<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1998.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AP HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7521 06-1269403
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
800 SUPERIOR AVENUE
CLEVELAND, OHIO 44114-2601
(216)522-0700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
<TABLE>
<S> <C>
Copies of all communications to:
A. PETTER OSTBERG ADAM O. EMMERICH, ESQ.
VICE PRESIDENT WACHTELL, LIPTON, ROSEN & KATZ
AP HOLDINGS, INC. 51 WEST 52ND STREET
800 SUPERIOR AVENUE NEW YORK, NEW YORK 10019
CLEVELAND, OHIO 44114-2601 (212) 403-1000
(216) 522-0700
(NAME, ADDRESS, INCLUDING ZIP CODE AND
TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: Upon
consummation of the Exchange Offer referred to herein.
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
AMOUNT TO PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE(1) OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 1/4% New Senior Discount
Notes due 2008............... $70,000,000 58.118% $40,682,600 $12,328.07
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee.
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 17, 1998
[STANDARD PARKING LOGO] [APCOA LOGO]
OFFER TO EXCHANGE
ALL OUTSTANDING
11 1/4% SENIOR DISCOUNT NOTES DUE 2008
($70,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR
11 1/4% NEW SENIOR DISCOUNT NOTES DUE 2008
($70,000,000 PRINCIPAL AMOUNT)
OF
AP HOLDINGS, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON , 1998, UNLESS EXTENDED
AP Holdings, Inc., a Delaware corporation ("Holdings"), hereby offers (the
"Exchange Offer"), upon the terms and subject to the conditions set forth in
this Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), to exchange up to an aggregate principal amount of $70,000,000 of
its 11 1/4% New Senior Discount Notes due 2008 (the "New Notes") for an equal
principal amount of its outstanding 11 1/4% Senior Discount Notes due 2008 (the
"Notes"), in integral multiples of $1,000. The New Notes will be general
unsecured obligations of Holdings and are substantially identical (including
principal amount, interest rate, maturity and redemption rights) to the Notes
for which they may be exchanged pursuant to this offer, except that (i) the
offering and sale of the New Notes will have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and (ii) holders of
New Notes will not be entitled to certain rights of holders under a Registration
Rights Agreement of Holdings dated as of March 30, 1998 (the "Registration
Rights Agreement"). The Notes have been, and the New Notes will be, issued under
an Indenture dated as of March 30, 1998 (the "Indenture"), among Holdings and
State Street Bank & Trust Company, as trustee (the "Trustee"). See "Description
of New Notes." There will be no proceeds to Holdings from this offering;
however, pursuant to the Registration Rights Agreement, Holdings will bear
certain offering expenses.
------------------------
SEE "RISK FACTORS," COMMENCING ON PAGE 14, FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER NOTES IN THE EXCHANGE
OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998.
(cover page continued)
<PAGE> 3
Holdings will accept for exchange any and all validly tendered Notes on or
prior to 12:00 midnight, New York City time, on , 1998, unless the
Exchange Offer is extended (the "Expiration Date"). Tenders of Notes may be
withdrawn at any time prior to 12:00 midnight, New York City time, on the
Expiration Date; otherwise such tenders are irrevocable. State Street Bank &
Trust Company will act as Exchange Agent with respect to the Notes (in such
capacity, the "Exchange Agent") in connection with the Exchange Offer. The
Exchange Offer is not conditioned upon any minimum principal amount of Notes
being tendered for exchange, but is otherwise subject to certain customary
conditions.
The Notes were sold by Holdings on March 25, 1998 in transactions not
registered under the Securities Act in reliance upon the exemption provided in
Section 4(2) of the Securities Act. A portion of the Notes were subsequently
resold to qualified institutional buyers in reliance upon Rule 144A under the
Securities Act, to a limited number of institutional accredited investors in a
manner exempt from registration under the Securities Act and to persons outside
the United States in reliance on Regulation S under the Securities Act.
Accordingly, the Notes may not be reoffered, resold or otherwise transferred in
the United States unless registered under the Securities Act or unless an
applicable exemption from the registration requirements of the Securities Act is
available. The New Notes are being offered hereunder in order to satisfy certain
obligations of Holdings under the Registration Rights Agreement. See "The
Exchange Offer."
The New Notes will accrete at a rate of 11 1/4% compounded semi-annually to
an aggregate principal amount of $70,000,000 at March 15, 2003. Thereafter, the
New Notes will accrue interest at the rate of 11 1/4% per annum, payable
semi-annually on March 15 and September 15 of each year, commencing September
15, 2003. The New Notes will be redeemable at the option of Holdings, in whole
or in part, at any time on or after March 15, 2003 in cash at the redemption
prices set forth herein, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of redemption. In addition, at any time
prior to March 15, 2001, Holdings may redeem the New Notes, in whole but not in
part, at the option of Holdings, at a redemption price of 111.25% of the
accreted value (determined at the date of redemption), with the net cash
proceeds of a Public Equity Offering. See "Description of New Notes -- Optional
Redemption," and "Prospectus Summary -- Summary of Terms of New Notes."
Upon the occurrence of a Change of Control (as defined in the Indenture),
each Holder (as defined herein) of New Notes will have the right to require
Holdings to repurchase all or any part of such Holder's New Notes at an offer
price in cash equal to 101% of the Accreted Value (determined at the date of
redemption) thereof on the date of repurchase (if such date of repurchase is
prior to March 15, 2003) or 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of repurchase (if such date of repurchase is on or after March 15, 2003). See
"Description of New Notes -- Repurchase at the Option of Holders." There can be
no assurance that, in the event of a Change of Control, Holdings would have
sufficient funds to repurchase all New Notes tendered. See "Risk
Factors -- Payment Upon a Change of Control."
The New Notes will be general, unsecured obligations of Holdings, will rank
pari passu in right of payment with all existing and future senior indebtedness
of Holdings and will rank senior in right of payment to all subordinated
indebtedness of Holdings. As indebtedness of Holdings, however, the Notes will
be effectively subordinated to all indebtedness of the Company. As of December
31, 1997, on a pro forma basis, after giving effect to the Combination, the
related financings and other transactions described herein, including, without
limitation, the Note Offering and the application of the net proceeds therefrom,
the Notes would have been effectively subordinate to approximately $152.3
million of indebtedness of the Company.
Based on an interpretation by the staff of the SEC (as defined herein) set
forth in no-action letters issued to third parties, Holdings believes that New
Notes issued pursuant to the Exchange Offer in exchange for Notes may be offered
for resale, resold and otherwise transferred by any holder thereof (other than
any such holder which is an "affiliate" of Holdings within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holder's business and that
such holder does not intend to participate in the distribution of such New
Notes.
(cover page continued)
2
<PAGE> 4
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with the initial resale of such New Notes. The Letter of Transmittal
delivered with this Prospectus states that by so acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of New Notes received in exchange for Notes where
such Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. Holdings has agreed that for a period of
120 days after the consummation of the Exchange Offer, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale.
Any Holder who tenders in the Exchange Offer with the intention to
participate, or for the purpose of participating, in a distribution of the New
Notes cannot rely on the position of the staff of the SEC enunciated in Exxon
Capital Holdings Corporation (available April 13, 1989), or Morgan Stanley &
Co., Inc. (available June 5, 1991) or similar no-action letters and, in the
absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale of the New Notes. Failure to comply with such requirements in such
instance may result in such Holder incurring liability under the Securities Act
for which the Holder is not indemnified by Holdings.
Holdings does not intend to list the New Notes on any securities exchange
or to seek admission thereof to trading in the National Association of
Securities Dealers Automated Quotation System. Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ" or the "Initial Purchaser") has advised Holdings
that it intends to make a market in the New Notes; however, it is not obligated
to do so and any market-making may be discontinued at any time. As a result,
Holdings cannot determine whether an active public market will develop for the
New Notes.
ANY NOTES NOT TENDERED AND ACCEPTED IN THE EXCHANGE OFFER WILL REMAIN
OUTSTANDING. TO THE EXTENT ANY NOTES ARE TENDERED AND ACCEPTED IN THE EXCHANGE
OFFER, A HOLDER'S ABILITY TO SELL UNTENDERED NOTES COULD BE ADVERSELY AFFECTED.
FOLLOWING CONSUMMATION OF THE EXCHANGE OFFER, THE HOLDERS OF NOTES WILL CONTINUE
TO BE SUBJECT TO THE EXISTING RESTRICTIONS UPON TRANSFER THEREOF AND HOLDINGS
WILL HAVE FULFILLED ONE OF ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS
AGREEMENT. HOLDERS OF NOTES WHO DO NOT TENDER THEIR NOTES GENERALLY WILL NOT
HAVE ANY FURTHER REGISTRATION RIGHTS UNDER THE REGISTRATION RIGHTS AGREEMENT OR
OTHERWISE. SEE "THE EXCHANGE OFFER -- CONSEQUENCES OF FAILURE TO EXCHANGE."
The New Notes issued pursuant to this Exchange Offer generally will be
issued in the form of Global New Notes (as defined herein), which will be
deposited with, or on behalf of, The Depository Trust Company (the "Depository"
or "DTC") and registered in its name or in the name of Cede & Co., its nominee.
Beneficial interests in the Global New Notes representing the New Notes will be
shown on, and transfers thereof will be effected through, records maintained by
the Depository and its participants. Notwithstanding the foregoing, Notes held
in certificated form will be exchanged solely for New Notes in certificated
form. After the initial issuance of the Global New Notes, New Notes in
certificated form will be issued in exchange for the Global New Notes only on
the terms set forth in the Indenture. See "Description of New Notes --
Book-Entry, Delivery and Form."
------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY HOLDINGS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN
THE NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY OF THE NEW NOTES TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO
SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (90 DAYS AFTER COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN
THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
3
<PAGE> 5
AVAILABLE INFORMATION
Holdings has filed with the Securities and Exchange Commission (the "SEC"
or the "Commission") a Registration Statement on Form S-4 under the Securities
Act for the registration of the New Notes offered hereby (the "Registration
Statement"). This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain items of which are contained in exhibits and schedules to the
Registration Statement as permitted by the rules and regulations of the SEC. For
further information with respect to Holdings or the New Notes offered hereby,
reference is made to the Registration Statement, including the exhibits and
financial statement schedules thereto, which may be inspected without charge at
the public reference facility maintained by the SEC at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and copies of which may be obtained from the
SEC at prescribed rates. Statements made in this Prospectus concerning the
contents of any document referred to herein are not necessarily complete. With
respect to each such document filed with the SEC as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
Such documents and other information filed by Holdings can be inspected and
copied at the public reference facilities of the SEC at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, at the website maintained by the SEC
(http://www.sec.gov), and at the regional offices of the SEC located at 7 World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials may be obtained
from the Public Reference Section of the SEC, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at its public reference facilities in New York,
New York and Chicago, Illinois at prescribed rates.
Holdings is not currently subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a result of
the offering of the New Notes, Holdings will become subject to the informational
requirements of the Exchange Act. Holdings will fulfill its obligations with
respect to such requirements by filing periodic reports with the Commission. In
addition, Holdings will send to each Holder of New Notes copies of annual
reports and quarterly reports containing the information required to be filed
under the Exchange Act.
So long as Holdings is subject to the periodic reporting requirements of
the Exchange Act, it is required to furnish the information required to be filed
with the SEC to the Trustees and the Holders of the Notes and the New Notes.
Holdings has agreed that, even if it is not required under the Exchange Act to
furnish such information to the SEC, it will nonetheless continue to furnish
information that would be required to be furnished by Holdings under Section 13
of the Exchange Act to the Trustees and the Holders of the Notes or New Notes as
if it were subject to such periodic reporting requirements.
In addition, Holdings has agreed that, for so long as any of the Notes
remain outstanding, it will make available to any prospective purchaser of the
Notes or Holder of the Notes in connection with any sale thereof, the
information required by Rule 144A(d)(4) under the Securities Act.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM AP
HOLDINGS, INC., 800 SUPERIOR AVENUE, CLEVELAND, OHIO 44114-2601, (216) 522-0700;
ATTENTION: ROBERT N. SACKS. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY , 1998.
4
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to and
should be read in conjunction with the more detailed information and financial
statements, including the notes thereto, appearing elsewhere in this Prospectus.
Unless otherwise indicated, all references in this Prospectus to Holdings'
business and all pro forma data give effect to the Transactions described below.
An index of certain defined terms used herein can be found on page 96. Unless
the context indicates or otherwise requires, references in this Prospectus to
(i) "Holdings" are to AP Holdings, Inc., and its subsidiaries; (ii) "APCOA" are
to APCOA, Inc., and its subsidiaries; (iii) "Standard" are to the combined
operations of the group of affiliated entities controlled by the Standard Owners
as defined in "The Transactions--The Combination"; and (iv) the "Company" are to
APCOA and Standard, on a combined basis after giving effect to the Combination.
HOLDINGS
Following consummation of the Transactions, capital stock of the Company
accounts for all of Holdings' assets. Holdings owns 84.0% of the Company's
common stock and all of the Company's preferred stock, which preferred stock
consists only of that issued by the Company in the Preferred Stock Contribution.
Holdings conducts substantially all of its business through the Company.
THE COMPANY
The Company is a leading national provider of parking facility management
services. The Company provides on-site management services at multi-level and
surface parking facilities in the two major markets of the parking industry:
urban parking and airport parking. Following consummation of the Combination,
the Company manages approximately 1,100 parking facilities, containing
approximately 580,000 parking spaces in over 45 cities across the United States
and Canada. The Company's pro forma gross customer collections, pro forma
parking services revenue, pro forma EBITDA and pro forma net loss for the year
ended December 31, 1997 were $948.6 million, $186.1 million, $19.9 million and
$2.8 million, respectively.
The Company believes that its superior management services coupled with its
focus on increasing market share in select core cities leads to higher
profitability per parking facility than its competitors. The Company believes
that it enhances its leading position by providing: (i) Ambiance in Parking(R),
an approach to parking that includes a number of premium, on-site, value-added
services and amenities; (ii) state-of-the-art information technology, including
Client View(C), a proprietary client reporting system which allows the Company
to provide clients with real-time access to site-level financial and operating
information; and (iii) award-winning training programs for on-site employees
that promote customer service and client retention. In addition, the Company
believes that it distinguishes itself from its competitors because of its
ability to leverage its long-standing experience in securing contracts,
particularly with regard to the airport parking market.
The Company's diversified client base includes some of the nation's largest
owners and developers of major office building complexes, shopping centers,
sports complexes, hotels and hospitals. In addition, the Company manages parking
operations at many of the major airports in North America. In the urban parking
market, the Company's clients include CB Commercial Real Estate Group, Equity
Office Properties, the Taubman Company, Harvard Medical School, Northwestern
University, Children's Memorial Medical Center in Chicago and Cedars Sinai
Medical Center in Los Angeles. Parking facilities managed by the Company include
the CNN Center in Atlanta, the Kennedy Center for the Performing Arts in
Washington, D.C. and the Gateway Sports Complex in Cleveland. In the airport
parking market, the Company's clients include Chicago O'Hare International and
Chicago Midway, Cleveland-Hopkins International, Minneapolis-St. Paul
International and Detroit Metropolitan airports.
The Company operates its clients' parking properties through two types of
arrangements: management contracts and leases. The Company does not own any
parking facilities and, as a result, the Company assumes fewer of the risks of
real estate ownership. Under a management contract, the Company typically
receives a base monthly fee for managing the property, and may also receive an
incentive fee based on the achievement
5
<PAGE> 7
of facility revenues above a base amount. In some instances, the Company also
receives certain fees for ancillary services. Typically, all of the underlying
revenues and expenses under a management contract flow through to the property
owner, not to the Company. Under lease arrangements, the Company generally pays
either a fixed annual rental, a percentage of gross customer collections, or a
combination thereof to the property owner. The Company collects all revenues
under lease arrangements and is responsible for most operating expenses, but it
is typically not responsible for major maintenance or capital expenditures. As
of December 31, 1997, the Company operated approximately 72% of its
approximately 1,100 parking facilities under management contracts and
approximately 28% under leases. Renewal rates for the Company's management
contracts and leases were approximately 96% for each of the last three years.
THE INDUSTRY
The International Parking Institute, a trade organization of parking
professionals, estimates that there are 35,000 parking facilities in the United
States generating over $26.0 billion in gross customer collections. The parking
industry is highly fragmented, with over 1,700 commercial parking operators in
the United States, as estimated by the Parking Market Research Company, an
independent research company. Industry participants, the vast majority of which
are privately-held companies, consist of relatively few nationwide companies and
a large number of small regional or local operators, including a substantial
number of companies providing parking as an ancillary service in connection with
property management or ownership. Clients of parking facility managers include
the owners of office buildings, major airports, shopping centers, sports
complexes, hotels and hospitals, which provide parking to customers.
The parking industry is comprised of two major markets: urban parking and
airport parking. The urban parking market consists of many sub-markets with
differing clients including commercial, office, residential, event,
entertainment, retail, shopping centers, hospitals and hotels. In contrast, the
airport parking market consists of a relatively small number of clients with
large revenue-generating parking operations and similar needs that are unique to
airport parking facilities.
THE COMBINATION AND EXPECTED BENEFITS
Pursuant to the terms of the Combination Agreement, APCOA has combined its
operations with the operations of Standard. After consummation of the
Combination, the Company is one of the largest parking facility managers in the
United States, operating approximately 1,100 parking locations, providing
first-class, customer-oriented parking services, and using proprietary,
award-winning management information systems and technology to improve services
and reduce costs. Through the Combination, the Company believes that it will be
able to achieve approximately $6.3 million of annualized cost savings within 12
to 18 months following the Combination as a result of the elimination of certain
duplicative costs and achievement of operating efficiencies. Specific
anticipated benefits include:
- Reduced Personnel Expenses. Subsequent to the Combination, the Company
intends to consolidate headquarters in Chicago and eliminate redundant
corporate functions. In addition, the Company expects to reduce the
number of field managers and administrative staff with overlapping
functions in certain core cities. The Company also expects to realize
additional net savings from the restructuring of certain executive
compensation packages.
- Operational Improvements and Elimination of Redundant Services Provided
by Third Parties. The Company plans to rely on APCOA's state-of-the-art
proprietary management information and reporting systems to perform many
services which Standard previously outsourced to third parties, such as
payroll and accounts receivable processing. The Company also expects to
realize purchasing economies and eliminate redundant services from
consolidating certain third-party service providers.
In addition, since January 1, 1997, the Company completed four small
acquisitions and entered into a binding letter of intent to acquire a fifth
company (the "Other Acquisitions" as defined below under "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Holdings"). The Company expects to realize $1.9 million of cost savings related
to the Other Acquisitions.
6
<PAGE> 8
Of the aggregate potential $8.2 million in annualized cost savings
discussed above, approximately $4.9 million are reflected in the Pro Forma
Condensed Consolidated Financial Statements included elsewhere herein. Actual
cost savings achieved by the Company may vary considerably from the estimates
discussed above. See "Summary Unaudited Pro Forma Consolidated Financial Data"
and "Risk Factors--Ability to Integrate Acquisitions."
BUSINESS STRATEGY & COMPETITIVE ADVANTAGES
The Company believes its innovative parking facility amenities, services
and management, coupled with its state-of-the-art information technology and
reporting systems, position the Company to enhance its standing as a leading
provider of parking services. Specific elements of the Company's business
strategy and competitive advantages include:
- Focus on Core Cities. Part of the Company's business strategy is to
focus on increasing system-wide profitability by maximizing operating
leverage. As part of this strategy, the Company operates in certain core
cities and realizes certain economies of scale, including the ability to
spread administrative overhead costs across a large number of parking
facilities in a single market. As a result, the Company has been able to
significantly increase profitability per contract. For example, in 1997,
management estimates that the Company's average profit per contract in
cities in which it operated more than 35 parking locations was nearly
double the Company's profit per contract in cities in which it operated
fewer than 35 locations.
- Strong Operating Performance and Stable Cash Flow. From 1993 to 1997,
the Company's EBITDA increased from $7.2 million to $15.0 million,
representing a compounded annual growth rate ("CAGR") of 20.0%. Over the
same period, the Company's capital expenditures averaged less than $3.0
million per year. In addition, the Company reduced exposure to increasing
cost of parking services by (i) increasing the proportion of its
management contracts, which generally pass cost of parking services onto
the Company's clients, and (ii) maintaining low minimum rental
commitments under its non-cancelable leases. The Company's average
management and lease contract renewal rate over the last three years was
approximately 96%. As a result of the Company's operating performance, as
well as the low capital expenditure requirements and low risk portfolio
of management contracts and leases, the Company has been able to generate
consistent cash flow.
- Strategic Growth Through Acquisitions. The parking industry is highly
fragmented, with over 1,700 industry participants. In addition to
pursuing individual contracts, the Company is seeking to capitalize on
this industry fragmentation by pursuing a focused acquisition strategy
which includes: (i) acquiring parking management companies within core
cities and target cities where the Company believes it can attain a
significant market share, and (ii) acquiring larger, regional parking
management companies. As a part of this strategy, APCOA and Standard,
combined, have successfully acquired and integrated 6 companies with 138
new facilities and 252 net individual contracts over the past five years.
- Leading Client Base. The Company's diversified, long-standing customer
base comprises many of the premier national property management and
ownership organizations in the United States and Canada. The Company is a
market leader in airport parking, operating approximately 100 parking
facilities at airports in the United States and Canada. Management
believes that the Company's focus on select core cities enables the
Company to maintain broader and stronger relationships with the local
client base and improves its client retention rates and its ability to
compete for new contracts.
- Value-Added Services and Award-Winning Information Systems. The Company
believes that it can continue to increase profitability and attract new
clients by providing: (i) Ambiance in Parking(R); (ii) state-of-the-art
information technology, including Client View(C); and (iii) award-winning
training programs for on-site employees. Management believes that these
capabilities facilitate development opportunities that typically lead to
long-term lease and management contracts on new facilities. Also, the
Company has developed state-of-the-art information technology systems
which connect local offices across the country to its corporate office.
These systems, which received the 1994 Esprit Award
7
<PAGE> 9
sponsored by Booz-Allen & Hamilton and CIO magazine, enable a centralized
staff to eliminate inefficient duplication of administrative and
accounting functions at the field level and also help provide key
operational information to clients. Management believes that these
systems will enable the Company to add many new clients and contracts
without incurring additional administrative staff and expense.
- Experienced Management Team. Myron C. Warshauer, the Company's Chief
Executive Officer and the third generation of his family to direct
Standard, has over 35 years of industry experience. G. Walter Stuelpe,
Jr., the Company's President, has been with APCOA for over 25 years,
serving as Chief Executive Officer since 1986. Other members of the
Company's executive team are the most experienced, talented executives
from both companies. Overall, the members of the Company's executive team
have an average of over 15 years of industry experience.
THE TRANSACTIONS
In connection with the Combination, Holdings consummated the Note Offering.
Concurrently, the Company: (i) consummated the offering of $140.0 million of
9 1/4% Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes
Offering"); (ii) entered into the New Credit Facility; and (iii) received the
Preferred Stock Contribution. The Combination, the issuance of the Notes, the
Senior Subordinated Notes Offering, the New Credit Facility, the Preferred Stock
Contribution, the application of proceeds therefrom and the payment of related
fees and expenses are collectively referred to herein as the "Transactions."
------------------------
Holdings' principal executive offices are presently located at 800 Superior
Avenue, Cleveland, Ohio 44114-2601, and its telephone number is (216) 522-0700.
Holdings expects to move its principal executive offices to Chicago, Illinois,
at a location to be determined.
8
<PAGE> 10
THE NOTE OFFERING
The Notes.................. The Notes were sold by Holdings on March 25, 1998
and were subsequently resold to qualified
institutional buyers pursuant to Rule 144A under the
Securities Act, to institutional investors that are
accredited investors in a manner exempt from
registration under the Securities Act and to persons
in transactions outside the United States in
reliance on Regulation S under the Securities Act
("the Note Offering").
Registration Rights
Agreement.................. In connection with the Note Offering, Holdings
entered into the Registration Rights Agreement,
which grants holders of the Notes certain exchange
and registration rights, which generally terminate
upon the consummation of the Exchange Offer.
THE EXCHANGE OFFER
Securities Offered......... $70.0 million in aggregate principal amount of
Holdings' 11 1/4% New Senior Discount Notes due
2008.
The Exchange Offer......... $1,000 principal amount of New Notes in exchange for
each $1,000 principal amount of the Notes. As of the
date hereof, $70.0 million aggregate principal
amount of Notes are outstanding. Holdings will issue
the New Notes to Holders on or promptly after the
Expiration Date.
Expiration Date............ 12:00 midnight, New York City time, on
, 1998, unless the Exchange Offer is
extended, in which case the term "Expiration Date"
means the latest date and time to which the Exchange
Offer is extended.
Interest on the New Notes
and the Notes.............. The New Notes will accrete at a rate of 11 1/4%
compounded semi-annually to an aggregate principal
amount of $70,000,000 at March 15, 2003. Thereafter,
the New Notes will accrue interest at the rate of
11 1/4% per annum, payable semi-annually on March 15
and September 15 of each year, commencing September
15, 2003.
Conditions to the
Exchange Offer............. The Exchange Offer is subject to certain customary
conditions, which may be waived by Holdings. See
"The Exchange Offer -- Conditions."
Procedures for
Tendering Notes............ Each Holder of Notes wishing to accept the Exchange
Offer must complete, sign and date the relevant
accompanying Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with the Notes and any other
required documentation to the relevant Exchange
Agent at the address set forth in the Letter of
Transmittal. The Letter of Transmittal should be
used to tender Notes. By executing the Letter of
Transmittal, each Holder will represent to Holdings
that, among other things, the Holder or the person
receiving such New Notes, whether or not such person
is the Holder, is acquiring the New Notes in the
ordinary course of business and that neither the
Holder nor any such other person has any arrangement
or understanding with any person to participate in
the distribution of such New Notes. In lieu of
physical delivery of the certificates representing
Notes, tendering Holders may transfer Notes pursuant
to the procedure for book-entry transfer as set
forth under "The Exchange Offer -- Procedures for
Tendering."
9
<PAGE> 11
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Notes are registered in
the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender
should contact such registered Holder promptly and
instruct such registered Holder to tender on such
beneficial owner's behalf. If such beneficial owner
wishes to tender on such beneficial owner's own
behalf, such beneficial owner must, prior to
completing and executing the Letter of Transmittal
and delivering its Notes, either make appropriate
arrangements to register ownership of the Notes in
such beneficial owner's name or obtain a properly
completed bond power from the registered Holder. The
transfer of registered ownership may take
considerable time.
Guaranteed Delivery
Procedures................. Holders of Notes who wish to tender their Notes and
whose Notes are not immediately available or who
cannot deliver their Notes, the Letter of
Transmittal or any other documents required by the
Letter of Transmittal to the Exchange Agent (or
comply with the procedures for book-entry transfer)
prior to the Expiration Date must tender their Notes
according to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 12:00
midnight, New York City time, on the Expiration Date
pursuant to the procedures described under "The
Exchange Offer -- Terms of the Exchange Offer."
Acceptance of Notes and
Delivery of New Notes...... Holdings will accept for exchange any and all Notes
that are properly tendered in the Exchange Offer
prior to 12:00 midnight, New York City time, on the
Expiration Date. The New Notes issued pursuant to
the Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
Federal Income Tax
Consequence................ The issuance of the New Notes to Holders of the
Notes pursuant to the terms set forth in this
Prospectus will not constitute an exchange for
federal income tax purposes. Consequently, no gain
or loss would be recognized by Holders of the Notes
upon receipt of the New Notes. See "Certain Federal
Income Tax Consequences of the Exchange Offer."
Use of Proceeds............ There will be no proceeds to Holdings from the
exchange of Notes pursuant to the Exchange Offer.
Effect on Holders of
Notes...................... As a result of the making of this Exchange Offer,
Holdings will have fulfilled certain of its
obligations under the Registration Rights Agreement,
and Holders of Notes who do not tender their Notes
will generally not have any further registration
rights under the Registration Rights Agreement or
otherwise. Such Holders will continue to hold the
untendered notes and will be entitled to all the
rights and subject to all the limitations applicable
thereto under the Indentures, except to the extent
such rights or limitations, by their terms,
terminate or cease to have further effectiveness as
a result of the Exchange Offer. All untendered Notes
will continue to be subject to certain restrictions
on transfer. Accordingly, if any Notes are tendered
and accepted in the Exchange Offer, the trading
market for the untendered Notes could be adversely
affected.
Exchange Agent............. State Street Bank and Trust Company is serving as
exchange agent in connection with the Exchange
Offer. See "The Exchange Offer -- Exchange Agent."
10
<PAGE> 12
SUMMARY OF TERMS OF NEW NOTES
The form and terms of the New Notes are the same as the form and terms of
the Notes (which they will replace) except that (i) the New Notes have been
registered under the Securities Act, and, therefore, will not bear legends
restricting the transfer thereof and (ii) the Holders of the New Notes generally
will not be entitled to further registration rights under the Registration
Rights Agreement, which rights generally will be satisfied when the Exchange
Offer is consummated. The New Notes will evidence the same debt as the Notes and
will be entitled to the benefits of the Indenture. See "Description of New
Notes."
Securities Offered......... $70.0 million in principal amount of 11 1/4% New
Senior Discount Notes due 2008.
Maturity Date.............. March 15, 2008.
Accretion.................. The New Notes will accrete at a rate of 11 1/4%,
compounded semi-annually to an aggregate principal
amount of $70.0 million at March 15, 2003.
Interest Rate.............. The New Notes will accrue interest at the rate of
11 1/4% per annum, payable semi-annually in cash on
March 15 and September 15 of each year, commencing
September 15, 2003.
Optional Redemption........ The New Notes will be redeemable at the option of
Holdings, in whole or in part, at any time on or
after March 15, 2003 in cash at the redemption
prices set forth herein, plus accrued and unpaid
interest and Liquidated Damages (as defined), if
any, thereon to the date of redemption. In
addition, at any time prior to March 15, 2001,
Holdings may redeem the New Notes, in whole, but
not in part, at the option of Holdings, at a
redemption price of 111.25% of the Accreted Value
(determined at the date of redemption), with the
net cash proceeds of a Public Equity Offering (as
defined). See "Description of New Notes--Optional
Redemption."
Change of Control.......... Upon the occurrence of a Change of Control (as
defined), each holder of New Notes will have the
right to require Holdings to repurchase all or any
part of such holder's New Notes at an offer price
in cash equal to 101% of the Accreted Value thereof
on the date of repurchase (if such date of
repurchase is prior to March 15, 2003) or 101% of
the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages,
if any, thereon to the date of repurchase (if such
date of repurchase is on or after March 15, 2003).
See "Description of New Notes--Repurchase at the
Option of Holders--Change of Control." There can be
no assurance that, in the event of a Change of
Control, Holdings would have sufficient funds to
purchase all New Notes tendered. See "Risk
Factors--Payment Upon a Change of Control."
Ranking.................... The New Notes will be general unsecured obligations
of Holdings, will rank pari passu in right of
payment with all existing and future senior
indebtedness of Holdings and will rank senior in
right of payment to all subordinated indebtedness
of Holdings. As indebtedness of Holdings, however,
the New Notes will be effectively subordinated to
all indebtedness of the Company. As of December 31,
1997, on a pro forma basis, after giving effect to
the Transactions, the New Notes would have been
effectively subordinate to approximately $152.3
million of indebtedness of the Company. See "Risk
Factors--Holding Company Structure; Effective
Subordination."
11
<PAGE> 13
Certain Covenants.......... The Indenture contains certain covenants that
limit, among other things, the ability of Holdings
and its Restricted Subsidiaries to: (i) pay
dividends, redeem capital stock or make certain
other restricted payments or investments; (ii)
incur additional indebtedness or issue preferred
equity interests; (iii) merge, consolidate or sell
all or substantially all of its assets; (iv) create
liens on assets; and (v) enter into certain
transactions with affiliates or related persons.
See "Description of New Notes--Certain Covenants."
Original Issue Discount.... The New Notes are being issued with original issue
discount for U.S. federal income tax purposes.
Thus, although interest will not be payable on the
New Notes prior to March 15, 2003, holders will be
required to include amounts in gross income for
U.S. federal income tax purposes in advance of
receipt of the cash payments to which such income
is attributable. See "Description of Certain
Federal Income Tax Consequences--Original Issue
Discount."
Form and Denomination...... The certificates representing the New Notes will be
issued in fully registered form, deposited with a
custodian for and registered in the name of a
nominee of the Depository in the form of a Global
New Note. Beneficial interests in the certificates
representing the Global New Notes will be shown on,
and transfers thereof will be effected through,
records maintained by the Depository and its
Participants. See "Book Entry, Delivery and Form."
Exchange Offer Registration
Rights................... If any Holder of an aggregate of at least $2.0
million in principal amount of Notes notifies
Holdings within 20 days of the consummation of the
Exchange Offer that (A) such Holder is prohibited
by law or SEC policy from participating in the
Exchange Offer, or (B) such Holder may not resell
the New Notes acquired by it in the Exchange Offer
to the public without delivering a prospectus and
the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or
available for such resales by such Holder, or (C)
such Holder is a broker-dealer and holds Notes
acquired directly from Holdings or one of its
respective affiliates, then Holdings will be
required to provide a shelf registration statement
(the "Shelf Registration Statement") to cover
resales of the Notes by the Holders thereof.
Notwithstanding the foregoing, at any time after
consummation of the Exchange Offer, Holdings may
allow the Shelf Registration Statement to cease to
be effective and usable if (i) the Board of
Directors of Holdings determines in good faith that
it is in the best interests of Holdings not to
disclose the existence of or facts surrounding any
proposed or pending material corporate transaction
involving Holdings, and Holdings notifies the
Holders within a certain period of time after the
Board of Directors makes such determination, or
(ii) the prospectus contained in the Shelf
Registration Statement contains an untrue statement
of a material fact necessary in order to make the
statements therein, in the light of the
circumstances under which they were made, not
misleading. Holdings will pay certain liquidated
damages to Holders of Notes and Holders of New
Notes if Holdings is not in compliance with its
obligations under the Registration Rights
Agreement. See "Exchange Offer; Registration
Rights."
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK FACTORS."
12
<PAGE> 14
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following table sets forth summary unaudited pro forma consolidated
balance sheet data of Holdings at December 31, 1997 and summary unaudited pro
forma consolidated income statement data of Holdings for the year ended December
31, 1997. The pro forma consolidated balance sheet data at December 31, 1997
give effect to the Transactions and the Other Acquisitions as if they had
occurred on December 31, 1997. The pro forma consolidated income statement data
and other data for the year ended December 31, 1997 give effect to the
Transactions and the Other Acquisitions as if they had occurred at the beginning
of the period presented. The following information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations of Holdings," "Management's Discussion and Analysis of Financial
Condition and Results of Operations of Standard," the historical financial
statements of Holdings, the unaudited pro forma financial statements of
Holdings, the historical financial statements of Standard and the related notes
thereto included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
---------------------
<S> <C>
INCOME STATEMENT DATA:
Parking services revenue.................................. $186,078
Cost of parking services.................................. 146,165
General and administrative expenses....................... 20,045
Depreciation and amortization............................. 7,498
--------
Operating income.......................................... 12,370
Interest expense, net..................................... 19,402
Minority interest......................................... 321
Income tax expense........................................ 140
--------
Net income (loss)......................................... $ (7,493)
========
OTHER DATA:
Gross customer collections................................ $948,612
Pro forma EBITDA(1)....................................... 19,868
Capital expenditures...................................... 3,249
Ratio of earnings to fixed charges(2)..................... N/A
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
---------------------
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 61,173
Working capital........................................... 37,531
Total assets.............................................. 216,594
Total debt................................................ 193,022
Common stock of subsidiary (the Company) subject to
put/call rights(3)..................................... 4,589
Common stock subject to put/call rights(4)................ 333
Stockholders' equity (deficit)............................ (29,161)
</TABLE>
- ------------------------------
(1) Pro forma EBITDA represents pro forma operating income plus pro forma
depreciation and amortization. EBITDA is presented because management
believes it is a widely accepted financial indicator used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance. The Company understands that EBITDA is not intended
to represent cash flow for the period, nor has it been presented as an
alternative to operating income as an indicator of operating performance and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.
(2) For purposes of computing this ratio, earnings consist of income before
income taxes and minority interest plus fixed charges. Fixed charges consist
of interest expense, amortization of deferred financing costs and one-third
of the rent expense from operating leases, which management believes is a
reasonable approximation of the interest factor of the rent. For the year
ended December 31, 1997, on a pro forma basis, earnings were inadequate to
cover fixed charges by $7.0 million.
(3) In accordance with the Stockholders Agreement (as defined below under
"Certain Relationships and Related Party Transactions -- Stockholders
Agreement"), the Company will be obligated under certain circumstances to
repurchase shares of common stock issued in connection with the Combination.
The amount reflected herein has been calculated based on the formula in the
Stockholders Agreement calculated on a pro forma basis giving effect to the
consummation of the Combination as of December 31, 1997. The Company will
not be obligated to repurchase such common stock prior to the third
anniversary of the consummation of the Combination.
(4) In accordance with an agreement (the "Put/Call Agreement"), between Holdings
and Delaware North Companies, Incorporated, a Delaware corporation and the
holder of 10% of the common stock of Holdings ("Delaware North"), Holdings
has the right under certain circumstances to, and has the obligation under
certain circumstances to, repurchase the shares of its common stock held by
Delaware North. Holdings has exercised the right to repurchase the common
stock held by Delaware North pursuant to the terms of the Put/Call
Agreement, and the price of such repurchase will be determined in accordance
with the terms of the Put/Call Agreement by a nationally recognized
investment bank.
13
<PAGE> 15
RISK FACTORS
Holders of the Notes should consider carefully the factors set forth below,
as well as the other information set forth elsewhere in this Prospectus, before
making a decision to tender into the Exchange Offer. This Prospectus includes
forward-looking statements, including statements concerning Holdings' business
strategy, operations, cost savings initiatives, economic performance, financial
condition and liquidity and capital resources. Such statements are subject to
various risks and uncertainties. Holdings' actual results may differ materially
from the results discussed in such forward-looking statements because of a
number of factors, including those identified in this "Risk Factors" section and
elsewhere in this Prospectus. See "Prospectus Summary," "Management's Discussion
and Analysis of Financial Condition and Results of Operations of Holdings,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Standard" and "Business." The forward-looking statements are made
as of the date of this Prospectus, and Holdings assumes no obligation to update
the forward-looking statements or to update the reasons why actual results could
differ from those projected in the forward-looking statements.
SUBSTANTIAL LEVERAGE AND DEBT SERVICE REQUIREMENTS
Holdings is and will continue to be highly leveraged as a result of the
substantial indebtedness it has incurred in connection with the Transactions.
After giving pro forma effect to the Transactions and the Other Acquisitions,
Holdings would have had total indebtedness of $193.0 million and a stockholders'
deficit of $29.2 million as of December 31, 1997, and Holdings' earnings would
have been inadequate to cover fixed charges by $7.0 million for the year ended
December 31, 1997. Holdings may incur additional indebtedness in the future,
subject to limitations imposed by the Indenture and the New Credit Facility. See
"Capitalization," "Unaudited Pro Forma Combined Financial Statements," "The
Transactions--The Combination" and "Description of Indebtedness."
Holdings' ability to make scheduled payments of principal of, or to pay
interest on, or to refinance its indebtedness (including the New Notes) depends
on its future performance, which, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors
beyond its control. Based upon the current level of operations and anticipated
growth, management of Holdings believes that the cash flow and available cash of
its subsidiaries, together with available borrowings under the New Credit
Facility, will be adequate to meet anticipated future requirements for working
capital, capital expenditures, scheduled payments of principal of and interest
on its indebtedness, and interest on the New Notes. However, all or a portion of
the principal payments at maturity on the New Notes may require refinancing.
There can be no assurance that Holdings will generate sufficient cash flow from
operations or that future borrowings will be available in an amount sufficient
to enable Holdings to service its indebtedness, including the New Notes, or to
make necessary capital expenditures, or that any refinancing would be available
on commercially reasonable terms or at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Holdings--Liquidity
and Capital Resources."
The degree to which Holdings is now leveraged and will continue to be
leveraged following the Note Offering could have important consequences to
holders of the New Notes, including, but not limited to, the following: (i) a
substantial portion of Holdings' cash flow from operations will be required to
be dedicated to debt service and will not be available for other purposes; (ii)
Holdings' ability to obtain additional financing in the future could be limited;
and (iii) the Indenture contains financial and restrictive covenants that limit
the ability of Holdings to, among other things, borrow additional funds, dispose
of assets or pay cash dividends. Failure by Holdings to comply with such
covenants could result in an event of default, which, if not cured or waived,
could have a material adverse effect on Holdings.
HOLDING COMPANY STRUCTURE; EFFECTIVE SUBORDINATION
Holdings is a holding company and does not have any material operations or
assets other than ownership of 84.0% of the Company Common Stock and $40.7
million of preferred stock of the Company as a result of the Preferred Stock
Contribution. Accordingly, the New Notes will be effectively subordinated to all
existing and future liabilities of Holdings' subsidiaries including indebtedness
under the New Credit Facility and the
14
<PAGE> 16
Company's Senior Subordinated Notes. As of December 31, 1997, on a pro forma
basis after giving effect to the Transactions, the aggregate amount of
indebtedness of Holdings' subsidiaries to which the holders of the Notes would
be effectively subordinated would have been approximately $152.3 million.
Holdings and its subsidiaries may incur additional indebtedness in the future,
subject to certain limitations contained in the instruments governing their
indebtedness.
Any right of Holdings to participate in any distribution of assets of its
subsidiaries upon the liquidation, reorganization or insolvency of any such
subsidiary (and the consequent right of the holders of the New Notes to
participate in the distribution of those assets) will be subject to the prior
claims of the respective subsidiary's creditors. The obligations of the Company
under the New Credit Facility are secured by substantially all of its assets.
Additionally, Holdings guarantees the Company's obligations under the New Credit
Facility and such guarantee is secured by a first priority pledge of all the
capital stock of the Company owned by Holdings. See "Description of
Indebtedness--New Credit Facility."
LIMITATION ON THE PAYMENT OF FUNDS TO HOLDINGS BY ITS SUBSIDIARIES
Holdings' cash flow, and consequently its ability to pay dividends and to
service debt, including its obligations under the New Notes, is dependent upon
the cash flows of its subsidiaries and the payment of funds by such subsidiaries
to Holdings in the form of loans, dividends or otherwise. Holdings' subsidiaries
have no obligation, contingent or otherwise, to pay any amounts due pursuant to
the New Notes or to make any funds available therefor. In addition, the
Company's New Credit Facility and the indenture governing the Company's Senior
Subordinated Notes impose, and agreements entered into in the future may impose,
significant restrictions on the payment of dividends and the making of loans by
the Company to Holdings. Under the New Credit Facility, subject to certain
financial covenants, the Company is permitted to pay dividends to Holdings equal
to the semi-annual interest payments due on the New Notes; provided that upon a
notice of a default or event of default under the New Credit Facility, Holdings'
subsidiaries are prohibited from paying such dividends until the earlier of the
180th day following such notice and the date such default or event of default is
cured or waived. Accordingly, repayment of the New Notes may depend upon the
ability of Holdings to effect an offering of capital stock or to refinance the
New Notes.
ASSET ENCUMBRANCES
In connection with the New Credit Facility, Holdings has granted the
lenders thereunder a first priority lien on all of the capital stock of the
Company owned by it as security for its guarantee of the Company's obligations
under the New Credit Facility. In the event of a default under the New Credit
Facility or such guarantee, the lenders under the New Credit Facility could
foreclose upon the assets pledged to secure the New Credit Facility, including
such capital stock, and the holders of the New Notes might not be able to
receive any payments until any payment default was cured or waived, any
acceleration was rescinded, or the indebtedness under the New Credit Facility
was discharged or paid in full.
