facilities acquired in 1998 from two small Canadian parking
operators.
Management contract revenues increased $0.2 million, or 2.8% to $8.0
million from $7.8 million in fiscal 1997. The increase was due primarily to
managing First Union's U.S. properties for a period of ten months in fiscal 1998
compared to six months in fiscal 1997.
Other revenue decreased $1.2 million, or 32.1%, to $2.6 million in fiscal
1998 from $3.8 million in fiscal 1997. The decrease was due primarily to lower
equipment sales and installation.
Direct costs in fiscal 1998 increased $2.1 million, or 5.7%, to $39.2
million from $37.1 million in fiscal 1997. Direct costs increased principally as
a result of new business and from acquisitions. Direct costs as a percentage of
total revenues, decreased to 72.5% in fiscal 1998 from 73.0% in fiscal 1997.
This decrease was attributable predominately to the spreading of fixed costs,
primarily rent and property costs, over a larger revenue base.
General and administrative expenses in fiscal 1998 increased $3.9 million,
or 35.2%, to $15.0 million from $11.1 million is fiscal 1997. This increase was
primarily a result of severance expenses of $2.4 million, U.S. expansion costs
of $2.0 million and $0.5 million allocated First Union stock compensation
expense, offset by one-time provisions of $1.1 million in fiscal 1997 to
terminate equipment installation contracts.
Depreciation and amortization increased from $5.0 million in fiscal 1997 to
$5.4 million in fiscal 1998, an increase of $0.4 million. The increase was due
primarily to increased amortization of management contracts and agreements for a
full year in fiscal 1998 following the April 1997 acquisition by FUMI.
Interest expense totalled $5.6 million in 1998 compared to $3.3 million in
1997. The increased interest expense was a result of higher interest rates in
1998 and a full year of financing from related parties following the acquisition
of Impark by FUMI on April 17, 1997. With respect to credit facilities which
represent substantially all of Impark's indebtedness, the weighted average
balance outstanding for fiscal 1998 was approximately $24.2 million at a
weighted average interest rate of 7.2%.
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Other expenses in fiscal 1998 include a write-down in the value of goodwill
of $15.0 million at the fiscal year end. Goodwill was primarily created on the
push-down of the acquisition of the business of Impark Holdings by FUMI in April
1997.
Net loss increased from $6.6 million for fiscal 1997 to $27.0 million for
fiscal 1998, an increase of $20.4 million. The increase is primarily due to
recording in 1998 the $15.0 million goodwill write-down combined with increased
general and administrative expenses of $3.9 million, increased interest costs of
$2.2 million, increased depreciation and amortization of $0.4 million, which was
partially offset by increased gross margin and reduced other expense totaling
$1.1 million.
LIQUIDITY AND CAPITAL RESOURCES
On an adjusted pro forma basis, Impark had cash of $7.7 million at December
31, 1999 as compared to $3.4 million before the pro forma changes and the
adjustments described in "Adjusted Pro Forma Selected Financial Data." The
additional $4.3 million primarily represents an up to $7.0 million cash
contribution which First Union will make to Impark immediately prior to the
Distribution. Of the cash to be contributed, $2.0 million is restricted solely
for settlement of tax contingencies.
Following the Distribution, Impark will have no long term bank or other
long term debt outstanding. We will have an $8.0 million line of credit from
First Union to fund working capital requirements, acquisitions and other capital
investment opportunities. The credit facility will be due on September 30, 2000,
with two options to extend for three additional months each. We are required to
pay $40,000 for each extension. The line of credit bears interest at a floating
annual rate equal to the London Interbank Offer Rate plus 4.5% per annum. The
credit facility will be secured by a cross collateralized mortgage on the
parking real estate contributed by the FUR Parking Business. We intend to obtain
a new credit facility with a commercial bank as soon as practicable after the
Distribution. This anticipated additional line will be used to establish letters
of credit, support working capital, fund capital investment opportunities and
repay the First Union line of credit. Impark may need letters of credit when it
bids on larger lease and management contracts.
In the 12 months following the Distribution, we anticipate the working
capital necessary to satisfy current obligations will be generated from
operations, available cash, First Union credit facility, and Impark's new credit
facility.
Depending on the timing and magnitude of future investment opportunities,
which could be in the form of leased or purchased properties, Impark's joint
ventures and acquisitions, we anticipate the cash required to come from
operations, First Union or bank credit facility, a rights offering or an equity
offering.
In the future, if we identify investment opportunities requiring cash in
excess of operating cash flows and credit facilities, we may seek additional
sources of capital, including the sale or issuance of Impark common stock or a
rights offering, or amending our credit facility to obtain additional
indebtedness. No assurances can be given that such increases would be available
at the time needed to complete any such acquisition.
Following the Distribution, Impark will be committed to the completion of
the development of the approximately 4,900 spaces for the new San Francisco
Giants Stadium (Pacific Bell Park). At closing, of the $7.8 million estimated
cost, Impark will have funded $1.1 million and First Union will contribute its
investment in the limited liability company and commit to fund the balance up to
$6.7 million. Should the development cost exceed $7.8 million, the excess cost
will be funded by Impark.
Net cash provided by operating activities for the year ended December 31,
1999 was $4.5 million. The primary factors which contributed to this cash
provision was income before depreciation and amortization of $0.4 million and
decreases in working capital of $2.8 million.
Net cash used in investing activities was $2.9 million for the year ended
December 31, 1999. The primary factor which contributed to the investing
activity was fixed asset expenditures of $1.4 million and investment in other
assets of $1.1 million primarily related to funding the San Francisco Giant
Stadium.
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NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities". This statement
is effective for fiscal quarters of fiscal years beginning after June 15, 2000.
SFAS 133 establishes consistent accounting and reporting standards for
derivative instruments and for hedging activities. As of December 31, 1999 we
have not adopted this standard and do not expect to do so prior to its required
application date. To December 31, 1999, we do not believe we have entered into
significant instruments that are subject to SFAS 133. However, we are continuing
to review and evaluate SFAS 133 and its impact on Impark.
FOREIGN CURRENCY EXPOSURE
Impark operates wholly owned subsidiaries in Canada. Total historical
revenues from Canadian operations amounted to $44.9 million and $49.7 million
for fiscal years 1998 and 1999, respectively. Impark intends to continue to
invest in Canadian leased or owned facilities, and may identify expansion
opportunities in other foreign countries. Our exposure to foreign currency
fluctuations is limited as the Canadian dollar revenues have to date been
significantly offset by Canadian dollar operating costs. In limited
circumstances we have denominated Canadian contracts in U.S. dollars to limit
currency exposure. Presently, Impark has no formal hedging programs. We
anticipate implementing a hedging program if such risk materially increases.
IMPACT OF INFLATION AND CHANGING PRICES
The primary sources of revenues to Impark are parking revenues from owned
and leased locations and management contract revenue (net of expense
reimbursements). In the years ended December 31, 1998 and 1999 inflation had a
limited impact on our operations.
YEAR 2000 COMPLIANCE PROJECT
In June 1998, we began implementing a Year 2000 compliance project which
was intended to assess the ability of our computer systems to recognize dates
properly on or after January 1, 2000 and to ensure that these systems were Year
2000 compliant as soon as possible. This project addressed three main areas: (a)
information technology systems, (b) process control instrumentation and (c)
third-party, suppliers and customers. This compliance project was completed
prior to December 31, 1999. Subsequent to that date we have not experienced any
significant problems with respect to the Year 2000 change. However, there can be
no certainty that we will not be affected during the fiscal year ending December
31, 2000 due to Year 2000 system facilities or other related events by our
suppliers.
QUARTERLY RESULTS
Impark may experience fluctuations in its income from quarter to quarter.
We may continue to experience fluctuations in revenues and related expenses due
to acquisitions, pre-opening costs, travel and transportation patterns affected
by weather and calendar related events, and local and national economic
conditions. Additionally, Impark manages the parking for a number of sports
stadiums and arenas and our income can be affected by the relative degree of
success of various sports teams.
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BUSINESS
GENERAL
We are a leading provider of parking services in North America. As of
December 31, 1999, we managed, leased or owned over 1,400 parking lots in Canada
and the United States, containing more than 250,000 parking spaces, making us
the largest parking provider in Canada and one of the four largest in North
America. We estimate that the more than 230,000 parking spaces we operate
throughout Canada give us approximately half of the urban, private parking lot
business in Canada. We also provide parking lot patrolling, ticketing and
collection services for our own lots and for those operated by other parties.
We provide parking services at multi-level parking facilities and surface
lots. We operate these facilities and lots under three general types of
arrangements: management contracts, leases and fee ownership. As of December 31,
1999, we managed 915 parking facilities and lots, leased 490 parking facilities
and lots and owned 15 parking facilities and lots.
Imperial Parking Limited, one of the entities that is part of Impark, was
originally incorporated in 1962 in Vancouver, British Columbia and initially
established a significant presence in Western Canada. Since then we have
expanded our operations throughout Canada and also into the United States. Over
the past 13 years we have completed 15 parking-related acquisitions.
Over the last five years Impark increased its number of locations operated
from 1,020 at January 1, 1995 to 1,420 at December 31, 1999. The growth was
achieved through a combination of acquisitions and internal growth.
Impark acquisitions included Citipark, Inc., a national Canadian parking
company in 1995 (176 locations), and several smaller companies including: P1
Parking in 1998 (18 locations), Prairie Parking Ltd. in 1998 (23 locations),
Advanced Parking Systems Ltd. in 1996 (45 locations), and Park Rite Ltd. in 1994
(28 locations). In 1999, as part of the FUMI reorganization plan as described on
pages 11, 12 and F-4 of this Information Statement, Impark disposed of Robbins
Parking Services Ltd. (141 locations) and Imperial Parking (Asia) Ltd. (14
locations).
Our management team has extensive experience in the parking industry. Our
three most senior officers, Messrs. Huntzinger, Wallner and Newsome, have over
45 years of combined experience. They have operated major parking operations
throughout the United States and Canada and have been involved in numerous
acquisitions. See "Management -- Executive Officers and Directors."
Charles Huntzinger, President and CEO will report to the Board of Directors
and Bruce Newsome, Senior Vice President Finance and CFO and Bryan Wallner,
Senior Vice President Operations will reporting to Charles Huntzinger. David
Schonberger, Vice President will also report to Charles Huntzinger.
Following the Distribution, Impark will be a North American parking company
which will concentrate its efforts in parking and the related collections
business. We will expand through a combination of strategic acquisitions and
internal business growth. We will continue our efforts to increase profitability
from existing locations concentrating our attention on facilities that do not
meet minimum profitability standards.
Our clients include a number of significant owners and developers of
commercial real estate in Canada and the United States, including Trizec/Hahn,
Colliers International, Marathon Properties, Trammell Crow Faison, Cadillac
Fairview and Oxford Properties. We provide parking at several high profile
sites, such as Waterfront Center, GM Place and BC Place in Vancouver, the
Skydome in Toronto, Clise Properties in Seattle and Trammell Crow Faison Tower
Place Mall in Cincinnati. In addition, we were recently awarded the right to
manage the parking facilities at the San Francisco Giants' new Pacific Bell
baseball park.
Upon the Distribution, we will no longer be involved in non-parking related
ancillary businesses we have historically operated and we will no longer have
operations outside of North America. We believe
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this renewed focus on our core business of parking management, including
ticketing and patrolling services, and our core geographic market of North
America will enable our management to concentrate its efforts on further
improving the businesses that have historically been most profitable for us, and
will minimize the distractions we have encountered from our non-core operations.
INDUSTRY
The parking industry is highly fragmented and competitive. Industry
participants, the vast majority of which are privately held companies, consist
of a relatively few national 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. The
parking industry has begun to experience consolidation as smaller operators have
found that they lack the capital, economies of scale and sophisticated
management techniques required to compete with larger providers. We expect this
trend will continue and will provide significant opportunities for us to acquire
smaller existing providers.
We expect that a number of other trends in the commercial property
management business will continue to provide opportunities for large,
specialized providers of high-quality parking services. We believe that:
- The trend toward consolidation of property management companies will
favor larger, nationwide parking providers, as increasingly centralized
property management companies and property owners seek to minimize the
number of separate parking providers they deal with;
- As the property management industry becomes increasingly sophisticated
and professional, property management companies and property owners will
likely seek to work with specialized, professional parking service
providers;
- Parking is increasingly seen by building owners as a profit center, and
owners seek parking providers who can help them to maximize
profitability, increase efficiency and reduce financial
unpredictability; and
- The owners of premier properties, as they begin to recognize that the
parking experience often provides both the first and last impression of
their properties to tenants and users, are seeking to offer the highest
possible level of quality in their parking services as a means of
distinguishing their properties from those of competitors.
We believe that the industry trends toward outsourcing by private-sector
owners and privatization by government entities provide additional significant
growth opportunities for parking facility operators. Private-sector parking
owners have begun to move from owner-operation of their parking facilities to
outsourcing the management of operations to specialized operators. This allows
them to focus on their core competencies while increasing overall returns on
parking assets. In addition, governments and government agencies, particularly
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.
GROWTH STRATEGY
Our strategy is to strengthen our position as the leading parking provider
in Canada while significantly expanding our presence into selected markets in
the United States. Key elements of this growth strategy include:
Increase penetration of existing core markets. We will seek to leverage
our long-standing relationships with real estate owners in cities where we
currently have significant operations. Our reputation for premium service, our
local market knowledge and our management infrastructure, allow us to compete
aggressively for new business in these core cities. Because existing parking
operations are sufficient to cover the costs of local and regional personnel,
additional parking operations in these markets will provide a greater
contribution to our profits than the operations in new markets. As we compete
for new business, it will also be critical to retain and improve the
profitability of existing contracts. We have
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historically achieved a favorable contract renewal rate, as evidenced by the
fact that over the past five years, we have retained 90% of all management
contracts and leases that have come up for renewal, where the renewal rate is
calculated as the number of locations at the end of the year divided by the sum
of locations at beginning of the year plus number of locations added during the
year.
Pursue aggressive growth in other urban markets. We have targeted major
cities in Canada and the United States where we currently have little or no
presence for aggressive expansion. We believe that expansion in the United
States will be the key component to enhancing our overall profitability. This is
because we have little presence in the United States, the largest parking market
in the world, and key members of our new management team have significant
experience in the United States. Also, there are far greater opportunities to
bid for contracts in the United States than in Canada where we already dominate
the industry. Additionally, parking rates and average profits per facility tend
to be higher than in Canada. Our strategy is to enter a new market only if we
believe we can quickly gain a significant position in the market, with
sufficient "critical mass" to compete effectively and realize economies of
scale. Certain markets are dominated by national parking companies that have
established strong relationships through more advanced parking techniques. We
may avoid these markets initially. However, where a market is fragmented by a
number of smaller less sophisticated parking operators we believe there is an
opportunity to gain market share by providing superior systems and controls to
prospective customers. We will pursue opportunities in these markets either
through acquisition or by establishing our own operations there. We believe that
there are approximately ten new markets in the United States in which we can
secure market share over the next three years.
Pursue acquisition opportunities. We believe there are significant
opportunities to expand our business through the acquisition of smaller
operators, both in existing core markets and in other targeted cities where we
believe we can attain a significant market share. The parking industry is highly
fragmented and we believe that many of our smaller competitors have limited
access to capital or do not have the systems or the scale to compete
effectively. We have successfully completed five acquisitions in the last five
years (adding approximately 300 facilities). Typically, we seek to acquire
smaller local operators with several years of experience in their market. We
believe this allows for the immediate understanding of the market and provides a
platform for additional acquisitions and increased penetration in the same city.
Participate in outsourcing and privatization trends. We believe
significant opportunities for growth will result from the current trend toward
outsourcing and privatization of parking services. We believe we are
particularly well positioned to participate in these trends because we are able
to provide parking facility management and related services at lower costs and
higher service levels than those provided by municipalities, hospitals and
universities. We have been successful in the past in working with the City of
Victoria and the City of Nanaimo to issue municipal tickets on our lots and have
parking contracts for the City of Coquitlam, the University of British Columbia
and the British Columbia Transit Authority. We believe that we are the only
major parking company with its own collection subsidiary, City Collection
Company Ltd. City Collection is a licensed debt collection company in several
Canadian provinces. We believe that having our own licensed debt collection
company enhances our ability to compete for outsourcing business by allowing us
to provide a package of both management and debt collection services.
OPERATING STRATEGY
We seek to increase the revenues and profitability of our parking
facilities through a variety of operating strategies, including the following:
Focus on larger urban markets. We intend to focus on larger urban markets.
We believe that (i) urban markets are more resistant to economic downturns, (ii)
property owners and real estate asset managers in these markets typically have a
presence in other cities, which provides opportunities to leverage these
relationships to expand to new locations, (iii) the typically higher prices
charged in these markets can support our premium service levels, and (iv) our
senior management team has significant expertise in these markets. Charles
Huntzinger and Bryan Wallner primarily contribute to the management team's
expertise in these markets. Between them they have 33 years of parking
experience in major
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U.S. cities including New York, Philadelphia, Baltimore, Washington, Boston,
Richmond, Jacksonville, Pittsburgh, Cleveland, Columbus, Cincinnati, Milwaukee,
Denver, San Francisco, Los Angeles, Seattle, St. Louis, Indianapolis, as well as
Toronto and Ottawa, Canada. We recently hired several regional and city managers
who have experience in major U.S. cities including Minneapolis, Kansas City and
Salt Lake City.
Focus on increasing profitability. We believe there is a significant
opportunity to increase the profitability of existing and future operations and
we intend to focus on the profitability of our operations. Our policy is to
continue to operate only those facilities that meet or exceed profitability
targets. When Mr. Huntzinger joined Impark in January 1999 he shifted Impark's
strategy from one of gaining market share to increasing the profitability of
each location. We now view each location as a stand alone profit center and not
a loss leader to gain market share.
Generally, we will seek to close or renegotiate the arrangements with
respect to facilities that do not meet our targets within the next 12 months
following our identification of such arrangements. In March 1999 we identified
124 locations, approximately 9% of our total locations operated, that were not
profitable. By August 1999 we were able to improve the results or cancel 95 of
those locations. In addition, we identified 453 locations, approximately 32% of
our total locations operated, that fell below our minimum profitability goals.
Our goal in 2000 is to convert at least 50% of these locations to higher
profitability levels. Typically there are few costs associated with closing a
facility other than ensuring that any equipment or supplies in the facility are
removed and any deposits repaid to customers.
We will also seek to reduce overhead costs through a program of continuing
cost cutting initiatives, including labor cost reduction, exploiting purchasing
power and other economies of scale and ongoing improvements of automation and
technology. In 1999, we eliminated approximately $500,000 of office overhead. We
are targeting a further $350,000 (approximately) in 2000. Corporate and branch
entertainment and travel expenses are more closely controlled. For example,
executives no longer fly first or business class but economy or discount class;
they stay at mid-priced hotels and also drive compact rental cars. Entertainment
expenses, charitable donations and the use of outside consultants have been
curtailed.
Increase proportion of leased facilities. We intend over time to increase
the number of facilities we operate under lease relative to the number we
operate under management contracts. Historically, our net profits have been
significantly higher on leased facilities than on managed facilities. Our goal
is to have a higher proportion of leased facilities than managed facilities. We
believe a mix of leased, managed, and owned parking facilities will diversify
our operations, providing us with a balance of lower risk and lower profit
managed operations, and higher risk and higher profit leased and owned
operations.
Provide consistently high level of service. Our goal is to provide a
uniformly high level of quality and service across all of the facilities we
manage, characterized by clean, well-lit, secure and pleasant surroundings,
attractive graphics and signage, and professional, courteous and well-dressed
staff. We also offer a wide range of optional premium services, including valet
parking, concierge services, car washing, dry cleaning drop off and pick up and
vehicle repair. These premium services are typically offered to owners of
first-class properties who seek to provide their tenants with the highest
possible level of service to help differentiate their property from competing
properties. Recently our Toronto branch was awarded the 1999 Pinnacle Award by
the Building Owners and Managers Association (BOMA) of Ontario. The award is
given to the company and property voted by BOMA to have exhibited excellence in
customer service. Many of our clients and prospective clients are BOMA members.
Continue to implement standardized systems and controls. Over the course
of more than 35 years in the parking management business, we have developed
sophisticated and comprehensive management systems and controls, which we seek
to implement uniformly at all facilities we manage. These systems include
accounting and financial management and reporting practices, general operating
procedures, training, employment policies and practices, cash controls,
marketing procedures and visual image. We believe that our standardized systems
and controls enhance our ability to successfully expand our operations into new
markets.
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Aggressively implement technology and automation. We believe that
automation and technology can enhance customer convenience, lower labor costs,
improve cash management and increase overall profitability. We have been a
leader in the field of introducing automation and technology to the parking
business and we were among the first to widely adopt innovations such as the use
of credit card payment systems, hand-held computers to track violators and issue
citations, bar-code scanners to ensure monthly parkers are using the correct lot
and are up-to-date in payment and entry and exit gates incorporating sensing
equipment that can automatically recognize and admit authorized vehicles. We
believe we have a greater proportion of unmanned facilities than any of our
major Canadian or U.S. competitors, and that this gives us a cost advantage as
we compete for business. We have also developed a sophisticated management
information system that enables us to effectively track revenue and manage cash
on a daily basis and generate a wide variety of internal reports, as well as
customized reports requested by our clients.
Implement incentive compensation program. We have adopted a
performance-based compensation system for city managers, vice presidents and
others based on the profitability of each individual's area of responsibility.
We believe this program will enhance the entrepreneurship of our
management-level employees by tying their compensation directly to improvements
in the profitability of the operations they manage and will encourage them to
improve operations and control costs.
Provide profitable patrol, enforcement and ticketing services. We seek to
increase the profitability of our overall operations by providing parking lot
patrol, enforcement and ticketing services, both at our own facilities and at
facilities operated by others. We believe there are significant opportunities to
market these services to facilities not operated by us, especially those owned
by municipalities or by suburban retail centers, who wish to discourage all-day
parkers by enforcing parking regulations favoring short-term parkers.
Maintain strict cash control. Strict cash control is critical to our
success and that of our clients. Our cash control procedures are based on a
ticketing system supervised by high level managers and include on-site spot
checks, multiple daily cash deposits, local audit functions, managerial
oversight and review, and internal audit procedures. It is our policy that
tickets and gate counts are reconciled daily against cash collected. We believe
our cash control procedures are effective in minimizing the loss of revenues at
parking facilities.
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PARKING FACILITIES AND SURFACE LOTS
The following table summarizes certain information regarding our parking
facilities and surface lots as of December 31, 1999.
<TABLE>
<CAPTION>
LEASED MANAGED OWNED TOTAL
------------- -------------- ------------- ---------------
LOCATION LOTS SPACES LOTS SPACES LOTS SPACES LOTS SPACES
- -------- ---- ------ ---- ------- ---- ------ ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CANADA
BRITISH COLUMBIA
Vancouver.................... 66 5,958 506 102,530 -- -- 572 108,488
Other........................ 7 755 41 4,942 -- -- 48 5,697
--- ------ --- ------- --- ----- ----- -------
Total...................... 73 6,713 547 107,472 -- -- 620 114,185
ALBERTA
Edmonton..................... 92 7,190 43 6,086 2 623 137 13,899
Calgary...................... 81 9,335 28 7,414 3 345 112 17,094
Banff........................ 2 83 6 612 -- -- 8 695
--- ------ --- ------- --- ----- ----- -------
Total...................... 175 16,608 77 14,112 5 968 257 31,688
SASKATCHEWAN
Saskatoon.................... 42 3,027 13 1,695 -- -- 55 4,722
Regina....................... 47 2,256 13 2,128 1 20 61 4,404
--- ------ --- ------- --- ----- ----- -------
Total...................... 89 5,283 26 3,823 1 20 116 9,126
MANITOBA
Winnipeg..................... 68 4,485 77 15,719 8(1) 682 153 20,886
ONTARIO
Toronto...................... 27 4,145 79 34,562 1 50 107 38,757
Hamilton..................... 4 595 12 3,995 -- -- 16 4,590
London....................... 3 709 11 3,106 -- -- 14 3,815
Ottawa....................... 2 144 9 5,348 -- -- 11 5,492
Windsor...................... 1 63 5 409 -- -- 6 472
Sudbury...................... 2 570 4 910 -- -- 6 1,480
--- ------ --- ------- --- ----- ----- -------
Total...................... 39 6,226 120 48,330 1 50 160 54,606
QUEBEC/OTHER
Montreal..................... 3 145 17 3,950 -- -- 20 4,095
Halifax...................... 2 48 7 939 -- -- 9 987
St. John's................... 2 246 4 621 -- -- 6 867
--- ------ --- ------- --- ----- ----- -------
Total...................... 7 439 28 5,510 -- -- 35 5,949
TOTAL CANADA................. 451 39,754 875 194,966 15 1,720 1,341 236,440
UNITED STATES
Minneapolis.................. 19 3,133 30 6,569 -- -- 49 9,702
Milwaukee.................... 14 2,123 2 250 -- -- 16 2,373
Buffalo...................... 6 1,552 2 774 -- -- 8 2,326
Seattle...................... -- -- 5 1,520 -- -- 5 1,520
Cincinnati................... -- -- 1 1,605 -- -- 1 1,605
--- ------ --- ------- --- ----- ----- -------
TOTAL UNITED STATES.......... 39 6,808 40 10,718 -- -- 79 17,526
TOTAL........................ 490 46,562 915 205,684 15 1,720 1,420 253,966
=== ====== === ======= === ===== ===== =======
</TABLE>
- ---------------
(1) Represents eight parking facilities located on seven properties acquired
from First Union.
37
<PAGE> 42
OPERATING ARRANGEMENTS
We operate parking facilities under three general types of arrangements:
leases, management contracts, and fee ownership. As of December 31, 1999, we
leased 490 parking facilities, operated 915 parking facilities through
management contracts and owned 15 parking facilities.
The general terms and benefits of these types of arrangements are described
below:
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 the 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, but generally provide a greater opportunity for long-term revenue
growth.
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 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.
Fee ownership. Under fee ownership arrangements, the parking facility
operator owns the property and fixtures. Ownership of parking facilities
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.
ENFORCEMENT AND COLLECTIONS
Approximately 70% of our parking lots are operated with parking meters and
without parking lot attendants. We enforce user payment at these lots by having
patrollers circulate regularly through lots to identify delinquent parkers and
issue violation notices. We use modern technology which enables our patrollers
to monitor and identify first-time and repeat offenders using hand-held
computers. The hand-held computers are updated daily to mainframe computers that
track violation history. This equipment generates violation notices for
first-time offenders. Payments on account of these violation notices are
collected by our collections operation and all of the proceeds become our
revenues. Therefore, we have a direct incentive to issue ticket and collect
violation notice payments from parking violators.
We facilitate information collection by using current technology including
bar scanning systems. Parking lot supervisors travel to each lot on a regular
basis to collect cash from both parking meters and lot attendants in order to
keep cash balances low and reduce the potential for shrinkage.
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<PAGE> 43
MANAGEMENT INFORMATION SYSTEMS
We have made a significant commitment to technology over the last several
years to provide our employees the tools to perform efficiently in today's
competitive environment, to provide our landlords the information they expect
from a parking operator and to provide management the reporting necessary to
manage the business.
The following is a brief list of key features of our information system:
- Monthly Parking System -- a sophisticated system developed in-house to
manage our more than 100,000 active monthly parkers;
- Attendant System - a control system developed in-house to assist in
balancing, recording, reporting and auditing attendant transactions;
- Parking Meter System -- a control option developed in-house to assist in
balancing, recording, reporting and auditing parking meter transactions
at "unattended" locations;
- Vehicle Violation System -- a system developed in-house to manage the
approximately 700,000 violation notices issued per year; and
- Financial Reporting System -- an in-house developed general ledger,
accounts payable and landlord reporting system to report to our
management and landlords. This is a new system completed in Spring of
1999.
Our information system runs on a Unisys mainframe computer which connects
to all of our major branch offices. The computer system is scalable and, as the
applications have only recently been developed, a continued moderate annual
investment in technology and continued development enhancement should be able to
meet our business objectives for the next few years.
COMPETITION
The parking industry is fragmented and highly competitive, with few
barriers to entry. We compete regularly with a wide variety of parking service
providers to retain our operations and to expand our operations in existing and
new markets. We compete for clients based on the pricing of our services and our
ability to increase revenues and control expenses for each of our client's
parking facilities.
Our largest competitors in North America are Central Parking Corporation,
APCOA/Standard Parking, Inc. and Ampco System Parking. Impark is substantially
smaller in number of locations and revenue than Central Parking. We have
approximately the same number of locations as APCOA/Standard and Ampco System.
However, Impark has lower revenues and profits than both APCOA/Standard and
Ampco System because they are principally in the United States where gross
revenue and profits generated from a location are typically higher than in
Canada. However, being principally in Canada gives us a solid Canadian base as
Canadian corporations prefer to do business with an established Canadian parking
company. Additionally, since profit per location is generally lower in Canada,
most U.S. competitors focus their efforts in the U.S. marketplace where there is
higher potential profit. Hence, we believe we have a secure base to work from in
Canada while growing our market in the U.S. where we believe new locations will
create higher profit margins than we typically realize.
We also compete with many regional or local parking service providers, as
well as municipalities and other governmental entities, property owners and
others.
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<PAGE> 44
REGULATION
Our business is not substantially affected by direct governmental
regulation, however, several provincial, state and local laws have been passed
in recent years that encourage car pooling and the use of mass transit,
including, for example, laws prohibiting employers from reimbursing employee
parking expenses. Laws and regulations that reduce the number of cars and
vehicles being driven could hurt our business. We are also affected by laws and
regulations (such as zoning ordinances and business taxes) that are common to
any business that own or leases real estate and by regulations (such as labor
and tax laws) that affect companies with a large number of employees.
Under various federal, provincial, 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 ownership or operation of parking facilities, we may be
potentially liable for such costs. Although we are currently not aware of any
material environmental claims pending or threatened against us or any of our
owned or operated parking facilities, there can be no assurance that a material
environmental claim will not be asserted against us or against our owned or
operated parking facilities. The cost of defending against claims of liability,
or of remediating a contaminated property, could have a material adverse effect
on our financial condition or results of operations.
Various other governmental regulations affect our operation of parking
facilities, both directly and indirectly. In the United States, these include
the Americans with Disabilities Act, or ADA. Under the ADA, all public
accommodations in the United States, 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. We believe
that the parking facilities we own and operate are in substantial compliance
with these requirements.
EMPLOYEES
As of December 31, 1999, we employed approximately 2,050 individuals,
including approximately 1,350 full-time and 700 part-time employees. We believe
that our employee relations are good. Approximately 46% of our Canadian
employees (some 845 employees) are represented by unions, including the
Construction and Specialized Workers' Union Local 1611 (British Columbia),
Christian Labour Association of Canada Local 501 (British Columbia), Service
Employees International Union (Regina), Saskatchewan Joint Board, Retail,
Wholesale & Department Store Union Local 558 (Saskatoon), Canada Labour Congress
(Winnipeg), Steelworkers (Sudbury), Teamsters (Ottawa), SEIU, UFCW (Toronto),
SEIU (London), Le Syndicat des employes and Union des employes de service
(Montreal).
LITIGATION
The provision of services to the public entails an inherent risk of
liability. We are engaged from time to time in routine litigation incidental to
our business. Other than a case involving Eau Claire Market in Calgary, Alberta
described below, there is no legal proceeding to which we are a party which, if
decided adversely could materially harm our financial condition. We attempt to
disclaim liability for personal injury and property damage claims by printing
disclaimers on our ticket stubs and by placing warning signs in the facilities
we operate. We also carry liability insurance that we believe meets or exceeds
industry standards as determined by our landlords. We can provide no assurance,
however, that any future legal proceedings (including any related judgments,
settlements or costs) will not have a material adverse effect on our financial
condition, liquidity or results of operations.
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<PAGE> 45
The Eau Claire Market litigation was filed in the Queen's Bench of Alberta
on August 20, 1998. It involves a claim against a property in which we are the
lessee. The plaintiff asserts that it is entitled to priority over our lease and
to possession of the property. We believe that this claim is without merit. If,
however, we do not prevail in the litigation, we may be forced to renegotiate
the lease with the landlord, in which case the rent could be substantially
increased and may materially impact our results.
Imperial Parking Limited, which will be a subsidiary of Impark after the
distribution, is a defendant in a lawsuit brought by Newcourt Financial Ltd. as
the assignee of Oracle Corporation Canada Inc. The suit was filed in Ontario
Superior Court on June 11, 1999. It alleges that Imperial Parking and FUMI owe
approximately $825,000 under a software license and services agreement. We
believe that these claims are without merit, however the legal action is in its
earliest stages. First Union has agreed to assume all liability with respect to
this claim.
41
<PAGE> 46
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Our executive officers and directors, and their ages as of December 31,
1999, are as set forth below. Each of the individuals who is to serve as a
director will begin that service immediately prior to the Distribution.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- ---- --------
<S> <C> <C>
Charles E. Huntzinger................ 52 President and Chief Executive Officer, Director
J. Bruce Newsome..................... 49 Senior Vice President, Chief Financial Officer
Bryan L. Wallner..................... 40 Senior Vice President, Operations
David Schonberger.................... 44 Vice President
William A. Ackman(1)................. 33 Chairman, Director
Daniel P. Friedman................... 42 Vice Chairman, Director
Talton R. Embry...................... 53 Director
Armand E. Lasky(2)................... 52 Director
William A. Scully.................... 37 Director
Beth A. Stewart...................... 43 Director
Mary Ann Tighe(1)(2)................. 51 Director
David J. Woods(2).................... 50 Director
</TABLE>
- ---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
CHARLES E. HUNTZINGER has served as president and chief executive officer
since joining Imperial Parking in January 1999. From 1993 until December 1998,
Mr. Huntzinger was associated with Central Parking Corporation where he was
vice-president for the Midwest Region and, later, for the New York Region. From
1992 until 1993 Mr. Huntzinger was vice president of Spectacore, a stadium
management company and owner of the Philadelphia Flyers; he was in charge of
parking operations. Mr. Huntzinger was the chief operating officer for Parkway
Corporation from 1978 until 1992, where he was in charge of parking operations
nationwide.
J. BRUCE NEWSOME has served as senior vice president and chief financial
officer of Impark since 1989. From 1986 to 1989, Mr. Newsome served as vice
president for finance and controller. Prior to 1989, Mr. Newsome served as
Impark's controller. He has been involved in several acquisitions in the last 16
years and is responsible for ensuring that financial, accounting, MIS and
treasury systems will accommodate expansion plans. Before joining Imperial
Parking, Mr. Newsome was a senior manager at the accounting firm of KPMG.
BRYAN L. WALLNER became senior vice president of Imperial Parking in March
1999. Prior to joining Impark, Mr. Wallner was a regional manager for Central
Parking Corporation ("Central Parking"). He guided Central Parking's growth in
the Midwest, opening offices in four new cities. He has expertise in
stadium/arena, mixed use, retail, office as well as valet, shuttle, and patrol
contracts. Mr. Wallner began his career in the parking industry in 1987 with
Central Parking Corporation in St. Louis, Missouri.
DAVID SCHONBERGER will become a vice president of Impark upon the
Distribution. He has been executive vice president of First Union since November
1998, where he is primarily responsible for retail, office and residential
projects. From November 1997 to November 1998, he was senior vice president of
Enterprise Asset Management Inc. At Enterprise, he was responsible for retail
and raw land development projects. Since January 1990, Mr. Schonberger has been
director of Legacy Construction Corporation, a privately held leasing and
project management company specializing in institutional property management and
oversight of specialty construction and development projects. In February 1996,
Legacy Construction Corporation merged with Peter Elliot Corporation to form
Peter Elliot LLC. From February 1996 to October 1997, Mr. Schonberger served as
treasurer and manager of Peter Elliot LLC.
42
<PAGE> 47
DANIEL P. FRIEDMAN will become vice chairman of the Impark board of
directors upon the Distribution. He has served as president, chief executive
officer and a trustee of First Union since November 1998. He was president and
chief operating officer of Enterprise Asset Management, Inc. from June 1996 to
November 1998 and was executive vice president and chief operating officer of
Enterprise from February 1992 to June 1996. At Enterprise, he was responsible
for asset management and new business development. From September 1994 to
November 1998, Mr. Friedman was a manager of all the Cheshire Limited Liability
Companies ("Cheshire"). Cheshire acquires and restructures non-performing
underlying residential co-op mortgage loans and unsold co-op apartments. From
May 1993 to December 1997, Mr. Friedman was a board member of Emax Advisors,
Inc. From May 1993 to December 1996, he was a board member of Emax Securities,
Inc., a NASD broker/dealer.
WILLIAM A. ACKMAN will become chairman of the Impark board of directors
upon the Distribution. He has been chairman of the board of trustees of First
Union since June 1998. Since January 1, 1993, through a company he owns, Mr.
Ackman has acted as co-investment manager of three investment funds: Gotham
L.P., Gotham III L.P. and Gotham Partners International, Limited.
TALTON R. EMBRY has been the chairman of Magten Asset Management Corp.
("Magten") since 1998, where he is the chief investment officer for Magten's
clients. He has been with Magten since 1978. Mr. Embry is also a director of
Anacomp, Inc., Salant Corporation and BDK Holdings, Inc.
ARMAND E. LASKY has been the president of Empire State Collateral
Corporation Real Estate ("Empire State") since 1983, where he oversees the
acquisition of parking properties and related commercial real estate.
WILLIAM A. SCULLY has been vice chairman of the board of trustees of First
Union since November 1998. Mr. Scully has been a partner of Apollo since 1996
and is responsible for new investments and investment management. From 1994 to
1996, Mr. Scully was a senior vice president of O'Connor Capital, Inc., the
general partner of The Argo Funds, and the director of acquisitions for The Argo
Funds. From 1993 to 1994, Mr. Scully directed private investment activities for
entities related to Clark Construction and The Carlyle Group, primarily in land
development projects in suburban Washington, D.C.
BETH A. STEWART has been president of Stewart Real Estate Capital since
1993, where she has been involved with numerous equity investments in private
and public securities with partners and properties throughout the United States.
Ms. Stewart worked for Goldman, Sachs & Co. from 1980 to 1992 where she was vice
president of the Real Estate Department from 1986 until 1992. Ms. Stewart is a
director of General Growth Properties, Inc.
MARY ANN TIGHE has been vice chairman of Insignia/ESG, a commercial real
estate firm, since January 1999. From 1993 until January 1999 she was an
executive managing director and from June 1992 until March 1993 was senior
managing director. She has also chaired the Executive and Strategic Planning
Committees of Insignia since November 1998. Ms. Tighe is a trustee of First
Union.
DAVID J. WOODS has been president of Pattison Outdoor Group, an outdoor
advertising firm since May 1997. From January 1997 to April 1997, Mr. Woods was
vice president for finance at Interactive Media Inc. From September 1995 until
December 1996 he was senior vice president for finance at Gannett Inc. From
January 1995 until August 1995 Mr. Woods was executive vice president at
Mediacom Inc.
Following the Distribution, the Impark board of directors will be divided
into three classes, each of whose members will serve for a staggered three-year
term. The Board will consist of three Class I directors (Messrs. Lasky and
Scully and Ms. Tighe), three Class II directors (Messrs. Embry, Huntzinger and
Woods) and three Class III directors (Messrs. Ackman and Friedman and Ms.
Stewart). At each annual meeting of stockholders, a class of directors will be
elected for a three-year term to succeed the directors of the same class whose
terms are then expiring. The terms of the Class I directors, Class II directors
and Class III directors expire upon the election and qualification of successor
directors at the annual meeting of stockholders held during the calendar years
2001, 2002 and 2003 respectively.
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<PAGE> 48
Each executive officer serves at the discretion of the board of directors
and holds office until his or her successor is elected and qualified or until
his or her earlier resignation or removal. There are no family relationships
among any of our directors or executive officers.
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors has an executive committee, composed of Messrs.
Ackman, Friedman and Huntzinger and Ms. Stewart, which oversees all aspects of
the management of the business of Impark. In addition, the board of directors
has a compensation committee, composed of Mr. Ackman and Ms. Tighe, which makes
recommendations concerning salaries and incentive compensation for our employees
and consultants and administers and grants stock options pursuant to our stock
option plans. The board of directors also has an audit committee, composed of
Messrs. Woods and Lasky and Ms. Tighe, which reviews the financial statements of
Impark that will be issued to its shareholders, the results and scope of the
annual audit and other services provided by our independent public accountants
and reviews matters that arise from time to time related to our internal
accounting controls.
DIRECTOR COMPENSATION
The directors of Impark will receive the following compensation:
- $1,500 for each board meeting attended;
- $500 for each board meeting participated in by telephone or committee
meeting; and
- an annual grant of $20,000 worth of Impark common stock, valued at the
time of the grant, but vesting one year after the grant.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued for
the year ended December 31, 1999 for Impark's chief executive officer and for
the two other executive officers whose salary and bonus totaled at least
$100,000 for 1999.
In accordance with the rules of the Securities and Exchange Commission the
compensation set forth in the table below does not include medical, group life
and other benefits which are available to all of our salaried employees, or
perquisites or other benefits, securities or property which do not exceed the
lesser of $50,000 or 10% of the person's salary and bonus shown in the table. In
the table below, columns required by the regulations of the Securities Exchange
Commission have been omitted where no information was required to be disclosed
under these columns.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------
NAME AND PRINCIPAL POSITION SALARY BONUS ALL OTHER
- --------------------------- -------- ------- ---------
<S> <C> <C> <C>
Charles E. Huntzinger
President and Chief Executive Officer(1)(2)(3)............ $510,000 $29,100 $10,000
Bryan L. Wallner
Senior Vice President(4)(5)(6)............................ $205,500 $20,000 $ 4,150
J. Bruce Newsome
Senior Vice President and Chief Financial Officer(7)(8)... $146,207 $15,400 $13,587
</TABLE>
- ---------------
(1) Paul Clough resigned as President and Chief Executive Officer on January 4,
1999 and Mr. Huntzinger was appointed to those offices effective January 4,
1999.
(2) The amount listed for Mr. Huntzinger's bonus was a payment to compensate him
for various costs associated with his relocation.
(3) Mr. Huntzinger's other compensation consists of a car allowance.
44
<PAGE> 49
(4) Mr. Wallner's salary is prorated to reflect the fact that he started in
February 1999. His annual salary is at a rate of $237,500.
(5) The amount listed for Mr. Wallner's bonus was a signing bonus paid upon his
joining Impark.
(6) Mr. Wallner's other compensation consists of use of a car that Impark rents
for him.
(7) Mr. Newsome's salary, bonus and other compensation are paid in Canadian
dollars. The figures in this table were converted to US dollars, based on a
conversion rate of 1.45 Canadian dollars to one US dollar on January 7,
2000, as published in the Federal Reserve Statistical Release, January 10,
2000.
(8) Mr. Newsome's other compensation consists of $11,518 for a car allowance and
$2,069 in club membership fees.
STOCK PLANS
A total of 315,000 shares of Impark common stock have been reserved for
issuance in the aggregate under our stock plan described below.
2000 Stock Incentive Plan. Under our 2000 Stock Incentive Plan, a variety of
awards, including incentive stock options intended to qualify under Section 422
of the Internal Revenue Code, nonstatutory stock options, stock appreciation
rights, restricted and unrestricted stock awards and other stock-based awards,
may be granted to our officers, employees, directors, consultants and advisors
and officers, employees, directors, consultants and advisors our subsidiaries.
The board of directors has authorized the compensation committee to administer
the Stock Incentive Plan. While we currently anticipate that most grants under
the Stock Incentive Plan will consist of stock options, we may also grant stock
appreciation rights, which represent the right to receive any excess in value of
the shares of common stock over the exercise price; restricted stock awards,
which entitle recipients to acquire shares of Impark common stock, subject to
our right to repurchase all or part of such shares at their purchase price in
the event that the conditions specified in the award are not satisfied; or
unrestricted stock awards, which represent grants of shares to participants free
of any restrictions under the Stock Incentive Plan. Options or other awards that
are granted under the Stock Incentive Plan but expire unexercised are available
for future grants. As of the date of the Distribution, we will not have any
options outstanding, but we expect to grant options to purchase shares of Impark
common stock thereafter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer has served as a director of or member of the
compensation committee (or other committee serving an equivalent function) of
any other entity, any of whose executive officers serve as a director of or
member of the compensation committee of the board of directors.
EMPLOYMENT AGREEMENTS
Mr. Huntzinger has entered into a 5 year employment agreement with us
effective as of the date of the Distribution to serve as our Chief Executive
Officer and President. Mr. Huntzinger will receive an annual base salary of
$425,000. He will also be granted on the 30th day following the Distribution an
option to acquire 95,625 shares of our common stock at a per share exercise
price equal to the greater of the closing price of a share on that date and the
average of the closing prices of a share during the 10 trading day period
immediately preceding the grant date. The options vest over four years based on
continued employment. If we consummate a rights offering for common stock, Mr.
Huntzinger will be granted an option to acquire 4.5% of the shares issued for
the first $30 million of capital raised. If we terminate Mr. Huntzinger's
employment without "cause" or if he terminates his employment for "good reason"
the options described above will vest and we will pay him in cash two times the
sum of his base salary and bonus (but not less than $1 million). Upon certain
change in control transactions, the option described above will vest. Mr.
Huntzinger's employment agreement contains standard non-compete, non-
solicitation and non-disclosure covenants.
45
<PAGE> 50
Mr. Wallner's five-year employment agreement, effective March 1999,
provides for a base salary of $237,500 per year. The agreement also provides
that Mr. Wallner is eligible to earn a bonus of 1.75% of the increase of
Impark's EBITDA over its EBITDA for 1998 after amortizing capital expenditures
and applying a 10% cost of capital. The opinions vest over four years based on
continued employment. If we consummate a rights offering for common stock, Mr.
Wallner will be granted options on 1.0% of the shares issued for the first $30
million of capital raised.