DEPENDENCE ON MANAGEMENT CONTRACTS AND LEASES
The principal sources of the Company's revenues are management contracts
and leases covering parking facilities. For the years ended December 31, 1996
and December 31, 1997, gross profits from management contracts accounted for
43.8% and 42.5%, respectively, of the Company's total gross profits, and for the
years ended December 31, 1996 and December 31, 1997, gross profits from leased
facilities accounted for 56.2% and 57.5%, respectively, of the Company's total
gross profits. Under a management contract, the Company typically receives a
base monthly fee for managing the property, and may also receive an incentive
fee based on the achievement of facility revenues above a base amount. In some
instances, the Company also receives certain fees for ancillary services.
Typically, all of the underlying revenues and expenses under a management
contract flow through to the property owner, not to the Company. Leases
generally are for three to ten year terms. Certain of Standard's management
contracts and leases contain provisions allowing the property owner to terminate
such management contract or lease in the event of a transaction such as the
Combination. There can be no assurance that property owners will not terminate
such management contracts or leases upon consummation of the Combination, nor
that any such terminations would not have a material adverse effect on
15
<PAGE> 17
the Company and its business, operations or financial condition. There also can
be no assurance that the Company will be able to maintain or renew its
management contracts and leases on favorable terms. In addition, because certain
management contracts and leases are with state, local and quasi-governmental
entities, changes to certain governmental entities' approaches to contracting
regarding parking facilities could affect such contracts. The loss, or renewal
on less favorable terms, of a substantial number of management contracts or
leases could have a material adverse effect on the Company. In addition, a
material reduction in the profit margins associated with ancillary services
provided by the Company under its management contracts and leases, including
increases in costs or claims associated with, or reductions in the number of
clients purchasing, insurance provided by the Company, could have a material
adverse effect on the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations of Holdings," "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Standard" and "Business--Insurance."
DEPENDENCE ON PROPERTY PERFORMANCE
The Company's leases generally require the Company to make a fixed monthly
lease payment regardless of the parking fees collected. Some management
contracts provide for payment to the Company based on a percentage of revenues
generated by the parking facility. Accordingly, the Company's revenues and net
income are dependent on the performance of the parking facilities it leases and
manages. Such performance depends, in part, on the ability to negotiate
favorable contract terms, the ability to control operating expenses, financial
conditions prevailing generally and in areas where parking facilities are
located, the nature and extent of competitive parking facilities in the area,
weather conditions at certain properties (particularly with respect to
airports), government-mandated security measures at airport parking facilities
and the real estate market generally. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations of Holdings" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Standard."
EXPANSION OF BUSINESS; ABILITY TO INTEGRATE ACQUISITIONS
Following the Combination, the Company will have to integrate Standard's
and APCOA's businesses. While the Company believes that such integration
provides significant opportunities to reduce costs, there can be no assurance
that the Company will be able to meet performance expectations or successfully
integrate these businesses on a timely basis without disruption in the quality
and reliability of service to its customers or clients or diversion of
management resources. In addition, while each of APCOA and Standard has made
acquisitions successfully before, the Combination is substantially larger than
any of such prior acquisitions. Further, the Company intends to expand its
business by adding leases and management contracts and by acquiring additional
parking management companies. The Company's growth will be directly affected by
results of operations of added parking facilities, which will depend, in turn,
upon the Company's ability to obtain suitable financing, contract terms,
government licenses and approvals, and the competitive environment for
acquisitions. In that regard, the nature of licenses and approvals, and the
timing and likelihood of obtaining them, vary widely from state to state and
from country to country. Some of the acquired operations may be located in
geographic markets in which the Company has little or no presence. Successful
integration and management of additional facilities will depend on a number of
factors, many of which are beyond the Company's control. There can be no
assurance that suitable acquisition candidates will be identified, that such
acquisitions can be consummated, or that the acquired operations can be
integrated successfully. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations of Holdings--Liquidity and Capital
Resources," "Management's Discussion and Analysis of Financial Condition and
Results of Operations of Standard--Liquidity and Capital Resources,"
"Business--Business Strategy and Competitive Advantages" and "--Regulation."
ENVIRONMENTAL AND OTHER REGULATIONS
Under various federal, state, and local environmental laws, ordinances, and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under, or in such property. Such laws typically impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic
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<PAGE> 18
substances. In connection with the operation of parking facilities, the Company
may be potentially liable for such costs. Although the Company is currently not
aware of any material environmental claims pending or threatened against it or
any of its operated parking facilities, no assurances can be given that a
material environmental claim will not be asserted against the Company or against
the parking facilities it operates. The cost of defending against claims of
liability, or of remediating a contaminated property, could have a material
adverse effect on the results of operations or financial condition of the
Company.
Various other governmental regulations affect the Company's operation of
parking facilities, both directly and indirectly, including air quality laws,
licensing laws and the Americans with Disabilities Act of 1990 (the "ADA").
Under the ADA, all public accommodations, including parking facilities, are
required to meet certain federal requirements related to access and use by
disabled persons. Although management believes that the parking facilities it
operates are in substantial compliance with these requirements, a determination
that the Company or the facility owner is not in compliance with the ADA could
result in the imposition of fines or damage awards against the Company. See
"Business--Regulation."
COMPETITION
The parking industry is highly competitive with limited barriers to entry.
The Company's competitors range from small single-lot operators to large
regional and national multi-facility operators, and include municipal and other
governmental entities. Some of the Company's present and potential competitors
have or may obtain greater financial and marketing resources than those of the
Company. Furthermore, the Company competes for qualified management personnel
with other parking facility operators, with property management companies, and
with property owners. The Company competes for acquisitions with other parking
facility operators. There can be no assurance that the Company will not
encounter increased competition for acquisitions in the future and that such
competition will not have an adverse effect on the Company's ability to complete
acquisitions or on prices paid for acquisitions. See "Business--Competition."
DEPENDENCE ON KEY PERSONNEL
The Company's and Holdings' success is, and will continue to be,
substantially dependent upon the continued services of the Company's management
team.
The loss of the services of one or more members of senior management could
have a material adverse effect on Holdings' financial condition and results of
operations. Although the Company has entered into employment agreements with,
and historically has been successful in retaining the services of, its senior
management, there can be no assurance that the Company will be able to retain
such personnel in the future. In addition, the Company's continued growth
depends on the ability to attract and retain skilled operating managers and
employees and the ability of its key personnel to manage the Company's growth
and consolidate and integrate its operations. See "Management."
CONTROL BY PRINCIPAL STOCKHOLDER
Following the consummation of the Transactions, Holberg Industries, Inc.
("Holberg") owns a majority of the issued and outstanding capital stock of
Holdings. See "Security Ownership of Certain Beneficial Holders and Management."
Holberg has sufficient rights and/or voting power to elect the majority of the
Board of Directors of each of Holdings, and through Holdings, the Company, and
thereby exercise control over the business, policies and affairs of Holdings,
and, in general, determine the outcome of any corporate transaction or other
matters submitted to stockholders for approval, such as any amendment to the
certificate of incorporation of Holdings (the "Certificate of Incorporation"),
the authorization of additional shares of capital stock, and any merger,
consolidation or sale of all or substantially all of the assets of Holdings, all
of which could adversely affect Holdings and holders of the New Notes. See
"Security Ownership of Certain Beneficial Holders and Management."
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<PAGE> 19
PAYMENT UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of New Notes may
require Holdings to repurchase all or a portion of such holder's New Notes at
101% of the Accreted Value thereof on the date of repurchase (if such date of
repurchase is prior to March 15, 2003) or 101% of the aggregate principal amount
thereof, together with accrued and unpaid interest, if any, and Liquidated
Damages, if any, to the date of repurchase (if such date of repurchase is on or
after March 15, 2003). In addition, the New Credit Facility provides that, if a
Change of Control (as defined therein) occurs, it will constitute an event of
default under the New Credit Facility. In the event of such a Change of Control,
the Company would be required to repay the indebtedness outstanding under the
New Credit Facility and the Company may be required to repay its Senior
Subordinated Notes. There can be no assurance that the Company and Holdings
would have the resources necessary to repay their respective indebtedness or
that a Change of Control would not have a material adverse effect on the value
of the New Notes or the ability of Holdings to repay the indebtedness under the
New Notes. See "Description of New Notes--Repurchase at the Option of
Holders--Change of Control" and "--Holding Company Structure; Effective
Subordination."
FRAUDULENT CONVEYANCE RISKS
Management of Holdings believes that the indebtedness represented by the
New Notes is being incurred for proper purposes and in good faith, and that,
based on present forecasts, asset valuations and other financial information,
after the consummation of the Transactions, Holdings will be solvent, will have
sufficient capital for carrying on its business and will be able to pay its
debts as they mature. See "--Substantial Leverage and Debt Service
Requirements." Notwithstanding management's belief, however, if a court of
competent jurisdiction in a suit by an unpaid creditor or a representative of
creditors (such as a trustee in bankruptcy or a debtor-in-possession) were to
find that, at the time of the incurrence of such indebtedness, Holdings was
insolvent, was rendered insolvent by reason of such incurrence, was engaged in a
business or transaction for which its remaining assets constituted unreasonably
small capital, intended to incur, or believed that it would incur, debts beyond
its ability to pay such debts as they matured, or intended to hinder, delay or
defraud its creditors, and that the indebtedness was incurred for less than
reasonably equivalent value, then such court could, among other things, (i) void
all or a portion of Holdings' obligations to the holders of the New Notes, the
effect of which would be that the holders of the New Notes may not be repaid in
full and/or (ii) subordinate Holdings' obligations to the holders of the New
Notes to other existing and future indebtedness of Holdings to a greater extent
than would otherwise be the case, the effect of which would be to entitle such
other creditors to be paid in full before any payment could be made on the New
Notes.
ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES; RESTRICTIONS ON TRANSFERS
The Notes are currently owned by a relatively small number of beneficial
owners. The Notes have not been registered under the Exchange Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for the New Notes. The New Notes will constitute a new issue of
securities with no established trading market. Although the New Notes will
generally be permitted to be resold or otherwise transferred by Holders who are
not affiliates of Holdings without compliance with the registration requirements
under the Securities Act, Holdings does not intend to list the New Notes on any
securities exchange or to seek admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. Although DLJ has
advised Holdings that it currently intends to make a market in the New Notes, it
is not obligated to do so and may discontinue such market making at any time
without notice. If a trading market does not develop or is not maintained,
holders of the New Notes may experience difficulty in reselling the New Notes or
may be unable to sell them at all. If a market for the New Notes develops, any
such market may be discontinued at any time. In addition, such market making
activity will be subject to the limits imposed by the Exchange Act. See
"Description of New Notes -- Registration Rights; Liquidated Damages."
Accordingly, there can be no assurance as to the development or liquidity of any
market for the New Notes.
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<PAGE> 20
COMPLIANCE WITH EXCHANGE OFFER PROCEDURES; RESTRICTIONS ON RESALES
Issuance of the New Notes in exchange for Notes pursuant to the Exchange
Offer will be made only after a timely receipt by the Exchange Agent of such
Notes, a properly completed and duly executed Letter of Transmittal and all
other required documents. Therefore, Holders of the Notes desiring to tender
such Notes in exchange for New Notes should allow sufficient time to ensure
timely delivery. Holdings is under no duty to give notification of defects or
irregularities with respect to the tenders of Notes for exchange. Notes that are
not tendered or are tendered but not accepted will, following the consummation
of the Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof and, upon consummation of the Exchange Offer, the registration
rights under the Registration Rights Agreement generally will terminate. In
addition, any Holder of Notes who tenders in the Exchange Offer for the purpose
of participating in a distribution of the New Notes may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale. Each broker-dealer that receives New Notes for its
own account in exchange for Notes, where such Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities must acknowledge that it will deliver a prospectus in connection with
the initial resale of such New Notes. To the extent that Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Notes could be adversely affected. See "The Exchange Offer."
FORWARD-LOOKING STATEMENTS
This Prospectus includes forward-looking statements, including statements
concerning Holdings and the Company's business strategy, operations, cost
savings initiatives, economic performance, financial condition and liquidity and
capital resources. Such statements are subject to various risks and
uncertainties. Holdings and the Company's actual results may differ materially
from the results discussed in such forward-looking statements because of a
number of factors, including those identified in the sections of this Prospectus
captioned "Prospectus Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Holdings,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Standard" and "Business." Forward-looking statements are made as
of the date of this Prospectus, and Holdings assumes no obligation to update the
forward-looking statements, or to update the reasons why actual results could
differ from those projected in the forward-looking statements.
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<PAGE> 21
THE EXCHANGE OFFER
The following discussion sets forth or summarizes what Holdings believes
are the material terms of the Exchange Offer, including those set forth in the
Letter of Transmittal distributed with this Prospectus. This summary is
qualified in its entirety by reference to the full text of the documents
underlying the Exchange Offer, copies of which are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and are incorporated
by reference herein.
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Notes were sold by Holdings on March 25, 1998, and were subsequently
resold to qualified institutional buyers pursuant to Rule 144A under the
Securities Act, to institutional investors that are accredited investors in a
manner exempt from registration under the Securities Act and to persons outside
the United States in reliance on Regulation S under the Securities Act. In
connection with the Note Offering, Holdings entered into the Registration Rights
Agreement, which requires, among other things, that promptly following the
completion of the Note Offering, Holdings: (i) file with the SEC a registration
statement under the Securities Act with respect to an issue of new Notes of
Holdings identical in all material respects to the Notes, (ii) use its best
efforts to cause such registration statement to become effective under the
Securities Act and (iii) upon the effectiveness of that registration statement,
offer to the Holders of the Notes the opportunity to exchange their Notes for a
like principal amount of New Notes, which would be issued without a restrictive
legend and may be reoffered and resold by the holder without restrictions or
limitations under the Securities Act (other than any such holder that is an
"affiliate" of Holdings within the meaning of Rule 405 under the Securities
Act). A copy of the Registration Rights Agreement has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part. The term
"Holder" with respect to the Exchange Offer means any person in whose name the
Notes are registered on the books of Holdings or any other person who has
obtained a properly completed bond power from the registered holder.
Because the Exchange Offer is for any and all Notes, the number of Notes
tendered and exchanged in the Exchange Offer will reduce the principal amount of
Notes outstanding. Following the consummation of the Exchange Offer, Holders of
the Notes who did not tender their Notes generally will not have any further
registration rights under the Registration Rights Agreement, and such Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for such Notes could be adversely affected. The Notes
are currently eligible for sale pursuant to Rule 144A through the PORTAL System
of the National Association of Securities Dealers, Inc. Because Holdings
anticipates that most holders of Notes will elect to exchange such Notes for New
Notes due to the absence of restrictions on the resale of New Notes under the
Securities Act, Holdings anticipates that the liquidity of the market for any
Notes remaining after the consummation of the Exchange Offer may be
substantially limited.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, Holdings will accept any and all Notes validly
tendered and not withdrawn prior to 12:00 midnight, New York City time, on the
Expiration Date. Holdings will issue $1,000 principal amount of New Notes in
exchange for each $1,000 principal amount of outstanding Notes accepted in the
Exchange Offer. Holders may tender some or all of their Notes pursuant to the
Exchange Offer. However, Notes may be tendered only in integral multiples of
$1,000.
The form and terms of the New Notes are the same as the form and terms of
the Notes except that (i) the New Notes have been registered under the
Securities Act and hence will not bear legends restricting the transfer thereof
and (ii) the holders of the New Notes generally will not be entitled to certain
rights under the Registration Rights Agreement, which rights generally will
terminate upon consummation of the Exchange Offer. The New Notes will evidence
the same debt as the Notes and will be entitled to the benefits of the
Indentures.
Holders of Notes do not have any appraisal or dissenters' rights under the
General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. Holdings intends to conduct the Exchange
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<PAGE> 22
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the SEC thereunder, including Rule 14e-1 thereunder.
Holdings shall be deemed to have accepted validly tendered Notes when, as
and if Holdings has given oral or written notice thereof to the Exchange Agents.
The Exchange Agent will act as agent for the tendering Holders for the purpose
of receiving the New Notes from Holdings.
If any tendered Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Notes will be returned, without
expense, to the tendering Holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Notes pursuant to
the Exchange Offer. Holdings will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange Offer.
See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 12:00 midnight, New York City time,
on , 1998, unless Holdings, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
To extend the Exchange Offer, Holdings will notify the Exchange Agent of
any extension by oral or written notice, followed by a public announcement
thereof no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
Holdings reserves the right, in its reasonable judgment, (i) to delay
accepting any Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under "-- Conditions" shall not
have been satisfied, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by a public announcement
thereof. If the Exchange Offer is amended in a manner determined by Holdings to
constitute a material change, Holdings will promptly disclose such amendment by
means of a prospectus supplement that will be distributed to the registered
Holders, and, depending upon the significance of the amendment and the manner of
disclosure to the registered Holders, Holdings will extend the Exchange Offer
for five to ten business days if the Exchange Offer would otherwise expire
during such five to ten business-day period.
If Holdings does not consummate the Exchange Offer, or, in lieu thereof,
Holdings does not file and cause to become effective a resale shelf registration
for the New Notes within the time periods set forth herein, liquidated damages
will accrue and be payable on the New Notes either temporarily or permanently.
See "Description of New Notes -- Registration Rights; Liquidated Damages."
INTEREST ON NEW NOTES
The New Notes will not bear interest prior to September 15, 2003.
Thereafter, interest will be payable in cash semi-annually on March 15 and
September 15 of each year, commencing on September 15, 2003.
PROCEDURES FOR TENDERING
Only a Holder of Notes may tender such Notes in the Exchange Offer. To
tender in the Exchange Offer, a Holder must complete, sign and date the relevant
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Notes
and any other required documents, to the Exchange Agent so as to be received by
the Exchange Agent at the address set forth below prior to 12:00 midnight, New
York City time, on the Expiration Date. The Letter of Transmittal must be used
to tender Notes.
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Delivery of the Notes may be made by book-entry transfer in accordance with
the procedures described below. Confirmation of such book-entry transfer must be
received by the Exchange Agent prior to the Expiration Date.
By executing the Letter of Transmittal, each Holder will make to Holdings
the representation set forth below in the second paragraph under the heading
"-- Resale of New Notes."
The tender by a Holder and the acceptance thereof by Holdings will
constitute an agreement between such Holder and Holdings in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO HOLDINGS. HOLDERS MAY REQUEST
THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES
TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered Holder promptly and instruct such registered
Holder to tender on such beneficial owner's behalf.
Signatures on the Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Notes tendered pursuant thereto are tendered (i) by a registered
Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Notes listed therein, such Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered Holder
as such registered Holder's name appears on such Notes with the signature
thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by Holdings, evidence
satisfactory to Holdings of their authority to so act must be submitted with the
Letter of Transmittal.
Holdings understands that each Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Notes at the Depository for the purpose of facilitating the Exchange Offer, and
subject to the establishment thereof, any financial institution that is a
participant in the Depository's system may make book-entry delivery of the Notes
by causing the Depository to transfer such Notes into the relevant Exchange
Agent's account with respect to the Notes in accordance with the Depository's
procedures for such transfer. Although delivery of the Notes may be effected
through book-entry transfer into the Exchange Agent's account at the Depository,
an appropriate Letter of Transmittal properly completed and duly executed with
any required signature guarantee and all other required documents must in each
case be transmitted to and received or confirmed by the Exchange Agent at its
address set forth below on or prior to the Expiration Date, or, if the
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures. Delivery of documents to the
Depository does not constitute delivery to the Exchange Agent.
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All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be
determined by Holdings in its sole discretion, which determination will be final
and binding. Holdings reserves the absolute right to reject any and all Notes
not properly tendered or any Notes Holdings' acceptance of which would, in the
opinion of counsel for Holdings, be unlawful. Holdings also reserves the right
to waive any defects, irregularities or conditions of tender as to particular
Notes. Holdings' interpretation of the terms and conditions of the Exchange
Offer (including the instructions in the Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as Holdings
shall determine. Although Holdings intends to notify Holders of defects or
irregularities with respect to tenders of Notes, none of Holdings, the Exchange
Agent or any other person shall incur any liability for failure to give such
notification. Tenders of Notes will not be deemed to have been made until such
defects or irregularities have been cured or waived. Any Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Notes and (i) whose New Notes are not
immediately available, (ii) who cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the relevant Exchange Agent or
(iii) who cannot complete the procedures for book-entry transfer, prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the relevant Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the Holder, the certificate
number(s) of such Notes and the principal amount of Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof), together with the certificate(s)
representing the Notes (or a confirmation of book-entry transfer of such
Notes into the Exchange Agent's account at the Depository) and any other
documents required by the Letter of Transmittal, will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Notes in proper form for transfer (or a confirmation of book-entry transfer
of such Notes into the Exchange Agent's account at the Depository) and all
other documents required by the Letter of Transmittal, are received by the
Exchange Agent within three New York Stock Exchange trading days after the
Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWALS OF TENDERS
Except as otherwise provided herein, tenders of Notes may be withdrawn at
any time prior to 12:00 midnight, New York City time, on the Expiration Date.
To withdraw a tender of Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth herein prior to 12:00 midnight, New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Notes to be withdrawn (the "Depositor"), (ii)
identify the Notes to be withdrawn (including the certificate number(s) and
principal amount of such Notes, or, in the case of Notes transferred by
book-entry transfer, the name and number of the account at the Depository to be
credited), (iii) be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal by which such Notes
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<PAGE> 25
were tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Notes
register the transfer of such Notes into the name of the person withdrawing the
tender, and (iv) specify the name in which any such Notes are to be registered,
if different from that of the Depositor. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by Holdings, whose determination shall be final and binding on all parties. Any
Notes so withdrawn will be deemed not to have been validly tendered for purposes
of the Exchange Offer and no New Notes will be issued with respect thereto
unless the Notes so withdrawn are validly retendered. Any Notes which have been
tendered but which are not accepted for exchange will be returned to the Holder
thereof without cost to such Holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Notes may be retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Holdings shall not be
required to accept for exchange, or to exchange New Notes for, any Notes, and
may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Notes, if any law, statute, rule, regulation or
interpretation by the staff of the SEC is proposed, adopted or enacted, which,
in the reasonable judgment of Holdings, might materially impair the ability of
Holdings to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to Holdings.
If Holdings determines in its reasonable judgment that any of the
conditions are not satisfied, Holdings may (i) refuse to accept any Notes and
return all tendered Notes to the tendering Holders, (ii) extend the Exchange
Offer and retain all Notes tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of Holders to withdraw such Notes (see
"-- Withdrawals of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Notes which have
not been withdrawn. If such waiver constitutes a material change to the Exchange
Offer, Holdings will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered Holders, and, depending
upon the significance of the waiver and the manner of disclosure to the
registered Holders, Holdings will extend the Exchange Offer for a period of five
to ten business days if the Exchange Offer would otherwise expire during such
five to ten business-day period.
EXCHANGE AGENT
State Street Bank & Trust Company will act as Exchange Agent for the
Exchange Offer with respect to the Notes (the "Exchange Agent").
Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal for the Notes and requests for
copies of Notice of Guaranteed Delivery should be directed to the Exchange
Agent, addressed as follows:
<TABLE>
<S> <C> <C>
By Mail By Facsimile Transmission: By Hand or Overnight Courier:
(registered or certified mail (617) 664-5395
recommended):
State Street Bank and
State Street Bank and Confirm by Telephone Trust Company
Trust Company or for Information Call: Corporate Trust Department
Corporate Trust Department (617) 664-5587 4th floor
P.O. Box 778 Attn: Kellie Mullen Two International Place
Boston, MA 02102-0078 Boston, MA 02110
</TABLE>
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FEES AND EXPENSES
The expenses of soliciting tenders will be borne by Holdings. The principal
solicitation is being made by mail; however, additional solicitation may be made
by telegraph, telephone, facsimile or in person by officers and regular
employees of Holdings and its affiliates.
Holdings has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers or other persons
soliciting acceptances of the Exchange Offer. Holdings, however, will pay the
Exchange Agents reasonable and customary fees for their services and will
reimburse them for their reasonable out-of-pocket expenses in connection
therewith and pay other registration expenses, including fees and expenses of
the Trustees, filing fees, blue sky fees and printing and distribution expenses.
Holdings will pay all transfer taxes, if any, applicable to the exchange of
the Notes pursuant to the Exchange Offer. If, however, certificates representing
the New Notes or the Notes for principal amounts not tendered or accepted for
exchange are to be delivered to, or are to be issued in the name of, any person
other than the registered Holder of the Notes tendered, or if tendered Notes are
registered in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of the Notes pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the registered Holder or any other
person) will be payable by the tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Notes,
which is the aggregate principal amount in the case of the Notes, as reflected
in Holdings' accounting records on the date of exchange. Accordingly, no gain or
loss for accounting purposes will be recognized in connection with the Exchange
Offer. The expenses of the Exchange Offer will be amortized over the term of the
New Notes.
RESALE OF NEW NOTES
Based on an interpretation by the staff of the SEC set forth in no-action
letters issued to third parties, Holdings believes that New Notes issued
pursuant to the Exchange Offer in exchange for Notes may be offered for resale,
resold and otherwise transferred by any Holder of such New Notes (other than any
such Holder which is an "affiliate" of Holdings within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such Holder's business and such
Holder does not intend to participate, and has no arrangement or understanding
with any person to participate, in the distribution of such New Notes. Any
Holder who tenders in the Exchange Offer with the intention to participate, or
for the purpose of participating, in a distribution of the New Notes may not
rely on the position of the staff of the SEC enunciated in Exxon Capital
Holdings Corporation (available April 13, 1989) and Morgan Stanley & Co.,
Incorporated (available June 5, 1991), or similar no-action letters, but rather
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. In addition, any such
resale transaction should be covered by an effective registration statement
containing the selling security holder's information required by Item 507 or 508
of Regulation S-K of the Securities Act, as applicable. Each broker-dealer that
receives New Notes for its own account in exchange for Notes, where such Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, may be a statutory underwriter and must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes.
By tendering in the Exchange Offer, each Holder will represent to Holdings
that, among other things, (i) the New Notes acquired pursuant to the Exchange
Offer are being obtained in the ordinary course of business of the person
receiving such New Notes, whether or not such person is a Holder, (ii) neither
the Holder nor any such other person has an arrangement or understanding with
any person to participate in the distribution of such New Notes and (iii) the
Holder and such other person acknowledge that if they
25
<PAGE> 27
participate in the Exchange Offer for the purpose of distributing the New Notes
(a) they must, in the absence of an exemption therefrom, comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the New Notes and cannot rely on the no-action
letters referenced above and (b) failure to comply with such requirements in
such instance could result in such Holder incurring liability under the
Securities Act for which such Holder is not indemnified by Holdings. Further, by
tendering in the Exchange Offer, each Holder that may be deemed an "affiliate"
(as defined under Rule 405 of the Securities Act) of Holdings will represent to
Holdings that such Holder understands and acknowledges that the New Notes may
not be offered for resale, resold or otherwise transferred by that Holder
without registration under the Securities Act or an exemption therefrom.
As set forth above, affiliates of Holdings are not entitled to rely on the
foregoing interpretations of the staff of the SEC with respect to resales of the
New Notes without compliance with the registration and prospectus delivery
requirements of the Securities Act. In connection with the Note Offering,
Holdings entered into the Registration Rights Agreement pursuant to which
Holdings agreed to file and maintain, subject to certain limitations, a
registration statement that would allow DLJ to engage in market-making
transactions with respect to the Notes or the New Notes. Holdings has agreed to
bear all registration expenses incurred under such agreement, including printing
and distribution expenses, reasonable fees of counsel, blue sky fees and
expenses, reasonable fees of independent accountants in connection with the
preparation of comfort letters, and SEC and the National Association of
Securities Dealers, Inc. filing fees and expenses.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, Holdings will have
fulfilled one of its obligations under the Registration Rights Agreement, and
Holders of Notes who do not tender their Notes generally will not have any
further registration rights under the Registration Rights Agreement or
otherwise. Accordingly, any Holder of Notes that does not exchange that Holder's
Notes for New Notes will continue to hold the untendered Notes and will be
entitled to all the rights and limitations applicable thereto under the
Indentures, except to the extent that such rights or limitations, by their
terms, terminate or cease to have further effectiveness as a result of the
Exchange Offer.
The Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such Notes may be resold
only (i) to Holdings (upon redemption thereof or otherwise), (ii) pursuant to an
effective registration statement under the Securities Act, (iii) so long as the
Notes are eligible for resale pursuant to Rule 144A, to a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A, (iv) outside the United
States to a foreign person pursuant to the exemption from the registration
requirements of the Securities Act provided by Regulation S thereunder, (v)
pursuant to an exemption from registration under the Securities Act provided by
Rule 144 thereunder (if available), or (vi) to an institutional accredited
investor in a transaction exempt from the registration requirements of the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States. See "Risk Factors -- Restrictions on
Transfer."
OTHER
Participation in the Exchange Offer is voluntary and Holders should
carefully consider whether to accept. Holders of the Notes are urged to consult
their financial and tax advisors in making their own decision on what action to
take.
Holdings may in the future seek to acquire untendered Notes in open market
or privately negotiated transactions, through subsequent exchange offers or
otherwise. Holdings has no present plans to acquire any Notes that are not
tendered in the Exchange Offer or to file a registration statement to permit
resales of any untendered Notes.
26
<PAGE> 28
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE EXCHANGE OFFER
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the "IRS") will not take a contrary view, and
no ruling from the IRS has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to Holders. Certain Holders of the Notes (including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations and persons who are not citizens or residents of the United
States) may be subject to special rules not discussed below. Each Holder of a
Note should consult his, her or its own tax advisor as to the particular tax
consequences of exchanging such Holder's Notes for New Notes, including the
applicability and effect of any state, local or foreign tax laws.
The issuance of the New Notes to Holders of the Notes pursuant to the terms
set forth in this Prospectus will not constitute an exchange for federal income
tax purposes. Consequently, no gain or loss would be recognized by Holders of
the Notes upon receipt of the New Notes, and ownership of the New Notes will be
considered a continuation of ownership of the Notes. For purposes of determining
gain or loss upon the subsequent sale or exchange of the New Notes, a Holder's
basis in the New Notes should be the same as such Holder's basis in the Notes
exchanged therefor. A Holder's holding period for the New Notes should include
the Holder's holding period for the Notes exchanged therefor. The issue price,
and other tax characteristics of the New Notes should be identical to the issue
price, and other tax characteristics of the Notes exchanged therefor.
See also "Description of Certain Federal Income Tax Consequences."
27
<PAGE> 29
THE TRANSACTIONS
In connection with the Combination, Holdings: (i) consummated the Note
Offering and (ii) effected the Preferred Stock Contribution. Concurrently, the
Company: (i) consummated the Senior Subordinated Notes Offering, (ii) received
the Preferred Stock Contribution, and (iii) entered into the New Credit
Facility. The Senior Subordinated Notes Offering, the Preferred Stock
Contribution and the New Credit Facility, collectively, will be referred to
herein as the "Financing." The Combination and the Financing will collectively
be referred to as the "Company Transactions" and, together with the Note
Offering, the "Transactions." See "Description of Indebtedness."
THE COMBINATION
Pursuant to the Combination Agreement, dated as of January 15, 1998 (the
"Combination Agreement"), by and among Myron C. Warshauer, Stanley Warshauer,
Steven A. Warshauer, Dosher Partners, L.P., a Delaware limited partnership, SP
Parking Associates, an Illinois general partnership, and SP Associates, an
Illinois general partnership (collectively, "Standard Owners") and APCOA, APCOA
has, subject to the terms and conditions contained in the Combination Agreement,
acquired all of the outstanding capital stock, partnership and other equity
interests of Standard Parking Corporation, an Illinois corporation; Standard
Auto Park, Inc., an Illinois corporation; Standard Parking Corporation MW, an
Illinois corporation; Standard Parking, L.P., a Delaware limited partnership;
Standard Parking Corporation IL, an Illinois corporation; and Standard/Wabash
Parking Corporation, an Illinois corporation (all such interests collectively,
"Standard") for consideration consisting of $65.0 million in cash, 16% of the
common stock of the Company ("Company Common Stock") outstanding as of January
15, 1998 and the assumption of certain liabilities. In addition, following the
Combination, APCOA paid to the Standard Owners $2.8 million, generally
representing Standard's earnings through the date of the Combination and
Standard's cash on hand at such time. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations of Holdings--Pro Forma
Liquidity and Capital Resources."
Pursuant to the Combination Agreement, the company executed certain
agreements including (a) a stockholders agreement among the stockholders of the
Company, (b) an escrow agreement among the Company and the Standard Owners, (c)
an employment agreement between the Company and Myron C. Warshauer, and (d) a
consulting agreement between the Company and Sidney Warshauer.
The Combination Agreement contains customary representations and warranties
by the parties which generally survive for a period of two years after the
consummation of the Combination. The Standard Owners and APCOA have agreed to
indemnify each other for any loss resulting from such party's breach of a
representation, warranty or covenant made by such party; provided, however, that
such indemnity is limited, in the aggregate, to a basket of $2.0 million and is
limited to a cap of $10.0 million, except for an indemnity by the Standard
Owners related to taxes which shall not be subject to such limitations.
THE FINANCING
The Senior Subordinated Notes Offering. Concurrently with the Note
Offering, the Company offered $140.0 million in aggregate principal amount of
its 9 1/4% Senior Subordinated Notes due 2008. The net proceeds from the Senior
Subordinated Notes Offering, together with the other Financings, were used to
finance the Company Transactions.
The Preferred Stock Contribution. In connection with the Combination,
Holdings contributed $40.7 million of cash to the Company (the "Preferred Stock
Contribution") in exchange for $40.7 million of new preferred stock of the
Company. The new preferred stock has terms substantially similar to those of the
New Notes. See "Certain Relationships and Related Party Transactions--Preferred
Stock". The Preferred Stock Contribution was financed with the proceeds of the
Note Offering, the fees and expenses of which were borne by APCOA.
28
<PAGE> 30
The New Credit Facility. Upon the closing of the Senior Subordinated Notes
Offering, the Company entered into a $40.0 million secured revolving credit
facility (the "New Credit Facility") with The First National Bank of Chicago
(the "Agent"). Borrowings under the New Credit Facility bear interest at
variable rates based, at the Company's option, either on LIBOR, the federal
funds rate, or the Agent's base rate. See "Description of Indebtedness--New
Credit Facility."
29
<PAGE> 31
USE OF PROCEEDS
HOLDINGS
The gross proceeds from the sale of the Notes of approximately $40.7
million were used by Holdings to fund the Preferred Stock Contribution. The fees
and expenses of the Note Offering were borne by APCOA.
THE COMPANY
(DOLLARS IN MILLIONS)
The Company used the net proceeds from the Senior Subordinated Notes
Offering (after deducting discounts and commissions and estimated expenses),
together with the Preferred Stock Contribution: (i) to fund the cash portion of
the consideration payable in connection with the Combination; (ii) to repay
certain indebtedness; (iii) for general corporate purposes, including working
capital needs and future acquisitions; (iv) to redeem preferred stock held by
Holberg; and (v) to pay fees and expenses in connection with the Transactions.
The existing indebtedness repaid in connection with the Senior Subordinated
Notes Offering included approximately $40.7 million of borrowings under APCOA's
then-existing credit facility and approximately $0.35 million of borrowings
under Standard's then-existing credit facility. See "Certain Relationships and
Related Party Transactions."
30
<PAGE> 32
CAPITALIZATION
(DOLLARS IN THOUSANDS)
The following table sets forth the actual cash and cash equivalents and
capitalization of Holdings as of December 31, 1997 and on a pro forma basis,
adjusted to reflect the Transactions and the Other Acquisitions, and in each
case on a consolidated basis. This table should be read in conjunction with the
historical financial statements of Holdings and the related notes thereto, the
historical financial statements of Standard and the related notes thereto and
the unaudited pro forma financial statements of Holdings and the related notes
thereto, each included elsewhere herein. See "The Transactions."
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
-----------------------
ACTUAL PRO FORMA
--------- ----------
<S> <C> <C>
Cash and cash equivalents(1)................................ $ 3,322 $ 61,173
======== ========
Long-term debt (including current portion):
Existing bank debt........................................ $ 29,529 $ --
New Credit Facility(2).................................... -- --
11 1/4% Senior Discount Notes due 2008.................... -- 40,683
9 1/4% Senior Subordinated Notes due 2008................. -- 140,000
Other debt................................................ 8,754 12,339
-------- --------
Total long-term debt................................... 38,283 193,022
Redeemable preferred stock of subsidiary (the Company)...... 8,728 --
Common stock of subsidiary (the Company) subject to put/call
rights(3)................................................. -- 4,589
Common stock subject to put/call rights(4).................. 333 333
Stockholders' equity (deficit):
Preferred stock........................................... 25,201 25,201
Common stock and additional paid-in capital............... 7,872 4,078
Retained earnings (deficit)............................... (55,665) (58,440)
-------- --------
Total stockholders' equity (deficit)................... (22,592) (29,161)
-------- --------
Total capitalization.............................. $ 24,752 $168,783
======== ========
</TABLE>
- ------------------------------
(1) As a result of anticipated normal fluctuations in working capital, Holdings
had approximately $7.5 million less in cash and cash equivalents at Closing
than indicated above.
(2) Following the Closing, $40.0 million is available under the New Credit
Facility for working capital and general corporate purposes, including the
issuance of letters of credit, $4.9 million of which were issued at Closing,
subject to the achievement of certain financial ratios and compliance with
certain conditions. See "Description of Indebtedness--New Credit Facility."
(3) In accordance with the Stockholders Agreement (as defined below under
"Certain Relationships and Related Party Transactions--Stockholders
Agreement") the Company will be obligated under certain circumstances to
repurchase shares of common stock issued in connection with the Combination.
The amount reflected herein has been calculated based on the formula in the
Stockholders Agreement calculated on a pro forma basis giving effect to the
consummation of the Combination as of December 31, 1997. The Company will
not be obligated to repurchase such common stock prior to the third
anniversary of the consummation of the Combination.
(4) In accordance with the Put/Call Agreement between Holdings and Delaware
North, Holdings has the right under certain circumstances to, and has the
obligation under certain circumstances to, repurchase the shares of its
common stock held by Delaware North. Holdings has exercised the right to
repurchase the common stock held by Delaware North pursuant to the terms of
the Put/Call Agreement, and the price of such repurchase will be determined
in accordance with the terms of the Put/Call Agreement by a nationally
recognized investment bank.
31
<PAGE> 33
SELECTED HISTORICAL FINANCIAL DATA OF HOLDINGS
(DOLLARS IN THOUSANDS)
The following table presents selected historical consolidated financial
data of Holdings at and for the fiscal years 1993, 1994, 1995, 1996 and 1997
which have been derived from the audited financial statements of Holdings,
audited by Ernst & Young LLP. The selected financial data set forth below should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations of Holdings" and the historical consolidated
financial statements of Holdings and the notes thereto included elsewhere
herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Parking services revenue.................. $150,280 $148,398 $141,540 $135,752 $115,676
Cost of parking services.................. 132,598 129,175 120,215 113,501 92,818
General and administrative expenses....... 10,712 10,879 12,121 13,017 13,528
Depreciation and amortization............. 8,486 8,749 8,772 4,888 3,767
-------- -------- -------- -------- --------
Operating income (loss)................... (1,516) (405) 432 4,346 5,563
Interest expense, net..................... 2,021 2,350 2,705 2,877 3,243
Other expense............................. 500 125 -- -- --
Minority interest......................... 496 850 604 424 321
Income tax expense........................ 126 169 240 106 140
-------- -------- -------- -------- --------
Net income (loss)......................... $ (4,659) $ (3,899) $ (3,117) $ 939 $ 1,859
======== ======== ======== ======== ========
OTHER DATA:
Gross customer collections................ $352,466 $389,556 $408,952 $430,696 $476,183
Capital expenditures...................... 1,577 2,002 2,782 2,552 2,757
Ratio of earnings to fixed charges(1)..... N/A N/A N/A 1.3x 1.5x
Number of managed locations............... 173 197 227 207 318
Number of leased locations................ 232 223 260 243 252
Number of total locations................. 405 420 487 450 570
Number of parking spaces.................. 268,000 235,000 226,000 225,000 273,000
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents................. $ 2,197 $ 2,021 $ 2,551 $ 2,532 $ 3,322
Working capital (deficiency).............. (24,065) (20,795) (20,990) (19,455) (17,059)
Total assets.............................. 52,788 51,544 51,605 52,823 59,095
Total debt................................ 24,829 27,700 30,461 32,795 38,283
Redeemable preferred stock of subsidiary
(the Company).......................... 6,000 6,330 7,045 7,841 8,728
Common stock subject to put/call rights... 333 333 333 333 333
Stockholders' equity (deficit)............ (14,470) (19,875) (23,707) (23,564) (22,592)
</TABLE>
- ------------------------------
(1) For purposes of computing this ratio, earnings consist of income before
income taxes and minority interest plus fixed charges. Fixed charges consist
of interest expense, amortization of deferred financing costs and one-third
of the rent expense from operating leases, which management believes is a
reasonable approximation of the interest factor of the rent. For the years
ended December 31, 1993, 1994 and 1995, earnings were inadequate to cover
fixed charges by $4,037, $2,880 and $2,273, respectively.
32
<PAGE> 34
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF HOLDINGS
The following discussion of Holdings' results of operations should be read
in conjunction with the consolidated financial statements of Holdings and the
notes thereto included elsewhere herein. Following consummation of the
Transactions, Holdings' assets consist solely of capital stock of the Company,
and Holdings conducts all of its business through the Company.
OVERVIEW
APCOA operates facilities under two types of arrangements: management
contracts and leases. APCOA does not own any parking facilities and, as a
result, APCOA assumes few of the risks of real estate ownership. Under a
management contract, APCOA typically receives a base monthly fee for managing
the property, and may also receive an incentive fee based on the achievement of
facility revenues above a base amount. In some instances, APCOA also receives
certain fees for ancillary services. Typically, all of the underlying revenues,
expenses and capital expenditures under a management contract flow through to
the property owner, not to APCOA. Under lease arrangements, APCOA generally pays
to the property owner either a fixed annual rental, a percentage of gross
customer collections or a combination thereof. APCOA collects all revenues under
lease arrangements and is responsible for most operating expenses, but it is
typically not responsible for major maintenance or capital expenditures. As of
December 31, 1997, the Company (giving effect to the Combination and the Other
Acquisitions) operated approximately 72% of its approximately 1,100 parking
facilities under management contracts and approximately 28% under leases.
Gross customer collections. Gross customer collections consist of gross
receipts collected at all leased and managed properties, including
unconsolidated affiliates.
Parking services revenue--leases. Lease parking services revenues consist
of all revenues received at a leased facility.
Parking services revenue--management contracts. Management contract
revenues consist of management fees, including both fixed and revenue-based, and
fees for ancillary services such as accounting, equipment leasing, consulting,
and other value-added services with respect to managed locations, but exclude
gross customer collections at such locations. Management contracts generally
provide APCOA a management fee regardless of the operating performance of the
underlying facility.
Cost of parking services--leases. Cost of parking services under lease
arrangements consist of (i) contractual rental fees paid to the facility owner
and (ii) all operating expenses incurred in connection with operating the leased
facility. Contractual fees paid to the facility owner are based on either a
fixed contractual amount or a percentage of gross revenue, or a combination
thereof. Generally under a lease arrangement, APCOA is not responsible for major
capital expenditures or property taxes.
Cost of parking services--management contracts. Cost of parking services
under management contracts are generally passed through to the facility owner.
Most management contracts have no cost of parking services related to them as
all costs are reimbursable to APCOA by the client. Several APCOA contracts,
however, require APCOA to pay for certain costs which are offset by larger
management fees. These contracts tend to be large airport properties with high
cost structures.
General and administrative expenses. General and administrative expenses
include primarily salaries, wages, travel and office related expenses for the
headquarters and field employees.