Mr. Newsome's four-year employment agreement, effective January 1998,
provides for a base salary of $136,900 in the first year. The base salary is
subject to annual adjustment by the Compensation Committee and for changes based
on the Consumer Price Index with respect to Vancouver, British Columbia. The
agreement also provides for a bonus to be determined by the Compensation
Committee annually.
In the event that Impark chooses not to renew Mr. Newsome's contract, he
will be entitled to a lump sum payment equal to his total salary for the
preceding 24 month period.
Mr. Schonberger's employment arrangements with Impark provide for him to
serve on an at-will basis at a salary of $112,500 per year. Mr. Schonberger is
not obligated to work for Impark on a full-time basis and Mr. Schonberger will
continue in his current duties at First Union.
Mr. Friedman's employment arrangements with Impark provide for him to serve
on an at-will basis at a salary of $82,500 per year. Mr. Friedman's employment
agreement does not require Mr. Friedman to work for Impark on a full-time basis,
and Mr. Friedman will continue in his current duties at First Union while
working for Impark.
In addition to the employment arrangements with Messrs. Huntzinger,
Wallner, Friedman and Schonberger described above, Impark has agreed to grant
each of those individuals options to purchase its common stock as follows:
<TABLE>
<S> <C>
Charles E. Huntzinger..................................... 95,625 shares
Bryan L. Wallner.......................................... 21,250 shares
David Schonberger......................................... 26,562 shares
Daniel P. Friedman........................................ 53,125 shares
</TABLE>
We expect to grant these options only after a trading market for Impark's
common stock has been established, in order to permit us to determine the
exercise price of the options based on the fair market value of the shares of
common stock. We will determine the fair market value equal to the greater of
the closing price of a share on the day of grant and the average of the closing
prices of a share during the 10 trading days immediately preceding the grant
date. The options will vest or become exercisable over a four-year period. In
addition, the options will provide for their exercise price to increase at a
rate of 10% per year.
Messrs. Huntzinger and Wallner also have an agreement with Impark to permit
them to maintain their level of ownership of Impark if Impark sells additional
shares of stock. Under the terms of this arrangement, Impark will grant
additional options to Messrs. Huntzinger and Wallner each time Impark sells
shares of its capital stock for cash until Impark has sold a total of $30
million worth of stock. The additional options will be sufficient to maintain
the percentage of Impark's outstanding shares and options represented by each
individual's options prior to the sale of stock. The new options will have an
exercise price equal to the greater of the closing price of a share on the day
of grant and the average of the closing prices of a share during the 10 trading
days immediately preceding the grant date.
Messrs. Friedman and Schonberger are expected to have an arrangement
similar to that of Messrs. Huntzinger and Wallner, except that their arrangement
is expected to require that they purchase some significant part of the shares
necessary to maintain their percentages.
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<PAGE> 51
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, with respect to each member of the board of
directors, the executive officers, and all directors and executive officers as a
group, information relating to their anticipated beneficial ownership of Impark
shares as of the date of the Distribution.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT
- ------------------------ ----------------------- -------
<S> <C> <C>
DIRECTORS
Charles E. Huntzinger (also an executive officer)......... 35 *
William A. Ackman(2)...................................... 292,061 13.91%
Daniel P. Friedman(3)..................................... 19,937 *
Talton R. Embry(4)........................................ 307,564 14.65%
Armand E. Lasky........................................... 50 *
William A. Scully(5)...................................... 0 0
Beth A. Stewart........................................... 225 *
Mary Ann Tighe(6)......................................... 375 *
David J. Woods............................................ 0 0
EXECUTIVE OFFICERS
J. Bruce Newsome.......................................... 0 0
Bryan L. Wallner.......................................... 0 0
David Schonberger(7)...................................... 6,453 *
All directors and executive officers (12 in number) as a
group..................................................... 626,700 29.84%
</TABLE>
- ---------------
* Beneficial ownership does not exceed 1%.
(1) Pursuant to Rule 13d-3 of the Exchange Act, a person is deemed to be a
beneficial owner if he has or shares voting power or investment authority in
respect of such security or has the right to acquire beneficial ownership
within 60 days. The amounts shown in the above table do not purport to
represent beneficial ownership except as determined in accordance with this
Rule. Each director and executive officer has sole voting and investment
power with respect to the amounts shown or shared voting and investment
powers with his or her spouse, except as indicated below.
(2) Mr. Ackman is the president of Karenina Corporation, a general partner of
Section H Partners, LP. Section H is the sole general partner of Gotham LP
and Gotham Partners III, LP. Accordingly, Mr. Ackman, Karenina Corporation
and Section H may be deemed beneficial owners of shares owned by Gotham LP
and Gotham III LP. Gotham Partners International, Limited, a Delaware
limited liability company, has the power to vote and dispose of the shares
held for the account of Gotham Partners International, Limited, a Cayman
exempted company, and accordingly, may be deemed the beneficial owner of
such shares. Mr. Ackman is a senior managing member of Gotham Partners
International and may be deemed a beneficial owner of shares owned by Gotham
Partners International. For purposes of this table, all of such ownership is
included. Mr. Ackman's address is c/o Gotham Partners, L.P., 110 East 42nd
Street, New York, NY 10017.
(3) Includes 18,187 shares that Mr. Friedman has a right to acquire through the
exercise of First Union options within 60 days after December 31, 1999.
(4) Mr. Embry is the chairman of Magten Asset Management Corp. and, accordingly,
may be deemed a beneficial owner of shares owned by Magten. For purposes of
this table, all such ownership is included. Mr. Embry disclaims beneficial
ownership of 222,638 shares owned by clients of Magten, 62,006 shares owned
by Magten's pension and profit sharing plans of which Mr. Embry is a
trustee, 2,275 shares owned by his wife and 5,425 shares owned by his
children. Mr. Embry shares investment and/or voting power with respect to
the shares held by Magten clients. Mr. Embry's address is c/o Magten Asset
Management Corp., 35 East 21st Street, New York, NY 10010.
(5) Mr. Scully is a limited partner of Apollo LP. As a limited partner, he has
no right to vote or dispose of any shares held by Apollo LP, and therefore
does not beneficially own any shares held by Apollo LP.
47
<PAGE> 52
(6) Ms. Tighe is a limited partner of Gotham L.P. As a limited partner of Gotham
L.P., she has no right to vote or dispose of any shares held by Gotham L.P.,
and therefore does not beneficially own any Shares held by Gotham L.P.
(7) Includes 6,453 shares that Mr. Schonberger has a right to acquire through
the exercise of First Union options within 60 days after December 31, 1999.
The following table sets forth, according to publicly available information
on file with the Commission as of the dates indicated in the accompanying
footnotes, except as otherwise indicated, information concerning each person
known by Impark to be the beneficial owner of more than 5% of First Union shares
and, therefore, who would own a similar percentage of Impark shares after the
Distribution.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT
- ------------------------ ----------------------- -------
<S> <C> <C>
Gotham Partners, L.P.(2).................................... 292,061 13.91%
Gotham Partners International Limited
Gotham Partners III, L.P.
110 East 42nd Street
New York, NY 10017
Apollo Real Estate Investment Fund II, L.P.(3).............. 149,518 7.12%
Apollo Real Estate Advisors II, L.P.
1301 Avenue of the Americas
New York, NY 10019
Magten Asset Management Corp. (4)........................... 223,319 10.63%
35 East 21st Street
New York, NY 10010
Snyder Capital Management, L.P. (5)......................... 225,950 10.76%
Snyder Capital Management, Inc.
350 California Street
Suite 1460
San Francisco, CA 94104
</TABLE>
- ---------------
(1) Pursuant to Rule 13d-3 of the Exchange Act, a person is deemed to be a
beneficial owner if he has or shares voting power or investment authority in
respect of such security or has the right to acquire beneficial ownership
within 60 days. The amounts shown in the above table do not purport to
represent beneficial ownership except as determined in accordance with this
Rule.
(2) The information regarding these holders was received by Impark from a
Schedule 14A filed with the Commission on October 14, 1999. Gotham L.P. has
sole voting and investment power with respect to 216,556 shares, Gotham
International Advisers has shared voting and investment power with respect
to 71,583 shares and Gotham III L.P. has sole voting and investment power
with respect to 3,922 shares.
(3) The information regarding these holders was received by Impark from a
Schedule 14A filed with the Commission on October 14, 1999. These holders
have shared voting and investment power with respect to all of their shares.
(4) The information regarding this holder is as of December 31, 1999, and was
obtained from Magten Asset Management Corporation. Includes 415 shares
attributable to the holder's pro-rata interest in shares owned by Magten
Partners, L.P. and 226 shares attributable to the holder's pro-rata interest
in shares owned by Magten Offshore Fund, Ltd. This holder has shared voting
and investment power with respect to 117,793 shares and shared investment
power with respect to 104,845 shares.
(5) The information regarding these holders was received by Impark from a
Schedule 13G filed with the Commission on February 15, 2000. These holders
have shared voting and investment power with respect to 201,617 shares and
shared investment and no voting power with respect to 24,333 shares.
48
<PAGE> 53
CERTAIN TRANSACTIONS
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with all of our executive
officers. We have also agreed to grant options to our executive officers. See
"Management -- Employment Agreements."
AFFILIATE TRANSACTION POLICY
We have adopted a policy providing that all material transactions between
us and our officers, directors and other affiliates must be:
- Approved by a majority of the members of our board of directors and by a
majority of the disinterested members of our board of directors; and
- On terms no less favorable to us than could be obtained from
unaffiliated third parties.
CONSULTING RELATIONSHIP WITH MS. BETH A. STEWART
Ms. Stewart worked for First Union under a consulting agreement dated
February 1999. She was retained to guide the process of evaluating whether
Impark should be sold, merged with another company or distributed to the First
Union shareholders and to oversee the implementation of the chosen alternative.
Through December 31, 1999, her fees under this agreement were $157,500 plus out
of pocket expenses. It is expected that Ms. Stewart will receive approximately
$42,500, plus out of pocket expenses in 2000 prior to the Distribution. Ms.
Stewart will not serve as a consultant to Impark after the Distribution.
AGREEMENT WITH PATTISON OUTDOOR GROUP
Pattison Outdoor is the largest outdoor advertising company in Canada with
billboards in all the major markets in the country. David Woods, who will become
director of Impark immediately prior to the Distribution, is the president of
Pattison Outdoor. Pursuant to a competitive bidding process, Pattison Outdoor
entered into a 10-year exclusive agreement with Impark to place a substantial
number of billboards (approximately 265 advertising faces) of various designs on
Impark-operated parking lots throughout Canada. The agreement between Imperial
Parking and Pattison Outdoor runs from July 1, 1999 to June 30, 2009. Pattison
Outdoor pays Impark a fee for the right to place billboards on these parking
lots and in year one these payments will be approximately $424,138 escalating to
$582,759 in year 10. The contract is in Canadian dollars. These amounts were
converted to U.S. dollars based on a conversion rate of 1.45 Canadian dollars to
one U.S. dollar on January 7, 2000, as published in the Federal Reserve
Statistical Release, January 10, 2000. Prior to July 1, 1999, the companies had
entered into similar agreements that covered only one to two years.
SALE OF SECURITY BUSINESS
Imperial Parking, previously operated Inner-Tec, a parking lot security
business. Imperial Parking will continue as an operating subsidiary of Impark.
In 1999, Imperial Parking sold the security business to one of its former
executive officers for cash of $1.3 million and promissory notes of
approximately $500,000.
SALE OF PARKING BUSINESS
In 1999, Imperial Parking sold Robbins, a subsidiary with parking lot
operations, to its former president a subsidiary with parking lot operations, to
its former president and chief executive officer for consideration equal to $2.1
million, the settlement of termination benefit claims, and related costs.
49
<PAGE> 54
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Impark consists of 10,000,000 shares of
common stock, $.01 par value per share, and 2,000,000 shares of preferred stock,
$.01 par value per share. Immediately following the Distribution, there will be
approximately 2.1 million shares of common stock outstanding held by
approximately 9,000 stockholders.
The following summary of the material provisions of Impark common stock,
preferred stock, certificate of incorporation and by-laws is qualified by
reference to the provisions of applicable law and to our certificate of
incorporation, by-laws and other agreements included as exhibits to the
registration statement of which this document is a part. See "Additional
Information."
COMMON STOCK
Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Holders of common stock are entitled to receive ratably such dividends,
if any, as may be declared by the board of directors out of funds legally
available therefor, subject to any preferential dividend rights of outstanding
preferred stock. Upon the dissolution or liquidation of Impark, subject to the
prior rights of holders of any outstanding preferred stock, the holders of
common stock are entitled to receive ratably the net assets of Impark available
after the payment of all debts and other liabilities. Holders of common stock
have no preemptive, subscription or redemption rights. The rights, preferences
and privileges of holders of common stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred
stock which our board of directors may designate and issue in the future.
At present, there is no established trading market for Impark Common Stock.
We have applied to list the common stock on the American Stock Exchange under
the symbol "IPK."
PREFERRED STOCK
Under the terms of our certificate of incorporation, the board of directors
is authorized, subject to any limitations prescribed by law, without stockholder
approval, to issue up to 2,000,000 shares of preferred stock in one or more
series. Each such series of preferred stock would have such rights, preferences,
privileges and restrictions, including voting rights, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as may be
determined by the board of directors.
The purpose of authorizing the board of directors to issue preferred stock
and determine its rights and preferences is to eliminate delays associated with
a stockholder vote on specific issuances. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, a
majority of our outstanding voting stock. We have no present plans to issue any
shares of preferred stock.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
Impark is subject to the provisions of Section 203 of the Delaware General
Corporation Law statute. Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination"
includes mergers, assets sales and other transactions resulting in a financial
benefit to the interested stockholder. Subject to certain exceptions, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
Our by-laws provide for the division of the board of directors into three
classes as nearly equal in size as possible with staggered three-year terms. See
"Management." In addition, our by-laws provide that directors may be removed
only for cause by the affirmative vote of the holders of more than 50% of the
50
<PAGE> 55
shares of capital stock entitled to vote. Under our by-laws, any vacancy on the
board of directors, including a vacancy resulting from an enlargement of the
board of directors, may only be filled by vote of a majority of the directors
then in office. The classification of the board of directors and the limitation
on the method of filling vacancies could make it more difficult for a third
party to acquire, or discourage a third party from acquiring, control of Impark.
Our by-laws also provide that any action required or permitted to be taken
by the stockholders at an annual meeting or special meeting of stockholders may
only be taken if it is properly brought before such meeting, and may not be
taken by written action in lieu of a meeting. Our certificate of incorporation
provides that special meetings of the stockholders may only be called by our
chairman of the board, our president or our board of directors. In order for any
matter to be considered "properly brought" before a meeting, a stockholder must
comply with advance notice and information disclosure requirements. The
stockholder must deliver written notice of the matter to the secretary of
Impark, to be received not less than 60 days nor more than 90 days prior to the
meeting. However, if less than 70 days' notice or prior public disclosure of the
date of the meeting is given to stockholders, the notice would have to be
received by the secretary not later than the close of business on the 10th day
following the date on which the notice of the meeting was mailed or such public
disclosure was made, whichever occurs first. If the matter relates to the
election of directors, the notice must set forth specific information regarding
each nominee and the nominating shareholder. For any other matter, the notice
must set forth a brief description of the business desired to be brought and the
reasons for conducting business at the annual meeting and certain information
regarding the proponent stockholder. These provisions could have the effect of
delaying until the next stockholders meeting stockholder actions that are
favored by the holders of a majority of our outstanding voting securities. These
provisions could also discourage a third party from making a tender offer for
the common stock, because even if it acquired a majority of our outstanding
voting securities, the third party would be able to take action as a stockholder
(such as electing new directors or approving a merger) only at a duly called
stockholders' meeting, and not by written consent.
Delaware corporate law provides generally that the affirmative vote of a
majority of the shares entitled to vote on any mater is required to amend a
corporation's certificate of incorporation or by-laws, unless a corporation's
certificate of incorporation or by-laws, as the case may be, requires a greater
percentage. Our by-laws require the affirmative vote of holders of more than 50%
of the votes which all the stockholders would be entitled to cast in any annual
election of directors or class of directors to amend or repeal any of the
provisions described in the prior two paragraphs.
Our certificate of incorporation contains certain provisions permitted
under the Delaware corporate law relating to the liability of directors. The
provisions eliminate a director's liability for monetary damages for a breach of
fiduciary duty, except in certain circumstances involving wrongful acts, such as
the breach of a director's duty of loyalty or acts or omissions which involve
intentional misconduct or a knowing violation of law. Further, our certificate
of incorporation contains provisions to indemnify our directors and officers to
the fullest extent permitted by the Delaware corporate law. We believe that
these provisions will assist us in attracting and retaining qualified
individuals to serve as directors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock will be National City
Bank.
51
<PAGE> 56
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law and Impark's Amended and Restated
Certificate of Incorporation and Amended and Restated By-Laws limit the monetary
liability of directors to Impark and to its shareholders and provide for
indemnification of Impark's officers and directors for liabilities and expenses
that they may incur in such capacities. In general, officers and directors are
indemnified with respect to actions taken in good faith in a manner reasonably
believed to be in, or not opposed to, the best interests of Impark, and with
respect to any criminal action or proceeding, actions that the indemnitee had no
reasonable cause to believe were unlawful. Impark also has indemnification
agreements with its directors and officers that provide for the maximum
indemnification allowed by law. Reference is made to Impark's Amended and
Restated Certificate of Incorporation and Amended and Restated By-Laws which are
filed as exhibits to the Registration Statement of which this Information
Statement is a part.
Under the Memorandum of Understanding regarding the Distribution, First
Union is obligated, under certain circumstances, to indemnify directors and
officers of Impark against certain liabilities. Reference is made to the form of
Memorandum of Understanding regarding the Distribution which is filed as an
exhibit to the Registration Statement of which this Information Statement is a
part.
AVAILABLE INFORMATION
Following the Distribution, Impark will be required to comply with the
reporting requirements of the Exchange Act and will file annual, quarterly and
other reports with the Commission. Impark will also be subject to the proxy
solicitation requirements of the Exchange Act and will furnish holders of Impark
common stock with annual reports containing consolidated financial statements
prepared in accordance with generally accepted accounting principles in the
United States which will be audited and reported on, as well as quarterly
reports for the first three quarters of each fiscal year containing unaudited
financial information.
Impark has filed a Registration Statement on Form 10 with the Commission to
register the shares of Impark common stock to be issued on the Distribution Date
under the Exchange Act. This Information Statement does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto, as certain items are omitted in accordance with the rules and
regulations of the Commission. Reference is made to such Registration Statement
and the exhibits and schedules thereto, which may be inspected and copied, at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at 7 World Trade Center, 13th Floor, New York, New York 10048
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Information on
the operation of the Public Reference Room is available by calling the SEC at
1-800-SEC-0330. Copies of such material also can be obtained at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth Street,
Washington, D.C. 20549. In addition, Impark is required to file electronic
versions of such material with the Commission through the Commission's
Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. The Commission
maintains a World Wide Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. Statements contained herein
concerning the provisions of any document are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
52
<PAGE> 57
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
IMPERIAL PARKING CORPORATION
Pro Forma and Adjusted Pro Forma Consolidated and Combined
Financial Statements (unaudited).......................... F-2
Consolidated Balance Sheet as of December 31, 1999........ F-2
Combined Statement of Operations for the year ended
December 31, 1999...................................... F-3
Notes to Pro Forma and Adjusted Pro Forma Consolidated and
Combined Financial Statements.......................... F-4
FUMI PARKING BUSINESS
Independent Auditors' Report................................ F-7
Combined Balance Sheets as of December 31, 1998 and 1999.... F-8
Combined Statements of Operations for the period from April
17, 1997 to December 31, 1997 and years ended December 31,
1998 and 1999............................................. F-9
Combined Statements of Owner's Deficiency for the period
from April 17, 1997 to December 31, 1997 and years ended
December 31, 1998 and 1999................................ F-10
Combined Statements of Cash Flows for the period from April
17, 1997 to December 31, 1997 and years ended December 31,
1998 and 1999............................................. F-11
Notes to Combined Financial Statements...................... F-13
FUR PARKING BUSINESS
Independent Auditors' Report................................ F-29
Combined Balance Sheets as of December 31, 1998 and 1999.... F-30
Combined Statements of Operations for the period from April
17, 1997 to December 31, 1997 and years ended December 31,
1998 and 1999............................................. F-31
Combined Statements of Owner's Equity for the period from
April 17, 1997 to December 31, 1997 and years ended
December 31, 1998 and 1999................................ F-32
Combined Statements of Cash Flows for the period from April
17, 1997 to December 31, 1997 and years ended December 31,
1998 and 1999............................................. F-33
Notes to Combined Financial Statements...................... F-34
IMPARK HOLDINGS INC.
Independent Auditors' Report................................ F-41
Consolidated Statements of Operations and Retained Earnings
(Deficit) for the nine months ended December 31, 1996 and
the period from January 1, 1997 to April 16, 1997......... F-42
Consolidated Statements of Cash Flows for the nine months
ended December 31, 1996 and the period from January 1,
1997 to April 16, 1997.................................... F-43
Notes to Consolidated Financial Statements.................. F-44
</TABLE>
F-1
<PAGE> 58
UNAUDITED PRO FORMA CONSOLIDATED AND
COMBINED FINANCIAL STATEMENTS
IMPERIAL PARKING CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS (NOTE 3(A))
FUMI FUR -----------------------------------------
PARKING PARKING DISCONTINUED
BUSINESS BUSINESS INTER-ENTITY OPERATION FORMATION PRO FORMA
-------- -------- ------------ ------------ ----------- ---------
(i) (ii) (iii)-(vii)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash................................ $ 1,394 $ 1,984 139 4,163 $ 7,680
Accounts receivable................. 4,620 30 (1,389) 3,261
Receivables from related parties.... -- 1,717 (1,716) 1
Inventory........................... 4,285 -- (3,395) 890
Deposits and prepaid expenses....... 827 -- (78) 749
-------- ------- -------
11,126 3,731 12,581
Notes receivable...................... -- 17,330 (17,330) --
Fixed assets.......................... 4,984 8,721 (385) 13,320
Management and lease agreements....... 908 -- 908
Other assets.......................... 4,747 331 1,277 6,355
Goodwill.............................. 43,344 -- 154 43,498
-------- ------- -------
$ 65,109 $30,113 $76,662
======== ======= =======
Current liabilities:
Bank indebtedness................... $ 2,356 $ -- (2,356) $ --
Rents payable to unrelated
parties.......................... 5,819 -- 5,819
Rents payable to FUR Parking
Business......................... 1,227 -- (1,227) --
Trade accounts payable.............. 11,352 14 (86) (1,922) (418) 8,940
Income and withholding taxes
payable.......................... -- 240 240
Payable to FUMI..................... -- 403 (403) --
Current portion of long-term debt... 21,229 -- (21,229) --
Deferred revenue.................... 2,361 -- 2,361
-------- ------- -------
44,344 657 17,360
Notes payable to related parties...... 36,329 -- (36,329) --
Payable to FUMI....................... 11,963 -- (11,963) --
Payable to First Union................ -- 28,061 (28,061) --
Deferred revenue...................... 628 -- 628
Deferred income taxes................. -- 24 24
Minority interest..................... 446 -- (446) --
-------- ------- -------
93,710 28,742 18,012
Stockholders' equity (deficiency)..... (28,601) 1,371 18,999 (3,186) 70,067 58,650
-------- ------- -------
$ 65,109 $30,113 $76,662
======== ======= =======
</TABLE>
See accompanying notes to pro forma consolidated and combined financial
statements.
F-2
<PAGE> 59
IMPERIAL PARKING CORPORATION
PRO FORMA AND ADJUSTED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
FUMI FUR (NOTE 3(b))
PARKING PARKING ------------------------ BUSINESSES ADJUSTED
BUSINESS BUSINESS INTER-ENTITY FORMATION PRO FORMA SOLD PRO FORMA
-------- -------- ------------ --------- --------- ---------- ---------
(note 1)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $ 60,145 $ 582 (582) (1,080) $59,065 (2,711) $56,354
Direct costs............... 44,939 2 (582) 44,359 (2,149) 42,210
-------- -------- ------- -------
Gross margin............... 15,206 580 14,706 14,144
Other operating expenses:
General and
administrative........ 10,236 -- 10,236 1,349 11,585
Depreciation and
amortization.......... 4,984 43 8 5,035 (51) 4,984
-------- -------- ------- -------
15,220 43 15,271 16,569
-------- -------- ------- -------
Operating income (loss).... (14) 537 (565) (2,425)
Other income (expense):
Allowance for credit
losses................ $ -- (19,000) 19,000 -- --
Interest expense:
Long-term debt........ (1,840) -- 1,840 -- --
Related parties....... (4,032) (3,044) 4,032 3,044 -- --
Other.................... (105) 66 (39) (39)
Interest income from
related parties....... -- 4,032 (4,032) -- --
-------- -------- ------- -------
(5,977) (17,946) (39) (39)
-------- -------- ------- -------
Income (loss) before income
taxes.................... (5,991) (17,409) (604) (2,464)
Income taxes (recovery).... 326 (86) 240 3 243
-------- -------- ------- -------
Income (loss) from
continuing operations.... $ (6,317) $(17,323) $ (844) $(2,707)
======== ======== ======= =======
Income (loss) per share
from continuing
operations............... $ (0.40) $ (1.29)
======= =======
</TABLE>
See accompanying notes to pro forma consolidated and combined financial
statements.
F-3
<PAGE> 60
IMPERIAL PARKING CORPORATION
NOTES TO PRO FORMA AND ADJUSTED PRO FORMA CONSOLIDATED AND
COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The pro forma consolidated and combined financial statements of Impark are
based upon the historical financial statements described below after giving
effect to the transactions and adjustments described in notes 2 and 3.
These pro forma consolidated and combined financial statements are not
necessarily indicative of the financial position and results of operations
that would have been achieved had the transactions actually taken place at
the dates indicated and do not purport to be indicative of the effects that
may be expected to occur in the future.
The pro forma consolidated and combined financial statements have been
compiled from financial information in the:
(a) audited combined financial statements of the FUMI Parking Business for
the year ended December 31, 1999;
(b) audited combined financial statements of the FUR Parking Business for
the year ended December 31, 1999; and
(c) the additional information described in note 2.
The adjusted pro forma column in the combined statement of operations gives
effect to the elimination of the operating results of businesses sold in
fiscal 1999, which businesses did not meet the definition of a segment for
purposes of discontinued operations accounting principles.
Impark's consolidated financial statements are prepared in accordance with
generally accepted accounting principles in the United States. The pro
forma consolidated statements of operations exclude non-recurring charges
or credits directly attributable to the transactions described in note 2.
2. PRO FORMA TRANSACTIONS:
Prior to completion of the Distribution, Impark will be formed through the
combination and amalgamation of the continuing business operations of the
FUMI Parking Business and the FUR Parking Business under First Union. These
pro forma consolidated and combined financial statements reflect the
following formation transactions:
(a) the cancellation of an existing lease agreement between the FUMI
Parking Business and First Union under which certain U.S. properties
owned by First Union are leased to FUMI;
(b) the funding and indemnification by First Union with respect to all
costs related to an existing legal dispute regarding a previously
cancelled software contract;
(c) the acquisition of all holdings of minority interests in entities
comprising the FUMI Parking Business;
(d) the purchase by an entity within the FUR Parking Business of
outstanding credit facilities by virtue of a cash contribution by
First Union;
(e) the effective transfer of the continuing business operations of the
FUMI Parking Business from FUMI to First Union;
(f) the contribution by First Union to Impark of up to $7.0 million in
cash in consideration for common stock of Impark. Of the $7.0 million
contributed, $2.0 million will be restricted cash to be utilized
solely towards the settlement of the goods and services tax
contingency described in
F-4
<PAGE> 61
IMPERIAL PARKING CORPORATION
NOTES TO PRO FORMA AND ADJUSTED PRO FORMA CONSOLIDATED AND
COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. PRO FORMA TRANSACTIONS: (CONTINUED)
note 16(c)(i) to the combined financial statements of the FUMI Parking
Business, and is materially consistent with the amount accrued in the
accounts at December 31, 1999;
(g) the contribution by First Union of its interest in a limited liability
company related to the development of approximately 4,900 parking
spaces for the San Francisco Giants new baseball stadium, "Pacific
Bell Park." Operation of the lot commences in 2000; and
(h) the capitalization of Impark resulting in it having issued and
outstanding 2.1 million common shares with a par value of $0.01 per
share.
3. PRO FORMA ADJUSTMENTS:
(a) Pro forma consolidated balance sheet:
The pro forma consolidated balance sheet gives effect to the
transactions described in note 2 as if they had occurred on December 31,
1999. Pro forma transactions recognized in the consolidated balance
sheet are as follows:
(i) the elimination of all inter-entity balances between the FUMI
Parking Business and the FUR Parking Business;
(ii) the elimination of balance sheet amounts related to the FUMI
Parking Business discontinued operations;
(iii) the acquisition of minority interests in the FUMI Parking Business
by FUMI for consideration having an estimated fair value of
$600,000. This transaction effectively represents a step purchase
of the FUMI Parking Business and has been pushed down into the pro
forma consolidated balance sheet. The excess of the cost of
repurchase over the carrying value of the minority interest
eliminated has been assigned to goodwill;
(iv) the elimination of an amount payable in the amount of $418,000
accrued in the accounts of the FUMI Parking Business related to the
legal action to be funded and indemnified as described in note
2(b);
(v) the purchase or capitalization of long-term debt and the advances
payable and note payable to FUMI and First Union effected by the
transactions as described in notes 2(d) and (e);
(vi) the contribution of $4.2 million cash as described in note 2(f),
being the amount which results in First Union's cash contribution
aggregating $7.0 million; and
(vii) the contribution of the interest in the limited liability company
as described in note 2(g) at its cost basis, which is estimated to
equal $6.7 million at the date of contribution. The FUMI Parking
Business holds the remaining interest and it is estimated that its
separate cost basis will equal $1.1 million immediately prior to
this contribution. As at December 31, 1999, First Union has
incurred $1.3 million of costs which have been included as an
adjustment in the pro forma consolidated balance sheet.
Adjustments (iii)-(vii) are disclosed in the pro forma consolidated
balance sheet under the column headed "Formation". The net equity of the
predecessor entities has been accounted for as a capital contribution.
F-5
<PAGE> 62
IMPERIAL PARKING CORPORATION
NOTES TO PRO FORMA AND ADJUSTED PRO FORMA CONSOLIDATED AND
COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. PRO FORMA ADJUSTMENTS: (CONTINUED)
(b) Pro forma combined statement of operations:
The pro forma combined statement of operations gives effect to the
transactions described in note 2 as if they had occurred by January 1,
1999. Pro forma transactions recognized in the combined statements of
operations are as follows:
(i) the elimination of inter-entity lease fees and interest costs;
(ii) the elimination of the asset management fee earned during the
period January 1, 1999 to December 31, 1999 for managing the
United States parking properties of First Union. The fee agreement
will be cancelled as described in note 2(a);
(iii) the amortization of the goodwill that will arise from the
acquisition of the minority interest described in note 2(c),
calculated on a straight-line basis over a 20 year period; and
(iv) the elimination of interest expense on long-term debt purchased or
the note payable capitalized as described in notes 2(d) and (e).
For purposes of the combined statements of operations, no adjustments
have been made for interest on additional cash balances.
4. CAPITAL STOCK:
Capital stock as at December 31, 1999 in the pro forma consolidated balance
sheet is comprised of the equity of the predecessor businesses to Impark.
Pro forma income (loss) per share from continuing operations has been
calculated by dividing pro forma combined income (loss) from continuing
operations by 2.1 million being the estimated number of shares of Impark
common stock to be issued by Impark to First Union prior to the
Distribution.
Per share information is presented as if the common shares issuable were
issued at the beginning of the 1999 year.
F-6
<PAGE> 63
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
First Union Managements, Inc.
We have audited the accompanying combined balance sheets of the FUMI
Parking Business (note 2(a)) as at December 31, 1999 and 1998 and the related
combined statements of operations, owner's deficiency and cash flows for the
years ended December 31, 1999 and 1998 and the period from April 17, 1997 to
December 31, 1997. These financial statements are the responsibility of the
management of the Business. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with United States 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of the FUMI Parking
Business as at December 31, 1999 and 1998 and the results of its operations and
its cash flows for the years ended December 31, 1999 and 1998 and the period
from April 17, 1997 to December 31, 1997 in accordance with generally accepted
accounting principles in the United States.
/s/ KPMG LLP
Chartered Accountants
Vancouver, Canada
February 4, 2000
F-7
<PAGE> 64
FUMI PARKING BUSINESS
COMBINED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ -- $ 1,394
Accounts receivable....................................... 6,915 4,620
Inventory................................................. 2,877 4,285
Deposits and prepaid expenses............................. 2,287 827
-------- --------
12,079 11,126
Fixed assets (note 5)....................................... 5,330 4,984
Management and lease agreements (note 6).................... 1,852 908
Other assets (note 7)....................................... 589 4,747
Goodwill (note 8)........................................... 45,379 43,344
-------- --------
$ 65,229 $ 65,109
======== ========
LIABILITIES AND OWNER'S DEFICIENCY
Current liabilities:
Bank indebtedness......................................... $ 2,744 $ 2,356
Rents payable to unrelated parties........................ 6,228 5,819
Rents payable to FUR Parking Business, a related party.... 716 1,227
Trade accounts payable and other accrued liabilities...... 10,390 11,352
Current portion of long-term debt......................... -- 21,229
Deferred revenue.......................................... 1,354 2,361
-------- --------
21,432 44,344
Long-term debt (note 9)..................................... 21,059 --
Notes payable to related parties (note 10).................. 31,592 36,329
Payable to First Union Management, Inc., parent company
(note 10)................................................. 10,401 11,963
Deferred revenue............................................ -- 628
Deferred income taxes....................................... 46 --
Minority interest........................................... 1,047 446
-------- --------
85,577 93,710
Owner's deficiency.......................................... (20,348) (28,601)
Future operations (note 3)
Commitments and contingencies (note 16)
Subsequent event (note 17)
-------- --------
$ 65,229 $ 65,109
======== ========
</TABLE>
See accompanying notes to combined financial statements.
F-8
<PAGE> 65
FUMI PARKING BUSINESS
COMBINED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 17, 1997 TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
----------------- ------------ ------------
<S> <C> <C> <C>
Revenues............................................. $36,710 $ 54,087 $60,145
Direct costs......................................... 25,654 39,638 44,939
------- -------- -------
Gross margin......................................... 11,056 14,449 15,206
Other operating expenses:
General and administrative......................... 7,526 14,972 10,236
Depreciation and amortization...................... 3,854 5,398 4,984
------- -------- -------
11,380 20,370 15,220
------- -------- -------
Operating income (loss).............................. (324) (5,921) (14)
Other expense:
Write-down of assets............................... -- 14,976 --
Interest expense:
Long-term debt.................................. 1,298 2,033 1,840
Amounts due to related entities................. 2,684 3,731 4,032
Other........................................... 668 778 --
Other.............................................. -- -- 105
------- -------- -------
4,650 21,518 5,977
------- -------- -------
Loss from continuing operations before income taxes
and discontinued operations........................ (4,974) (27,439) (5,991)
Income taxes......................................... 370 516 326
------- -------- -------
Loss from continuing operations before minority
interest and discontinued operations............... (5,344) (27,955) (6,317)
Loss attributed to minority interest................. 944 -- --
------- -------- -------
Loss from continuing operations before discontinued
operations......................................... (4,400) (27,955) (6,317)
Income (loss) from discontinued operations net of
income taxes....................................... 578 (1,537) (1,914)
------- -------- -------
Net loss............................................. (3,822) (29,492) (8,231)
Other comprehensive income (loss):
Foreign currency translation adjustment............ 46 (319) (10)
Unrealized loss on available for sale security..... -- -- (46)
------- -------- -------
Comprehensive loss................................... $(3,776) $(29,811) $(8,287)
======= ======== =======
</TABLE>
See accompanying notes to combined financial statements.
F-9
<PAGE> 66
FUMI PARKING BUSINESS
COMBINED STATEMENTS OF OWNER'S DEFICIENCY
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
OTHER COMPREHENSIVE
INCOME (LOSS)
------------------------
FOREIGN
CURRENCY UNREALIZED
ACCUMULATED TRANSLATION LOSS ON
CAPITAL EARNINGS ADJUSTMENT INVESTMENT TOTAL
------- ----------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Shares issued on acquisition of business
on April 17, 1997 (note 4(b))......... $ 721 $ -- $ -- $ -- $ 721
Net loss................................ -- (3,822) -- -- (3,822)
Dividends............................... -- (34) -- -- (34)
Foreign currency translation
adjustment............................ -- -- 46 -- 46
------- -------- ----- ---- --------
Balance, December 31, 1997.............. 721 (3,856) 46 -- (3,089)
Acquisition of shares from minority
interest (note 11(a))................. 10,120 -- -- -- 10,120
Capital contributions................... 2,478 -- -- -- 2,478
Net loss................................ -- (29,492) -- -- (29,492)
Dividends............................... -- (46) -- -- (46)
Foreign currency translation
adjustment............................ -- -- (319) -- (319)
------- -------- ----- ---- --------
Balance, December 31, 1998.............. 13,319 (33,394) (273) -- (20,348)
Capital contributed to acquire shares
held by minority interests............ 1,070 -- -- -- 1,070
Return of capital from FUMI parking
division.............................. (990) -- -- -- (990)
Net loss................................ (8,231) -- (8,231)
Dividends............................... (46) (46)
Foreign currency translation
adjustment............................ (10) (10)
Unrealized loss on available for sale
security.............................. -- (46) (46)
------- -------- ----- ---- --------
Balance, December 31, 1999.............. $13,399 $(41,671) $(283) $(46) $(28,601)
======= ======== ===== ==== ========
</TABLE>
See accompanying notes to combined financial statements.
F-10
<PAGE> 67
FUMI PARKING BUSINESS
COMBINED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 17, 1997 TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
----------------- ------------ -------------
<S> <C> <C> <C>
Cash flows provided by (used in)
operating activities:
Loss from continuing operations................... $(4,400) $(27,955) $ (6,317)
Adjustments to reconcile loss from continuing
operations to net cash provided by (used in)
continuing operations:
Depreciation and amortization.................. 3,854 5,398 4,984
Interest expense capitalized to notes payable
to related parties........................... 1,789 2,487 2,688
Amortization of financing costs................ -- 163 155
Write-down of assets........................... -- 14,976 --
Deferred income taxes.......................... 77 198 65
Loss attributable to minority interest......... (944) -- --
Other.......................................... -- 11 65
Changes in non-cash working capital items, net of
effects from companies purchased and divested:
Accounts receivable............................ (2,016) (71) 744
Inventory...................................... (790) (256) 264
Deposits and prepaid expenses.................. 433 (444) 379
Trade accounts payable and accrued
liabilities.................................. 86 1,346 1,407
Rents payable.................................. 1,065 (32) (42)
Deferred revenue............................... 581 (446) 1,078
------- -------- --------
Net cash provided by (used in) continuing
operations..................................... (265) (4,625) 5,470
Net cash provided by (used in) discontinued
operations..................................... (1,144) (1,109) (1,773)
------- -------- --------
Net cash provided by (used in) operating
activities..................................... (1,409) (5,734) 3,697
Cash flows provided by (used in)
investing activities:
Purchase of fixed assets....................... (1,335) (1,980) (1,431)
Purchase of minority interests................. 172 (10,120) (986)
Increase (decrease) in other assets............ -- 88 (1,826)
Acquisition of businesses, net of cash
acquired..................................... (40,309) (808) --
Proceeds from dispositions of businesses....... -- -- 1,624
Proceeds from disposition of real estate....... 8,616 -- --
------- -------- --------
Net cash used in investing activities from
continuing operations.......................... (32,856) (12,820) (2,619)
Net cash used in discontinued operations.......... (239) (174) (239)
------- -------- --------
Net cash as used in investing activities.......... (33,095) (12,994) (2,858)
</TABLE>
F-11
<PAGE> 68
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 17, 1997 TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
----------------- ------------ -------------
<S> <C> <C> <C>
Cash flows provided by (used in)
financing activities:
Contributions of capital....................... 721 12,599 --
Equity contribution by minority interests...... 415 -- --
Increase in long-term debt..................... 1,795 1,336 --
Long-term debt repayments...................... (4,020) (3,408) (1,144)
Increase in payable to First Union Management,
Inc.......................................... 4,758 6,024 1,598
Bank indebtedness.............................. 538 2,206 (388)
Increase in notes payable to related parties... 30,342 -- --
Other.......................................... -- -- 611
------- -------- --------
Net cash provided by financing activities from
continuing operations.......................... 34,549 18,757 677
Net cash used in discontinued operations.......... (67) (147) --
------- -------- --------
Net cash provided by financing activities......... 34,482 18,610 677
Effect of exchange rate changes in cash............. 22 118 (122)
------- --------
Decrease (increase) in cash......................... -- -- 1,394
Cash, beginning of period........................... -- -- --
------- -------- --------
Cash, end of period................................. $ -- $ -- $ 1,394
======= ======== ========
Supplementary information:
Interest paid..................................... $ 2,193 $ 3,277 $ 2,616
Income taxes paid................................. 278 604 299
Non-cash transactions:
Interest capitalized to notes payable to
related parties.............................. 1,789 2,487 2,688
======= ======== ========
</TABLE>
See accompanying notes to combined financial statements.
F-12
<PAGE> 69
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
1. OPERATIONS:
These combined financial statements have been prepared solely for inclusion
in the registration statement of Imperial Parking Corporation ("Impark").
They present the parking related business activities that will be
contributed to Impark and have, for the periods presented, been carried on
directly and indirectly, through wholly-owned subsidiaries, of First Union
Management, Inc. ("FUMI"). Such business activities, collectively defined
as the "FUMI Parking Business", are to be acquired by Impark, pursuant to a
plan of acquisition and reorganization which is expected to be completed on
or before March 31, 2000. These activities will be combined with certain of
the parking operations of First Union Real Estate Equity and Mortgage
Investments ("First Union"), which activities are, for purposes of these
combined financial statements, referred to as the FUR Parking Business.
FUMI's indirect subsidiaries, Imperial Parking Limited ("Imperial Parking")
and Impark Services Ltd. ("Services"), operate and manage parking
facilities and carry on other activities related to the parking business in
Canada and the United States. The FUR Parking Business owns certain parking
facilities in Canada which it leases to the FUMI Parking Business for their
operation and management. First Union and FUMI are related parties for
accounting purposes, under a trust agreement, the shares of FUMI are held
for the benefit of shareholders of First Union.
FUMI and First Union purchased the parking business formerly carried on by
an unrelated party effective April 17, 1997 (the "Acquisition"). Generally,
the Acquisition was structured such that the real estate assets were
acquired by First Union and the other business activities, including
management contracts, were acquired by FUMI. These other business
activities included Imperial Parking and Services and their subsidiaries.
An entity within the FUR Parking Business has made loans to the business
operations of Imperial Parking and Services.
2. SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of presentation:
These financial statements have been prepared in accordance with
accounting principles generally accepted in the United States and
present only the assets, liabilities, revenues and expenses of the FUMI
Parking Business and do not present any other assets, liabilities,
revenues or expenses of FUMI. The carrying values of the assets and
liabilities included in the FUMI Parking Business include any
adjustments necessary to reflect the cost basis of FUMI. These combined
financial statements include expenses incurred by FUMI to the extent
that such expenses relate to the separate FUMI Parking Business.
These financial statements have been prepared on a combined basis to
reflect the parking business activities under a common parent, FUMI,
from the date of their acquisition from unrelated parties. These
combined financial statements exclude the assets, liabilities, revenues
and expenses of the parking business carried on through First Union. The
combined financial statements of the FUR Parking Business are separately
included in this Information Statement.
Specifically, these combined financial statements present the financial
position and results of operations of the FUMI Parking Business which
consists of the following:
(i) Imperial Parking and Services:
Imperial Parking was formed under the Canada Business Corporation
Act pursuant to the amalgamation on April 17, 1997 of 3357392
Canada Inc. ("Canco 1"), Imperial Parking
F-13
<PAGE> 70
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(a) Basis of presentation: (continued)
Ltd. and Impark Properties Limited. Canco 1 was formed to acquire
100% of the shares of Imperial Holdings No. 2 Inc. ("Holdco") (note
4(b)). Prior to the amalgamation, Holdco owned 100% of Imperial
Parking Ltd., a Canadian company with a principal business of
managing parking lots. Holdco was dissolved and its assets
transferred to Canco 1 immediately prior to the amalgamation.
Services was incorporated on April 11, 1997 under the New Brunswick
Business Corporations Act. Services' principal business activity is
the provision of ancillary services to the parking business.
(ii) Lease of First Union Canadian parking facilities:
Pursuant to a lease agreement, First Union leased sixteen parking
facilities in Canada to FUMI. Of these facilities, fifteen were
acquired effective from April 17, 1997 from Imperial Parking
Limited. Effective September 8, 1997, First Union purchased an
additional Canadian parking facility from an unrelated party. The
results of the operations of these facilities are included in these
combined financial statements from the date of the acquisition.
All significant balances and transactions between entities included in
these combined financial statements have been eliminated.
(b) 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 reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual amounts may differ from the
estimates applied in the preparation of these combined financial
statements.
(c) Inventory:
Imperial Parking's inventory consists of equipment parts and supplies
and is recorded at the lower of cost, determined on a first-in,
first-out basis, and replacement cost.
(d) Fixed assets:
Fixed assets are recorded at cost. Depreciation and amortization is
provided as follows:
<TABLE>
<CAPTION>
BASIS RATE
----------------- -----------
<S> <C> <C>
ASSET
Furniture and fixtures........................... declining-balance 20%
Equipment........................................ declining-balance 20% and 30%
Automotive equipment............................. declining-balance 30%
</TABLE>
F-14
<PAGE> 71
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(d) Fixed assets: (continued)
Leasehold improvements are depreciated straight-line over the shorter of
the lease term or the estimated useful life of the asset.
Routine maintenance and repairs are expensed as incurred.
(e) Management and lease agreements:
Management and lease agreements are recorded at cost and represent the
value assigned to parking lot agreements acquired from other parking
facility management companies. Amortization is provided over the lives
of the related agreements in amounts equal to the discounted future cash
flows used to measure their original cost. The remaining carrying value
of management and lease agreements terminated before the end of the
agreements is expensed at that time.
(f) Impairment of fixed assets and management and lease agreements:
The FUMI Parking Business accounts for long-lived assets (which include
fixed assets and management and lease agreements) in accordance with the
provisions of SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of. This Statement
requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset to future net cash flows expected to
be generated by the asset. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceed the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying
amount or fair value less cost to sell.
(g) Deferred financing costs:
The costs of obtaining long-term debt are initially capitalized and then
amortized over the term of the related debt. The amortization of these
charges is included in interest expense.
(h) Goodwill:
Goodwill represents the excess of cost over the value assigned to the
net assets acquired on business acquisitions. Goodwill is amortized on a
straight line basis over 20 years. Prior to the year ended December 31,
1999, acquired goodwill was amortized on a straight-line basis over 40
years. The effect of this change in amortization period increased net
loss for 1999 by $1.2 million. This change in estimated useful life of
the goodwill was made by management in accordance with its policy
described below.
The FUMI Parking Business assesses the recoverability of goodwill by
determining whether the amortization of the goodwill balance over its
remaining life can be recovered through undiscounted future operating
cash flows of the acquired operation. The remaining useful life is
estimated based on management's expectations and plans for the acquired
businesses. The amount of goodwill impairment, if any, is measured based
on projected discounted future
F-15
<PAGE> 72
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(h) Goodwill: (continued)
operating cash flows using a discount rate reflecting the FUMI Parking
Businesses average cost of funds. The assessment of the recoverability
of goodwill will be impacted if estimated future operating cash flows
are not achieved. Pursuant to such an assessment, the FUMI Parking
Business recorded a $15 million reduction in the carrying value of
goodwill at December 31, 1998.
(i) Income taxes:
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to (i) differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and (ii) operating loss and tax credit carry
forwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
(j) Revenue recognition:
Parking revenues consist of the parking revenues from managed and leased
locations. Management contract revenues represent revenues (both fixed
fees and additional payments based upon parking revenues) from
facilities managed for other parties and miscellaneous management fees
for accounting, insurance and other ancillary services such as
consulting and transportation management services. Parking and
management contract revenues are recognized when earned in accordance
with the applicable agreement. Revenues from leased locations are
recognized in accordance with the terms of the agreements. Deferred
revenue primarily represents revenue received in advance of its due
date. Net income from transit vending machine contracts are recognized
by the percentage of completion method.
(k) Research and development:
Research and development costs are expensed as incurred.
(l) Foreign currency translation:
The functional currency of the FUMI Parking Businesses operations in the
United States is the United States dollar. For facilities and operations
located in Canada, the functional currency is the Canadian dollar
("Cdn.").
The assets and liabilities of the Canadian operations are translated
into United States dollars at exchange rates in effect at the balance
sheet date. Revenue and expense items are translated at the rates of
exchange prevailing during the period. The gains or losses resulting
from these translations are excluded from the determination of income
and included in the separate foreign currency translation account within
owners' equity. Other exchange gains and losses are included in the
determination of income.
F-16
<PAGE> 73
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(m) Comprehensive income:
On January 1, 1998, the FUMI Parking Business adopted SFAS No. 130,
Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting and presentation of comprehensive income and its components in
a full set of financial statements. Comprehensive income consists of net
income and net unrealizable gains (losses) on securities and is
presented in the consolidated statements of owners' deficiency as other
comprehensive income. The Statement requires only additional disclosures
in the consolidated financial statements; it does not affect the FUMI
Parking Businesses financial position or results of operations. Prior
year financial statements have been reclassified to conform to the
requirements of SFAS No. 130.
3. FUTURE OPERATIONS:
During the year ended December 31, 1999, the FUMI Parking Business incurred
a loss of $8.2 million. At December 31, 1999, the FUMI Parking Business has
a working capital deficiency of $33.2 million including $21.2 million in
long-term debt maturing in April 2000. In order to continue its operations
as a going concern, the FUMI Parking Business requires continued support
from their parent company or other equity financing to reduce long-term
debt to a level which can be supported by recurring operations. Failure to
achieve this support or otherwise commence to generate sufficient positive
cash flow could necessitate that the FUMI Parking Business dispose of
assets which may occur at values significantly less than their carrying
values.
During the 1999 fiscal year, management has taken various steps in
reviewing its business activities, including the discontinuance of certain
operations as described in note 12. In addition, management of First Union
and FUMI have approved a plan which will result in First Union combining
the FUMI Parking Business with the FUR Parking Business into a new company,
Imperial Parking Corporation ("Impark"), repaying or capitalizing all of
the FUMI Parking Businesses outstanding long-term debt and the notes and
advances payable to related parties, contributing $7.0 million cash and an
interest in a joint venture to develop a parking lot at the San Francisco
Giants new baseball stadium, indemnifying against certain existing claims
against Impark, and granting a $8.0 million line of credit. Management is
also evaluating additional alternatives for increasing future business
prospects.
Upon completion of these steps, First Union has indicated its intention to
distribute 100% of the common shares of Impark to First Union's
beneficiaries. If these steps had been completed at January 1, 1999, the
exclusion of interest expense related to the debt repaid or capitalized
results in the FUMI Parking Business generating substantially no loss and
having a significantly reduced working capital deficiency. In addition,
during the year ended December 31, 1999 the FUMI Parking Business has
generated positive cash flow from operations and this number would have
increased. As a result, management believes that the completion of these
steps are fundamental to Impark continuing to operate in the future as a
going concern.
4. ACQUISITION OF BUSINESSES:
(a) Prairie Parking Limited and PI Parking Systems Limited:
On February 9, 1998 and July 31, 1998 respectively, the FUMI Parking
Business purchased 100% of the common shares of Prairie Parking Limited
and PI Parking Systems Limited for total cash consideration, including
costs, of $1.2 million. The purchase price was allocated $800,000 to
goodwill and $400,000 to management agreements. The acquisitions are
accounted
F-17
<PAGE> 74
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
4. ACQUISITION OF BUSINESSES: (CONTINUED)
(a) Prairie Parking Limited and PI Parking Systems Limited: (continued)
for by the purchase method with the results of operations included in
these combined financial statements from the dates of acquisition.
The fair value assigned to the management agreements acquired equalled
their tax basis at date of acquisition.
(b) Imperial Holdings No. 2 Inc.:
On April 17, 1997, Canco 1 purchased 100% of Holdco (note 2(a)) for net
cash of $36.2 (Cdn.$50.6) million and the issuance of 16,947,598 common
shares having an assigned value of $12.1 (Cdn.$16.9) million (note 11).
Expenses related to the acquisition amounting to $3.9 (Cdn.$5.6) million
have been included in the cost of the acquisition. Holdco was then
dissolved and its assets transferred to Canco 1.
This acquisition of Holdco, and therefore of Imperial Parking, was
accounted for by the purchase method and accordingly the aggregate
purchase price, including related costs, was assigned to assets acquired
and liabilities assumed based on their fair values as of the acquisition
date as follows:
<TABLE>
<S> <C>
Net working capital......................................... $ (9,716)
Other assets................................................ 1,214
Fixed assets................................................ 13,226
Future tax asset............................................ 224
Management and lease agreements............................. 6,032
Goodwill.................................................... 68,966
Long-term debt.............................................. (27,728)
--------
$ 52,218
========
Purchase price, including costs............................. $ 52,218
========
</TABLE>
The tax basis of the deductible acquired assets was greater than the
fair values assigned at the date of acquisition. No value has been
assigned to the acquired deferred tax asset in the purchase equation
above due to uncertainty as to its realizability. See note 13. Any
ultimate realization of the acquired temporary difference will be
accounted for as a reduction in goodwill.
Certain of the fixed assets were subsequently sold to a subsidiary of
First Union (note 14).
Financing for the acquisition included the amount of $39.3 million which
was lent to the FUMI Parking Business by an entity within the FUR
Parking Business (note 10).
The net working capital deficiency acquired of $9.7 million includes
$1.6 million (Cdn. $2.3 million) accrued for employee terminations and
relocation costs. Such costs reflect plans initiated by management at or
prior to the time of the acquisition and substantially completed prior
to December 31, 1997. As indicated below, certain acquisition related
accruals are unpaid at December 31, 1999. These amounts primarily relate
to employee termination agreements that, by contract, are payable over a
period of years.
F-18
<PAGE> 75
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
4. ACQUISITION OF BUSINESSES: (CONTINUED)
(b) Imperial Holdings No. 2 Inc.: (continued)
The activity impacting the accrual for employee terminations and
relocation costs in the periods presented is as follows:
<TABLE>
<CAPTION>
EMPLOYEE RELOCATION
TERMINATION COSTS TOTAL
----------- ---------- ------
<S> <C> <C> <C>
Balance, April 17, 1997............................. $1,112 $ 518 $1,630
Charges utilized.................................... (147) (209) (356)
------ ----- ------
Balance, December 31, 1997.......................... 965 309 1,274
Charges utilized.................................... (237) (205) (442)
Accruals reversed................................... (238) -- (238)
------ ----- ------
Balance, December 31, 1998.......................... 490 104 594
Charges utilized.................................... (35) -- (35)
Accruals reversed................................... (20) (68) (88)
------ ----- ------
Balance, December 31, 1999.......................... $ 435 $ 36 $ 471
====== ===== ======
</TABLE>
5. FIXED ASSETS:
<TABLE>
<CAPTION>
ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
------ ------------ --------
<S> <C> <C> <C>
DECEMBER 31, 1998
Furniture and fixtures................................... $ 652 $ 193 $ 459
Equipment................................................ 4,859 1,066 3,793
Automotive equipment..................................... 330 148 182
Leasehold improvements................................... 1,513 617 896
------ ------ ------
$7,354 $2,024 $5,330
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
------ ------------ --------
<S> <C> <C> <C>
DECEMBER 31, 1999
Furniture and fixtures................................... $ 569 $ 125 $ 444
Equipment................................................ 5,874 2,356 3,518
Automotive equipment..................................... 320 204 116
Leasehold improvements................................... 1,879 973 906
------ ------ ------
$8,642 $3,658 $4,984
====== ====== ======
</TABLE>
6. MANAGEMENT AND LEASE AGREEMENTS:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ -------------
<S> <C> <C>
Cost........................................................ $5,750 $6,120
Less accumulated amortization............................... 3,898 5,212
------ ------
$1,852 $ 908
====== ======
</TABLE>
F-19
<PAGE> 76
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
7. OTHER ASSETS:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ -------------
<S> <C> <C>
Deferred financing costs.................................... $ 410 $ 436
Accumulated amortization.................................... 260 436
------ ------
150 --
Note receivable(a).......................................... -- 2,157
Note receivable(b).......................................... -- 520
Investments................................................. 242 1,629
Other....................................................... 197 441
------ ------
$ 589 $4,747
====== ======
</TABLE>
(a) During the year ended December 31, 1999, the FUMI Parking Business
sold a subsidiary parking services company to the former president of
Imperial Parking for proceeds of $2.1 (Cdn.$3.1) million. As
consideration for the sale, a promissory note receivable of $2.1
million, repayable to May 2010, was received.
(b) During the year ended December 31, 1999, the FUMI Parking Business
sold its security business to the former president of that business
for proceeds of $1.8 (Cdn.$2.8) million. As partial consideration for
the sale, a promissory note receivable repayable to June 2001 was
received.
(c) Included in investments at December 31, 1999 are marketable securities
which are held as available-for-sale having an original cost of
$75,000 and a market value of $29,000. The net unrealized loss of
$46,000 has been recorded as an adjustment to owner's equity.
8. GOODWILL:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Cost, beginning of year..................................... $66,560 $51,269
Acquisition............................................... -- 400
Dispositions of businesses................................ -- (2,895)
Accumulated write-down.................................... (14,976) --
Acquisition accruals extinguished......................... (315) (84)
------- -------
Cost, end of year........................................... 51,269 48,690
Effect of changes in foreign currency exchange rates...... (3,125) (54)
Accumulated amortization.................................... 2,765 (5,292)
------- -------
$45,379 $43,344
======= =======
</TABLE>
In December 1998, the FUMI Parking Business recorded a $15 million
write-down of goodwill that originally arose on the acquisition of Holdco.
This write-down is as a result of management's annual review of the
recoverability of the net book value of the FUMI Parking Business which
review is based on estimated undiscounted future cash flows of the FUMI
Parking Business and applying a multiple of earnings of similar companies
to determine a value of the entire operations, including goodwill. As this
calculated value was less than the net book value, a discount factor was
applied to the estimated future cash flows to estimate fair value, with the
fair value difference recognized as an impairment in goodwill. The
estimates used for future cash flows may differ from actual performance
F-20
<PAGE> 77
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
8. GOODWILL: (CONTINUED)
due to the number of variables having an effect on daily operations and
markets in which these operations are located.
During 1998 and 1999, management reviewed the remaining liabilities
recognized on the acquisition described in note 4(b) relative to final
settlements and actual costs incurred. As a result of these reviews,
management determined that certain specific accrued obligations of the FUMI
Parking Business had been contractually extinguished. Extinguished
liabilities in the amount of $315,000 in the year ended December 31, 1998
and $84,000 in the year ended December 31, 1999 have been recorded as a
reduction in goodwill.
9. LONG-TERM DEBT:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Term facility............................................... $20,473 $21,229
Acquisition facility........................................ 586 --
----------- -----------
21,059 21,229
Less current portion of long-term debt...................... -- 21,229
----------- -----------
$21,059 $ --
=========== ===========
Long-term debt is repayable in Canadian dollars as
follows:.................................................. Cdn.$32,340 Cdn.$30,640
=========== ===========
</TABLE>
The FUMI Parking Business has bank credit facilities consisting of
operating, term and acquisition facilities. The revolving operating
facility is available to a maximum of Cdn.$6.5 million under which, at
December 31, 1999, Cdn.$3.4 million had been drawn on the facility.
Pursuant to the second amendment to the credit facility agreement, no
further accommodations may be obtained by the FUMI Parking Business under
either the term facility or the acquisition facility.
The term facility and revolving acquisition facility are repayable in
mandatory prepayments of 50% of excess cash flow with the balance due on
April 16, 2000. Funds advanced under the term and revolving acquisition
facilities are available at rates of interest based on Canadian prime rate
plus 0.75% per annum or bankers' acceptance rates plus 1.75%. The FUMI
Parking Business is also required to pay a fee on maturity equal to 0.55%
per annum on the aggregate amounts outstanding under all credit facilities.
The bank credit facilities are secured by a general assignment by the FUMI
Parking Business in favor of the bank, debentures over certain real
property, assignment of rents and leases, securities pledge agreements and
assignment of insurance. The terms of the bank credit facilities require
that certain financial and non-financial covenants be met by the FUMI
Parking Business including the maintenance of specified financial ratios
and tests. These covenants allow for the deduction of certain non-recurring
charges for determining earnings before interest, taxes, depreciation and
amortization for covenant purposes. First Union has granted security on the
long-term debt including granting cash collateral of $15.0 million and has
provided the lender with put rights whereby the lender can require First
Union to purchase the amounts outstanding under the credit facilities
during the 30-day period which runs from November 18, 1999 to December 17,
1999 or on the occurrence of an event of default or breach of covenants.
All of the long-term debt is repayable on April 16, 2000 and is intended to
be extinguished through the transactions described in note 17.
F-21
<PAGE> 78
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
10. PAYABLE TO RELATED PARTIES:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Notes payable(a)............................................ $31,592 $36,329
Advances(b)................................................. 10,401 11,607
Other....................................................... -- 356
------- -------
$41,993 $48,292
======= =======
</TABLE>
(a) The notes payable are due to an entity within the FUR Parking Business
and represent senior subordinated partial payment-in-kind notes
secured, in part, by guarantees provided by certain entities within
the FUMI Parking Business and which, as at the dates indicated, were
payable in Canadian dollars as follows:
<TABLE>
<S> <C>
December 31, 1998........................................... Cdn.$48,441
December 31, 1999........................................... Cdn.$52,434
</TABLE>
These notes bear interest at 12.0% per annum, of which 4% is payable
quarterly in cash and the balance is payable on April 17, 2009 when the
principal outstanding on the notes is repayable in full. The notes are
secured by the assets of the FUMI Parking Business. Interest expense
incurred during the periods indicated has been capitalized to the
balance of notes payable as follows:
<TABLE>
<S> <C> <C>
Period from April 17, 1997 to December 31, 1997............. $1,789 (Cdn.$2,551)
Year ended December 31, 1998................................ $2,487 (Cdn.$4,029)
Year ended December 31, 1999................................ $2,688 (Cdn.$3,993)
</TABLE>
(b) The advances due to FUMI are unsecured, non-interest bearing and have
no specific terms of repayment. As FUMI has confirmed that repayment
will not be requested before December 31, 2000, the advances have been
classified as non-current.
11. CAPITAL:
(a) At the time of the acquisition (note 4(b)), First Union entered into
an agreement whereby the holders of 14.7 million class A non-voting
common shares could require First Union to purchase their shares for
the issue price plus specified accretions. During 1998, First Union
assigned its right to repurchase these non-voting common shares from
the holders to FUMI and FUMI repurchased the shares.
(b) The class B and C preferred shares of Imperial Parking are redeemable
by Imperial Parking at its option at a price of $1.00 per share and
are entitled to receive cumulative dividends at a rate of $0.045 per
share per annum.
12. DISCONTINUED OPERATIONS:
Prior to the issuance of its financial statements for the year ended
December 31, 1999, the FUMI Parking Business entered into a formal plan to
discontinue activities related to the manufacturing and sale of metered
equipment for public transit systems and parking lots. As these activities
will not form part of the business activities of Impark, to which the FUMI
Parking Business is considered to be a predecessor entity, they have been
accounted for as discontinued operations in these combined
F-22
<PAGE> 79
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
12. DISCONTINUED OPERATIONS: (CONTINUED)
financial statements. This disposition is scheduled to be completed by
March 31, 2000 through the distribution to FUMI of all of the shares of the
company in which these activities are undertaken. This disposition will be
at the cost basis of the FUMI Parking Business.
In addition, during 1999 the FUMI Parking Business sold its security
business for consideration equal to cash of $1.3 million and notes
receivable of approximately $500,000. No gain or loss was recognized on
this sale.
Income (loss) from discontinued operations for the periods presented is
calculated as follows:
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 17, 1997 TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
----------------- ------------ ------------
<S> <C> <C> <C>
Revenues........................................ $11,497 $15,838 $12,639
Direct costs.................................... 9,071 13,573 11,010
General and administrative...................... 1,712 3,572 3,367
Depreciation and amortization................... 136 230 176
------- ------- -------
10,919 17,375 14,553
------- ------- -------
Income (loss) from discontinued operations...... $ 578 $(1,537) $(1,914)
======= ======= =======
</TABLE>
Interest expense has not been allocated to discontinued operations.
13. INCOME TAXES:
Total income taxes for the years presented were allocated as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Income from continuing operations............... $ 370 $ 516 $ 326
Discontinued operations......................... 6 1 (20)
-------- -------- --------
$ 376 $ 517 $ 306
======== ======== ========
</TABLE>
F-23
<PAGE> 80
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
13. INCOME TAXES: (CONTINUED)
Income tax expense attributable to continuing operations consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
-------- -------- --------
<S> <C> <C> <C>
Period from April 17, 1997 to December 31, 1997:
Canada............................................. $ 321 $ -- $ 321
United States...................................... 49 -- 49
-------- -------- --------
$ 370 $ -- $ 370
======== ======== ========
Year ended December 31, 1998:
Canada............................................. $ 534 $ (74) $ 460
United States...................................... 28 28 56
-------- -------- --------
$ 562 $ (46) $ 516
======== ======== ========
Year ended December 31, 1999:
Canada............................................. $ 217 $ 113 $ 330
United States...................................... 35 (39) (4)
-------- -------- --------
$ 252 $ 74 $ 326
======== ======== ========
</TABLE>
Income tax expense attributable to income from continuing operations
differed from the amounts computed by applying the U.S. federal income tax
rate of 35% to pretax income from continuing operations as a result of the
following:
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 17, 1997 YEAR ENDED YEAR ENDED
TO DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
--------------- ------------ ------------
<S> <C> <C> <C>
Computed "expected" tax expense................. $(1,741) $(9,604) $(2,097)
Increase (reduction) in income taxes resulting
from:
Write-down of non-deductible goodwill......... -- 5,242 --
Loss carryforwards not recognized............. 1,741 4,362 2,229
Capital and state taxes....................... 370 516 194
------- ------- -------
$ 370 $ 516 $ 326
======= ======= =======
</TABLE>
F-24
<PAGE> 81
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
13. INCOME TAXES: (CONTINUED)
The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1998 and 1999 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carry forwards........................ $ 5,122 $ 7,539
Net capital loss carry forwards.......................... -- 2,363
Fixed assets............................................. 937 1,894
Trade accounts payable................................... 1,722 632
Management and lease agreements.......................... 461 438
Other.................................................... 82 124
------- -------
Total gross deferred tax assets............................ 8,324 12,990
Less: valuation allowance.................................. (8,194) (12,990)
------- -------
130 --
------- -------
Deferred tax liabilities:
Inventory................................................ (132) --
Goodwill................................................. (10) --
Other.................................................... (34) --
------- -------
Total deferred tax liabilities............................. (176) --
------- -------
Net deferred tax assets (liabilities)...................... $ (46) $ --
======= =======
</TABLE>
The valuation allowance for deferred tax assets as of April 17, 1997 and
January 1, 1998 and 1999 was $8.3, $6.5 million and $8.1 million,
respectively. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion
or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment. In order to fully realize
the deferred tax asset at December 31, 1999, the FUMI Parking Business will
need to generate future taxable income of approximately $16.7 million prior
to the expiration of the net operating loss carry forwards in 2005. Based
upon the level of historical taxable income deductible, management does not
believe that it is more likely than not that the FUMI Parking Business will
realize the benefits of these deductible differences.
The companies which comprise the FUMI Parking Business had total income tax
losses and deductions available in Canada of approximately $16.7 million
available at December 31, 1999 to reduce future income taxes payable. These
losses are available and expire as follows:
<TABLE>
<CAPTION>
<S> <C>
2000........................................................ 538
2001........................................................ 1,686
2002........................................................ 1,352
2003........................................................ 5,785
2004........................................................ 1,917
2005........................................................ 5,474
</TABLE>
F-25
<PAGE> 82
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
14. RELATED PARTY TRANSACTIONS:
In addition to those discussed elsewhere in these combined financial
statements, the following significant related party transactions occurred
during the periods presented.
During the year ended December 31, 1999 the FUMI Parking Business earned
asset management fee income of $1.1 million (1998 -- $nil; period from
April 17, 1997 to December 31, 1997 -- $nil) from First Union.
During the year ended December 31, 1998, First Union made a loan to FUMI
which reimbursed the FUMI Parking Business for expenditures in the amount
of $3.5 million (period from April 17 to December 31, 1997 -- $nil)
incurred in relation to a discontinued plan of expansion.
During the year ended December 31, 1999, included in direct costs is a
charge of $56,000 (1998 -- $94,000; period from April 17 to December 31,
1997 -- $93,000) paid to a company partly owned by then management of the
FUMI Parking Business relating to contracts to sweep parking lots under
terms that are estimated to be consistent with others in the parking
industry.
Effective May 8, 1997, the FUMI Parking Business sold certain real estate
assets to a subsidiary of First Union for proceeds of Cdn$11.8 million,
being the estimated fair value of the assets at the time of the acquisition
(note 4(b)).
During the year ended December 31, 1999 the FUMI Parking Business sold its
security business to a former executive officer of Imperial Parking for
consideration equal to cash of $1.3 million and notes receivable of
approximately $500,000 (Cdn. $750,000). During the same period the FUMI
Parking Business sold a subsidiary with parking lot operations on Vancouver
Island, British Columbia Canada to the former president and chief executive
officer of Imperial Parking for consideration equal to notes receivable of
$2.1 million. Termination benefit claims and related costs were settled at
the same time. Termination benefit costs aggregating $2.4 million had been
accrued at December 31, 1998 and, on settlement, $1.8 million of the
provision was reversed. These amounts are included in general and
administrative expenses.
15. FAIR VALUE OF FINANCIAL INSTRUMENTS:
Financial instruments to the FUMI Parking Business include cash, accounts
receivable, accounts payable and accrued liabilities, long-term debt and
indebtedness to related parties. The fair values of those items included in
current assets and liabilities are estimated to equal their carrying value
due to their short-term to maturity or ability for prompt liquidation. The
fair value of long-term debt is not considered to differ materially form
its carrying value as the FUMI Parking Business pays interest at a floating
rate and management does not consider there to have been a significant
change in its risk premium since the FUMI Parking Business entered into the
bank credit facilities agreements. The fair value of the notes payable to
related parties is estimated to be $17.3 million. The fair value of the
amount payable to FUMI is not readily determinable due to the nature of the
relationship between the FUMI Parking Business and the other party.
16. COMMITMENTS AND CONTINGENCIES:
(a) Operating lease commitments:
The FUMI Parking Business leases certain of its office premises,
automobiles and office equipment under long-term operating leases. At
December 31, 1999, the aggregate annual
F-26
<PAGE> 83
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
16. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
(a) Operating lease commitments: (continued)
minimum lease payments required under operating leases in each of the
next five years are as follows:
<TABLE>
<S> <C>
2000........................................................ $1,059
2001........................................................ 910
2002........................................................ 505
2003........................................................ 300
2004........................................................ 10
------
$2,784
======
</TABLE>
(b) Development commitment:
The FUMI Parking Business and First Union are members of a limited
liability company which is committed to develop 37 acres of property in
San Francisco, California. The development provides for construction of
approximately 4,900 paved surface parking stalls for the new Pacific
Bell Park for the San Francisco Giants baseball team.
It is anticipated the construction will complete in the first quarter of
fiscal 2000 at an estimated cost of $7.8 million, which includes an
estimated $6.7 million to be contributed to the limited liability
company by First Union and an estimated $1.1 million to be contributed
to the limited liability company by the FUMI Parking Business.
(c) Contingencies:
(i) Canada Customs and Revenue Agency:
The FUMI Parking Business was subject to a series of audits by
Canada Customs and Revenue Agency primarily regarding its treatment
of goods and services tax with respect to customer receipts for
parking violation notices. The FUMI Parking Business appealed all
assessments to the Tax Court of Canada and during 1998 it lost its
case before the Court. Management intends to appeal the Tax Court
of Canada decision and has accrued amounts owed pursuant to the
assessed amounts.
As part of its regular operations, the FUMI Parking Business
periodically becomes involved with legal claims or potential claims
related to damage to vehicles or personal injuries for which the
FUMI Parking Business carries insurance, or disagreements with
individual employees or on the interpretation of management or
lease agreements. In the opinion of management, the resolution of
these matters will not have a material effect on the financial
condition, results of operations or cash flows of the FUMI Parking
Business.
(ii) Performance bond:
First Union has provided performance guarantees for the
manufacturing and installation of transit ticket vending equipment
totalling $11.5 million which expires in February 2001 and 2002.
F-27
<PAGE> 84
FUMI PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
17. SUBSEQUENT EVENT:
On January 20, 2000, the board of trustees of First Union approved a series
of transactions that will result in:
(a) the cancellation of an existing lease agreement between the FUMI
Parking Business and First Union under which certain U.S. properties
owned by First Union are leased to FUMI;
(b) the funding and indemnification by First Union with respect to all
costs related to an existing legal dispute regarding a previously
cancelled software contract;
(c) the acquisition of all holdings of minority interests in entities
comprising of FUMI Parking Business; and
(d) the purchase by an entity within the FUR Parking Business of
outstanding credit facilities by virtue of a cash contribution by
First Union;
(e) the effective transfer of the continuing business operations of the
FUMI Parking Business from FUMI to First Union;
(f) the contribution by First Union to the combined entity, Impark of up
to $7.0 million cash, of which $2.0 million will be restricted cash to
be utilized solely towards the settlement of the goods and services
tax contingency described in note 16(c)(i);
(g) the contribution by First Union of its interest in the limited
liability company described in note 16(b);
(g) the capitalization of Impark resulting in it having issued and
outstanding 2.1 million common shares with a par value of $0.01 per
share; and
(h) the distribution of all shares of Impark by First Union to First
Union's beneficiaries.
F-28
<PAGE> 85
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees
First Union Real Estate Equity and Mortgage Investments
We have audited the accompanying combined balance sheets of the FUR Parking
Business (note 2(a)) as at December 31, 1999 and 1998 and the related combined
statements of operations, owner's equity and cash flows for the years ended
December 31, 1999 and 1998 and the period from April 17, 1997 to December 31,
1997. These financial statements are the responsibility of the management of the
Business. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of the FUR Parking
Business as at December 31, 1999 and 1998 and the results of its operations and
its cash flows for the years ended December 31, 1999 and 1998 and the period
from April 17, 1997 to December 31, 1997 in conformity with generally accepted
accounting principles in the United States.
/s/ KPMG LLP
Chartered Accountants
Vancouver, Canada
February 4, 2000
F-29
<PAGE> 86
FUR PARKING BUSINESS
COMBINED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 1,128 $ 1,984
Accounts receivable....................................... 8 30
Rents receivable from First Union Management Inc., a
related party.......................................... 716 1,360
Interest receivable on notes receivable from related
parties................................................ -- 356
Current portion of receivable from sale of parking
facility............................................... -- 1
------- -------
1,852 3,731
Notes receivable from related parties (note 4).............. 31,592 17,330
Long-term receivable from sale of parking facility (note
9)........................................................ -- 331
Fixed assets (note 5)....................................... 8,558 8,721
------- -------
$42,002 $30,113
======= =======
LIABILITIES AND OWNER'S EQUITY
Current liabilities:
Trade accounts payable.................................... $ -- $ 14
Income and withholding taxes payable...................... 290 240
Payable to First Union Management, Inc., a related
party.................................................. 390 403
------- -------
680 657
Note payable to First Union Real Estate Equity and Mortgage
Investments, parent company (note 6)...................... 23,759 28,061
Deferred income taxes (note 7).............................. 12 24
------- -------
24,451 28,742
Owner's equity.............................................. 17,551 1,371
------- -------
Subsequent event (note 10) $42,002 $30,113
======= =======
</TABLE>
See accompanying notes to combined financial statements.
F-30
<PAGE> 87
FUR PARKING BUSINESS
COMBINED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
PERIOD FROM YEAR
APRIL 17, 1997 TO YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
----------------- ------------ ------------
<S> <C> <C> <C>
Parking facilities lease revenue from related
party............................................. $ 302 $ 454 $ 582
Other operating expenses:
Direct costs...................................... -- 12 2
Depreciation...................................... 31 45 43
------ ------- --------
31 57 45
------ ------- --------
Operating income.................................... 271 397 537
Other income (expense):
Interest income on notes receivable from related
companies (note 4)............................. 2,672 3,725 4,032
Interest expense on note payable to First Union
Real Estate Equity and Mortgage Investments
(note 6)....................................... (904) (2,757) (3,044)
Allowance for credit losses....................... -- -- (19,000)
Other............................................. -- -- 66
------ ------- --------
1,768 968 (17,946)
------ ------- --------
Income (loss) before income taxes................... 2,039 1,365 (17,409)
Income taxes (note 7):
Current (recovery)................................ 673 380 (97)
Deferred.......................................... -- 12 11
------ ------- --------
673 392 (86)
------ ------- --------
Net income (loss)................................... 1,366 973 (17,323)
Other comprehensive income (loss):
Foreign currency translation adjustment........... (527) (1,278) 1,143
------ ------- --------
Comprehensive income (loss)......................... $ 839 $ (305) $(16,180)
====== ======= ========
</TABLE>
See accompanying notes to combined financial statements.
F-31
<PAGE> 88
FUR PARKING BUSINESS
COMBINED STATEMENTS OF OWNER'S EQUITY
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
-------------
FOREIGN
CURRENCY
ACCUMULATED TRANSLATION
CAPITAL EARNINGS ADJUSTMENT TOTAL
------- ----------- ------------- -------
<S> <C> <C> <C> <C>
Issuance of shares in Nominee for cash
consideration.................................. $ 7,580 $ -- $ -- $ 7,580
Issuance of shares in Ontario Holdings for cash
consideration.................................. 336 -- -- 336
Capital contributions to purchase Canadian
properties..................................... 9,101 -- -- 9,101
Net income....................................... -- 1,366 -- 1,366
Foreign currency translation adjustment.......... -- -- (527) (527)
------- -------- ------- -------
Balance, December 31, 1997....................... 17,017 1,366 (527) 17,856
Net income....................................... -- 973 -- 973
Foreign currency translation adjustment.......... -- -- (1,278) (1,278)
------- -------- ------- -------
Balance, December 31, 1998....................... 17,017 2,339 (1,805) 17,551
Net income (loss)................................ -- (17,323) -- (17,323)
Foreign currency translation adjustment.......... -- -- 1,143 1,143
------- -------- ------- -------
Balance, December 31, 1999....................... $17,017 $(14,984) $ (662) $ 1,371
======= ======== ======= =======
</TABLE>
See accompanying notes to combined financial statements.
F-32
<PAGE> 89
FUR PARKING BUSINESS
COMBINED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 17, 1997 TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
----------------- ------------ -------------
<S> <C> <C> <C>
Cash flows provided by (used in) operating
activities:
Net income (loss).................................. $ 1,366 $ 973 $(17,323)
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation.................................... 31 45 43
Deferred income taxes........................... -- 12 11
Allowance for credit losses..................... -- -- 19,000
Interest income capitalized........................ (1,789) (2,487) (2,688)
Changes in non-cash working capital items:
Accounts receivable............................. -- 6 (21)
Rents receivable from First Union Management,
Inc........................................... (304) (469) (582)
Interest receivable on notes receivable from
related parties............................... -- -- (346)
Trade accounts payable.......................... 10 (9) 13
Income and withholding taxes payable............ 762 (416) (66)
Accrued interest added to note payable to First
Union......................................... 753 2,469 2,740
-------- ------ --------
Net cash provided by (used in) operating
activities...................................... 829 124 781
Cash flows provided by (used in) financing
activities:
Capital contribution............................... 30,342 -- --
Redemption of capital stock........................ (22,047) -- --
Increase in amount due to FUMI..................... 75 333 (11)
Initial issue and increase in note payable to First
Union Real Estate Equity and Mortgage
Investments..................................... 22,774 -- --
-------- ------ --------
Net cash provided by financing activities.......... 31,144 333 (11)
Cash flows used in investing activities:
Purchase of fixed assets........................... (734) (141) (5)
Increase in notes receivable from related
parties......................................... (30,342) -- --
-------- ------ --------
Net cash used in investing activities.............. (31,076) (141) (5)
Effect of exchange rate changes on cash.............. (15) (70) 91
-------- ------ --------
Increase in cash..................................... 882 246 856
Cash, beginning of period............................ -- 882 1,128
-------- ------ --------
Cash, end of period.................................. $ 882 $1,128 $ 1,984
======== ====== ========
Supplementary information:
Interest paid...................................... $ 241 $ 288 $ 408
Income taxes paid.................................. -- 1,159 --
Non-cash transactions:
Interest income capitalized to notes
receivable.................................... 1,789 2,487 2,688
======== ====== ========
</TABLE>
See accompanying notes to combined financial statements.
F-33
<PAGE> 90
FUR PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
1. OPERATIONS:
These combined financial statements have been prepared solely for inclusion
in the registration statement of Imperial Parking Corporation ("Impark").
They present the parking related business activities that will be
contributed to Impark and have, for the periods presented, been carried on
directly and indirectly, through wholly-owned subsidiaries, of First Union
Real Estate Equity and Mortgage Investments ("First Union"). Such business
activities, collectively defined as the "FUR Parking Business", are to be
acquired by Impark pursuant to a plan of acquisition and reorganization
which is expected to be completed on or before March 31, 2000. These
activities will be combined with the parking operations of First Union
Management, Inc. ("FUMI"), which activities are, for the purpose of these
combined financial statements, referred to as the FUMI Parking Business.
The FUR Parking Business owns certain parking facilities in Canada which it
leases to FUMI for their operation and management. In addition, an entity
within the FUR Parking Business has made loans to the business operations
of Imperial Parking Limited ("Imperial Parking") and Impark Services Ltd.
("Services"), Canadian companies which operate and manage parking
facilities and carry on other related activities. Imperial Parking and
Services are indirect subsidiaries of First Union Management Investments
Inc., a wholly-owned subsidiary of FUMI. First Union and FUMI are related
parties for accounting purposes as, under a trust agreement, the shares of
FUMI are held for the benefit of shareholders of the Trust.
First Union and FUMI purchased the parking business formerly carried on by
an unrelated party effective April 17, 1997 (the "Acquisition"). Generally,
the Acquisition was structured such that the real estate assets were
acquired by First Union and the other business activities, including
management contracts, were acquired by FUMI. These other business
activities included Imperial Parking and Services and their subsidiaries.
An entity within the FUR Parking Business has made loans to the business
operations of Imperial Parking and Services.
2. SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of presentation:
These financial statements have been prepared in accordance with
accounting principles generally accepted in the United States and
present only the assets, liabilities, revenues and expenses of the FUR
Parking Business and do not present any other assets, liabilities,
revenues or expenses of First Union. The carrying values of the assets
and liabilities included in the FUR Parking Business include any
adjustments necessary to reflect the cost basis of First Union. These
combined financial statements include expenses incurred by First Union
to the extent that such expenses relate to the separate FUR Parking
Business.
These financial statements have been prepared on a combined basis to
reflect the parking business activities of the FUR Parking Business
being under a common parent, First Union, from the date of their
acquisitions from unrelated parties. These combined financial statements
exclude the assets, liabilities, revenues and expenses of the parking
business carried on through FUMI, including through its direct and
indirect subsidiaries. The combined financial statements of the FUMI
Parking Business are separately included in this Information Statement.
F-34
<PAGE> 91
FUR PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(a) Basis of presentation: (continued)
Specifically, these combined financial statements present the financial
position and results of operations of the FUR Parking Business which
consists of the following:
(i) Canadian properties:
The FUR Parking Business includes sixteen parking facilities and
one office building in Canada owned through First Union's
wholly-owned subsidiaries, 3006712 Nova Scotia Company ("Nominee")
and 3006714 Nova Scotia Company ("Ontario Holdings"), respectively.
Of these facilities, fifteen were acquired from Imperial Parking,
effective from April 17, 1997 for Cdn.$11.8 million, which price
reflected the fair values assigned to the fixed assets on the
Acquisition. Nominee acquired its facilities beneficially for First
Union. During the periods presented, First Union leased the
facilities to FUMI. Effective September 8, 1997, First Union
purchased an additional Canadian parking facility for $844,000
(Cdn.$1.2 million) from an unrelated party. The results of
operations of these facilities are included in these combined
financial statements from the date of acquisition.
(ii) Imperial Parking and Services financing:
The FUR Parking Business includes the financial position and
results of operations of 3006302 Nova Scotia Company ("Finance
Entity"), a wholly-owned subsidiary of First Union. Finance Entity
is a Canadian incorporated company which commenced operations on
April 17, 1997 by making loans to finance the acquisition of
Imperial Parking and Services by First Union, FUMI and their
wholly-owned subsidiaries.
All significant balances and transactions between entities included in
these combined financial statements have been eliminated.
(b) 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 reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual amounts may differ from the
estimates applied in the preparation of these combined financial
statements.
(c) Notes receivable from affiliated companies:
Notes receivable from affiliated companies are recorded at cost less an
allowance for credit loss if required. Management, considering current
information and events, considers a note receivable to be impaired when
it is probable that the FUR Parking Business will be unable to collect
all amounts due according to the contractual terms of the note
agreement. When a note is considered to be impaired, the amount of the
impairment is measured based on the present value of expected future
cash flows discounted at the note's effective interest rate. Impairment
losses are included in the allowance for credit losses as a charge to
operations. Interest arising subsequent to the recording of an
impairment loss is recognized on a cost-recovery basis.
F-35
<PAGE> 92
FUR PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(d) Fixed assets:
Fixed assets are recorded at cost. Depreciation is provided by the
straight-line method. Buildings are depreciated over their estimated
useful lives of 25 to 40 years, based on the property's age, overall
physical condition and type of construction materials. Improvements to
buildings are depreciated over the remaining useful life of the building
at the time the improvement is completed. Leasehold improvements are
depreciated over five years. Routine maintenance and repairs are
expensed as incurred.
The FUR Parking Business accounts for fixed assets in accordance with
the provisions of SFAS No. 121 -- Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. This
Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by
a comparison of the carrying value of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to
be impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the asset exceeds its fair value. Assets
to be disposed of are reported at the lower of their carrying value or
fair value less costs to sell.
(e) Income taxes:
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to (i) differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and (ii) operating loss and tax credit carry
forwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
(f) Revenue recognition:
The FUR Parking Business earns revenues from its owned facilities
pursuant to agreements whereby it has leased the facility to FUMI, which
entered into agreements with Imperial Parking to manage their
operations. The FUR Parking Business does not manage facilities on
behalf of other parties. Revenues are recognized as earned in accordance
with the individual lease agreements.
(g) Foreign currency translation:
The functional currency of the operations of FUR Parking Business in the
United States is the United States dollar. For facilities and operations
located in Canada, the functional currency is the Canadian dollar
("Cdn.").
The assets and liabilities of the Canadian operations are translated
into United States dollars at exchange rates in effect at the balance
sheet date. Revenue and expense items are translated at the rates of
exchange prevailing during the period. The gains and losses resulting
from these translations are excluded from the determination of income
and included in the separate foreign
F-36
<PAGE> 93
FUR PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(g) Foreign currency translation: (continued)
currency translation account within owners' equity. Other exchange gains
and losses are included in the determination of income.
(h) Comprehensive income:
On January 1, 1998, the FUR Parking Business adopted SFAS No. 130,
Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting and presentation of comprehensive income and its components in
a full set of financial statements. To the FUR Parking Business,
comprehensive income consists of net income and unrecognized foreign
currency translation adjustments and is presented in the consolidated
statements of owners' equity as other comprehensive income. SFAS No. 130
requires only additional disclosures in the consolidated financial
statements; it does not affect the FUR Parking Business's financial
position or results of operations. Prior year financial statements have
been reclassified to conform to the requirements of SFAS No. 130.
3. ACQUISITIONS:
Acquisitions of parking facilities have been accounted for by the purchase
method with the consideration paid assigned to the fair value of the assets
acquired as follows:
<TABLE>
<CAPTION>
CANADIAN PARKING FACILITIES
-------------------------------
ACQUIRED ON SUBSEQUENTLY
THE ACQUISITION ACQUIRED TOTAL
--------------- ------------ ------
(NOTE 2(A)(I))
<S> <C> <C> <C>
Net assets acquired at assigned values:
Fixed assets................................... $8,436 $844 $9,280
====== ==== ======
Consideration paid:
Cash........................................... $8,436 $844 $9,280
====== ==== ======
</TABLE>
The fair value assigned equalled the tax basis of the assets acquired at
the date of acquisition.
4. NOTES RECEIVABLE FROM RELATED PARTIES:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31
1998 1999
------------ -------------
<S> <C> <C>
Imperial Parking............................................ $24,749 $28,460
Services.................................................... 6,843 7,870
------- -------
31,592 36,330
Allowance for credit loss................................... -- (19,000)
------- -------
$31,592 $17,330
======= =======
</TABLE>
F-37
<PAGE> 94
FUR PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
4. NOTES RECEIVABLE FROM RELATED PARTIES: (CONTINUED)
The notes receivable from related parties represent senior subordinated
partial payment-in-kind notes secured, in part, by guarantees provided by
certain entities within the FUMI Parking Business and which as at the dates
indicated, were receivable in Canadian dollars as follows:
<TABLE>
<S> <C>
December 31, 1998........................................... Cdn. $48,441
December 31, 1999, (prior to the allowance for credit
losses)................................................... Cdn. $52,434
</TABLE>
These notes bear interest at 12.0% per annum, of which 4% is receivable
quarterly in cash and the balance is receivable on April 17, 2009 when the
principal outstanding on the notes is repayable in full. Interest income
earned during the periods indicated has been capitalized to the balance of
notes receivable from related parties as follows:
<TABLE>
<S> <C> <C>
Period from April 17, 1997 to December 31, 1997............. $1,789 (Cdn. $2,551)
Year ended December 31, 1998................................ $2,487 (Cdn. $4,029)
Year ended December 31, 1999................................ $2,688 (Cdn. $3,993)
</TABLE>
The notes are subordinate to bank indebtedness of FUMI Parking Business in
the amount of $21.2 million at December 31, 1999.
5. FIXED ASSETS:
<TABLE>
<CAPTION>
ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
------ ------------ --------
<S> <C> <C> <C>
DECEMBER 31, 1998
Land................................................... $6,878 $ -- $6,878
Buildings and improvements............................. 1,752 72 1,680
------ ---- ------
$8,630 $ 72 $8,558
====== ==== ======
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
------ ------------ --------
<S> <C> <C> <C>
DECEMBER 31, 1999
Land................................................... $7,114 $ -- $7,114
Buildings and improvements............................. 1,722 115 1,607
------ ---- ------
$8,836 $115 $8,721
====== ==== ======
</TABLE>
6. NOTE PAYABLE TO FIRST UNION:
The promissory note payable to First Union is unsecured, bears interest
payable on December 31st each year at 11.875% per annum, matures on April
17, 2009 and, as at the dates indicated, was repayable in Canadian dollars
as follows:
<TABLE>
<S> <C>
December 31, 1998........................................... Cdn.$36,430
December 31, 1999........................................... Cdn.$40,500
</TABLE>
F-38
<PAGE> 95
FUR PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
6. NOTE PAYABLE TO FIRST UNION: (CONTINUED)
Interest expense incurred during the periods indicated has been included to
the note payable to First Union as follows:
<TABLE>
<S> <C> <C>
Period from April 17, 1997 to December 31, 1997............. $ 753 (Cdn.$1,074)
Year ended December 31, 1998................................ $2,469 (Cdn.$3,796)
Year ended December 31, 1999................................ $2,740 (Cdn.$3,954)
</TABLE>
7. INCOME TAXES:
Income tax expense is attributable to the Canadian operations of the FUR
Parking Business.