SUMMARY OF OPERATING FACILITIES
Pursuant to the terms of the Combination Agreement, APCOA paid to the
Standard Owners $65.0 million in cash and 16.0% of the Company Common Stock
outstanding as of January 15, 1998. In addition to the Combination, APCOA
completed four acquisitions since January 1, 1997, as follows: (i) Colonial
Richmond (March 1, 1997); (ii) Metropolitan Parking (June 1, 1997); (iii) the
remaining 50% interest in APCOA Limited (November 1, 1997); and (iv) Dixie
Parking (January 22, 1998). In addition, APCOA has
33
<PAGE> 35
entered into a binding letter of intent with respect to the acquisition of the
remaining 76% interest in Executive Parking Industries LLC ("EPI") not currently
owned by APCOA (such proposed acquisition, together with the four completed
acquisitions described above, the "Other Acquisitions"). The Other Acquisitions
will contribute 233 additional parking locations.
The following table reflects the Company's facilities at the end of the
periods indicated taking into consideration the Combination and the Other
Acquisitions, on a pro forma basis:
<TABLE>
<CAPTION>
FISCAL YEAR
---------------------
1995 1996 1997
<S> <C> <C> <C>
Managed facilities:
APCOA..................................................... 227 207 263
Standard.................................................. 233 295 344
Other Acquisitions........................................ N/A N/A 187
--- --- -----
Combined............................................... 460 502 794
Leased facilities:
APCOA..................................................... 260 243 227
Standard.................................................. 32 32 35
Other Acquisitions........................................ N/A N/A 46
--- --- -----
Combined............................................... 292 275 308
--- --- -----
Total facilities............................................ 752 777 1,102
=== === =====
Contract retention rate..................................... 96% 96% 96%
</TABLE>
RESULTS OF OPERATIONS
APCOA has made a strategic decision to pursue management contracts
primarily because its target client base generally prefers such arrangements
and, therefore, management believes that there are greater growth opportunities
in this area.
APCOA does not believe that an analysis of margins is a meaningful
indicator of operating performance with respect to management contracts because
the cost of parking services in connection with the provision of management
services is generally paid by the clients. Similarly, APCOA does not believe
that an analysis of margins is a meaningful indicator of operating performance
with respect to lease arrangements because margins are significantly impacted by
variables other than operating performance, such as the ability to charge higher
parking rates in different cities and widely varying space utilization by
parking facility type.
The following table sets forth, for the periods indicated, Holdings'
results of operations expressed in thousands of dollars:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1995 1996 1997
<S> <C> <C> <C>
Gross customer collections......................... $408,952 $430,696 $476,183
======== ======== ========
Parking services revenue:
Lease contracts.................................. $128,745 $120,286 $ 99,594
Management contracts............................. 12,795 15,466 16,082
-------- -------- --------
141,540 135,752 115,676
Cost of parking services:
Lease contracts.................................. 113,337 104,718 83,327
Management contracts............................. 6,878 8,783 9,491
-------- -------- --------
120,215 113,501 92,818
</TABLE>
34
<PAGE> 36
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1995 1996 1997
<S> <C> <C> <C>
General and administrative expenses................ 12,121 13,017 13,528
Depreciation and amortization...................... 8,772 4,888 3,767
-------- -------- --------
Operating income................................... $ 432 $ 4,346 $ 5,563
======== ======== ========
</TABLE>
FISCAL 1997 COMPARED TO FISCAL 1996
Gross customer collections. Gross customer collections increased $45.5
million, or 10.6%, to $476.2 million in fiscal 1997 from $430.7 million in
fiscal 1996. This increase resulted primarily from the net addition of 120
leased and managed locations, as well as a combination of rate increases and
higher utilization of parking spaces at existing facilities.
Parking services revenue--leases. Lease revenue decreased $20.7 million,
or 17.2%, to $99.6 million in fiscal 1997 from $120.3 million in fiscal 1996.
This decrease resulted from the loss of an airport lease ($31.7 million)
partially offset by improvements at other lease facilities ($6.9 million) and
new leases acquired in connection with the Other Acquisitions ($4.1 million).
Parking services revenue--management contracts. Management contract
revenue increased $0.6 million, or 4.0%, to $16.1 million in fiscal 1997 from
$15.5 million in fiscal 1996. This increase resulted primarily from increased
revenues at existing facilities ($0.4 million) and new contracts acquired in
connection with the Other Acquisitions ($1.1 million), offset by APCOA's Los
Angeles facilities that were contributed to EPI ($0.9 million).
Cost of parking services--leases. Cost of parking for leases decreased
$21.4 million, or 20.4%, to $83.3 million in fiscal 1997 from $104.7 million in
fiscal 1996. The reduction in cost of parking services leases was due to the
loss of a large airport lease ($31.2 million) partially offset by increases in
costs at existing lease locations ($6.6 million) and new leases acquired in
connection with the Other Acquisitions ($3.8 million).
Cost of parking services--management contracts. Cost of parking for
management contracts increased $0.7 million, or 8.1%, to $9.5 million in fiscal
1997 from $8.8 million in fiscal 1996. Most management contracts have no cost of
parking services related to them as all costs are reimbursable to APCOA.
However, several contracts (primarily large airport properties), require APCOA
to pay for certain costs which are offset by larger management fees. The
increase in cost of parking for management contracts was related to growth at
two airport facilities ($0.8 million), costs related to new management contracts
and the acquisition of Metropolitan in June 1997 ($0.4 million), offset by
APCOA's Los Angeles facilities that were contributed to EPI ($0.5 million).
General and administrative expenses. General and administrative expenses
increased $0.5 million, or 3.9%, to $13.5 million in fiscal 1997 from $13.0
million in fiscal 1996. This increase was primarily a result of inflation.
Depreciation and amortization expense. Depreciation and amortization
expense decreased $1.1 million, or 22.9%, to $3.8 million in fiscal 1997 from
$4.9 million in fiscal 1996. This decrease resulted primarily from the declining
balance of the leasehold contracts which were amortized over seven years. The
leasehold contracts were recorded in 1989 at their fair value in connection with
the acquisition of APCOA by Holberg.
FISCAL 1996 COMPARED TO FISCAL 1995
Gross customer collections. Gross customer collections increased $21.7
million, or 5.3%, to $430.7 million in fiscal 1996 from $409.0 million in fiscal
1995. This increase resulted primarily from a combination of rate increases and
higher utilization of parking spaces at existing facilities.
Parking services revenue--leases. Lease revenue decreased $8.4 million, or
6.6%, to $120.3 million in fiscal 1996 from $128.7 million in fiscal 1995. This
decrease resulted from a strategic shift from leases to
35
<PAGE> 37
management contracts, particularly the conversion of one large airport lease
($10.7 million). This decrease was partially offset by growth in existing
revenues at other locations ($2.3 million).
Parking services revenue--management contracts. Management contract
revenue increased $2.7 million, or 20.9%, to $15.5 million in fiscal 1996 from
$12.8 million in fiscal 1995. This increase resulted from the conversion of one
large lease to a management contract ($0.2 million), significant growth at two
large airports ($1.4 million) and the increased revenues at existing facilities
primarily as a result of rate increases ($1.1 million).
Cost of parking services--leases. Cost of parking for leases decreased
$8.6 million, or 7.6%, to $104.7 million in fiscal 1996 from $113.3 million in
fiscal 1995. The reduction in cost of parking services for leases is primarily
related to the conversion of one airport lease to a management contract ($10.4
million).
Cost of parking services--management contracts. Cost of parking for
management contracts increased $1.9 million, or 27.7%, to $8.8 million in fiscal
1996 from $6.9 million in fiscal 1995. The increase in cost of parking services
for management contracts reflects the significant growth at two airport
facilities ($0.9 million), and additional costs at other management accounts
($1.0 million).
General and administrative expenses. General and administrative expenses
increased $0.9 million, or 7.4%, to $13.0 million in fiscal 1996 from $12.1
million in fiscal 1995. This increase was primarily a result of additions to the
airport administrative staff designed to stimulate growth in that segment.
Depreciation and amortization. Depreciation and amortization expenses
decreased $3.9 million, or 44.3%, to $4.9 million in fiscal 1996 from $8.8
million in fiscal 1995. This decrease resulted primarily from the declining
balance of the leasehold contracts which were amortized over seven years. The
leasehold contracts were recorded in 1989 at their fair value in connection with
the acquisition of APCOA by Holberg.
HISTORICAL LIQUIDITY AND CAPITAL RESOURCES
As a result of day-to-day activity at the parking locations, APCOA collects
significant amounts of cash. Under lease contracts, this revenue is deposited
into APCOA's bank account, with a portion remitted to the clients in the form of
rental payments according to the terms of the leases. Under management
contracts, some clients require APCOA to deposit the daily receipts into an
APCOA bank account while others require the deposit into a client account. The
locations with revenues deposited into the APCOA banks result in the Company
operating with a negative working capital. This negative working capital arises
from the liability that is created for the amount of revenue that will be
remitted to the clients in the form of rents or net profit distributions
subsequent to month end, after the books are closed and reconciled. Since the
Company operates with a revolving working capital facility, all funds held for
future remittance to the clients are used to reduce the line until the payments
are made to the clients.
Holdings had $17.1 million of negative working capital at December 31, 1997
as compared to $19.5 million at December 31, 1996. The reduction in negative
working capital in fiscal 1997 resulted primarily from an increase in cash and
accounts receivable attributable to the addition of management contracts during
the year. This is partially offset by the increase in current portion of
long-term debt which totaled $4.1 million at December 31, 1997 and $0.7 million
at December 31, 1996.
Net cash provided by operating activities totaled $0.9 million for fiscal
1997 and $2.0 million for fiscal 1996. The reduction of $1.1 million resulted
from working capital uses primarily related to adding new management contracts
and reductions in accrued rent and insurance reserves. The new management
contracts were concentrated in the type that require the Company to deposit the
receipts into the client's account. The reductions in accrued rent were
primarily a result of a location that was lost in a competitive bid. Insurance
reserves declined due to a concerted effort to close out old claims.
Cash used in investing activities totaled $3.6 million in 1997 and $3.3
million in 1996. The primary use is for capital expenditures which are used to
extend lease contracts, obtain new contracts and for management information
system equipment and upgrades. The Company has historically expended about $2.0
million annually on capital expenditures at parking properties. These
expenditures are generally used to acquire
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<PAGE> 38
parking equipment, booths, or install paving or fencing. The average expenditure
is $50,000 to $60,000 per project. In addition, the Company spends approximately
$250,000 to $500,000 per year on management information system upgrades.
Cash from financing activities totaled $3.5 million in 1997 up from $1.3
million in 1996. The primary reason for the increase was the acquisition of
three small parking companies in 1997 that were funded partially with promissory
notes issued by APCOA to the sellers in these transactions.
PRO FORMA LIQUIDITY AND CAPITAL RESOURCES
In connection with the Offering, the Company has $55.8 million of
additional cash on its balance sheet as of December 31, 1997. The Company
anticipates using this cash to finance working capital needs, as well as for
future acquisitions.
The Company has lease commitments of $51.4 million for fiscal 1998. The
leased properties generate sufficient cash flow to meet the base rent payments.
In addition, following the Combination APCOA paid to the Standard Owners $2.8
million, generally representing Standard's earnings through the date of the
Combination and Standard's cash on hand at such time. See "The Transactions--The
Combination."
Also, the Company anticipates taking a one-time charge of $8.5 million in
connection with the Transactions and Other Acquisitions, of which an estimated
$6.6 million will be paid in cash. See Note 2 to the Unaudited Pro Forma
Consolidated Statement of Operations.
The Company entered into the New Credit Facility for $40.0 million of
secured revolving credit. Borrowings under the New Credit Facility will bear
interest at variable rates based, at the Company's option, either on LIBOR,
overnight federal funds rate, or the bank's base rate. The New Credit Facility
contains certain covenants with which the Company must comply, including
restrictions on debt limits relative to EBITDA, capital expenditures, and other
customary requirements.
After the Transactions, the Company's primary capital requirements, on a
pro forma basis, are for working capital, capital expenditures and debt service.
The Company believes that cash flow from operating activities, cash and cash
equivalents and borrowings under the New Credit Facility will be adequate to
meet the Company's short-term and long-term liquidity requirements prior to the
maturity of its long-term indebtedness, although no assurance can be provided in
this regard. If the Company identifies investment opportunities requiring cash
in excess of the Company's cash flows and the net proceeds from the Senior
Subordinated Notes Offering, the Company may borrow under the New Credit
Facility, or may seek additional sources of capital including the sale or
issuance of Company Common Stock. The Company has in the past and expects in the
future to pursue a strategy of growth through acquisition. The Company is
currently in negotiations with respect to several possible acquisitions. No
binding agreements with respect to acquisitions are pending, other than with
respect to the proposed acquisition of the interest in EPI not currently owned
by the Company. There can be no assurance as to the Company's ability to effect
future acquisitions, nor as to the effect of any such acquisition on the
Company's operations, financial condition and profitability.
IMPACT OF INFLATION AND CHANGING PRICES
The primary sources of revenues to APCOA are parking revenues from leased
locations and management contract revenue on managed parking facilities. APCOA
believes that inflation has had a limited impact on its overall operations for
fiscal years 1995, 1996 and 1997.
YEAR 2000
APCOA has tested its computer systems and applications for compliance with
Year 2000 issues and believes that its computer systems and applications are
Year 2000 compliant and that Year 2000 issues will not have a significant impact
on its operations or liquidity.
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<PAGE> 39
SELECTED HISTORICAL FINANCIAL DATA OF STANDARD
(DOLLARS IN THOUSANDS)
The following table presents selected historical financial data of Standard
at and for the fiscal years 1993, 1994, 1995, 1996 and 1997. The selected
historical financial data of Standard at and for the fiscal years 1994, 1995,
1996 and 1997 have been derived from the audited financial statements of
Standard, audited by Altschuler, Melvoin and Glasser LLP. The selected
historical financial data of Standard at and for the fiscal year 1993 have been
derived from the unaudited financial statements of Standard. The selected
financial data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Standard" and the historical consolidated financial statements of Standard and
the notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Parking services revenue.......... $ 21,537 $ 35,787 $ 45,201 $ 50,275 $ 63,652
Cost of parking services.......... 12,213 25,901 35,168 37,838 50,142
General and administrative
expenses....................... 9,074 6,095 6,798 7,547 7,857
Depreciation and amortization..... 119 184 316 376 464
-------- -------- -------- -------- --------
Operating income.................. 131 3,607 2,919 4,514 5,189
Interest income, net.............. 16 9 59 56 85
-------- -------- -------- -------- --------
Net income........................ $ 147 $ 3,616 $ 2,978 $ 4,570 $ 5,274
======== ======== ======== ======== ========
OTHER DATA:
Gross customer collections........ $217,734 $250,081 $339,234 $412,114 $462,261
Capital expenditures.............. 196 306 547 336 492
Ratio of earnings to fixed
charges(1)..................... 2.9x 41.6x 26.9x 35.9x 41.6x
Number of managed locations....... 177 186 233 295 344
Number of leased locations........ 18 23 32 32 35
Number of total locations......... 195 209 265 327 379
Number of parking spaces.......... 155,000 174,000 192,000 235,000 249,000
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and cash equivalents......... $ 838 $ 2,774 $ 1,248 $ 2,968 $ 2,478
Working capital................... 2,305 2,615 1,697 3,453 3,449
Total assets...................... 5,642 6,672 6,956 9,130 10,176
Total debt........................ -- 248 529 470 590
Equity............................ 2,516 3,894 3,400 4,912 5,016
</TABLE>
- ------------------------------
(1) For purposes of computing this ratio, earnings consist of net income plus
fixed charges. Fixed charges consist of interest expense, amortization of
deferred financing costs and one-third of the rent expense from operating
leases, which management believes is a reasonable approximation of the
interest factor of the rent.
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<PAGE> 40
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF STANDARD
The following discussion of Standard's results of operations should be read
in conjunction with the Standard Consolidated Financial Statements and Notes
thereto.
OVERVIEW
For a general discussion of parking revenues, costs and expenses, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Holdings--Overview."
As of December 31, 1997, Standard operated 344 facilities under management
contracts and 35 facilities pursuant to leases. A summary of Standard's
facilities is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1995 1996 1997
<S> <C> <C> <C>
Managed facilities......................................... 233 295 344
Leased facilities.......................................... 32 32 35
--- --- ---
Total facilities (end of period)........................... 265 327 379
Contract retention rate.................................... 97% 97% 96%
</TABLE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, Standard's
results of operations expressed in thousands of dollars:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1995 1996 1997
<S> <C> <C> <C>
Gross customer collections................................. $339,234 $412,114 $462,261
======== ======== ========
Parking services revenue:
Leases................................................... $ 38,418 $ 41,770 $ 54,801
Management contracts..................................... 6,783 8,505 8,851
-------- -------- --------
45,201 50,275 63,652
Cost of parking services:
Leases................................................... 35,168 37,838 50,142
Management contracts..................................... -- -- --
-------- -------- --------
35,168 37,838 50,142
General and administrative expenses........................ 6,798 7,547 7,857
Depreciation and amortization.............................. 316 376 464
-------- -------- --------
Operating income........................................... $ 2,919 $ 4,514 $ 5,189
======== ======== ========
</TABLE>
FISCAL 1997 COMPARED TO FISCAL 1996
Gross customer collections. Gross customer collections increased $50.2
million, or 12.2%, to $462.3 million in fiscal 1997 from $412.1 million in
fiscal 1996. This increase resulted primarily from the net addition of 52 leased
and managed locations as well as from a combination of rate increases and higher
utilization of parking spaces at existing facilities.
Parking services revenue--leases. Lease revenue increased $13.0 million,
or 31.1%, to $54.8 million in fiscal 1997 compared to $41.8 million in fiscal
1996. This increase resulted from the net addition of two large leased
properties.
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<PAGE> 41
Parking services revenue--management contracts. Revenue at managed
locations increased $0.4 million, or 4.1%, to $8.9 million in fiscal 1997 from
$8.5 million in fiscal 1996. This increase resulted from the net addition of 49
managed locations.
Cost of parking services. Cost of parking services increased $12.3
million, or 32.5%, to $50.1 million in fiscal 1997 from $37.8 million in fiscal
1996. This increase resulted from a net addition of two large leased properties.
There are no cost of parking services for management contracts because all such
costs are reimbursed by the parking facility owner.
General and administrative expenses. General and administrative expenses
increased $0.4 million, or 4.1%, to $7.9 million in fiscal 1997 from $7.5
million in fiscal 1996. This modest increase was primarily due to an increase in
employee compensation.
Depreciation and amortization expenses. Depreciation and amortization
expenses were $0.5 million in fiscal 1997 and $0.4 in fiscal 1996.
FISCAL 1996 COMPARED TO FISCAL 1995
Gross customer collections. Gross customer collections increased $72.9
million, or 21.5%, to $412.1 million in fiscal 1996 from $339.2 million in
fiscal 1995. This increase resulted primarily from the net addition of 62 leased
and managed locations as well as from a combination of rate increases and higher
utilization of parking spaces at existing facilities.
Parking services revenue--leases. Lease revenue increased $3.4 million, or
8.7%, to $41.8 million in fiscal 1996 from $38.4 in fiscal 1995. This increase
resulted from rate increases and increased volume.
Parking services revenue--management contracts. Management contract
revenue increased $1.7 million, or 25.4%, to $8.5 million in fiscal 1996 from
$6.8 million in fiscal 1995. This increase resulted from the net addition of 62
managed locations.
Cost of parking services. Cost of parking services increased $2.6 million,
or 7.6%, to $37.8 million in fiscal 1996 from $35.2 million in fiscal 1995. This
increase was due to increased volume.
General and administrative expenses. General and administrative expenses
increased $0.7 million, or 11.0%, to $7.5 million in fiscal 1996 from $6.8
million in fiscal 1995. This increase was primarily a result of increased
compensation of key employees.
Depreciation and amortization expenses. Depreciation and amortization
expenses increased $0.1 million, or 19.0%, to $0.4 million in fiscal 1996 from
$0.3 million in fiscal 1995. This increase resulted primarily from the
headquarters office relocation late in 1995.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1997, Standard generated cash flows from operating activities
of $5.1 million compared to $5.3 million in fiscal 1996. This decrease in cash
flow from operating activities resulted primarily from net changes in the
components of working capital.
Net cash used in investing activities was $0.5 million for the years ended
December 31, 1997 and December 31, 1996. The primary use of these funds was the
acquisition of capital assets.
Net cash used by financing activities was $5.0 million for the year ended
December 31, 1997 and $3.1 million for the year ended December 31, 1996. The
primary use of these funds was distributions to partners.
Standard has lease commitments of $23.3 million for fiscal 1998. The lease
commitments are in the form of a fixed base rent with the majority of leases on
a year-to-year renewal. The leased properties generate sufficient cash flow in
order to meet the base rent payments.
YEAR 2000
Standard has considered the impact of Year 2000 issues on its computer
systems and applications and believes the impact of the Year 2000 will not have
a significant impact on its operations or liquidity. As part of the Combination,
Standard will convert to the APCOA computer system which has been tested to
comply with Year 2000 issues.
40
<PAGE> 42
BUSINESS
GENERAL
The Company is a leading national provider of parking facility management
services. The Company provides on-site management services at multi-level and
surface parking facilities in the two major markets of the parking industry:
urban parking and airport parking. Following consummation of the Combination,
the Company manages approximately 1,100 parking facilities, containing
approximately 580,000 parking spaces in over 45 cities across the United States
and Canada. The Company's pro forma gross customer collections, pro forma
parking services revenue, pro forma EBITDA and pro forma net loss for the year
ended December 31, 1997 were $948.6 million, $186.1 million, $19.9 million and
$2.8 million, respectively.
The Company believes that its superior management services coupled with its
focus on increasing market share in select core cities leads to higher
profitability per parking facility than its competitors. The Company believes
that it enhances its leading position by providing: (i) Ambiance in Parking(C),
an approach to parking that includes a number of premium, on-site, value-added
services and amenities; (ii) state-of-the-art information technology, including
Client View(C), a proprietary client reporting system which allows the Company
to provide clients with real-time access to site-level financial and operating
information; and (iii) award-winning training programs for on-site employees
that promote customer service and client retention. In addition, the Company
believes that it distinguishes itself from its competitors because of its
ability to leverage its long-standing experience in securing contracts,
particularly with regard to the airport parking market.
The Company's diversified client base includes some of the nation's largest
owners and developers of major office building complexes, shopping centers,
sports complexes, hotels and hospitals. In addition, the Company manages parking
operations at many of the major airports in North America. In the urban parking
market, the Company's clients include CB Commercial Real Estate Group, Equity
Office Properties, the Taubman Company, Harvard Medical School, Northwestern
University, Children's Memorial Medical Center in Chicago and Cedars Sinai
Medical Center in Los Angeles. Parking facilities managed by the Company include
the CNN Center in Atlanta, the Kennedy Center for the Performing Arts in
Washington, D.C. and the Gateway Sports Complex in Cleveland. In the airport
parking market, the Company's clients include Chicago O'Hare International and
Chicago Midway, Cleveland-Hopkins International, Minneapolis-St. Paul
International and Detroit Metropolitan airports.
The Company operates its clients' parking properties through two types of
arrangements: management contracts and leases. The Company does not own any
parking facilities and, as a result, the Company assumes fewer of the risks of
real estate ownership. Under a management contract, the Company typically
receives a base monthly fee for managing the property, and may also receive an
incentive fee based on the achievement of facility revenues above a base amount.
In some instances, the Company also receives certain fees for ancillary
services. Typically, all of the underlying revenues and expenses under a
management contract flow through to the property owner, not to the Company.
Under lease arrangements, the Company generally pays either a fixed annual
rental, a percentage of gross customer collections, or a combination thereof to
the property owner. The Company collects all revenues under lease arrangements
and is responsible for most operating expenses, but it is typically not
responsible for major maintenance or capital expenditures. As of December 31,
1997, the Company operated approximately 72% of its approximately 1,100 parking
facilities under management contracts and approximately 28% under leases.
Renewal rates for the Company's management contracts and leases were
approximately 96% for each of the last three years.
INDUSTRY OVERVIEW
General. The International Parking Institute, a trade organization of
parking professionals, estimates that there are 35,000 parking facilities in the
United States generating over $26.0 billion in gross customer collections. The
parking industry is highly fragmented, with over 1,700 commercial parking
operators in the United States, as estimated by the Parking Market Research
Company, an independent research company. Industry participants, the vast
majority of which are privately-held companies, consist of a relatively few
41
<PAGE> 43
nationwide companies and a large number of small regional or local operators,
including a substantial number of companies providing parking as an ancillary
service in connection with property management or ownership. Clients of parking
facility managers include the owners of office buildings, major airports,
shopping centers, sports complexes, hotels and hospitals, which provide parking
to customers.
Operating Arrangements. Parking facilities operate under three general
types of arrangements: management contracts, leases and fee ownership. The
general terms and benefits of these three types of arrangements are as follows:
Management Contracts. Under a management contract, the facility
manager generally receives a base monthly fee for managing the facilities
and often receives an incentive fee based on the achievement of facility
revenues above a base amount. Facility managers generally charge fees for
various ancillary services such as accounting, equipment leasing and
consulting. Responsibilities under a management contract include hiring,
training and staffing parking personnel, and providing collections,
accounting, record-keeping, insurance and facility marketing services. In
general, the facility manager is not responsible for structural or
mechanical repairs, and typically is not responsible for providing security
or guard services. Under typical management contracts, the facility owner
is responsible for operating expenses such as taxes, license and permit
fees, insurance premiums, payroll and accounts receivable processing and
wages of personnel assigned to the facility. In addition, the facility
owner is responsible for non-routine maintenance, repair costs and capital
improvements. The typical management contract is for a term of one to three
years (though the owner often reserves the right to terminate, without
cause, on 30 days' notice) and may contain a renewal clause.
Leases. Under a lease arrangement, the parking facility operator
generally pays either a fixed annual rent, a percentage of gross customer
collections, or a combination thereof to the property owner. The parking
facility operator collects all revenues and is responsible for most
operating expenses, but is typically not responsible for major maintenance.
In contrast to management contracts, lease arrangements are typically for
terms of three to ten years and typically contain a renewal term, and
provide for a fixed payment to the facility owner regardless of the
operating earnings of the parking facility. As a result, the leased
facilities generally require a longer commitment and a larger capital
investment by the parking facility operator than do managed facilities.
Fee Ownership. Under fee ownership arrangements, the parking facility
operator owns the property and fixtures. Ownership of parking facilities,
either independently or through joint ventures, typically requires a larger
capital investment than managed or leased facilities but provides maximum
control over the operation of the parking facility, and all increases in
revenue flow directly to the owner. Ownership provides the potential for
realizing capital gains from the appreciation in the value of the
underlying real estate, but it also subjects the property owner to risks
including reduction in value of the property and additional potential
liabilities, as well as additional costs such as real estate taxes and
structural, mechanical or electrical maintenance or repairs.
Parking Industry Markets. The parking industry is comprised of two major
markets: urban parking and airport parking. The urban parking market consists of
many sub-markets with differing clients including commercial, office,
residential, event, entertainment, retail, shopping centers, hospitals and
hotels. In contrast, the airport parking market consists of a relatively small
number of clients with large revenue-generating parking operations and similar
needs that are unique to airport parking facilities.
Industry Growth Dynamics. A number of opportunities for growth exist for
parking facility operators:
Industry Consolidation. There are many opportunities for industry
consolidation, both domestically and abroad. Consolidation is essential to
growth in the parking industry because of the limitations on growth in
revenues of existing operations. While some growth in revenues from
existing operations is possible through redesign, increased operational
efficiency or increased facility use and prices, such growth is ultimately
limited by the size of a facility and market conditions. The net effect of
the consolidation in the urban parking market is that the typical buyer in
this market is becoming larger and increasingly sophisticated. This
increase in sophistication has placed greater demands on parking
42
<PAGE> 44
management firms and has driven the trend toward management contracts where
clients require high-level management and reporting systems, site-specific
services and quality control.
Privatization of Government-Owned and Operated Facilities. Additional
growth in the industry has been a function of the trend for parking owners
to move from owner-operation to outsourcing the management of operations to
private operators. This is particularly true in the case of privatization
of government operations and facilities, which is resulting in new
opportunities for the parking industry. The Company believes that cities
and municipal authorities are increasingly retaining private firms to
operate facilities and parking-related services in an effort to reduce
operating budgets and increase efficiency.
Expanding Relationships with Large Property Managers, Owners and
Developers. Generally, the overall parking industry expansion is created
by new construction of parking facilities by property managers, owners and
developers. While new construction in the United States slowed in the late
1980s and has only gradually begun to increase in recent years, growth for
parking facility operators during such period generally resulted from more
established parking facility operators leveraging their relationships with
property managers and owners to take market share from smaller companies.
As new construction of parking facilities increases, the Company believes
that facility operators with established relationships with such parking
facility developers can leverage such relationships to capture incremental
market share.
BUSINESS STRATEGY AND COMPETITIVE ADVANTAGES
The Company believes its innovative parking facility amenities, services
and management, coupled with its state-of-the-art information technology and
reporting systems, position the Company to enhance its standing as a leading
provider of parking services. Specific elements of the Company's business
strategy and competitive advantages include:
Focus on Core Cities. Part of the Company's business strategy is to
focus on increasing system-wide profitability by maximizing operating
leverage. As part of this strategy, the Company operates in certain core
cities and realizes certain economies of scale, including the ability to
spread administrative overhead costs across a large number of parking
facilities in a single market. As a result, the Company has been able to
increase significantly profitability per contract. For example, management
estimates that in 1997 the Company's average profit per contract in cities
in which it operated more than 35 parking locations was nearly double the
Company's profit per contract in cities in which it operated fewer than 35
locations.
Strong Operating Performance and Stable Cash Flow. From 1993 to 1997,
the Company's EBITDA increased from $7.2 million to $15.0 million,
representing a CAGR of 20.0%. Over the same period, the Company's capital
expenditures averaged less than $3.0 million per year. In addition, the
Company reduced exposure to increasing cost of parking services by (i)
increasing the proportion of its management contracts, which generally pass
cost of parking services onto the Company's clients, and (ii) maintaining
low minimum rental commitments under its non-cancelable leases. The
Company's average management and lease contract renewal rate over the last
three years was approximately 96%. As a result of the Company's operating
performance, as well as the low capital expenditure requirements and low
risk portfolio of management contracts and leases, the Company has been
able to generate consistent cash flow.
Strategic Growth Through Acquisitions. The parking industry is highly
fragmented, with over 1,700 industry participants. In addition to pursuing
individual contracts, the Company is seeking to capitalize on this industry
fragmentation by pursuing a focused acquisition strategy which includes:
(i) acquiring parking management companies within core cities and target
cities where the Company believes it can attain a significant market share,
and (ii) acquiring larger, regional parking management companies. As a part
of this strategy, APCOA and Standard, combined, have successfully acquired
and integrated 6 companies with 138 new facilities and also added 252 net
individual contracts over the past five years.
Leading Client Base. The Company's diversified, long-standing
customer base comprises many of the premier national property management
and ownership organizations in the United States and
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<PAGE> 45
Canada. The Company is a market leader in airport parking, operating
approximately 100 parking facilities at airports in the United States and
Canada. The Company's focus on select core cities enables the Company to
maintain broader and stronger relationships with the local client base,
which the Company believes improves its client retention rates and its
ability to compete for new contracts.
Value-Added Services and Award-Winning Information Systems. The
Company believes that it can continue to increase profitability and attract
new clients by providing: (i) Ambiance in Parking(R); (ii) state-of-the-art
information technology, including Client View(C); and (iii) award-winning
training programs for on-site employees. In addition, these capabilities
facilitate development opportunities that typically lead to long-term lease
and management contracts on new facilities. Also, the Company has developed
state-of-the-art information technology systems which connect local offices
across the country to its corporate office. These systems, which received
the 1994 Esprit Award sponsored by Booz-Allen & Hamilton and CIO magazine,
enable a centralized staff to eliminate inefficient duplication of
administrative and accounting functions at the field level and also help
provide key operational information to clients. Management believes that
these systems will enable the Company to add many new clients without
incurring additional administrative staff and expense.
Experienced Management Team. Myron C. Warshauer, the Company's Chief
Executive Officer and the third generation of his family to direct
Standard, has over 35 years of industry experience. G. Walter Stuelpe, Jr.,
the Company's President, has been with APCOA for over 25 years, serving as
Chief Executive Officer since 1986. The Company's other executive team
members are comprised of the most experienced, talented executives from
both companies. Overall, the members of the Company's executive team have
an average of over 15 years of industry experience.
AMBIANCE IN PARKING(R)
The Company offers a comprehensive package of value-added, on-site parking
services and amenities which the Company characterizes as Ambiance in Parking(R)
which includes:
Patented Musical Theme Floor Reminder System. The Company's patented
musical theme floor reminder system is designed to help customers remember
the garage level on which they had parked. A different song is played on
each floor of the parking garage which also displays distinctive signs and
graphics which correspond with the floor's theme. For example, in one
garage with U.S. cities as a theme, songs played include "I Left My Heart
in San Francisco" on one floor and "New York, New York" on a different
floor. Other garages have themes such as college fight songs, broadway
shows, classic movies and professional sports teams.
Books-To-Go(R). Books-To-Go(R) is an audiotape library which is
provided free-of-charge for monthly parkers.
ParkNet(R). The ParkNet(R) traffic information system allows parking
customers to obtain continuous, site-specific traffic reports relating to
current traffic conditions on area expressways as well as the routes
utilized to get from the specific parking facility to the expressways.
CarCare(R). The CarCare(R) service program is provided in conjunction
with Midas(R). Parking customers can have their cars picked up from the
parking facility, serviced and returned before the end of the business day.
Standard Parking Exchange(TM). The Standard Parking Exchange(TM)
program entitles monthly parkers at participating locations to free parking
for one hour per day at all other participating locations.
Complimentary Windshield and Headlight Cleaning. During off-peak
hours, the Company's parking attendants clean windshields and headlights of
cars and place a card on the windshield informing the parking customer that
this service has been provided.
Emergency Car Services. The Company offers complimentary services
such as battery starts, lost car assistance, tire inflation, tire change,
escort service and key retrieval.
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<PAGE> 46
STATE-OF-THE-ART INFORMATION TECHNOLOGY
The Company's information technology provides valuable benefits to the
Company's clients. Client View(C), a proprietary Windows(R)-based client
reporting system, allows the Company's clients to access, on a real-time basis,
site-level financial and operating information.
The Company has created advanced information systems that connect local
offices across the country to its corporate office. A centralized staff provides
accounting and administrative expertise and controls that eliminate duplication
of administrative and accounting functions at the field level. ParkStat(C), one
of the Company's proprietary software tools, enhances the performance of parking
facilities managed by the Company. By automatically polling information from
on-site collection devices, ParkStat(C) uses location-specific information to
calculate the impact of pricing alternatives, optimize staffing levels, improve
forecasting and assist in long-range planning.
Technological innovations such as an automated credit card lane and a
radio-activated hands-free parking access system allow fast and hassle-free
service for parking customers.
AWARDS
In 1994, the Company received the prestigious Esprit Award sponsored by CIO
magazine and Booz-Allen & Hamilton for its proprietary state-of-the-art
information technology systems which connect local offices across the country to
the Company's corporate office. These systems enable a centralized staff to
eliminate inefficient duplication of administrative and accounting functions at
the field level and also help provide key operational, financial and demographic
information to clients. No other parking facility manager has ever received this
award.
Over the past five years various elements of the Company's training program
have received industry awards for outstanding content and production, including:
- National Association of Industrial and Office Properties' Outstanding
Literature and Video Award;
- two Telly Awards, a prestigious national award in the field of
advertising, film and video productions;
- BPAA Bronze Tower Award which recognizes business-to-business
communications in Business/Professional Advertising; and
- Great-Lakes Sho-Me Award which recognizes outstanding business
communication in Greater Cleveland.
45
<PAGE> 47
PARKING FACILITIES
The Company operates parking facilities in 35 states, Washington D.C. and
two provinces of Canada pursuant to management contracts or leases. The Company
does not currently own any parking facilities. The following table summarizes
certain information regarding the Company's facilities as of December 31, 1997,
giving effect to the Combination and the Other Acquisitions:
<TABLE>
<CAPTION>
NUMBER OF LOCATIONS NUMBER OF SPACES
------------------------- -----------------------------
STATES/PROVINCES AIRPORTS AND URBAN CITIES AIRPORT URBAN TOTAL AIRPORT URBAN TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
Alabama Airports 3 3 1,430 1,430
Arizona Phoenix 3 3 4,225 4,225
California Los Angeles, San Diego, San 6 177 183 23,779 51,866 75,645
Francisco, San Jose, Santa
Barbara and Airports
Colorado Denver and Airports 5 12 17 713 5,688 6,401
Connecticut Stamford and Airport 2 6 8 4,351 4,332 8,683
Delaware Wilmington 1 1 500 500
District of Columbia Washington D.C. 11 11 7,577 7,577
Florida Miami, Orlando and Airports 4 13 17 4,340 6,085 10,425
Georgia Atlanta and Airports 2 36 38 2,142 9,677 11,819
Hawaii Honolulu 53 53 21,735 21,735
Idaho Airport 1 1 376 376
Illinois Chicago and Airport 2 150 152 26,800 87,246 114,046
Indiana Indianapolis and Airport 1 19 20 619 4,420 5,039
Kentucky Louisville and Airport 2 1 3 3,071 395 3,466
Louisiana New Orleans and Airport 1 45 46 909 8,125 9,034
Maine Airport 2 2 1,299 1,299
Maryland Baltimore, Bethesda 19 19 4,167 4,167
Massachusetts Boston and Airports 2 95 97 645 61,557 62,202
Michigan Detroit and Airports 6 1 7 1,412 132 1,544
Minnesota Minneapolis and Airports 8 38 46 13,495 12,938 26,433
Missouri Kansas City and Airports 2 77 79 9,848 14,206 24,054
Montana Great Falls and Airports 5 4 9 2,432 1,966 4,398
Nebraska Airport 1 1 1,361 1,361
Nevada Las Vegas 1 1 286 286
New York Buffalo, Hamburg, Hawthorne and 10 3 13 8,678 16,060 24,738
Airports
North Dakota Airports 2 2 1,415 1,415
Ohio Cleveland, Columbus and Airports 9 94 103 7,492 38,474 45,966
Ontario East York, North York, Oshawa, 1 34 35 3,171 23,912 27,083
Scarsborough, Toronto and Airport
Oregon Airport 1 1 433 433
Pennsylvania Philadelphia, Pittsburgh and 2 3 5 1,331 2,182 3,513
Airports
Quebec Airports 3 3 8,591 8,591
South Carolina Airport 1 1 4,987 4,987
South Dakota Airport 1 1 1,024 1,024
Tennessee Memphis and Airports 2 11 13 3,077 5,176 8,253
Texas Houston, Dallas, Fort Worth and 4 57 61 2,862 29,176 32,038
Airports
Virginia Richmond and Airport 4 32 36 3,468 6,109 9,577
Washington Seattle and Airports 2 3 5 822 1,195 2,017
Wisconsin Milwaukee and Airports 3 3 6 1,512 1,948 3,460
--- ----- ----- ------- ------- -------
TOTALS 100 1,002 1,102 147,885 431,355 579,240
=== ===== ===== ======= ======= =======
</TABLE>
The Company has interests in 18 joint ventures that each operate a single
parking facility. The Company is the general partner of three limited
partnerships which operate a single parking facility and one limited partnership
which operates five parking facilities. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Holdings--Summary
of Operating Facilities."
46
<PAGE> 48
COMPETITION
The parking industry is fragmented and highly competitive, with limited
barriers to entry. The Company faces direct competition for additional
facilities to manage or lease and the facilities currently operated by the
Company face competition for employees and customers. The Company competes with
a variety of other companies to add new operations. Although there are
relatively few large, national parking companies that compete with the Company,
developers, hotel companies, and national financial services companies also have
the potential to compete with parking companies. Municipalities and other
governmental entities also operate parking facilities that compete with the
Company. The Company also faces competition from local owner-operators of
facilities who are potential clients for the Company's management services.
Construction of new parking facilities near the Company's existing facilities
could adversely affect the Company's business. See "Risk Factors--Competition."
REGULATION
The Company's business is not substantially affected by direct governmental
regulation, although parking facilities are sometimes directly regulated by both
municipal and state authorities. The Company is affected by laws and regulations
(such as zoning ordinances) that are common to any business that deals with real
estate and by regulations (such as labor and tax laws) that affect companies
with a large number of employees. In addition, several state and local laws have
been passed in recent years that encourage car pooling and the use of mass
transit, including, for example, a Los Angeles, California law prohibiting
employers from reimbursing employee parking expenses. Laws and regulations that
reduce the number of cars and vehicles being driven could adversely impact the
Company's business.
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws typically impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In connection with the operation
of parking facilities, the Company may be potentially liable for any such costs.
Although the Company is currently not aware of any material environmental claims
pending or threatened against it or any of the parking facilities which it
operates, there can be no assurance that a material environmental claim will not
be asserted against the Company or against the parking facilities which it
operates. The cost of defending against claims of liability, or of remediating a
contaminated property, could have a material adverse effect on the Company's
financial condition or result of operations.
Various other governmental regulations affect the Company's operation of
parking facilities, both directly and indirectly, including the ADA. Under the
ADA, all public accommodations, including parking facilities, are required to
meet certain federal requirements related to access and use by disabled persons.
For example, the ADA requires parking facilities to include handicapped spaces,
headroom for wheelchair vans, attendants' booths that accommodate wheelchairs,
and elevators that are operable by disabled persons. When negotiating management
contracts and leases with clients, the Company generally has the property owner
contractually assume responsibility for any ADA liability in connection with the
property; however, there can be no assurance that the property owner has assumed
such liability for any given property and there can be no assurance that the
Company would not be held liable despite assumption of responsibility for such
liability by the property owner. Management believes that the parking facilities
the Company operates are in substantial compliance with ADA requirements.
EMPLOYEES
As of December 31, 1997, the Company employed approximately 8,000
individuals, including approximately 4,200 full-time and 3,800 part-time
employees. The Company believes that its employee relations are good.
Approximately 2,600 employees are represented by unions. Most union employees
are represented by the Teamsters Union. The largest union facilities are in the
Chicago metropolitan area and in airport parking facilities located in Detroit,
Michigan, San Jose, California, Minneapolis, Minnesota, Cleveland, Ohio and
Hartford, Connecticut.
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<PAGE> 49
INTELLECTUAL PROPERTY
The APCOA name and logo and the Standard name and logo are registered with
the United States Patent and Trademark Office. In addition, the Company has
registered the names and, as applicable, the logos of all material subsidiaries
and divisions of the Company in the United States Patent and Trademark Office or
the equivalent State registry, including the right to the exclusive use of the
name Central Park in the Chicago metropolitan area. The Company has also
obtained a United States patent for its Multi-Level Vehicle Parking Facility
(the Musical Theme Floor Reminder System) and trademark protection for its
proprietary parker programs, such as Books-To-Go(C) and Ambiance in Parking(C).
Proprietary software developed by the Company, such as Client View(C), Hand Held
Program(C), License Plate Inventory Program(C) and Parkstat(C) are registered in
the United States Copyright Office.
LITIGATION
The provision of services to the public entails an inherent risk of
liability. The Company is engaged in routine litigation incidental to its
business. There is no legal proceeding to which the Company is a party which, if
decided adversely, would be material to the Company's financial condition,
liquidity, or results of operations. The Company attempts to disclaim liability
for personal injury and property damage claims by printing disclaimers on its
ticket stubs and by placing warning signs in the facilities it operates. The
Company also carries liability insurance that management believes meets or
exceeds industry standards; however, there can be no assurance that any future
legal proceedings (including any related judgments, settlements or costs) will
not have a material adverse effect on the financial condition, liquidity, or
results of operations of the Company.