Income tax expense differed from the amounts computed by applying the U.S.
federal income tax rate of 35% to income before income taxes as a result of
the following:
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 17, 1997 YEAR ENDED YEAR ENDED
TO DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
--------------- ------------ -------------
<S> <C> <C> <C>
Computed "expected" tax expense.............. $ 714 $ 486 $(6,093)
Increase (reduction) in income taxes
resulting from:
Difference between U.S. federal and
Canadian effective tax rates.......... 82 57 (786)
Deductions allocated to the FUR Parking
Business by First Union............... (123) (151) (190)
Allowance for credit losses............. -- -- 7,095
Other................................... -- -- (112)
----- ----- -------
$ 673 $ 392 $ (86)
===== ===== =======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at the
balance sheet dates are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ -------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ -- $ 6,825
Other..................................................... -- --
---- -------
Total deferred tax assets................................... -- 6,825
Less: valuation allowance................................... -- (6,825)
---- -------
-- --
---- -------
Deferred tax liabilities:
Fixed assets, principally due to differences in
depreciation........................................... (11) (24)
Other..................................................... (1) --
---- -------
Total deferred tax liabilities.............................. (12) (24)
---- -------
Net deferred tax asset (liability).......................... $(12) $ (24)
==== =======
</TABLE>
F-39
<PAGE> 96
FUR PARKING BUSINESS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS)
8. FAIR VALUE OF FINANCIAL INSTRUMENTS:
Financial instruments to the FUR Parking Business include cash, accounts
receivable, notes receivable from related companies, trade accounts payable
and accrued liabilities, long-term debt and the note payable to First
Union. The fair values of those items included in current assets and
liabilities are estimated to equal their carrying value due to the
shorter-term to maturity or ability for prompt liquidation. At December 31,
1999, the fair value of the notes receivable from related parties is
estimated to be equal to the carrying value after giving effect to the
allowance for credit losses. The fair value of notes payable to First Union
are not readily determinable due to the nature of the relationship between
the FUR Parking Business and the other party.
9. RELATED PARTY TRANSACTIONS:
In addition to related party transactions disclosed elsewhere in these
combined financial statements, during the year ended December 31, 1999, the
FUR Parking Business sold a parking facility to the former president and
chief executive officer of Imperial Parking for proceeds equal to the
facility's net book value of $326,000 (Cdn.$480,000). The remaining
consideration is receivable over the period to May 2010.
10. SUBSEQUENT EVENT:
On January 20, 2000, the board of trustees approved a series of
transactions that will result in the combination of the FUR Parking
Business and the FUMI Parking Business under First Union and the
distribution of the all shares of the combined entity by First Union to
First Union's beneficiaries.
F-40
<PAGE> 97
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Impark Holdings Inc.
We have audited the consolidated statements of operations and retained
earnings (deficit) and cash flows of Impark Holdings Inc. for the period from
January 1, 1997 to April 16, 1997 and the nine months ended December 31, 1996.
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 Canadian generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance 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.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the results of the Company's operations and its cash
flows for the period from January 1, 1997 to April 16, 1997 and the nine months
ended December 31, 1996 in accordance with generally accepted accounting
principles in the United States.
/s/ KPMG LLP
Chartered Accountants
Vancouver, Canada
January 12, 2000
F-41
<PAGE> 98
IMPARK HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
(THOUSANDS OF UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
NINE MONTHS PERIOD FROM
ENDED JANUARY 1, 1997
DECEMBER 31, TO APRIL 16,
1996 1997
------------ ---------------
<S> <C> <C>
Revenues (note 2(j))........................................ $35,755 $14,065
Direct costs................................................ 25,209 11,724
------- -------
Gross margin................................................ 10,546 2,341
Other operating expenses:
General and administrative................................ 7,568 3,547
Depreciation and amortization............................. 2,567 1,066
------- -------
10,135 4,613
------- -------
Operating income (loss)..................................... 411 (2,272)
Other income (expenses):
Gain on sale of investment................................ 993 --
Write-down of asset....................................... -- (236)
Interest expense:
Long-term debt......................................... (541) (453)
Other.................................................. (46) --
------- -------
406 (689)
------- -------
Income (loss) from continuing operations before income taxes
and discontinued operations............................... 817 (2,961)
Income taxes (recovery) (note 5):
Current................................................... 73 50
Deferred.................................................. 246 (353)
------- -------
319 (303)
------- -------
Income (loss) from continuing operations before discontinued
operations................................................ 498 (2,658)
Income (loss) from discontinued operations (note 6)......... 33 (30)
------- -------
Net income (loss)........................................... 531 (2,688)
Retained earnings, beginning of period...................... -- 531
------- -------
Retained earnings (deficit), end of period.................. $ 531 $(2,157)
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-42
<PAGE> 99
IMPARK HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
NINE MONTHS PERIOD FROM
ENDED JANUARY 1, 1997
DECEMBER 31, TO APRIL 16,
1996 1997
------------ ---------------
<S> <C> <C>
Cash provided by (used in) operating activities:
Income (loss) from continuing operations.................. $ 498 $(2,658)
Adjustments to reconcile income (loss) from continuing
operations to cash provided by (used in) operating
activities:
Gain on sale of investments............................ (993) --
Depreciation and amortization.......................... 2,567 1,066
Deferred income taxes (recovery)....................... 246 (353)
Changes in non-cash working capital items:
Accounts receivable.................................... (2,067) 886
Inventory.............................................. (388) 9
Deposits and prepaid expenses.......................... (240) 127
Rents payable.......................................... 342 387
Trade accounts payable and other accrued liabilities... 404 682
Deferred revenue....................................... 74 (111)
-------- -------
Operating cash flows from continuing operations........ 443 35
Operating cash flows from discontinued operations...... (146) (217)
-------- -------
Net cash provided by (used in) operating activities....... 297 (182)
Cash flows provided by (used in) investing activities:
Additions to other assets................................. (650) (469)
Purchase of fixed assets.................................. (2,575) --
Additions to management agreements........................ (55) --
Acquisition of businesses, net of cash acquired (note
3)..................................................... (42,441) --
Proceeds on sale of investments........................... 1,085 --
Proceeds on disposal of assets............................ -- 131
-------- -------
Investing cash flows from continuing operations........... (44,636) (338)
Investing cash flows from discontinued operations......... (404) (61)
-------- -------
Net cash used in investing activities..................... (45,040) (399)
Cash flows provided by (used in) financing activities:
Issue of share capital, net............................... 24,662 --
Long-term debt issued..................................... 20,698 --
Bank indebtedness......................................... -- 30
Repayment of long-term debt............................... -- (34)
-------- -------
Financing cash flows from continuing operations........... 45,360 (4)
Financing cash flows from discontinued operations......... -- (32)
-------- -------
Net cash provided by (used in) financing activities....... 45,360 (36)
-------- -------
Increase (decrease) in cash................................. 617 (617)
Cash, beginning of period................................... -- 617
-------- -------
Cash, end of period......................................... $ 617 $ --
======== =======
Supplementary information:
Interest paid............................................. $ 406 $ 689
Income taxes paid......................................... 12 38
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-43
<PAGE> 100
IMPARK HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS OF UNITED STATES DOLLARS)
1. OPERATIONS:
Impark Holdings Inc. (the "Company") was incorporated on February 23, 1996
under the Ontario Business Corporations Act, and was inactive until the
commencement of operations upon the acquisition of Imperial Parking Ltd.
(see below) The Company's principal business activity during the periods
presented was the management of parking lots in Canada, the United States
and Asia.
Effective March 4, 1996, Onex Corporation, a Canadian public company,
through wholly-owned subsidiaries (the "Group") acquired all of the issued
and outstanding shares of Imperial Parking Ltd. ("Imperial") from existing
shareholders. Information with respect to the acquisition by the Group of
Imperial is set out in note 3(a). During the period ended December 31,
1996, 99.2% of the shares of Imperial were sold from the Group to the
Company. The remaining 0.8% was sold to companies controlled by the
existing management of Imperial.
As the shareholders of the Group also controlled the Company, this transfer
represented a transaction between companies under common control and has
been accounted for in these consolidated financial statements by a method
similar to the pooling of interests method. Under this method, the assets
and liabilities are recorded in the accounts of the Company at the carrying
amounts recorded by the Group. In addition, under this method, the
operations and cash flows of Imperial are reflected from the date that the
Group acquired Imperial.
The Company sold its investment in Imperial effective April 17, 1997 to
3357392 Canada Inc., an unrelated party. The Company's business was
subsequently carried on under First Union Real Estate Equity and Mortgage
Investments ("First Union") and First Union Management, Inc. ("FUMI"),
which are related entities. The operations carried on under FUMI are herein
defined as the "FUMI Parking Business". As allowed by the rules and
regulations of the Securities and Exchange Commission, the business
activities carried on by entities consolidated in these financial
statements subsequent to April 16, 1997 are included in separate financial
statements included in this Information Statement.
2. SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of presentation:
The consolidated financial statements have been prepared in accordance
with United States generally accepted accounting principles and in
United States dollars. They include the accounts of the Company, its
99.2% owned subsidiary Imperial Holdings No. 2 Inc. ("Holdings") and
Holdings subsidiaries all of which are wholly-owned. All significant
intercompany balances and transactions have been eliminated.
These consolidated financial statements have been prepared solely to
comply with the rules and regulations of the Securities and Exchange
Commission for the presentation of information with respect to a
predecessor entity to a registrant. In accordance with these rules and
regulations, no consolidated balance sheet is required to be or has been
presented.
(b) Use of estimates:
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the recognized amounts of revenues and expenses
during the reporting period. Actual amounts may differ from the
estimates applied in the preparation of these consolidated financial
statements.
F-44
<PAGE> 101
IMPARK HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS OF UNITED STATES DOLLARS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(c) Inventory:
Inventory consists of equipment parts and supplies and is recorded at
the lower of cost, determined on a first-in, first-out basis, and
replacement cost.
(d) Fixed assets:
Fixed assets are recorded at cost. Depreciation and amortization is
provided as follows:
<TABLE>
<CAPTION>
ASSET BASIS RATE
----- ----------------- -----------
<S> <C> <C>
Buildings........................................ declining-balance 3%
Furniture and fixtures........................... declining-balance 20%
Equipment........................................ declining-balance 20% and 30%
Automotive equipment............................. declining-balance 30%
</TABLE>
Leasehold improvements are depreciated straight-line over the shorter of
the lease term or the estimated useful life of the asset.
Routine maintenance and repairs are expensed as incurred.
(e) Management and lease agreements:
Management and lease agreements are recorded at cost and represent the
Company's investment in parking lot agreements acquired from other
parking facility management companies. Amortization is provided on a
straight-line basis over the agreements expected useful lives of twenty
years. The remaining carrying value of management and lease agreements
that are terminated before the end of the agreements are expensed at
that time.
(f) Impairment of fixed assets and management and lease agreements:
The Company accounts for long-lived assets (which include fixed assets
and management and lease agreements) in accordance with the provisions
of SFAS No. 121 -- Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of. This Statement requires
that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that
the carrying value of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying
value of an asset to future net cash flows expected to be generated by
the asset. If such assets are considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying amount
of the asset exceeds its fair value. Assets to be disposed of are
reported at the lower of their carrying value or fair value less costs
to sell.
(g) Deferred financing costs:
The costs of obtaining long-term debt are initially capitalized and then
amortized over the term of the related debt. The amortization of these
charges is included in interest expense.
(h) Goodwill:
Goodwill represents the excess of cost over the fair values assigned to
the net assets acquired on the business acquisitions (note 3). Goodwill
is amortized on a straight line basis over 40 years.
F-45
<PAGE> 102
IMPARK HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS OF UNITED STATES DOLLARS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(h) Goodwill: (continued)
The Company assesses the recoverability of goodwill by determining
whether the amortization of the goodwill balance over its remaining life
can be recovered through undiscounted future operating cash flows of the
acquired operation. The amount of goodwill impairment, if any, is
measured based on projected discounted future operating cash flows using
a discount rate reflecting the Company's average cost of funds. The
assessment of the recoverability of goodwill will be impacted if
estimated future operating cash flows are not achieved.
(i) Income taxes:
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to (i) differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and (ii) operating loss and tax credit carry
forwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
(j) Revenue recognition:
Parking revenues consist of the revenues from managed and leased
locations. Management agreement revenues represent revenues (both fixed
fees and additional payments based upon parking revenues) from
facilities managed for other parties and miscellaneous management fees
for accounting, insurance and other ancillary services such as
consulting and transportation management services. Parking and
management contract revenues are recognized when earned in accordance
with the applicable agreement. Revenues from leased locations are
recognized in accordance with the terms of the lease agreements.
Deferred revenue is derived primarily for revenue received in advance of
its due date.
(k) Research and development:
Research and development costs are expensed as incurred.
(l) Foreign currency translation:
The functional currency of the Company's operations in Canada is the
Canadian dollar ("Cdn."). For facilities and operations located in the
United States, the functional currency is the United States dollar.
The assets and liabilities of the Canadian operations are translated
into United States dollars at exchange rates in effect at the balance
sheet date. Revenue and expense items are translated at the rates of
exchange prevailing during the period. The gains or losses resulting
from these translations are excluded from the determination of income
and included in the separate foreign currency translation account within
owners' equity. Other exchange gains and losses are included in the
determination of income.
F-46
<PAGE> 103
IMPARK HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS OF UNITED STATES DOLLARS)
3. ACQUISITION OF BUSINESSES:
(a) Imperial Parking Ltd.:
Effective March 4, 1996, through a series of share purchase
transactions, the Group acquired 100% of the outstanding common shares
of Imperial from unrelated parties for aggregate consideration
(including costs) of $44.6 (Cdn.$60.6) million. The Group subsequently
sold its shares in Imperial to the Company (note 1). The acquisition by
the Group was accounted for by the purchase method and accordingly, the
aggregate purchase price, including related costs paid by the Group, was
assigned to Imperial's assets acquired and liabilities assumed based on
their fair values as of the acquisition date as follows:
<TABLE>
<S> <C>
Net working capital......................................... $(6,863)
Other assets................................................ 2,501
Fixed assets................................................ 9,453
Management and lease agreements............................. 13,225
Goodwill.................................................... 32,385
Long-term debt.............................................. (6,101)
-------
Consideration paid.......................................... $44,600
=======
Cash........................................................ $44,600
=======
</TABLE>
The tax basis of the deductible acquired assets was greater than the
fair values assigned at the date of acquisition. No value has been
assigned to the acquired deferred tax asset in the purchase equation
above due to uncertainty as to its realizability. See note 5.
The net working capital deficiency acquired of $6.9 million includes
$1.4 (Cdn.$1.9) million accrued for employee terminations and relocation
costs. Such costs reflect plans initiated by management of the Group at
the time of the acquisition and completed prior to December 31, 1996. As
indicated below, certain acquisition related accruals are unpaid at
April 16, 1997. These amounts relate to employee termination agreements
that, by contract, are payable over a period of years.
The activity impacting the accrual for employee terminations and
relocation costs in the periods presented is as follows:
<TABLE>
<CAPTION>
EMPLOYEE RELOCATION
TERMINATION COSTS TOTAL
----------- ---------- ------
<S> <C> <C> <C>
Balance, April 1, 1996.............................. $1,342 $74 $1,416
Charges utilized.................................... (319) (74) (393)
------ --- ------
Balance, December 31, 1996.......................... 1,023 -- 1,023
Charges utilized.................................... (125) -- (125)
------ --- ------
Balance, April 16, 1997............................. $ 898 $-- $ 898
====== === ======
</TABLE>
(b) Parking Services, Inc.:
On April 1, 1996, Imperial acquired the parking lot management and lease
agreements of Parking Services, Inc. from an unrelated party for cash
consideration, including costs, of $1.1 million. The acquisition is
accounted for by the purchase method with the results of operations
under the agreements included in these consolidated financial statements
from the
F-47
<PAGE> 104
IMPARK HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS OF UNITED STATES DOLLARS)
3. ACQUISITION OF BUSINESSES: (CONTINUED)
(b) Parking Services, Inc.: (continued)
date of acquisition. The purchase price was assigned to management and
lease agreements, the identifiable asset acquired.
The fair values assigned equalled the tax basis of the assets acquired
at the date of acquisition.
(c) Century Security Limited:
On November 1, 1996, Imperial acquired 100% of the issued shares of
Century Security Limited from an unrelated party for cash consideration,
including costs, of approximately $210,000 (Cdn.$282,000). The
acquisition was accounted for by the purchase method with the results of
operations of Century included in these consolidated financial
statements from the date of acquisition. The purchase price was assigned
to management and lease agreements, the identifiable asset acquired.
The fair values assigned equalled the tax basis of the assets acquired
at the date of acquisition.
4. DEBT:
At April 16, 1997, the Company had outstanding debt and bank credit
facilities as follows:
(a) Term loan of $23.9 (Cdn.$33.5) million, repayable in semi-annual
installments of principal and interest commencing on June 30, 1997
with the balance to be repaid in full by October 31, 2003. The
semi-annual installments commence at $750,000 (Cdn.$1.05 million)
increasing annually to semi-annual installments of $3.0 (Cdn.$4.2)
million in the year 2003.
(b) Revolving acquisition loan of $1.1 (Cdn.$1.5) million, repayable in
semi-annual installments of principal and interest commencing on June
30, 1998 with the balance to be repaid in full by October 31, 2003.
The semi-annual installments commence at $285,000 (Cdn.$400,000)
increasing annually to semi-annual installments of $900,000 (Cdn.$1.3
million) in the year 2003.
Funds advanced under the term loan and revolving acquisition loan are
available at variable rates of interest based on Canadian prime, U.S. base,
Eurodollar and bankers' acceptances rates plus an applicable margin. The
applicable margin will vary to a maximum of 1.75% depending upon the type
of advance and the Company's compliance with certain financial ratios. The
average interest rate on long-term debt at April 16, 1997 was 4.90% (at
December 31, 1996 -- 5.00%).
(c) Loans payable:
Loans payable of $2.1 (Cdn.$2.9) million, repayable based on a 15 year
amortization period in equal monthly blended principal and interest
payments of Cdn.$34,514, and bearing interest at 8.2% per annum.
(d) Mortgage payable:
First mortgage payable of $140,000 (Cdn.$200,000), repayable in equal
monthly blended principal and interest payments of Cdn.$2,070 to
maturity on July 1, 1998, and bearing interest at 9.25% per annum.
F-48
<PAGE> 105
IMPARK HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS OF UNITED STATES DOLLARS)
5. INCOME TAXES:
Income tax expense for the periods presented is substantially attributable
to continuing operations in Canada.
Income tax expense attributable to continuing operations differed from
amounts completed by applying the Canadian combined statutory income tax
rate to income (loss) from continuing operations before income taxes as
follows:
<TABLE>
<CAPTION>
NINE MONTHS PERIOD FROM
ENDED JANUARY 1, 1997
DECEMBER 31, TO APRIL 16,
1996 1997
------------ ---------------
<S> <C> <C>
Combined Canadian federal and provincial statutory rate..... 45.0% 45.0%
Income tax expense is comprised of:
At statutory rate......................................... $368 $(1,332)
Increase in losses carried forward........................ -- 979
Large corporations tax.................................... 38 48
Other..................................................... (87) 2
---- -------
$319 $ (303)
==== =======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1996 and April 16, 1997 are presented below:
<TABLE>
<CAPTION>
DECEMBER 31, APRIL 16,
1996 1997
------------ ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carry forwards......................... $ 1,065 $1,726
Research and development costs............................ 797 637
Fixed assets.............................................. 1,445 1,342
Accrued liabilities....................................... 686 1,181
Other..................................................... 284 331
------- ------
Total deferred tax assets................................... 4,277 5,217
Less: valuation allowance................................... (1,011) (1,947)
------- ------
3,266 3,270
------- ------
Deferred tax liabilities:
Management and lease agreements........................... (3,127) (3,270)
Other..................................................... (139) --
------- ------
Total deferred tax liabilities.............................. (3,266) (3,270)
------- ------
Net deferred tax assets (liabilities)....................... $ -- $ --
======= ======
</TABLE>
As of April 16, 1997, the Company has total income tax losses and
deductions carry forward of $3.9 (Cdn. -- $5.4) million which are available
to reduce taxable income otherwise calculated to 2003.
F-49
<PAGE> 106
IMPARK HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(TABULAR DOLLAR AMOUNTS STATED IN THOUSANDS OF UNITED STATES DOLLARS)
6. DISCONTINUED OPERATIONS:
Prior to the issuance of its financial statements for the period ended
September 30, 1999, the FUMI Parking Business entered into a formal plan to
discontinue activities related to the manufacturing and sale of metered
equipment for public transit systems and parking lots. As these activities
will not form part of the business activities of Imperial Parking
Corporation, to which the Company is considered to be a predecessor entity,
they have been accounted for as discontinued operations in these
consolidated financial statements. This disposition is scheduled to be
completed by March 31, 2000 through the distribution to FUMI of all of the
shares of the company in which these activities are undertaken.
In addition, during 1999, the FUMI Parking Business sold all of its
security business for consideration equal to cash of $625,000 (Cdn.
$950,000) and notes receivable of $500,000 (Cdn. $750,000). No gain or loss
was recognized on this sale.
For the nine months ended December 31, 1996 and the period from January 1,
1997 to April 16, 1997 these activities were undertaken in subsidiaries of
the Company.
Loss from discontinued operations for the periods presented is calculated
as follows:
<TABLE>
<CAPTION>
NINE MONTHS PERIOD FROM
ENDED JANUARY 1, 1997
DECEMBER 31, TO APRIL 16,
1996 1997
------------ ---------------
<S> <C> <C>
Revenues.................................................... $8,866 $3,494
Direct costs................................................ 6,733 2,556
General and administrative.................................. 1,958 910
Depreciation and amortization............................... 142 58
------ ------
8,833 3,524
------ ------
Income (loss) from discontinued operations.................. $ 33 $ (30)
====== ======
</TABLE>
Interest expense has not been allocated to discontinued operations.
F-50
<PAGE> 107
INFORMATION NOT INCLUDED IN THE INFORMATION STATEMENT
ITEM 15. FINANCIAL STATEMENT SCHEDULES AND EXHIBITS
(a) Financial Statement Schedules
Financial Statement Schedules for the FUMI Parking Business and the FUR
Parking Business and the Report of Independent Public Accountants on
such Schedules are included in this Registration Statement as of January
12, 2000. All other financial statement schedules have been omitted
either because they are not required, are not applicable or the
information is otherwise set forth in the Financial Statement and Notes
thereto.
(b) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
2.1 Form of Memorandum of Understanding regarding the
Distribution between First Union Real Estate Equity and
Mortgage Investments ("First Union") and the Registrant.
3.1 Form of Amended and Restated Certificate of Incorporation of
the Registrant.
3.2 Form of Amended and Restated By-Laws of the Registrant.
4.1 Specimen certificate for shares of common stock of the
Registrant.
10.1 Form of 2000 Stock Incentive Plan of the Registrant.
10.2 Form of Credit Agreement.
10.3 Form of Guarantee.
10.4 Form of Indemnification Agreement.
10.6* Huntzinger Employment Agreement.
10.7* Wallner Employment Agreement.
10.8 Newsome Employment Agreement.
10.9 Form of Debenture.
21.1 Subsidiaries of the Registrant.
27.1 Financial Data Schedule for FUMI Parking Business for year
ending December 31, 1999.
27.2** Financial Data Schedule for FUMI Parking Business for year
ending December 31, 1998.
27.3 Financial Data Schedule for FUR Parking Business for year
ending December 31, 1999.
27.4** Financial Data Schedule for FUR Parking Business for year
ending December 31, 1998.
</TABLE>
- ---------------
*To be filed by amendment.
**Previously filed
A-1
<PAGE> 108
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Amendment No. 1 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Vancouver, British Columbia on this 2nd day of March, 2000.
IMPERIAL PARKING CORPORATION
By: /s/ CHARLES HUNTZINGER
------------------------------------
Charles Huntzinger
President and Chief Executive
Officer
A-2
<PAGE> 109
(LOGO)
PRINTED IN CANADA
O04278
<PAGE> 1
Exhibit 2.1
MEMORANDUM OF UNDERSTANDING REGARDING THE DISTRIBUTION
THIS MEMORANDUM OF UNDERSTANDING (the "MOU") REGARDING THE DISTRIBUTION
is made as of the ___ day of ________, ____, between First Union Real Estate
Equity and Mortgage Investments, an Ohio business trust, ("First Union"), and
Imperial Parking Corporation, a Delaware corporation ("Impark").
RECITALS
WHEREAS, First Union is the holder of approximately 2,100,000 shares of
Common Stock, $.01 par value per share, of Impark ("Impark Common Stock"),
comprising 100% of the issued and outstanding shares of Impark Common Stock;
and
WHEREAS, First Union has contributed certain assets to Impark and intends
to make other arrangements to establish Impark as a separate enterprise for the
purpose of providing parking and ancillary services; and
WHEREAS, it is the intention of First Union to distribute all of the
issued and outstanding shares of Impark Common Stock held by First Union to the
shareholders of First Union as of the Distribution Record Date (the
"Distribution"); and
WHEREAS, First Union and Impark have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
the Distribution and to set forth other agreements that will govern certain
other matters following such Distribution.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
made herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 General. As used in this MOU and the Exhibits hereto, the following
terms shall have the following meanings:
Action: any action, claim, suit, litigation, arbitration, inquiry,
subpoena, discovery request, proceeding or investigation by or before any court
or grand jury, any governmental or other regulatory or administrative agency or
commission or any arbitration tribunal.
Affiliate: with respect to any specified person, a person that, directly
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, such specified person; provided, however,
that First Union (and
<PAGE> 2
its subsidiaries) shall not be deemed to be Affiliates of Impark (and its
subsidiaries), and vice versa, for purposes of this MOU.
Agent: National City Bank, as the distribution agent appointed by First
Union to distribute the shares of Impark Common Stock in connection with the
Distribution.
Ancillary Agreements: all of the agreements, instruments, understandings,
assignments or other arrangements entered into in connection with the
transactions contemplated hereby, including, without limitation, the Credit
Agreement, the Debenture, the Guarantee, the Indemnity Agreement and the
Mortgages.
Credit Agreement: the Credit Agreement of even date herewith between
First Union and Impark.
Debenture: the Debenture given by Imperial Parking Limited to First Union
pursuant to the Credit Agreement.
Commission: the Securities and Exchange Commission.
Distribution: as defined in the Recitals.
Distribution Date: the date of effecting the Distribution, as determined
by the First Union Board.
Distribution Record Date: the date determined by the First Union Board as
of which the holders of First Union Common Shares and their respective share
holdings shall be determined for purposes of distributing Impark Common Stock
to such First Union shareholders.
Exchange Act: the Securities Exchange Act of 1934, as amended.
First Union Board: the Board of Trustees of First Union.
First Union Business: all of the businesses and operations conducted at
any time, whether prior to, on or after the Distribution Date, by any member of
the First Union Group, other than the Impark Business.
First Union Common Shares: the Common Shares of beneficial interest, $.01
par value per share, of First Union.
First Union Group: First Union, the First Union Subsidiaries, First Union
Management, Inc. and all Subsidiaries of First Union Management, Inc.
-2-
<PAGE> 3
First Union Indemnitees: First Union, each Affiliate of First Union and
each of their respective Representatives and each of the heirs, executors,
successors and assigns of any of the foregoing.
First Union Subsidiaries: all Subsidiaries of First Union, other than
Impark and the Impark Subsidiaries.
Form 10: the Registration Statement on Form 10 filed by Impark with the
Commission to effect the registration of the Impark Common Stock pursuant to
the Exchange Act.
Guarantee: the guarantee given by certain subsidiaries of Imperial
Parking, to First Union pursuant to the Credit Agreement.
Impark Assets: all of the assets owned by any member of the Impark Group
immediately prior to the Distribution Date, excluding items to be retained by
any member of the First Union Group pursuant to the Ancillary Agreements.
Impark Board: the Board of Directors of Impark.
Impark Business: all of the businesses and operations conducted at any
time, whether prior to, on or after the Distribution Date, by any member of the
Impark Group.
Impark Common Stock: as defined in the Recitals.
Impark Group: Impark and the Impark Subsidiaries.
Impark Indemnitees: Impark, each Affiliate of Impark and each of their
respective Representatives and each of the heirs, executors, successors and
assigns of any of the foregoing.
Impark Subsidiaries: all Subsidiaries of Impark.
Indemnifiable Losses: all losses, Liabilities, damages, claims, demands,
judgments or settlements of any nature or kind, known or unknown, fixed,
accrued, absolute or contingent, liquidated or unliquidated, including all
reasonable costs and expenses (legal, accounting or otherwise as such costs are
incurred) relating thereto, suffered (and not actually reimbursed by insurance
proceeds) by an Indemnitee, including any reasonable costs or expenses of
enforcing any indemnity hereunder.
Indemnifying Party: a Person who or which is obligated under this MOU to
provide indemnification.
Indemnitee: a Person who or which may seek indemnification under this
MOU.
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Information Statement: the Information Statement, constituting a part of
the Form 10, in the form to be distributed to the holders of First Union Common
Shares as of the Distribution Record Date in connection with the Distribution,
and as it may be amended or supplemented subsequent to such dissemination.
Liabilities: any and all debts, liabilities and obligations, absolute or
contingent, mature or unmature, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising (unless otherwise specified in
this MOU), including without limitation all costs and expenses relating
thereto, and those debts, liabilities and obligations arising under any law,
rule, regulation, Action, threatened Action, order or consent decree of any
governmental entity or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
Mortgages: the Mortgages granted by Imperial Parking Limited to First
Union pursuant to the Debenture to secure the obligations under the Guarantee.
Person: an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization or a
government or any department or agency thereof.
Representative: with respect to any Person, any of such Person's
trustees, directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
Subsidiary: with respect to any specified Person, any corporation or
other legal entity of which such Person or any of its Subsidiaries controls or
owns, directly or indirectly, more than 50% of the stock or other equity
interest entitled to vote on the election of members to the board of directors
or similar governing body; provided, however, that for purposes of this MOU,
Impark and the Impark Subsidiaries shall not be deemed to be Subsidiaries of
First Union or any of the First Union Subsidiaries.
Third-Party Claim: any claim, suit, arbitration, injury, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal asserted by a
Person who or which is neither a party hereto nor an Affiliate of a party
hereto.
ARTICLE II
ACKNOWLEDGMENT OF MATERIAL FACTS
2.1 Organization. First Union and Impark acknowledge that each is duly
organized, validly existing and in good standing under the laws of the State of
Ohio and the State of Delaware, respectively, with requisite trust or corporate
power,
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respectively, to own their respective properties and assets and to carry on
their respective businesses as presently conducted or contemplated. First
Union is the owner of all of the issued and outstanding shares of Impark Common
Stock.
ARTICLE III
PRELIMINARY ACTION
3.1 Cooperation Prior to the Distribution.
(a) Ancillary Agreements. First Union and Impark shall use their
respective reasonable efforts to cause, on or before the Distribution Date, the
execution and delivery by First Union and Impark, or their respective
Affiliates, of the Ancillary Agreements and any other agreements, instruments
or other documents deemed necessary or desirable by the applicable parties to
establish and govern their post-Distribution relationships.
(b) Form 10. First Union and Impark have prepared, and Impark has filed
with the Commission, the Form 10, which includes the Information Statement,
setting forth appropriate disclosure concerning Impark, the Distribution and
any other appropriate matters required to be stated therein. First Union and
Impark shall use their respective reasonable efforts to cause the Form 10 to
become effective under the Exchange Act, and thereafter First Union or its
agent shall promptly mail the Information Statement to all of the appropriate
holders of First Union Common Shares.
(c) Listing. First Union and Impark shall prepare, and Impark shall file
and pursue, an application to effect the listing of the Impark Common Stock on
the American Stock Exchange as soon as practicable following the effectiveness
of the Form 10.
3.2 Consents. Each party hereto understands and agrees that no party
hereto is, in this MOU or in any other agreement or document contemplated by
this MOU or otherwise, representing or warranting in any way that the obtaining
of any consents or approvals, the execution and delivery of any agreements or
the making of any filings or applications contemplated by this MOU will satisfy
the provisions of any or all applicable agreements or the requirements of any
or all applicable laws or judgments except as expressly represented, warranted
or covenanted herein or in the Ancillary Agreements. Notwithstanding the
foregoing, the parties shall use their reasonable efforts to obtain all
consents and approvals, to enter into all agreements and to make all filings
and applications which may be required for the consummation of the transactions
contemplated by this MOU, including, without limitation, all applicable
regulatory filings or consents under federal or state laws and all necessary
consents, approvals, agreements, filings and applications.
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ARTICLE IV
THE DISTRIBUTION
4.1 The Distribution.
(a) Prior to the Distribution Date, First Union shall deliver to Impark
the certificates for the approximately 2,100,000 shares of Impark Common Stock
owned by First Union, and Impark shall cancel such certificates. In exchange
therefor, and upon receipt from the Agent of a certificate as to the number of
shares of First Union Common Shares outstanding as of the Distribution Record
Date, Impark shall deliver to the Agent on the Distribution Date on behalf of
First Union and for the benefit of the holders of record of First Union Common
Shares as of the Distribution Record Date, an omnibus stock certificate
representing in the aggregate 1 (one) share of Impark Common Stock for every 20
(twenty) shares of First Union Common Shares outstanding as of the Distribution
Record Date. Effective as of 9:00 a.m., Cleveland Time, on the date of the
delivery of such omnibus stock certificate to the Agent, ownership of the
Impark Common Stock held by First Union shall pass to First Union's
shareholders. First Union shall instruct the Agent to distribute, beginning on
or promptly following the Distribution Date, to such holders of First Union
Common Shares on the Distribution Record Date, certificates representing 1
(one) share of Impark Common Stock for every 20 (twenty) shares of First Union
Common Shares outstanding as of the Distribution Record Date. Impark agrees to
provide to the Agent sufficient certificates in such denominations as the Agent
may request in order to effect the Distribution. All of the shares of Impark
Common Stock issued in the Distribution shall be fully paid, nonassessable and
free of preemptive rights. Holders of First Union Common Shares shall not be
required to pay cash or other consideration for the Impark Common Stock
received in the Distribution.
(b) No fractional shares of Impark Common Stock will be received by First
Union shareholders. Each holder of a fractional share will receive a cash
payment in lieu of the fractional share. First Union will instruct the Agent
to provide the funds necessary for these payments by aggregating and selling
all fractional shares on behalf of the First Union shareholders, which funds
shall be disbursed by the Agent to the applicable shareholders with the share
certificates distributed pursuant to Section 4.1(a).
4.2 First Union Board Action.
(a) The First Union Board shall establish in its sole discretion and in
accordance with all applicable rules of the American Stock Exchange, the
Distribution Record Date, the Distribution Date, the date on which certificates
representing Impark Common Stock shall be mailed to holders of First Union
Common Shares and all appropriate procedures in connection with the
Distribution.
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(b) In its sole discretion for any reason, the First Union Board may
rescind the declaration of the Distribution, and after the declaration and until
the Distribution Date, the First Union Board may postpone, withdraw, cancel or
abandon the Distribution for any reason and simultaneously terminate this MOU
and the Ancillary Agreements.
ARTICLE V
SURVIVAL, ASSUMPTION AND INDEMNIFICATION
5.1 Survival of Agreements. All covenants and agreements of the parties
hereto contained in this MOU shall survive the Distribution Date.
5.2 Assumption and Indemnification.
(a) Except as specifically otherwise provided in the Ancillary Agreements,
First Union shall indemnify, defend and hold harmless the Impark Indemnitees
from and against (1) all Indemnifiable Losses arising from or relating to the
First Union Business, whether such Indemnifiable Losses relate to events,
occurrences or circumstances occurring or existing, or whether such
Indemnifiable Losses are asserted, before or after the Distribution Date; (2)
all Indemnifiable Losses incurred by Impark as a consequence of any
misstatement or omission of a material fact with respect to First Union based
on information supplied by First Union in any documents or filings prepared for
purposes of compliance or qualification under applicable securities laws in
connection with the Distribution, and related transactions, including without
limitation, the Information Statement and the Form 10; and (3) all
Indemnifiable Losses arising from any breach of or failure to perform any
obligation on the part of any member of First Union Group contained in this MOU
or any of the Ancillary Agreements.
(b) Except as specifically otherwise provided in the Ancillary Agreements,
Impark shall indemnify, defend and hold harmless the First Union Indemnitees
from and against (1) all Indemnifiable Losses arising from or relating to the
Impark Business, whether such Indemnifiable Losses relate to events,
occurrences or circumstances occurring or existing, or whether such
Indemnifiable Losses are asserted, before or after the Distribution Date; (2)
all Indemnifiable Losses incurred by First Union as a consequence of any
misstatement or omission of a material fact with respect to Impark based on
information supplied by Impark in any documents or filings prepared for
purposes of compliance or qualification under applicable securities laws in
connection with the Distribution and related transactions, including without
limitation, the Information Statement and the Form 10; and (3) all
Indemnifiable Losses arising from any breach of or failure to perform any
obligation on the part of any member of the Impark Group contained in this MOU
or any of the Ancillary Agreements.
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(c) If any Indemnifiable Loss arises from or relates to both the First
Union Business and the Impark Business, First Union shall indemnify the Impark
Indemnitees against any portion of such Indemnifiable Loss that pertains more
directly to the First Union Business than to the Impark Business, and Impark
shall indemnify the First Union Indemnitees against any portion of such
Indemnifiable Loss that pertains more directly to the Impark Business than to
the First Union Business, each as determined in good faith negotiations between
the parties.
(d) Notwithstanding anything to the contrary set forth herein,
indemnification relating to any arrangements between any member of the First
Union Group and any member of the Impark Group (or any unit of the Impark
Business) for the provision after the Distribution of goods and services in the
ordinary course shall be governed by the terms of such arrangements and not by
this Section.
5.3 Procedures for Indemnification for Third-Party Claims.
(a) Impark shall, and shall cause the other Impark Indemnitees to, notify
First Union in writing promptly after learning of any Third-Party Claim for
which any Impark Indemnitee intends to seek indemnification from First Union
under this MOU. First Union shall, and shall cause the other First Union
Indemnitees to, notify Impark in writing promptly after learning of any
Third-Party Claim for which any First Union Indemnitee intends to seek
indemnification from Impark under this MOU. The failure of any Indemnitee to
give such notice shall not relieve any Indemnifying Party of its obligations
under this Article V except to the extent that such Indemnifying Party or its
Affiliate is actually prejudiced by such failure to give notice. Such notice
shall describe such Third-Party Claim in reasonable detail considering the
information provided to the Indemnitee.
(b) Except as otherwise provided in subsection (c) of this Section, an
Indemnifying Party may, by notice to the Indemnitee and to Impark, if First
Union is the Indemnifying Party, or to First Union, if Impark is the
Indemnifying Party, at any time after receipt by such Indemnifying Party of
such Indemnitee's notice of a Third-Party Claim, undertake (itself or through
another member of its Group) the defense or settlement of such Third-Party
Claim. If an Indemnifying Party undertakes the defense of any Third-Party
Claim, such Indemnifying Party shall thereby admit its obligation to indemnify
the Indemnitee against such Third-Party Claim, and such Indemnifying Party
shall control the investigation and defense or settlement thereof, except that
such Indemnifying Party shall not require any Indemnitee, without its prior
written consent, to take or refrain from taking any action in connection with
such Third-Party Claim, or make any public statement, which such Indemnitee
reasonably considers to be against its interest, nor shall the Indemnifying
Party, without the prior written consent of the Indemnitee and of Impark, if
the Indemnitee is an Impark Indemnitee, or of First Union, if the Indemnitee is
an First Union Indemnitee, consent to any settlement that
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does not include as a part thereof an unconditional release of the Indemnitees
from liability with respect to such Third-Party Claim or that requires the
Indemnitee or any of its Representatives or Affiliates to make any payment that
is not fully indemnified under this MOU or to submit to any non-monetary
remedy; and subject to the Indemnifying Party's control rights, as specified
herein, the Indemnitees may participate in such investigation and defense, at
their own expense.
(c) With respect to any Third-Party Claim, if there is a material conflict
of interest between the Indemnifying Party and the Indemnitees involved,
neither the Indemnifying Party nor the Indemnitees shall be entitled to control
the defense or settlement thereof. If an Indemnitee notifies an Indemnifying
Party of a Third-Party Claim pursuant to this Article V, and the Indemnifying
Party does not take control of the defense or settlement thereof, or prior to
the time that it does so take control, neither the Indemnifying Party nor the
Indemnitees shall be entitled to control the defense or settlement thereof. In
any such event, the Indemnifying Parties and the Indemnitees involved shall
each be entitled to conduct their own investigation and defense at their own
expense in accordance with Section 5.3(d) below, but the parties shall
cooperate to conduct such investigation and defense as efficiently as possible.
No Indemnitee may compromise or settle any Third-Party Claim described in this
subsection as to which indemnification from an Indemnifying Party has or will
be sought under this MOU without the prior written consent of such Indemnifying
Party.
(d) Impark shall, and shall cause the other Impark Indemnitees to, and
First Union shall, and shall cause the other First Union Indemnitees to, make
available to each other, their counsel and other Representatives, all
information and documents reasonably available to them which relate to any
Third-Party Claim, and otherwise cooperate as may reasonably be required in
connection with the investigation, defense and settlement thereof.
5.4 Remedies Cumulative. The remedies provided in this Article V shall be
cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any other remedies against any Indemnifying Party.
However, the procedures set forth in Section 5.3 shall be the exclusive
procedures governing any indemnity action brought under this MOU or otherwise
and relating to a Third-Party Claim, except as otherwise specifically provided
in any of the Ancillary Agreements.
ARTICLE VI
ADDITIONAL ASSURANCES
6.1 Mutual Assurances. First Union and Impark agree to cooperate with
respect to the implementation of this MOU and the Ancillary Agreements and to
execute such further documents and instruments as may be necessary to confirm
the
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transactions contemplated hereby. Such cooperation may include joint meetings
with corporate partners, suppliers, customers and others to assure the orderly
transition of the business and assets contemplated hereby; provided, however,
that nothing herein shall be deemed to obligate either First Union or Impark to
take any action or reach any understandings which may violate any applicable
laws.
ARTICLE VII
CONDITIONS TO EFFECTIVENESS OF DISTRIBUTION
The Distribution shall be subject to the implementation of the portions of
this MOU which are contemplated to become effective prior to the Distribution
and to the satisfaction or waiver of the following conditions:
7.1 Board Approval. This MOU and the Ancillary Agreements (including
exhibits and schedules) shall have been approved by the First Union Board and
the Impark Board and shall have been executed and delivered by appropriate
officers of First Union and Impark.
7.2 Securities Laws Compliance. The transactions contemplated hereby
shall be in compliance with applicable federal and state securities laws.
7.3 Form 10 Effective. The Form 10 shall have become effective under the
Exchange Act.
7.4 Consents. First Union shall have received such consents, and shall
have received executed copies of such agreements or amendments of agreements,
as it shall deem necessary in connection with the completion of the transaction
contemplated by this MOU.
7.5 Other Instruments. All actions and other documents and instruments
deemed necessary or advisable in connection with the transactions contemplated
hereby shall have been taken or executed, as the case may be, in form and
substance satisfactory to First Union and Impark.
7.6 Legal Proceedings. No legal proceedings affecting or arising out of
the transactions contemplated hereby or which could otherwise affect First
Union or Impark in a materially adverse manner shall have been commenced or
threatened against First Union, Impark or the directors or officers of either
First Union or Impark.
7.7 Material Changes. No material adverse change shall have occurred with
respect to First Union or Impark, the securities markets or general economic or
financial
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conditions which shall, in the reasonable judgment of First Union and Impark,
make the transactions contemplated by this MOU inadvisable.
ARTICLE VIII
ACCESS TO INFORMATION AND SERVICES
8.1 Provision of Corporate Records. Upon Impark's request, First Union
shall arrange as soon as practicable following the Distribution Date for the
delivery to Impark of existing corporate records in the possession of First
Union relating to the business and assets to be transferred to Impark, together
with all active agreements and any active litigation files relating to the
business, except to the extent such items are already in the possession of
Impark. Such records shall be the property of Impark but shall be available to
First Union for review and duplication until First Union shall notify Impark in
writing that such records are no longer of use to First Union.
8.2 Access to Information. From and after the Distribution Date, First
Union shall afford to Impark and its authorized accountants, counsel and other
designated representatives reasonable access (including using reasonable
efforts to give access to persons or firms possessing information) and
duplicating rights during normal business hours to all records, books,
contracts, instruments, computer data and other data and information
(collectively, "Information") within First Union's possession relating to the
Impark Business, insofar as such access is reasonably required by Impark.
Impark shall afford to First Union and its authorized accountants, counsel and
other designated representatives reasonable access (including using reasonable
efforts to give access to persons or firms possessing Information) and
duplicating rights during normal business hours to Information within Impark's
possession relating to the First Union Business as constituted after the
Distribution, insofar as such access is reasonably required by First Union.
Information may be requested under this Article VIII for, without limitation,
audit, accounting, claims, litigation and tax purposes, as well as for purposes
of fulfilling disclosure and reporting obligations and for performing the
transactions contemplated in this MOU and the Ancillary Agreements.
8.3 Production of Witnesses. At all times from and after the Distribution
Date, each of First Union and Impark shall use reasonable efforts to make
available to the other, upon written request, its officers, directors,
employees and agents as witnesses to the extent that such persons may
reasonably be required in connection with legal, administrative or other
proceedings in which the requesting party may from time to time be involved.
8.4 Reimbursement. Except to the extent otherwise contemplated by any
Ancillary Agreement, a party providing Information to the other party under
this Article VIII shall be entitled to receive from the recipient, upon the
presentation of invoices therefor, payments for such amounts, relating to
supplies, disbursements and
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other out-of-pocket expenses, as may be reasonably incurred in providing such
Information.