INSURANCE
The Company purchases comprehensive liability insurance covering the
parking facilities that it leases and manages. The Company also purchases
workers' compensation insurance with respect to all its employees, whether such
persons are employed at leased or managed facilities. The Company's insurance
program insulates its clients against any additional annual premium charges in
the event of adverse claims experience. Due to the magnitude of the Company's
parking operations, the Company's management believes that the rates at which it
purchases such insurance represent a discount to the rates that would be charged
to parking facility owners on a stand-alone basis. Recognizing the benefits and
protection afforded by the Company's insurance program, a significant majority
of the Company's clients historically have purchased liability insurance through
the Company. However, the clients of the Company have the option of purchasing
their own policies, provided that the Company is adequately protected. A
significant reduction in the number of clients that purchase insurance through
the Company could have a material adverse effect on operating earnings. In
addition, although the cost of insurance has not fluctuated significantly in
recent years for the Company, a material increase either in the Company's
insurance costs or in the magnitude of its claims could have a material adverse
effect on the Company's operating earnings.
48
<PAGE> 50
MANAGEMENT
HOLDINGS
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to each
person who is an executive officer or director of Holdings, as indicated below:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
John V. Holten................. 41 Director and Chairman
G. Walter Stuelpe, Jr.......... 53 Director, President and Chief Executive Officer
Gunnar E. Klintberg............ 49 Director and Assistant Secretary
Andrew Nicol................... 59 Director
A. Petter Ostberg.............. 36 Vice President
Michael J. Celebrezze.......... 41 Treasurer
Robert N. Sacks................ 45 Secretary
</TABLE>
John V. Holten. Mr. Holten joined Holdings as a Chairman, President and
Secretary in 1989. Mr. Holten has served as Chairman and Chief Executive Officer
of Holberg since its inception in 1986, and as a Director and Chairman of APCOA
since 1989. Mr. Holten was Managing Director of DnC Capital Corporation, a
merchant banking firm in New York City, from 1984 to 1986. Mr. Holten received
his M.B.A. from Harvard University in 1982 and he graduated from the Norwegian
School of Economics and Business Administration in 1980.
G. Walter Stuelpe, Jr. Mr. Stuelpe joined Holdings as Vice President,
Treasurer and Assistant Secretary in 1989. Mr. Stuelpe has been associated with
APCOA for over 25 years, serving as the Company's President since 1986. His
prior executive positions have included sales and marketing, corporate
development and strategic planning, as well as having headed up different
operational divisions in a variety of cities in the United States and Europe.
Mr. Stuelpe is an alumnus of Indiana University, class of 1967. Mr. Stuelpe has
since participated in numerous executive programs specifically designed to
address managing business change and growth. He has also had an active
leadership role in industry-related associations, having served as president,
chairman and now as a member of the Board of the National Parking Association as
well as the International Parking Institute, and is a full member of the Urban
Land Institute.
Gunnar E. Klintberg. Mr. Klintberg joined Holdings as Vice President,
Treasurer and Assistant Secretary in 1989. Mr. Klintberg has served as Vice
Chairman of Holberg since its inception in 1986, and as a Director of APCOA
since 1989. Mr. Klintberg was a Managing Partner of DnC Capital Corporation, a
merchant banking firm in New York City, from 1983 to 1986. From 1975 to 1983,
Mr. Klintberg held various management positions with the Axel Johnson Group,
headquartered in Stockholm, Sweden. Mr. Klintberg headed up the Axel Johnson
Group's headquarters in Moscow from 1976 to 1979 and served as assistant to the
President of Axel Johnson Group's $1 billion operation in the U.S.,
headquartered in New York City, from 1979 to 1983. Mr. Klintberg received his
undergraduate degree from Dartmouth College in 1972 and a degree in Business
Administration and Economics from the University of Uppsala, Sweden in 1974.
Andrew Nicol. Mr. Nicol joined Holdings as Director in 1996. Mr. Nicol is
the Vice President--Corporate Development of Delaware North, which owns 10.0% of
the outstanding common stock of Holdings. From 1985 to 1988, Mr. Nicol was the
Vice President, Administration and Chief Financial Officer of APCOA. Mr. Nicol
received his B.A. degree from Western Reserve University.
A. Petter Ostberg. Mr. Ostberg joined Holdings as Vice President in 1998.
Mr. Ostberg joined Holberg in 1994 and was appointed Chief Financial Officer of
Holberg in 1997. Mr. Ostberg is currently a Vice President of APCOA. Prior to
joining Holberg, Mr. Ostberg held various finance positions from 1990 to 1994
with New York Cruise Lines, Inc., including Group Vice President, Treasurer and
Secretary. Prior to joining New York Cruise Lines, Inc., Mr. Ostberg was General
Manager of Planter Technology Ltd. in Mountain View, California, and from 1985
to 1987, Mr. Ostberg was a Financial Analyst with Prudential Securities, Inc.
49
<PAGE> 51
in New York. Mr. Ostberg received a B.A. in International Relations and
Economics from Tufts University in 1985, and an M.B.A. from Stanford University
Graduate School of Business in 1989.
Michael J. Celebrezze. Mr. Celebrezze joined Holdings as Treasurer in
1989. Mr. Celebrezze joined APCOA in 1984 as Manager, Treasury and Financial
Planning. Since then he has held the positions of Vice President, Controller
and, since 1995, Senior Vice President, Chief Financial Officer and Treasurer.
His responsibilities included the operations of accounting, tax, management
information systems, corporate security, financial planning, insurance and risk
management, real estate finance and banking. Mr. Celebrezze graduated cum laude
from Kent State University with a Degree in Business Administration, majoring in
Accounting and he subsequently earned a Masters in Business Administration from
John Carroll University. He is a Certified Public Accountant in the State of
Ohio.
Robert N. Sacks. Mr. Sacks joined Holdings as Secretary in 1989. Mr. Sacks
joined APCOA in 1988, serving as General Counsel and Secretary since 1988,
serving as Vice President, Secretary, and General Counsel since 1989 and serving
as Senior Vice President, Secretary and General Counsel since 1997. Mr. Sacks
has overall responsibility for the Legal Department, which includes negotiation,
documentation and approval of parking and corporate contracts, financing
documentation and coordination of outside counsel. In his position, Mr. Sacks is
also responsible for maintaining field compliance with corporate legal and
financial policies. Mr. Sacks received his B.A. Degree, cum laude, from
Northwestern University in 1976 and, in 1979, received his J.D. Degree from
Suffolk University. Mr. Sacks has spoken on legal issues concerning the parking
industry at the National Parking Association National Convention and the
Institutional and Municipal Parking Congress.
THE COMPANY
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to each
person who is an executive officer or director of the Company following
consummation of the Combination, as indicated below (biographical information
for those persons who are also officers or directors of Holdings is not
repeated):
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
John V. Holten................. 41 Director and Chairman
Myron C. Warshauer............. 58 Director and Chief Executive Officer
G. Walter Stuelpe.............. 53 Director and President
Michael J. Celebrezze.......... 41 Executive Vice President -- Chief Financial Officer
Douglas R. Warshauer........... 30 Executive Vice President -- Marketing/Business Development
Steven A. Warshauer............ 43 Executive Vice President -- Operations
Michael K. Wolf................ 48 Executive Vice President -- Chief Administrative Officer
and Associate General Counsel
James A. Wilhelm............... 44 Executive Vice President -- Operations
Herbert W. Anderson, Jr. ...... 39 Executive Vice President -- Operations
Robert N. Sacks................ 45 Executive Vice President -- General Counsel and Secretary
James V. LaRocco, Jr........... 53 Executive Vice President -- Corporate Development
Patrick J. Meara............... 35 Director
Gunnar E. Klintberg............ 49 Director, Vice President
A. Petter Ostberg.............. 36 Vice President
</TABLE>
Myron C. Warshauer. Mr. Warshauer has served as President and Chief
Executive Officer of Standard since 1973, and has been associated with Standard
since 1963. Mr. Warshauer received his B.S. Degree in Finance from the
University of Illinois in 1962, and received a Masters Degree in Business
Administration from Northwestern University in 1963.
50
<PAGE> 52
Douglas R. Warshauer. Mr. Warshauer joined Standard in 1994, initially
serving as Vice President. Upon receiving his Masters of Management Degree with
distinction from the J.L. Kellogg School of Management at Northwestern
University, Mr. Warshauer became Standard's Executive Vice President for
Finance. Mr. Warshauer also holds a Bachelors Degree with highest honors in
Social Science from the University of California at Berkeley.
Steven A. Warshauer. Mr. Warshauer joined Standard in 1982, initially
serving as Vice President, then becoming Senior Vice President and, since
January 1, 1998, serving as Executive Vice President. Mr. Warshauer is a
Certified Public Accountant and a member of both the American Institute of
Certified Public Accountants and the Illinois Society of Certified Public
Accountants. Mr. Warshauer received his Bachelor of Science Degree from the
University of Northern Colorado in 1976 with dual majors in Accounting and
Finance. Prior to joining Standard, he practiced with a national accounting
firm.
Michael K. Wolf. Mr. Wolf joined Standard as Senior Vice President and
General Counsel in 1990, after sixteen years in the private practice of law. Mr.
Wolf was subsequently appointed Executive Vice President of Standard. Prior to
joining Standard, Mr. Wolf was a partner of the international law firm of Jones,
Day, Reavis & Pogue, resident in the Chicago office, where his primary
concentration was in the field of real estate. Mr. Wolf received his B.A. Degree
in 1971 from the University of Pennsylvania, and in 1974 received his J.D.
Degree from Washington University, where he served as Notes and Comments editor
of the Washington University Law Quarterly. Upon graduation from law school, Mr.
Wolf was elected to the Order of the Coif.
James A. Wilhelm. Mr. Wilhelm joined Standard in 1985, serving as
Executive Vice President since January 1, 1998. Mr. Wilhelm is currently
responsible for managing Standard's Midwest and Western Regions, which include
parking facilities in Chicago and sixteen other cities throughout the United
States and Canada. Mr. Wilhelm received his B.A. Degree from Northeastern
Illinois University in 1976. Mr. Wilhelm is a member of the National Parking
Association and the International Parking Institute.
Herbert W. Anderson, Jr. Mr. Anderson joined APCOA in 1994, and has served
as Corporate Vice President--Urban Properties since 1995. Mr. Anderson graduated
from LaSalle University and began his career in the parking industry in 1984.
Mr. Anderson is a member of the Board of the National Parking Association.
James V. LaRocco, Jr. Mr. LaRocco has been associated with APCOA since
1962, starting in an operations position at the Los Angeles International
Airport, and has served as Executive Vice President since 1995. His prior
positions have included Division Manager, Regional Manager and Vice President.
Patrick J. Meara. Mr. Meara became a director of the Company upon
consummation of the Combination. Mr. Meara is a Senior Vice President of JMB
Realty Corporation, which held an interest in Standard prior to the Combination,
and acquired an interest in the Company as a result of the Combination.
EXECUTIVE COMPENSATION
Holdings has no paid employees. The following table sets forth information
for 1995, 1996 and 1997 with regard to compensation for services rendered in all
capacities (a) to APCOA by the Chief Executive Officer and the other four most
highly compensated executive officers of APCOA and (b) to Standard by two
executive officers of Standard for each of whom disclosure would have been
provided but for the fact that he was not serving as an executive officer of
APCOA at the end of the last completed fiscal year (collectively, the "Named
Executive Officers"). Except as otherwise noted, information set forth in the
table reflects compensation earned by such individuals for services with APCOA
or its respective subsidiaries.
51
<PAGE> 53
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER
ANNUAL ALL OTHER
COMPEN- COMPEN-
FISCAL SALARY BONUS SATION SATION
NAME AND PRINCIPAL POSITION YEAR ($) $ $ ($)
--------------------------- ------ ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
G. Walter Stuelpe, Jr................. 1997 420,942(1) 183,500(4) -- 21,000(2)
Chief Executive Officer 1996 405,129(1) 216,600 -- 17,000(2)
and President 1995 393,834(1) 222,100 -- 17,000(2)
James V. LaRocco, Jr.................. 1997 189,396(1) 72,895(4) -- 22,000(2)
Executive Vice President, 1996 172,006(1) 64,539 -- 19,300(2)
Corporate Development 1995 164,063(1) 61,710 -- 19,300(2)
Trevor R. Van Horn(5)................. 1997 140,399(1) 56,646(4) -- --
Corporate Vice President, 1996 98,654(1) 29,798 17,033(3) --
Airport Properties 1995 -- -- -- --
Herbert W. Anderson, Jr............... 1997 130,250(1) 53,146(4) 21,241(3) 7,900(2)
Corporate Vice President, 1996 121,944(1) 49,050 17,695(3) --
Urban Properties 1995 101,334(1) 26,972 -- --
Michael J. Celebrezze................. 1997 128,477(1) 43,750(4) -- 8,500(2)
Senior Vice President, Chief 1996 116,386(1) 45,911 -- 7,900(2)
Financial Officer and 1995 108,227(1) 38,304 -- 2,400(2)
Treasurer
Myron C. Warshauer(6)................. 1997 98,265 -- 41,229(7) 42,102(8)
Chief Executive Officer and 1996 53,290 -- 28,795(7) 41,630(8)
President of Standard 1995 37,950 -- 18,740(7) 46,169(8)
Michael K. Wolf(6).................... 1997 376,400 -- -- --
Executive Vice President and 1996 313,800 -- -- --
General Counsel of Standard 1995 254,800 -- -- --
</TABLE>
- ------------------------------
(1) The amount shown includes amounts contributed by APCOA to its 401(k) plan
under a contribution matching program.
(2) The amount shown reflects deposits made by APCOA on behalf of Named
Executive Officers into a supplemental pension plan pursuant to which the
Named Executive Officers will be entitled to monthly cash retirement and
death benefit payments.
(3) The amount shown includes car allowances, club dues and moving expenses paid
by APCOA.
(4) The amount shown is a target only, bonuses for 1997 have not yet been paid,
and the actual bonus may be different from the amount shown in the table
above.
(5) As of April 1, 1998, Mr. Van Horn is no longer an employee of the Company.
(6) All compensation information set forth in the table for this individual
reflects compensation earned for services with Standard or its respective
subsidiaries.
(7) The amount shown includes car allowances, club dues, health insurance
premiums and legal fees related to estate planning paid by Standard.
(8) The amount shown reflects premiums paid by Standard on behalf of Myron C.
Warshauer for life insurance policies to which Mr. Warshauer is entitled to
the cash surrender value.
DIRECTOR COMPENSATION
Directors of Holdings do not receive compensation for serving on Holdings'
Board of Directors. Directors of the Company do not receive compensation for
serving on the Company's Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Holdings did not have a Compensation Committee in the year ended December
31, 1997. During 1997, no executive officer of Holdings served as a member of
the Compensation Committee of another entity.
52
<PAGE> 54
The Company did not have a Compensation Committee in the year ended
December 31, 1997. The Company intends to form a Compensation Committee in 1998.
The members of such committee have not yet been determined. During 1997, no
executive officer of the Company served as a member of the Compensation
Committee of another entity.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Mr. Stuelpe's current employment agreement with the Company provides for an
initial four-year term with default annual renewals, and is scheduled to lapse
on December 31, 2000. The agreement also provides for an annual base salary of
$423,306 in 1998, plus an annual bonus equal to eight percent of an amount
substantially based on the amount by which the Company's EBITDA, subject to
certain adjustments, exceeds a certain floor amount, as well as certain other
benefits. Mr. Stuelpe agrees not to disclose confidential information if such
disclosure would have a material adverse effect on the Company. During the term
of the employment agreement, and for two years after its termination, or, under
certain circumstances, until receipt of the final salary payment due under the
terms of the agreement, Mr. Stuelpe agrees not to render services to, or have
any ownership interest in, any business which is competitive with the Company.
If Mr. Stuelpe's employment is terminated by reason of his death or
Disability (as defined in the agreement), the Company is obligated to pay Mr.
Stuelpe's designated beneficiary, in the case of termination by reason of death,
and Mr. Stuelpe, in the case of termination by reason of Disability, (i) an
amount equal to Mr. Stuelpe's annual base salary at the time of his death; (ii)
the annual bonus for the year in which the termination of employment occurred,
prorated for the numbers of days Mr. Stuelpe was employed during that year; and
(iii) certain other benefits.
If Mr. Stuelpe's employment is terminated other than for death or
Disability, and without Cause (as defined in the agreement) or within six months
following a Change of Control (as defined in the agreement), the Company is
required to pay Mr. Stuelpe (a) his salary (i) through the date that the
agreement was scheduled to terminate as if Mr. Stuelpe had continued to be
employed by the Company, in the case of a termination without Cause and (ii) for
a minimum period of twenty-four months after the termination of employment, in
the case of a Change of Control; (b) the annual bonus for the year in which the
termination of employment occurred, prorated for the number of days Mr. Stuelpe
was employed during that year; and (c) certain other benefits.
Mr. LaRocco's current employment agreement with the Company provides for a
three-year term, scheduled to lapse on June 30, 1998, default annual renewals,
and an annual base salary of not less than $165,000, subject to annual review
and increases at the discretion of the Company's Chief Executive Officer, plus
an annual bonus of up to forty percent of annual base salary, as well as certain
other benefits. Mr. LaRocco agrees not to disclose confidential information for
any reason whatsoever. During the term of the employment agreement, and for one
year after its termination if Mr. LaRocco is terminated other than without Cause
(as defined in the agreement), Mr. LaRocco agrees not to render services to, or
have any ownership interest in, any business which is competitive with the
Company. Mr. LaRocco's employment agreement does not contain change of control
provisions.
If Mr. LaRocco's employment is terminated by reason of his death or
Disability (as defined in the agreement), the Company is obligated to pay Mr.
LaRocco's designated beneficiary, in the case of termination by reason of death,
and Mr. LaRocco, in the case of termination by reason of Disability, (i) an
amount equal to Mr. LaRocco's annual base salary at the time of his death plus
$9,600, which represents the estimated annual value of the right to use a
company automobile and (ii) certain other benefits.
If Mr. LaRocco's employment is terminated other than for death or
Disability and without Cause, the Company is required to pay Mr. LaRocco (i) the
greater of his annual base salary at the time of termination or the aggregate
amount payable to Mr. LaRocco under the company's severance benefit policy; (ii)
a termination bonus in an amount equal to the annual bonus for the year in which
the termination of employment occurred, multiplied by the number of days
remaining after the date of termination in that year plus 365, and then divided
by 365; and (iii) certain other benefits.
Mr. Van Horn's employment agreement with the Company terminated as of April
1, 1998. In connection with such termination, the Company paid Mr. Van Horn (i)
thirty weeks' severance pay; (ii) a thirty-five
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<PAGE> 55
percent Severance Retention Bonus and (iii) $25,000 in relocation and related
expenses. In addition, the Company transferred to Mr. Van Horn the title to Mr.
Van Horn's company automobile and company computer, and will continue providing
insurance benefits to Mr. Van Horn for a certain time after such termination.
Mr. Anderson's current employment agreement with the Company provides for a
two and one-half year term, scheduled to lapse on June 30, 1998, default annual
renewals, and an annual base salary of not less than $125,000, subject to annual
review and increases at the discretion of the Company's Chief Executive Officer,
plus an annual bonus of up to forty percent of the annual base salary, as well
as certain other benefits. Mr. Anderson agrees not to disclose confidential
information for any reason whatsoever. During the term of the employment
agreement, and for one year after its termination if Mr. Anderson is terminated
other than without Cause (as defined in the agreement), Mr. Anderson agrees not
to render services to, or have any ownership interest in, any business which is
competitive with the Company. Mr. Anderson's employment agreement does not
contain change of control provisions.
If Mr. Anderson's employment is terminated by reason of his death or
Disability (as defined in the agreement), the Company is obligated to pay Mr.
Anderson's designated beneficiary, in the case of termination by reason of
death, and Mr. Anderson, in the case of termination by reason of Disability, (i)
an amount equal to Mr. Anderson's annual base salary at the time of his death
plus $9,600, which represents the estimated annual value of the right to use a
company automobile and (ii) certain other benefits.
If Mr. Anderson's employment is terminated other than for death or
Disability and without Cause, the Company is required to pay Mr. Anderson (i)
the greater of his annual base salary at the time of termination and the
aggregate amount payable to Mr. Anderson under the company's severance benefit
policy; (ii) a termination bonus in an amount equal to the annual bonus for the
year in which the termination of employment occurred, multiplied by the number
of days remaining after the date of termination in that year plus 365, and then
divided by 365; and (iii) certain other benefits.
Mr. Celebrezze's current employment agreement with the Company provides for
a three-year term, scheduled to lapse on March 30, 2001, default renewals for
additional two year periods, an annual base salary of not less than $180,000,
subject to annual review, plus an annual bonus of at least 35% of Mr.
Celebrezze's annual base salary and a $250,000 housing differential loan with a
term of three years, of which one-third of the principal balance and the accrued
interest due thereon shall be forgiven by the Company, and treated as additional
compensation to Mr. Celebrezze in the year of such forgiveness, for each year
Mr. Celebrezze remains in the continual employ of the Company (and the Company
shall make Mr. Celebrezze whole with respect to the tax consequences of any such
forgiveness), as well as certain other benefits.
Mr. Celebrezze agrees not to communicate, divulge or disseminate
confidential information at any time during or after his employment with the
Company, except with the prior written consent of the Company or as required by
law or legal process. During the term of the employment agreement and for two
years after its termination, Mr. Celebrezze agrees not to render services to, or
have any ownership interest in, any business which is competitive with the
Company in geographic areas in which the Company, or its affiliates, is then
conducting, or is in the process of developing prospects to conduct, business.
Mr. Celebrezze's employment agreement does not contain change of control
provisions.
If Mr. Celebrezze's employment is terminated by reason of his death, the
Company is obligated to pay Mr. Celebrezze's estate an amount equal to the sum
of (i) Mr. Celebrezze's annual base salary through the end of the calendar month
in which death occurs and (ii) any earned and unpaid annual bonus, vacation pay
and other vested benefits. If Mr. Celebrezze's employment is terminated by
reason of his Disability (as defined in the agreement), the Company is obligated
to pay Mr. Celebrezze or his legal representative (a) Mr. Celebrezze's annual
base salary for the duration of the employment period in effect on the date of
termination, reduced by amounts received under any disability benefit program
and (b) any earned and unpaid annual bonus and other vested benefits.
If Mr. Celebrezze's employment is terminated by the Company other than for
death, Disability or Cause (as defined in the agreement) or if Mr. Celebrezze
terminates his employment for Good Reason (as defined in the agreement), the
Company is required to continue (A) to pay Mr. Celebrezze for the remainder of
the
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<PAGE> 56
employment period in effect immediately before the date of termination his
annual base salary and annual bonus(es) through the end of the then-current
employment period and (B) to provide Mr. Celebrezze and/or his family with
certain other benefits, provided that in the event of a termination of
employment by Mr. Celebrezze for Good Reason, the annual base salary, annual
bonus and benefit continuation period shall be two years from the date of such
termination. In addition, under the foregoing circumstances, any remaining
principal balance and any accrued and unpaid interest on the housing
differential loan shall be forgiven by the Company, and the Company shall make
Mr. Celebrezze whole for any tax consequences of such forgiveness.
If Mr. Celebrezze's employment is terminated by the Company any time before
the third anniversary of the employment agreement for any reason other than for
Cause, or if the Company gives notice of its intention not to renew the
agreement for an additional two-year term beginning on the third anniversary of
the agreement, the Company is obligated to (x) pay Mr. Celebrezze his annual
base salary and annual bonus for the remaining balance of the initial three-year
term, if any, and for an additional two years and (y) to continue to provide Mr.
Celebrezze with certain other benefits for the same period.
Mr. Wolf's current employment agreement with the Company provides for a
three-year term, scheduled to lapse on March 26, 2001, default annual renewals,
and an annual base salary of not less than $376,400, subject to annual review,
plus an annual bonus based on a percentage of the annual base salary to be
mutually agreed upon by the Company and Mr. Wolf, as well as certain other
benefits. Mr. Wolf agrees to hold all confidential information in strict
confidence and not publish or otherwise disclose any portion thereof to any
person whatsoever except with the prior written consent of the Company. During
the term of the employment agreement and for two years after its termination (or
eighteen months if such termination follows a Change in Control (as defined in
the agreement)), Mr. Wolf agrees not to render services to, or have any
ownership interest in, any business which is competitive with the Company in
certain geographic areas.
If Mr. Wolf's employment is terminated by reason of his death, the Company
is obligated to pay Mr. Wolf's estate an amount equal to the sum of (i) Mr.
Wolf's annual base salary through the end of the calendar month in which death
occurs and (ii) any earned and unpaid annual bonus, vacation pay and other
vested benefits.
If Mr. Wolf's employment is terminated by reason of his Disability (as
defined in the agreement), the Company is obligated to pay Mr. Wolf or his legal
representative (a) an amount equal to Mr. Wolf's annual base salary for the
duration of the employment period in effect on the date of termination, reduced
by amounts received under any disability benefit program and (b) any earned and
unpaid annual bonus and other vested benefits.
If Mr. Wolf's employment is terminated by the Company other than for death
or Disability and without Cause (as defined in the agreement), the Company is
required to continue (A) to pay Mr. Wolf for the remainder of the employment
period in effect immediately before the date of termination his annual base
salary and annual bonus(es) through the end of the then-current employment
period and (B) to provide Mr. Wolf and/or his family with certain other
benefits.
If Mr. Wolf's employment is terminated by the Company for any reason other
than Cause during the three-year period following a Change in Control (as
defined in the agreement), the Company is obligated to (x) pay Mr. Wolf an
amount ("Severance Pay") equal to the greater of (1) one and one-half times the
sum of (I) Mr. Wolf's current annual base salary plus (II) the amount of any
bonus paid to Mr. Wolf in the preceding twelve months and (2) the annual base
salary and annual bonuses through the end of the then-current employment period
and (y) continue to provide Mr. Wolf with certain other benefits for a certain
period of time. If Mr. Wolf terminates his employment voluntarily following a
Change in Control, he shall not be entitled to Severance Pay, provided, however,
that any such termination by Mr. Wolf for Good Reason (as defined in the
agreement) shall not be considered a voluntary termination and Mr. Wolf will be
treated as if he had been terminated by the Company other than for Cause.
Consummation of the Combination was conditioned, among other things, upon
the execution of an employment agreement between the Company and Myron C.
Warshauer.
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<PAGE> 57
Employment Agreement with Myron C. Warshauer. The Employment Agreement
between the Company and Myron C. Warshauer (the "Warshauer Employment
Agreement") provides that Myron C. Warshauer serve as Chief Executive Officer of
the Company, and be appointed as a member of the Board of Directors of the
Company (the "Board") and each committee of the Board, for a period beginning on
the date of the consummation of the Combination and ending on Myron C.
Warshauer's 65th birthday (the "Employment Period"). Myron C. Warshauer will
receive during the Employment Period an annual base salary of $600,000 ("Annual
Base Salary"). The Warshauer Employment Agreement also provides for certain
perquisites.
Under the Warshauer Employment Agreement, if Myron C. Warshauer's
employment were to be terminated by Myron C. Warshauer for Good Reason (as
defined below), or by the Company other than for Cause (as defined below), death
or Disability (as defined below), the Company would be obligated to (i) pay
Myron C. Warshauer a lump sum cash payment in an amount equal to the aggregate
Annual Base Salary that he would have received for the remainder of the
Employment Period, reduced to present value using as a discount rate the
"applicable federal rate," as defined in Section 1274(d) of the Internal Revenue
Code of 1986, as amended, and (ii) continue to provide for the same period
welfare benefits to Myron C. Warshauer and/or his family, at least as favorable
as those that would have been provided to them under the Warshauer Employment
Agreement if Myron C. Warshauer's employment had continued until the end of the
Employment Period, provided, however, that during any period when Myron C.
Warshauer is eligible to receive such benefits under another employer-provided
plan, such benefits provided by the Company may be made secondary to those
provided under such other plan. If Myron C. Warshauer's employment were to be
terminated by reason of his Disability during the Employment Period, the Company
would be obligated to pay Myron C. Warshauer, or his legal representative, as
applicable, the Annual Base Salary for the duration of the Employment Period in
effect at the time of the termination of employment.
In addition to the above compensation and benefits, if Myron C. Warshauer's
employment were to be terminated for any reason other than by the Company for
Cause, the Company would be obligated, beginning on the date of such termination
in the case of a voluntary termination by Myron C. Warshauer, and beginning on
Myron C. Warshauer's 65th birthday in all other cases, and ending on the first
to occur of Myron C. Warshauer's 75th birthday and Myron C. Warshauer's death
(such ending date, the "Cutoff Date"), to (i) pay Myron C. Warshauer $200,000
annually, adjusted for inflation and (ii) provide Myron C. Warshauer with an
executive office and secretarial services. In consideration for such benefits,
Myron C. Warshauer is obligated to provide reasonable consulting services to the
Company from the date of termination of his employment through the Cutoff Date.
As used in the Warshauer Employment Agreement: (i) "Cause" means (a)
illegal conduct, or gross misconduct, that results in material damage to the
business or reputation of the Company; or (b) any willful and continued failure
by Myron C. Warshauer to perform his duties under the Warshauer Employment
Agreement, (ii) "Disability" means that Myron C. Warshauer has been unable, for
a period of 180 consecutive days, or for periods aggregating 180 business days
in any period of twelve months, to perform a material portion of his duties
under the Warshauer Employment Agreement, as a result of physical or mental
illness or injury, and a physician selected by the Company has determined that
Myron C. Warshauer's incapacity is total and permanent, and (iii) "Good Reason"
means (a) the relocation of Myron C. Warshauer's principal place of business
outside of the central business district and northern suburbs of Chicago; (b) a
material reduction in Myron C. Warshauer's responsibilities; (c) the assignment
to Myron C. Warshauer of duties inconsistent with his position as set forth in
the Warshauer Employment Agreement; (d) a change in Myron C. Warshauer's title
from that required under the Warshauer Employment Agreement; (e) a removal of
Myron C. Warshauer from the Board or any committee thereof; (f) a requirement
that Myron C. Warshauer report to anyone other than the Chairman of the Board;
or (g) any material breach by the Company of any other term of the Warshauer
Employment Agreement.
The Warshauer Employment Agreement also provides that during the period
beginning on the date of the consummation of the Combination and ending on Myron
C. Warshauer's 75th birthday (the "Noncompetition Period"), Myron C. Warshauer
shall not, without written consent of the Board, engage in or become associated
with any business or other endeavor that engages in construction, ownership,
leasing, design and/or
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<PAGE> 58
management of parking lots, parking garages, or other parking facilities or
consulting with respect thereto, provided, however, that Myron C. Warshauer may
own or sell investments in certain parking facilities ("Permitted Investments")
during the Noncompetition Period, and may own or sell any interest in any other
real estate ("Other Real Estate") at any time after the Employment Period for
the remainder of the Noncompetition Period. The Warshauer Employment Agreement
provides that, if such Permitted Investment or Other Real Estate includes a
parking facility, Myron C. Warshauer shall initiate negotiations, or, under
certain circumstances, use reasonable and good-faith efforts to cause such
negotiations, with the Company in an attempt to determine mutually agreeable
terms pursuant to which the Company will manage or lease the parking facility
and, if such negotiations fail, that, under certain circumstances, the Company
shall have a right of first refusal with respect to any management agreement or
lease that may be negotiated with any independent third party.
Pursuant to the Warshauer Employment Agreement, within 120 days after the
Closing Date, the Company shall establish a stock option or phantom stock option
plan (the "Option Plan") providing for grants of actual or phantom options with
respect to the common stock of the Company ("Company Common Stock"), under which
Myron C. Warshauer will be granted options to purchase a number of shares of
Company Common Stock equal to 1.0% of the total number of shares of Company
Common Stock. All such options will have a term of 10 years from the date of the
grant.
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<PAGE> 59
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
HOLDINGS
The following table sets forth certain information regarding the beneficial
ownership of the common stock of Holdings, par value $0.01 per share ("Holdings
Common Stock"), by (i) each person known to Holdings to own beneficially more
than 5% of Holdings Common Stock, (ii) each director of Holdings, (iii) each
Named Executive Officer of Holdings, and (iv) all executive officers and
directors of Holdings, as a group. All information with respect to beneficial
ownership has been furnished to Holdings by the respective stockholders of
Holdings. Except as otherwise indicated in the footnotes, each beneficial owner
has the sole power to vote and to dispose of all shares held by such holder.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OUTSTANDING
<S> <C> <C>
Holberg Industries, Inc................... 7,260 shares of Common Stock(1) 82.5%
Delaware North............................ 880 shares of Common Stock(2) 10.0
G. Walter Stuelpe, Jr. ................... 276.6 shares of Common Stock 3.1
Michael J. Celebrezze..................... 27.7 shares of Common Stock 0.3
Robert N. Sacks........................... 27.7 shares of Common Stock 0.3
John V. Holten............................ (3)
Orkla ASA ("Orkla")....................... (4)
Gunnar E. Klintberg....................... --
Directors and Executive Officers as a
Group................................... 65.3
</TABLE>
- ------------------------------
(1) Holberg also owns the Holdings Preferred Stock. See "Certain Relationships
and Related Party Transactions--Preferred Stock."
(2) Holdings has exercised the right to repurchase the shares of its common
stock held by Delaware North pursuant to the terms of the Put/Call
Agreement.
(3) Mr. Holten owns all of the outstanding common stock of the corporate parent
of Holberg, which parent entity owns approximately 70% of the outstanding
common stock of Holberg, which in turn owns 82.5% of the outstanding common
stock of Holdings. The corporate parent of Holberg has an additional
interest in the common stock of Holberg of approximately 25% through certain
preferred stock convertible into common stock. The convertible interests
described in this note have been computed based upon the outstanding common
shares of Holberg, without taking into account any convertible interests of
Holberg. Holberg also owns the Holdings Preferred Stock. See "Certain
Relationships and Related Party Transactions--Preferred Stock."
(4) Orkla owns approximately 30% of the outstanding common stock of Holberg.
Orkla has an additional interest in the common stock of Holberg of
approximately 17% through certain preferred stock convertible into common
stock. The convertible interests described in this note have been computed
based upon the outstanding common shares of Holberg, without taking into
account any convertible interests of Holberg.
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<PAGE> 60
THE COMPANY
The following table sets forth certain information regarding the beneficial
ownership of Company Common Stock by (i) each person known to the Company to own
beneficially more than 5% of Company Common Stock, (ii) each director of the
Company, (iii) each Named Executive Officer of APCOA and (iv) all executive
officers and directors of the Company, as a group. All information with respect
to beneficial ownership has been furnished to the Company by the respective
stockholders of the Company. Except as otherwise indicated in the footnotes,
each beneficial owner has the sole power to vote and to dispose of all shares
held by such holder.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OUTSTANDING
<S> <C> <C>
Holdings.................................. 26.3 shares of Common Stock 84.0%
John V. Holten............................ (1)
Orkla..................................... (2)
Delaware North............................ (3)
Dosher Partners, L.P...................... 2.5 shares of Common Stock(4) 8.0
Myron C. Warshauer........................ (4)
SP Associates............................. 2.5 shares of Common Stock(5) 8.0
G. Walter Stuelpe, Jr..................... (6)
Michael J. Celebrezze..................... (7)
Robert N. Sacks........................... (8)
James V. LaRocco, Jr...................... (9)
Directors and Executive Officers as a
Group................................... (1)(4)(6)(7)(8)(9)
</TABLE>
- ------------------------------
(1) Mr. Holten owns all of the outstanding common stock of the corporate parent
of Holberg, which parent entity owns approximately 70.0% of the outstanding
common stock of Holberg, which in turn owns 82.5% of the outstanding common
stock of Holdings. The corporate parent of Holberg has an additional
interest in the common stock of Holberg of approximately 25% through
certain preferred stock convertible into common stock. The convertible
interests described in this note have been computed based upon the
outstanding common shares of Holberg, without taking into account any
convertible interests of Holberg. Holberg also owns the Holdings Preferred
Stock. See "Certain Relationships and Related Party Transactions--Preferred
Stock."
(2) Orkla owns approximately 30.0% of the outstanding common stock of Holberg.
Orkla has an additional interest in the common stock of Holberg of
approximately 17% through certain preferred stock convertible into common
stock. The convertible interests described in this note have been computed
based upon the outstanding common shares of Holberg, without taking into
account any convertible interests of Holberg.
(3) Delaware North owns 10.0% of the outstanding common stock of Holdings.
Holdings has exercised the right to repurchase the shares of its common
stock held by Delaware North pursuant to the terms of the Put/Call
Agreement.
(4) All of the interests in Dosher Partners, L.P. are beneficially owned by
Myron C. Warshauer and trusts for the benefit of certain members of his
family. Mr. Warshauer disclaims beneficial ownership of the assets of
Dosher Partners, L.P., including the shares of Common Stock held by it, to
the extent those interests are held for the benefit of such trusts.
(5) SP Associates is a general partnership controlled by affiliates of JMB
Realty Corp.
(6) Mr. Stuelpe owns approximately 3.1% of the common stock of Holdings.
(7) Mr. Celebrezze owns less than 1.0% of the common stock of Holdings.
(8) Mr. Sacks owns less than 1.0% of the common stock of Holdings.
(9) Mr. LaRocco owns approximately 1.6% of the common stock of Holdings.
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<PAGE> 61
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
COMPANY STOCKHOLDERS AGREEMENT
Upon consummation of the Combination, the Company entered into a
Stockholders Agreement (the "Company Stockholders Agreement") with Dosher
Partners, L.P. ("Dosher") and SP Associates (collectively, the "Standard
Parties") and Holberg and Holdings (collectively with the Standard Parties, the
"Company Stockholders"). The Company Stockholders Agreement provides, among
other things, for (i) prior to the earliest of (a) the seventh anniversary of
the consummation of the Combination, (b) the termination of Myron C. Warshauer's
employment with the Company under certain circumstances and (c) the consummation
of an initial public offering of Company Common Stock (as such offering will be
defined in the Company Stockholders Agreement), certain obligations of Holberg
to allow Dosher the opportunity to acquire all, but not less than all, of the
Company Common Stock held by Holberg and/or its affiliates before Holberg may
directly or indirectly sell an amount of Company Common Stock which would
constitute a Control Transaction (as will be defined in the Company Stockholders
Agreement); provided that, under certain circumstances, Holberg may sell such
shares to a party other than Dosher if the terms of such other party's offer are
more favorable to Holberg, (ii) until the consummation of an initial public
offering of Company Common Stock, certain rights of each Standard Party to
purchase shares of Company Common Stock to the extent necessary to maintain such
Standard Party's percentage ownership of the Company, (iii) the right of the
Standard Parties to participate in, and the right of Holberg to require the
Standard Parties to participate in, certain sales of Company Common Stock, (iv)
following the third anniversary of the consummation of the Combination and prior
to an initial public offering of Company Common Stock, certain rights of the
Company to purchase, and certain rights of the Standard Parties to require the
Company to purchase, shares of Company Common Stock at prices determined in
accordance with the Company Stockholders Agreement and (v) certain additional
restrictions on the rights of the Standard Parties to transfer shares of Company
Common Stock. The Company Stockholders Agreement also contains certain
provisions granting the Company Stockholders certain rights in connection with
registrations of Company Common Stock in certain offerings and provides for
indemnification and certain other rights, restrictions and obligations in
connection with such registrations.
HOLDINGS STOCKHOLDERS AGREEMENT
Holdings is party to a Stockholders Agreement with Holberg, Delaware North
and each of the members of APCOA management who is a stockholder of Holdings,
and an ancillary Put/Call Option Agreement between Holberg and Delaware North,
which provide for, among other things, (i) a board of directors consisting of
three or more Holberg nominees, one Delaware North nominee, and one management
nominee, (ii) certain restrictions on the sale, assignment, transfer,
encumbrance or other disposition of the Holdings Common Stock, (iii) certain
first offer, repurchase and put/call rights with respect to the Holdings Common
Stock held by the management investors, (iv) certain pre-emptive rights in favor
of the management investors with respect to the issuance of Holdings Common
Stock, and (v) certain put/call rights with respect to the Holdings Common Stock
held by Delaware North.
TAX SHARING AGREEMENT
Holdings is a party to the Tax Sharing Agreement, dated April 28, 1989, by
and among Holberg, Holdings and the Company (the "Tax Sharing Agreement"), which
applies to each of Holberg's consolidated return years beginning with 1989. The
Tax Sharing Agreement provides that each member of Holberg's affiliated group,
including Holdings, will pay to Holberg the amount of federal income tax that
such member would be required to pay on a separate return basis for the year in
question, except that the amount that Holdings is required to pay to Holberg
will not exceed the tax liabilities of Holdings on a separate return basis for
all taxable years to which the Tax Sharing Agreement applies and for which
Holdings joined in the Holberg consolidated return, computed as if Holdings had
actually filed separate returns for all such years and taking into account any
net operating loss carryforward Holdings would have had if it had filed a
separate return for all such years. Holberg is not required to make a payment to
Holdings by virtue of the utilization by
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<PAGE> 62
the Holberg affiliated group of any net operating loss generated by Holdings. In
the event that the consolidated federal income tax liability of the Holberg
affiliated group is adjusted for any taxable period, whether by means of an
amended return, claim for refund, or tax audit by the Internal Revenue Service,
the liability of Holdings under the Tax Sharing Agreement will be recomputed to
give effect to such adjustments. The Combination Agreement contemplates that the
Tax Sharing Agreement may be amended prior to consummation of the Combination as
may be agreed by APCOA and the Standard Owners.
PREFERRED STOCK
Holberg currently owns $25.2 million of Series A Cumulative Preferred Stock
of Holdings ("Holdings Preferred Stock"). Dividends on the Holdings Preferred
Stock are not payable in cash to the extent prohibited by any agreement of
Holdings, including the Indenture. Holdings Preferred Stock is redeemable at the
option of Holdings. Prior to the consummation of the Combination, Holberg held
$8.7 million of preferred stock of APCOA. A portion of the proceeds of the
Senior Subordinated Notes Offering was used to redeem $8.0 million of the
preferred stock. The remaining $0.7 million was contributed to the capital of
the Company.
The preferred stock issued by the Company to Holdings in respect of the
Preferred Stock Contribution has the same maturity as the New Notes, has an
initial liquidation preference equal to the issue price of the New Notes,
increases in liquidation preference at the same rate as the New Notes accrue
interest, such that the liquidation preference of the preferred stock will at
all times be equal to the then principal amount of the New Notes, and accrues
cash dividends commencing at such times as the New Notes commence to accrue cash
interest, at the same rate as the New Notes.
MANAGEMENT CONTRACTS AND RELATED ARRANGEMENTS WITH AFFILIATES
The Company has a management contract to operate one parking facility in
Chicago with an Illinois land trust which is beneficially owned by a partnership
in which Myron C. Warshauer, Steven A. Warshauer and Stanley Warshauer have an
equity interest. All expenses that are typically borne by a facility owner under
a management contract, such as salaries, wages and benefits associated with
employees at the parking facility and an allocable portion of such costs for
supervisory management personnel, the cost of uniforms, supplies, insurance,
utilities and other direct operating costs ("property-level expenses") are paid
by the facility owner. Pursuant to the management contract, the Company is
entitled to an annual management fee of approximately $40,700 in 1998. However,
certain subordination provisions in the loan agreement between the facility
owner and its lender have resulted in the non-payment of all or a portion of the
management fee for the past four years. The Company estimates that the
management fee to which it is entitled pursuant to this management contract is
no less than would normally be obtained through arm's-length negotiations.
The Company has a management contract with the Buckingham Plaza Limited
Partnership ("BPLP") to operate the parking facility at a condominium complex in
Chicago of which BPLP was the developer. Myron C. Warshauer and SP Associates
own an equity interest in one of BPLP's limited partners. The Company received
an annual management fee of $20,200 pursuant to such management contract. The
Company estimates that such management fee is no less than would normally be
obtained through arm's-length negotiations.
The Company has management contracts to operate two surface parking lots in
Chicago. Myron C. Warshauer, Steven A. Warshauer, Michael K. Wolf and SP
Associates own membership interests in a limited liability company that is a
member of the limited liability companies that own such surface parking lots.
The Company receives a total of $39,300 in management fees annually under such
management contracts. The Company estimates that such management fees are no
less than would normally be obtained through arm's-length negotiations.
The Company operates the Clark Fullerton Self Park, a parking facility in
which Myron C. Warshauer has a 50% equity interest. The facility owner pays all
of the property-level expenses. The Company does not receive a management fee.
The Company estimates that in today's market it reasonably could expect to
receive an annual management fee ranging from $15,000 to $20,000 for providing
such services.
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The Company provides office and related support services to Auditorium
Garage, Inc. ("Auditorium"), an Illinois corporation owned by Stanley Warshauer
and his wife, in conjunction with Auditorium's management of a parking facility.
Auditorium reimburses the Company for the general and administrative costs
associated with providing these services, which reimbursement totaled $32,200 in
1997.
Myron C., Stanley and Steven A. Warshauer own an equity interest in two
parking facilities in Chicago. One of those facilities is leased to the Company
on terms that the Company believes are no less favorable to the Company than
would normally be obtained through arm's-length negotiations. The Company earned
net lease income of $342,000 in 1997 at such facility. The other parking
facility (the "Tremont Facility") is leased to Standard/Tremont Parking
Corporation ("Standard Tremont"), an Illinois corporation that is owned by
Stanley Warshauer, Steven A. Warshauer and Myron C. Warshauer. The Company
provides office and related support services to Standard Tremont, in conjunction
with Standard Tremont's management of the Tremont Facility. Standard Tremont
reimburses the Company for the general and administrative costs associated with
providing these services, which reimbursement totaled $13,900 in 1997.
The Company pays 12.5% of the lease net operating income derived from one
parking facility to Warshauer Management Corporation for services rendered in
obtaining the right to operate the facility.
LIABILITY INSURANCE
The Company currently purchases a portion of its casualty insurance from an
affiliate of Holberg. The Company estimates that the premiums paid for such
insurance are comparable to premiums it would pay for comparable coverage from
an unrelated third party. See Note I to the Historical Consolidated Financial
Statements of Holdings included herein.
The Company purchases liability insurance covering certain parking
facilities from JMB Insurance Agency, Inc., an affiliate of JMB Realty Corp. The
Company estimates that the premiums paid for such insurance are comparable to
premiums it would pay for comparable coverage from an unrelated third party.
CONSULTING AGREEMENT WITH SIDNEY WARSHAUER
Consummation of the Combination was conditioned, among other things, upon
the execution of a consulting agreement between the Company and Sidney
Warshauer, the father of Myron C. Warshauer. Sidney Warshauer is 83 years old.
The Consulting Agreement between the Company and Sidney Warshauer (the
"Consulting Agreement") provides that Sidney Warshauer render such services as
may be requested, from time to time, by the Board of Directors of the Company
(the "Board") and/or the Chief Executive Officer of the Company, consistent with
Mr. Warshauer's past practices and experience, for a period beginning on the
date of the consummation of the Combination and ending on Sidney Warshauer's
death (the "Consulting Period"). Sidney Warshauer will receive, during the
Consulting Period, an annual consulting fee of $552,000. The Consulting
Agreement also provides that Sidney Warshauer will receive certain other
benefits during the Consulting Period.
The Consulting Agreement is not terminable by the Company for any reason
other than the death of Sidney Warshauer, or a breach by Sidney Warshauer of his
obligations under the Consulting Agreement with respect to non-disclosure of
Company confidential information, or his obligation under the Consulting
Agreement to refrain from engaging in competition with the Company, as described
below.
The Consulting Agreement provides that, during the Consulting Period,
Sidney Warshauer will not, without written consent of the Board, engage in, or
become associated with, any business or other endeavor that engages in
construction, ownership, leasing, design and/or management of parking lots,
parking garages, or other parking facilities or consulting with respect thereto.
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CERTAIN OTHER MATTERS RELATING TO HOLBERG
Holberg has received customary investment banking and advisory fees from
APCOA in connection with certain prior transactions, and received a $1.0 million
advisory fee (and reimbursement of expenses) upon consummation of the
Combination. The Company also may pay an annual management fee to Holberg and
otherwise reimburse Holberg for certain expenses incurred by Holberg on behalf
of the Company. In addition, the Company currently leases a plane on behalf of
Holberg. Holberg pays all costs under the lease other than amounts that may be
charged to the Company in connection with use of the plane and indemnifies the
Company for all obligations under the lease. All of these fees and other amounts
paid to Holberg are subject to the limits and restrictions imposed by the
Indenture. See "Description of New Notes--Affiliate Transactions."
APCOA and Holberg and its affiliates have periodically engaged in
bi-lateral loans and advances. In connection with the Combination, APCOA made a
$4.5 million non-cash distribution to Holberg of the receivable in such amount
due from Holberg to APCOA, thereby eliminating all amounts due from Holberg to
APCOA. The Company may from time to time enter into such bi-lateral loans and
advances in the future as permitted under the Indenture. See Note 5 to the
Unaudited Pro Forma Consolidated Balance Sheet and "Description of New
Notes--Permitted Investments."
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DESCRIPTION OF INDEBTEDNESS
The following sets forth information concerning the Company's indebtedness
available immediately following the consummation of the Transactions.
NEW CREDIT FACILITY
The Company has entered into the New Credit Facility, pursuant to which the
Company has available a new $40 million revolving credit facility with a
six-year term. The New Credit Facility is available for working capital and
general corporate purposes, including the issuance of letters of credit. At the
Closing, the Company issued approximately $4.9 million of letters of credit
under the New Credit Facility.
The initial interest rate for borrowings under the New Credit Facility is,
at the option of the Company, LIBOR plus 2.50% or the Alternate Base Rate (as
defined below) plus 1.25%. The initial rates may be reduced or increased
according to a pricing grid. The Company may elect interest periods of one, two,
three or six months for LIBOR borrowings. The "Alternate Base Rate" is the
higher of (i) the Agent's corporate base rate and (ii) the federal funds rate
plus 1%. LIBOR will at all times include maximum statutory reserves.
Indebtedness under the New Credit Facility may be prepaid in whole or in part
without premium or penalty (subject in some cases to related breakage) and the
Company may reduce or terminate the Lenders' commitments upon such notice and in
such amounts as may be agreed upon.
All of the Company's existing and future wholly-owned domestic subsidiaries
guarantee indebtedness under the New Credit Facility. All extensions of credit
under the New Credit Facility to the Company and the guarantees of subsidiaries
of the Company's indebtedness under the New Credit Facility are secured, subject
to certain exceptions, by all existing and after-acquired personal property of
the Company and its subsidiaries, including all outstanding capital stock of the
Company's subsidiaries, and any intercompany debt obligations, and all existing
and after-acquired real property fee and leasehold interests and management
contracts, subject to prohibitions in certain of such arrangements relating to
collateral assignment. With certain exceptions, the Company and its subsidiaries
are prohibited from pledging any of their assets other than under the New Credit
Facility. Additionally, Holdings guarantees the Company's obligations under the
New Credit Facility and such guarantee is secured by a first priority pledge of
all the capital stock of the Company owned by Holdings.
Under the New Credit Facility, the initial letter of credit fee is 2.50%
per annum based upon the amount available for drawing under outstanding standby
letters of credit plus customary and reasonable issuing fees. The issuing bank
will retain 0.25% per annum from the fee for issuing the standby letters of
credit. There may be adjustments in the letter of credit fees described above
according to a pricing grid.
The New Credit Facility contains customary and appropriate representations
and warranties, including, without limitation, those relating to due
organization and authorization, no conflicts, financial condition, no material
adverse changes, title to properties, liens, litigation, payment of taxes,
compliance with laws, and full disclosure.
The New Credit Facility also contains customary and appropriate conditions
to all borrowings including requirements relating to prior written notice of
borrowing.
The New Credit Facility also contains customary affirmative and negative
covenants (including, where appropriate, certain exceptions and baskets),
including but not limited to furnishing information and limitations on asset
sales, other indebtedness, liens, investments, guarantees, restricted payments,
mergers and acquisitions, capital expenditures, and affiliate transactions. The
New Credit Facility also contains financial covenants including, without
limitation, those relating to: minimum interest coverage; minimum fixed charge
coverage; and maximum leverage.
Events of default under the New Credit Facility include those relating to:
(a) non-payment of interest, principal or fees payable under the New Credit
Facility; (b) non-performance of certain covenants; (c) cross default to other
material debt of the Company and its subsidiaries; (d) bankruptcy or insolvency;
(e) judgments in excess of specified amounts; (f) materially inaccurate or false
representations or warranties; and (g) change of control.
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DESCRIPTION OF NEW NOTES
GENERAL
The New Notes will be issued pursuant to the same indenture (the
"Indenture") between Holdings and State Street Bank and Trust Company, as
trustee (the "Trustee"), under which the Notes were issued. The terms of the New
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The New Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summary of the material provisions of the Indenture does
not purport to be complete and is qualified in its entirety by reference to the
Indenture, including the definitions therein of certain terms used below. Copies
of the Indenture and Registration Rights Agreement are available as set forth
below under "-- Additional Information." The definitions of certain terms used
in the following summary are set forth below under "--Certain Definitions." For
purposes of this summary, the term "Holdings" refers to AP Holdings, Inc. and
not to any of its Subsidiaries.
The New Notes will be general unsecured obligations of Holdings, will rank
pari passu in right of payment with all existing and future senior indebtedness
of Holdings and will rank senior in right of payment to all existing and future
subordinated indebtedness of Holdings. As indebtedness of Holdings, however, the
New Notes will be effectively subordinated to all indebtedness of the Company.
As of December 31, 1997, on a pro forma basis, after giving effect to the
Combination, the related financings and other transactions described herein,
including, without limitation, the Note Offering and the application of the net
proceeds therefrom, the New Notes would have been effectively subordinate to
approximately $152.3 million of indebtedness of the Company.
The operations of Holdings are conducted through its Subsidiaries, and
Holdings, therefore, is dependent upon the cash flow of its Subsidiaries to meet
its debt obligations, including its obligations under the New Notes. Under
certain circumstances, Holdings is able to designate current or future
Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be
subject to many of the restrictive covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The New Notes will be limited in aggregate principal amount to $120.0
million at maturity of which $70.0 million were issued in the Note Offering and
will mature on March 15, 2008. The New Notes will accrete at a rate of 11 1/4%
per annum, compounded semi-annually to an aggregate principal amount of $70.0
million. Thereafter, interest on the New Notes will accrue at the rate of
11 1/4% per annum and will be payable semi-annually in arrears on March 15 and
September 15 of each year, commencing on September 15, 2003, to Holders of
record on the immediately preceding March 1 and September 1. No cash interest
will be payable prior to September 15, 2003. Interest on the New Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from September 15, 2003. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months. Additional notes
may be issued from time to time, subject to the provisions of the Indenture
described below under the caption "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock." Principal, premium and Liquidated
Damages, if any, and interest on the New Notes will be payable at the office or
agency of Holdings maintained for such purpose within the City and State of New
York or, at the option of Holdings, payment of interest and Liquidated Damages,
if any, may be made by check mailed to the Holders of the New Notes at their
respective addresses set forth in the register of Holders of New Notes; provided
that all payments of principal, premium and Liquidated Damages, if any, and
interest with respect to New Notes the Holders of which have given wire transfer
instructions to Holdings will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
Until otherwise designated by Holdings, Holdings' office or agency in New York
will be the office of the Trustee maintained for such purpose. The New Notes
will be issued in denominations of $1,000 and integral multiples thereof.
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OPTIONAL REDEMPTION
The New Notes will not be redeemable at Holdings' option prior to March 15,
2003. Thereafter, the New Notes will be subject to redemption at any time at the
option of Holdings, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the applicable redemption date, if redeemed during the
twelve-month period beginning on March 15 of the years indicated below:
<TABLE>
<CAPTION>
PERCENTAGE
----------
<S> <C>
2003.................................................... 105.625%
2004.................................................... 103.750%
2005.................................................... 101.875%
2006 and thereafter..................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to March 15, 2001 Holdings
may redeem the New Notes, in whole but not in part, at the option of Holdings,
at a redemption price of 111.25% of the Accreted Value (determined at the date
of redemption), plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the redemption date, with the net cash proceeds of a Public Equity
Offering; provided that such redemption shall occur within 45 days of the date
of the closing of such Public Equity Offering.
SELECTION AND NOTICE
If less than all of the New Notes are to be redeemed at any time, selection
of New Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
New Notes are listed, or, if the New Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no New Notes of $1,000 or less shall be redeemed in part. Notices
of redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of New Notes to be redeemed at
its registered address. Notices of redemption may not be conditional. If any New
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new New Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. New Notes called for redemption become due on the date fixed
for redemption. On and after the redemption date, interest ceases to accrue on
New Notes or portions of them called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders,"
Holdings is not required to make mandatory redemption or sinking fund payments
with respect to the New Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of New Notes will
have the right to require Holdings to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's New Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the Accreted Value thereof on the date of purchase (if
such date of purchase is prior to March 15, 2003) or 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase (if such date of purchase is on or
after March 15, 2003) (the "Change of Control Payment"). Within 30 days
following any Change of Control, Holdings will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase New Notes on the date specified in such notice, which
date shall be no earlier than 30 days and no later than 60 days from the date
such notice is mailed (the "Change of Control Payment Date"), pursuant to the
procedures required by the Indenture and described in such notice. Holdings will
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder
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to the extent such laws and regulations are applicable in connection with the
repurchase of the New Notes as a result of a Change of Control.
On the Change of Control Payment Date, Holdings will, to the extent lawful,
(1) accept for payment all New Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all New Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the New Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of New Notes or portions thereof being purchased
by Holdings. The Paying Agent will promptly mail to each Holder of New Notes so
tendered the Change of Control Payment for such New Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new New Note equal in principal amount to any unpurchased portion
of the New Notes surrendered, if any; provided that each such new New Note will
be in a principal amount of $1,000 or an integral multiple thereof. Holdings
will publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the New Notes to require that Holdings
repurchase or redeem the New Notes in the event of a takeover, recapitalization
or similar transaction.
Due to Change of Control repayment provisions in certain indebtedness of
Holdings' Subsidiaries and the existence of a Change of Control event of default
in the New Credit Facility, it is unlikely that Holdings would be able to
repurchase all of the New Notes upon the occurrence of a Change of Control. See
"Risk Factors -- Change of Control Payment." In addition, the New Notes will
rank pari passu in right of payment with other senior Indebtedness of Holdings.
The ability of Holdings to redeem all of the New Notes upon a Change of Control
may also be limited by restrictions on the ability of Holdings' Subsidiaries to
pay dividends to Holdings. Finally, the New Notes will be effectively
subordinated to Obligations of Subsidiaries of Holdings, including with respect
to Change of Control Payments. See "-- General."
The Change of Control provision of the Indenture could have the effect of
deterring certain acquisition proposals which would constitute a Change of
Control even if such acquisition might be beneficial to certain Holders of New
Notes, as well as restricting the ability of Holdings to obtain additional
financing in the future.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the New Notes to require that Holdings
repurchase or redeem the New Notes in the event of a takeover, recapitalization
or similar transaction.
Holdings will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by Holdings and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Holdings and its Subsidiaries taken as a whole. Although there
is a developing body of case law interpreting the phrase "substantially all,"
there is no precise established definition of the phrase under applicable law.
Accordingly, the ability of a Holder of New Notes to require Holdings to
repurchase such New Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of Holdings and its
Subsidiaries taken as a whole to another Person or group may be uncertain.
ASSET SALES
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) Holdings (or
the Restricted Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity
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Interests issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor received by Holdings or such Restricted Subsidiary is in
the form of cash; provided that the amount of (x) any liabilities (as shown on
Holdings' or such Restricted Subsidiary's most recent balance sheet), of
Holdings or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases Holdings or such Restricted
Subsidiary from further liability and (y) any securities, notes or other
obligations received by Holdings or any such Restricted Subsidiary from such
transferee that are converted by Holdings or such Restricted Subsidiary into
cash within 180 days (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
Holdings may apply such Net Proceeds, at its option, (a) to permanently repay
Senior Debt (and to correspondingly reduce commitments with respect thereto in
the case of revolving borrowings), or (b) to the acquisition of a controlling
interest in another business, the making of a capital expenditure or the
acquisition of other long-term assets and parking facility agreements, in each
case, in a Permitted Business. Pending the final application of any such Net
Proceeds, Holdings may temporarily reduce the revolving Indebtedness under the
New Credit Facility or otherwise invest such Net Proceeds in any manner that is
not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $15.0 million, Holdings will be required to make an offer to
all Holders of New Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of New Notes that may be purchased out of the Excess Proceeds,
at an offer price in cash in an amount equal to 100% of the Accreted Value
thereof on the date of purchase (if such date of purchase is prior to March 15,
2003) or 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase (if such date of
purchase is on or after March 15, 2003), in each case, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of New Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, Holdings may use any remaining Excess Proceeds for general corporate
purposes. If the aggregate principal amount of New Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the New
Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that from and after the date of the Indenture
Holdings will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of Holdings' or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving Holdings) or to the direct
or indirect holders of Holdings' or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of Holdings); (ii)
purchase, redeem or otherwise acquire or retire for value (including without
limitation, in connection with any merger or consolidation involving Holdings)
any Equity Interests of Holdings or any direct or indirect parent of Holdings;
(iii) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness of Holdings that is pari
passu with or subordinated to the New Notes (other than New Notes), except a
payment of interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) Holdings would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter
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period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
the first paragraph of the covenant described below under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Holdings and its Subsidiaries after the
date of the Indenture (excluding Restricted Payments permitted by clause
(ii) and (iii) of the next succeeding paragraph), is less than the sum of
(i) 50% of the Consolidated Net Income of Holdings for the period (taken as
one accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of Holdings' most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by Holdings from the
issue or sale since the date of the Indenture of Equity Interests of
Holdings (other than Disqualified Stock) or of Disqualified Stock or debt
securities of Holdings that have been converted into such Equity Interests
(other than Equity Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of Holdings and other than Disqualified
Stock or convertible debt securities that have been converted into
Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made after the date of the Indenture is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost
of disposition, if any) and (B) the initial amount of such Restricted
Investment, plus (iv) if any Unrestricted Subsidiary (A) is redesignated as
a Restricted Subsidiary, the fair market value of such redesignated
Subsidiary (as determined in good faith by the Board of Directors) as of
the date of its redesignation or (B) pays any cash dividends or cash
distributions to Holdings or any of its Restricted Subsidiaries, 50% of any
such cash dividends or cash distributions made after the date of the
Indenture.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of Holdings in exchange for, or out of the net cash proceeds of the
substantially concurrent sale or issuance (other than to a Restricted Subsidiary
of Holdings) of, other Equity Interests of Holdings (other than any Disqualified
Stock); (iii) the defeasance, redemption, repurchase or other acquisition of
pari passu or subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any
dividend by a Restricted Subsidiary of Holdings to the holders of its Equity
Interests on a pro rata basis; (v) the declaration or payment of dividends to
Holberg in its capacity as a holding company that are attributable to the
operations of Holdings and its Restricted Subsidiaries, including, without
limitation, (a) customary salary, bonus and other benefits payable to officers
and employees of Holberg, (b) fees and expenses paid to members of the Board of
Directors of Holberg, (c) general corporate overhead expenses of Holberg, (d)
foreign, federal, state or local tax liabilities paid by Holberg and (e)
management, consulting or advisory fees paid to Holberg not to exceed $2.0
million in any fiscal year, and (f) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of Holberg held by
any member of Holdings' (or any of their Restricted Subsidiaries') management
pursuant to any management equity subscription agreement or stock option
agreement in effect as of the date of the Indenture; provided, however, the
aggregate amount paid pursuant to the foregoing clauses (a) through (f) does not
exceed $8.0 million; (vi) Investments in any Person (other than the Company or a
Wholly-Owned Restricted Subsidiary) engaged in a Permitted Business in an amount
taken together with all other Investments made pursuant to this clause (vi) that
are at that time outstanding not to exceed $5.0 million; (vii) other Investments
in Unrestricted Subsidiaries having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (vii) that are
at that time outstanding, not to exceed $2.0 million; (viii) payments to Holberg
pursuant to the tax sharing agreement among Holberg and other members of the
affiliated corporations of which Holberg is the common parent; (ix) the
designation of certain of the Company's Subsidiaries as Unrestricted
Subsidiaries immediately prior to the date of the Indenture; (x) the redemption
in connection with the Transactions of the preferred stock of the Company held
by Holberg; (xi) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of Holdings or the Company held by any member
of Holdings' or the Company's (or any
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of their Restricted Subsidiaries') management pursuant to any management equity
subscription agreement or stock option agreement or in connection with the
termination of employment of any employees or management of Holdings or the
Company or their Subsidiaries; provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $2.0 million in the aggregate plus the aggregate cash proceeds received
by Holdings or the Company after the date of the Indenture from any reissuance
of Equity Interests by Holdings or the Company to members of management of
Holdings or the Company and their Restricted Subsidiaries; and (xii) other
Restricted Payments in an aggregate amount not to exceed $10.0 million.
From and after the date of the Indenture, the Board of Directors may
designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such
designation would not cause a Default. For purposes of making such
determination, all outstanding Investments by Holdings and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this covenant. All such outstanding Investments will be
deemed to constitute Investments in an amount equal to the fair market value of
such Investments at the time of such designation (as determined in good faith by
the Board of Directors). Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by Holdings or such Subsidiary, as the case
may be, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined in good faith by the Board of
Directors whose resolution with respect thereto shall be delivered to the
Trustee such determination to be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $10.0 million. Not later than the date of making any
Restricted Payment, Holdings shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "Restricted
Payments" were computed, together with a copy of any fairness opinion or
appraisal required by the Indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Indenture provides that Holdings will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that Holdings will not issue any Disqualified Stock and will
not permit any of its Subsidiaries to issue any shares of preferred stock;
provided, however, that Holdings may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio
for Holdings' most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.0 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Restricted Subsidiaries of Holdings of revolving
credit Indebtedness and letters of credit pursuant to New Credit Facility;
provided that the aggregate principal amount of all revolving credit
Indebtedness (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Restricted Subsidiaries of
Holdings thereunder) outstanding under the New Credit Facility after giving
effect to such incurrence does not exceed $40.0 million less the aggregate
amount of all Net Proceeds of Asset Sales applied to repay revolving credit
Indebtedness under the New Credit Facility pursuant to the covenant described
above under "--Repurchase at the Option of Holders--Asset Sales";
(ii) the incurrence by Holdings and its Restricted Subsidiaries of the
Existing Indebtedness;
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(iii) the incurrence by Holdings and its Restricted Subsidiaries of
Indebtedness represented by the Notes offered in the Note Offering, the Senior
Subordinated Notes and the Senior Subordinated Note Guarantees, respectively;
(iv) the incurrence by Holdings or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of Holdings or such Restricted
Subsidiary (whether through the direct purchase of assets or the Capital Stock
of any Person owning such Assets), in an aggregate principal amount not to
exceed $7.5 million;
(v) the incurrence by Holdings or any of its Restricted Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new Restricted
Subsidiary; provided that such Indebtedness was incurred by the prior owner of
such assets or such Restricted Subsidiary prior to such acquisition by Holdings
or one of its Subsidiaries and was not incurred in connection with, or in
contemplation of, such acquisition by Holdings or one of its Subsidiaries;
provided further that the principal amount (or accreted value, as applicable) of
such Indebtedness, together with any other outstanding Indebtedness incurred
pursuant to this clause (v), does not exceed $5.0 million;
(vi) the incurrence by Holdings or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which
are used to refund, refinance or replace Indebtedness that was permitted by the
Indenture to be incurred under the first paragraph hereof or clauses (i), (ii),
(iii), (iv), (v) or (xv) of this paragraph;
(vii) the incurrence by Holdings or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among Holdings and any of its Wholly Owned
Restricted Subsidiaries; provided, however, that (i) if Holdings is the obligor
on such Indebtedness and the payee is not a Subsidiary Guarantor, such
Indebtedness is expressly subordinated to the prior payment in full in cash of
all Obligations with respect to the Notes and (ii)(A) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness being held by
a Person other than Holdings or a Wholly Owned Restricted Subsidiary and (B) any
sale or other transfer of any such Indebtedness to a Person that is not either
Holdings or a Wholly Owned Restricted Subsidiary shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(viii) the incurrence by Holdings or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
currency risk or interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be outstanding;
(ix) the guarantee by Holdings or any of its Restricted Subsidiaries of
Indebtedness of Holdings or a Restricted Subsidiary of Holdings that was
permitted to be incurred by another provision of this covenant;
(x) the incurrence by Holdings' Unrestricted Subsidiaries of Non-Recourse
Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse
Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of Holdings that was not
permitted by this clause (x);
(xi) Indebtedness incurred by Holdings or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters of
credit issued in the ordinary course of business, including without limitation
to letters of credit in respect to workers' compensation claims or
self-insurance, surety bonds or other Indebtedness with respect to reimbursement
type obligations regarding workers' compensation claims, provided, however, that
upon the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following such
drawing or incurrence;
(xii) Indebtedness arising from agreements of Holdings or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with the
disposition of any business, asset or Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of
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financing such acquisition; provided that the maximum aggregate liability of all
such Indebtedness shall at no time exceed 50% of the gross proceeds actually
received by Holdings;
(xiii) obligations in respect of performance and surety bonds and
completion guarantees provided by Holdings or any Restricted Subsidiary in the
ordinary course of business;
(xiv) guarantees incurred in the ordinary course of business in an
aggregate principal amount not to exceed $5.0 million; and
(xv) the incurrence by Holdings or any of its Restricted Subsidiaries of
additional Indebtedness, including Attributable Debt incurred after the date of
the Indenture, in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant to this clause (xv), not to exceed $35.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xv) above or is
entitled to be incurred pursuant to the first paragraph of this covenant,
Holdings shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant and such item of Indebtedness will
be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. The incurrence of Indebtedness pursuant
to the first paragraph of the covenant described above shall not be classified
as any of the items in clauses (i) through (xv) above. Accrual of interest and
the accretion of accreted value will not be deemed to be an incurrence of
Indebtedness for purposes of this covenant.
LIENS
The Indenture provides that Holdings will not and will not permit any of
its Restricted Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind securing Indebtedness
or trade payables of Holdings that is subordinate to or pari passu with the New
Notes (other than Permitted Liens) upon any of their property or assets, now
owned or hereafter acquired.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to Holdings or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to Holdings or any of
its Restricted Subsidiaries, (ii) make loans or advances to Holdings or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
Holdings or any of its Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of the Indenture, (b) the New Credit Facility as in effect as
of the date of the Indenture, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof; provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive in the aggregate (as determined by the Credit Agent in good faith)
with respect to such dividend and other payment restrictions than those
contained in the New Credit Facility as in effect on the date of the Indenture,
(c) the Indenture and the New Notes, (d) any applicable law, rule, regulation or
order, (e) any instrument governing Indebtedness or Capital Stock of a Person
acquired by Holdings or any of its Restricted Subsidiaries as in effect at the
time of such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired; provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the Indenture to be incurred, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired in the ordinary course of
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business that impose restrictions of the nature described in clause (iii) above
on the property so acquired, (h) Permitted Refinancing Indebtedness; provided
that the material restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced, (i) contracts for
the sale of assets, including without limitation customary restrictions with
respect to a Subsidiary pursuant to an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock or
assets of such Subsidiary, and (j) restrictions on cash or other deposits or net
worth imposed by customers under contracts entered into in the ordinary course
of business.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Indenture provides that Holdings may not consolidate or merge with or
into (whether or not Holdings is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) Holdings is the surviving corporation
or the entity or the Person formed by or surviving any such consolidation or
merger (if other than Holdings) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state thereof or
the District of Columbia; (ii) the entity or Person formed by or surviving any
such consolidation or merger (if other than Holdings) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of Holdings under the Notes and
the Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no Default
or Event of Default exists; and (iv) except in the case of a merger of Holdings
with or into a Wholly Owned Restricted Subsidiary of Holdings, Holdings or the
entity or Person formed by or surviving any such consolidation or merger (if
other than Holdings), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant described
above under the caption "-- Incurrence of Indebtedness and Issuance of Preferred
Stock."
TRANSACTIONS WITH AFFILIATES
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction")
unless (i) such Affiliate Transaction is on terms that are no less favorable to
Holdings or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by Holdings or such Restricted Subsidiary
with an unrelated Person and (ii) Holdings delivers to the Trustee (a) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors and (b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided that the following shall
not be deemed Affiliate Transactions: (q) any employment agreement entered into
by Holdings or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of Holdings or such Restricted
Subsidiary, (r) transactions between or among Holdings and/or its Restricted
Subsidiaries, (s) Permitted Investments and Restricted Payments that are
permitted by the provisions of the Indenture described above under the caption
"-- Restricted Payments," (t) customary loans, advances, fees and compensation
paid to, and indemnity provided on behalf of, officers, directors, employees or
consultants of Holdings or any of its Restricted Subsidiaries, (u) annual
management
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fees paid to Holberg Industries, Inc. not to exceed $5.0 million in any one
year, (v) transactions pursuant to any contract or agreement in effect on the
date of the Indenture as the same may be amended, modified or replaced from time
to time so long as any such amendment, modification or replacement is no less
favorable to Holdings and its Restricted Subsidiaries than the contract or
agreement as in effect on the date of the Indenture or is approved by a majority
of the disinterested directors of Holdings, (w) transactions between Holdings or
its Restricted Subsidiaries on the one hand, and Holberg on the other hand,
involving the provision of financial or advisory services by Holberg; provided
that fees payable to Holberg do not exceed the usual and customary fees for
similar services, (x) transactions between the Company or its Restricted
Subsidiaries on the one hand, and Donaldson, Lufkin & Jenrette Securities
Corporation or its Affiliates ("DLJ") on the other hand, involving the provision
of financial, advisory, placement or underwriting services by DLJ; provided that
fees payable to DLJ do not exceed the usual and customary fees of DLJ for
similar services, (y) the insurance arrangements between Holdings and its
Subsidiaries and an Affiliate of Holberg that are not less favorable to Holdings
or any of its Subsidiaries than those that are in effect on the date hereof
provided such arrangements are conducted in the ordinary course of business
consistent with past practices and (z) payments under the tax sharing agreement
among Holberg and other members of the affiliated group of corporations of which
it is the common parent.
SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that Holdings may enter into a sale and leaseback transaction if (i)
Holdings could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the covenant described above under the caption "--Incurrence of Additional
Indebtedness and Issuance of Preferred Stock" and (b) incurred a Lien to secure
such Indebtedness pursuant to the covenant described above under the caption
"--Liens," (ii) the gross cash proceeds of such sale and leaseback transaction
are at least equal to the fair market value (as determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and Holdings applies the proceeds of such
transaction in compliance with, the covenant described above under the caption
"--Asset Sales."
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY OWNED RESTRICTED
SUBSIDIARIES
The Indenture provides that Holdings (i) will not, and will not permit any
Wholly Owned Restricted Subsidiary of Holdings to, transfer, convey, sell, lease
or otherwise dispose of any Capital Stock of any Wholly Owned Subsidiary of
Holdings to any Person (other than Holdings or a Wholly Owned Restricted
Subsidiary of Holdings), unless (a) such transfer, conveyance, sale, lease or
other disposition is of all the Capital Stock of such Wholly Owned Restricted
Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with the covenant described
above under the caption "--Asset Sales," and (ii) will not permit any Wholly
Owned Restricted Subsidiary of Holdings to issue any of its Equity Interests
(other than, if necessary, shares of its Capital Stock constituting directors'
qualifying shares) to any Person other than to Holdings or a Wholly Owned
Restricted Subsidiary of Holdings.
BUSINESS ACTIVITIES
Holdings will not, and will not permit any Restricted Subsidiary to, engage
in any business other than Permitted Businesses, except to such extent as would
not be material to Holdings and its Restricted Subsidiaries taken as a whole.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any New Notes are outstanding,
Holdings will furnish to the Holders of New Notes (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if Holdings were required to file such
Forms, including a "Management's Discussion
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and Analysis of Financial Condition and Results of Operations" and, with respect
to the annual information only, a report thereon by Holdings' certified
independent accountants and (ii) all current reports that would be required to
be filed with the Commission on Form 8-K if Holdings were required to file such
reports. In addition, whether or not required by the rules and regulations of
the Commission, Holdings will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, Holdings has agreed that,
for so long as any New Notes remain outstanding, it will furnish to the Holders
and to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the New Notes; (ii) default in payment when
due of the principal of or premium, if any, on the New Notes; (iii) failure by
the Company to comply with the provisions described under the captions
"-- Change of Control," "-- Asset Sales," or "-- Merger, Consolidation, or Sale
of Assets;" (iv) failure by Holdings for 30 days after notice from the Trustee
or at least 30% in principal amount of the New Notes then outstanding to comply
with the provisions described under the captions "-- Restricted Payments" or
"-- Incurrence of Indebtedness and Issuance of Preferred Stock;" (v) failure by
Holdings for 60 days after notice from the Trustee or at least 25% in principal
amount of the New Notes then outstanding to comply with any of its other
agreements in the Indenture or the Notes; (vi) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by Holdings or any of
its Subsidiaries (or the payment of which is guaranteed by Holdings or any of
its Subsidiaries) whether such Indebtedness or Guarantee now exists, or is
created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default") or (b) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $15.0 million or more; (vii)
failure by Holdings or any of its Subsidiaries to pay final judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; and (viii) certain events of bankruptcy or
insolvency with respect to Holdings or any of its Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding New Notes
may declare all the New Notes to be due and payable immediately. Upon such
declaration, the principal of (or, if prior to March 15, 2003, the Accreted
Value of) premium, if any, and accrued and unpaid interest on the New Notes
shall be due and payable immediately. Notwithstanding the foregoing, in the case
of an Event of Default arising from certain events of bankruptcy or insolvency,
with respect to Holdings or any of its Subsidiaries all outstanding New Notes
will become due and payable without further action or notice. Holders of the New
Notes may not enforce the Indenture or the New Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding New Notes may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders of the New Notes
notice of any continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal or interest) if it determines
that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of Holdings with the
intention of avoiding payment of the premium that Holdings would have had to pay
if Holdings then had elected to redeem the New Notes pursuant to the optional
redemption provisions of the Indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the New Notes. If an Event of Default occurs prior to March 15,
2003 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of Holdings with the intention of avoiding the prohibition on redemption
of the New Notes prior to March 15,
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2003, then the premium specified in the Indenture shall also become immediately
due and payable to the extent permitted by law upon the acceleration of the New
Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
New Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the New Notes.
Holdings is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and Holdings is required upon becoming
aware of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Holdings, as
such, shall have any liability for any obligations of Holdings under the New
Notes, the Indenture, or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of New Notes by accepting a New
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the New Notes. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Holdings may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding New Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding New Notes to
receive payments in respect of the principal of, premium and Liquidated Damages,
if any, and interest on such New Notes when such payments are due from the trust
referred to below, (ii) Holdings' obligations with respect to the New Notes
concerning issuing temporary New Notes, registration of New Notes, mutilated,
destroyed, lost or stolen New Notes and the maintenance of an office or agency
for payment and money for security payments held in trust, (iii) the rights,
powers, trusts, duties and immunities of the Trustee, and Holdings, obligations
in connection therewith and (iv) the Legal Defeasance provisions of the
Indenture. In addition, Holdings may, at its option and at any time, elect to
have the obligations of Holdings released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the New Notes. In the event Covenant Defeasance
occurs, certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the New Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance: (i)
Holdings must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the New Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium and Liquidated Damages, if any, and interest on
the outstanding New Notes on the stated maturity or on the applicable redemption
date, as the case may be, and Holdings must specify whether the New Notes are
being defeased to maturity or to a particular redemption date; (ii) in the case
of Legal Defeasance, Holdings shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that (A) Holdings has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders of the outstanding New Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, Holdings shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance
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and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day after the date
of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under any material agreement
or instrument (other than the Indenture) to which Holdings or any of its
Subsidiaries is a party or by which Holdings or any of its Subsidiaries is
bound; (vi) Holdings must have delivered to the Trustee an opinion of counsel to
the effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; (vii)
Holdings must deliver to the Trustee an Officers' Certificate stating that the
deposit was not made by Holdings with the intent of preferring the Holders of
New Notes over the other creditors of Holdings with the intent of defeating,
hindering, delaying or defrauding creditors of Holdings or others; and (viii)
Holdings must deliver to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that all conditions precedent provided for relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange New Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and Holdings
may require a Holder to pay any taxes and fees required by law or permitted by
the Indenture. Holdings is not required to transfer or exchange any New Note
selected for redemption. Also, Holdings is not required to transfer or exchange
any New Note for a period of 15 days before a selection of New Notes to be
redeemed.
The registered Holder of a New Note will be treated as the owner of it for
all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the New Notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the New Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, New Notes), and any existing default
or compliance with any provision of the Indenture or the New Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding New Notes (including consents obtained in connection with a tender
offer or exchange offer for New Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any New Notes held by a non-consenting Holder): (i) reduce the
principal amount of New Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any New Note or alter the provisions with respect to the redemption of the
New Notes (other than provisions relating to the covenants described above under
the caption "-- Repurchase at the Option of Holders"), (iii) reduce the rate of
or change the time for payment of interest on any New Note, (iv) waive a Default
or Event of Default in the payment of principal of or premium, if any, or
interest on the New Notes (except a rescission of acceleration of the New Notes
by the Holders of at least a majority in aggregate principal amount of the New
Notes and a waiver of the payment default that resulted from such acceleration),
(v) make any New Note payable in money other than that stated in the New Notes,
(vi) make any change in the provisions of the Indenture relating to waivers of
past Defaults or the rights of Holders of New Notes to receive payments of
principal of or premium, if any, or interest on the New Notes, (vii) waive a
redemption payment with respect to any New Note (other than a payment required
by one of the covenants described above under the caption "-- Repurchase at the
Option of Holders") or (viii) make any change in the foregoing amendment and
waiver provisions.
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Notwithstanding the foregoing, without the consent of any Holder of New
Notes, Holdings and the Trustee may amend or supplement the Indenture or the New
Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated New Notes in addition to or in place of certificated New Notes,
to provide for the assumption of Holdings' obligations to Holders of New Notes
in the case of a merger or consolidation, to make any change that would provide
any additional rights or benefits to the Holders of New Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of Holdings, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding New
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of New Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to AP Holdings, Inc.,
c/o APCOA, Inc., 800 Superior Avenue, Cleveland, Ohio 44114; Attention:
Corporate Secretary.
BOOK-ENTRY, DELIVERY AND FORM
The New Notes initially being issued in exchange for the Notes generally
will be represented by one or more fully-registered global notes without
interest coupons (collectively, "Global New Notes"). Notwithstanding the
foregoing, Notes held in certificated form will be exchanged solely for New
Notes in certificated form as discussed below. The Global New Notes will be
deposited upon issuance with The Depository Trust Company ("DTC"), in New York,
New York, and registered in the name of DTC or its nominee, in each case for
credit to an account of a direct or indirect participant as described below.
Except as set forth below, the Global New Notes may be transferred, in whole and
not in part, only to another nominee of the DTC or to a successor of the DTC or
its nominee. See "-- Exchange of Book-Entry New Notes for Certificated Notes."
The New Notes may be presented for registration of transfer and exchange at
the offices of the Registrar.
DEPOSITORY PROCEDURES
DTC has advised Holdings that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of Participants. The Participants include
securities brokers and dealers (including the Initial Purchaser), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or Indirect
Participants. The ownership interest and transfer of ownership interest of
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each actual purchaser of each security held by or on behalf of DTC are recorded
on the records of the Participants and Indirect Participants.
DTC has also advised Holdings that pursuant to procedures established by
it, (i) upon deposit of the Global New Notes, DTC will credit the accounts of
Participants designated by the Initial Purchaser with portions of the principal
amount of Global New Notes and (ii) ownership of such interests in the Global
New Notes will be shown on, and the transfer ownership thereof will be effected
only through, records maintained by DTC (with respect to Participants) or by
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global New Notes).
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NEW NOTES WILL
NOT HAVE NEW NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY
OF NEW NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED
OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal and premium and Liquidated Damages, if
any, and interest on a Global New Note registered in the name of DTC or its
nominee will be payable by the Trustee to DTC or its nominee in its capacity as
the registered holder under the Indenture. Under the terms of the Indenture,
Holdings and the Trustee will treat the persons in whose names the New Notes,
including the Global New Notes, are registered as the owners thereof for the
purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, none of Holdings, the Trustee nor any agent of
Holdings or the Trustee has or will have any responsibility or liability for (i)
any aspect of DTC's records or any Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interests in the Global New Notes, or for maintaining, supervising or reviewing
any of DTC's records or any Participant's or Indirect Participant's records
relating to the beneficial ownership interests in the Global New Notes or (ii)
any other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants.
DTC has advised Holdings that its current practice, upon receipt of any
payment in respect of securities such as the New Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security
such as the Global New Notes as shown on the records of DTC. Payments by
Participants and the Indirect Participants to the beneficial owners of New Notes
will be governed by standing instructions and customary practices and will not
be the responsibility of DTC, the Trustee or Holdings. Neither Holdings nor the
Trustee will be liable for any delay by DTC or its Participants in identifying
the beneficial owners of the New Notes, and Holdings and the Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee as the registered owner of the New Notes for all purposes.
DTC has advised Holdings that it will take any action permitted to be taken
by a holder of New Notes only at the direction of one or more Participants to
whose account DTC interests in the Global New Notes are credited and only in
respect of such portion of the aggregate principal amount of the New Notes as to
which such Participant or Participants have given direction. However, if there
is an Event of Default under the New Notes, DTC reserves the right to exchange
Global New Notes for legended New Notes in certificated form, and to distribute
such New Notes to its Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that Holdings believes to be reliable, but
Holdings takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global New Notes among Participants in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of Holdings, the Initial
Purchaser or the Trustee will have any responsibility for the performance by DTC
or its Participants or indirect Participants of its obligations under the rules
and procedures governing their operations.
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EXCHANGE OF BOOK-ENTRY NEW NOTES FOR CERTIFICATED NEW NOTES
A Global New Note is exchangeable for definitive New Notes in registered
certificated form if (i) DTC (x) notifies Holdings that it is unwilling or
unable to continue as depositary for the Global New Note and Holdings thereupon
fails to appoint a successor depositary or (y) has ceased to be a clearing
agency registered under the Exchange Act, (ii) Holdings, at its option, notifies
the Trustee in writing that it elects to cause the issuance of the New Notes in
certificated form or (iii) there shall have occurred and be continuing to occur
a Default or an Event of Default with respect to the New Notes. In addition,
beneficial interests in a Global New Note may be exchanged for certificated New
Notes upon request but only upon at least 20 days' prior written notice given to
the Trustee by or on behalf of DTC in accordance with customary procedures. In
all cases, certificated New Notes delivered in exchange for any Global New Note
or beneficial interest therein will be registered in the names, and issued in
any approved denominations, requested by or on behalf of the depositary (in
accordance with its customary procedures).
Subject to the restrictions on the transferability of the New Notes
described in "Risk Factors -- Restrictions on Transfer," a New Note in
definitive form will be issued (i) in the Exchange Offer solely in exchange for
certificated Notes or (ii) following the Exchange Offer, upon the resale, pledge
or other transfer of any New Note or interest therein to any person or entity
that does not participate in the Depository. The exchange of certificated Notes
in the Exchange Offer may be made only by presentation of the Notes, duly
endorsed, together with a duly completed Letter of Transmittal and other
required documentation as described under "The Exchange Offer -- Procedures for
Tendering" and "-- Guaranteed Delivery Procedures." Transfers of certificated
New Notes may be made only by presentation of New Notes, duly endorsed, to the
Trustees for registration of transfer on the Note Register maintained by the
Trustees for such purposes.