8.5 Retention of Records. For a period of seven (7) years following the
Distribution Date, each of First Union and Impark shall retain all Information
relating to the other, except as otherwise required by law or set forth in an
Ancillary Agreement or except to the extent that such Information is in the
public domain or in the possession of the other party; provided, that, after
the expiration of such retention period, such Information shall not be
destroyed or otherwise disposed of at any time, unless, prior to such
destruction or disposal, (i) the party proposing to destroy or otherwise
dispose of such Information shall provide no less than ninety (90) days' prior
written notice to the other, specifying in reasonable detail the Information
proposed to be destroyed or disposed of and (ii) if a recipient of such notice
shall request in writing prior to the scheduled date for such destruction or
disposal that any of the Information proposed to be destroyed or disposed of be
delivered to such requesting party, the party proposing the destruction or
disposal shall promptly arrange for the delivery of such of the Information as
was requested, at the expense of the party requesting such Information.
8.6 Confidentiality. Subject to any contrary requirement of law and the
right of each party to enforce its rights hereunder in any legal action, each
party shall keep strictly confidential, and shall cause its employees and
agents to keep strictly confidential, any Information of or concerning the
other party which it or any of its agents or employees may acquire pursuant to,
or in the course of performing its obligations under, any provisions of this
MOU or any Ancillary Agreement; provided, however, that such obligation to
maintain confidentiality shall not apply to Information which: (i) at the time
of disclosure was in the public domain, not as a result of improper acts by the
receiving party; (ii) was already independently in the possession of the
receiving party at the time of disclosure; or (iii) is received by the
receiving party from a third party who did not receive such Information from
the disclosing party under an obligation of confidentiality.
ARTICLE IX
NO REPRESENTATIONS OR WARRANTIES
9.1 No Representations or Warranties. Impark acknowledges that, prior to
the date of this MOU, it has had primary responsibility for the operation and
management of the Impark Business and First Union acknowledges that, prior to
the date of this MOU, it has had primary responsibility for the operation and
management of the First Union Business. Impark understands and agrees that no
member of the First Union Group is, in this MOU or in any other agreement or
document, representing or warranting to Impark or any member of the Impark
Group in any way as to the Impark
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Assets, the Impark Business or the Liabilities of the Impark Group, it being
agreed and understood that Impark and each member of the Impark group shall
bear the economic and legal risk that conveyances of the Impark Assets shall
prove to be insufficient, that the title of any member of the Impark group to
any Impark Assets shall be other than good and marketable and free from
encumbrances or that results from the failure of Impark or any member of the
Impark Group to obtain any consents or approvals relating to the Impark
Business required in connection with the consummation of the transactions
contemplated by this MOU.
ARTICLE X
MISCELLANEOUS
10.1 Governing Law. This MOU shall be governed by the laws of the State
of New York.
10.2 Construction. Each provision of this MOU shall be interpreted in a
manner to be effective and valid to the fullest extent permissible under
applicable law. The invalidity or unenforceability of any particular provision
of this MOU shall not affect the other provisions of this MOU which shall
remain in full force and effect.
10.3 Counterparts. This MOU may be executed in counterparts, all of which
shall be considered one and the same agreement.
10.4 Amendments; Waivers. This MOU may be amended or modified only in
writing executed on behalf of First Union and Impark. No waiver shall operate
to waive any further or future act and no failure to object of forbearance
shall operate as a waiver.
10.5 Notices. All notices, requests, demands and other communications
under this MOU shall be in writing and shall be deemed to have been duly given
(i) on the date of service if served personally on the party to whom notice is
given, (ii) on the day of transmission if sent via facsimile transmission to
the facsimile number given below, provided telephonic confirmation of receipt
is obtained promptly after completion of transmission, (iii) on the business
day after delivery to an overnight courier service or the Express mail service
maintained by the United States Postal Service, provided receipt of delivery
has been confirmed, or (iv) on the fifth day after mailing, if mailed by
registered or certified mail, postage prepaid, properly addressed and
return-receipt requested, in all cases to the parties as follows:
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First Union Real Estate Equity and
Mortgage Investments
551 Fifth Avenue
New York, NY 10176-1499
Attention: Chief Executive Officer
Telephone: (212) 905-1100
Telecopier: (212) 905-1102
or to:
Imperial Parking Corporation
601 West Corodova Street, Suite 300
Vancouver, BC Canada V6B1G1
Attention: Chief Executive Officer
Telephone: (604) 331-7206
Telecopier: (604) 331-7172
10.6 Successors and Assigns. This MOU and any of the rights, interests
and obligations of each party hereunder shall not be assigned, in whole or in
part, without the prior written consent of the other party, which consent shall
not be unreasonably withheld, provided that either party may sell, assign,
transfer, delegate or otherwise dispose of its rights and obligations hereunder
in connection with its merger or consolidation or the sale of substantially all
of its assets. This MOU shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns to the extent such
assignments are in accordance with this Section 10.6.
10.7 Interpretation. The Article and Section headings contained in this
MOU are solely for the purpose of reference, are not part of the agreement of
the parties and shall not in any way affect the meaning or interpretation of
this MOU. Whenever any words are used herein in the masculine gender, they
shall be construed as though they were also used in the feminine gender in all
cases where they would so apply.
10.8 No Third-Party Beneficiaries. Except for the provisions of Sections
5.2 and 5.3 relating to Indemnitees, which are also for the benefit of the
Indemnitees, this MOU is solely for the benefit of the parties hereto and their
Subsidiaries and Affiliates and is not intended to confer upon any other
Persons any rights or remedies hereunder.
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IN WITNESS WHEREOF, the parties have executed this MOU as of the date
first written above.
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS
By:____________________________________
Name:__________________________________
Title:_________________________________
IMPERIAL PARKING CORPORATION
By:____________________________________
Name:__________________________________
Title:_________________________________
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Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
IMPERIAL PARKING CORPORATION
FIRST: The name of the corporation is Imperial Parking Corporation
(the "Corporation").
SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is 1209 Orange
Street, City of Wilmington 19801, County of New Castle; and the name of the
registered agent of the Corporation in the State of Delaware at such address is
The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock that the
Corporation shall have authority to issue is ten million (10,000,000) shares of
Common Stock, $0.01 par value per share, and two million (2,000,000) shares of
Preferred Stock, $0.01 par value per share. Authority is hereby expressly
granted to the Board of Directors from time to time to issue the Preferred Stock
as Preferred Stock in one or more classes or series, having such additional
designations, powers, rights, preferences, qualifications, limitations and
restrictions with respect to such series as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors providing for the
issuance of the shares of such series and as may be now or hereafter permitted
by the General Corporation Law of the State of Delaware.
FIFTH: The name and mailing address of the incorporator is as
follows:
Steven H. Sneiderman, Esq.
Hahn Loeser & Parks LLP
3300 BP Tower
200 Public Square
Cleveland, Ohio 44114
SIXTH: The Corporation is to have perpetual existence.
<PAGE> 2
SEVENTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation and for the
further definition of the powers of the Corporation and of its directors and
stockholders:
(a) The Corporation shall indemnify its directors and officers and may
indemnify any other employees or agents, in each case, to the fullest extent
permitted by the laws of the State of Delaware. No amendment or repeal of this
paragraph shall affect the obligations of the Corporation to indemnify any
director or officer of the Corporation with respect to, arising out of or
related to any event that occurred prior to such amendment or repeal.
(b) The Corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against any
such liability under the provisions of the General Corporation Law of the State
of Delaware, as amended from time to time.
(c) To the fullest extent permitted by the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended, a
director or officer of the Corporation shall not be liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
(d) Special meetings of the stockholders of the Corporation for any
purpose may be called at any time only by the written request of the Board of
Directors, the Chairman of the Board of Directors or the President. Such request
shall state the purpose or purposes of the proposed meeting.
(e) Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such places as may be designated, from time to time, by the Board of
Directors or in the bylaws of the Corporation.
<PAGE> 1
Exhibit 3.2
IMPERIAL PARKING CORPORATION
AMENDED AND RESTATED BY-LAWS
Adopted March ____, 2000
ARTICLE I
OFFICES
Section 1. The registered office of the corporation shall be in the
City of Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation also may have offices at such other places
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the corporation may from time to time
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings; Generally. Meetings of stockholders for any
purpose may be held on such date and at such time and place, either 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 2. Annual Meetings. Annual meetings of stockholders, commencing
with the year 2001 shall be held at 10:00 a.m. on the 15th day of March each
year, if not a legal holiday, and if a legal holiday, at such other date and
time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting, at which the stockholders shall elect such
Class of the Board of Directors as
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provided in Article III and transact such other business as may properly be
brought before the meeting as provided in Section 11 of this Article.
Section 3. Notice of Annual Meeting. Written notice of the annual
meeting stating the place, date, and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting.
Section 4. Stockholder List. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten (10) 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 stock registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list also shall 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. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute, may only be
called in the manner and by those parties enumerated in the Certificate of
Incorporation.
Section 6. Notice of Special Meetings. Written notice of a special
meeting of stockholders, stating the place, date, and hour of the meeting and
the purpose or purposes for which the meeting is called, shall
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be given not less than ten (10) nor more than sixty (60) days before the date of
the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Purpose of Special Meetings. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice, except to the extent that a stockholder has properly brought notice of
other matters for consideration as provided in Section 11 of this Article.
Section 8. Quorum; Adjournment. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented by proxy, any business may be transacted which might have been
transacted at the meeting as originally notified. Notwithstanding the foregoing,
if the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. Voting. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before the meeting,
unless the question is one upon which by express provision of the statutes, of
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the Certificate of Incorporation or of these By-laws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 10. Proxies. Unless otherwise provided in the Certificate of
Incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three (3) years from its date, unless the proxy provides for a longer
period.
Section 11. Matters Properly Brought; No Actions Without a Meeting. In
order for any matter to be considered "properly brought" before a special or
annual meeting of the stockholders, a stockholder must comply with the advance
notice and information disclosure requirements hereinafter provided in this
Section. The stockholder must deliver written notice of the matter to the
Secretary to be received not less than sixty (60) days nor more than ninety (90)
days prior to the meeting. However, if less than seventy (70) days notice or
prior public disclosure of the date of the meeting is given to stockholders, the
notice would have to be received by the Secretary not later than the close of
business on the tenth (10) following the date on which the notice of the meeting
was mailed or such public disclosure was made, whichever occurs first. If the
matter relates to the election of directors, the notice must set forth specific
information regarding each nominee and the nominating stockholder, which the
Board of Directors may specify at the time of the notice. For any other matter,
the notice must set forth a brief description of the business desired to be
brought and the reasons for conducting business at the annual meeting and
certain information which the Board of Directors may specify at the time of the
notice regarding the proponent stockholders.
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Unless otherwise provided in the Certificate of Incorporation, any
action required to be taken or which may be taken at any annual or special
meeting of stockholders of the corporation, may not be taken by written action
in lieu of a meeting.
ARTICLE III
DIRECTORS
Section 1. Number and Election. The number of directors which shall
constitute the whole Board shall not be less than three nor more than fifteen,
as from time to time determined at annual or special meetings of the
stockholders by affirmative vote of the holders of a majority of the shares
represented and entitled to vote at such meetings. Directors shall be divided
into three classes, to be known as Class I, Class II and Class III. The classes
shall be as nearly equal in size as possible. In case of any increase or
decrease in the number of directors, the additional or remaining directors, as
the case may be, shall be distributed among several classes as nearly equally as
possible. A decrease in the number of directors shall not shorten the term of
any director then in office. The Board of Directors as of the date of the
adoption of these By-laws shall consist of nine directors. Thereafter, within
the limits above specified, the number of directors shall be determined by
resolution of the Board of Directors.
The Board will initially consist of three Class I directors (Mr. Lasky,
Mr. Scully and Ms. Tighe), three Class II directors (Messrs. Embry, Huntzinger
and Woods) and three Class III directors (Messrs. Ackman and Friedman and Ms.
Stewart). At each annual meeting of stockholders, a class of directors will be
elected for a three-year term to succeed the directors of the same class whose
terms are then expiring. The initial terms of the Class I directors, Class II
directors and Class III directors expire upon the election
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and qualification of successor directors at the annual meeting of stockholders
held during the calendar years 2001, 2002 and 2003, respectively. At each annual
meeting of the stockholders beginning in 2001, successors to the directors whose
terms expire at that meeting shall be elected to three-year terms. The directors
shall be elected at the annual meeting of the stockholders, except as provided
in Section 3 of this Article, and each director elected shall hold office until
his successor is elected and qualified. The election of directors need not be by
written ballot. Directors need not be stockholders.
The term of office for each director shall be three (3) years (except
as provided above) and the members of one class of directors shall be elected
annually to serve for such term; except that, initially as provided in the
previous paragraph or whenever necessary, a director may be elected for a
shorter term in order to provide for a proper rotation of directors. A director
shall hold office until the annual meeting of stockholders coinciding with the
termination of the term of the class of directors to which he was elected and
until his successor shall be elected and qualified or until his earlier
resignation, removal from office or death.
Section 2. Liability of Directors. A director of the corporation shall
not be personally liable to the corporation or its stockholders as provided in
the Certificate of Incorporation.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may only be
filled by a vote of a majority of the directors then in office, though less than
a quorum, or by a sole remaining director, and the directors so chosen shall
hold office until the next annual election and until their successors are duly
elected and shall qualify, unless sooner displaced. If there are no directors in
office, then an election of directors may be held in the manner provided by
statute.
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Section 4. Powers. The business of the corporation shall be managed by
or under the direction of its Board of Directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these By-laws directed or
required to be exercised or done by the stockholders.
Section 5. Meetings, Generally. The Board of Directors of the
corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 6. First Meeting. The first meeting of the Board of Directors,
including each newly elected director, shall be held immediately following the
annual meeting of stockholders, and no notice of such meeting shall be necessary
to the newly elected directors in order legally to constitute the meeting,
provided a quorum shall be present. In the event of the failure of the Board of
Directors to hold a meeting immediately following the annual meeting of
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
of the directors.
Section 7. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall from time to
time be determined by the Board.
Section 8. Special Meetings. Special meetings of the Board may be
called by the President on three (3) days notice to each director, either
personally or by mail, by telegram or by facsimile transmission; special
meetings shall be called by the President or the Secretary in like manner and on
like notice on the written request of two directors unless the Board consists of
only one director, in which case special meetings shall be called by the
President or the Secretary in like manner and on like notice on the written
request of the sole director.
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Section 9. Quorum. At all meetings of the Board, four directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as may be otherwise specifically provided by
statute. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 10. Action Without a Meeting. Unless otherwise restricted by
the Certificate of Incorporation or these By-laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 11. Participation by Conference Telephone. Unless otherwise
restricted by the Certificate of Incorporation or these By-laws, members of the
Board of Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Section 12. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, 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.
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In the absence or disqualification of a 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.
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 business and affairs of the
corporation; but no such committee shall have the power or authority 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 stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the By-laws of the corporation; and,
unless the resolution or the Certificate of Incorporation expressly so provides,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
Section 13. Committee Minutes. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors when
required.
Section 14. Compensation. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, 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
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receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
Section 15. Removal. At a meeting of stockholders called expressly for
that purpose, any director or the entire Board of Directors may be removed from
office at any time with cause, but only by the affirmative vote of the holders
of more than fifty percent of the shares of capital stock of the corporation
then entitled to vote.
ARTICLE IV
NOTICES
Section 1. By Mail. Whenever, under the provisions of the statutes or
of the Certificate of Incorporation or of these By-laws, notice is required to
be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed to
such director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors also may be given by telegram.
Section 2. Waiver. Whenever any notice is required to be given under
the provisions of the statutes or of the Certificate of Incorporation or of
these By-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
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OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board
of Directors. There shall be one Chairman of the Board, a President, a
Secretary, and a Treasurer. The Board of Directors also may choose one or more
Vice-Presidents, and one or more Assistant Secretaries and Assistant Treasurers.
Any number of offices may be held by the same person, unless the Certificate of
Incorporation or these By-laws otherwise provide.
Section 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose a Chairman of the Board, a
President, a Secretary, and a Treasurer.
Section 3. Additional Officers. The Board of Directors may appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
Section 4. Salaries. The salaries and other compensation, including,
but not limited to, benefits, bonuses, and perquisites, of all officers of the
corporation shall be fixed by the Board of Directors.
Section 5. Tenure; Removal; Vacancy. The officers of the corporation
shall hold office until their successors are chosen and qualify. Any officer
elected or appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. Any vacancy occurring
in any office of the corporation shall be filled by the Board of Directors.
Section 6. Chairman of the Board. The Chairman of the Board shall be
the chief executive officer of the corporation, shall preside at all meetings of
the stockholders and the Board of Directors, shall have general and active
management of the business of the corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. He shall execute
bonds, mortgages and other
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contracts, except where required or permitted by law to be otherwise signed and
executed and except where the signing and execution thereof shall be expressly
delegated by the Board of Directors to some other officer or agent of the
corporation.
Section 7. President. The President shall be the chief operational
officer of the corporation, and shall have management of the day-to-day
operations of the corporation.
Section 8. Vice-President. In the absence of the President or in the
event of his inability or refusal to act, the Vice-President, if any (or in the
event there be more than one Vice-President, the most senior Vice-President, or
in the absence of any such designation, then in the order of their election),
shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. The
Vice-President or Vice-Presidents, if any, shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
Section 9. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or President, under whose supervision he shall be.
Section 10. Assistant Secretary. The Assistant Secretary, if any, or if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election) shall, in the absence of the Secretary or in the event of his
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inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 11. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
corporation.
Section 12. Bond. If required by the Board of Directors, the Treasurer
shall give the corporation a bond (which shall be renewed every six (6) years)
in such sum and with such surety or sureties as shall be satisfactory to the
Board of Directors for the faithful performance of the duties of his office and
for the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
Section 13. Assistant Treasurer. The Assistant Treasurer, if any, or if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors (or if there be no such determination, then in the
order of their election) shall, in the absence or disability of the Treasurer or
upon the direction of the Treasurer, perform the duties and exercise the powers
of the Treasurer and shall
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perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form of Certificates and Signatures. Every holder of stock
in the corporation shall be entitled to have a certificate signed by, or in the
name of the corporation by, the Chairman of the Board, the President or a
Vice-President and the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary of the corporation, certifying the number of shares of
stock owned by him in the corporation.
Certificates may be issued for partly paid stock and in such case upon
the face or back of the certificates issued to represent any such partly paid
stock, the total amount of the consideration to be paid therefor, and the amount
paid thereon shall be specified.
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 as
otherwise 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
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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.
Section 2. Facsimile Signatures. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 4. New Issues. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for stock duly endorsed or
accompanied by proper evidence of succession, assignation 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.
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Section 5. 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 of any change, conversion or exchange of stock 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 nor less than ten (10) days before the date
of such meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 6. Recognition of Ownership. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of stock to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of stock, and shall not be bound to recognize any equitable or other claim to or
interest in such share of stock 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.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any
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regular or special meeting, pursuant to law. Dividends may be paid in cash, in
property or in shares of the capital stock of the corporation, subject to the
provisions of the Certificate of Incorporation.
Section 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. Statement of Corporate Conditions. The Board of Directors
shall present at each annual meeting, and at any special meeting of the
stockholders when called for by vote of the stockholders, a full and clear
statement of the business and condition of the corporation.
Section 4. Endorsement of Checks and Notes. All checks or demands for
money and notes of the corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time
designate.
Section 5. Fiscal Year. The fiscal year of the corporation shall be the
calendar year.
Section 6. Annual Audit. A firm of independent certified public
accountants shall be appointed by the Chairman of the Board with the approval of
the Board of Directors. These accountants shall perform an independent audit of
the annual financial statements of the corporation.
Section 7. Transfer Agent and Registrar. Until the Chairman of the
Board appoints a successor, the transfer agent and registrar for the common
stock of the corporation is National City Bank.
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ARTICLE VIII
INDEMNIFICATION AND INSURANCE
Section 1. Right to Indemnity. Except as otherwise provided in the
Certificate of Incorporation, each person who was or is made a party or is
threatened to be made a party to or is involved in any action, lawsuit, or
proceeding, whether civil, criminal, administrative, or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, 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 with respect
to any actions taken in good faith in a manner reasonably believed to be in, or
not opposed to, the best interests of the corporation, and with respect to any
criminal action or proceeding, actions that the person had no reasonable cause
to believe were unlawful, to the fullest extent authorized by the Delaware
General Corporation Law, 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) with
respect by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as
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provided in Section 2 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 of Directors of the corporation. The right to
indemnification conferred in this Article VIII 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 Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his 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 its Board of Directors, provide indemnification to
employees and agents of the corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
Section 2. Action to Enforce Indemnity. If a claim under Section 1
hereof is not paid in full by the corporation within thirty (30) days after a
written claim has been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in 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
19
<PAGE> 20
standards of conduct which make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the corporation.
Neither the failure of the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, 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.
Section 3. Non-Exclusivity. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article VIII shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors, or otherwise.
Section 4. Insurance. The corporation may maintain insurance as
provided in the Certificate of Incorporation.
ARTICLE IX
AMENDMENTS
Section 1. These Amended By-laws may be altered, amended or repealed or
new By-laws may be adopted by the stockholders or by the Board of Directors,
when such power is conferred upon the Board of Directors by the Certificate of
Incorporation, at any regular meeting of the stockholders or of the
20
<PAGE> 21
Board of Directors or at any special meeting of the stockholders or of the Board
of Directors if notice of such alteration, amendment, repeal or adoption of new
bylaws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal By-laws is conferred upon the Board of Directors by the
Certificate of Incorporation, it shall not divest or limit the power of the
stockholders to adopt, amend or repeal By-laws.
Notwithstanding anything to the contrary herein, Sections 1, 2, 3, 5,
6, 7 and 11 of Article II and Sections 1, 3 and 5 of Article III may be altered,
amended or repealed upon the affirmative vote of holders of more than fifty
percent of the votes which all the stockholders would be entitled to cast in any
annual election of directors or class of directors.
21
<PAGE> 1
EXHIBIT 4.1
COMMON STOCK COMMON STOCK
INCORPORATED UNDER THE LAWS
OF THE
STATE OF DELAWARE
IMPERIAL PARKING CORPORATION
THIS CERTIFICATE IS TRANSFERABLE
IN CLEVELAND, OHIO
CUSIP 453077 10 9
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $.01 PAR VALUE PER SHARE,
OF IMPERIAL PARKING CORPORATION
transferable in person or by duly authorized attorney on the books of the
Corporation upon surrender of this certificate properly endorsed.
This certificate and the shares represented hereby are issued and shall be
held subject to the laws of the State of Delaware and the provisions of the
Certificate of Incorporation and the By-laws of the Corporation, as amended from
time to time, to which the holder by acceptance hereof assents.
This certificate is not valid until countersigned by the Transfer Agent
and registered by the Registrar.
IN WITNESS WHEREOF the Corporation has caused this certificate to be signed
by the facsimile signatures of its duly authorized officers and a facsimile of
its corporate seal hereunto affixed.
Dated:
IMPERIAL PARKING CORPORATION
CORPORATE
COUNTERSIGNED AND REGISTERED:
NATIONAL CITY BANK PRESIDENT AND CHIEF EXECUTIVE OFFICER
(CLEVELAND, OHIO) SEAL
DELAWARE
Transfer Agent and Registrar
By
Authorized Signature
<PAGE> 2
IMPERIAL PARKING CORPORATION
SHAREHOLDERS MAY OBTAIN, WITHOUT CHARGE A FULL STATEMENT OF THE
DESIGNATIONS, PREFERENCES, RIGHTS, POWERS, RESTRICTIONS, LIMITATIONS,
QUALIFICATIONS, AND TERMS AND CONDITIONS OF THE STOCK OF EACH CLASS AND OF EACH
SERIES AUTHORIZED TO BE ISSUED BY THE CORPORATION BY WRITTEN REQUEST TO THE
SECRETARY OF IMPERIAL PARKING CORPORATION, AT THE PRINCIPAL OFFICES OF THE
CORPORATION.
The following abbreviations, when used in the inscription on the face of
the Certificate, shall construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with rights
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT -- _______________ Custodian _______________
(Cust) (Minor)
under Uniform Gifts to Minors
Act _____________________________________
(State)
UNIF TRAN MIN ACT -- _______________ Custodian _______________
(Cust) (Minor)
under Uniform Transfers to Minor
Act _____________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OF OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the capital stock represented by the within Certificate and do hereby
innvocably constitute and appoint ______________________________________________
________________________________________________________________________________
________________________________________________________________________________
Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution is the premises.
Dated ____________________________________________
X_______________________________________________
NOTICE: THE SIGNATURES TO THIS AGREEMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17 Ad-15.
SIGNATURE(S) GUARANTEED:
KEEP THIS CERTIFICATE IN A SAFE PLACE, IF LOST, STOLEN, MUTILATED OR DESTROYED,
THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE
OF A REPLACEMENT CERTIFICATE.
<PAGE> 1
Exhibit 10.1
IMPERIAL PARKING CORPORATION
2000 STOCK INCENTIVE PLAN
1. Purpose
The purpose of this 2000 Stock Incentive Plan (the "Plan") of IMPERIAL
PARKING CORPORATION, a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's
stockholders. Except where the context otherwise requires, the term "Company"
shall include any of the Company's present or future subsidiary corporations as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder (the "Code") and any other business
venture (including, without limitation, joint venture or limited liability
company) in which the Company has a significant interest, as determined by the
Board of Directors of the Company (the "Board").
2. Eligibility
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant."
3. Administration, Delegation
(a) Administration by Board of Directors. The Plan will be administered
by the Board. The Board shall have authority to grant Awards and to adopt,
amend and repeal such administrative rules, guidelines and practices relating
to the Plan as it shall deem advisable. The Board may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or any Award in
the manner and to the extent it shall deem expedient to carry the Plan into
effect and it shall be the sole and final judge of such expediency. All
decisions by the Board shall be made in the Board's sole discretion and shall
be final and binding on all persons having or claiming any interest in the Plan
or in any Award. No director or person acting pursuant to the authority
delegated by the Board shall be liable for any action or determination relating
to or under the Plan made in good faith.
(b) Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in
the Plan to the "Board" shall mean the Board or a Committee of the Board to the
extent that the Board's powers or authority under the Plan have been delegated
to such Committee. If the Board determines to appoint a Committee, it shall
appoint one such Committee of not less than two members, each member of which
shall be an "outside director" within the meaning of Section 162(m) of the Code
("Section
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<PAGE> 2
162(m)") and a "non-employee director" as defined in Rule 16b-3 promulgated
under the Exchange Act.
4. Stock Available for Awards
(a) Number of Shares. Subject to adjustment under Section 8, Awards may be
made under the Plan for up to 315,000 shares of common stock, $.01 par value
per share, of the Company (the "Common Stock"). If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive
Stock Options (as hereinafter defined), to any limitation required under the
Code. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) Per-Participant Limit. Subject to adjustment under Section 8, for
Awards granted after the Common Stock is registered under the Securities
Exchange Act of 1934 (the "Exchange Act"), the maximum number of shares of
Common Stock with respect to which Awards may be granted to any Participant
under the Plan shall be 100,000 per calendar year. The per-Participant limit
described in this Section 4(b) shall be construed and applied consistently with
Section 162(m).
5. Stock Options
(a) General. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered
by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive
Stock Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option."
(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option does not qualify as an Incentive stock option under
Section 422 of the Code.
(c) Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.
(d) Duration of Options. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement provided, however, that no Option will be granted
for a term in excess of 10 years.
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<PAGE> 3
(e) Exercise of Option. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board together with
payment in full as specified in Section 5(f) for the number of shares for which
the Option is exercised.
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise provide
in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly
to the Company sufficient funds to pay the exercise price or (ii)
delivery by the Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver promptly
to the Company cash or a check sufficient to pay the exercise price;
(3) when the Common Stock is registered under the Exchange Act, by
delivery of shares of Common Stock owned by the Participant valued at
their fair market value as determined by (or in a manner approved by)
the Board in good faith ("Fair Market Value"), provided (i) such method
of payment is then permitted under applicable law and (ii) such Common
Stock was owned by the Participant at least six months prior to such
delivery;
(4) to the extent permitted by the Board, in its sole discretion by
(i) delivery of a promissory note of the Participant to the Company on
terms determined by the Board, or (ii) payment of such other lawful
consideration as the Board may determine; or
(5) by any combination of the above permitted forms of payment.
(g) Substitute Options. In connection with a merger or consolidation of
an entity with the Company or the acquisition by the Company of property or
stock of an entity, the Board may grant Options in substitution for any options
or other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5.
6. Restricted Stock
(a) Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all
or part of such shares at their issue price or other stated or formula price
(or to require forfeiture of such shares if issued at no cost) from the
recipient in the event that conditions specified by the Board in the applicable
Award are not satisfied prior to the end of the applicable restriction period
or periods established by the Board for such Award (each, a "Restricted Stock
Award").
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<PAGE> 4
(b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. Other Stock-Based Awards
The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including
the grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.
8. Adjustments for Changes in Common Stock and Certain Other Events
(a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this
Plan, (ii) the per-Participant limit set forth in Section 4(b), (iii) the
number and class of securities and exercise price per share subject to each
outstanding Option, (iv) the repurchase price per share subject to each
outstanding Restricted Stock Award, and (v) the terms of each other outstanding
Award shall be appropriately adjusted by the Company (or substituted Awards may
be made, if applicable) to the extent the Board shall determine, in good faith,
that such an adjustment (or substitution) is necessary and appropriate. If
this Section 8(a) applies and Section 8(c) also applies to any event, Section
8(c) shall be applicable to such event, and this Section 8(a) shall not be
applicable.
(b) Liquidation or Dissolution. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation
or dissolution on any Restricted Stock Award or other Award granted under the
Plan at the time of the grant of such Award.
-4-
<PAGE> 5
(c) Acquisition Events
(1) Definition. An "Acquisition Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of which
the Common Stock is converted into or exchanged for the right to receive cash,
securities or other property or (b) any exchange of shares of the Company for
cash, securities or other property pursuant to a statutory share exchange
transaction.
(2) Consequences of an Acquisition Event on Options. Upon the occurrence
of an Acquisition Event, or the execution by the Company of any agreement with
respect to an Acquisition Event, the Board shall provide that all outstanding
Options shall be assumed, or equivalent options shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof). For purposes
hereof, an Option shall be considered to be assumed if, following consummation
of the Acquisition Event, the Option confers the right to purchase, for each
share of Common Stock subject to the Option immediately prior to the
consummation of the Acquisition Event, the consideration (whether cash,
securities or other property) received as a result of the Acquisition Event by
holders of Common Stock for each share of Common Stock held immediately prior
to the consummation of the Acquisition Event (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however, that if
the consideration received as a result of the Acquisition Event is not solely
common stock of the acquiring or succeeding corporation (or an affiliate
thereof), the Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received upon the exercise of
Options to consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in fair market value to the
per share consideration received by holders of outstanding shares of Common
Stock as a result of the Acquisition Event.
Notwithstanding the foregoing, if the acquiring or succeeding corporation
(or an affiliate thereof) does not agree to assume, or substitute for, such
Options, then the Board shall, upon written notice to the Participants, provide
that all then unexercised Options will become exercisable in full as of a
specified time prior to the Acquisition Event and will terminate immediately
prior to the consummation of such Acquisition Event, except to the extent
exercised by the Participants before the consummation of such Acquisition
Event; provided, however, that in the event of an Acquisition Event under the
terms of which holders of Common Stock will receive upon consummation thereof a
cash payment for each share of Common Stock surrendered pursuant to such
Acquisition Event (the "Acquisition Price"), then the Board may instead provide
that all outstanding Options shall terminate upon consummation of such
Acquisition Event and that each Participant shall receive, in exchange
therefor, a cash payment equal to the amount (if any) by which (A) the
Acquisition Price multiplied by the number of shares of Common Stock subject to
such outstanding Options (whether or not then exercisable), exceeds (B) the
aggregate exercise price of such Options.
(3) Consequences of an Acquisition Event on Restricted Stock Awards. Upon
the occurrence of an Acquisition Event, the repurchase and other rights of the
Company under each outstanding Restricted Stock Award shall inure to the
benefit of the Company's successor
-5-
<PAGE> 6
and shall apply to the cash, securities or other property which the Common
Stock was converted into or exchanged for pursuant to such Acquisition Event in
the same manner and to the same extent as they applied to the Common Stock
subject to such Restricted Stock Award.
(4) Consequences of an Acquisition Event on Other Awards. The Board shall
specify the effect of an Acquisition Event on any other Award granted under the
Plan at the time of the grant of such Award.
9. General Provisions Applicable to Awards
(a) Transferability of Awards. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the
extent relevant in the context, shall include references to authorized
transferees.
(b) Documentation. Each Award shall be evidenced by a written instrument
in such form as the Board shall determine. Such written instrument may be in
the form of an agreement signed by the Company and the Participant or a written
confirming memorandum to the Participant from the Company. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each
Award may be made alone or in addition or in relation to any other Award. The
terms of each Award need not be identical, and the Board need not treat
Participants uniformly.
(d) Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the extent
to which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law
to be withheld in connection with Awards to such Participant no later than the
date of the event creating the tax liability. Except as the Board may
otherwise provide in an Award, when the Common Stock is registered under the
Exchange Act, Participants may, to the extent then permitted under applicable
law, satisfy such tax obligations in whole or in part by delivery of shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value. The Company may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind
otherwise due to a Participant.
(f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive
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<PAGE> 7
Stock Option to a Nonstatutory Stock Option, provided that the Participant's
consent to such action shall be required unless the Board determines that the
action, taking into account any related action, would not materially and
adversely affect the Participant.
(g) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been
satisfied, including any applicable securities laws and any applicable stock
exchange or stock market rules and regulations, and (iii) the Participant has
executed and delivered to the Company such representations or agreements as the
Company may consider appropriate to satisfy the requirements of any applicable
laws, rules or regulations.
(h) Acceleration. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part, that any Restricted
Stock Awards shall be free of restrictions in full or in part or that any other
Awards may become exercisable in full or in part or free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.
10. Miscellaneous
(a) No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any
other relationship with the Company. The Company expressly reserves the right
at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) Effective Date and Term of Plan. The Plan shall become effective on
the date on which it is adopted by the Board, but no Award granted to a
Participant that is intended to comply with Section 162(m) shall become
exercisable, vested or realizable, as applicable to such Award, unless and
until the Plan has been approved by the Company's stockholders to the extent
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<PAGE> 8
stockholder approval is required by Section 162(m) in the manner required under
Section 162(m) (including the vote required under Section 162(m)). No Awards
shall be granted under the Plan after the completion of ten years from the
earlier of (i) the date on which the Plan was adopted by the Board or (ii) the
date the Plan was approved by the Company's stockholders, but Awards previously
granted may extend beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders as required by
Section 162(m) (including the vote required under Section 162(m)).
(e) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
-8-
<PAGE> 1
Exhibit 10.2
CREDIT AGREEMENT
Made as of , 2000
Between
IMPERIAL PARKING CORPORATION
as Borrower
and
FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
as Lender
<PAGE> 2
- i -
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1 - THE CREDIT....................................................................................1
1.1 Amount..................................................................................1
1.2 Revolving, Credit.......................................................................1
1.4 Purpose.................................................................................1
SECTION 2 -- PAYMENTS.....................................................................................1
2.1 Principal Repayments....................................................................1
(1) Mandatory Repayments.......................................................1
(2) Voluntary Prepayments......................................................2
2.2 Interest Payments.......................................................................2
(1) Interest Rate Payable......................................................2
(2) Frequency of Interest Payments.............................................2
(3) Interest on Overdue Principal..............................................2
(4) Term of Interest Period....................................................2
(5) Payment on a day which is not the last day of an Interest Period...........2
2.3 Taxes...................................................................................3
2.4 Increased Costs, etc....................................................................3
SECTION 3 - ADVANCES......................................................................................4
3.1 Utilization of the Aggregate Credit.....................................................4
3.2 Evidence of Indebtedness................................................................4
SECTION 4 - REPRESENTATIONS AND WARRANTIES................................................................4
4.1 Representations and Warranties..........................................................4
4.2 Survival of Representations and Warranties..............................................6
SECTION 5 - COVENANTS AND CONDITIONS......................................................................6
5.1 Positive Covenants......................................................................6
(1) Compliance with Law........................................................6
(2) Insurance..................................................................6
(3) Maintenance of Properties..................................................6
(4) Payment of Taxes and Claims................................................6
(5) Corporate Existence, etc...................................................7
(6) Maintenance of Net Worth...................................................7
(7) Maintenance of Consolidated Indebtedness to Net Worth Ratio................7
(9) Maintenance of Leverage Ratio..............................................7
(10) Maintenance of Parking Contracts...........................................7
(11) Further Assurances.........................................................7
(12) Financial and Business Information.........................................7
(13) Officer's Certificate......................................................11
(14) Inspection.................................................................11
5.2 Negative Covenants......................................................................12
(1) Transactions with Affiliates...............................................12
(2) Merger, Consolidation, etc.................................................12
(3) Indebtedness...............................................................12
</TABLE>
<PAGE> 3
- ii -
<TABLE>
<S> <C> <C>
(4) Liens......................................................................12
(5) Disposal of Assets Generally...............................................13
(6) Change in Business.........................................................13
(7) Distributions..............................................................13
(8) Investments................................................................13
(9) Lease-Backs................................................................13
(10) Subsidiaries...............................................................13
(11) Maintenance and Ownership of Subsidiaries..................................13
(12) Compromise of Accounts.....................................................14
SECTION 6 - REMEDIES ON DEFAULT...........................................................................14
6.1 Remedies................................................................................14
6.2 Expenses and Indemnity..................................................................14
(1) Payment of Expenses........................................................14
(2) General Indemnity..........................................................14
6.3 Set-Off or Compensation.................................................................14
6.4 Remedies Cumulative.....................................................................15
SECTION 7 - APPLICATION AND MANNER OF PAYMENTS............................................................15
7.1 Application of Payments.................................................................15
7.2 Manner of Payments......................................................................15
SECTION 8 - SECURITY......................................................................................15
8.1 Security................................................................................15
8.2 Registration............................................................................15
8.3 Further Assurances......................................................................15
SECTION 9 - CONDITIONS PRECEDENT..........................................................................16
9.1 Conditions Precedent....................................................................16
(1) Delivery of Documents......................................................16
(2) Approvals..................................................................16
(3) No Default.................................................................16
(4) Additional Documents and Action............................................16
9.2 Conditions Precedent to All Advances....................................................16
(1) No Default.................................................................17
(2) Representations Correct....................................................17
(3) Notice of Advance..........................................................17
9.3 Waiver of a Condition Precedent.........................................................17
SECTION 10 - MISCELLANEOUS PROVISIONS.....................................................................17
10.1 Headings and Tables of Contents.........................................................17
10.2 Generally Accepted Accounting Principles................................................17
10.3 Severability............................................................................17
10.4 Number and Gender; extended meanings....................................................17
10.5 Amendment, Supplement or Waiver.........................................................17
10.6 Governing Law...........................................................................17
10.7 Currency................................................................................18
10.8 Entire Agreement........................................................................18
10.9 No Liability of Shareholders of Borrower................................................18
10.10 Successors and Assigns..................................................................18
</TABLE>
<PAGE> 4
- iii -
<TABLE>
<S> <C> <C>
10.11 Assignment After Default................................................................ 18
10.12 Address for Notice...................................................................... 19
10.13 Time of the Essence..................................................................... 19
10.14 Further Assurances...................................................................... 19
10.15 Term of Agreement....................................................................... 19
10.16 Payments on Business Day................................................................ 19
10.17 Counterparts and Facsimile.............................................................. 19
10.18 Date of Agreement....................................................................... 19
</TABLE>
<PAGE> 5
- 1 -
CREDIT AGREEMENT
This Agreement is made as of -- , 2000, between
IMPERIAL PARKING CORPORATION, as Borrower
(the "Borrower")
and
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, as Lender
(the "Lender")
RECITAL
The Borrower has requested, and the Lender has agreed, that a line of
credit be made available to the Borrower on the terms set forth below.
FOR VALUE RECEIVED, the parties agree as follows:
SECTION 1 - THE CREDIT
1.1 AMOUNT. The Lender confirms, with effect from the Effective Date, the
extension of credit in the aggregate principal amount of US$8,000,000 (the
"FACILITY"), upon and subject to the terms and conditions of this Agreement.
1.2 REVOLVING CREDIT. The Facility is a revolving, secured credit
facility.
1.3 PURPOSE. The proceeds of Advances shall be used for working capital
purposes of the Borrower.
SECTION 2 - PAYMENTS
2.1 PRINCIPAL REPAYMENTS
(1) MANDATORY REPAYMENTS. Advances shall be repaid on the six month anniversary
of the Effective Date (the "MATURITY DATE"). Once all Advances have been repaid
in full together with interest thereon, the Facility shall terminate.
Notwithstanding the foregoing, so
<PAGE> 6
- 2 -
long as it is not in Default hereunder, the Borrower shall be entitled on no
more than two occasions by written notice delivered to the Lender at least
30 days prior to the Maturity Date to defer the date upon which all Advances are
to be repaid hereunder by a period of three months from the then established
Maturity Date and such deferred date shall thereafter be referred to herein as
the Maturity Date.
(2) VOLUNTARY PREPAYMENTS. Subject to Section 2.2(5), the Borrower may from time
to time repay Advances outstanding under the Facility without penalty upon
providing the Lender with written notice of any such proposed repayment on the
second Business Day prior to the date of the proposed repayment. Notices shall
be given not later than 11:00 a.m. (New York time) on the date for notice.
Repayments must be made prior to 3:00 p.m. (New York time) on the date for
repayment.
2.2 INTEREST PAYMENTS.
(1) INTEREST RATE PAYABLE. Interest shall be payable on Advances at the
LIBOR Rate plus 4.5%.
(2) FREQUENCY OF INTEREST PAYMENTS. Interest on each Advance shall be payable
based on the number of days actually elapsed and for each Interest Period shall
be payable (i) on the last day thereof, (ii) if such Interest Period is longer
than three months, every three months in arrears during such Interest Period and
(iii) when the Advance becomes due (whether at maturity, after acceleration or
otherwise).
(3) INTEREST ON OVERDUE PRINCIPAL. Any overdue principal on any Advance and any
overdue interest thereon owing by the Borrower shall bear interest payable on
demand for each day from and including the date payment thereof was due to but
excluding the date of actual payment at a rate per annum (expressed on the basis
of a 365 day year) equal to the Base Rate.
(4) TERM OF INTEREST PERIOD. No later than 11:00 a.m. (Cleveland time) three
Banking Days prior to the expiry of any Interest Period relating to an Advance,
the Borrower shall notify the Lender in writing of its election as to the term
of the immediately following Interest Period in respect of such Advance, if it
is to remain constituted as such. In the event that the Borrower has not on or
before such date given such notification, the interest calculated on such
Advance shall be calculated at the Base Rate from and including the last day of
the expiring Interest Period.
(5) PAYMENT ON A DAY WHICH IS NOT THE LAST DAY OF AN INTEREST PERIOD. If by
reason of payments made by the Borrower, whether pursuant to Section 2.1(1),
2.1(2) on acceleration pursuant to Article 6 or for any other reason, the Lender
receives payment of any LIBOR Loan other than on the last day of the Interest
Period relating thereto, the Borrower shall within five days of demand therefor
pay and indemnify the Lender for all of its reasonable costs, expenses and
charges of whatsoever nature and kind incurred by the Lender (other than lost
profits) arising from such payment being made other than on such day, including
the cost of any payment by the Lender of its borrowings in the London interbank
market or elsewhere to fund such amounts so paid to it and any loss incurred by
the Lender in reapplying the amounts so paid to it up to the expiry of such
time. For purposes hereof the Lender hereby covenants and agrees to use
reasonable efforts to minimize any such costs, expenses and charges. If the
Lender is entitled to indemnity hereunder, it shall deliver a certificate to the
<PAGE> 7
- 3 -
Borrower certifying as to such costs, expenses and charges and, absent manifest
error, such certificate shall be conclusive and binding for all purposes.
2.3 TAXES.
(1) The Borrower shall bear all Taxes, however designated, imposed as a result
of the existence or operation of this Agreement, including but not limited to
any Tax which the Borrower is required to withhold or deduct from payments to
the Lender.
(2) If the Borrower is required to bear a Tax pursuant to Subsection 2.3(1), the
Borrower shall pay such Taxes and other charges and any additional amounts as
are necessary to ensure that the net amounts received by the Lender after such
payments or withholdings equal the amounts to which the Lender is otherwise
entitled under this Agreement as if such Taxes, or other charges, did not exist.
2.4 INCREASED COSTS, ETC.
(1) If after the date of this Agreement, any Canadian Requirement of Law or U.S.
Requirement of Law in respect of the Lender or this Agreement, any change in
that Canadian Requirement of Law or U.S. Requirement of Law or any change in its
interpretation or application by any Canadian Governmental Authority or U.S.
Governmental Authority, or compliance by the Lender with any Applicable
Directive in respect of the Lender or this Agreement:
(a) imposes, modifies or deems applicable any reserve, special
deposit, deposit insurance or similar requirements against
assets held by, or deposits in or for the account of or loans
by or any other acquisition of funds by, an office of the
Lender, or
(b) imposes on the Lender or expects there to be maintained
by the Lender any capital adequacy or additional capital
requirements,
and, in the determination of the Lender acting reasonably, increases the cost
to, or reduces the amount of principal, interest or other amount received or
receivable by the Lender under this Agreement, or its effective return in
respect of any amount received or receivable by the Lender under this Agreement,
the Lender will, acting reasonably, determine the amount of money which would
compensate the Lender for the increase in cost or reduction in income
("ADDITIONAL COMPENSATION").