The information in this section concerning the Depository and the
Depository's book-entry system has been obtained from sources that Holdings
believes to be reliable, but Holdings takes no responsibility for the accuracy
thereof.
CERTIFICATED NEW NOTES
Subject to certain conditions, any person having a beneficial interest in
the Global New Notes may, upon request to the Trustee, exchange such beneficial
interest for New Notes in the form of Certificated New Notes. Upon any such
issuance, the Trustee is required to register such Certificated New Notes in the
name of, and cause the same to be delivered to, such person or persons (or the
nominee of any thereof). In addition, if (i) Holdings notifies the Trustee in
writing that the DTC is no longer willing or able to act as a depositary and
Holdings is unable to locate a qualified successor within 90 days or (ii)
Holdings, at its option, notifies the Trustee in writing that it elects to cause
the issuance of New Notes in the form of Certificated New Notes under the
Indenture, then, upon surrender by the Global New Note Holder of its Global New
Note, New Notes in such form will be issued to each person that the Global New
Note Holder and the DTC identify as being the beneficial owner of the related
Notes.
Neither Holdings nor the Trustee will be liable for any delay by the Global
New Note Holder or the DTC in identifying the beneficial owners of New Notes and
Holdings and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the Global New Note Holder or the DTC for all
purposes.
SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the New Notes
represented by the Global New Notes (including principal, premium, if any,
interest and Liquidated Damages, if any) be made by wire transfer of immediately
available next day funds to the accounts specified by the Global New Note
Holder. With respect to Certificated New Notes, Holdings will make all payments
of principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof or, if no such account is specified, by mailing a check to each such
Holder's registered address. Holdings expects that secondary trading in the
Certificated New Notes will also be settled in immediately available funds.
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REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Holdings and the Initial Purchaser entered into the Registration Rights
Agreement on the Closing Date. Pursuant to the Registration Rights Agreement,
Holdings agreed to file with the Commission the Exchange Offer Registration
Statement of which this Prospectus is a part on the appropriate form under the
Securities Act with respect to the New Notes. Pursuant to the Exchange Offer,
Holdings is offering to the Holders of Transfer Restricted Securities who are
able to make certain representations the opportunity to exchange their Transfer
Restricted Securities for New Notes. If any Holder of Transfer Restricted
Securities notifies Holdings prior to the 20th day following consummation of the
Exchange Offer that (i) it is prohibited by law or Commission policy from
participating in the Exchange Offer or (ii) that it may not resell the New Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (iii) that it is a
broker-dealer and owns Notes acquired directly from Holdings or an affiliate of
Holdings, Holdings will file with the Commission a Shelf Registration Statement
to cover resales of the Notes by the Holders thereof who satisfy certain
conditions relating to the provision of information in connection with the Shelf
Registration Statement. Holdings will use its best efforts to cause the
applicable registration statement to be declared effective as promptly as
possible by the Commission. For purposes of the foregoing, "Transfer Restricted
Securities" means each Note until (i) the date on which such Note has been
exchanged by a person other than a broker-dealer for a New Note in the Exchange
Offer, (ii) following the exchange by a broker-dealer in the Exchange Offer of a
Note for a New Note, the date on which such New Note is sold to a purchaser who
receives from such broker-dealer on or prior to the date of such sale a copy of
the prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Note has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (iv) the
date on which such Note is distributed to the public pursuant to Rule 144 under
the Act.
The Registration Rights Agreement provides among other things, that (i)
unless the Exchange Offer would not be permitted by applicable law or Commission
policy, Holdings will have commenced the Exchange Offer and used its best
efforts to issue on or prior to 30 business days after the date on which the
Exchange Offer Registration Statement was declared effective by the Commission,
New Notes in exchange for all Notes tendered prior thereto in the Exchange Offer
and (ii) if obligated to file the Shelf Registration Statement, Holdings will
use its best efforts to file the Shelf Registration Statement with the
Commission on or prior to 45 days after such filing obligation arises and to
cause the Shelf Registration to be declared effective by the Commission on or
prior to 120 days after such obligation arises. If Holdings (a) fails to file
any of the Registration Statements required by the Registration Rights Agreement
on or before the date specified for such filing, (b) any of such Registration
Statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), or (c) fails
to consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement, or (d)
the Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable in connection
with resales of Transfer Restricted Securities during the periods specified in
the Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then Holdings will pay Liquidated
Damages to each Holder of Notes, with respect to the first 90-day period
immediately following the occurrence of the first Registration Default in an
amount equal to $.05 per week per $1,000 principal amount of Notes held by such
Holder. The amount of the Liquidated Damages will increase by an additional $.05
per week per $1,000 principal amount of Notes with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of Liquidated Damages of $.50 per week per $1,000 principal amount of
Notes. All accrued Liquidated Damages will be paid by Holdings on each Damages
Payment Date to the Global Note Holder by wire transfer of immediately available
funds or by federal funds check and to Holders of Certificated Notes by wire
transfer to the accounts specified by them or by mailing checks to their
registered addresses if no such accounts have been specified. Following the cure
of all Registration Defaults, the accrual of Liquidated Damages will cease.
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Holders of Notes will be required to make certain representations to
Holdings (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Notes included in
the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Accreted Value" means, for each $1,000 face amount of Notes, as of any
date of determination prior to March 15, 2003, the sum of (i) the initial
offering price of each Note and (ii) that portion of the excess of the principal
amount of each Note over such initial offering price which shall have been
accreted thereon through such date, such amount to be so accreted on a daily
basis and compounded semi-annually on each March 15 and September 15 at the rate
of 11 1/4% per annum from the date of issuance of the Notes through the date of
determination.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of Holdings and its
Restricted Subsidiaries taken as a whole will be governed by the provisions of
the Indenture described above under the caption "--Change of Control" and/or the
provisions described above under the caption "--Merger, Consolidation or Sale of
Assets" and not by the provisions of the Asset Sale covenant), and (ii) the
issue or sale by Holdings or any of its Restricted Subsidiaries of Equity
Interests of any of Holdings' Restricted Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $3.0 million or (b)
for net proceeds in excess of $3.0 million. Notwithstanding the foregoing: (i) a
transfer of assets by the Company to a Wholly Owned Restricted Subsidiary or by
a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned
Restricted Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned
Restricted Subsidiary to Holdings or to another Wholly Owned Restricted
Subsidiary, and (iii) a Restricted Payment that is permitted by the covenant
described above under the caption "--Restricted Payments" will not be deemed to
be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
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"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any lender party to the New Credit
Facility or with any domestic commercial bank having capital and surplus in
excess of $500 million and a Thompson Bank Watch Rating of "B" or better, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above, and (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within six months after the date of acquisition.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of Holdings and its Subsidiaries, taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than the Principals or their Related Parties (as defined below), (ii)
the adoption of a plan relating to the liquidation or dissolution of Holdings,
(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as defined
above), other than the Principals and their Related Parties, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is currently exercisable or is exercisable only upon the occurrence
of a subsequent condition), directly or indirectly, of more than 50% of the
Voting Stock of Holdings (measured by voting power rather than number of
shares), (iv) the first day on which a majority of the members of the Board of
Directors of Holdings are not Continuing Directors or (v) Holdings consolidates
with, or merges with or into, any Person or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets to any
Person, or any Person consolidates with, or merges with or into, Holdings, in
any such event pursuant to a transaction in which any of the outstanding Voting
Stock of Holdings is converted into or exchanged for cash, securities or other
property, other than any such transaction where the Voting Stock of Holdings
outstanding immediately prior to such transaction is converted into or exchanged
for Voting Stock (other than Disqualified Stock) of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to such
issuance).
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any)
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pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, plus (v) one-time charges related to the
Combination, to the extent that such charges were deducted in computing
Consolidated Net Income, plus (vi) in connection with any acquisition by
Holdings or a Restricted Subsidiary, projected quantifiable improvements in
operating results (on an annualized basis) due to cost reductions calculated in
good faith by Holdings or one of its Restricted Subsidiaries, as evidenced by
(A) in the case of cost reductions of less than $10.0 million, an Officers'
Certificate delivered to the Trustee and (B) in the case of cost reductions of
$10.0 million or more, a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee, minus (vii) non-cash items
increasing such Consolidated Net Income for such period. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent that a corresponding amount would be
permitted at the date of determination to be dividended to Holdings by such
Subsidiary without prior governmental approval (that has not been obtained), and
without direct or indirect restriction pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary or its stockholders,
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded, (iv) the cumulative effect of a change in accounting principles shall
be excluded and (v) the Net Income of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to Holdings or one of its Restricted
Subsidiaries for purposes of the covenant described under the covenant
"Incurrence of Indebtedness and Issuance of Preferred Stock."
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Holdings who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Credit Agent" means The First National Bank of Chicago, in its capacity as
Administrative Agent for the lenders party to the New Credit Facility or any
successor thereto or any person otherwise appointed.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature; provided, however,
that any Capital Stock that would not qualify as Disqualified Stock but for
change of control provisions shall not constitute Disqualified Stock if the
provisions are not more favorable to the
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holders of such Capital Stock than the provisions described under "-- Change of
Control" applicable to the Holders of the Notes.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of Holdings and its Subsidiaries
(other than Indebtedness under the New Credit Facility) in existence on the date
of the Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated
interest expense of such Person and its Restricted Subsidiaries that was
capitalized during such period, and (iii) to the extent paid by such Person, any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries (whether or not such Guarantee
or Lien is called upon) and (iv) the product of (a) all dividend payments,
whether or not in cash, on any series of preferred stock of such Person or any
of its Restricted Subsidiaries, other than dividend payments on Equity Interests
payable solely in Equity Interests of Holdings, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that Holdings or any
of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by Holdings or any of its Restricted Subsidiaries, including through
mergers or consolidations and including any related financing transactions,
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and Consolidated Cash Flow for
such reference period shall be calculated without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income, and (ii)
the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such Fixed
Charges will not be obligations of the referent Person or any of its Restricted
Subsidiaries following the Calculation Date.
"Foreign Subsidiary" means any Subsidiary organized and existing under the
laws of a jurisdiction other than those of any state or commonwealth in the
United States of America.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
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"Global Notes" means the Rule 144A Global Note, the Regulation S Temporary
Global Notes and the Regulation S Permanent Global Notes.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency rates.
"Holdings" means AP Holdings, Inc., a Delaware corporation and the parent
(but not 100% owner) of APCOA, Inc.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If Holdings or any Restricted Subsidiary of Holdings sells or otherwise disposes
of any Equity Interests of any direct or indirect Restricted Subsidiary of
Holdings such that, after giving effect to any such sale or disposition, such
Person is no longer a Restricted Subsidiary of Holdings, Holdings shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Restricted
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of the covenant described above under the caption
" -- Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and
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leaseback transactions) or (b) the disposition of any securities by such Person
or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness
of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary
or nonrecurring gain (but not loss), together with any related provision for
taxes on such extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by Holdings or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"New Credit Facility" means that certain Credit Agreement, dated as of the
date of the Indenture, by and among APCOA, Inc., the lenders and other parties
thereto from time to time and The First National Bank of Chicago, as agent,
together with all related documents executed or delivered pursuant thereto at
any time (including, without limitation, all mortgages, guarantees, security
agreements and all other collateral and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder provided that such increase in borrowings is within the definition of
Permitted Indebtedness or is otherwise permitted under the covenant described
"Incurrence of Indebtedness and Issuance of Preferred Stock" or adding
Subsidiaries as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness and other Obligations under such agreement or
agreements or any successor or replacement agreement or agreements, and whether
by the same or any other agent, lender or group of lenders.
"Non-Recourse Debt" means Indebtedness (i) as to which neither Holdings nor
any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness (other than the Notes being
offered hereby) of Holdings or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of Holdings or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness, and in all cases whether now
outstanding or hereafter created, assumed or incurred and including, without
limitation, interest accruing subsequent to the filing of a petition in
bankruptcy at the rate provided in the relevant document, whether or not an
allowed claim, and any obligation to redeem or defease any of the foregoing.
"Permitted Business" means any of the businesses and any other businesses
related to the businesses engaged in by Holdings and its respective Restricted
Subsidiaries on the date of the Indenture.
"Permitted Investments" means (a) any Investment in APCOA or in a Wholly
Owned Restricted Subsidiary of Holdings that is engaged in a Permitted Business;
(b) any Investment in Cash Equivalents; (c) any Investment by Holdings or any
Restricted Subsidiary of Holdings in a Person, if as a result of such Investment
(i) such Person becomes a Wholly Owned Restricted Subsidiary of Holdings that is
engaged in a Permitted Business or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, Holdings or a Wholly Owned Restricted
Subsidiary of Holdings that is engaged in a Permitted Business; (d) any
Restricted Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in
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compliance with the covenant described above under the caption " -- Repurchase
at the Option of Holders -- Asset Sales"; (e) any acquisition of assets solely
in exchange for the issuance of Equity Interests (other than Disqualified Stock)
of Holdings; (f) loans and advances made after the date of the Indenture to
Holberg Industries, Inc. not to exceed $10.0 million at any time outstanding;
(g) make and permit to remain outstanding travel and other like advances in the
ordinary course of business consistent with past practices to officers and
employees of Holdings or a Subsidiary of Holdings; (h) other Investments made
after the date of the Indenture in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause; and (h) that are at the time
outstanding, not to exceed $10.0 million.
"Permitted Liens" means (i) Liens securing Obligations of Holdings and its
Restricted Subsidiaries under the New Credit Facility that were permitted by the
terms of the Indenture to be incurred; (ii) Liens in favor of Holdings; (iii)
Liens on property of a Person existing at the time such Person is merged into or
consolidated with Holdings or any Restricted Subsidiary of Holdings; provided
that such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with Holdings; (iv) Liens on property existing at
the time of acquisition thereof by Holdings or any Restricted Subsidiary of
Holdings, provided that such Liens were in existence prior to the contemplation
of such acquisition; (v) Liens to secure the performance of bids, tenders,
contracts, statutory obligations, surety or appeal bonds, performance bonds or
other obligations of a like nature incurred in the ordinary course of business;
(vi) Liens existing on the date of the Indenture; (vii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (viii) Liens incurred in the ordinary course of business of
Holdings or any Restricted Subsidiary of Holdings with respect to obligations
that do not exceed $7.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by Holdings or
such Restricted Subsidiary; (ix) Liens on assets of Unrestricted Subsidiaries
that secure Non-Recourse Debt of Unrestricted Subsidiaries; (x) Liens on the
daily revenues in favor of Persons other than Holdings and its Restricted
Subsidiaries who are parties to parking facility agreements for the amounts due
to them pursuant thereto; (xi) Liens arising by applicable law in respect of
employees' wages, salaries or commissions not overdue; and (xii) Liens arising
out of judgments or awards not in excess of $5.0 million with respect to which
the Company or its Subsidiary with respect to which Holdings or such
Subsidiaries are prosecuting an appeal or a proceeding or review and the
enforcement of such lien is stayed pending such appeal or review.
"Permitted Refinancing Indebtedness" means any Indebtedness of Holdings or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of Holdings or any of its Restricted Subsidiaries; provided that:
(i) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by Holdings
or by the Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
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"Principals" means Holberg Industries, Inc. and John V. Holten.
"Public Equity Offering" means a public offering of Equity Interests (other
than Disqualified Stock) of Holdings that results in net proceeds to the Company
of at least $25.0 million.
"Receivables" means, with respect to any Person or entity, all of the
following property and interests in property of such Person or entity, whether
now existing or existing in the future or hereafter acquired or arising: (i)
accounts, (ii) accounts receivable incurred in the ordinary course of business,
including without limitation, all rights to payment created by or arising from
sales of goods, leases of goods or the rendition of services no matter how
evidenced, whether or not earned by performance, (iii) all rights to any goods
or merchandise represented by any of the foregoing after creation of the
foregoing, including, without limitation, returned or repossessed goods, (iv)
all reserves and credit balances with respect to any such accounts receivable or
account debtors, (v) all letters of credit, security, or guarantees for any of
the foregoing, (vi) all insurance policies or reports relating to any of the
foregoing, (vii) all collection or deposit accounts relating to any of the
foregoing, (viii) all proceeds of the foregoing and (ix) all books and records
relating to any of the foregoing.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Notes" means the Regulation S Temporary Global Notes
or the Regulation S Permanent Global Notes as applicable.
"Regulation S Permanent Global Notes" means the permanent global notes that
are deposited with and registered in the name of the Depositary or its nominee,
representing a series of Notes sold in reliance on Regulation S.
"Regulation S Temporary Global Notes" means the temporary global notes that
are deposited with and registered in the name of the Depositary or its nominee,
representing a series of Notes sold in reliance on Regulation S.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) or trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means a permanent global note that is deposited
with and registered in the name of the Depositary or its nominee, representing a
series of Notes sold in reliance on Rule 144A.
"Senior Subordinated Notes" means the 9 1/4% Senior Subordinated Notes due
2008 of APCOA, Inc.
"Senior Subordinated Note Guarantees" means the guarantees by certain
Restricted Subsidiaries of the Company of the Obligations under the Senior
Subordinated Notes.
"Senior Subordinated Note Indenture" means the Indenture relating to
APCOA's Senior Subordinated Notes.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time
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owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person (or a combination thereof) and (ii) any
partnership (a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or of one or more Subsidiaries of such Person
(or any combination thereof).
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by the covenant described above under the
caption "Certain Covenants -- Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date (and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption "Incurrence of Indebtedness
and Issuance of Preferred Stock," the Company shall be in default of such
covenant). The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under the covenant described under the caption "Certain Covenants
- -- Incurrence of Indebtedness and Issuance of Preferred Stock," and (ii) no
Default or Event of Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
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DESCRIPTION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general discussion summarizes certain of the material U.S.
federal income and estate tax aspects of the purchase, ownership and disposition
of the New Notes. This discussion is a summary for general information only and
does not consider all aspects of U.S. federal income tax that may be relevant to
the purchase, ownership and disposition of the New Notes by a prospective
investor in light of such investor's personal circumstances. This discussion
also does not address the U.S. federal income tax consequences or ownership of
New Notes not held as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"), or the U.S. federal
income tax consequences to investors subject to special treatment under the U.S.
federal income tax laws, such as dealers in securities or foreign currency, tax-
exempt entities, banks, thrifts, insurance companies, persons that hold the New
Notes as part of a "straddle," a "hedge" against currency risk or a "conversion
transaction," persons that have a "functional currency" other than the U.S.
dollar, and investors in pass-through entities. In addition, this discussion is
limited to the U.S. federal income tax consequences to initial holders that
purchase the New Notes for cash at their issue price (as defined below) pursuant
to the Note Offering. It does not describe any tax consequences arising out of
the tax laws of any state, local or foreign jurisdiction.
This discussion is based upon the Code, existing and proposed regulations
thereunder, IRS rulings and pronouncements and judicial decisions now in effect,
all of which are subject to change (possibly on a retroactive basis). Holdings
has not and will not seek any rulings from the U.S. Internal Revenue Service
(the "IRS") with respect to the matters discussed below. There can be no
assurance that the IRS will not take positions concerning the tax consequences
of the purchase, ownership or disposition of the New Notes which are different
from those discussed herein.
PROSPECTIVE HOLDERS OF NEW NOTES SHOULD CONSULT THEIR OWN ADVISORS
CONCERNING THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS
OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO THEIR PARTICULAR
SITUATIONS.
U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a New Note that is (i) a citizen or
resident of the United States, (ii) a corporation, a partnership or other entity
created or organized under the laws of the United States or any political
subdivision thereof or therein, (iii) an estate or trust described in Section
7701(a)(30) of the Code or (iv) a person whose worldwide income or gain is
otherwise subject to U.S. federal income taxation on a net income basis (a "U.S.
Holder"). Certain U.S. federal income tax consequences relevant to a holder
other than a U.S. Holder are discussed separately below.
Interest and Original Issue Discount
The New Notes will be considered to have been issued with original issue
discount ("OID") for U.S. federal income tax purposes. OID is the excess of (i)
the stated redemption price at maturity of a New Note over (ii) its issue price.
The "stated redemption price at maturity" of a New Note is the sum of all
payments provided by the instrument. The "issue price" of a New Note is the
first price at which a substantial amount of the New Notes are sold to the
public (excluding sales to bond houses, brokers or similar persons or
organizations acting in the capacity as underwriters, placement agents or
wholesalers).
A U.S. Holder is required to include OID in gross income as ordinary
interest as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of such U.S. Holder's
regular method of accounting. A U.S. Holder will not be required to report
separately as taxable income actual distributions of stated interest with
respect to the New Notes; such stated interest will be included in income as OID
under the method described immediately below. In general, the amount of OID
included in income by the holder of a New Note is the sum of the daily portions
of OID for each day during the taxable year (or portion of the taxable year) on
which such holder held such Note, including the purchase date and excluding the
disposition date. The "daily portion" is determined by allocating the OID for an
accrual period equally to each day in that accrual period. The "accrual period"
for a Note may be of any length and may vary in length over the term of a New
Note, provided that each accrual period is no longer
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<PAGE> 93
than one year and each scheduled payment of principal or interest occurs either
on the first or final day of an accrual period.
The amount of OID for an accrual period is generally equal to the product
of the New Note's adjusted issue price at the beginning of such accrual period
and its yield to maturity. The "adjusted issue price" of a New Note at the
beginning of any accrual period is the sum of the issue price of the New Note
plus the amount of OID allocable to all prior accrual periods minus the amount
of any prior payments on the New Note. Under those rules, a U.S. Holder
generally will have to include in income increasingly greater amounts of OID in
successive accrual periods. The "yield to maturity" of a New Note is the
discount rate that, when used in computing the present value of all payments to
be made on a New Note, produces an amount equal to the issue price of the New
Note.
In determining the yield and maturity of the New Notes, Holdings will be
deemed to exercise the unconditional call option in a manner that minimizes the
yield on the New Notes. If the New Notes are not in fact called on a presumed
exercise date, then, for purposes of the accrual of OID, the yield and maturity
of the New Notes are redetermined by treating the New Notes as retired and
reissued on that date for an amount equal to their adjusted issue price on that
date.
Additional Interest
Under certain circumstances described above, Holdings will be required to
pay an additional amount on the New Notes if it fails to comply with certain of
its obligations under the Registration Rights Agreement. Although the matter is
not free from doubt, Holdings believes that such additional amount should be
taxable to a U.S. Holder as ordinary income at the time it accrues or is
received in accordance with such holder's regular method of accounting. It is
possible, however, that the IRS may take a different position, in which case the
timing and the amount of such income may be different.
Applicable High Yield Discount Obligation
If the New Notes constitute "applicable high yield discount obligations,"
the OID on the New Notes will not be deductible by Holdings until paid. An
"applicable high yield discount obligation" is any debt instrument that (i) has
a maturity date which is more than five years from the date of issue, (ii) has a
yield to maturity which equals or exceeds the AFR (as set forth in Section
1274(d) of the Code) for the calendar month in which the obligation is issued
plus five percentage points and (iii) has "significant original issue discount."
The AFR is an interest rate, announced monthly by the IRS, that is based on the
yield of debt obligations issued by the U.S. Treasury. A debt instrument
generally has "significant original issue discount" if, as of the close of any
accrual period ending more than five years after the date of issue, the excess
of the interest (including OID) that has accrued on the obligation over the
interest (including OID) that is required to be paid thereunder exceeds the
product of the issue price of the instrument and its yield to maturity.
Moreover, if the New Notes' yield to maturity exceeds the AFR plus six
percentage points, a ratable portion of Holdings' deduction for OID (the
"Disqualified OID")(based on the portion of the yield to maturity that exceeds
the AFR plus six percentage points) will be characterized as a non-deductible
dividend with respect to Holdings to the extent of Holdings' current and
accumulated earnings and profits. For purposes of the dividends-received
deduction under Section 243 of the Code, the Disqualified OID will be treated as
a dividend to the extent it would have been so treated had such amount been
distributed by Holdings with respect to its stock.
Sale, Exchange or Redemption of the New Notes
Upon the sale, exchange, retirement or other disposition of a New Note, a
U.S. Holder generally will recognize taxable gain or loss equal to the
difference between (i) the amount realized on the disposition and (ii) the U.S.
Holder's adjusted tax basis in the New Note. A U.S. Holder's adjusted tax basis
in a New Note generally will equal the cost of the New Note to the U.S. Holder
increased by any OID included in income through the date of disposition and
decreased by any payments received on the New Notes. Such gain or loss will
generally constitute capital gain or loss. In the case of a U.S. Holder who is
an individual, any capital gain
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<PAGE> 94
will be subject to tax at a maximum rate of 28% if the Note has been held for
more than 12 months but not more than 18 months at the time of the sale,
exchange, retirement or other disposition thereof, and a maximum rate of 20% if
the New Note has been held for more than 18 months.
A U.S. Holder will not recognize any taxable gain or loss on the exchange
of Notes for New Notes pursuant to the Exchange Offer.
Information Reporting and Backup Withholding
U.S. Holders may be subject, under certain circumstances, to information
reporting and "backup withholding" at a 31% rate with respect to cash payments
in respect of principal (and premium, if any), interest (including OID) and the
gross proceeds from dispositions of New Notes. Backup withholding applies only
if the U.S. Holder (i) fails to furnish its social security or other taxpayer
identification number ("TIN") within a reasonable time after a request therefor,
(ii) furnishes an incorrect TIN, (iii) fails to report properly interest or
dividends, or (iv) fails, under certain circumstances, to provide a certified
statement, signed under penalty of perjury, that the TIN provided is its correct
number and that it is not subject to backup withholding. Any amount withheld
from a payment to a U.S. Holder under the backup withholding rules is allowable
as a credit (and may entitle such holder to a refund) against such U.S. Holder's
U.S. federal income tax liability, provided that the required information is
furnished to the IRS. Certain persons are exempt from backup withholding,
including corporations and financial institutions. U.S. Holders of Notes should
consult their tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining such exemption.
Holdings will furnish annually to the IRS and to record holders of the New
Notes (to whom it is required to furnish such information) information relating
to the amount of OID and interest, as applicable.
NON-U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a New Note that is not a U.S. Holder (a
"Non-U.S. Holder").
Subject to the discussion of backup withholding below, payments of interest
(including OID) on a New Note to any Non-U.S. Holder will generally not be
subject to U.S. federal income or withholding tax, provided that (1) the holder
is not (i) a direct or indirect owner of 10% or more of the total voting power
of all voting stock of Holdings, (ii) a controlled foreign corporation related
to Holdings through stock ownership or (iii) a foreign tax-exempt organization
or a foreign private foundation for U.S. federal income tax purposes, (2) such
interest payments are not effectively connected with the conduct by the Non-U.S.
Holder of a trade or business within the United States and (3) Holdings or its
paying agent receives (i) from the Non-U.S. Holder, a properly completed IRS
Form W-8 (or substitute IRS form W-8) under penalties of perjury which provides
the Non-U.S. Holder's name and address and certifies that the Non-U.S. Holder of
the New Note is a Non-U.S. Holder or (ii) from a security clearing organization,
bank or other financial institution that holds the New Notes in the ordinary
course of its trade or business (a "financial institution") on behalf of the
Non-U.S. Holder, certification under penalties of perjury that such an IRS Form
W-8 (or substitute IRS Form W-8) has been received by it, or by another such
financial institution, from the Non-U.S. Holder, and a copy of an IRS Form W-8
(or substitute IRS Form W-8) is furnished to the payor.
A Non-U.S. Holder that does not qualify for exemption from withholding
under the preceding paragraph generally will be subject to withholding of U.S.
federal income tax at the rate of 30% (or lower applicable treaty rate) on
payments of interest and/or OID on the Notes.
If the payments of interest and/or OID on a New Note are effectively
connected with the conduct by a Non-U.S. Holder of a trade or business in the
United States, such payments will be subject to U.S. federal income tax on a net
basis at the rates applicable to U.S. persons generally (and, with respect to
corporate holders, may also be subject to a 30% branch profits tax). If payments
are subject to U.S. federal income tax on a net basis in accordance with the
rules described in the preceding sentence, such payments will not be subject to
U.S. withholding tax so long as the holder provides Holdings or its paying agent
with a properly executed IRS Form 4224. Under recently finalized U.S. Treasury
regulations (the "Final Regulations"),
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<PAGE> 95
which generally apply to interest paid on a New Note after December 31, 1998
(and to payments made after such date of proceeds from the sale or exchange of a
New Note) subject to certain transaction rules, such a Non-U.S. Holder will be
required to provide an IRS Form W-8.
Non-U.S. Holders should consult any applicable income tax treaties, which
may provide for a lower rate of withholding tax, exemption from or reduction of
branch profits tax, or other rules different from those described above.
Sale, Exchange or Redemption of New Notes
Subject to the discussion concerning backup withholding, any gain realized
by a Non-U.S. Holder on the sale, exchange, retirement or other disposition of a
New Note generally will not be subject to U.S. federal income tax, unless (i)
such gain is effectively connected with the conduct by such Non-U.S. Holder of a
trade or business within the United States, (ii) the Non-U.S. Holder is an
individual who is present in the United States for 183 days or more in the
taxable year of the disposition and certain other conditions are satisfied, or
(iii) the Non-U.S. Holder is subject to tax pursuant to the provisions of U.S.
tax law applicable to certain U.S. expatriates.
Federal Estate Tax
New Notes held (or treated as held) by an individual who is a Non-U.S.
Holder at the time of his or her death will not be subject to U.S. federal
estate tax provided that (i) the individual does not actually or constructively
own 10% or more of the total voting power of all voting stock of Holdings and
(ii) income on the New Note was not effectively connected with the conduct by
such Non-U.S. Holder of a trade or business within the United States.
Information Reporting and Backup Withholding
Holdings must report annually to the IRS and to each Non-U.S. Holder any
interest (including OID) that is subject to withholding or that is exempt from
U.S. withholding tax. Copies of those information returns may also be made
available, under the provisions of a specific treaty or agreement, to the tax
authorities of the country in which the Non-U.S. Holder resides.
The regulations provide that backup withholding (which generally is a
withholding tax imposed at the rate of 31% on payments to persons that fail to
furnish certain required information) and information reporting will not apply
to payments made in respect of the New Notes by Holdings to a Non-U.S. Holder,
if the holder certifies as to its non-U.S. status under penalties of perjury or
otherwise establishes an exemption (provided that neither Holdings nor its
paying agent has actual knowledge that the holder is a U.S. person or that the
conditions of any other exemption are not, in fact, satisfied).
The payment of the proceeds from the disposition of New Notes to or through
the United States office of any broker, U.S. or foreign, will be subject to
information reporting and possible backup withholding unless the owner certifies
as to its non-U.S. status under penalty of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of a New
Note to or through a non-U.S. office of a non-U.S. broker that is not a U.S.
related person will not be subject to information reporting or backup
withholding. For this purpose, a "U.S. related person" is (i) a "controlled
foreign corporation" for U.S. federal income tax purposes, (ii) a foreign person
50% or more of whose gross income from all sources for the three-year period
ending with the close of its taxable year preceding the payment (or for such
part of the period that the broker has been in existence) is derived from
activities that are effectively connected with the conduct of a U.S. trade or
business or (iii) in the case of payments made after December 31, 1998, a
foreign partnership (x) at least 50% of the capital or profit interests in which
are owned by U.S. persons or (y) that has a U.S. trade or business.
In the case of the payment of proceeds from the disposition of New Notes to
or through a non-U.S. office of a broker that is a U.S. related person, the
regulations require information reporting on the payment unless the broker has
documentary evidence in its files that the owner is a Non-U.S. Holder and the
broker has no knowledge to the contrary. Backup withholding will not apply to
payments made through foreign offices of a
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<PAGE> 96
broker that is a U.S. person or a U.S. related person (absent actual knowledge
that the payee is a U.S. person).
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
The Final Regulations do not significantly alter the substantive
withholding and information reporting requirements but rather unify current
certification procedures and forms and clarify reliance standards. Non-U.S.
Holders should consult their own tax advisors with respect to the impact, if
any, of the Final Regulations.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE HOLDER OF NEW NOTES SHOULD CONSULT ITS OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO THE PROSPECTIVE HOLDER OF THE
NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR
NON-U.S. INCOME TAX LAWS AND ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX
LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account
("Participating Broker-Dealer") pursuant to the Exchange Offer must acknowledge
that it will deliver a Prospectus in connection with the initial sales of such
New Notes. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with the sales
of New Notes received in exchange for Notes where such Notes were acquired as a
result of market-making activities or other trading activities. Holdings has
agreed that it will make this Prospectus, as amended or supplemented, available
to any Participating Broker-Dealer for use in connection with any such resale
and Participating Broker-Dealers shall be authorized to deliver this prospectus
for a period not exceeding 120 days after the Expiration Date. In addition,
until , 1998 (90 days after the date of this Prospectus), all dealers
effecting transactions in the New Notes may be required to deliver a prospectus.
Holdings will not receive any proceeds from any sales of the New Notes by
participating Broker-Dealers. New Notes received by Participating Broker-Dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time, in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such Participating Broker-Dealer that resells the New Notes that were
received by it for its own account pursuant to the Exchange Offer. Any broker or
dealer that participates in a distribution of such New Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and may profit on any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Holdings will promptly send additional copies of this Prospectus and any
amendment or supplement to this prospectus to any Participating Broker-Dealer
that requests such documents in the Letter of Transmittal. See "The Exchange
Offer."
DLJ has, from time to time, provided investment banking and other financial
advisory services to affiliates of Holdings for which it has received customary
compensation.
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<PAGE> 97
LEGAL MATTERS
Certain legal matters in connection with the New Notes offered hereby will
be passed upon for Holdings by Wachtell, Lipton, Rosen & Katz, New York, New
York.
EXPERTS
The consolidated financial statements of Holdings at December 31, 1996 and
1997 and for each of the three years in the period ended December 31, 1997,
appearing in this Prospectus and in the Registration Statement, and the
financial statement schedule for each of the three years in the period ended
December 31, 1997 included in the Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein and in the Registration Statement, and are included
herein in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
The financial statements of Standard at December 31, 1996 and 1997 and for
each of the three years in the period ended December 31, 1997, appearing in this
Prospectus and in the Registration Statement have been audited by Altschuler,
Melvoin and Glasser LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein, and are included herein in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
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<PAGE> 98
INDEX OF CERTAIN DEFINED TERMS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
ADA............................... 17
Affiliate Transaction............. 73
Agent............................. 29
Annual Base Salary................ 56
APCOA............................. 5
Board............................. 56
CAGR.............................. 7
Change of Control Offer........... 66
Closing........................... 12
Code.............................. 86
Combination....................... 28
Combination Agreement............. 28
Commission........................ 44
Company........................... 5
Company Common Stock.............. 28
Company Stockholders.............. 60
Company Stockholders Agreement.... 60
Company Transactions.............. 28
Delaware North.................... 13
Depositary........................ 3
DTC............................... 78
EPI............................... 34
ERISA............................. 94
Exchange Act...................... 2
Exchange Offer.................... 1
Exchange Offer Registration
Statement....................... 12
Holberg........................... 18
Holdings Common Stock............. 58
Indenture......................... 1
Initial Purchaser................. 3
Liquidated Damages................ 76
</TABLE>
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Named Executive Officers.......... 51
New Credit Facility............... 29
New Notes......................... 1
Notes............................. 1
Note Offering..................... 9
Option Plan....................... 57
Other Acquisitions................ 6
PORTAL............................ 1
Preferred Stock Contribution...... 28
property-level expenses........... 58
Registration Default.............. 1
Registration Rights Agreement..... 1
Regulation S Certificate.......... 74
Regulation S Global Notes......... 70
Regulation S Notes................ 70
Regulation S Permanent Global
Notes........................... 70
Regulation S Temporary Global
Notes........................... 70
Restricted Period................. 70
Rule 144A Notes................... 70
Securities Act.................... 1
Shelf Registration Statement...... 12
Standard.......................... 28
Standard Owners................... 28
Standard Parties.................. 60
Tax Sharing Agreement............. 60
Transactions...................... 28
Trustee........................... 1
Trust Indenture Act............... 65
U.S. Holder....................... 71
Warshauer Employment Agreement.... 56
</TABLE>
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<PAGE> 99
AP HOLDINGS, INC.
INDEX TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of Unaudited Pro Forma Consolidated Financial
Statements................................................ P-2
Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1997......................................... P-3
Notes to Unaudited Pro Forma Consolidated Balance Sheet as
of December 31, 1997...................................... P-4
Unaudited Pro Forma Consolidated Statement of Operations for
the Year Ended December 31, 1997.......................... P-6
Notes to Unaudited Pro Forma Consolidated Statement of
Operations for the Year Ended December 31, 1997........... P-7
</TABLE>
P-1
<PAGE> 100
AP HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Consolidated Balance Sheet as of December
31, 1997 and Unaudited Pro Forma Consolidated Statement of Operations for the
year then ended are based on the historical consolidated financial statements of
Holdings. The Unaudited Pro Forma Consolidated Balance Sheet is adjusted to give
effect to (1) the acquisition of Standard, (2) the Other Acquisitions, including
the probable acquisition of EPI, (3) the sale of the Company's Senior
Subordinated Notes, (4) the sale of the Notes and (5) the application of the
estimated net proceeds therefrom as described under "Use of Proceeds," as if
these events had occurred on December 31, 1997. The Unaudited Pro Forma
Consolidated Statement of Operations is adjusted to give effect to (1) the
acquisition of Standard, (2) the Other Acquisitions, including the probable
acquisition of EPI, (3) the sale of the Company's Senior Subordinated Notes, (4)
the sale of the Notes, and (5) the application of the net proceeds therefrom, as
described under "Use of Proceeds," as if these events had occurred as of January
1, 1997. The Unaudited Pro Forma Consolidated Statement of Operations combines
the historical operations of Holdings with the historical operations of the
acquired businesses prior to the date APCOA made such acquisitions, using the
purchase method of accounting. The actual allocation of purchase price for each
acquisition will be based on management's final determination of the fair value
of assets acquired or to be acquired and liabilities assumed or to be assumed.
The pro forma operating results are not necessarily indicative of the operating
results that would have been achieved had the acquisitions actually occurred at
January 1, 1997, nor do they purport to indicate the results of future
operations.
The Unaudited Pro Forma Consolidated Financial Statements are based on the
assumptions set forth in the notes to such statements and should be read in
conjunction with the related consolidated financial statements and notes thereto
of Holdings and Standard included elsewhere in this Prospectus.
P-2
<PAGE> 101
AP HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS COMBINED
---------------------------------- FOR STANDARD PRO FORMA
OTHER AND OTHER COMBINED ADJUSTMENTS ADJUSTED
HOLDINGS STANDARD ACQUISITIONS ACQUISITIONS PRO FORMA FOR OFFERING(7) FOR OFFERING
-------- -------- ------------ ------------ --------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash......................... $ 3,322 $ 2,478 $ 824 $ (1,200)(1) $ 5,424 $ 55,749 $ 61,173
Notes and accounts
receivable, net............ 13,806 4,919 338 (2,800)(1) 16,263 -- 16,263
Prepaid expenses............. 1,126 150 73 -- 1,349 -- 1,349
-------- ------- ------ -------- -------- -------- --------
Total current assets... 18,254 7,547 1,235 (4,000) 23,036 55,749 78,785
Property and equipment, net... 8,248 1,170 222 -- 9,640 -- 9,640
Cost of parking contracts,
net.......................... 4,092 328 -- 6,473(2) 12,725 -- 12,725
935(3)
897(4)
Cost in excess of net assets
acquired, net................ 18,457 -- -- 74,475(2) 102,649 -- 102,649
6,364(3)
3,353(4)
Other intangible assets,
net.......................... 4,013 -- -- (283)(3) 3,730 7,200 10,155
(775)
Due from affiliate............ 4,522 -- -- (4,522)(5) -- -- --
Other assets.................. 1,509 1,131 -- -- 2,640 -- 2,640
-------- ------- ------ -------- -------- -------- --------
$59,095 $10,176 $1,457 $ 83,692 $154,420 $ 62,174 $216,594
======== ======= ====== ======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable............. $16,401 $ 650 $ 848 $ -- $ 17,899 $ -- $ 17,899
Accrued expenses............. 14,810 2,910 625 4,875(2) 25,720 (4,875) 20,845
2,500(2)
Line of credit............... -- 330 -- -- 330 (330) --
Current portion of long-term
debt....................... 4,102 208 -- -- 4,310 (1,800) 2,510
-------- ------- ------ -------- -------- -------- --------
Total current
liabilities........... 35,313 4,098 1,473 7,375 48,259 (7,005) 41,254
Long-term liabilities:
Existing credit facilities... 27,729 -- -- 1,000(4) 28,729 (28,729) --
New credit facility.......... -- -- -- -- -- -- --
11 1/4% Senior Discount Notes
due 2008................... -- -- -- -- -- 40,683 40,683
9 1/4% Senior Subordinated
Notes due 2008............. -- -- -- -- -- 140,000 140,000
Other debt................... 6,452 127 -- -- 6,579 -- 6,579
Due to Standard.............. -- -- -- 65,000(2) 65,000 (65,000) --
Due to EPI................... -- -- -- 7,000(3) 7,000 (7,000) --
Seller notes................. -- -- -- 3,250(4) 3,250 -- 3,250
Other liabilities............ 3,132 935 -- 5,000(2) 9,067 -- 9,067
-------- ------- ------ -------- -------- -------- --------
Total long-term
liabilities........... 37,313 1,062 -- 81,250 119,625 79,954 199,579
Redeemable preferred stock of
subsidiary................... 8,728 -- -- (728)(6) 8,000 (8,000) --
Common stock of subsidiary
subject to put/call rights... -- -- -- 4,589(2) 4,589 -- 4,589
Common stock, subject to
put/call rights.............. 333 -- -- -- 333 -- 333
Stockholders' equity
(deficit):
Preferred stock.............. 25,201 -- -- -- 25,201 -- 25,201
Common stock................. 1 -- -- -- 1 -- 1
Additional paid in capital... 7,871 -- -- (4,522)(5) 4,077 -- 4,077
728(6)
Retained earnings
(deficit).................. (55,665) -- -- -- (55,665) (2,000) (58,440)
(775)
Owners' equity (deficit)..... -- 5,016 (16) (4,000)(2) -- -- --
(1,016)(2)
16(3)
-------- ------- ------ -------- -------- -------- --------
Total stockholders'
equity (deficit)...... (22,592) 5,016 (16) (8,794) (26,386) (2,775) (29,161)
-------- ------- ------ -------- -------- -------- --------
$59,095 $10,176 $1,457 $ 83,692 $154,420 $ 62,174 $216,594
======== ======= ====== ======== ======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated balance sheet.
P-3
<PAGE> 102
AP HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(IN THOUSANDS)
(1) Represents the reduction in cash and notes and accounts receivable for the
closing distribution to the Standard Owners pursuant to the Combination
Agreement.
(2) Represents the following adjustments to reflect the Combination (the final
purchase price allocation will be based upon a final determination of fair
values of the net assets acquired):
<TABLE>
<S> <C>
Cash consideration payable from proceeds of the Senior
Subordinated Notes Offering............................... $65,000
APCOA common stock to be issued, at calculated put/call
value per the Stockholders' Agreement..................... 4,589
-------
Total consideration............................... $69,589
=======
The total consideration is allocated as follows:
Historical net assets of Standard......................... $ 5,016
Closing distribution to the Standard Owners............... (4,000)
-------
Net assets acquired.................................... 1,016
Cost of parking contracts................................. 6,473
Cost in excess of net assets acquired..................... 74,475
Accrued transaction costs................................. (4,875)
Restructuring reserves.................................... (2,500)
Long-term severance liabilities........................... (5,000)
-------
$69,589
=======
</TABLE>
(3) Represents the following adjustments to reflect the probable acquisition of
EPI (the final purchase price allocation will be based upon a final
determination of fair values of the net assets acquired):
<TABLE>
<S> <C>
Historical net assets (deficit) of EPI...................... $ (16)
Less: Current APCOA investment in EPI....................... (283)
-------
Net deficit acquired................................... (299)
Cost of parking contracts................................... 935
Cost in excess of net assets acquired....................... 6,364
-------
Cash consideration payable from proceeds of the Senior
Subordinated Notes Offering............................... $ 7,000
=======
</TABLE>
(4) Represents the acquisition by the Company of Dixie Parking on January 22,
1998, but which was managed by the Company in 1997. The purchase price
consisted of cash of $1,000, which was borrowed under the existing credit
facility, and seller notes of $3,250. The purchase price allocation
consisted of $897 to parking contracts acquired and $3,353 to cost in excess
of net assets acquired.
(5) Represents the closing distribution to Holberg Industries, Inc., pursuant to
the Combination Agreement, of the receivable, "Due from affiliate."
(6) Represents $728 of preferred stock eliminated pursuant to the Combination
Agreement.
P-4
<PAGE> 103
AP HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET--(CONTINUED)
(7) Reflects the issuance of $140,000 of Senior Subordinated Notes due 2008 and
proceeds of $40,683 from issuance of Senior Discount Notes due 2008. The
application of the proceeds therefrom are as follows:
<TABLE>
<S> <C>
Reduction of existing indebtedness:
Amounts due the Standard Owners........................... $ 65,000
Existing credit facilities................................ 28,729
Amounts due EPI owners.................................... 7,000
Current portion of long-term debt......................... 1,800
Line of credit for Standard............................... 330
Redemption of preferred stock held by Holberg Industries,
Inc....................................................... 8,000
Deferred financing fees..................................... 7,200
Prepayment penalty on existing credit facilities, charged to
stockholders' equity (deficit)............................ 2,000
Payment of accrued transaction costs at closing............. 4,875
Excess proceeds from the Senior Subordinated Notes
Offering.................................................. 55,749
--------
$180,683
========
</TABLE>
In connection with the reduction of existing indebtedness, $775 of deferred
financing costs will be written off.
P-5
<PAGE> 104
AP HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL FOR COMBINED
-------------------------------------- STANDARD ADJUSTMENTS PRO FORMA
OTHER AND OTHER COMBINED FOR ADJUSTED
HOLDINGS STANDARD ACQUISITIONS(1) ACQUISITIONS PRO FORMA OFFERING FOR OFFERING
--------- -------- --------------- ------------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Parking service revenue... $115,676 $63,652 $6,750 $ -- $186,078 $ -- $186,078
Cost and expenses:
Cost of parking
services............. 92,818 50,142 3,205 -- 146,165 -- 146,165
General and
administrative....... 13,528 7,857 3,566 (2,987)(2) 20,045 -- 20,045
(1,919)(3)
Depreciation and
amortization......... 3,767 464 -- 1,298(4) 7,678 (180)(8) 7,498
2,149(5)
-------- ------- ------ ------- -------- ------- --------
Total costs and
expenses...... 110,113 58,463 6,771 (1,459) 173,888 (180) 173,708
-------- ------- ------ ------- -------- ------- --------
Operating income.......... 5,563 5,189 (21) 1,459 12,190 180 12,370
Other expense (income):
Interest expense........ 3,713 45 -- 7,124(6) 10,882 8,769(9) 19,651
Interest income......... (470) (130) -- 351(7) (249) -- (249)
-------- ------- ------ ------- -------- ------- --------
Income (loss) before
income taxes and
minority interest....... 2,320 5,274 (21) (6,016) 1,557 (8,589) (7,032)
Minority interest......... 321 -- -- -- 321 -- 321
Income tax expense........ 140 -- -- -- 140 -- 140
-------- ------- ------ ------- -------- ------- --------
Net income (loss)......... $ 1,859 $ 5,274 $ (21) $(6,016) $ 1,096 $(8,589) $ (7,493)
======== ======= ====== ======= ======== ======= ========
Other data:
EBITDA(10)................ $ 19,868
========
Deficiency of earnings to
fixed charges(11)....... $ 7,032
========
</TABLE>
See accompanying notes to unaudited pro forma consolidated statement of
operations.
P-6
<PAGE> 105
AP HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
(1) The historical consolidated statement of operations data for the Other
Acquisitions for the year ended December 31, 1997 represents the results of
operations of such companies from January 1, 1997 to the earlier of their
respective dates of acquisition or December 31, 1997. The Other
Acquisitions and their respective acquisition dates include: (i) Colonial
Richmond (March 1, 1997); (ii) Metropolitan Parking (June 1, 1997); (iii)
the remaining 50% interest in APCOA Parking Management & Development, Ltd.
(November 1, 1997); (iv) Dixie Parking (January 22, 1998); and (v) the
remaining 76% interest in EPI, a probable acquisition. Each of the Other
Acquisitions has been or is proposed to be accounted for as a purchase.
Accordingly, the results of the operations of each such acquired company
are or will be included in APCOA's results of operations from the date of
acquisition.
(2) Represents the net reduction in costs in accordance with the Company's
business plan to integrate Standard:
<TABLE>
<S> <C>
Payroll reductions for the elimination of duplicative
administrative and operations personnel................... $1,461
Reduction in salaries of certain Standard executives
pursuant to post-acquisition employment agreements........ 1,139
Reductions in management information systems costs.......... 387
------
$2,987
======
</TABLE>
In addition, there are $3,289 of anticipated cost savings ($1,883
represents personnel reduction savings at APCOA and $1,406 represents
purchasing efficiencies) that have not been reflected in the pro forma
statement of operations because they are not directly attributable to the
acquisition of Standard. APCOA intends to record a $8,500 charge in fiscal
1998 related to its planned restructuring of existing operations. This
charge is composed of $5,700 in employee displacement costs, $1,900 in
writedowns of long-term assets to current fair value, and $900 in other
restructuring costs.
(3) Represents the net reduction in costs in accordance with APCOA's business
plans to integrate the Other Acquisitions:
<TABLE>
<S> <C>
Payroll reductions for the elimination of duplicative
administrative and operations personnel:
EPI.................................................. $ 331
Other................................................ 428
Reduction in salaries of certain EPI executives pursuant to
proposed post-acquisition employment agreements........... 577
Reduction in management fees paid to third parties which
will be eliminated upon acquisition....................... 583
------
$1,919
======
</TABLE>
(4) Represents the incremental depreciation and amortization due to the
application of purchase accounting. Property, leaseholds and equipment are
being amortized over 3 to 7 years. Depreciation and amortization has been
increased to reflect each acquisition as if it had occurred on January 1,
1997 as follows:
<TABLE>
<S> <C>
Amortization of cost of parking contracts acquired from
Standard.................................................. $1,034
Amortization of cost of parking contracts acquired from the
Other Acquisitions........................................ 347
Net reduction in depreciation of property and equipment
acquired from Standard.................................... (83)
------
$1,298
======
</TABLE>
P-7
<PAGE> 106
AP HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS--(CONTINUED)
(5) Represents the incremental amortization, due to the application of purchase
accounting, for amortization of the excess cost over the fair value of net
assets acquired over 40 years. Amortization has been increased to reflect
each acquisition as if it had occurred on January 1, 1997 as follows:
<TABLE>
<S> <C>
Amortization of excess cost over fair value of net assets
acquired
for Standard.............................................. $1,862
Amortization of excess cost over fair value of net assets
acquired for the
Other Acquisitions........................................ 287
------
$2,149
======
</TABLE>
(6) Represents the incremental interest expense for the additional financing
required for the acquisitions. Interest expense has been increased to
reflect each acquisition as if it had occurred on January 1, 1997. The
interest rate used for the additional financing for the Standard
acquisition and the proposed EPI acquisition was 9 1/4%, the actual rate of
the Senior Subordinated Notes, the proceeds from which will be partially
used to finance such acquisitions. The interest expense is as follows:
<TABLE>
<CAPTION>
INCREMENTAL
PRINCIPAL INTEREST
AMOUNT RATE EXPENSE
--------- ----------- -----------
<S> <C> <C> <C>
Standard................................. $65,000 9 1/4% $6,013
EPI...................................... 7,000 9 1/4% 648
Seller notes for Dixie acquisition....... 3,250 8 1/4% 268
Other borrowings (pro-rated)............. 3,128 8.0% - 9.0% 195
------
$7,124
======
</TABLE>
(7) Represents the elimination of interest income from Holberg Industries, Inc.
on the outstanding amount due from Holberg Industries, Inc.
(8) Represents the elimination of historical amortization expense related to
the deferred financing costs on the existing credit facilities.
(9) Represents the change in interest expense related to the Offering and
Subordinated Notes Offering:
<TABLE>
<CAPTION>
PRINCIPAL YEAR ENDED
AMOUNT DECEMBER 31,
OF DEBT 1997
--------- ------------
<S> <C> <C>
Recording of pro forma interest expense:
9 1/4% Senior Subordinated Notes due 2008................. $140,000 $12,950
Nonrecourse third party debt at 11.0% to 15.0%............ 5,523 660
Seller notes for Dixie acquisition at 8 1/4%.............. 3,250 268
Letters of credit......................................... 4,905 123
Capital leases............................................ 168
Other debt................................................ 56
-------
Cash interest expense..................................... 14,225
11 1/4% Senior Discount Notes due 2008.................... 40,683 4,706
Amortization of deferred financing costs.................. 720
-------
Total interest expense............................ 19,651
Less: Combined pro forma interest expense................... 10,882
-------
Pro forma interest adjustment after the Offering and Senior
Subordinated Notes Offering............................... $ 8,769
=======
</TABLE>
P-8
<PAGE> 107
AP HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS--(CONTINUED)
(10) EBITDA represents operating income plus depreciation and amortization.
EBITDA is presented because management believes it is a widely accepted
financial indicator used by certain investors and analysts to analyze and
compare companies on the basis of operating performance. EBITDA is not
intended to represent cash flows for the period, nor has it been presented
as an alternative to operating income as an indicator of operating
performance and should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with generally accepted
accounting principles. The Company understands that, while EBITDA is
frequently used by securities analysts in the evaluation of companies,
EBITDA, as used herein, is not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies in the
method of calculation.
(11) For purposes of computing the deficiency of earnings to fixed charges,
earnings consist of income (loss) before income taxes and minority interest
plus fixed charges. Fixed charges consist of interest expense, amortization
of deferred financing costs and one-third of the rent expense from
operating leases, which management believes is a reasonable approximation
of the interest factor of the rent.
P-9
<PAGE> 108
INDEX TO HISTORICAL FINANCIAL STATEMENTS
<TABLE>
<S> <C>
AP HOLDINGS, INC.
Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets as of December 31, 1996 and
1997...................................................... F-3
Consolidated Statements of Operations for each of the three
years in the period ended December 31, 1997............... F-4
Consolidated Statements of Stockholders' Equity (Deficit)
for each of the three years in the period ended December
31, 1997.................................................. F-5
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1997............... F-6
Notes to Consolidated Financial Statements.................. F-7
STANDARD PARKING
Report of Altschuler, Melvoin and Glasser LLP, Independent
Auditors.................................................. F-13
Balance Sheets as of December 31, 1996 and 1997............. F-14
Statements of Income for each of the three years in the
period ended December 31, 1997............................ F-15
Statements of Changes in Equity for each of the three years
in the period ended December 31, 1997..................... F-16
Statements of Cash Flows for each of the three years in the
period ended December 31, 1997............................ F-17
Notes to Financial Statements............................... F-18
</TABLE>
F-1
<PAGE> 109
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
Board of Directors
AP Holdings, Inc.
Cleveland, Ohio
We have audited the accompanying consolidated balance sheets of AP
Holdings, Inc. and subsidiaries, as of December 31, 1996 and 1997, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
AP Holdings, Inc. at December 31, 1996 and 1997, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 3, 1997, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Cleveland, Ohio
February 3, 1998
F-2
<PAGE> 110
AP HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1996 1997
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 2,532 $ 3,322
Notes and accounts receivable, less allowances of $315 in
1996 and $443 in 1997................................... 10,241 13,806
Prepaid expenses and supplies............................. 1,343 1,126
------- -------
Total current assets........................................ 14,116 18,254
Property, leaseholds and equipment:
Buildings and equipment................................... 9,296 10,024
Land and leasehold improvements........................... 15,804 13,981
Leaseholds................................................ 31,446 31,293
Construction in progress.................................. 36 417
------- -------
56,582 55,715
Less accumulated depreciation and amortization............ 44,906 43,375
------- -------
11,676 12,340
Other assets:
Advances and deposits
Cost in excess of net assets acquired, less accumulated... 1,011 1,509
amortization of $2,979 and $3,412 in 1996 and 1997,
respectively........................................... 17,118 18,457
Other intangible assets, less accumulated amortization of
$3,081 and $3,433 in 1996 and 1997, respectively........ 3,381 4,013
Due from affiliate........................................ 5,521 4,522
------- -------
27,031 28,501
------- -------
Total assets....................................... $52,823 $59,095
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.......................................... $15,742 $16,401
Accrued rent.............................................. 6,023 5,649
Compensation and payroll withholdings..................... 2,057 1,924
Property, payroll and other taxes......................... 3,004 3,111
Accrued insurance and expenses............................ 6,079 4,126
Current portion of long-term borrowings................... 666 4,102
------- -------
Total current liabilities................................... 33,571 35,313
Long-term borrowings, excluding current portion:
Obligation under credit agreements........................ 25,261 27,729
Other..................................................... 6,868 6,452
------- -------
32,129 34,181
Other long-term liabilities................................. 2,513 3,132
Redeemable preferred stock of subsidiary.................... 7,841 8,728
Common stock, 880 shares issued and outstanding, subject to
put/call rights, at stated value on date of issuance...... 333 333
Stockholders' equity (deficit):
Preferred stock, 12% quarterly, cumulative, par value $.01
per share, 10,000 shares authorized; 2,487.94 shares in
1996 and 2,800.20 shares in 1997 issued and
outstanding............................................. 22,391 25,201
Common stock, par value $.01 per share, 20,000 shares
authorized; 7,898 shares in 1996 and 7,920 shares in
1997 issued and outstanding............................. 1 1
Additional paid-in capital................................ 7,871 7,871
Accumulated deficit....................................... (53,827) (55,665)
------- -------
Total stockholders' equity (deficit)........................ (23,564) (22,592)
------- -------
Total liabilities and stockholders' equity
(deficit)......................................... $52,823 $59,095
======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE> 111
AP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997
<S> <C> <C> <C>
Parking revenue............................................ $141,540 $135,752 $115,676
Costs and expenses:
Cost of parking services................................. 120,215 113,501 92,818
General and administrative............................... 12,121 13,017 13,528
Depreciation and amortization............................ 8,772 4,888 3,767
-------- -------- --------
Total costs and expenses................................... 141,108 131,406 110,113
-------- -------- --------
Operating income........................................... 432 4,346 5,563
Other expenses (income):
Interest expense......................................... 3,101 3,409 3,713
Interest income.......................................... (396) (532) (470)
-------- -------- --------
2,705 2,877 3,243
-------- -------- --------
Income (loss) before minority interest and income taxes.... (2,273) 1,469 2,320
Minority interest.......................................... 604 424 321
Income tax expense......................................... 240 106 140
-------- -------- --------
Net income (loss).......................................... $ (3,117) $ 939 $ 1,859
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE> 112
AP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
------------------- ----------------- ADDITIONAL
NUMBER PAR NUMBER PAR PAID-IN ACCUMULATED
OF SHARES VALUE OF SHARES VALUE CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
Balance (deficit) at January
1, 1995..................... 1,964.01 $17,676 7,898 $1 $7,871 $(45,423) $(19,875)
Net loss...................... (3,117) (3,117)
Preferred stock dividend...... 246.50 2,218 (2,933) (715)
-------- ------- ----- -- ------ -------- --------
Balance (deficit) at December
31, 1995.................... 2,210.51 19,894 7,898 1 7,871 (51,473) (23,707)
Net income.................... 939 939
Preferred stock dividend...... 277.43 2,497 (3,293) (796)
-------- ------- ----- -- ------ -------- --------
Balance (deficit) at December
31, 1996.................... 2,487.94 22,391 7,898 1 7,871 (53,827) (23,564)
Net income.................... 1,859 1,859
Preferred stock dividend...... 312.26 2,810 (3,697) (887)
Issuance of common stock...... 22 --
-------- ------- ----- -- ------ -------- --------
Balance (deficit) at December
31, 1997.................... 2,800.20 $25,201 7,920 $1 $7,871 $(55,665) $(22,592)
======== ======= ===== == ====== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE> 113
AP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------
1995 1996 1997
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $(3,117) $ 939 $ 1,859
Adjustment to reconcile net income (loss) to net cash
provided by operations:
Depreciation and amortization............................. 8,772 4,888 3,767
Changes in operating assets and liabilities:
(Increase) decrease in notes and accounts receivable... (686) 1,041 (3,495)
(Increase) decrease in prepaid assets.................. (2) 163 273
(Increase) decrease in other assets.................... (452) (1,071) 216
Increase (decrease) in accounts payable................ 2,067 (845) 294
Decrease in accrued liabilities........................ (1,340) (1,209) (2,982)
(Increase) decrease in due from affiliate.............. (902) (1,864) 999
------- -------- -------
Net cash provided by operating activities................... 4,340 2,042 931
INVESTING ACTIVITIES
Purchase of property, leaseholds and equipment.............. (2,782) (2,552) (2,357)
Purchase of property, leaseholds and equipment by joint
ventures.................................................. (1,930) (1,181) (480)
Increase in other assets.................................... (100) (906)
Businesses acquired, net of cash............................ (227) 151
Proceeds from disposition of property, leaseholds and
equipment................................................. 122 384
------- -------- -------
Net cash used in investing activities....................... (4,917) (3,349) (3,592)
FINANCING ACTIVITIES
Proceeds from refinancing................................... 11,217
Payments due to refinancing................................. (11,071)
Proceeds from long-term borrowings.......................... 1,027 4,269
Payments on long-term borrowings............................ (1,183) (412) (829)
Proceeds from joint venture borrowings...................... 2,430 2,665 400
Payments on joint venture borrowing......................... (140) (1,414) (389)
Payments of debt issuance costs............................. (724)
------- -------- -------
Net cash provided by financing activities................... 1,107 1,288 3,451
------- -------- -------
Increase (decrease) in cash................................. 530 (19) 790
Cash at beginning of year................................... 2,021 2,551 2,532
------- -------- -------
CASH AT END OF YEAR......................................... $ 2,551 $ 2,532 $ 3,322
======= ======== =======
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE> 114
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
NOTE A. ORGANIZATION
AP Holdings, Inc. (the Company), is a subsidiary of Holberg Industries,
Inc. (Holberg). The Company is a holding company which owns APCOA, Inc. and its
subsidiaries (APCOA) which manages, operates and develops parking properties
throughout the United States and Canada.
NOTE B. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION--The Company's consolidated financial
statements include the accounts of APCOA, its wholly owned subsidiaries, and
joint ventures in which APCOA has more than 50% ownership interest. Minority
interest recorded in the consolidated statement of operations is APCOA's
noncontrolling interest in consolidated joint ventures. Minority interest
included in the consolidated balance sheet was $49 and $276 at December 31, 1996
and 1997, respectively. Investments in joint ventures of 50% or less ownership
interest are reported on the equity method. Investments in joint ventures
accounted for using the equity method in the consolidated balance sheet was $217
and $273 at December 31, 1996 and 1997, respectively. All significant
intercompany profits, transactions and balances have been eliminated in
consolidation.
GROSS CUSTOMER COLLECTIONS--Gross customer collections represent gross
receipts collected at all leased and managed properties, including
unconsolidated affiliates. Gross customer collections were $408,952, $430,696
and $476,183 in 1995, 1996 and 1997.
PARKING REVENUE --APCOA recognizes gross receipts from leased locations and
management fees earned from management contract properties as parking revenue as
the related services are provided. Also included in parking revenue is $850 in
1995, $147 in 1996 and $1,207 in 1997 from gains on sales of property and
leaseholds.
COST OF PARKING SERVICES--APCOA recognizes costs for leases and
nonreimbursed costs from managed facilities as cost of parking services. Cost of
parking services consists primarily of rent and payroll related costs.
PROPERTIES, LEASEHOLDS AND EQUIPMENT--Leaseholds and property and equipment
are stated at cost. Leaseholds are amortized on a straight-line basis over the
average contract life of 7 years. Equipment is depreciated on the straight-line
basis over the estimated useful lives of approximately 5 years on average.
Leasehold improvements are amortized on the straight-line basis over the terms
of the respective leases or the service lives of the improvements, whichever is
shorter (average of approximately 7 years). Depreciation and amortization
includes losses on abandonments of property and leaseholds.
ADVERTISING COSTS--Advertising costs are expensed as incurred and are
included in general and administrative expenses. Advertising expenses were $246,
$414 and $440 for 1995, 1996 and 1997, respectively.
COST IN EXCESS OF NET ASSETS ACQUIRED (GOODWILL)--Cost in excess of net
assets acquired arising from acquisitions is amortized using the straight-line
method over 40 years. The carrying value of goodwill is evaluated if
circumstances indicate a possible impairment in value. If undiscounted cash
flows over the remaining amortization period indicate that goodwill may not be
recoverable, the carrying value of goodwill will be reduced by the estimated
shortfall of cash flows on a discounted basis.
INTANGIBLE ASSETS--Organization and start-up costs of $633 and $1,296 at
December 31, 1996 and 1997, respectively, are amortized over 7 years using the
straight-line method. Debt issuance costs of $900 and $775 at December 31, 1996
and 1997, respectively, are amortized over the terms of the credit agreements
using the straight-line method.
F-7
<PAGE> 115
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
FINANCIAL INSTRUMENTS--The carrying values of cash, accounts receivable and
accounts payable are reasonable estimates of their fair value due to the
short-term nature of these financial instruments. Other long-term assets and
debt have a carrying value that approximates fair value.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
NEW ACCOUNTING PRONOUNCEMENT--In June 1997, the Financial Accounting
Standards Board issued Statement No. 131, Disclosures about Segments of an
Enterprise and Related Information. Statement No. 131, which becomes effective
in 1998, establishes standards for reporting segment information in annual and
interim financial statements including disclosures about services, geographic
areas and major customers. The Company has not yet determined the impact of
adopting Statement No. 131 on its financial statement disclosures.
NOTE C. BORROWING ARRANGEMENTS
Long-term borrowings consist of:
<TABLE>
<CAPTION>
AMOUNT OUTSTANDING
DECEMBER 31
INTEREST DUE ------------------
RATE(S) DATE 1996 1997
<S> <C> <C> <C> <C>
Prudential term note.................. 9.18% April, 2003 $18,000 $18,000
Prudential term note.................. 8.92% March, 2005 5,000 5,000
Key Bank revolver..................... 7.82--8.75% April, 2000 2,261 6,529
Joint venture debentures.............. 11.00--15.00% December, 2006 5,512 5,523
Capital leases and other.............. Various Various 2,022 3,231
------- -------
32,795 38,283
Less current portion.................. 666 4,102
------- -------
$32,129 $34,181
======= =======
</TABLE>
APCOA has a term facility with the Prudential Insurance Company of America
in the amount of $23 million. The facility, with semi-annual principal payments
beginning in 1998 contains two term notes. In March 1996, APCOA refinanced its
revolving credit facility with KeyBank, as agent, which provides for borrowings
and letters of credit of up to $20 million and bears interest at LIBOR plus 2%
or prime plus .25% as selected by APCOA. These facilities are secured by
substantially all of the assets of APCOA. The terms of the credit agreements
call for, among other things, meeting defined net worth, income and debt
coverage ratios as well as restrictions on the payment of dividends on common
stock and capital expenditures.
Consolidated joint ventures have entered into four agreements for
stand-alone development projects providing nonrecourse funding. These joint
venture debentures are collateralized by the specific contracts that were funded
and approximate the net book value of the related assets.
APCOA has entered into capital leases and various financing agreements,
which were used for the purchase of equipment and on November 1, 1997, APCOA
signed interest free promissory notes in the amount of $1,123 to purchase the
remaining interest of an unconsolidated subsidiary. The notes were paid in
January, 1998.
APCOA paid interest of $3,174, $3,230 and $3,878 in 1995, 1996, and 1997,
respectively.
F-8
<PAGE> 116
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
The aggregate maturities of borrowings outstanding at December 31, 1997 are
as follows:
<TABLE>
<S> <C>
1998............................................... $ 4,102
1999............................................... 4,849
2000............................................... 11,162
2001............................................... 4,466
2002............................................... 4,587
2003 and thereafter................................ 9,117
-------
$38,283
=======
</TABLE>
NOTE D. INCOME TAXES
The Company is included in the consolidated federal income tax return filed
with its affiliates and has a tax sharing agreement with the affiliates. The
Company's income tax provision is determined on a separate return basis. Income
tax expense consists of state and local taxes.
At December 31, 1997, APCOA has net operating loss carryforwards of $23.2
million for income tax purposes that expire in years 2004 through 2012. Net
operating loss carryforwards have been utilized to eliminate federal income tax
expense in 1996.
Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
APCOA's deferred tax assets and liabilities as of December 31, 1996 and 1997 are
as follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
Net operating loss carryforwards......................... $ 7,736 $ 8,111
Book over tax depreciation and amortization.............. 2,042 1,234
Casualty/liability insurance............................. 674 699
Accrued compensation..................................... 433 (55)
Other, net............................................... 280 361
------- -------
11,165 10,350
Less: valuation allowance for deferred tax assets........ 11,165 10,350
------- -------
Net deferred tax assets.................................. $ 0 $ 0
======= =======
</TABLE>
For financial reporting purposes, a valuation allowance for deferred tax
assets will continue to be recorded until realization is certain.
NOTE E. BENEFIT PLANS
APCOA sponsors a deferred compensation plan for certain key executives as
well as an employees' savings and retirement plan in which certain employees are
eligible to participate. Subject to their continued employment by APCOA,
employees eligible for participation in the deferred compensation plan will
receive a defined monthly benefit upon attaining age 65. Participants in the
savings and retirement plan may elect to contribute a portion of their
compensation to the plan. APCOA, in turn, contributes an amount in cash or other
property as required by the plan. Expenses related to these plans amounted to
$441, $473 and $461 in 1995, 1996 and 1997, respectively.
APCOA also contributes to two multi-employer defined contribution and nine
multi-employer defined benefit plans which cover certain union employees.
Expenses related to these plans were $562, $561 and $418 in 1995, 1996 and 1997,
respectively.
F-9
<PAGE> 117
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
NOTE F. LEASES
APCOA operates parking facilities under operating leases expiring on
various dates, generally prior to the year 2012. Certain of the leases contain
options to renew at APCOA's discretion.
At December 31, 1997, APCOA was committed to install in future years, at an
estimated cost of $1,063, certain capital improvements at leased facilities.
Future annual rent expense is not determinable due to the application of
percentage factors based on revenues. At December 31, 1997, APCOA's minimum
rental commitments, under all non-cancelable leases with remaining terms of more
than one year, are as follows:
<TABLE>
<S> <C>
1998............................................... $28,036
1999............................................... 16,117
2000............................................... 12,301
2001............................................... 7,925
2002............................................... 6,443
2003 and thereafter................................ 25,216
-------
$96,038
=======
</TABLE>
Rent expense for office space and equipment was $1,623, $1,873 and $2,155
in 1995, 1996 and 1997, respectively.
NOTE G. REDEEMABLE PREFERRED STOCK OF SUBSIDIARY
APCOA has 400 shares of preferred stock authorized, of which 78 and 87
shares are outstanding at December 31, 1996 and 1997, respectively. The
preferred shareholder, an affiliate, is entitled to 11% annual dividends payable
semiannually in cash or additional preferred shares. The preferred stock is
recorded at its $100,000 per share liquidation value plus unpaid dividends.
Subject to the approval of the Board of Directors, APCOA has the right to redeem
for cash all or any part of the preferred shares then outstanding at a
redemption price equal to the per share liquidation value. All of the then
outstanding preferred shares will be mandatorily redeemed for cash on February
25, 2004 at a redemption price equal to the per share liquidation value.
NOTE H. STOCKHOLDERS' EQUITY (DEFICIT)
The Company has a put/call agreement with a stockholder that permits the
stockholder to put its shares of common stock to the Company at fair market
value, as defined in the put/call agreement. As of December 31, 1997, no
determination has been made of the current fair market value.
The Company's preferred shareholders are entitled to 12% annual dividends
payable quarterly in cash or additional preferred shares. The preferred stock,
which includes accrued stock dividends, is recorded at its $9,000 per share
liquidation value. As of December 31, 1997, the preferred stock dividends
distributable during 1997 have not been declared or issued.
NOTE I. RELATED PARTIES TRANSACTIONS
Due from affiliate represents amounts due from Holberg as the result of
various transactions between APCOA and Holberg including net cash transferred,
investment income and insurance premiums. Interest is recorded on amounts due
based on current investment rates of return.
APCOA participates in a master insurance program with affiliates which
serves to reduce the insurance costs of the combined group. The program provides
APCOA with a stop loss for each insurance policy year.
F-10
<PAGE> 118
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
Insurance premium for the coverage is included in the cost of parking services
and reflects APCOA's estimated cost indicative of the ongoing entity on a stand
alone basis through the purchase of insurance and related costs for self-insured
retention amounts consistent with the limits used in the 1997 policy year and
expected to be followed in the future.
NOTE J. ACQUISITIONS
During the year ended December 31, 1997, APCOA completed three
acquisitions. In January 1998, APCOA acquired Dixie Parking Services, Inc.
located in New Orleans, Louisiana. The aggregate purchase price of the four
acquisitions was $2.0 million in cash and $4.4 million in notes payable.
Additional consideration of up to $875 for one acquisition is contingent upon
the operating results of the acquired company. The excess purchase price over
the fair value of the net assets acquired, primarily cost of contracts, was
recorded as goodwill for all acquisitions.
All acquisitions have been accounted for under the purchase method of
accounting, and the consolidated results of operations include the results of
each business from the date of acquisition. Unaudited pro forma data for the
year ended December 31, 1996 and 1997 as though APCOA had purchased all of the
above businesses at the beginning of 1996 and 1997 are set forth below. The pro
forma operating results are not necessarily indicative of what would have
occurred had the transactions taken place on January 1, 1996.
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
Parking revenue........................................ $142,091 $116,935
Net income............................................. 1,454 2,025
</TABLE>
NOTE K. COMMITMENTS AND CONTINGENCIES
As a result of its day-to-day operations, APCOA is involved in several
disputes, generally regarding the terms of lease agreements. In the opinion of
management, the outcome of these disputes and litigation will not have a
material adverse effect on the consolidated financial position or operating
results of APCOA.
NOTE L. SUBSEQUENT EVENTS AND SUBSIDIARY GUARANTORS
In January 1998, APCOA entered into a definitive Combination Agreement to
acquire all of the outstanding capital stock, partnership and other equity
interests of Standard Parking Corporation and certain affiliates (Standard). On
March 30, 1998, APCOA acquired Standard for consideration consisting of $65
million in cash, common stock of the Company equal to 16.0% of the common stock
of the Company outstanding as of January 15, 1998, and the assumption of certain
liabilities. Standard currently manages approximately 380 properties in 29
cities.
In connection with the Standard acquisition, on March 30, 1998, APCOA
issued $140 million principal amount of 9 1/4% Senior Subordinated Notes due
2008 in a Rule 144A private placement and entered into a $40 million senior
credit facility. In addition, the Company received proceeds of approximately
$40.7 million from issuance of $70 million principal amount of 11 1/4% Senior
Discount Notes due 2008 in a Rule 144A private placement. The Company
contributed the proceeds from the offering of the Senior Discount Notes to APCOA
in exchange for redeemable preferred stock of APCOA. The net proceeds from the
offerings were used by APCOA to fund the cash portion of the consideration for
the acquisition of Standard, to repay certain existing debt of APCOA and
Standard, for general corporate purposes and to redeem preferred stock held by
an affiliate.
The majority of APCOA's operating subsidiaries, as well as Standard, will
fully, unconditionally, jointly and severally guarantee the Senior Subordinated
Notes. Separate financial statements of the guarantor subsidiaries are not
separately presented because, in the opinion of management, such financial
statements are
F-11
<PAGE> 119
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
not material to investors. The following is summarized combining financial
information for APCOA, Inc., the guarantor subsidiaries of APCOA and the
non-guarantor subsidiaries of APCOA:
<TABLE>
<CAPTION>
APCOA, GUARANTOR NON-GUARANTOR
INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
1995
Income Statement Data:
Parking revenue.............................. $73,720 $ 1,901 $ 65,919 -- $141,540
Gross profit................................. 17,588 360 3,377 -- 21,325
Depreciation and amortization................ 7,996 51 725 -- 8,772
Operating income (loss)...................... (1,828) 182 2,078 -- 432
Interest expense (income), net............... 2,289 (34) 450 -- 2,705
Net income (loss)............................ (4,357) 216 1,024 -- (3,117)
Statement of Cash Flows Data:
Net cash provided by (used in) operating
activities................................. 4,515 10 (185) -- 4,340
Investing activities:
Purchase of property, leaseholds and
equipment................................ (2,769) (13) (1,930) -- (4,712)
Other...................................... (205) -- -- -- (205)
------- ------- -------- -------- --------
Net cash used in investing activities........ (2,974) (13) (1,930) -- (4,917)
Financing activities:
Proceeds from long-term borrowings......... -- -- 2,430 -- 2,430
Payments on long-term borrowings........... (1,183) -- (140) -- (1,323)
------- ------- -------- -------- --------
Net cash provided by (used in) financing
activities................................. (1,183) -- 2,290 -- 1,107
1996
Balance Sheet Data:
Notes and accounts receivable................ 7,489 (146) 2,898 -- 10,241
Current assets............................... 10,327 93 3,696 -- 14,116
Property, leaseholds and equipment, net...... 5,925 146 5,605 -- 11,676
Cost in excess of net assets acquired, net... 16,479 639 -- -- 17,118
Total assets................................. 42,283 977 11,017 (1,454) 52,823
Accounts payable............................. 13,603 241 1,898 -- 15,742
Current liabilities.......................... 26,303 377 6,891 -- 33,571
Long-term borrowings, excluding current
portion.................................... 27,006 -- 5,123 -- 32,129
Redeemable preferred stock................... 7,841 -- -- -- 7,841
Total stockholders' equity (deficit)......... (20,956) 600 (1,421) (1,454) (23,231)
Total liabilities and stockholders' equity... 42,283 977 11,017 (1,454) 52,823
Income Statement Data:
Parking revenue.............................. 73,140 2,914 59,698 -- 135,752
Gross profit................................. 18,412 669 3,170 -- 22,251
Depreciation and amortization................ 3,745 166 977 -- 4,888
Operating income............................. 2,722 198 1,426 -- 4,346
Interest expense (income), net............... 2,340 (18) 555 -- 2,877
Net income (loss)............................ 276 216 447 -- 939
Statement of Cash Flows Data:
Net cash provided by (used in) operating
activities................................. 2,012 286 (256) -- 2,042
Investing activities:
Purchase of property, leaseholds and
equipment................................ (2,481) (71) (1,181) -- (3,733)
Other...................................... 384 -- -- -- 384
------- ------- -------- -------- --------
Net cash used in investing activities........ (2,097) (71) (1,181) -- (3,349)
</TABLE>
F-12
<PAGE> 120
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
APCOA, GUARANTOR NON-GUARANTOR
INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
</TABLE>
F-13
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
APCOA, GUARANTOR NON-GUARANTOR
INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------ ------------ ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
Financing activities:
Proceeds from refinancing.................. $11,217 $ -- $ -- $ -- $11,217
Payments due to refinancing................ (11,071) -- -- -- (11,071)
Proceeds from long-term borrowings......... 1,027 -- 2,665 -- 3,692
Payments on long-term borrowings........... (412) -- (1,414) -- (1,826)
Payments of debt issuance costs............ (724) -- -- -- (724)
------- ------- -------- -------- --------
Net cash provided by financing activities.... 37 -- 1,251 -- 1,288
1997
Balance Sheet Data:
Notes and accounts receivable................ 10,587 1,113 2,106 -- 13,806
Current assets............................... 12,801 2,610 2,843 -- 18,254
Property, leaseholds and equipment, net...... 6,246 501 5,593 -- 12,340
Cost in excess of net assets acquired, net... 16,190 2,267 -- -- 18,457
Total assets................................. 43,895 6,541 10,206 (1,547) 59,095
Accounts payable............................. 13,574 1,756 1,071 -- 16,401
Current liabilities.......................... 26,593 4,006 4,714 -- 35,313
Long-term borrowings, excluding current
portion.................................... 28,747 407 5,027 -- 34,181
Redeemable preferred stock................... 8,728 -- -- -- 8,728
Total stockholders' equity (deficit)......... (22,334) 1,981 (359) (1,547) (22,259)
Total liabilities and stockholders' equity... 43,895 6,541 10,206 (1,547) 59,095
Income Statement Data:
Parking revenue.............................. 78,051 3,510 34,115 -- 115,676
Gross profit................................. 18,400 1,033 3,425 -- 22,858
Depreciation and amortization................ 2,836 65 866 -- 3,767
Operating income............................. 4,451 512 600 -- 5,563
Interest expense (income), net............... 2,654 -- 589 -- 3,243
Net income (loss)............................ 1,657 512 (310) -- 1,859
Statement of Cash Flows Data:
Net cash provided by (used in) operating
activities................................. (173) 739 365 -- 931
Investing activities:
Purchase of property, leaseholds and
equipment................................ (2,357) -- (480) -- (2,837)
Other...................................... (1,467) 712 -- -- (755)
------- ------- -------- -------- --------
Net cash provided by (used in) investing
activities................................. (3,824) 712 (480) -- (3,592)
Financing activities:
Proceeds from long-term borrowings......... 4,269 -- 400 -- 4,669
Payments on long-term borrowings........... (685) (144) (389) -- (1,218)
------- ------- -------- -------- --------
Net cash provided by (used in) financing
activities................................. 3,584 (144) 11 -- 3,451
</TABLE>
F-14
<PAGE> 121
REPORT OF ALTSCHULER, MELVOIN AND GLASSER LLP,
INDEPENDENT AUDITORS
To the Owners of Standard Parking
We have audited the accompanying balance sheets of STANDARD PARKING as of
December 31, 1996 and 1997 and the related statements of income, changes in
equity and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the management of
Standard Parking. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Standard Parking as of
December 31, 1996 and 1997, and the combined results of its operations, changes
in equity and cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.
Altschuler, Melvoin and Glasser LLP
Chicago, Illinois
February 3, 1998
F-14
<PAGE> 122
STANDARD PARKING
BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $2,968 $ 2,478
Management fees receivable and due from managed
facilities............................................. 1,357 1,843
Accounts receivable--other................................ 1,143 2,041
Current maturities of notes receivable.................... 60 116
Due from related parties.................................. 879 919
Prepaid expenses.......................................... 168 150
------ -------
Total current assets.............................. 6,575 7,547
------ -------
Property and Equipment (at cost, net of accumulated
depreciation)............................................. 1,014 1,170
------ -------
Other Assets:
Management contracts (net of accumulated amortization of
$58 and $85)........................................... 456 328
Due from related parties.................................. 168 218
Notes receivable--long term............................... 296 184
Cash value of life insurance.............................. 621 729
------ -------
Total other assets................................ 1,541 1,459
------ -------
Total Assets................................. $9,130 $10,176
====== =======
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses..................... $1,608 $ 2,413
Due to related parties.................................... 70 75
Key card security and lease deposits...................... 167 198
Accrued basic and percentage rents........................ 755 792
Deferred rent............................................. 136 28
Line of credit borrowings................................. 0 330
Current maturities of long-term debt...................... 185 133
Funds held on behalf of managed facilities................ 201 129
------ -------
Total current liabilities......................... 3,122 4,098
------ -------
Long-term Liabilities:
Deferred rent............................................. 265 395
Deferred compensation..................................... 423 417
Long-term debt............................................ 203 70
Long-term related party debt.............................. 82 57
Other..................................................... 123 123
------ -------
Total long-term liabilities....................... 1,096 1,062
------ -------
Total Liabilities........................................... 4,218 5,160
------ -------
Equity...................................................... 4,912 5,016
------ -------
Total Liabilities and Equity................. $9,130 $10,176
====== =======
</TABLE>
The accompanying notes are an integral part of this statement.
F-15
<PAGE> 123
STANDARD PARKING
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997
<S> <C> <C> <C>
Revenue:
Leased facilities......................................... $38,418 $41,770 $54,801
Management and consulting fees and other parking services
revenue................................................ 6,783 8,505 8,851
------- ------- -------
Total revenue............................................... 45,201 50,275 63,652
Cost and expenses:
Cost of parking services.................................. 35,168 37,838 50,142
General and administrative expenses....................... 6,390 7,547 7,857
Depreciation and amortization............................. 316 376 464
Loss on office relocation................................. 408
------- ------- -------
Total costs and expenses.................................... 42,282 45,761 58,463
------- ------- -------
Operating income............................................ 2,919 4,514 5,189
Other expense (income):
Interest income........................................... (96) (110) (130)
Interest expense.......................................... 37 54 45
------- ------- -------
(59) (56) (85)
------- ------- -------
Net income.................................................. $ 2,978 $ 4,570 $ 5,274
======= ======= =======
</TABLE>
The accompanying notes are an integral part of this statement.
F-16
<PAGE> 124
STANDARD PARKING
STATEMENTS OF CHANGES IN EQUITY
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
Equity, January 1, 1995..................................... $ 3,894
Capital Contribution........................................ 10
Net Income for Year......................................... 2,978
Distributions............................................... (3,482)
-------
Equity, December 31, 1995................................... 3,400
Net Income for Year......................................... 4,570
Distributions............................................... (3,058)
-------
Equity, December 31, 1996................................... 4,912
Net Income for Year......................................... 5,274
Distributions............................................... (5,170)
-------
Equity, December 31, 1997................................... $ 5,016
=======
</TABLE>
The accompanying notes are an integral part of this statement.
F-17
<PAGE> 125
STANDARD PARKING
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................ $ 2,978 $ 4,570 $ 5,274
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 316 376 464
Increase (decrease) in cash arising from changes in:
Management fees receivable and amounts due from
managed facilities................................ 275 (166) (486)
Accounts receivable and prepaid expenses............. 292 (407) (881)
Related party receivables/payables................... (1,375) 287 (103)
Accrued basic and percentage rents................... (441) 236 37
Deferred compensation................................ 141 149 (6)
Deferred rent........................................ 377 24 22
Other current liabilities............................ 280 262 765
------- ------- -------
Net cash provided by operating activities................... 2,843 5,331 5,086
------- ------- -------
INVESTING ACTIVITIES
Increase in cash value of life insurance.................. (120) (31) (108)
Management contracts acquired............................. (561) 0 0
Capital expenditures...................................... (547) (336) (492)
Proceeds from sale of fixed assets........................ 0 100 0
Increase in notes receivable.............................. (50) (305) 0
Other, net................................................ (25) 76 71
------- ------- -------
Net cash used in investing activities....................... (1,303) (496) (529)
------- ------- -------
FINANCING ACTIVITIES
Principal payments on debt................................ (70) (187) (207)
Proceeds from bank loans.................................. 476 130 330
Distributions............................................. (3,472) (3,058) (5,170)
------- ------- -------
Net cash used in financing activities....................... (3,066) (3,115) (5,047)
------- ------- -------
Net increase (decrease) in cash and cash equivalents........ (1,526) 1,720 (490)
Cash at beginning of year................................... 2,774 1,248 2,968
------- ------- -------
Cash at end of year......................................... $ 1,248 $ 2,968 $ 2,478
======= ======= =======
</TABLE>
The accompanying notes are an integral part of this statement.