(2) If the Lender determines that it is entitled to Additional Compensation in
accordance with the provisions of this Section 2.4 the Lender shall promptly
notify the Borrower and provide to the Borrower a certificate of an officer of
the Lender setting forth the amount of Additional Compensation and the basis of
its calculation, including the assumptions on which the calculation is based,
together with a copy of the relevant Canadian Requirement of Law or U.S.
Requirement of Law. The certificate will be prima facie evidence of the
Additional Compensation to which the Lender is entitled in the absence of
manifest error. The Borrower shall pay to the Lender within ten Business Days of
the giving of the notice the Additional Compensation calculated to the date of
the notice. The Lender shall be entitled to be paid Additional Compensation from
time to time to the extent that the provisions of this
<PAGE> 8
- 4 -
Section 2.4 are then applicable, notwithstanding that the Lender has previously
been paid any other Additional Compensation.
(3) The Lender shall make commercially reasonable efforts to limit the incidence
of Additional Compensation, including seeking recovery for the account of the
Borrower, by appealing any assessment at the expense of the Borrower on the
Borrower's request, if the Lender, in its sole determination, would incur no
appreciable economic, legal, regulatory or other disadvantage.
SECTION 3 - ADVANCES
3.1 UTILIZATION OF THE AGGREGATE CREDIT. Subject to the provisions hereof, the
Borrower shall give the Lender not less than three Banking Days' notice of each
drawdown hereunder. Any such notice shall be irrevocable, shall be substantially
in the form of Appendix B (a "NOTICE OF BORROWING") and shall be received no
later than 11:00 a.m. (New York time) on the relevant day, failing which it
shall be deemed to have been received on the next following Banking Day. Each
such notice shall specify:
(a) the date of the requested Borrowing, which shall be a Banking
Day,
(b) the amount; and
(c) the duration of the Interest Period.
3.2 EVIDENCE OF INDEBTEDNESS. The indebtedness of the Borrower resulting from
Advances made by the Lender shall be evidenced by records maintained by the
Lender concerning those Advances it has made. The records maintained by the
Lender shall govern in the event of any discrepancy and such records shall
constitute, in the absence of manifest error, prima facie evidence of the
indebtedness of the Borrower to the Lender in respect of such Advances and all
details relating thereto. The failure of the Lender to correctly record any such
indebtedness shall not, however, adversely affect the obligation of the Borrower
to pay amounts due to the Lender in accordance with the Credit Documents.
SECTION 4 - REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Lender as of the date hereof that:
(a) It is a duly incorporated and validly existing corporation and
has the corporate power and authority to enter into and
perform its obligations under the Credit Documents to which it
is a party, to own its Property and to conduct the business in
which it is currently engaged.
(b) It holds all Permits required to enter into and perform its
obligations under the Credit Documents to which it is a party,
to own its Property and to conduct the business in which it is
currently engaged, except for Permits the absence of which
does not materially and adversely affect the Financial
Condition of the Borrower. Each such Permit is valid, in full
force and effect and has not been surrendered or forfeited.
There are no proceedings in progress, pending or threatened,
which may result in the revocation, suspension or material and
adverse modification of any such Permit.
<PAGE> 9
- 5 -
(c) The entering into and the performance by it of this Agreement
(i) are within its powers and have been duly authorized by all
necessary corporate action on its part, and (ii) do not
violate or breach its Constating Documents, any Requirement of
Law or any Contract to which it is a party, except to the
extent that any violation or breach would not, in the
aggregate, have a material and adverse effect on the Financial
Condition of the Borrower, or its ability to perform its
obligations under this Agreement or to the extent that any
necessary consent to the entering into and performance of this
Agreement has been obtained. (d) Neither its Constating
Documents nor any shareholder agreement or unanimous
shareholders agreement to which it is a party, if any,
contains restrictions on or affects the power of its directors
to borrow money upon its credit, or to manage its business and
affairs, which are not being complied with.
(e) As of the date of this Agreement, there are no litigation,
arbitration or administrative proceedings outstanding and, to
its knowledge after having made all due inquiry, there are no
proceedings or investigations pending or threatened, against
it or its Property which could materially and adversely affect
its Financial Condition, or its ability to perform its
obligations under the Credit Documents to which it is a party,
except as disclosed on Schedule 4.1(e).
(f) No Event of Default or Pending Event of Default which has not
been waived has occurred and is continuing.
(g) It is not in violation of any term of its Constating
Documents. To the best of its knowledge, it is not in
violation of or default under any Permit, Contract or
Requirement of Law (including employment standards and labour
codes of all applicable Governmental Authorities), the
violation of or default under which would materially and
adversely affect its ability to own its Property and conduct
its business. Its execution, delivery and performance of this
Agreement will not result in any such violation or default.
(h) The Lender has been provided with its most recent audited
annual and unaudited quarterly financial statements. Such
statements are complete and fairly present its financial
position as of the dates referred to therein, and have been
prepared in accordance with Generally Accepted Accounting
Principles except notes to the statements and audit
adjustments required by Generally Accepted Accounting
Principles are not included in the case of quarterly financial
statements.
(i) It has no liabilities (contingent or other) or other
obligations of the type required to be disclosed in accordance
with Generally Accepted Accounting Principles which are not
fully disclosed in the financial statements referred to in
Section 4.1(h), other than liabilities and obligations
incurred in the ordinary course of its business.
<PAGE> 10
- 6 -
(j) No consent or authorization of, or filing with any person
(including any Governmental Authority) is required in
connection with its execution and delivery of, or performance
of its obligations under, or the validity or enforceability
against it of this Agreement.
4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in this Agreement shall survive the execution of this Agreement.
SECTION 5 - COVENANTS AND CONDITIONS
5.1 POSITIVE COVENANTS. During the term of this Agreement, the Borrower
covenants that so long as the Facility is outstanding:
(1) COMPLIANCE WITH LAW. The Borrower will and will cause each of its
Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(2) INSURANCE. The Borrower will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
(3) MAINTENANCE OF PROPERTIES. The Borrower will and will cause each of its
Subsidiaries to maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times, provided that this Section shall not
prevent the Borrower or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Borrower has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(4) PAYMENT OF TAXES AND CLAIMS. The Borrower will and will cause each of its
Subsidiaries to file all tax returns required to be filed in any jurisdiction
and to pay and discharge all taxes shown to be due and payable on such returns
and all other taxes, assessments, governmental charges, or levies imposed on
them or any of their properties, assets, income or franchises, to the extent
such taxes and assessments have become due and payable and before they have
become delinquent and all claims for which sums have become due and payable that
have or might become a Lien on properties or assets of the Borrower or any
Subsidiary, provided that neither the Borrower nor any Subsidiary need pay any
such tax
<PAGE> 11
- 7 -
or assessment or claims if (i) the amount, applicability or validity thereof is
contested by the Borrower or such Subsidiary on a timely basis in good faith and
in appropriate proceedings, and the Borrower or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Borrower
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
(5) CORPORATE EXISTENCE, ETC. The Borrower will at all times preserve and keep
in full force and effect its corporate existence. The Borrower will at all times
preserve and keep in full force and effect the corporate existence of each of
its Subsidiaries (unless merged into the Borrower or a Subsidiary) and all
rights and franchises of the Borrower and its Subsidiaries unless, in the good
faith judgment of the Borrower, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise could
not, individually or in the aggregate, have a Material Adverse Effect.
(6) MAINTENANCE OF NET WORTH. The Borrower will maintain, on the last day of
each fiscal year, calculated as at such day, Consolidated Net Worth of the
Borrower and its Consolidated Subsidiaries of at least an a mount equal to
$26,000,000 determined in accordance with GAAP.
(7) MAINTENANCE OF CONSOLIDATED INDEBTEDNESS TO NET WORTH RATIO. The Borrower
will maintain, as at the last day of each fiscal quarter, a ratio, calculated as
at such day, of Consolidated Indebtedness to Consolidated Net Worth of the
Borrower and its Consolidated Subsidiaries of not more than 0.80:1 for each
fiscal quarter.
(8) MAINTENANCE OF LEVERAGE RATIO. The Borrower will maintain, as at the end of
each fiscal quarter, a Leverage Ratio of not more than 5.50:1.
(9) MAINTENANCE OF PARKING CONTRACTS. The Borrower will ensure the existence on
a consolidated basis on the last day of each fiscal quarter of an aggregate of
at least 1,200 Consolidated Parking Contracts.
(10) FURTHER ASSURANCES. The Borrower will, at its cost and expense, upon
request of the Lender, duly execute and deliver or cause to be duly executed and
delivered to the Lender such further instruments and do and cause to be done
such further acts as may be necessary or proper in the reasonable opinion of the
Lender to carry out more effectually the provisions and purposes of the
Facility.
(11) FINANCIAL AND BUSINESS INFORMATION. The Borrower shall deliver to the
Lender:
(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Borrower
(other than the last quarterly fiscal period of each such
fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of such
quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Borrower
and its Consolidated Subsidiaries, for
<PAGE> 12
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such quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending
with such quarter,
setting forth in each case in comparative form the figures for
the corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable
to quarterly financial statements generally, and certified by
a Senior Financial Officer as fairly presenting, in all
material respects, the financial position of the companies
being reported on and their results of operations and cash
flows, subject to changes resulting from year-end adjustments;
(b) Annual Statements-- within 120 days after the end of each
fiscal year of the Borrower, duplicate copies of,
(i) a consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries, as at the end
of such year, and
(ii) consolidated statements of income, changes in
shareholder' equity and cash flows of the Borrower
and its Consolidated Subsidiaries, for
such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP,
and accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion
shall state that such financial statements present fairly, in
all material respects, the financial position of the companies
being reported upon and their results of operations and cash
flows and have been prepared in conformity with GAAP, and that
the examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making
their audit, they have become aware of any condition or event
that then constitutes a Default or an Event of Default, and,
if they are aware that any such condition or event then
exists, specifying the nature and period of the existence
thereof (it being understood that such accountants shall not
be liable, directly or indirectly, for any failure to obtain
knowledge of any Default or Event of Default unless such
accountants should have obtained knowledge thereof in making
an audit in accordance with generally accepted auditing
standards or did not make such an audit);
<PAGE> 13
- 9 -
(c) Financial Projections - promptly upon their becoming available
and in any event 30 days prior to the end of each fiscal year
of the Borrower, consolidated financial projections, including
the balance sheet, income statement and cash flow statements
for each of the next 12 months of the next fiscal year
together with the detailed budget for such fiscal year
providing supplementary detailed schedules as necessary and
required by the Lender;
(d) Notice of Default or Event of Default -- promptly, and in any
event within five days after a Responsible Officer becoming
aware of the existence of any Default or Event of Default or
that any Person has given any notice or taken any action with
respect to a claimed default hereunder, a written notice
specifying the nature and period of existence thereof and what
action the Borrower is taking or proposes to take with respect
thereto;
(e) ERISA Matters -- promptly, and in any event within ten days
after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof
and the action, if any, that the Borrower or an ERISA
Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the
regulations thereunder, for which notice thereof has
not been waived pursuant to such regulations as in
effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of,
proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Borrower
or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by
the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Borrower or
any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights,
properties or assets of the Borrower or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability
or Lien, taken together with any other such
liabilities or Liens then existing, could reasonably
be expected to have a Material Adverse Effect;
(f) Environmental Reporting -- promptly, and in any event within
10 days of each occurrence, (i) a written notice of any
proceeding or order before any Governmental Authority
requiring the Borrower or its Subsidiaries to comply with or
take action under any Environmental Laws where such compliance
or action requires expenditures in the amount of $500,000 or
more, the violation thereof involves the possibility of the
imposition of a fine or fines aggregating $500,000 or more,
the violation thereof involves the possibility of the
imposition of a fine or fines aggregating $500,000 or more or
the closing of any property owned or leased by the Borrower or
any Subsidiary for a period
<PAGE> 14
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in excess of 48 hours where such closure would have a Material
Adverse Effect; and (ii) a written notice of any Material
occurrence relating to environmental matters that does not
require notification under (i) above, together with each
delivery of financial statements pursuant to Section 5.1(11).
Such Material --- occurrences shall include occurrences where
any of the Borrower or its Subsidiaries (iii) receives a
written notice or claim to the effect that the Borrower or any
of its Subsidiaries is liable to any Person as a result of the
release or threatened release of any Hazardous Material into
the environment in, on, under or adjacent to any real estate
owned or leased by the Borrower or any Subsidiary; (iv)
receives any written notice that the Borrower or any of its
Subsidiaries is subject to investigation by any Governmental
Authority evaluating whether any remedial action is needed to
respond to the release or threatened release of any Hazardous
Material into the environment in, on, under or adjacent to any
real estate owned or leased by the Borrower or any Subsidiary;
(v) receives any written notice that all or any portion of the
properties owned or leased by the Borrower or any Subsidiary
is subject to an order or a security interest under or
pursuant to any Environmental Law; (vi) receives any written
notice of a condition with respect to which might reasonably
result in a notice of violation by Company or any Subsidiary
of any Environmental Law; (vii) receives any written notice of
the commencement of any judicial or administrative proceeding
alleging a violation by the Borrower or any Subsidiary of any
Environmental Law with respect to any property owned or leased
by the Borrower or any Subsidiary; or (viii) undertakes any
activities as a result of new or proposed changes to any
existing Environmental Law that could have a Material Adverse
Effect on the condition of Company or any of its Subsidiaries.
(g) Additional Reporting Requirements -- promptly provide notice
in writing of (i) any default, or event, condition or
occurrence which with notice or lapse of time, or both, would
constitute a default under any agreement in respect of
Indebtedness to which the Borrower or any of its Subsidiaries
is a party and under which the Borrower or any such Subsidiary
owes (contingently or otherwise) at least $500,000 (or the
equivalent amount in any other currency); (ii) from time to
time upon request of the Lender, evidence of the maintenance
of all insurance required to be maintained by Section 5.1(2),
including such originals or copies as the Lender may request
of policies, certificates of insurance, riders and
endorsements relating to such insurance and proof of premium
payments; and (iii) promptly upon the issuance thereof, copies
of all notices, reports, press releases, circulars, offering
documents and other documents filed with, or delivered to, the
British Columbia Securities Commission or to a similar
Governmental Authority in any other jurisdiction with respect
to the Borrower or any Subsidiary.
(h) Notices from Governmental Authority -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice
to the Borrower or any Subsidiary from any Federal or state
Governmental Authority relating to any order, ruling, statute
or other law or regulation that could reasonably be expected
to have a Material Adverse Effect; and
<PAGE> 15
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(i) Requested Information -- with reasonable promptness, such
other data and information relating to the business,
operations, affairs, financial condition, assets or properties
of the Borrower or any of its Subsidiaries or relating to the
ability of the Borrower to perform its obligations hereunder
as from time to time may be reasonably requested by the
Lender.
(12) OFFICER'S CERTIFICATE. Each set of financial statements delivered to
the Lender pursuant to Section 5.1(11)(a) or Section 5.1(11)(b) hereof shall be
accompanied by a certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Borrower was in
compliance with the requirements of Section 5.1(6) through Section 5.1(9)
hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such Section,
where applicable, the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such Sections,
and the calculation of the amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Borrower and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Borrower or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Borrower shall have taken or
proposes to take with respect thereto.
(13) INSPECTION. The Borrower shall permit the representatives of the
Lender:
(a) No Default-- if no Default or Event of Default then exists, at
the expense of the Lender and upon reasonable prior notice to
the Borrower, to visit the principal executive office of the
Borrower, to discuss the affairs, finances and accounts of the
Borrower and its Subsidiaries with the Borrower's officers,
and with the consent of the Borrower, which consent will not
be unreasonably withheld) its independent public accountants,
and (with the consent of the Borrower, which consent will not
be unreasonably withheld) to visit the other offices and
properties of the Borrower and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested
in writing; and
(b) Default-- if a Default or Event of Default then exits, at the
expense of the Borrower to visit and inspect any of the
offices or properties of the Borrower or any Subsidiary, to
examine all their respective books of account, records,
reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers and independent
public accountants (and by this provision the Borrower
authorizes said accountants to discuss the affairs, finances
and accounts of the Borrower and its Subsidiaries), all at
such times and as often as may be requested.
<PAGE> 16
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5.2 NEGATIVE COVENANTS. The Borrower covenants that, without the consent
of the Lender, so long as the Facility remains outstanding:
(1) TRANSACTIONS WITH AFFILIATES. The Borrower will not and will not permit any
Subsidiary to enter into directly or indirectly any transaction or Material
group of related transactions (including without limitation the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service) with
any Affiliate (other than the Borrower or another Subsidiary), except in the
ordinary course and pursuant to the reasonable requirements of the Borrower's or
such Subsidiary's business and upon fair and reasonable terms no less favorable
to the Borrower or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
(2) MERGER, CONSOLIDATION, ETC. The Borrower shall not consolidate with or merge
with any other corporation or convey, transfer or lease substantially all of its
assets in a single transaction or series of transactions to any Person unless:
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance,
transfer or lease substantially all of the assets of the
Borrower as an entirety, as the case may be, shall be a
solvent corporation organized and existing under the laws of
Canada, the United States or any Province or State thereof
(including the District of Columbia), and, if the Borrower is
not such corporation, (i) such corporation shall have executed
and delivered to the Lender its assumption of the due and
punctual performance and observance of each covenant and
condition of this Agreement and (ii) shall have caused to be
delivered to the Lender an opinion of nationally recognized
independent counsel, or other independent counsel reasonably
satisfactory to the Lender, to the effect that all agreements
or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof;
(b) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be
continuing. No such conveyance, transfer or lease of
substantially all of the assets of the Borrower shall have the
effect of releasing the Borrower or any successor corporation
that shall theretofore have become such in the manner
prescribed in this Section 5.2(2) from its liability under
this Agreement.
(3) INDEBTEDNESS. The Borrower shall not create, incur, assume or suffer to
exist or permit any of its Subsidiaries to create, incur, assume or suffer to
exist any Indebtedness other than (i) Indebtedness to the Lender hereunder; (ii)
the Permitted Senior Indebtedness; (iii) Indebtedness incurred in respect of a
Purchase Money Mortgage up to an aggregate outstanding amount, at any time, of
$1,000,000 (or the equivalent amount in any other currency); and (iv)
Indebtedness incurred with respect to performance bonds posted in the ordinary
course of business.
(4) LIENS. The Borrower shall not create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Liens on any of their respective assets, other than Permitted Liens.
<PAGE> 17
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(5) DISPOSAL OF ASSETS GENERALLY. The Borrower shall not sell, exchange, lease,
release or abandon or otherwise dispose of, or permit any of its Subsidiaries to
sell, exchange, lease, release or abandon or otherwise dispose of any assets to
any Person other than (i) any bona fide sales, exchanges, leases, abandonments
or other dispositions in the ordinary course of business, for the purpose of
carrying on the business of the Borrower; (ii) property or assets which have no
material economic value in the business of the Borrower or are obsolete; and
(iii) assets having a fair market value of not greater than $100,000 in the
aggregate in any fiscal year.
(6) CHANGE IN BUSINESS. The Borrower shall not, and shall not permit any of its
Subsidiaries to engage in any line of business other than the businesses engaged
in by the Borrower and its Subsidiaries as of the date hereof and business
reasonably related thereto.
(7) DISTRIBUTIONS. The Borrower shall not declare, make or pay, or permit any of
its Subsidiaries to declare, make or pay, any Distributions, except (i)
directors' fee in an aggregate amount not to exceed $30,000 per director
annually, (ii) performance bonuses paid by the Borrower or any of its
Subsidiaries in the ordinary course of business as part of remuneration for
services rendered at fair market value; (iii) Distributions by a Guarantor to
the Borrower or by the Borrower to a Guarantor; (iv) payments made under
management or employment agreements entered into by the Borrower or any of its
Subsidiaries with senior employees in the ordinary course of business; (v) loans
made to employees; and (vi) payments on the Permitted Senior Indebtedness.
(8) INVESTMENTS. The Borrower shall not make any loans, incur any obligations
(contingent or otherwise), or make any investments in any Person or permit any
of its Subsidiaries to do the same, except for (i) foreign currency hedges,
interest rate swaps or similar interest rate and currency hedging obligations or
agreements; (ii) indebtedness and obligations incurred in the ordinary course of
business; (iii) Permitted Marketable Securities; or (iv) inter-company loans to
or investments in Subsidiaries.
(9) LEASE-BACKS. The Borrower shall not enter into or permit any of its
Subsidiaries to enter into any arrangements, directly or indirectly, with any
Person, whereby the Borrower or such Subsidiary, as the case may be, shall sell
or transfer any property, whether now owned or hereafter acquired, used or
useful in the business, in connection with the rental or lease of the property
so sold or transferred or of other property for substantially the same purpose
or purposes as the property so sold or transferred.
(10) SUBSIDIARIES. (i) The Borrower shall not incorporate or acquire, after the
date hereof, any Subsidiaries or commence to carry on business, otherwise than
through the Borrower and its Subsidiaries existing as of the date hereof, except
for the incorporation or acquisition of Subsidiaries in North America or such
other jurisdictions as the Lender may agree to, acting reasonably, where in each
case, such Subsidiary has executed and delivered a guarantee of all of the
obligations of the Borrower under this Agreement and accompanied by opinions
satisfactory to the Lender, in each case, acting reasonably, prior to or
contemporaneously with such Subsidiary having net asset values or revenues, in
either case, greater than $50,000; or (ii) permit any Subsidiary to exist after
the date hereof having net asset values or revenues, in either case, greater
than $50,000 unless such Subsidiary is a Guarantor.
(11) MAINTENANCE AND OWNERSHIP OF SUBSIDIARIES. The Borrower shall not sell or
otherwise dispose of any shares of any of its Subsidiaries or permit any of such
Subsidiaries
<PAGE> 18
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to issue, sell or otherwise dispose of the shares of any other Subsidiary,
except to the Borrower or a Guarantor.
(12) COMPROMISE OF ACCOUNTS. The Borrower shall not compromise or adjust or
permit any of its Subsidiaries to compromise or adjust any material accounts
receivable of the Borrower or such Subsidiary (or extend the time for payment
thereof) or grant any discounts, allowances or credits thereon, in each case
other than in the ordinary course of business.
SECTION 6 - REMEDIES ON DEFAULT
6.1 REMEDIES. If an Event of Default has occurred, all of the Obligations shall
automatically become immediately due and payable and the Lender may take such
action or proceedings as it in its sole discretion deems expedient to enforce
the same (including by realizing upon the Security), all without any additional
notice, presentment, demand, protest or other formality, all of which are hereby
expressly waived by the Borrower.
6.2 EXPENSES AND INDEMNITY.
(1) PAYMENT OF EXPENSES. The Borrower shall pay on demand all reasonable costs
and expenses incurred by the Lender including the reasonable fees and expenses
of counsel for the Lender (all on a solicitor and own client basis) incurred in
connection with (i) the preparation, execution, delivery or enforcement of this
Agreement, and (ii) advice to the Lender as to its rights and responsibilities
in connection with this Agreement or any Pending Event of Default or Event of
Default.
(2) GENERAL INDEMNITY. The Borrower shall indemnify the Lender against any loss
or expense which the Lender may sustain or incur as a consequence of (i) any
representation or warranty made herein by the Borrower which was incorrect at
the time it was made or deemed to have been made, (ii) a default by the Borrower
in the payment of any sum due from it, including all sums (whether in respect of
principal, interest or any other amount) paid or payable to lenders of funds
borrowed by the Lender in order to fund the amount of any such unpaid amount to
the extent the Lender is not reimbursed pursuant to any other provisions of this
Agreement, and (iii) any other default by the Borrower hereunder. A certificate
of the Lender as to the amount of any such loss or expense shall be prima facie
evidence as to the amount thereof, in the absence of manifest error. The
agreements in this Section shall survive the termination of this Agreement and
repayment of the Obligations for borrowed money.
6.3 SET-OFF OR COMPENSATION. In addition to and not in limitation of any rights
now or hereafter granted under applicable law, upon any failure of the Borrower
to pay any amount on account of the Obligations when due, the Lender may at any
time and from time to time without notice to the Borrower or any other person,
any notice being expressly waived by the Borrower, set off and compensate and
apply any and all deposits, general or special, time or demand, provisional or
final, matured or unmatured, receivables and any other indebtedness at any time
owing by the Lender to or for the credit of or the account of the Borrower,
against and on account of the Obligations, notwithstanding that any of them are
contingent or unmatured.
<PAGE> 19
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6.4 REMEDIES CUMULATIVE. The rights and remedies of the Lender under this
Agreement are cumulative and are in addition to and not in substitution for any
rights or remedies provided by law. Any single or partial exercise by the Lender
of any right or remedy for a default or breach of any term, covenant, condition
or agreement herein contained shall not be deemed to be a waiver of or to alter,
affect, or prejudice any other right or remedy or other rights or remedies to
which the Lender may be lawfully entitled for the same default or breach. Any
waiver by the Lender of the strict observance, performance or compliance with
any term, covenant, condition or agreement herein contained, and any indulgence
granted by the Lender shall be deemed not to be a waiver of any subsequent
default.
SECTION 7 - APPLICATION AND MANNER OF PAYMENTS
7.1 APPLICATION OF PAYMENTS. All payments made to the Lender by or on behalf of
the Borrower on account of principal and interest pursuant to this Agreement
shall be applied by the Lender as follows:
(a) firstly, in satisfaction of interest on Advances outstanding
under the Facility; and
(b) secondly, in satisfaction of principal amounts outstanding in
respect of Advances outstanding under the Facility.
7.2 MANNER OF PAYMENTS. Unless the Lender otherwise notifies the Borrower in
writing, all amounts owing by the Borrower hereunder shall be paid to the Lender
directly by way of wire transfer.
SECTION 8 - SECURITY
8.1 SECURITY. To secure the due payment and performance of the Obligations, the
Borrower shall deliver to the Lender, or cause the delivery to the Lender of,
each of the following agreements, documents and instruments (each in form and
substance satisfactory to the Lender) on or before the Effective Date:
(a) a fixed and floating charge demand debenture in the principal
amount of $20,000,000 (the "Debenture"); and
(b) guarantees of the Obligations, duly executed by each of the
Guarantors (the "Guarantees").
8.2 REGISTRATION. The Borrower irrevocably authorizes the Lender to register,
file or record the Security (or a financing statement, notice or other document
in respect thereof) in all offices where such registration, filing or recording
is necessary or of advantage, in the opinion of the Lender's legal counsel, to
the creation, perfection, priority, preservation or protection of the Security,
including any land registry or land titles office. Upon request from the Lender,
the Borrower shall forthwith carry out any such registration, filing or
recording.
8.3 FURTHER ASSURANCES. The Borrower shall, forthwith and from time to time on
request from the Lender, execute or cause to be executed, all such agreements,
documents and instruments (including any amendment, supplement or other
modification to, or restatement or novation of, any Debenture) and do or cause
to be done all such other matters
<PAGE> 20
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and things which in the opinion of the Lender or the Lender's legal counsel may
be necessary or of advantage to give the Lender (so far as may be possible under
any applicable law) the Liens and the priority intended to be created by the
Debenture or to facilitate realization under such Liens. It is the intention of
the parties that the Lender will, among other things, have, subject to Permitted
Liens, a first priority Lien over all property which is the subject of the
Debenture.
SECTION 9 - CONDITIONS PRECEDENT
9.1 CONDITIONS PRECEDENT. The obligation of the Lender under this Agreement to
make an initial Advance is subject to and conditional upon the following
conditions being fulfilled and performed to the satisfaction of, or waived by,
the Lender.
(1) DELIVERY OF DOCUMENTS. The Lender shall have received original or certified
copies of the following documents in form and substance satisfactory to the
Lender and, if applicable, duly executed and delivered by all signatories:
(a) this Agreement;
(b) certified copies of (i) all corporate proceedings of the
Borrower necessary to authorize the execution and delivery of
this Agreement, and (ii) the Constating Documents of the
Borrower;
(c) a consent of the lenders under the Senior Credit Agreement to
the extension of credit under the Facility;
(d) a consent of the lenders under the PIK Note Agreement to the
extension of credit under the Facility;
(e) the Debenture; and
(f) the Guarantee.
(2) APPROVALS. All notices, approvals or consents of Governmental Authorities
necessary for the entering into and performance of obligations under this
Agreement by the Borrower shall have been obtained and shall be in form and
substance satisfactory to the Lender.
(3) NO DEFAULT. No Pending Event of Default or Event of Default shall exist
which has not been waived.
(4) ADDITIONAL DOCUMENTS AND ACTION. The Lender shall have received such other
documents, and such other acts shall have been performed, as the Lender may
reasonably require.
9.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligations of the Lender to make
any Advance, in addition to being subject to and conditional upon the conditions
set forth in Section 9.1 being satisfied, are subject to and conditional upon
each of the conditions below being satisfied on the date of a proposed Advance:
<PAGE> 21
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(1) NO DEFAULT. No Default or Event of Default or Pending Event of Default shall
exist which has not been waived.
(2) REPRESENTATIONS CORRECT. The representations and warranties contained in
Section 4.1 shall be true and correct as if made on that date (unless stated to
relate solely to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date) and the Borrower
shall deliver a certificate of a senior officer of the Borrower, in form and
substance satisfactory to the Lender, acting reasonably, certifying the truth of
such matter.
(3) NOTICE OF ADVANCE. The Borrower shall have given any notice required under
Section 3.1 in respect of the Advance.
9.3 WAIVER OF A CONDITION PRECEDENT. The conditions stated in Sections 9.1 and
9.2 are inserted for the sole benefit of the Lender and may be waived by the
Lender in whole or in part, with or without terms or conditions, in respect of
all or any portion of the Advances, without affecting the rights of the Lender
to assert any unwaived terms and conditions, in whole or in part in respect of
any Advance.
SECTION 10 - MISCELLANEOUS PROVISIONS
10.1 HEADINGS AND TABLES OF CONTENTS. The headings of the Sections and the Table
of Contents are inserted for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
10.2 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Each accounting term used in this
Agreement, unless otherwise defined herein, has the meaning assigned to it under
Generally Accepted Accounting Principles. Unless otherwise specified, all
financial statements to be delivered to the Lender in respect of any accounting
period are to be prepared in accordance with Generally Accepted Accounting
Principles on a basis consistently applied.
10.3 SEVERABILITY. Any provision of this Agreement which is or becomes
prohibited or unenforceable in any relevant jurisdiction shall not invalidate or
impair the remaining provisions hereof which shall be deemed severable from such
prohibited or unenforceable provision and any such prohibition or
unenforceability in any such jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Should this Agreement
fail to provide for any relevant matter, the validity, legality or
enforceability of this Agreement shall not thereby be affected.
10.4 NUMBER AND GENDER; EXTENDED MEANINGS. Unless the context otherwise
requires, words importing the singular number shall include the plural and vice
versa, words importing any gender include all genders and references to
agreements and other contractual instruments shall be deemed to include all
present or future amendments, supplements, restatements or replacements thereof
or thereto. The term "INCLUDING" shall be interpreted to mean "including without
limitation".
10.5 AMENDMENT, SUPPLEMENT OR WAIVER. No amendment, supplement or waiver of any
provision of this Agreement, nor any consent to any departure by the Borrower
therefrom, shall in any event be effective unless it is in writing, makes
express reference to the provision
<PAGE> 22
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affected thereby and is signed by the Lender, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No waiver or act or omission of the Lender shall extend to or
be taken in any manner whatsoever to affect any subsequent Event of Default or
breach by the Borrower of any provision of this Agreement or the rights
resulting therefrom.
10.6 GOVERNING LAW. This Agreement shall be conclusively deemed to be a contract
made under, and shall for all purposes be governed by and construed in
accordance with, the laws of the State of New York. Each party to this Agreement
hereby irrevocably and unconditionally attorns to the non-exclusive jurisdiction
of the courts of New York and all courts competent to hear appeals therefrom.
10.7 CURRENCY. All payments made hereunder shall be made in United States
Dollars. Unless the context otherwise requires, all amounts expressed in this
Agreement in terms of money shall refer to United States Dollars.
10.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and cancels and
supersedes any prior agreements, undertakings, declarations or representations,
written or oral in respect thereof.
10.9 NO LIABILITY OF SHAREHOLDERS OF BORROWER. No shareholder of the Borrower or
Affiliate of any shareholder, or any successor and assign of any of them, shall
be liable for the Obligations.
10.10 SUCCESSORS AND ASSIGNS.
(1) This Agreement shall be binding upon and enure to the benefit of the
Borrower and the Lender and their respective successors and assigns, except that
the Borrower shall not assign or transfer any rights or obligations with respect
to this Agreement without the prior written consent of the Lender, which may be
given in its sole discretion.
(2) The Lender may on notice to the Borrower assign and/or transfer all or part
of its rights and/or obligations in respect of the Facility under this
Agreement; provided that unless an Event of Default shall have occurred and be
continuing, the Lender shall not so assign and/or transfer all or any part of
such rights without the prior written consent of the Borrower, which consent the
Borrower shall not unreasonably withhold.
(3) Any such assignee or transferee shall be and be treated as the Lender for
all purposes of this Agreement and shall be entitled to the full benefit hereof
and shall be subject to the obligations of such assignor or transferor to the
same extent as if it were an original party in respect of the rights or
obligations assigned or transferred to it.
10.11 ASSIGNMENT AFTER DEFAULT. Notwithstanding anything to the contrary herein
contained, where an Event of Default has occurred and is continuing, nothing in
this Agreement shall limit or otherwise restrict the right of the Lender to
assign all or any part of its rights and obligations under or with respect to
this Agreement. Without limiting the generality of the foregoing, any such
assignment shall not require the consent of the Borrower.
<PAGE> 23
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10.12 ADDRESS FOR NOTICE. Notice to be given under this Agreement shall, except
as otherwise specifically provided, be in writing addressed to the party for
whom it is intended and, unless the law deems a particular notice to be received
earlier, a notice shall not be deemed received until actual receipt thereof by
the other party. The addresses of the parties hereto for the purposes hereof
shall be the addresses specified beside their respective signatures to this
Agreement, or such other mailing or telecopier addresses as each party from time
to time may notify the others as aforesaid.
10.13 TIME OF THE ESSENCE. Time shall be of the essence in this Agreement.
10.14 FURTHER ASSURANCES. The Borrower shall, at the request of the Lender, do
all such further acts and execute and deliver all such further documents as may,
in the reasonable opinion of the Lender, be necessary or desirable in order to
fully perform and carry out the purpose and intent of this Agreement.
10.15 TERM OF AGREEMENT. Except as otherwise provided herein, this Agreement
shall remain in full force and effect until the payment and performance in full
of all of the Obligations.
10.16 PAYMENTS ON BUSINESS DAY. Whenever any payment or performance under this
Agreement would otherwise be due on a day other than a Business Day, such
payment shall be made on the following Business Day.
10.17 COUNTERPARTS AND FACSIMILE. This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to be
an original, and such counterparts together shall constitute one and the same
agreement. For the purposes of this Section, the delivery of a facsimile copy of
an executed counterpart of this Agreement shall be deemed to be valid execution
and delivery of this Agreement, but the party delivering a facsimile copy shall
deliver an original copy of this Agreement as soon as possible after delivering
the facsimile copy.
10.18 DATE OF AGREEMENT. This Agreement may be referred to as being dated as of
the date first mentioned above notwithstanding the actual date of execution.
IN WITNESS HEREOF the parties have executed this Agreement.
Suite 300 IMPERIAL PARKING CORPORATION
601 West Cordova Street
Vancouver B.C.
V6B 1G1 By:
-------------------------
Name:
Attention: Chief Financial Officer Title:
Fax No.: (604) 681-7311
By:
-------------------------
and to: Name:
Title
Attention: General Counsel
Fax No.: (604) 681-4098
<PAGE> 24
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551 Fifth Avenue, Suite 1416 FIRST UNION REAL ESTATE EQUITY
New York, New York 10176 AND MORTGAGE INVESTMENTS
U.S.A. 07920-1002
Attention: Chief Financial Officer By:___________________________
Fax No.: (212) 905-1102 Name:
Title:
<PAGE> 25
APPENDIX A
DEFINED TERMS
In this Agreement, unless something in the subject matter or context is
inconsistent therewith:
"ADDITIONAL COMPENSATION" has the meaning ascribed thereto in Section
2.4.
"ADVANCE" means an advance by the Lender in respect of the Facility in
Canadian Dollars.
"AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person and (b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests of the
Borrower or any Subsidiary or any corporation of which the Borrower and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Borrower.
"AGGREGATE CREDIT" at any time means the aggregate principal amount of
the Facility which at such time is being made available by the Lender to the
Borrower pursuant to this Agreement, being, $8,000,000.
"AGREEMENT, HEREOF, HERETO, HEREUNDER" or similar expressions mean this
Agreement and the schedules and appendices hereto, as amended, supplemented,
restated and replaced from time to time.
"AMERICAN TAXES" has the meaning ascribed thereto in Section 2.3.
"APPLICABLE DIRECTIVES" in respect of any person, property, transaction
or event, means all applicable official requirements, requests, directives,
rules, consents, approvals, authorizations, guidelines, orders and policies of
any Canadian Governmental Authority or U.S. Governmental Authority having or
purporting to have authority over that person, property, transaction or event,
whether or not having the force of law.
"BANKING DAY" means a Business Day on which dealings in foreign
currency and exchange between Lenders may be carried on in Toronto, Ontario, New
York, New York and London, England.
"BASE RATE" for any day means the aggregate of the Federal Funds Rate
and 7.5% per annum (expressed on the basis of a 365 day year).
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which commercial banks in Toronto or New York are required or authorized to
be closed.
<PAGE> 26
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"CANADIAN GOVERNMENTAL AUTHORITY" means any Governmental Authority of
Canada or any political subdivision thereof.
"CANADIAN REQUIREMENT OF LAW" means any Requirement of Law of any
Canadian Governmental Authority.
"CONSOLIDATED INDEBTEDNESS" means the aggregate of all Indebtedness for
borrowed money of the Borrower and its Consolidated Subsidiaries less (y) the
Notes and (z) such cash and Permitted Marketable Securities on the balance sheet
of the latest financial statements delivered pursuant to Section 5.1(12).
"CONSOLIDATED NET WORTH" means at any time, with respect to any Person
and its Consolidated Subsidiaries, the aggregate of (i) the total shareholders'
equity determined as of such time in accordance with GAAP; plus (ii) the Notes;
where shareholders equity for greater certainty and without duplication includes
any shares in the capital of such Person or its Subsidiaries which are
redeemable at the option of the holder in accordance with their terms.
"CONSOLIDATED PARKING CONTRACTS" means, at any time, with respect to
the Borrower and its Consolidated Subsidiaries, the aggregate of (i) the total
number of existing contracts and leases which are in full force and effect for
the management or operation of parking lots of parking garages; and (ii) the
number of parking lots of parking garages operated on properties owned by the
Borrower and its Consolidated
"CONSOLIDATED SUBSIDIARY" means, at any date, in respect of any person,
a Subsidiary of such Person which is or should be consolidated with such Person
in its consolidated financial statements prepared as of such date.
"CONSTATING DOCUMENTS" means, with respect to a corporation, its
certificate of incorporation, amalgamation or continuance or other similar
document as amended from time to time, and its by-laws.
"CONTRACTS" means agreements, franchises, leases, easements,
servitudes, privileges and other rights acquired from persons other than
Governmental Authorities.
"CONTROL" (including, with correlative meanings, "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means the possession of the power, in law or in
fact, to direct or cause the direction of the management and policies of a
corporation whether through legal and beneficial ownership of a majority of
voting securities of the corporation, by agreement or otherwise.
"CREDIT DOCUMENTS" means this Agreement and all other documents
relating thereto.
"DEBENTURE" has the meaning ascribed thereto in Section 8.1(a).
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DISTRIBUTIONS" means (i) any dividend or other distribution on issued
shares of the Borrower or any of its Subsidiaries; (ii) the purchase, redemption
or retirement of any issued
<PAGE> 27
- 3 -
shares of the Borrower or any of its Subsidiaries redeemed or purchased by the
Borrower or any such Subsidiary, as the case may be, or any payments made under
any employee stock option agreement; (iii) any consulting fee, management fee or
management bonus paid or payable to any director, officer, shareholder or
Affiliate of the Borrower or any of its Subsidiaries or any Person not dealing
at arm's length with the Borrower or any of its Subsidiaries or their respective
directors, officers, shareholders or Affiliates; or (iv) any payment on account
of any principal and interest on any loans or advances owing at any time by the
Borrower or any of its Subsidiaries to any of their respective directors,
officers, shareholders or Affiliates.
"EFFECTIVE DATE" means the date upon which the first Advance is made
hereunder.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Borrower
under section 414 of the Code.
"EVENT OF DEFAULT" means any of the following events shall have
occurred:
(a) if the Borrower fails to pay: (i) any principal payable
hereunder when due; (ii) any interest or fees payable
hereunder within three Business Days of the due date therefor;
(b) if any representation or warranty made by the Borrower herein
or in any certificate or other document delivered by any
director or officer of the Borrower in connection herewith
shall have been found to be false or incorrect in any way as
of its date so as to make it materially misleading;
(c) if the Borrower shall default in the performance of or
compliance with any other term, condition, or covenant
contained herein, or provided for herein (including, without
limitation, its covenant to pay all costs and expenses
provided for herein) and such default has not been remedied or
cured within 30 Business Days after receipt of notice from the
Lender of such default;
(d) if the Borrower shall not generally pay its debts as such
debts become due or shall admit in writing its inability to
pay its debts generally or shall make a general assignment for
the benefit of creditors or shall convey or transfer any of
its property with a view to delaying, defeating or hindering
creditors or any proceedings shall be instituted by or against
it seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding-up, reorganization, arrangement,
adjustment, protection, relief or composition of it or of its
debts
<PAGE> 28
- 4 -
under any law relating to bankrupt, insolvency or
reorganization or relief of debtors or other similar law or
seeking the entry of an order for relief or the appointment of
a receiver, trustee, custodian or other similar official for
it or for any substantial part of its property (excluding
proceedings being contested in good faith so long as any
enforcement proceedings are and remain stayed and are
dismissed within 60 days of their commencement) or it shall
take corporate action to authorize any of the actions set
forth above in this subsection (d); or if a receiver, trustee,
custodian or other similar official for it or for any
substantial part of its property is appointed;
(e) if the Borrower, or any of its Subsidiaries shall fail to pay
to any Person when due (whether at scheduled maturity or by
required prepayment, acceleration, demand or otherwise) any
indebtedness of the Borrower or any indebtedness of a
Subsidiary guaranteed, directly or indirectly, by the Borrower
having a dollar value in excess of, in the aggregate, an
amount equal to 5% of the Borrower's shareholders' equity,
determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles, such failure shall
continue after any applicable grace period and such Person has
declared such amount to be due and payable;
(f) if any judgment or order for the payment of money in an amount
having a dollar value in excess of, in the aggregate, an
amount equal to 5% of the Borrower's shareholders' equity,
determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles, is rendered against
the Borrower which would have a material adverse effect on the
Borrower and its Subsidiaries taken as a whole, and in respect
of which any such judgment or order the appeal period shall
have expired and which shall remain unstayed or unsatisfied
for more than 30 Business Days;
(g) if this Agreement shall at any time after execution and
delivery hereof (other than in accordance with its terms or
with the consent of the Lender) cease to be in full force and
effect (unless within five Business Days of the same being
notified by the Lender to the Borrower, this Agreement shall
again have full force and effect as if the same had always had
full force and effect) or if this Agreement shall be declared
by a court or tribunal of competent jurisdiction in whole or
in part to be null and void, or, where applicable, the
validity or enforceability hereof shall be contested by the
Borrower or the Borrower shall deny in writing that it has any
or further liability or obligation hereunder;
(h) except as may be expressly permitted by this Agreement, if an
order shall be made or an effective resolution passed for the
winding-up, liquidation or dissolution of the Borrower;
(i) if an encumbrancer in pursuit of a claim having a dollar value
in excess of, in the aggregate, an amount equal to 5% of the
Borrower's shareholders equity, determined on a consolidated
basis in accordance with Generally Accepted Accounting
Principles, shall take possession (whether by appointment of a
custodian, receiver, receiver and manager or otherwise) of all
or a substantial part of the property of the Borrower, or if
in pursuit of a claim having a dollar value in excess of such
amount or which would have such a material adverse
<PAGE> 29
- 5 -
effect, a distress or execution or any similar process be
levied or enforced there against and remain unsatisfied for
such period as would permit such property or such substantial
part thereof to be sold thereunder; or
(j) if the Borrower shall cease to carry on business or a
substantial part thereof in the ordinary course of business.
"FACILITY" has the meaning ascribed thereto in Section 1.1.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum (expressed on the basis of a 365 day year) equal for each day during
such period to the weighted average of the rates on overnight federal funds
transactions with members of the U.S. Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the immediately preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for such day on such transactions received by the
Lender from the federal funds brokers of recognized standing selected by the
Lender.
"FINANCIAL CONDITION" means, with respect to a person, its financial
condition, Property and business operations.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means generally
accepted accounting principles in effect from time to time in Canada, including
the accounting recommendations published in the handbook of the Canadian
Institute of Chartered Accountants.
"GOVERNMENTAL AUTHORITY" means the government of any nation, state,
province, municipality or other political subdivision thereof, and any entity
exercising executive, legislative, regulatory or administrative functions, and
any corporation or other entity owned or controlled in any manner by any of the
foregoing.
"GUARANTEES" has the meaning ascribed thereto in Section 8.1(b).
"GUARANTORS" means all Subsidiaries of Borrower unless otherwise agreed
to in writing by the Lender.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations
in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all
<PAGE> 30
- 6 -
liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with respect
to any property owned by such Person (whether or not it has assumed or otherwise
become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks and other
financial institutions (whether or not representing obligations for borrowed
money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"INTEREST PERIOD" means, with respect to each Advance, unless the
Lender in its discretion otherwise determines:
(i) initially, the period commencing on the date of such Advance
and ending 30 to 180 days thereafter, as the Borrower may
elect in the applicable Notice of Borrowing; and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Loan and ending
30 to 180 days thereafter, as the Borrower may elect pursuant
to the provisions hereof;
provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Banking Day shall be extended to
the next succeeding Banking Day unless such Banking
Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding
Banking Day;
(b) any Interest Period which begins on the last Banking
Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end
on the last Banking Day of a calendar month; and
(c) Interest Periods shall terminate on such dates as
will permit the mandatory repayments of the Facility
on the dates and in the manner provided for herein.
<PAGE> 31
- 7 -
"LIBOR" for any Interest Period means the rate per annum (on the basis
of a 360 day year) rounded upwards if necessary to the nearest 1/16% at which
deposits in US Dollars would be offered by Deutsche Bank Canada in Toronto,
Canada to prime Lenders in the interbank Euro-currency market at approximately
12:00 p.m. (Toronto time) two Banking Days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the Advance
to which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Borrower
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Borrower and its Subsidiaries taken as a whole, or (b) the ability of the
Borrower to perform its obligations under this Agreement, or (c) the validity or
enforceability of this Agreement.
"MATURITY DATE" has the meaning ascribed thereto in Section 2.1.
"NOTICE OF BORROWING" has the meaning ascribed thereto in Section 3.1.
"OBLIGATIONS" means all obligations of the Borrower to the Lender under
or in connection with the Credit Documents, including all debts and liabilities,
present or future, direct or indirect, absolute or contingent, matured or not,
at any time owing by the Borrower, to the Lender in any currency or remaining
unpaid by the Borrower to the Lender in any currency under or in connection with
the Credit Documents, whether arising from dealings between the Lender and the
Borrower or from any other dealings or proceedings by which the Lender may be or
become in any manner whatever a creditor of the Borrower under or in connection
with the Credit Documents, and wherever incurred, and whether incurred by the
Borrower alone or with another or others and whether as principal or surety, and
all interest, commissions, legal and other costs, charges and expenses.
"PENDING EVENT OF DEFAULT" means an event which would constitute an
Event of Default hereunder, alone or subject to giving of notice, passing of
time, determination of materiality or failure to cure.
"PERMITS" means licences, authorizations, consents, registrations,
exemptions, permits and other approvals from Governmental Authorities.
"PERMITTED LIENS" means any one or more of the following:
a. Liens for taxes, rates, assessments or governmental charges or levies not at
the time due and delinquent or the validity of which is being contested at the
time by the Borrower in
<PAGE> 32
- 8 -
good faith by proper legal proceedings;
b. Liens resulting from any judgment rendered or claim filed against the
Borrower which the Borrower shall be contesting in good faith by proper legal
proceedings;
c. undetermined or inchoate Liens which have not at such time been filed or
registered pursuant to law against the Borrower or which relate to obligations
not due or delinquent;
d. Liens affecting real property which are (i) title defects or irregularities
of a minor nature; or (ii) restrictions, easements, rights-of-way, servitudes or
other similar rights in land (including, without restriction, rights-of-way and
servitudes for railways, sewers, drains, gas and oil pipelines, gas and water
mains, electric light and power and telephone or telegraph or cable television
conduits, poles, wires, cables or other incidental equipment) granted to or
reserved by other Persons; in each case where such Liens in the aggregate do not
materially impair the usefulness of the property for the purposes for which it
is held and mortgages of and other Liens against the said easements,
rights-of-way, servitudes or other similar rights in real property;
e. Liens or deposits in connection with bids, tenders, contracts or
expropriation proceedings of the Borrower or to secure workers' compensation,
unemployment insurance or other similar statutory assessments, or to secure
costs of litigation when required by law, and surety or appeal bonds in
connections with such litigation;
f. mechanic's, warehouseman's, carriers' or other similar common law liens or
privileges, where the action to enforce the same has not proceeded to final
judgment, is being defended in good faith by the Borrower and by appropriate
proceedings and in respect of which it shall have set aside on its books
reserves deemed by it to be adequate therefor;
g. any other liens or privileges or other title irregularities, encroachments or
encumbrances of a nature similar to the foregoing which are of a minor nature
and will not in the aggregate materially and adversely affect the use of the
property for the purpose for which it is held by the Borrower or any of its
Subsidiaries;
h. Liens in favour of the holders of the Permitted Senior Indebtedness;
i. Purchase Money Mortgages, securing Indebtedness, in an aggregate amount not
to exceed $1,000,000; and
j. other Liens in an aggregate amount not to exceed $50,000.
"PERMITTED MARKETABLE SECURITIES" means any securities held by the
Borrower or any of its Subsidiaries which are publicly traded on a recognized
stock exchange and do not represent greater than 5% of the issued and
outstanding securities of the issuing corporation and any fixed income
securities for which a public market exists.
"PERMITTED SENIOR INDEBTEDNESS" means Indebtedness outstanding from
time to time pursuant to the Amended and Restated Credit Agreement dated as of
April 17, 1997 among the Borrower (by amalgamation with Imperial Parking
Limited), 504463 N.B. Inc., the financial institutions party thereto and BT Bank
of Canada, as agent, including all
<PAGE> 33
- 9 -
Accommodations (as defined in the Amended and Restated Credit Agreement) and
interest, fees, expenses and other amounts owed pursuant thereto or contemplated
thereby, as such amounts are reduced from time to time.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PIK NOTE AGREEMENT" means that certain Senior Subordinated Partial PIK
Note Purchase Agreement entered into between the Borrower and 3006302 Nova
Scotia Company on April 17, 1997.
"PROPERTY" means, with respect to any person, all of its undertaking,
property and assets.
"PURCHASE MONEY MORTGAGE" means any Lien charging property acquired by
the Borrower, which is or has been granted or assumed by the Borrower or which
arises by operation of law in favour of the transferor substantially
concurrently with and for the purpose of the acquisition of such property, in
each case where (i) the principal amount secured by such Lien is not in excess
of the cost to the Borrower of the property acquired; and (ii) such Lien extends
only to the property acquired.
"REQUIREMENT OF LAW" in respect of any person, property, transaction or
event, means all present and future laws, statutes, regulations, treaties,
judgments and decrees applicable to that person, property, transaction or event
and, whether or not having the force of law, all Applicable Directives, rules,
consents, approvals, authorizations, guidelines, orders and policies of any
Governmental Authority having or purporting to have authority over that person,
property, transaction or event.
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Borrower with responsibility for the administration of the
relevant portion of this agreement.
"SECURITY" has the meaning ascribed thereto in Section 8.1.
"SENIOR CREDIT AGREEMENT" means that certain amended and restated
credit agreement dated as of April 17, 1997 between the Borrower, 504463 N.B.
Inc. now Impark Services Limited, Hong Kong Bank Canada now HSBC Bank Canada and
BT Bank of Canada now Deutsche Bank Canada, as the same has been amended to the
date hereof and as the same may be further amended, supplemented, restated or
otherwise modified from time to time.
"SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
<PAGE> 34
- 10 -
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Borrower.
"TAXES" means all taxes, levies, imposts, stamp taxes, duties,
deductions, withholdings and similar impositions payable, levied, collected,
withheld or assessed as of the date of this Agreement or at any time in the
future, and any interest, penalties or similar amounts in respect thereof, and
"Tax" shall have a corresponding meaning.
"U.S. GOVERNMENTAL AUTHORITY" means any Governmental Authority of the
United States of America or any political subdivision thereof.
"U.S. REQUIREMENT OF LAW" means any Requirement of Law of any U.S.
Governmental Authority.
<PAGE> 35
APPENDIX B
NOTICE OF UTILIZATION OF CREDIT FACILITY
TO: FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
Reference is made to that certain credit agreement (the "CREDIT
AGREEMENT") made as of ****, 2000 between Imperial Parking Limited and First
Union Management, Inc. All terms used herein commencing with initial capital
letters and defined in the Credit Agreement have the meanings attributed thereto
in the Credit Agreement.
Notice is hereby given pursuant to the provisions of Section 3.1 of the
Credit Agreement that the undersigned Borrower requests that:
1. an Advance be made;
2. the aggregate principal amount of the Advance shall be
$ [INSERT AMOUNT];
3. the Borrowing Date shall be [INSERT DATE];
4. the Interest Periods shall be [INSERT NUMBER OF DAYS
BETWEEN 30 - 180 -, SUBJECT TO MATURITY DATE];
5. the Lender make or cause the funds to which the undersigned
Borrower is entitled in light of the foregoing to be made
available to the Borrower as contemplated by the Credit
Agreement;
6. no Event of Default has occurred and is continuing.
DATED this day of
Yours very truly,
IMPERIAL PARKING LIMITED
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
<PAGE> 36
- 12 -
<PAGE> 1
Exhibit 10.3
G U A R A N T E E
-- DAY OF MARCH, 2000
BY
Imperial Parking LIMITED
AS GUARANTOR
IN FAVOUR OF
First Union Real Estate Equity and Mortgage Investments
AS CREDITOR
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<C> <C>
1. INTERPRETATION.................................................................................1
1.01 Definitions....................................................................................1
1.02 Generally Accepted Accounting Principles.......................................................2
1.03 Headings.......................................................................................2
1.04 Number and Gender..............................................................................3
2. Guarantee and indemnity........................................................................3
2.01 Guarantee......................................................................................3
2.02 Nature of Guarantee............................................................................3
2.03 Performance of Obligations.....................................................................3
2.04 Obligations Unconditional......................................................................3
2.05 Guarantee Unaffected by Judgment or Bankruptcy.................................................3
2.06 Independence of Guarantee......................................................................4
2.07 Indemnity......................................................................................4
3. Representations and Warranties.................................................................4
3.01 Incorporation..................................................................................4
3.02 Capacity.......................................................................................4
3.03 Licences.......................................................................................5
3.04 Non-Conflict...................................................................................5
3.05 No Default.....................................................................................5
3.06 Enforceability.................................................................................5
3.07 Financial Information..........................................................................5
3.08 Due Authorization by Guarantor.................................................................5
3.09 Reliance and Survival..........................................................................6
4. Covenants of the Guarantor.....................................................................6
4.01 Waiver.........................................................................................6
4.02 No Requirement to Exhaust Recourse.............................................................6
4.03 Payment of Obligations.........................................................................6
4.04 Assignment and Postponement....................................................................6
4.05 Postponed Subrogation..........................................................................7
4.06 Bankruptcy.....................................................................................7
4.07 Set-Off, Combination of Accounts and Crossclaims...............................................7
4.08 Powers.........................................................................................7
4.09 Survival of Guarantee..........................................................................7
4.10 Further Assurances.............................................................................8
4.11 Payment of Realization Costs...................................................................8
4.12 No Termination.................................................................................8
4.13 Financial Condition of Debtor..................................................................8
5. Rights of the Creditor.........................................................................8
5.01 Appropriations.................................................................................8
</TABLE>
<PAGE> 3
<TABLE>
<C> <C>
5.02 Dealing with Liabilities and Security..........................................................8
5.03 Assignment.....................................................................................9
5.04 Creditor Accounts to Govern....................................................................9
5.05 Guarantee in Addition..........................................................................9
5.06 Successors and Assigns........................................................................10
5.07 Set-Off by the Creditor.......................................................................10
5.08 Right to Recover for Contingent Liabilities...................................................10
6. GENERAL.......................................................................................10
6.01 Notices.......................................................................................10
6.02 Time of the Essence...........................................................................11
6.03 Governing Law.................................................................................11
6.04 Guarantee Effective Immediately...............................................................11
6.05 Entire Agreement..............................................................................11
6.06 Severability..................................................................................11
6.07 Judgment Currency.............................................................................11
6.08 Amendment.....................................................................................12
6.09 Waiver of Rights..............................................................................12
6.10 Receipt of Copy...............................................................................12
</TABLE>
<PAGE> 4
- 1 -
GUARANTEE
THIS GUARANTEE is given the o day of March, 2000, by (the
"Guarantor") whose principal office or place of business is located at Suite
300, 601 West Cordova St., Vancouver, B.C. V6B 1G1 in favour of First Union Real
Estate Equity and Mortgage Investments (the "Creditor").
PREMISES:
(a) Imperial Parking Corporation (the "Debtor") has or may become
indebted to the Creditor.
(b) The Creditor has required the Guarantor to enter into this
Guarantee as a condition of the Creditor advancing funds to
the Debtor.
IN CONSIDERATION of $1.00 now paid by the Creditor to the
Guarantor and of other consideration (the receipt and sufficiency of which are
acknowledged by the Guarantor), the Guarantor agrees with the Creditor as
follows:
1. INTERPRETATION
1.01 DEFINITIONS
In this Guarantee:
"AGREEMENT" means any agreement, oral or written, and any
indenture, instrument or undertaking.
"BUSINESS DAY" means any day of the week other than a
Saturday, Sunday or statutory or civic holiday observed in
Vancouver, British Columbia or New York, New York.
"CONTINGENT FACILITY" means any obligation in any form assumed
or issued by the Creditor at the request of or for the account
of the Debtor under which the Creditor has any contingent or
future liability, including, without limitation, any
guarantee, uncleared payment order, endorsement, letter of
credit or banker's acceptance.
"GUARANTEE" means this Guarantee and all attached Schedules.
The words "hereto," "herein," "hereof," "hereby", "hereunder,"
and similar expressions, refer to this Guarantee and not to
any particular portion of it. The words "Article," "Section,"
"Subsection" or "Schedule" refer to the applicable article,
section, subsection or schedule of this Guarantee.
<PAGE> 5
- 2 -
"LIABILITIES" means all and any item or part, of the existing
and future indebtedness, obligations and liabilities of any
kind whatever of the Debtor to the Creditor, whether direct or
indirect or absolute or contingent, and whether matured or
not. "Liabilities" includes, without limitation, all such
indebtedness, obligations and liabilities regardless of the
place or manner in which they arise or are evidenced, whether
resulting from dealings between the Creditor and the Debtor or
from other dealings or proceedings by which the Debtor may be
or become in any manner indebted, obligated or liable to the
Creditor and in any currency and whether incurred by the
Debtor alone or with another or others and whether as
principal, guarantor, or surety. "Liabilities" also includes
the aggregate amount of all Contingent Facilities and all
interest, commissions, costs, charges and expenses which the
Creditor incurs in respect of any of the Liabilities and any
Security granted in respect of any of the Liabilities.
"OBLIGATIONS" means all, and any part, of the guarantees,
indemnities, obligations and liabilities of the Guarantor to
the Creditor under this Guarantee.
"PERSON" includes an individual, corporation, partnership,
joint venture, trust or unincorporated organization, the Crown
or any agency or instrumentality thereof or any other entity
recognized by law.
"SECURITY" means existing or future security interests of any
type and any guarantee other than this Guarantee, granted by
any Person in respect of the Liabilities or the Obligations.
"TAXES" means all taxes, imposts, rates, levies, assessments
and government fees or dues lawfully levied, assessed or
imposed, including, without limitation, sales, excise, use,
property, capital, business transfer, goods and services or
value added taxes.
1.02 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
All accounting and financial terms used in this Guarantee
shall be interpreted in accordance with generally accepted accounting principles
in Canada. Where the Canadian Institute of Chartered Accountants or any
successor thereto includes a recommendation in its Handbook or any successor
thereto concerning the treatment of any accounting matter, such recommendation
shall be regarded as the only generally accepted accounting principle applicable
to the circumstances that it covers and references herein to "generally accepted
accounting principles" shall be interpreted accordingly.
1.03 HEADINGS
The division of this Guarantee into Articles, Sections,
paragraphs and subparagraphs and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation of
this Guarantee. The Article and Section headings in
<PAGE> 6
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this Guarantee are not intended to be full or accurate descriptions of the text
to which they refer and shall not be considered part of this Guarantee.
1.04 NUMBER AND GENDER
In this Guarantee, words in the singular include the plural
and vice-versa and words in one gender include all genders.
2. Guarantee and indemnity
2.01 GUARANTEE
The Guarantor guarantees to the Creditor the due and punctual
payment and performance in full of the Liabilities as they become due from time
to time. The Guarantor shall be liable for the Liabilities as a primary obligor,
not merely as a surety.
2.02 NATURE OF GUARANTEE
This Guarantee is an unconditional, irrevocable and continuing
guarantee of all of the Liabilities, and the liability of the Guarantor in
respect of the Liabilities is unlimited.
2.03 PERFORMANCE OF OBLIGATIONS
The Guarantor shall pay or perform the Liabilities immediately
on demand from the Creditor, without any requirement that the Creditor has
demanded that the Debtor pay or perform any of the Liabilities or that the
Debtor has failed to do so.
2.04 OBLIGATIONS UNCONDITIONAL
This Guarantee is effective irrespective of the genuineness,
validity or enforceability of the Liabilities. No circumstance, act or omission,
even if known by the Guarantor or the Creditor, which might otherwise limit,
lessen or release the Obligations or discharge this Guarantee shall release or
discharge, or wholly or partly exonerate the Guarantor from, any Obligations or
prejudice the Creditor's rights and remedies under this Guarantee. The Creditor
may at any time vary, compromise, exchange, renew, discharge, release or abandon
any Obligation or any other right or remedy it may have without thereby
lessening, limiting or releasing any other Obligation. The Guarantor hereby
waives all defences to any action or proceeding to enforce this Guarantee,
except any defence that there has been no default by the Debtor in paying and
performing the Liabilities or that the amount claimed has been permanently and
irrevocably paid to the Creditor.
2.05 GUARANTEE UNAFFECTED BY JUDGMENT OR BANKRUPTCY
Without limiting Section 2.04, none of the Obligations shall
be limited, lessened or released, nor shall this Guarantee be discharged, by the
recovery of any judgment against the Debtor or any other Person, by any
voluntary or involuntary liquidation, dissolution, winding-up,
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merger or amalgamation of the Debtor, the Guarantor or any other Person, by any
sale or other disposition of all or substantially all of the assets of the
Debtor, or by any judicial or extra-judicial receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization, moratorium,
arrangement, composition with creditors or other proceedings affecting the
Debtor, the Guarantor or any other Person.
2.06 INDEPENDENCE OF GUARANTEE
The Obligations are in addition to and independent of any
Security. The Obligations shall not be lessened or limited, nor shall this
Guarantee be discharged, by:
(a) any direction of application of payment by the Debtor or by
any other Person; or
(b) any payment received on account of the Liabilities that the
Creditor may consider that it is obliged to repay pursuant to
any applicable law or for any other reason.
2.07 INDEMNITY
The Guarantor shall indemnify and save the Creditor harmless
from and against all loss, cost, damage, expense, claims and liability which it
may at any time suffer or incur in connection with:
(a) any failure by the Debtor to duly and punctually pay or
perform the Liabilities;
(b) any loss for any reason whatsoever, including by operation of
law, the negligence of the Creditor or otherwise, of any right
of the Creditor against the Debtor or the Guarantor; and
(c) any action or omission of the Creditor in connection with the
enforcement of any of its rights against the Debtor or the
Guarantor or under any Security.
3. Representations and Warranties
The Guarantor represents and warrants to the Creditor as
follows:
3.01 INCORPORATION
The Guarantor is validly incorporated and organized and is a
valid and subsisting corporation under the laws applicable to it.
3.02 CAPACITY
The Guarantor has the power, capacity, legal right and
authority to execute and perform this Guarantee.
<PAGE> 8
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3.03 LICENCES
The Guarantor has the power, capacity, legal right and
authority, and holds all licences, permits and consents that it requires, to own
its property and to carry on its current business, and any business in which it
contemplates it will engage, in each relevant jurisdiction.
3.04 NON-CONFLICT
Neither the execution nor the performance of this Guarantee
requires the approval of any regulatory agency having jurisdiction over the
Guarantor nor is this Guarantee in contravention of or in conflict with the
articles, by-laws or resolutions of the directors or shareholders of the
Guarantor or of the provisions of any Agreement to which the Guarantor is a
party or by which any of its property may be bound or of any statute,
regulation, by-law, ordinance or other law, or of any judgment, decree, award,
ruling or order to which the Guarantor or any of its property may be subject.
Neither the execution nor the performance of this Guarantee will oblige the
Guarantor to grant any encumbrance of any kind to any Person other than the
Creditor.
3.05 NO DEFAULT
The Guarantor is not in breach of or in default under any
Agreement to which it is a party.
3.06 ENFORCEABILITY
This Guarantee constitutes a valid and legally binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms, subject only to applicable bankruptcy, insolvency or other statutes
or jurisprudence affecting the enforcement of creditors' rights in general, and
to general principles of equity under which specific performance and injunctive
relief may be awarded by a court in its discretion.
3.07 FINANCIAL INFORMATION
In all information and financial statements supplied for the
benefit of the Creditor, the Guarantor has made no untrue statement of any
material fact, and has revealed all material facts the omission of which would
make such information and statements misleading. The Guarantor has disclosed all
facts which materially adversely affect or, so far as the Guarantor can
reasonably foresee, will materially adversely affect the business, properties,
prospects or financial condition of the Guarantor or the ability of the
Guarantor to pay or perform the Obligations. All accounting information and
financial statements have been prepared in accordance with generally accepted
accounting principles.
3.08 DUE AUTHORIZATION BY GUARANTOR
The Guarantor has taken all necessary corporate action, and
those signing on its behalf have been duly authorized, to execute this Guarantee
effectively.
<PAGE> 9
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3.09 RELIANCE AND SURVIVAL
All representations and warranties of the Guarantor made
herein or in any certificate or other document delivered by or on behalf of the
Guarantor for the benefit of the Creditor are material, shall survive the
execution and delivery of this Guarantee and shall continue in full force and
effect without time limit. The Creditor shall be deemed to have relied upon each
such representation and warranty notwithstanding any investigation made by or on
behalf of the Creditor at any time.
4. COVENANTS OF THE GUARANTOR
The covenants set forth in the Credit Agreement which are
applicable to the Guarantor in its capacity as a subsidiary of the Debtor are
deemed to be made herein by the Guarantor in favour of the Creditor as if such
covenants were included herein mutatis mutandis. In addition he Guarantor
further covenants:
4.01 WAIVER
The Guarantor hereby waives both notice of the existence or
creation of the Liabilities and presentment, demand, dishonour, notice of
dishonour, protest, notice of protest and all other notices whatsoever.
4.02 NO REQUIREMENT TO EXHAUST RECOURSE
The Creditor shall not be bound to seek or exhaust its
recourse against the Debtor or any other Person nor to enforce or value any
Security before being entitled to payment under this Guarantee. The Guarantor
renounces the benefits of discussion and division, if applicable.
4.03 PAYMENT OF OBLIGATIONS
The Guarantor shall pay to the Creditor, at any office of the
Creditor as notified in writing by the Creditor, all amounts payable hereunder,
in the applicable currencies of the Liabilities, free and clear and without
deduction for any present or future Taxes, charges or withholdings.
4.04 ASSIGNMENT AND POSTPONEMENT
All present and future obligations and liabilities of the
Debtor to the Guarantor are assigned to the Creditor and postponed to the
Liabilities and all moneys received from the Debtor or for its account by the
Guarantor or its representatives or assigns shall be received in trust for the
Creditor and, forthwith upon receipt, paid over to the Creditor in reduction of
the Liabilities, all without prejudice to and without in any way limiting,
lessening or releasing the Obligations. This assignment and postponement is
independent of the Guarantor's other Obligations, and shall remain in effect
even though the Guarantor has no further liability to guarantee the payment or
performance of the Liabilities.
<PAGE> 10
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4.05 POSTPONED SUBROGATION
The Guarantor shall not be subrogated to any right or remedy
of the Creditor until the Liabilities have been paid and performed in full and
the Creditor no longer has any obligation, actual or contingent, to provide
financial accommodation to the Debtor. Thereafter, the Guarantor may require the
Creditor to assign to the Guarantor any of its rights and remedies then
remaining with respect to the Liabilities, but any such assignment shall only be
without representation or warranty by, or recourse against, the Creditor.
4.06 BANKRUPTCY
Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Debtor or any surety or guarantor of the Liabilities, any sale
or other disposition of all or substantially all of the assets of the Debtor, or
any insolvency, bankruptcy, reorganization, moratorium, arrangement with
creditors, judicial or extra-judicial receivership, or other similar proceedings
affecting the Debtor or any surety or guarantor for any Liabilities, the rights
of the Creditor shall not be limited, lessened or released by its omission to
prove its claim or to prove its full claim and it may prove such claim as it
sees fit and may refrain from proving any claim and in its discretion it may
value as it sees fit or refrain from valuing any security or securities held by
it, without in any way lessening, limiting or releasing the liability to it of
the Guarantor and until the Liabilities have been fully paid or discharged, the
Creditor shall have the right to include in its claim the amount of all sums
paid to the Creditor under this Guarantee and to prove and rank for and receive
dividends in respect thereof. Any and all rights to prove and rank for such sums
paid by the Guarantor and to receive the full amount of all dividends in respect
thereto are assigned by the Guarantor to the Creditor.
4.07 SET-OFF, COMBINATION OF ACCOUNTS AND CROSSCLAIMS
The Guarantor will pay and perform the Obligations without
regard to any equities between the Guarantor, the Debtor and the Creditor, or
any of them, or any defence or right of set-off, combination of accounts or
cross-claim which the Debtor or the Guarantor may have.
4.08 POWERS
The Creditor need not inquire into the powers of the Debtor or
its directors, officers, employees or agents purporting to act on its behalf.
All advances, credits or other financial accommodation in fact obtained from the
Creditor in the purported exercise of such powers shall be deemed to be part of
the Liabilities. The Guarantor will not contest the validity of any of the
Liabilities on the grounds that the Liabilities were obtained irregularly,
fraudulently, defectively or informally or in excess of the powers of the Debtor
or of its directors, officers, employees or agents, even if the Creditor had
notice of any such powers.
4.09 SURVIVAL OF GUARANTEE
The Obligations shall continue unaffected by any change in the
name of the Debtor or of the Guarantor, or by any change whatsoever in the
objects, capital structure or
<PAGE> 11
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constitution of the Debtor or the Guarantor, or by the Debtor or the Guarantor
being amalgamated with another corporation.
4.10 FURTHER ASSURANCES
The Guarantor shall at all times do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged or delivered all such
further acts, deeds, transfers, assignments and assurances as the Creditor may
reasonably require in order to give effect to the provisions of this Guarantee.
4.11 PAYMENT OF REALIZATION COSTS
The Guarantor shall reimburse or pay the Creditor on demand
for all costs, expenses and reasonable legal fees paid or incurred by the
Creditor in enforcing the Liabilities, the Obligations or any Security. The
Guarantor shall pay interest on the amount of each such demand at a rate of 7.5%
per annum, compounded and payable monthly both before and after judgment and
default, commencing on the 15th day following such demand until payment of such
amount is made in full.
4.12 NO TERMINATION
This Guarantee and the Obligations are irrevocable. The
Guarantor may not terminate its liability in regard to any Liabilities,
including future Liabilities, without the prior written consent of the Lender.
4.13 FINANCIAL CONDITION OF DEBTOR
The Guarantor acknowledges that it has fully informed itself
about the financial condition of the Debtor. The Guarantor assumes full
responsibility for keeping fully informed of the financial condition of the
Debtor and all other circumstances affecting the Debtor's ability to pay or
perform the Liabilities, and agrees that the Creditor has no duty to report to
the Guarantor any information which the Creditor has or receives about the
Debtor's financial condition or any circumstances bearing on its ability to pay
or perform the Liabilities.
5. Rights of the Creditor
5.01 APPROPRIATIONS
The Creditor may, at its sole discretion, appropriate moneys
received to such of the Liabilities, and in such order, as it sees fit, and may
change any appropriation at any time.
5.02 DEALING WITH LIABILITIES AND SECURITY
Without limiting Section 2.04, the Creditor may:
<PAGE> 12
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(a) grant or allow any waiver, consent, extension, indulgence or
other act or omission in respect of any Agreement, any of the
Liabilities or any Security;
(b) do, or omit to do, anything to enforce the payment or
performance of any Agreement, any of the Liabilities or any
Security;
(c) give, refuse, cease or refrain from giving any credit, loans
or other financial accommodation to the Debtor;
(d) vary, compromise, exchange, renew, discharge, release,
subordinate, postpone or abandon any Agreement, any of the
Liabilities or any Security;
(e) take, refuse or refrain from taking any Security;
(f) refuse or omit to register or otherwise perfect or keep
perfected any Security; or
(g) deal with or allow the Debtor, the Guarantor or any other
Person to deal with goods or property covered by any Security;
all when and in such manner and with or without notice as the Creditor may deem
expedient. The Creditor may do, or omit or refuse to do, anything enumerated in
this Section without thereby lessening, limiting or releasing the Obligations or
its rights and remedies under this Guarantee in any way, even if the effect is
to deprive the Guarantor of any right or opportunity to be reimbursed by the
Debtor or any other Person for any sums paid to the Creditor, and even if any
such action or omission results from inadvertence or negligence of any Person.
5.03 ASSIGNMENT
The Creditor may, without notice to the Guarantor, assign or
transfer the Liabilities or any of its rights and remedies under this Guarantee.
The Creditor shall have an unimpaired right, prior and superior to that of any
such assignee or transferee to enforce this Guarantee for the benefit of the
Creditor as to such of the Liabilities as the Creditor has not assigned or
transferred.
5.04 CREDITOR ACCOUNTS TO GOVERN
The amount of the Liabilities at any time shall be deemed to
be as stated by the Creditor based solely on its records. The Guarantor shall be
bound by any account settled between the Creditor and the Debtor. Any
acceleration of any of the Liabilities shall be binding on the Guarantor, even
if contested by the Debtor.
5.05 GUARANTEE IN ADDITION
The rights and remedies of the Creditor hereunder are in
addition to and not in substitution for any other rights or remedies which the
Creditor has at any time against the Debtor respecting the Liabilities or under
any Security.
<PAGE> 13
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5.06 SUCCESSORS AND ASSIGNS
This Guarantee shall enure to the benefit of the Creditor's
successors and assigns and all Obligations shall be binding upon the successors
and assigns of the Guarantor.
5.07 SET-OFF BY THE CREDITOR
Whenever any Obligation is due and payable, the Creditor
may, without prior demand or notice to the Guarantor,
(a) appropriate and apply to such Obligation any property,
balances, credits, accounts or moneys of the Guarantor then in
its possession or control, whether received by the Creditor
for safekeeping, as agent for collection or transmission or
otherwise, and
(b) set-off any deposits or other sums at any time credited by or
due from the Creditor to the Guarantor, whether in a special
or other account or represented by a certificate of deposit or
deposit receipt (and whether or not the liability of the
Creditor therefor is conditional, contingent or unmatured),
all notwithstanding the contrary term of any present or future account or
instrument.
5.08 RIGHT TO RECOVER FOR CONTINGENT LIABILITIES
Whenever the Creditor may demand payment or performance of any
of the Obligations, the Guarantor must, upon demand, also pay the Creditor an
amount equal to the Creditor's maximum aggregate potential liability (including
without limitation out-of-pocket expenses and fees) under all outstanding
Contingent Facilities. Such amount may be held by the Creditor as collateral
security or for offset against the obligations of the Creditor under the
Contingent Facilities or applied by the Creditor as a prepayment thereof.
6. GENERAL
6.01 NOTICES
Any notice, demand or other communication (in this Section, a
"notice") from the Guarantor to the Creditor shall be in writing and shall be
sufficiently given or made if:
(a) delivered in person during normal business hours on a Business
Day and left with a receptionist or other responsible employee
of the Creditor at the address set out in the first paragraph
of this Guarantee;
(b) sent by prepaid first class mail; or
<PAGE> 14
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(c) sent by any electronic means of sending messages, including
telex or facsimile transmission, which produces a paper record
during normal business hours on a Business Day charges prepaid
and confirmed by prepaid first class mail.
The Creditor may change its address by giving notice to the
Guarantor.
6.02 TIME OF THE ESSENCE
Time is of the essence of each provision of this Guarantee.
6.03 GOVERNING LAW
This Guarantee shall be governed by, and interpreted and
enforced in accordance with, the laws in force in the State of New York. The
Guarantor irrevocably submits to the jurisdiction of the courts of the State of
New York with respect to any matter arising hereunder or related hereto.
6.04 GUARANTEE EFFECTIVE IMMEDIATELY
Neither the execution of, nor any filing with respect to, this
Guarantee shall bind the Creditor to grant any credit, loans or other financial
accommodation to the Debtor, but the Obligations shall arise forthwith upon the
execution of this Guarantee by the Guarantor. Possession of this instrument by
the Creditor shall be conclusive evidence against the Guarantor that this
Guarantee was not delivered in escrow or pursuant to any Agreement that it
should not be effective until any terms or conditions precedent or subsequent
have been complied with.
6.05 ENTIRE AGREEMENT
There are no representations, warranties, conditions, other
agreements or acknowledgements, whether direct or collateral, express or
implied, that form part of or affect this Guarantee. The execution of this
Guarantee has not been induced by, nor does the Guarantor rely upon or regard as
material, any representations, warranties, conditions, other agreements or
acknowledgements not expressly made in this Guarantee or in the agreements and
other documents to be delivered pursuant hereto.
6.06 SEVERABILITY
If any provision of this Guarantee is determined to be invalid
or unenforceable by a court of competent jurisdiction from which no further
appeal lies or is taken, that provision shall be deemed to be severed herefrom,
and the remaining provisions of this Guarantee shall not be affected thereby and
shall remain valid and enforceable.
6.07 JUDGMENT CURRENCY
If, for the purposes of obtaining or enforcing judgment in any
court in any jurisdiction, it becomes necessary to convert into the currency of
the jurisdiction giving such judgment (the "Judgment Currency") an amount due
hereunder in any other currency (the
<PAGE> 15
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"Original Currency"), then the date on which the rate of exchange for conversion
is selected by that court is referred to herein as the "Conversion Date." If
there is a change in the rate of exchange between the Judgment Currency and the
Original Currency between the Conversion Date and the actual receipt by the
Creditor of the amount due hereunder or under such judgment, the Guarantor
shall, notwithstanding such judgment, pay all such additional amounts as may be
necessary to ensure that the amount received by the Creditor in the Judgment
Currency, when converted at the rate of exchange prevailing on the date of
receipt, will produce the amount due in the Original Currency. The Guarantor's
liability hereunder constitutes a separate and independent liability which shall
not merge with any judgment or any partial payment or enforcement of payment of
sums due under this Guarantee. The term "rate of exchange," as used in this
Section, includes any premiums or costs payable in connection with the currency
conversion then being effected.
6.08 AMENDMENT
This Guarantee may only be amended or supplemented by a
written agreement signed by the Guarantor and the Creditor.
6.09 WAIVER OF RIGHTS
Any waiver of, or consent to depart from, the requirements of
any provision of this Guarantee shall be effective only in the specific instance
and for the specific purpose for which it has been given. No failure on the part
of the Creditor to exercise, and no delay in exercising, any right under this
Guarantee shall operate as a waiver of such right. No single or partial exercise
of any such right shall preclude any other or further exercise of such right or
the exercise of any other right.
6.10 RECEIPT OF COPY
The Guarantor acknowledges receipt of an executed copy of this
Guarantee.
TO WITNESS this Guarantee, the Guarantor has caused it to be
duly signed and sealed.
By:
-------------------------------
- name and title of signatory
(seal)
By:
-------------------------------
- name and title of signatory
<PAGE> 16
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<PAGE> 1
Exhibit 10.4
INDEMNITY AGREEMENT
INDEMNITY AGREEMENT ("Indemnity Agreement"), dated this ___ day of ____,
_____, between First Union Real Estate Equity and Mortgage Investments, an Ohio
business trust having its principal place of business at 55 Public Square, Ste.
1900, Cleveland, OH 44113 ("First Union"), and Imperial Parking Corporation, a
Delaware corporation having its principal place of business at 601 West Cordova
Street, Suite 300, Vancouver, BC Canada V6B 1G1 ("Impark").
WITNESSETH:
WHEREAS, First Union desires to distribute all of the outstanding common
stock of Impark to First Union shareholders pursuant to a Memorandum of
Understanding dated _________________;
WHEREAS, Impark desires that First Union distribute all of the shares of
Impark Common Stock that First Union holds to the First Union shareholders; and
WHEREAS, the Boards of Directors of First Union and Impark have adopted a
resolution approving this Indemnity Agreement;
NOW THEREFORE, in consideration of the foregoing premises and the
undertakings herein contained and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
STATEMENT OF FACTS
1.1 Oracle Litigation. Newcourt Financial Ltd., as the assignee of Oracle
Corporation Canada Inc., has brought suit against First Union Management, Inc.,
an affiliate of First Union ("FUMI"), and Imperial Parking Limited, a
subsidiary of Impark ("Impark Limited"), in Ontario Superior Court. The suit
alleges that the plaintiff is owed $825,000 (USD) plus interest and costs
pursuant to a payment plan agreement among Oracle Corporation Canada Inc., FUMI
and Impark Limited. This matter shall be referred to herein as the "Oracle
Litigation".
<PAGE> 2
1.2 VenTek Bond I. Reference is made to Contract A950 (97031) between
VenTek International, Inc., a California corporation and subsidiary of FUMI
("VenTek"), and the Santa Clara County Transit District. In connection with that
contract, VenTek was required to furnish a Performance/Payment/Maintenance Bond
for Public Works in favor of Santa Clara County Transit District, in the sum of
$5,316,483.00 (USD). The National Fire Insurance Company of Hartford is Surety
for the bond, dated February 13, 1998. At the time the bond was executed, VenTek
was a subsidiary of Imperial Parking (U.S.), Inc., a predecessor of Impark
("Impark US"). This matter shall be referred to as "VenTek Bond I" in this
Indemnification Agreement.
1.3 VenTek Bond II. Reference is made to Ticket Vending Equipment Contract
C-60379JPB between VenTek and the Peninsula Corridor Joint Powers Board. In
connection with that contract, VenTek was required to furnish a
Performance\Payment\Maintenance\ Guarantee Bond in favor of the Peninsula
Corridor Joint Powers Board, in the sum of $6,169,265 (USD). The National Fire
Insurance Company of Hartford is Surety for the bond, dated February 25, 1998.
At the time the bond was executed, VenTek was a subsidiary of Impark U.S. This
matter shall be referred to as "VenTek Bond II" in this Indemnification
Agreement.
ARTICLE II
INDEMNIFICATION
2.1 Indemnification by First Union. First Union shall indemnify Impark
and each of its affiliates, directors, officers, employees, consultants and
agents in respect of, and hold each such party harmless against, any and all
debts, obligations and other liabilities (whether absolute, accrued,
contingent, fixed or otherwise, or whether known or unknown, or due or to
become due or otherwise), monetary damages, fines, fees, penalties, interest
obligations, deficiencies, losses and expenses (including without limitation
amounts paid in settlement, interest, court costs, costs of investigators,
reasonable fees and expenses of attorneys, accountants, financial advisors and
other experts, and other expenses of litigation whether or not resulting in any
liability) ("Damages") incurred or suffered by Impark or each such party
resulting from, relating to or constituting:
(a) the Oracle Litigation, but only to the extent that Damages resulting
from, relating to or constituting the Oracle Litigation exceed $605,000;
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<PAGE> 3
(b) VenTek Bond I; and
(c) VenTek Bond II.
2.2 Indemnification Claims.
(a) A party entitled, or seeking to assert rights, to indemnification
under this Article II (an "Indemnified Party") shall give written notification
to the party from whom indemnification is sought (an "Indemnifying Party") of
the commencement of any suit or proceeding relating to a third party claim for
which indemnification pursuant to this Article II may be sought. Such
notification shall be given within 20 business days after receipt by the
Indemnified Party of notice of such suit or proceeding, and shall describe in
reasonable detail (to the extent known by the Indemnified Party) the facts
constituting the basis for such suit or proceeding and the amount of the
claimed damages; provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party of any liability or obligation hereunder except to the
extent of any damage or liability caused by or arising out of such failure.
Promptly, and in any event within 20 days after delivery of such notification,
the Indemnifying Party may, upon written notice thereof to the Indemnified
Party, assume control of the defense of such suit or proceeding with counsel
reasonably satisfactory to the Indemnified Party; provided that (i) the
Indemnifying Party may only assume control of such defense if it acknowledges
in writing to the Indemnified Party that any Damages that may be assessed
against the Indemnified Party in connection with such suit or proceeding shall
be indemnified pursuant to this Article II and (ii) the Indemnifying Party may
not assume control of the defense of a suit or proceeding involving criminal
liability or in which equitable relief is sought against the Indemnified Party.
If the Indemnifying Party does not so assume control of such defense, the
Indemnified Party shall control such defense. The party not controlling such
defense (the "Non-controlling Party") may participate therein at its own
expense; provided that if the Indemnifying Party assumes control of such
defense and the Indemnified Party reasonably concludes that the Indemnifying
Party and the Indemnified Party have conflicting interests or different
defenses available with respect to such suit or proceeding, the reasonable fees
and expenses of counsel to the Indemnified Party shall be considered "Damages"
for purposes of this Agreement. The party controlling such defense (the
"Controlling Party") shall keep the Non-controlling Party advised of the status
of such suit or proceeding and the defense thereof and shall consider in good
faith recommendations made by the Non-controlling Party with respect thereto.
The Non-controlling Party shall furnish the Controlling Party with such
information as it may have with respect to such suit or proceeding (including
copies of any summons, complaint
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<PAGE> 4
or other pleading which may have been served on such party and any written
claim, demand, invoice, billing or other document evidencing or asserting the
same) and shall otherwise cooperate with and assist the Controlling Party in
the defense of such suit or proceeding. The Indemnifying Party shall not agree
to any settlement of, or the entry of any judgment arising from, any such suit
or proceeding without the prior written consent of the Indemnified Party, which
shall not be unreasonably withheld or delayed. The Indemnified Party shall not
agree to any settlement of, or the entry of any judgment arising from, any such
suit or proceeding without the prior written consent of the Indemnifying Party,
which shall not be unreasonably withheld or delayed.
(b) Impark hereby acknowledges that First Union is the Controlling Party
with respect to the Oracle Litigation, VenTek Bond I and VenTek Bond II. First
Union acknowledges that any damages, fines, costs or other liabilities that may
be assessed against Impark in connection with the Oracle Litigation, VenTek Bond
I and VenTek Bond II constitute Damages for which Impark shall be indemnified
pursuant to this Article II.
(c) In order to seek indemnification under this Article II other than as
provided in Section 2.2(a) above, an Indemnified Party shall give written
notification (a "Claim Notice") to the Indemnifying Party which contains (i) a
description and the amount (the "Claimed Amount") of any Damages incurred or
reasonably expected to be incurred by the Indemnified Party, (ii) a statement
that the Indemnified Party is entitled to indemnification under this Article II
for such Damages and a reasonable explanation of the basis therefor, and (iii)
a demand for payment (in the manner provided in paragraph (d) below) in the
amount of such Damages.
(d) Within 20 days after delivery of a Claim Notice, the Indemnifying
Party shall deliver to the Indemnified Party a written response (the
"Response") in which the Indemnifying Party shall: (i) agree that the
Indemnified Party is entitled to receive all of the Claimed Amount (in which
case the Response shall be accompanied by a payment by the Indemnifying Party
to the Indemnified Party of the Claimed Amount, by check or by wire transfer);
(ii) agree that the Indemnified Party is entitled to receive part, but not all,
of the Claimed Amount (the "Agreed Amount") (in which case the Response shall
be accompanied by a payment by the Indemnifying Party to the Indemnified Party
of the Agreed Amount, by check or by wire transfer) or (iii) dispute that the
Indemnified Party is entitled to receive any of the Claimed Amount. If the
Indemnifying Party in the Response disputes its liability for all or part of
the Claimed Amount, the Indemnifying Party and the Indemnified Party shall
follow the procedures set forth in Section 2.2(e) for the resolution of such
dispute (a "Dispute").
-4-
<PAGE> 5
(e) During the 60-day period following the delivery of a Response that
reflects a Dispute, the Indemnifying Party and the Indemnified Party shall use
good faith efforts to resolve the Dispute.
(f) Notwithstanding the other provisions of this Section 2.2, if a third
party asserts (other than by means of a lawsuit) that an Indemnified Party is
liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which such Indemnified Party may be
entitled to indemnification pursuant to this Article II, and such Indemnified
Party reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Party shall be entitled to satisfy such
obligation, without prior notice to or consent from the Indemnifying Party,
(ii) such Indemnified Party may subsequently make a claim for indemnification
in accordance with the provisions of this Article II, and (iii) such
Indemnified Party shall be reimbursed, in accordance with the provisions of
this Article II, for any such Damages for which it is entitled to
indemnification pursuant to this Article II (subject to the right of the
Indemnifying Party to dispute the Indemnified Party's entitlement to
indemnification, or the amount for which it is entitled to indemnification,
under the terms of this Article II).
2.3 Withdrawal of Claims. If the legal proceeding or written claim with
respect to which a claim notice has been given is definitively withdrawn or
resolved in favor of the Indemnified Party, the Indemnified Party shall
promptly so notify the Indemnifying Party.
ARTICLE III
TERMINATION
3.1 Termination of Agreement. The Parties may terminate this Agreement by
mutual written consent.
3.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 3.1, all obligations of the Parties hereunder shall
terminate without any further liability of any Party to any other Party (except
for any liability of any Party for breaches of this Agreement).
-5-
<PAGE> 6
ARTICLE IV
MISCELLANEOUS
4.1 Press Releases and Announcements. No Party shall issue any press
release or public announcement relating to the subject matter of this Indemnity
Agreement including with respect to the settlement of any claim without the
prior written approval of the other Parties; provided, however, that any Party
may make any public disclosure it believes in good faith is required by
applicable law, regulation or stock market rule (in which case the disclosing
Party shall use reasonable efforts to advise the other Parties and provide them
with a copy of the proposed disclosure prior to making the disclosure). The
Parties hereby consent to the filing of this Indemnity Agreement with the
United States Securities and Exchange Commission in connection with the Impark
Form 10 filing.
4.2 No Third Party Beneficiaries. This Indemnity Agreement shall not
confer any rights or remedies upon any person other than the Parties and the
affiliates of Impark that are entitled to indemnification hereunder and their
respective successors and permitted assigns.
4.3 Entire Agreement. This Indemnity Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements or representations by or among
the Parties, written or oral, with respect to the subject matter hereof.
4.4 Succession and Assignment. This Indemnity Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval, not to be unreasonably withheld or delayed, of the other Party.
4.5 Counterparts and Facsimile Signature. This Indemnity Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but both of which together shall constitute one and the same instrument. This
Indemnity Agreement may be executed by facsimile signature.
4.6 Headings. The section headings contained in this Indemnity Agreement
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Indemnity Agreement.
-6-
<PAGE> 7
4.7 Notices. All notices, requests, demands and other communications under
this Indemnity Agreement shall be in writing and shall be deemed to have been
duly given (i) on the date of service if served personally on the party to whom
notice is given, (ii) on the day of transmission if sent via facsimile
transmission to the facsimile number given below, provided telephonic
confirmation of receipt is obtained promptly after completion of transmission,
(iii) on the business day after delivery to an overnight courier service or the
Express mail service maintained by the United States Postal Service, provided
receipt of delivery has been confirmed, or (iv) on the fifth day after mailing,
if mailed by registered or certified mail, postage prepaid, properly addressed
and return-receipt requested, in all cases to the parties as follows:
First Union Real Estate Equity and
Mortgage Investments
551 Fifth Avenue
New York, NY 10176-1499
Attention: Chief Executive Officer
Telephone: (212) 905-1100
Telephone: (212) 905-1102
or
Imperial Parking Corporation
501 West Corodova Street, Suite 300
Vancouver, BC Canada V6B1G1
Attention: Chief Executive Officer
Telephone: (604) 331-7206
Telephone: (212) 331-7172
4.8 Governing Law. This Indemnity Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of
the State of New York or any other jurisdiction) that would cause the
application of laws of any jurisdictions other than those of the State of New
York.
4.9 Amendments and Waivers. No amendment of any provision of this
Indemnity Agreement shall be valid unless the same shall be in writing and
signed by both of the Parties. No waiver of any right or remedy hereunder
shall be valid unless the same shall be in writing and signed by the Party
giving such waiver. No waiver by any Party with respect to any default,
-7-
<PAGE> 8
misrepresentation or breach of warranty or covenant hereunder shall be deemed
to extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
4.10 Severability. Any term or provision of this Indemnity Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to limit
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified.
4.11 Construction.
(a) The language used in this Agreement shall be deemed to be the language
chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party.
(b) Any reference to any federal, state, local or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
-8-
<PAGE> 9
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
FIRST UNION REAL ESTATE EQUITY & MORTGAGE
INVESTMENTS
By:____________________________________
Name:__________________________________
Title:_________________________________
IMPERIAL PARKING CORPORATION
By:____________________________________
Name:__________________________________
Title:_________________________________
-9-
<PAGE> 1
Exhibit 10.8
MEMO
TO: Charles Huntzinger
FROM: Bruce Newsome
DATE: August 19, 1999
RE: Annual Bonus
- --------------------------------------------------------------------------------
Charles, as per our discussion the following is the agreed bonus structure for
1999 for myself.
Bonus to be approximately 25% of salary or up to $50,000.
KEY AREAS FOR INCENTIVE PURPOSES
<TABLE>
<S> <C> <C>
1. Overall EBITDA of Imperial Group 50% $25,000
2. Y2K Compliance both non-FIS and FIS 15% 7,500
3. Completion of Business Plan Corporate Strategy and initial
acceptance by FUR and Beth Stewart 10% 5,000
6. Subjective Bonus - Charles Huntzinger to determine amount based on merit.
Merit will be based on such areas as effort, acquisition successes,
restructuring of balance sheet with FUR, tax compliance, judgmental
skills, bank refinancing, FUR reporting-timeliness and accuracy, cost
savings, company exceeding budget and other matters 25% 12,500
-------
TOTAL $50,000
=======
</TABLE>
Page 1
<PAGE> 2
DEFINITIONS FOR BONUS PAYMENT
1. EBITDA BONUS
FACTS:
<TABLE>
<S> <C> <C>
1998 - EBITDA $6,112,000
==========
1999 - Business Plan EBITDA $7,091,000
==========
1999 - Budget $8,035 $8,035,000
==========
Add Cash Savings
Less Robbins - April to December (net) (202)
Less Inner-Tec - July to December (net) (347)
Less VenTek results for year (935)
-----
ADJUSTED BUDGET $6,551
======
Target EBITDA = Adjusted Budget $6,551,000
==========
SUGGESTED BONUS:
First 25% if 90% of target EBITDA achieved = $5,895 $6,250
Additional 25% when 95% of target EBITDA achieved = $6,223 6,250
Final 50% when 100% of target EBITDA achieved = $6,551 12,500
------
TOTAL EBITDA BONUS: $25,000
=======
</TABLE>
eg.
1. If EBITDA = $5,500
Bonus = $5,500 = 84% < 90% = 0 Bonus
------
6,551
2. If EBITDA = $6,000
Bonus = $6,000 = 91.5% = > 90% = 25% bonus = $6,250
------
6,551
3. If EBITDA = $6,400
Bonus = $6,400 = 97.7% > 95% = 50% bonus = $12,500
------
6,551
4. If EBITDA > $6,551 = 100% bonus = $25,000
Note: Payment in February once KPMG audit is finalized.
Page 2
<PAGE> 3
January 16, 1998
Bruce Newsome
5741 - 125A Street
Surrey, British Columbia
V3W 0J3
Dear Bruce:
This letter is to provide you with written confirmation of the terms of your
employment with Imperial Parking Limited (the "Company"). In the busy, chaotic
and uncertain times that the Company has gone through over the years you and I
have often talked about formalizing your arrangement with the Company in
writing.
I am hopeful that receiving this written summary of the deal that you have
always had will give you the comfort necessary to stay with the Company for
years to come.
The terms of the agreement between Bruce Newsome (the "CFO") and the Company are
as follows:
1. The term ("Term") of your employment with the Company means the period
from the date of this Agreement until December 31, 2001 and thereafter,
this Agreement will be automatically renewed on the same terms and
conditions other than terms relating to renewal, for further
consecutive 12 month periods unless the Company provides the CFO with a
notice of non-renewal at least 60 days prior to the expiry of the
immediately preceding 12 month renewal period. If a notice of
non-renewal is issued by the Company, the Company will deliver to the
CFO a certified cheque payable to the CFO for an amount equal to the
total salary of the CFO for the immediately preceding 24 month period
and this cheque will be delivered to the CFO on the effective date of
termination.
It is understood that if the Company wishes to terminate the services
of the CFO after 2001 the notice provisions and payment outlined above
will apply. If the CFO terminates this agreement pursuant to section
12(3) the Company will have no such payment obligation.
2. The Company hereby appoints the CFO as Chief Financial Officer and Vice
President of the Company responsible for ensuring the performance of
the services described herein, all upon the terms and conditions
contained herein, and the CFO hereby accepts such appointment and
agrees to cause such services to be performed in accordance with the
terms and conditions contained herein.
3. The CFO agrees to devote substantially all of his time, energy and
skill during regular business hours to provide such financial
management and financial administrative services as may be required to
operate and manage the Business and to issue his best efforts and
reasonable care, skill and judgment in carrying out such duties.
<PAGE> 4
4. The remuneration of the CFO payable under this Agreement will be as
follows:
(a) for the first year of the Term you will continue to receive
your current annual salary of $198,500 payable in biweekly
instalments;
(b) on each anniversary of the Term, the annual salary will be
increased by an amount determined by an annual review
procedure carried out by the Compensation Committee (and
failing agreement of the Compensation Committee, as determined
by the Board of Directors) plus the percent of the annual
salary for the immediately proceeding 12 month period equal to
the percent increase, if any, in the consumer price index
("CPI") with respect to Vancouver, British Columbia, and if no
such CPI statistic is available with respect to Vancouver,
British Columbia, then such CPI statistic as is available in
respect of the immediately preceding 12 month period as set
out in the official statistics provided by the Canadian
Government; and
(c) in addition to the annual salary, the CFO will receive a cash
bonus ("Cash Bonus") as established by the Compensation
Committee of the Company within 120 days of the commencement
of each year and the amount of the such Cash Bonus, will be
established following consideration of the financial
performance of the Company.
5.
(1) The CFO will be reimbursed for all expenses actually and
properly incurred by him in connection with his duties
hereunder.
(2) The Company will provide the CFO with:
(a) all medical and health benefits offered to senior
management employees of the Company as supplemented
by any other benefits approved by the Board;
(b) reimbursement for all motor vehicle expenses and a
motor vehicle lease or purchase allowance of
$1,000.00 per month;
(c) disability insurance coverage reasonably acceptable
to the Company and the CFO; and
(d) reimbursement for all club, membership and
association fees and dues in The Point Grey Golf Club
and all expenses incurred by the CFO at such club for
for business purposes. All personal expenses will be
paid by the CFO. The decision as to whether the
Company will pay for any additional club, membership
and association fees and dues will be made by the
Compensation Committee.
6. In each calendar year the CFO will be entitled to a reasonable period
of vacation, but such period will not exceed 5 weeks in any one
calendar year provided that if less than 5
2
<PAGE> 5
weeks vacation is taken by the CFO in any year the balance of vacation
time up to 5 weeks may, with the consent of the Compensation Committee,
be taken in whole or in part in any later year or years in addition to
the annual 5 weeks.
7.
(1) Subject to the overall control of the Board of Directors and
the President of the Company the CFO who will have full
authority and duty to manage all financial information in
respect of the Company and report to the President in respect
of all of the financial affairs of the Company and do all
things as CFO as directed by the President.
(2) The CFO will obey and carry out all lawful order given to him
by the President or the Board of Directors of the Company,
subject to the terms of this Agreement, and comply with the
Articles of the Company and all regulatory requirements
affecting the Business.
(3) The CFO will keep the Company informed concerning the
financial operations of the Business.
8. In the exercise of any of his responsibilities or authority hereunder,
the CFO will be obligated to act in good faith, and so long as the CFO
acts in good faith, he will have no liability or obligation to the
Company for any act or omission resulting from carrying out such
obligation, irrespective of whether or not such act or omission may
have been reasonably prudent or in good business judgment.
9.
(1) The Company hereby agrees to indemnify and hold the CFO
harmless, from and against any and all claims, damages, costs,
suits, actions and expenses (including legal fees), arising
directly or indirectly, in whole or in part, out of any matter
related to the Business, or any action taken by the CFO within
the scope of his duties or authority hereunder, excluding only
such of the foregoing as arise from negligent acts or bad
faith of the CFO and this indemnity will survive termination
of this Agreement.
(2) The CFO hereby agrees to indemnify and hold the Company
harmless, from and against any and all claims, damages, costs,
suits or actions growing out of any breach, violation or
non-performance of any covenant, condition or agreement in
this Agreement set forth and contained on the part of the CFO
to be fulfilled, kept, observed or performed and this
indemnity will survive the termination of this Agreement.
10. For the purpose of this Agreement:
(1) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally
accepted accounting principles; and
(2) all computations herein provided for will be made in
accordance with generally accepted accounting principles to
the Business.
3
<PAGE> 6
11. At all times during the Term the CFO will:
(1) ensure that accurate books of account and other records
(separate from any other books of account and records the CFO
may be maintaining) in accordance with the provisions of
Section 10 above, in which will be entered all matters
relating to the Business, including all income, expenditures,
assets and liabilities;
(2) keep all books of account and other records in connection with
the Business at the place or places approved by the Board of
Directors in accordance with the provisions of Section 10
above; and
(3) permit any of the directors of the Company and any person
designated by any of them, at all reasonable times to inspect,
examine, copy or audit the books of account and other records
described in (a) and (b) above.
12.
(1) This Agreement will be in force during the Term.
(2) The CFO's engagement to perform services hereunder will
terminate if the CFO dies and may be terminated by the Company
by written notice to the CFO;
(a) if the CFO is found guilty by a court in respect of
any offence involving fraud or dishonesty on his
part;
(b) if the CFO negligently or improperly performs the
duties of CFO, where such negligent or improper
performance has a material adverse effect on the
Business;
(c) if the CFO is determined by a court of competent
jurisdiction to have breached his obligations under
any non-competition agreement relating to the Company
and such decision has not been appealed by the CFO
and the time for filing an appeal has expired; or
(d) if the CFO be incapacitated by reason of mental or
physical disability from carrying on his duties under
this Agreement for a longer period than 12
consecutive months or if he shall be incapacitated at
different times for more than 6 consecutive months in
one calendar year.
(3) The CFO's engagement hereunder may be terminated upon 90 days
notice of termination by the CFO.
13. Any notice relating to this Agreement or to be given by any party to
any party hereunder, will be in writing and will be well and
sufficiently given if personally delivered as follows:
4
<PAGE> 7
to the Company:
Confidential to:
Imperial Parking Limited
300 - 601 West Cordova Street
Vancouver, British Columbia
V6B 1G1
Attention: President
to the CFO:
Confidential to:
Bruce Newsome
5741 - 125A Street
Surrey, British Columbia
V3W 0J3
This Agreement may not be assigned or transferred by either party hereto except
with the prior written consent of the other party.
If you agree that this sets out the agreement between you and the Company please
sign and return the enclosed duplicate copy of this letter.
Yours truly,
IMPERIAL PARKING LIMITED
/S/ PAUL T. CLOUGH
- ----------------------------------
PER: PAUL T. CLOUGH
Chairman, President and CEO
Accepted and agreed to
/s/ Bruce Newsome
- ----------------------------------
Bruce Newsome
5
<PAGE> 1
Exhibit 10.9
DEBENTURE
IMPERIAL PARKING LIMITED
incorporated under the laws of
the Province of Nova Scotia
US$20,000,000 DUE: ON DEMAND
THIS DEBENTURE is issued March , 2000 by Imperial Parking
Limited and its subsidiary 3006712 Nova Scotia Company (collectively, the
"CORPORATION"), whose principal office or place of business is located at
Suite 300, 601 West Cordova Street, Vancouver, British Columbia V6B 1G1, to
First Union Real Estate Equity and Mortgage Investments (the "CREDITOR") of
551 Fifth Avenue, Suite 1416, New York, New York 10176 U.S.A. 07920-1002.
For good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the Corporation covenants,
acknowledges, represents and warrants as follows:
1. INTERPRETATION
1.01 DEFINITIONS
Each word and phrase with initial capitals used in this
Debenture has the meaning assigned to it in Schedule A. Words and phrases
defined in the PPSA and used without initial capitals in this Debenture
(including in Schedule A) have the meanings assigned to them in the PPSA, unless
the context otherwise requires.
1.02 STATUTES, HEADINGS, NUMBER AND GENDER
A reference in this Debenture to a statute refers to that
statute as it may be amended, and to any restated or successor legislation of
comparable effect. The Article and Section headings in this Debenture are
included solely for convenience, are not intended to be full or accurate
descriptions and shall not be considered part of this Debenture. In this
Debenture, words in the singular include the plural and vice-versa and words in
one gender include all genders.
1.03 GENERALLY ACCEPTED ACCOUNTING TERMS
Where the Canadian Institute of Chartered Accountants includes
a recommendation in its Handbook concerning the treatment of any accounting
matter, such recommendation shall be regarded as the only generally accepted
accounting principle applicable
<PAGE> 2
-2-
to the circumstances that it covers and references herein to generally accepted
accounting principles shall be interpreted accordingly.
2. PROMISE TO PAY
The Corporation hereby acknowledges itself indebted and
promises to pay to or to the order of the Creditor, ON DEMAND, or on such
earlier date as the principal moneys hereby secured may become payable in
accordance with the terms hereof, the principal sum of $20,000,000 at the office
of the Creditor in the City of New York, or at such other place as the Creditor
may designate from time to time by notice to the Corporation, and shall pay
interest thereon at such location at the rate of 7.5 per cent per annum
calculated monthly not in advance both before and after maturity, default or
judgment together with interest on overdue interest at the same rate. Such
interest shall be payable monthly on the last Business Day of each month.
3. SECURITY
3.01 FIXED AND FLOATING CHARGE
As general and continuing security for the due payment and
performance of the Obligations, and subject to the exception as to leaseholds in
Section 3.09, the Corporation:
(a) grants, assigns, conveys, hypothecates, mortgages, pledges and
charges as and by way of a fixed and specific mortgage, pledge
and charge to and in favour of the Creditor
(i) all real or immovable property now or hereafter owned
or acquired by the Corporation including, but not
limited to, the lands and premises described in
Schedule B, together with all buildings, erections
and fixtures now or hereafter constructed, erected or
installed thereon;
(ii) all leasehold property now or hereafter leased by the
Corporation together with all buildings, erections
and fixtures now or hereafter constructed, erected or
installed thereon; and
(iii) all Proceeds and Replacements arising in respect of
any or all of the foregoing.
3.02 HABENDUM
The Creditor shall have and hold the Mortgaged Property
forever but subject to the provisions of this Debenture.
<PAGE> 3
-3-
3.03 ATTACHMENT
The Corporation acknowledges that value has been given. The
parties have not agreed to postpone the time for attachment. The Charges are
intended to attach, as to all of the Mortgaged Property in which the Corporation
has an interest, when the Corporation executes this Debenture, and, as to all
Mortgaged Property in which the Corporation acquires an interest after the
execution of this Debenture, when the Corporation acquires such interest.
3.04 SALE OR ENCUMBRANCE OF MORTGAGED PROPERTY
The Corporation shall not sell, consign, lease, move, destroy
or otherwise dispose of, impair or abandon any Mortgaged Property and the
Corporation shall not create, assume or have outstanding, other than to the
Creditor, any Encumbrance on the Mortgaged Property other than Permitted
Encumbrances or Vendor Purchase Money Encumbrances created in accordance with
the provisions hereof. All rights of the Corporation as vendor, consignor or
lessor and all resulting Accounts shall be subject to the Charges.
3.05 PROCEEDS HELD IN TRUST
The Corporation shall receive and hold all Proceeds in trust,
separate and apart from other moneys, instruments or property, and shall endorse
as necessary and pay over or deliver them to the Creditor upon demand.
3.06 ACCOUNT DEBTOR
The Creditor may require an account debtor to make payment to
the Creditor and the Creditor may hold all amounts acquired from any account
debtors and any Proceeds as part of the Mortgaged Property.
3.07 COLLECTION OF ACCOUNTS
The Corporation shall take all reasonable steps to collect all
Accounts.
3.08 LEASES
The last day of the term of any lease, oral or written, or any
Agreement therefor, now held or hereafter acquired by the Corporation shall be
exempted from the Charges but the Corporation shall stand possessed of such one
day remaining upon trust to assign and dispose of the same as the Creditor
directs.
3.09 AGREEMENTS THAT CANNOT BE ASSIGNED
If any Agreement or lease contains a provision which provides
that it may not be assigned, sub-leased, charged or made the subject of any
Encumbrance without the consent of some Person other than the Corporation, the
application of the Charges to it shall be conditional
<PAGE> 4
-4-
upon such consent having been obtained. The Corporation shall use reasonable
efforts to obtain such consent in a timely manner.
4. COVENANTS OF CORPORATION
The covenants of the Corporation set forth in the Guarantee
are deemed to be included herein mutatis mutandis. In addition, the Corporation
further covenants:
4.01 ENCUMBRANCES
Except for Encumbrances in favour of the Creditor, any
Permitted Encumbrances and any Vendor Purchase Money Encumbrance, the
Corporation shall keep the Mortgaged Property free at all times from
Encumbrances and shall defend the title to the Mortgaged Property against all
Persons. The Corporation shall not permit any Mortgaged Property to become an
accession to any property other than other Mortgaged Property or to become a
fixture unless the Charges rank prior to the interests of all Persons in the
realty. The foregoing shall not in any way prevent the Creditor from, at any
time, contesting the validity, enforceability or priority of any Encumbrance. No
Vendor Purchase Money Encumbrance or other purchase money security interest
shall be entitled to priority over the Charges except to the extent that it is
entitled to such priority as a purchase money security interest under the PPSA.
4.02 NOTICE OF CHANGE OF ADDRESS, ETC.
The Corporation shall notify the Creditor in writing:
(a) forthwith of any significant loss of or damage to any
Mortgaged Property, of the failure of any account debtor in
the payment or performance of obligations due to the
Corporation in respect of the Mortgaged Property or of any
proceedings before any court, administrative board or other
tribunal which could materially affect the Corporation or any
Mortgaged Property; and
(b) at least 20 Business Days prior to any change of name of the
Corporation, any transfer of the Corporation's interest in any
Mortgaged Property not expressly permitted hereunder or any
change in the location of any Mortgaged Property.
4.03 COSTS
The Corporation shall forthwith on demand reimburse the
Creditor for all interest, commissions, costs of realization and other costs and
expenses (including legal fees and expenses on a solicitor and his own client
scale) incurred by the Creditor or any Receiver in connection with the
preparation, issuance, protection, enforcement of and advice with respect to
this Debenture and the perfection, protection, enforcement of and advice with
respect to the Charges, including, without limitation, those arising in
connection with the realization, disposition of, retention, protection or
collection of any Mortgaged Property and the protection or enforcement of the
rights, remedies and powers of the Creditor or any Receiver and those
<PAGE> 5
-5-
incurred for perpetual registration of any financing statement registered in
connection with the Charges.
4.04 REIMBURSEMENTS AS OBLIGATIONS
All amounts for which the Corporation is required hereunder to
reimburse the Creditor or any Receiver shall, from the date of disbursement
until the date the Creditor or such Receiver receives reimbursement, be deemed
advanced to the Corporation by the Creditor, shall be deemed to be Obligations
and shall bear interest at the highest rate per annum charged by the Creditor on
any of the other Obligations.
4.05 GENERAL INDEMNITY
The Corporation will indemnify the Creditor and save it fully
harmless of and from all loss, cost, damage, expense, claims and liability which
it may suffer or incur in connection with (i) the exercise by the Creditor of
its remedies and powers hereunder, (ii) any breach of the representations or
warranties contained herein, or (iii) any failure by the Corporation to perform
any of its covenants or obligations under this Debenture.
4.06 REGISTRATION
The Corporation shall forthwith register, file and record this
Debenture or notice thereof, at all proper offices where, in the opinion of
counsel to the Creditor, such registration, filing or recording may be necessary
or advantageous to secure, perfect or protect the Charges and shall hereafter
maintain all such registrations in full force and effect to maintain and protect
the Charges.
4.07 UPDATED LISTS OF MORTGAGED PROPERTY
As soon as the Corporation acquires any interest in any
Mortgaged Property, a copy of the instrument of conveyance or lease or other
written description describing that item of Mortgaged Property shall be deemed
to have been incorporated into one of Schedules B or C, the choice depending
upon the appropriate description of the acquired Mortgaged Property. Upon
request at any time, the Corporation will deliver to the Creditor updated
versions of such Schedules, each showing additions and deletions to the
Mortgaged Property since the prior version. Each such version shall be deemed to
be part of this Debenture as of its preparation date.
5. REMEDIES ON DEFAULT
Upon the Default of the Corporation, the Creditor shall have,
in addition to any other rights, remedies and powers which it may have at law,
in equity or by statute, the following rights, remedies and powers:
5.01 RECEIVER
<PAGE> 6
-6-
The Creditor may appoint by instrument in writing one or more
Receivers of any Mortgaged Property. Any such Receiver shall have the rights and
powers set out in Sections 5.02 through 5.06. In exercising such rights and
powers, any Receiver shall act as and for all purposes shall be deemed to be the
agent of the Corporation and the Creditor shall not be responsible for any act
or default of any Receiver. The Creditor may remove any Receiver and appoint
another from time to time. An officer or employee of the Creditor may be
appointed as a Receiver. No Receiver appointed by the Creditor need be appointed
by, nor need its appointment be ratified by, or its actions in any way
supervised by, a Court.
5.02 POWER OF ENTRY
The Receiver may forthwith enter into possession of any
Mortgaged Property, and use whatever means the Receiver considers advisable to
do so.
5.03 POWER OF SALE
Any Receiver may sell, lease, consign or otherwise dispose of
any Mortgaged Property by public auction, private tender or private contract
with or without notice, advertising or any other formality, all of which are
hereby waived by the Corporation. Any Receiver may, at its discretion, establish
the terms of such disposition, including, without limitation, terms and
conditions as to credit, upset, reserve bid or price. All payments made pursuant
to such dispositions shall be credited against the Obligations only as they are
actually received. Any Receiver may buy in, rescind or vary any contract for the
disposition of any Mortgaged Property and may dispose of any Mortgaged Property
again without being answerable for any loss occasioned thereby. Any such
disposition may take place whether or not the Receiver has taken possession of
the Mortgaged Property.
5.04 CARRYING ON BUSINESS
Any Receiver may carry on, or concur in the carrying on of,
any of the business or undertaking of the Corporation and may, to the exclusion
of all others, including the Corporation, enter upon, occupy and use any of the
premises, buildings, plant and undertaking of or occupied or used by the
Corporation and may use any of the tools, machinery, equipment and intangibles
of the Corporation for such time and such purposes as the Receiver sees fit. No
Receiver shall be liable to the Corporation for any negligence in so doing or in
respect of any rent, charges, costs, depreciation or damages in connection with
any such action.
5.05 PAY ENCUMBRANCES
Any Receiver may pay any liability secured by any actual or
threatened Encumbrance against any Mortgaged Property. A Receiver may borrow
money for the maintenance, preservation or protection of any Mortgaged Property
or for carrying on any of the business or undertaking of the Corporation and may
grant Encumbrances in any Mortgaged Property in priority to the Charges as
security for the money so borrowed. The Corporation will forthwith on demand
reimburse the Receiver for all such payments and borrowings.
<PAGE> 7
-7-
5.06 DEALING WITH MORTGAGED PROPERTY
Any Receiver may seize, collect, realize, dispose of, enforce,
release to third parties or otherwise deal with any Mortgaged Property in such
manner, upon such terms and conditions and at such time as it deems advisable
without notice to the Corporation (except as otherwise required by any
applicable law), and may charge on its own behalf and pay to others its costs
and expenses (including legal fees and expenses on a solicitor and his own
client scale and Receivers' and accounting fees) incurred in connection with
such actions. The Corporation will forthwith upon demand reimburse the Receiver
for all such costs or expenses.
5.07 RIGHT TO HAVE COURT APPOINT A RECEIVER
The Creditor may, at any time, apply to a court of competent
jurisdiction for the appointment of a Receiver, or other official, who may have
powers the same as, greater or lesser than, or otherwise different from, those
capable of being granted to a Receiver appointed by the Creditor pursuant to
this Debenture.
5.08 CREDITOR MAY EXERCISE RIGHTS OF A RECEIVER
In lieu of, or in addition to, exercising its rights, remedies
and powers under Sections 5.01, 5.07 and 5.09, the Creditor has, and may
exercise, any of the rights and powers which are capable of being granted to a
Receiver appointed by the Creditor pursuant to this Debenture.
5.09 RETENTION OF MORTGAGED PROPERTY
The Creditor may elect to retain any Mortgaged Property in
satisfaction of the Obligations or any of them. The Creditor may designate any
part of the Obligations to be satisfied by the retention of particular Mortgaged
Property which the Creditor considers to have a net realizable value
approximating the amount of the designated part of the Obligations, in which
case only the designated part of the Obligations shall be deemed to be satisfied
by the retention of the particular Mortgaged Property.
5.10 LIMITATION OF LIABILITY
The Creditor shall not be liable or accountable for any
failure to seize, collect, realize, dispose of, enforce or otherwise deal with
any Mortgaged Property and shall not be bound to institute proceedings for any
such purposes or for the purpose of preserving any rights, remedies or powers of
the Creditor, the Corporation or any other Person in respect of any Mortgaged
Property. The Creditor shall not be liable or responsible for any loss or damage
whatever which may accrue in consequence of any such failure resulting from any
negligence of the Creditor or its officers, employees, agents, or any Receiver,
or otherwise. If any Receiver or the Creditor takes possession of any Mortgaged
Property, neither the Creditor nor any Receiver shall have any liability as a
mortgagee in possession or be accountable for anything except actual receipts.
<PAGE> 8
-8-
5.11 EXTENSIONS OF TIME
The Creditor may grant renewals, extensions of time and other
indulgences, take and give up securities, accept compositions, grant releases
and discharges, perfect or fail to perfect any securities, release any Mortgaged
Property to third parties and otherwise deal or fail to deal with the
Corporation, debtors of the Corporation, guarantors, sureties and others and
with any Mortgaged Property and other securities as the Creditor may see fit,
all without prejudice to the liability of the Corporation to the Creditor or the
Creditor's rights, remedies and powers under this Debenture.
5.12 APPLICATION OF PAYMENTS AGAINST OBLIGATIONS
Any payments received in respect of the Obligations from time
to time, any insurance monies received and any moneys realized on any Mortgaged
Property may be appropriated to such parts of the Obligations and in such order
as the Creditor sees fit, and the Creditor shall have the right to change any
appropriation at any time. Any such insurance moneys may, at the option of the
Creditor, be used to repair or replace any Mortgaged Property, be held as part
of the Mortgaged Property or be appropriated to the Obligations.
5.13 SET-OFF, COMBINATION OF ACCOUNTS AND CROSSCLAIMS
The Obligations will be paid by the Corporation without regard
to any equities between the Corporation and the Creditor or any right of
set-off, combination of accounts or cross-claim. Any indebtedness owing by the
Creditor to the Corporation may be set off or applied against, or combined with,
the Obligations by the Creditor at any time either before or after maturity,
without demand upon or notice to anyone.
5.14 DEFICIENCY
If the proceeds of the realization of any Mortgaged Property
are insufficient to repay all monetary Obligations, the Corporation shall
forthwith pay or cause to be paid to the Creditor such deficiency.
5.15 VALIDITY OF SALE
No Person dealing with the Creditor or any Receiver or with
any officer, employee, agent or solicitor of the Creditor or any Receiver shall
be concerned to inquire whether the Charges have become enforceable, whether any
right, remedies or power of the Creditor or any Receiver has become exercisable,
whether any Obligations remain outstanding or otherwise as to the propriety or
regularity of any dealing by the Creditor or any Receiver with any Mortgaged
Property or to see to the application of any money paid to the Creditor or any
Receiver, and in the absence of fraud on the part of such Person such dealings
shall be deemed, as regards such Person, to be within the rights, remedies and
powers hereby conferred and to be valid and effective accordingly.
<PAGE> 9
-9-
5.16 CREDITOR NOT OBLIGED TO PRESERVE THIRD PARTY INTERESTS
To the extent that any of the Mortgaged Property constitutes
an instrument or chattel paper (as those terms are defined in the PPSA) the
Creditor shall not be obliged to take any steps to preserve rights against prior
parties in respect of any such instrument or chattel paper.
5.17 EFFECT OF APPOINTMENT OF RECEIVER
As soon as the Creditor takes possession of any Mortgaged
Property or appoints a Receiver, all powers, functions, rights and privileges of
each of the directors and officers of the Corporation with respect to the
Mortgaged Property shall cease, unless specifically continued by the written
consent of the Creditor or the Receiver.
5.18 TIME FOR PAYMENT
If the Creditor demands payment of any Obligations which are
payable on demand or if any Obligations are otherwise due by maturity or
acceleration, it shall be deemed reasonable for the Creditor to exercise its
remedies immediately if such payment is not made, and any days of grace or any
time for payment which might otherwise be required to be afforded to the
Corporation by applicable law is hereby irrevocably waived.
5.19 RIGHTS IN ADDITION
The rights, remedies and powers conferred by this Article 5
are in addition to, and not in substitution for, any other rights, remedies or
powers the Creditor may have under this Debenture at law, in equity or by or
under the PPSA or any other statute. The Creditor may proceed by way of any
action, suit or other proceeding at law or in equity and no right, remedy or
power of the Creditor shall be exclusive of or dependent on any other. Any
right, remedy or power may be exercised separately or in combination, and at any
time.
6. GENERAL
6.01 HOLDER EXCLUSIVELY ENTITLED
The holder of this Debenture from time to time will be
regarded as exclusively entitled to the benefit of this Debenture and all
Persons may act accordingly.
6.02 NEGOTIABLE INSTRUMENT
This Debenture shall be treated as a negotiable instrument and
all Persons may act accordingly.
6.03 SECURITY IN ADDITION
<PAGE> 10
-10-
The Charges do not replace or otherwise affect any existing or
future Encumbrance held by the Creditor. Neither the taking of any action, suit
or proceedings, judicial or extra-judicial, nor the refraining from so doing,
nor any dealing with any other security for any Obligations shall release or
affect the Charges. Neither the taking of any action, suit or proceedings,
judicial or extra-judicial, pursuant to this Debenture, nor the refraining from
so doing, nor any dealing with any Mortgaged Property shall release or affect
any of the Creditor's other security for the payment or performance of the
Obligations.
6.04 NO MERGER
Neither the taking of any judgment nor the exercise of any
power of seizure or disposition shall extinguish the liability of the
Corporation to pay and perform the Obligations nor shall the acceptance of any
payment or alternate security constitute or create any novation. No covenant,
representation or warranty of the Corporation herein shall merge in any
judgment.
6.05 NOTICES
Any notice, demand or other communication (in this Section, a
"notice") from the Corporation to the Creditor shall be in writing and shall be
sufficiently given or made if:
(a) delivered in person during normal business hours on a Business
Day and left with a receptionist or other responsible employee
of the Creditor at the address set out in the first paragraph
of this Debenture;
(b) sent by prepaid first class mail; or
(c) sent by any electronic means of sending messages, including
telex or facsimile transmission, which produces a paper record
during normal business hours on a Business Day charges prepaid
and confirmed by prepaid first class mail.
The Creditor may change its address by giving notice to the
Corporation.
6.06 TIME OF THE ESSENCE
Time is of the essence of each provision this Debenture.
6.07 GOVERNING LAW
This Debenture shall be governed by, and interpreted and
enforced in accordance with, the laws in force in the State of New York. The
Corporation irrevocably submits to the jurisdiction of the courts of the State
of New York with respect to any matter arising hereunder or related hereto.
6.08 CHARGES EFFECTIVE IMMEDIATELY
<PAGE> 11
-11-
Neither the issuance nor registration of, or any filings with
respect to, this Debenture, nor any partial advances by the Creditor, shall bind
the Creditor to advance any amounts to the Corporation, but the Charges shall
take effect forthwith upon the issuance of this Debenture by the Corporation.
6.09 ENTIRE AGREEMENT
There are no representations, warranties, conditions, other
agreements or acknowledgements, whether direct or collateral, express or
implied, that form part of or affect this Debenture or any Mortgaged Property.
The execution of this Debenture has not been induced by, nor does the
Corporation rely upon or regard as material, any representations, warranties,
conditions, other agreements or acknowledgements not expressly made in this
Debenture or in the agreements and other documents to be delivered pursuant
hereto.
6.10 JOINT AND SEVERAL LIABILITY
If more than one Person issues this Debenture, their
obligations under this Debenture shall be joint and several.
6.11 PROVISIONS REASONABLE
The Corporation acknowledges that the provisions of this
Debenture and, in particular, those respecting rights, remedies and powers of
the Creditor or any Receiver against the Corporation, its business and any
Mortgaged Property upon a Default, are commercially reasonable and not
manifestly unreasonable.
6.12 INVALIDITY
If any provision of this Debenture is determined to be invalid
or unenforceable by a court of competent jurisdiction from which no further
appeal lies or is taken, that provision shall be deemed to be severed herefrom,
and the remaining provisions of this Debenture shall not be affected thereby and
shall remain valid and enforceable.
6.13 BINDING EFFECT
This Debenture shall enure to the benefit of the Creditor and
its successors and assigns and be binding on the Corporation and its successors.
6.14 DEBENTURE LOST OR STOLEN
If this Debenture is mutilated, lost, stolen or destroyed, the
Corporation shall, upon being furnished with evidence satisfactory to it of such
mutilation, loss, theft or destruction, issue and deliver a new Debenture of
like date and tenor as the one mutilated, lost, stolen or destroyed, in exchange
for, in place of and upon cancellation of the mutilated Debenture, or in lieu of
or in substitution for the lost, stolen or destroyed Debenture.
<PAGE> 12
-12-
6.15 STATUTORY WAIVERS
To the fullest extent permitted by law, the Corporation waives
all of the rights, benefits and protections given by the provisions of any
existing or future statute which imposes limitations upon the powers, rights or
remedies of a secured party or upon the methods of realization of security,
including any seize or sue or anti-deficiency statute or any similar provisions
of any other statute.
6.16 LAND REGISTRATION
(a) Covenants 1.v and 1.vi deemed to be included in a charge by
subsection 7(1) of the Land Registration Reform Act (Ontario)
are expressly excluded.
(b) Covenant 1.vii deemed to be included in a charge by subsection
7(1) of the Land Registration Reform Act (Ontario) is
expressly varied by providing that the Corporation or its
successors and assigns will, before and after default, execute
such assurances of the property herein described and do such
other acts, at the Corporation's expense, as may be reasonably
required by the Creditor.
6.17 CURRENCY
All sums of money payable under this Debenture shall be paid
in US dollars.
6.18 JUDGMENT CURRENCY
If, for the purposes of obtaining or enforcing judgment in any
court in any jurisdiction, it becomes necessary to convert into the currency of
the country giving such judgment (the "Judgment Currency") an amount due
hereunder in US dollars (the "Agreed Currency"), then the date on which the rate
of exchange for conversion is selected by that court is referred to herein as
the "Conversion Date." If there is a change in the rate of exchange between the
Judgment Currency and the Agreed Currency between the Conversion Date and the
actual receipt by the Creditor of the amount due hereunder or under such
judgment, the Corporation will, notwithstanding such judgment, pay all such
additional amounts as may be necessary to ensure that the amount received by the
Creditor in the Judgment Currency, when converted at the rate of exchange
prevailing on the date of receipt, will produce the amount due in the Agreed
Currency. The Corporation's liability hereunder constitutes a separate and
independent liability which shall not merge with any judgment or any partial
payment or enforcement of payment of sums due under this Debenture. The term
"rate of exchange," as used in this Section, includes any premiums or costs
payable in connection with the currency conversion then being effected.
6.19 AMENDMENT
This Debenture may only be amended or supplemented by a
written agreement signed by the Corporation and the Creditor.
<PAGE> 13
-13-
6.20 LANGUAGE
The Corporation and the Creditor have expressly required that
this Debenture and all documents and notices relating hereto be drafted in
English. Les parties aux presentes ont expressement exige que la presente
convention et tous les documents et avis qui y sont afferents soient rediges en
anglais.
6.21 RECEIPT OF COPY
The Corporation acknowledges receipt of a duplicate or
conformed copy of this Debenture.
TO WITNESS THIS AGREEMENT, the Corporation has caused
this Debenture to be duly signed and sealed.
IMPERIAL PARKING LIMITED
(Name)
---------------------------
(Title)
---------------------------
c/s
(Name)
---------------------------
(Title)
---------------------------
3006712 NOVA SCOTIA COMPANY
(Name)
---------------------------
(Title)
---------------------------
c/s
(Name)
---------------------------
(Title)
---------------------------
<PAGE> 14
SCHEDULE A
DEFINITIONS
"ACCOUNTS" means all accounts, and any item or part thereof, which are now owned
by or are due, owing or accruing due to the Corporation or which may hereafter
be owned by or become due, owing or accruing due to the Corporation or in which
the Corporation now or hereafter has any other interest, including, without
limitation, all debts, claims and demands of any kind whatever, claims against
the Crown and claims under insurance policies.
"AGREEMENT" means any agreement, oral or written, and any indenture, instrument
or undertaking.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a statutory or
civic holiday in Vancouver, British Columbia or New York, New York.
"CHARGES" means any and all Encumbrances granted by the Corporation to the
Creditor in this Debenture.
"CREDITOR" includes any assignee of or successor to the rights of the Creditor
hereunder and any purchaser of this Debenture from the Creditor or from any
current holder hereof.
"DEBENTURE" means this debenture and all schedules attached hereto, and all
references to "hereto," "herein," "hereof," "hereby" and "hereunder," including
similar expressions, refer to this Debenture and not to any particular section
or portion of it. References to "Article," "Section," or "Schedule" refer to the
applicable article, section or schedule of this Debenture, as the case may be.
"DEFAULT" means a failure by the Corporation to pay the principal amount of the
Debenture to the Creditor within three Business Days of a demand by the Creditor
for payment.
"ENCUMBRANCE" means any encumbrance of any kind whatever, choate or inchoate,
and includes, without limitation, a security interest, mortgage, lien, hypothec,
pledge, hypothecation, charge, trust or deemed trust, whether contractual,
statutory other otherwise arising.
"GUARANTOR" means any Person who from time to time guarantees any of the
Obligations, either in this Debenture or in any other Agreement.
<PAGE> 15
-2-
"MORTGAGED PROPERTY" means the property and undertaking of the Corporation which
are subject to the Charges and to any item or part thereof.
"OBLIGATIONS" means all, and each part or item, of the principal amount of this
Debenture, all interest due on this principal amount, all other moneys from time
to time owing pursuant to this Debenture including all interest on all amounts
due hereunder and the observance and performance by the Corporation of its
covenants and obligations pursuant to this Debenture.
"PERMITTED ENCUMBRANCE" means any Encumbrance granted by the Corporation in the
Mortgaged Property that satisfies the criteria set out in Schedule C, including,
without limitation, those encumbrances listed in Schedule C.
"PERSON" includes an individual, corporation, partnership, joint venture, trust,
unincorporated organization, the Crown or any agency or instrumentality thereof
or any other entity recognized by law.
"PPSA" means the Personal Property Security Act of the Province of Ontario.
"PROCEEDS" means all fixtures, proceeds and personal property in any form
derived directly or indirectly from any dealing with any item or part of the
Mortgaged Property, or that indemnifies or compensates for such property
destroyed or damaged, and proceeds of Proceeds whether or not of the same type,
class or kind as the original Proceeds, and any item or part thereof.
"RECEIVER" means any receiver, manager or receiver and manager for the Mortgaged
Property or the business and undertaking of the Corporation appointed by the
Creditor or by a court on application by the Creditor.
"REPLACEMENTS" means all increases, additions and accessions to, and all
substitutions for and replacements of, any item or part of the Mortgaged
Property, and any item or part thereof.
"TAXES" means all taxes, imposts, rates, levies, assessments and government fees
or dues lawfully levied, assessed or imposed in respect of any Mortgaged
Property, including, without limitation, income, sales, excise, use, goods and
services, property, business transfer and value added taxes.
"VENDOR PURCHASE MONEY ENCUMBRANCE" means an Encumbrance not in excess of the
acquisition price of property acquired by the Corporation, granted by the
Corporation to the seller of such property (but not to a party who gives value
to the Corporation to acquire such property) solely to secure its indebtedness
for the acquisition price of such property, goods and services or any extension
or renewal or replacement of such indebtedness provided that neither the
principal amount of
<PAGE> 16
-3-
such indebtedness nor the rate at which interest is accruing
thereon is increased and the Encumbrance is not extended to apply to any other
property of the Corporation or any Guarantor.
<PAGE> 17
SCHEDULE B
DESCRIPTION OF REAL OR IMMOVABLE PROPERTY
<PAGE> 18
SCHEDULE C
PERMITTED ENCUMBRANCES
1. Definition
IN THIS DEBENTURE, "Permitted Encumbrances" MEANS,
(i) in relation to Mortgaged Property described in Sections
3.01(a)(i) and (ii)
(a) the reservations or exceptions contained in the
original grants from the Crown;
(b) minor easements, rights of way of or reservations or
rights of others for sewers, water lines, gas lines,
electric lines, telegraph and telephone lines and
other similar utilities;
(c) zoning by-laws, ordinances or other restrictions as
to the use of such Mortgaged Property; and
(d) minor discrepancies in the legal description of any
real property or any adjoining real property which
would be disclosed in an up-to-date survey;
which do not in the aggregate materially detract from the value of the Mortgaged
Property affected or materially impair its use by the Corporation;
(ii) liens for Taxes not yet due or which are being contested in
good faith if, in the opinion of the Creditor, reasonable
reserves with respect thereto are maintained by the
Corporation;
(iii) construction or repair or storage liens arising in the
ordinary course of the Corporation's business which are not
overdue or which are being contested in good faith if in the
opinion of the Creditor, reasonable reserves or holdbacks with
respect thereto are maintained by the Corporation; and
(iv) statutory liens incurred or deposits made in the ordinary
course of the Corporation's business in connection with
worker's compensation, unemployment insurance and similar
legislation; and
(v) the following existing Encumbrances:
<PAGE> 19
LIST OF PERMITTED ENCUMBRANCES
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES
3006712 Nova Scotia Company
Advanced Parking Systems Ltd.
P1 Parking Systems Inc.
P1 Parking Systems, Inc.
Prairie Parking Ltd.
Impark Management Ltd.
City Collection Company Ltd.
Citation Collection Company Ltd.
Imperial Parking Ltd.
Imperial Parking, Inc.
IPC Holdings, LLC
IPC Subsidiary, Inc.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMBINED FINANCIAL STATEMENTS OF THE FUMI PARKING
BUSINESS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENT.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,394
<SECURITIES> 0
<RECEIVABLES> 4,620
<ALLOWANCES> 0
<INVENTORY> 4,285
<CURRENT-ASSETS> 11,126
<PP&E> 8,642
<DEPRECIATION> 3,658
<TOTAL-ASSETS> 65,109
<CURRENT-LIABILITIES> 44,344
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (28,601)
<TOTAL-LIABILITY-AND-EQUITY> 65,109
<SALES> 0
<TOTAL-REVENUES> 60,175
<CGS> 0
<TOTAL-COSTS> 44,939
<OTHER-EXPENSES> 15,220
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,872
<INCOME-PRETAX> (5,991)
<INCOME-TAX> 326
<INCOME-CONTINUING> (6,317)
<DISCONTINUED> (1,914)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,231)
<EPS-BASIC> 0.00
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMBINED FINANCIAL STATEMENTS OF THE FUR PARKING BUSINESS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENT.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,984
<SECURITIES> 0
<RECEIVABLES> 1,390
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,731
<PP&E> 8,836
<DEPRECIATION> 115
<TOTAL-ASSETS> 30,113
<CURRENT-LIABILITIES> 657
<BONDS> 28,061
0
0
<COMMON> 0
<OTHER-SE> 1,371
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