F-18
<PAGE> 126
STANDARD PARKING
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
NOTE 1--NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation--The financial statements of Standard Parking have
been prepared in connection with the Combination Agreement dated January 15,
1998 between the owners of Standard Parking and APCOA, Inc. The financial
statements include the accounts and activities of the following entities,
exclusive of certain assets not included in the acquisition, as specified and
defined in the Combination Agreement:
Standard Parking, L.P. and consolidated entities:
Central Parking Entities:
Standard Parking I, L.L.C.
Standard Parking II, L.L.C.
Standard Parking/Marina, L.L.C. (ceased operations during 1997)
Standard Parking of Canada, L.P.
Standard Parking Corporation
Standard Auto Park, Inc.
Standard Parking Corporation, MW
Standard Parking Corporation, IL
Standard/Wabash Parking Corporation
Certain business interests, defined as excluded assets in the Combination
Agreement, have not been included in these financial statements as follows:
Standard Parking, L.P.:
Interests in Buckingham Investors Partnership (a partnership) and
Standard Parking/Courthouse, L.L.C. (a limited liability company),
including associated debt of $142.
Standard Parking Corporation:
All assets and liabilities, except for investments in Standard Parking
L.P., Standard Parking I, L.L.C., Standard Parking II, L.L.C., Standard
Parking/Marina L.L.C. and Standard Parking of Canada, L.P.
Because all of the above entities are under the common control and
management of Standard Parking, the financial statements have been combined
based on the historical costs of the underlying entities. All significant
intercompany balances and transactions have been eliminated in the combined
presentation.
In addition, certain other entities under common control are not subject to
the Combination Agreement and have not been included in these financial
statements.
The Combination Agreement states that APCOA, Inc. will acquire the defined
business for $65 million plus 16% of APCOA, Inc.'s common stock.
Standard Parking leases and manages parking facilities located throughout
North America from regional offices in Chicago, Houston, Boston, Los Angeles and
Canada. Standard Parking, L.P. (the "Partnership") was formed pursuant to an
Agreement of Limited Partnership dated January 1, 1994 between Standard Parking
Corporation, as general (and a limited) partner, and SP Associates, as a limited
partner. On formation, the partners contributed to the Partnership cash and
certain assets, net of assumed liabilities, including the rights to management
contracts and parking facility leases previously owned by the general partner.
At December 31, 1997, Standard Parking leased and managed 379 parking
facilities.
Revenue consists primarily of gross receipts from facilities leased by
Standard Parking with terms varying from one to several years and basic and
incentive management fees received from managing parking facilities owned by
related and third parties.
F-19
<PAGE> 127
STANDARD PARKING
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements, as well as the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
A summary of other significant accounting policies is as follows:
Depreciation--For both financial and tax reporting purposes,
depreciation is computed using both the straight-line and accelerated
methods over the estimated useful lives of the assets.
Amortization of Management Contracts--Management contracts acquired
valued at acquisition cost of $561 in accordance with the purchase
agreement are being amortized on the straight-line basis over the average
15 years of expected economic lives of the contracts. The management
contracts are reviewed for impairment based on an assessment of future
operations.
Statement of Cash Flows--For purposes of the statement of cash flows,
all highly liquid debt instruments purchased with a maturity of three
months or less are reflected as cash equivalents.
Deferred Compensation--Standard Parking is contractually committed to
pay additional compensation to certain key employees for a defined period
of time after retirement. The liability for deferred compensation
represents the present value of the payments required to meet the
contractual requirements earned by the employees.
Funds Held on Behalf of Managed Facilities--Standard Parking holds
funds as a deposit for certain managed facilities which usually represents
one month's payroll to be incurred by Standard Parking on behalf of the
facility.
Financial Instruments--Standard Parking believes the book value of its
cash equivalents, current receivables, accounts payable and accrued
expenses and other current liabilities approximates fair value due to their
short-term nature. The book value of its long-term receivables and
obligations approximates their fair value as the current interest rates
approximate rates at which similar types of borrowing arrangements could be
currently obtained.
NOTE 2--PROPERTY AND EQUIPMENT:
Office and parking facility equipment and leasehold improvements consisted
of the following:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1996 1997
<S> <C> <C> <C>
Furniture, fixtures and vehicles.................... 1 to 7 years $ 570 $ 577
Machinery and equipment............................. 1 to 5 years 359 395
Computer equipment and software..................... 1 to 5 years 500 878
Improvements........................................ 1 to 13 years 281 268
------ ------
1,710 2,118
Accumulated depreciation............................ 696 948
------ ------
$1,014 $1,170
====== ======
</TABLE>
Depreciation expense was $273 in 1995, $314 in 1996 and $336 in 1997.
Depreciation expense includes loss on sale/abandonment of fixed assets of $40 in
1995, $15 in 1996 and $53 in 1997.
F-20
<PAGE> 128
STANDARD PARKING
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3--NOTES RECEIVABLE:
Notes receivable at December 31, 1996 and 1997 were as follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
(a) Relating to the financing of parking facility
maintenance equipment utilized at facilities managed by
Standard Parking. The notes, secured by the equipment,
call for monthly payments of principal and interest (at
rates ranging from 7.5% to 10.5%) with final payments
being due in 2001....................................... $306 $250
(b) Unsecured note from a third party calling for monthly
payments of interest (at 7%) with entire balance being
due in 1998............................................. 50 50
---- ----
356 300
Less current portion........................................ 60 116
---- ----
$296 $184
==== ====
</TABLE>
Future scheduled receipts are $76 in 1999, $78 in 2000 and $30 in 2001.
NOTE 4--ACCOUNTS RECEIVABLE--OTHER:
Accounts receivable--other at December 31, 1996 and 1997 were as follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
Customer receivables........................................ $ 165 $ 588
Insurance receivables....................................... 715 885
Other accounts receivable................................... 263 568
------ ------
$1,143 $2,041
====== ======
</TABLE>
NOTE 5--ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses at December 31, 1996 and 1997 were as
follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
Accrued payroll............................................. $ 412 $ 673
Accrued payroll--managed facilities......................... 0 633
Parking tax withheld........................................ 288 387
Accrued real estate tax..................................... 277 199
Other accounts payable and accrued expenses................. 631 521
------ ------
$1,608 $2,413
====== ======
</TABLE>
Accrued payroll for managed facilities represents funds held by Standard
Parking as of December 31, 1997 which were expended in January 1998 on behalf of
its managed facilities.
NOTE 6--DEBT ARRANGEMENTS:
During 1995, Standard Parking borrowed $476 from LaSalle National Bank to
finance the acquisition of management contracts. The note is payable in monthly
installments of $13, plus interest at the prime rate over three years, with the
final payment being due in 1998.
Additionally, Standard Parking borrowed $130 from Amalgamated Bank of
Chicago during 1996. The proceeds were loaned to one of Standard Parking's
managed facilities to finance the purchase of equipment (see Note 3). The
unsecured note is payable in monthly installments of $2 plus interest at the
prime rate over five years, with the final payment being due in 2001.
F-21
<PAGE> 129
STANDARD PARKING
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
During 1997, Standard Parking borrowed $330 from LaSalle National Bank
under a $500 line of credit. The line is due on July 8, 1998 with payments of
interest at the prime rate, which was 8.5% during 1997, being due monthly.
The prime rates of interest in effect pertaining to the above bank debt at
December 31, 1996 and 1997 were 8.25% and 8.5%, respectively.
Future payments on the installment loans are $26 in 1999 and 2000 and $18
in 2001.
NOTE 7--RELATED-PARTY TRANSACTIONS:
Amounts due from related parties were as follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
Relating to the financing of parking facility maintenance
equipment utilized at a facility managed by Standard
Parking and owned by a related party. The note, secured by
the equipment, calls for monthly payments of principal and
interest at 9.25%, with a final payment being due in
1999...................................................... $ 30 $ 15
Advances to affiliates and employees, no stated repayment
terms..................................................... 153 211
Management fees and other amounts due from related party
managed and leased facilities, due currently.............. 864 911
------ ------
1,047 1,137
Less current maturities..................................... 879 919
------ ------
$ 168 $ 218
====== ======
</TABLE>
Amounts due to related parties were as follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
Short term operating advances payable....................... $ 48 $ 50
Unsecured loan payable. The loan terms call for monthly
repayment of principal and interest at 12% per year with
final payment being due in 2000........................... 104 82
---- ----
152 132
Less current maturities..................................... 70 75
---- ----
$ 82 $ 57
==== ====
</TABLE>
Future payments pertaining to the unsecured loan payable are $27 in 1999
and $30 in 2000.
Management and consulting fee income relating to management of facilities
controlled by related parties amounted to $1,801, $1,332 and $1,329 during 1995,
1996 and 1997, respectively. These amounts are included with "management and
consulting fees and other parking services revenue" on the statement of income.
Rent expense incurred relating to parking facilities leased from related
parties under short term leases renewable annually amounted to $5,464, $7,628
and $13,403 during 1995, 1996 and 1997, respectively. These expenses are
included with cost of parking services on the statement of income. Minimum lease
payments relating to these leases will approximate $15,808 during 1998.
F-22
<PAGE> 130
STANDARD PARKING
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--LEASE COMMITMENTS:
Standard Parking leases several parking and office facilities throughout
North America from both related and third parties under leases expiring over
various dates through 2010. Future minimum lease payments are approximately as
follows:
<TABLE>
<S> <C>
1998............................................... $23,326
1999............................................... 5,555
2000............................................... 997
2001............................................... 413
2002............................................... 333
Thereafter......................................... 1,887
-------
$32,511
=======
</TABLE>
In addition to the minimum rental payments, Standard Parking, as designated
in certain of the leases, is responsible for the payment of percentage rent,
real estate taxes, maintenance and operating costs. Total rent expense for 1995,
1996 and 1997 was $20,969, $24,428, and $34,589, respectively, of which $5,173,
$6,753 and $7,634, respectively, related to percentage rent.
Standard Parking relocated its Chicago administrative headquarters to new
leased offices in November 1995. The loss on vacating the old leased space of
approximately $408, which includes rent due until the scheduled lease expiration
date, net of sublease income, was charged to operations during 1995. The new
headquarters office lease requires minimum annual rentals (exclusive of
escalation charges) on an increasing scale. Such total minimum rentals payable
for the lease period from October 1, 1995 through September 30, 2010 are being
amortized to expense in approximately equal installments each month.
A summary of deferred rent as of December 31, 1996 and 1997 relating to the
old and new facilities is as follows:
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C>
Rent accrued on the vacated leased space net of sublease
income.................................................... $205 $ 69
Deferred rent on new leased space........................... 196 354
---- ----
401 423
Less amount due currently................................. 136 28
---- ----
Deferred rent--long-term portion............................ $265 $395
==== ====
</TABLE>
NOTE 9--EMPLOYEE BENEFIT PLAN:
Standard Parking maintains a qualified Section 401(k) Plan which benefits
all eligible employees. Under the plan, Standard Parking partially matches
employee contributions. For 1995, 1996 and 1997, management authorized an
employer match of employee contributions at the rate of 50% of the first 4% of
eligible wages. Standard Parking contributions to the plan were $41, $42 and $53
for 1995, 1996 and 1997, respectively.
NOTE 10--INCOME TAXES:
Under the provisions of the Internal Revenue Code, the affiliated companies
combined herein, which are all partnerships or Subchapter S corporations, pay no
federal income taxes and their net income and losses (including the distributive
shares resulting from its ownership as a member in the subsidiary limited
liability companies, which file partnership income tax returns) are reportable
in the tax returns of the respective partners and shareholders. However, the
partnerships and the affiliated companies are subject to state income taxes.
F-23
<PAGE> 131
======================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY HOLDINGS OR THE INITIAL PURCHASER. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF HOLDINGS SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information................. 4
Prospectus Summary.................... 5
Risk Factors.......................... 14
The Exchange Offer.................... 20
Certain Federal Income Tax
Consequences of the Exchange
Offer............................... 27
The Transactions...................... 28
Use of Proceeds....................... 30
Capitalization........................ 31
Selected Historical Financial Data of
Holdings............................ 32
Management's Discussion and Analysis
of Financial Condition and Results
of Operations of Holdings........... 33
Selected Historical Financial Data of
Standard............................ 38
Management's Discussion and Analysis
of Financial Condition and Results
of Operations of Standard........... 39
Business.............................. 41
Management............................ 49
Security Ownership of Certain
Beneficial Holders and Management... 57
Certain Relationships and Related
Party Transactions.................. 59
Description of Indebtedness........... 63
Description of New Notes.............. 64
Description of Certain Federal Income
Tax Consequences.................... 90
Plan of Distribution.................. 94
Legal Matters......................... 95
Experts............................... 95
Index of Certain Defined Terms........ 96
Index to Unaudited Pro Forma
Consolidated Financial Statements... P-1
Index to Historical Financial
Statements.......................... F-1
</TABLE>
======================================================
======================================================
$70,000,000
AP HOLDINGS, INC.
----------------------------------
OFFER TO EXCHANGE
----------------------------------
11 1/4% NEW SENIOR DISCOUNT NOTES DUE 2008
, 1998
======================================================
<PAGE> 132
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102(b)(7) of the General Corporation Law of the State of Delaware
(the "DGCL"), provides that a corporation (in its original certificate of
incorporation or an amendment thereto) may eliminate or limit the personal
liability of a director (or certain persons who, pursuant to the provisions of
the certificate of incorporation, exercise or perform duties conferred or
imposed upon directors by the DGCL) to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provisions shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockbrokers,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL
(providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions) or (iv) for any transaction from which
the director derived an improper personal benefit. Article SEVENTH, paragraph
(a) of Holdings' Restated Certificate of Incorporation limits the liability of
directors thereof to the extent permitted by Section 102(b)(7) of the DGCL.
Under Section 145 of the DGCL, in general, a corporation may indemnify its
directors, officers, employees or agents against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties to which they may be made parties by reason of their being or
having been directors, officers, employees or agents and shall so indemnify such
persons if they acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interest of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful. Article SEVENTH, paragraph (b) of the Restated Certificate
of Incorporation of Holdings provides that Holdings shall indemnify its
officers, directors, employees and agents to the full extent permitted by
Delaware law.
Article SEVENTH, paragraph (b) of Holdings' Restated Certificate of
Incorporation also provides that Holdings shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the Board. Any rights to
indemnification conferred in paragraph (b) are contract rights, and include the
right to be paid by Holdings the expenses incurred in defending any such
proceeding in advance of its final disposition, except that, if the DGCL
requires, the payment of such expenses incurred by a director or officer in such
capacity in advance of final disposition shall be made only upon delivery to
Holdings of an undertaking by or on behalf of such director or officer, to repay
all amounts so advanced if it is ultimately determined that such director or
officer is not entitled to be indemnified under paragraph (b) or otherwise. By
action of the board of directors, Holdings may extend such indemnification to
employees and agents of Holdings.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<C> <S>
1.1 Purchase Agreement, by and among Holdings and Donaldson,
Lufkin & Jenrette Securities Corporation, dated as of March
25, 1998.
2.1 Combination Agreement, dated as of January 15, 1998, by and
between APCOA, Inc. and the Standard Owners.**
3.1 Restated Certificate of Incorporation of Holdings.*
3.2 By-Laws of Holdings.*
4.1 Indenture, dated as of March 30, 1998, by and among Holdings
and State Street Bank and Trust Company, with respect to the
New Notes.
4.2 Form of New Note (included as Exhibit A to Exhibit 4.1).
5.1 Opinion of Wachtell, Lipton, Rosen & Katz.*
</TABLE>
II-1
<PAGE> 133
<TABLE>
<C> <S>
10.1 Registration Rights Agreement, dated as of March 30, 1998, by and among Holdings and Donaldson, Lufkin &
Jenrette Securities Corporation.
10.2 Credit Agreement, dated as of March 30, 1998, by and among the Company, The First National Bank of
Chicago, as Agent and Lender, and the Other Financial Institutions party thereto.**
10.3 Stockholders Agreement, dated as of March 30, 1998, by and among Dosher Partners, L.P. and SP Associates
and Holberg, Holdings and the Company.**
10.4 Stockholders Agreement, dated as of April 14, 1989, by and among Holdings, Holberg, Delaware North and
each member of the management of the Company who is a stockholder of Holdings.**
10.5 Tax Sharing Agreement, dated as of April 28, 1989, as amended as of March 30, 1998, by and among Holberg,
Holdings and the Company.**
10.6 Employment Agreement between the Company and Myron C. Warshauer.**
10.7 Employment Agreement between the Company and G. Walter Stuelpe, Jr.**
10.8 Employment Agreement between the Company and James V. LaRocco, Jr.**
10.9 Employment Agreement between the Company and Trevor R. Van Horn.**
10.10 Employment Agreement between the Company and Herbert W. Anderson, Jr.**
10.11 Employment Agreement between the Company and Michael J. Celebrezze.**
10.12 Employment Agreement between the Company and Michael K. Wolf.**
10.13 Deferred Compensation Agreement between the Company and Michael K. Wolf.**
10.14 Company Retirement Plan For Key Executive Officers.**
10.15 Consulting Agreement between the Company and Sidney Warshauer.**
12.1 Statements re computation of ratios.
21.1 Subsidiaries of Holdings.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Altschuler, Melvoin and Glasser LLP.
23.3 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit 5.1).
24.1 Power of Attorney (see signature page).
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of State Street Bank and Trust Company
under the Trust Indenture Act of 1939.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal for the 11 1/4% New Senior Discount Notes due 2008.
99.2 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
99.3 Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* To be filed by amendment.
** Incorporated by reference to the Registration Statement on Form S-4 (File
No. 333- ) of APCOA, Inc. filed with the SEC on April 17, 1998.
(b) Financial Statement Schedule.
II-2
<PAGE> 134
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(c) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore unenforceable. In the
event that a claim for indemnification against such liabilities (other than
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 135
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio,
on April 17, 1998.
AP HOLDINGS, INC.
By /s/ G. WALTER STUELPE, JR.
------------------------------------
G. Walter Stuelpe, Jr.
Chief Executive Officer, President
and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert N. Sacks and Michael K. Wolf his
attorney-in-fact with power of substitution for him in any and all capacities,
to sign any amendments, supplements, subsequent registration statements relating
to the offering to which this Registration Statement relates, or other
instruments he deems necessary or appropriate, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact or his substitute may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated and on April 17, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ G. WALTER STUELPE, JR. Chief Executive Officer, President and
- ----------------------------------------------------- Director (Principal Executive Officer)
G. Walter Stuelpe, Jr.
/s/ MICHAEL J. CELEBREZZE Treasurer (Principal Financial and Accounting
- ----------------------------------------------------- Officer)
Michael J. Celebrezze
/s/ JOHN V. HOLTEN Chairman and Director
- -----------------------------------------------------
John V. Holten
/s/ GUNNAR E. KLINTBERG Assistant Secretary and Director
- -----------------------------------------------------
Gunnar E. Klintberg
</TABLE>
II-4
<PAGE> 136
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We have audited the consolidated financial statements of AP Holdings, Inc.
(the Company) as of December 31, 1996 and 1997, and for each of the three years
in the period ended December 31, 1997, and have issued our report thereon dated
February 3, 1998 (included elsewhere in this Registration Statement). Our audit
also included the financial statement schedule for each of the three years in
the period ended December 31, 1997, listed in Item 21(b) of this Registration
Statement. This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Cleveland, Ohio
February 3, 1998
II-5
<PAGE> 137
SCHEDULE II
AP HOLDINGS, INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
------------------------
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS(1) OF YEAR
----------- ------------ ------------ -------- ------------- -------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Deducted from asset accounts
Allowance for doubtful
accounts................... $ 369 $ 101 $ -- $ (68) $ 402
====== ====== ====== ====== ======
Year ended December 31, 1996:
Deducted from asset accounts
Allowance for doubtful
accounts................... $ 402 $ 7 $ -- $ (94) $ 315
====== ====== ====== ====== ======
Year ended December 31, 1997:
Deducted from asset accounts
Allowance for doubtful
accounts................... $ 315 $ 139 $ -- $ (11) $ 443
====== ====== ====== ====== ======
</TABLE>
- ---------------
(1) Represents uncollectible accounts written off, net of recoveries.
II-6
<PAGE> 138
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
1.1 Purchase Agreement, by and among Holdings and Donaldson,
Lufkin & Jenrette Securities Corporation, dated as of March
25, 1998.
2.1 Combination Agreement, dated as of January 15, 1998, by and
between APCOA, Inc. and the Standard Owners.**
3.1 Restated Certificate of Incorporation of Holdings.
3.2 By-Laws of Holdings.
4.1 Indenture, dated as of March 30, 1998, by and among Holdings
and State Street Bank and Trust Company, with respect to the
New Notes.
4.2 Form of New Note (included as Exhibit A to Exhibit 4.1).
5.1 Opinion of Wachtell, Lipton, Rosen & Katz.*
10.1 Registration Rights Agreement, dated as of March 30, 1998,
by and among Holdings and Donaldson, Lufkin & Jenrette
Securities Corporation.
10.2 Credit Agreement, dated as of March 30, 1998, by and among
the Company, The First National Bank of Chicago, as Agent
and Lender, and the Other Financial Institutions party
thereto.**
10.3 Stockholders Agreement, dated as of March 30, 1998, by and
among Dosher Partners, L.P. and SP Associates and Holberg,
Holdings and the Company.**
10.4 Stockholders Agreement, dated as of April 14, 1989, by and
among Holdings, Holberg, Delaware North and each member of
the management of the Company who is a stockholder of
Holdings.**
10.5 Tax Sharing Agreement, dated as of April 28, 1989, as
amended as of March 30, 1998, by and among Holberg, Holdings
and the Company.**
10.6 Employment Agreement between the Company and Myron C.
Warshauer.**
10.7 Employment Agreement between the Company and G. Walter
Stuelpe, Jr.**
10.8 Employment Agreement between the Company and James V.
LaRocco, Jr.**
10.9 Employment Agreement between the Company and Trevor R. Van
Horn.**
10.10 Employment Agreement between the Company and Herbert W.
Anderson, Jr.**
10.11 Employment Agreement between the Company and Michael J.
Celebrezze.**
10.12 Employment Agreement between the Company and Michael K.
Wolf.**
10.13 Deferred Compensation Agreement between the Company and
Michael K. Wolf.**
10.14 Company Retirement Plan For Key Executive Officers.**
10.15 Consulting Agreement between the Company and Sidney
Warshauer.**
12.1 Statements re computation of ratios.
21.1 Subsidiaries of Holdings.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Altschuler, Melvoin and Glasser LLP.
23.3 Consent of Wachtell, Lipton, Rosen & Katz (contained in
Exhibit 5.1).
24.1 Power of Attorney (see signature page).
25.1 Statement of Eligibility and Qualification of Trustee on
Form T-1 of State Street Bank and Trust Company under the
Trust Indenture Act of 1939.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal for the 11 1/4% New Senior
Discount Notes due 2008.
99.2 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
</TABLE>
<PAGE> 1
Exhibit 1.1
EXECUTION COPY
================================================================================
AP HOLDINGS, INC.
--------------------
$70,000,000
11 1/4% Senior Discount due 2008
--------------------
PURCHASE AGREEMENT
DATED AS OF MARCH 25, 1998
--------------------
Donaldson, Lufkin & Jenrette
Securities Corporation
================================================================================
<PAGE> 2
AP Holdings, Inc.
$70,000,000 Principal Amount of
11 1/4% Senior Discount Notes due 2008
PURCHASE AGREEMENT
March 25, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
AP Holdings, Inc., a Delaware corporation ("AP Holdings"), proposes
to issue and sell an aggregate of $70,000,000 in principal amount of 11 1/4%
Senior Discount Notes due 2008 (the "Senior Discount Notes") of the Company, to
Donaldson, Lufkin & Jenrette Securities Corporation (the "Initial Purchaser") to
be issued pursuant to an indenture (the "Indenture") between the Company and
State Street Bank and Trust Company, as trustee (the "Trustee"). The Senior
Discount Notes and the New Senior Discount Notes (as defined below) issuable in
exchange therefor are collectively referred to herein as the "Notes."
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Indenture.
The Senior Discount Notes are being issued and sold in connection
with the combination (the "Combination") of APCOA, Inc., a Delaware corporation
and a subsidiary of AP Holdings ("APCOA") pursuant to the terms and conditions
contained in a combination agreement (the "Combination Agreement"), pursuant to
which APCOA will acquire all of the outstanding capital stock, partnership and
other equity interests of Standard Parking Corporation, an Illinois corporation;
Standard Auto Park, Inc., an Illinois corporation; Standard Parking Corporation,
MW, an Illinois corporation; Standard Parking, L.P., a Delaware limited
partnership; Standard Parking Corporation, IL, an Illinois corporation; and
Standard/Wabash Parking Corporation, an Illinois corporation (all such interests
collectively, "Standard").
The net proceeds to AP Holdings from the sale to the Initial
Purchaser of the Senior Discount Notes (the "Proceeds") will be used by AP
Holdings to fund the Preferred Stock Contribution.
1. ISSUANCE OF SECURITIES. The Senior Discount Notes will be offered and sold to
the Initial Purchaser pursuant to an exemption from the registration
requirements under the Securities Act of 1933, as amended (the "Act"). AP
Holdings has prepared a preliminary offering memorandum, dated March 13, 1998
(the "Preliminary Offering Memorandum") and a
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<PAGE> 3
final offering memorandum, dated March 25, 1998 (the "Offering Memorandum" and,
together with the Preliminary Offering Memorandum, the "Offering Documents"),
relating to the Senior Discount Notes.
Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Act, the Senior
Discount Notes (and all securities issued in exchange therefor, in substitution
thereof or upon conversion thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1) (a) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL THAT SUCH
TRANSFER IS IN COMPLIANCE
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<PAGE> 4
WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN
THE CASE OF CLAUSE (b), (c), (d), or (e), BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to the terms
and conditions contained herein, AP Holdings agrees to issue and sell to the
Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, the principal amount of Senior Discount Notes set forth on Schedule I
hereto at a purchase price equal to 58.118% of the principal amount thereof (the
"Purchase Price").
3. TERMS OF OFFERING. The Initial Purchaser will make offers (the "Exempt
Resales") of the Senior Discount Notes purchased hereunder on the terms set
forth in the Offering Memorandum, as amended or supplemented, solely to persons
(each, a "144A Purchaser") whom the Initial Purchaser reasonably believes to be
"qualified institutional buyers" as defined in Rule 144A under the Act ("QIBs")
or persons otherwise exempt under Regulation S of the Securities Act (together
with QIBs, "Eligible Purchasers"). The Initial Purchaser will offer the Senior
Discount Notes to Eligible Purchasers initially at a price equal to 100% of the
principal amount thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Senior Discount
Notes will have the registration rights set forth in the registration rights
agreement (the "Registration Rights Agreement"), to be dated the Closing Date
(as defined below), in substantially the form of Exhibit A hereto, for so long
as such Senior Discount Notes constitute "Transfer Restricted Securities" (as
defined in the Registration Rights Agreement). Pursuant to the Registration
Rights Agreement, AP Holdings will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth
therein, (i) a registration statement under the Act (the "Exchange Offer
Registration Statement") relating to the AP Holdings' 11 1/4% new Senior
Discount Notes due 2008 (the "New Senior Discount Notes") to be offered in
exchange for the Senior Discount Notes, (such offer to exchange being referred
to as the "Registered Exchange Offer") and (ii) a shelf registration statement
pursuant to Rule 415 under the Act (the "Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, the "Registration
Statements") relating to the resale by certain holders of the Senior Discount
Notes, and to use its best efforts to cause such Registration Statements to be
declared effective and consummate the Registered Exchange Offer. This Agreement,
the Indenture, the Notes, and the
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Registration Rights Agreement are hereinafter referred to collectively as the
"Operative Documents."
4. DELIVERY AND PAYMENT. (a) Delivery of, and payment of the Purchase Price for,
the Senior Discount Notes shall be made at the offices of Wachtell, Lipton,
Rosen & Katz, 51 West 52nd Street, New York, New York or at such other location
as may be mutually acceptable. Such delivery and payment shall be made at 9:00
a.m. New York City time, on March 30, 1998 or at such other time as shall be
agreed upon by AP Holdings and the Initial Purchaser. The time and date of such
delivery and the payment are herein called the "Closing Date."
One or more Senior Discount Notes in definitive form, registered in
the name of Cede & Co., as nominee of the Depository Trust Company ("DTC"), or
such other names as the Initial Purchaser may request upon at least one business
day's notice to AP Holdings, having an aggregate principal amount corresponding
to the aggregate principal amount of Senior Discount Notes sold pursuant to
Exempt Resales to Eligible Purchasers (collectively, the "Master Notes"), shall
be delivered by AP Holdings to the Initial Purchaser (or as the Initial
Purchaser directs) in each case with any taxes thereon duly paid by APCOA,
against payment by the Initial Purchaser of the Purchase Price thereof by wire
transfer in same day funds to the order of AP Holdings or as AP Holdings may
direct. The Master Notes shall be made available to the Initial Purchaser for
inspection not later than 9:30 a.m., New York City time, on the business day
immediately preceding the Closing Date.
5. AGREEMENTS OF AP HOLDINGS. AP Holdings covenants and agrees with the Initial
Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested by
the Initial Purchaser, to confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending
the qualification or exemption from qualification of any of the Senior
Discount Notes for offering or sale in any jurisdiction designated by the
Initial Purchaser pursuant to Section 5(e) hereof, or the initiation of
any proceeding for such purpose by any state securities commission or
other regulatory authority and (ii) of the happening of any event that
makes any statement of a material fact made in the Offering Documents (or
any amendment or supplement thereto) untrue or that requires the making of
any additions to or changes in the Offering Documents (or any amendment or
supplement thereto) in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading. AP
Holdings shall use its best efforts to prevent the issuance of any stop
order or order suspending the qualification or exemption from
qualification of the Senior Discount Notes under any state securities or
Blue Sky laws, and, if at any time any state securities commission or
other regulatory authority shall issue any stop order or order suspending
the qualification or exemption from qualification of any of the Senior
Discount Notes under any state securities or Blue Sky laws, AP Holdings
shall use its best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
(b) To furnish the Initial Purchaser and those persons identified by
the Initial Purchaser to AP Holdings, without charge, as many copies of
the Offering Documents,
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<PAGE> 6
and any amendments or supplements thereto, as the Initial Purchaser may
reasonably request. AP Holdings consents to the use of the Offering
Documents, and any amendments or supplements thereto required pursuant
hereto, by the Initial Purchaser in connection with Exempt Resales.
(c) During such period as in the written opinion of counsel for the
Initial Purchaser an Offering Memorandum is required by law to be
delivered in connection with the Exempt Resales by the Initial Purchaser
and in connection with market-making activities of the Initial Purchaser
for so long as the Senior Discount Notes are outstanding (i) not to amend
or supplement the Offering Documents, whether before or after the Closing
Date, unless the Initial Purchaser shall previously have been advised
thereof, and all not have objected thereto within a reasonable time after
being furnished a copy thereof, and (ii) to promptly prepare, upon the
Initial Purchaser's reasonable request, any amendment or supplement to the
Offering Documents that the Initial Purchaser reasonably believes
necessary or advisable in connection with Exempt Resales or such
market-making activities.
(d) If, after the date hereof and prior to the earlier of the
completion of all Exempt Resales by the Initial Purchaser and the 90th day
after the Closing Date, any event shall occur as a result of which, in the
judgment of AP Holdings or counsel to the Initial Purchaser, it becomes
necessary to amend or supplement the Offering Memorandum in order to make
the statements therein, in the light of the circumstances when such
Offering Memorandum is delivered to an Eligible Purchasers, not misleading
or if it is necessary to amend or supplement the Offering Memorandum to
comply with any law, statute, rule or regulation, to forthwith prepare an
appropriate amendment or supplement to such Offering Memorandum so that
the statements therein, as so amended or supplemented, will not, in the
light of the circumstances when it is so delivered, be misleading, or so
that such Offering Memorandum will comply with applicable law.
(e) To cooperate with the Initial Purchaser and counsel to the
Initial Purchaser in connection with the registration or qualification of
the Senior Discount Notes under the state securities or Blue Sky laws of
such jurisdictions as the Initial Purchaser may request, to continue such
registration or qualification in effect so long as required for the Exempt
Resales and to file such consents to service of process or other documents
as may be necessary in order to effect such registration or qualification;
provided, however, that AP Holdings shall not be required in connection
therewith to register or qualify as a foreign corporation in any
jurisdiction in which AP Holdings is not now so qualified, or take any
action that would subject AP Holdings to general consent to service of
process or taxation, other than as to matters and transactions relating to
Exempt Resales, in any jurisdiction in which AP Holdings is not now so
subject.
(f) For so long as the Notes are outstanding, to furnish without
charge to the Initial Purchaser promptly upon their becoming available (i)
all reports or other publicly available information that AP Holdings shall
mail or otherwise make available to AP Holdings' stockholders and (ii) all
reports, financial statements and proxy or information statements filed by
AP Holdings or its subsidiaries with the Commission or any national
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<PAGE> 7
securities exchange and such other publicly available information
concerning the business and financial condition of AP Holdings or its
subsidiaries, including without limitation, press releases, as the Initial
Purchaser may reasonably request.
(g) To use the net proceeds from the sale of the Senior Discount
Notes in the manner described in the Offering Memorandum (and any
amendments or supplements thereto) under the caption "Use of Proceeds."
(h) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(i) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated to
pay and be responsible for all costs, expenses, fees and taxes in
connection with or incident to:
(1) the preparation, printing, processing, duplicating, filing and
distribution of the Offering Documents (including, without limitation,
financial statements and exhibits) and all amendments and supplements
thereto;
(2) the preparation, printing and delivery of the Operative Documents, the
preliminary and final Blue Sky memoranda and all other agreements,
memoranda, correspondence and other documents printed, distributed and
delivered in connection herewith and with the Exempt Resales (including in
each case any disbursements of counsel to the Initial Purchaser relating
to such printing and delivery);
(3) the issuance, transfer and delivery by AP Holdings of the Senior Discount
Notes to the Initial Purchaser;
(4) the registration or qualification of the Notes for offer and sale under
the securities or Blue Sky laws of the jurisdictions referred to in
Section 5(e) (including, in each case, the fees and disbursements of
counsel to the Initial Purchaser relating to such registration or
qualification and memoranda relating thereto);
(5) furnishing such copies of the Preliminary Offering Memorandum and the
Offering Memorandum, and all amendments and supplements thereto, as may be
requested for use in connection with the Exempt Resales;
(6) the preparation of certificates for the Notes (including, without
limitation, printing and engraving thereof);
(7) the rating of the Notes by investment rating agencies;
(8) the fees, disbursements and expenses of AP Holdings' and counsel and
accountants;
(9) all expenses and listing fees in connection with the application for
quotation of the Senior Discount Notes in the National Association of
Securities Dealers, Inc. ("NASD") Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL");
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<PAGE> 8
(10) the fees and expenses of the Trustee and the Trustee's counsel in
connection with the Indenture and the Notes;
(11) all fees and expenses (including fees and expenses of counsel to AP
Holdings) of AP Holdings in connection with approval of the Notes by DTC
for "book-entry" transfer; and
(12) the performance by AP Holdings of its other obligations under this
Agreement and the other Operative Documents.
(j) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than a default by the Initial Purchaser) or if
for any reason AP Holdings shall be unable or unwilling to perform its
obligations hereunder, AP Holdings shall, except as otherwise agreed by
the parties hereto, reimburse the Initial Purchaser for the fees and
expenses to be paid or reimbursed pursuant to Section 5(i) above, and
reimburse the Initial Purchaser for all out-of-pocket expenses (including
the fees and expenses of counsel to the Initial Purchaser) reasonably
incurred by the Initial Purchaser in connection with the transactions
contemplated by this Agreement.
(k) Prior to the consummation of the Exchange Offer, to furnish to
the Initial Purchaser, as soon as they have been prepared by AP Holdings,
a copy of any consolidated financial statements of AP Holdings for any
period subsequent to the period covered by the financial statements
appearing in the Offering Memorandum.
(l) Not to distribute prior to the Closing Date any offering
material in connection with the offering and sale of the Senior Discount
Notes other than the Offering Memorandum.
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Senior Discount Notes in a
manner that would require the registration under the Act of the sale to
the Initial Purchaser or the Eligible Purchasers of the Senior Discount
Notes.
(n) For so long as any of the Notes remain outstanding and during
any period in which AP Holdings is not subject to Section 13 or 15(d) of
the Exchange Act, to make available to any holder of Notes in connection
with any sale thereof and any prospective purchaser of such Notes from
such holder, the information ("Rule 144A Information") required by Rule
144A(d)(4) under the Act.
(o) To comply with all of their agreements set forth in the
Registration Rights Agreement, and all agreements set forth in the
representation letters of AP Holdings to DTC relating to the approval of
the Notes by DTC for "book-entry" transfer.
(p) To cause the Exchange Offer to be made in the appropriate form
to permit registered New Senior Discount Notes to be offered in exchange
for the Senior Discount Notes and to comply with all applicable federal
and state securities laws in connection with the Registered Exchange
Offer.
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<PAGE> 9
(q) To use their respective best efforts to cause the Notes to be
eligible for trading through PORTAL and to obtain approval of the Notes by
DTC for "book-entry" transfer.
6. REPRESENTATIONS AND WARRANTIES. AP Holdings represents and warrants to the
Initial Purchaser that:
(a) The Offering Documents have been prepared in connection with the
Exempt Resales. The Preliminary Offering Memorandum and the Offering
Memorandum do not and any supplement or amendment thereto will not,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
contained in this paragraph (a) shall not apply to statements in or
omissions from the Offering Documents (or any amendment or supplement
thereto) made in reliance upon information relating to the Initial
Purchaser furnished to AP Holdings in writing by the Initial Purchaser
expressly for use therein. AP Holdings acknowledges for all purposes under
this Agreement that the statements set forth in the last paragraph on the
cover page, the legend on the bottom of the inside cover page and in the
first and second sentences of the third paragraph, the first sentence of
the fourth paragraph, the fourth sentence of the sixth paragraph, the
first sentence of the seventh paragraph and the eighth and ninth
paragraphs under the caption "Plan of Distribution" in the Offering
Memorandum constitute the only written information finished to AP Holdings
by the Initial Purchaser expressly for use in the Offering Documents (or
any amendment or supplement thereto). No stop order preventing the use of
the Offering Documents, or any amendment or supplement thereto, or any
order asserting that any of the transactions contemplated by this
Agreement are subject to the registration requirements of the Act, has
been issued.
(b) Each of AP Holdings and APCOA (i) has been, and after giving
effect to the Combination pursuant to the terms of the Combination
Agreement will be, duly organized and validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) has,
and after giving effect to the Combination pursuant to the terms of the
Combination Agreement will have, all requisite corporate power and
authority to carry on its business as described in the Offering Memorandum
and to own, lease and operate its properties, and (iii) is, and after
giving effect to the Combination pursuant to the terms of the Combination
Agreement will be, duly qualified and in good standing as a foreign
corporation authorized to do business in each other jurisdiction in which
the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect. As used herein, "Material
Adverse Effect" shall mean, with respect to any Person, any effect or
group of related or unrelated effects that (i) would be reasonably
expected to result in a material adverse effect on the assets, properties,
business, results of operations, condition (financial or otherwise) or
prospects of AP Holdings and APCOA, taken as a whole or (ii) would
reasonably be expected to interfere with, adversely affect or question the
validity of the execution, delivery and performance of any of the
Operative Documents, the issuance of the Notes or the consummation of this
Agreement.
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<PAGE> 10
(c) All of the issued and outstanding shares of capital stock,
partnership interests or other interests of AP Holdings and APCOA have
been duly and validly authorized and issued, and all of the capital stock,
partnership interests or other interests of each such subsidiary are
owned, directly or indirectly, by AP Holdings. All such shares of capital
stock, partnership interests or other interests are fully paid and
non-assessable and have not been issued in violation of any preemptive or
similar rights and are owned free and clear of any security interest,
mortgage, pledge, claim, lien, limitation on voting rights or encumbrance
(each, a "Lien"), except for Liens granted pursuant to the New Credit
Facility and except for limitations on voting rights with respect to
shares of Atrium Parking, Inc. held by APCOA. Except as disclosed in the
Offering Memorandum, there are not currently, and will not be as a result
of the Offering or the consummation of the Combination pursuant to the
terms of the Combination Agreement, any outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or
Liens related to or entitling any person to purchase or otherwise to
acquire any shares of the capital stock of, or other securities evidencing
equity ownership interests in, AP Holdings or APCOA.
(d) AP Holdings has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Operative Documents
to which it is a party, and to consummate the transactions contemplated
hereby and thereby, including, without limitation, the corporate power and
authority to issue, sell and deliver the Senior Discount Notes to the
Initial Purchaser.
(e) Neither AP Holdings nor APCOA is, and after giving effect to the
Offering and the Combination pursuant to the terms of the Combination
Agreement will be, (i) in violation of its charter, bylaws or other
organizational documents, (ii) in default in the performance of any
obligation, agreement or condition contained in any bond, debenture, note
or any other evidence of indebtedness or in any other agreement, indenture
or instrument, in each case, which is material to the conduct of the
business of AP Holdings, to which AP Holdings is a party or by which it or
their respective property is bound, except as disclosed in the Offering
Documents, or (iii) in violation of any local, state or federal law,
statute, ordinance, rule, regulation, requirement, judgment or court
decree (including, without limitation, environmental laws, statutes,
ordinances, rules, regulations, judgments or court decrees) applicable to
AP Holdings or any of its assets or properties (whether owned or leased),
other than violations or defaults that would not reasonably be expected to
have a Material Adverse Effect. To the best knowledge of AP Holdings,
there exists no condition that, with notice, the passage of time or
otherwise, would constitute a default under any such document or
instrument, except for such defaults that could not reasonably be expected
to have a Material Adverse Effect.
(f) None of (i) the execution, delivery or performance by AP
Holdings of this Agreement and the other Operative Documents, (ii) the
performance by APCOA of the Combination Agreement and consummation of the
Combination pursuant to the terms of the Combination Agreement, (iii) the
issuance and sale of the Notes by AP Holdings and (iv) the consummation by
AP Holdings or APCOA of the transactions described in the Offering
Memorandum under the caption "Use of Proceeds," will conflict with or
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<PAGE> 11
constitute a breach of any of the terms or provisions of, or, after giving
effect to the Combination pursuant to the terms of the Combination
Agreement, will violate, conflict with or constitute a breach of any of
the terms or provisions of, or a default under, or result in the
imposition of a lien or encumbrance on any properties of AP Holdings, as
the case may be, or an acceleration of indebtedness pursuant to, (1) the
respective charter, bylaws or other organizational documents of AP
Holdings, (2) any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which AP Holdings, is a party or
by which any of its property is bound, or (3) any law or administrative
regulation applicable to AP Holdings, or any of its assets or properties,
or any judgment, order or decree of any court or governmental agency or
authority entered in any proceeding to which AP Holdings was or is now a
party or to which any of their respective properties may be subject. No
consent, approval, authorization or order of, or filing or registration
with, any regulatory body, administrative agency, or other governmental
agency (except as securities or Blue Sky laws of the various states may
require) is required for the execution, delivery and performance of the
Operative Documents and the valid issuance and sale of the Securities. No
consents or waivers from any person are required to consummate the
transactions contemplated by the Operative Documents or the Offering
Documents, other than such consents and waivers as have been or will be
obtained prior to the Closing Date or, in the case of the Registration
Rights Agreement and the transactions contemplated thereby, will be
obtained and made under the Act, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act") and state securities or Blue Sky laws
and regulations.
(g) This Agreement has been duly authorized and, when validly
executed by AP Holdings and (assuming the due execution and delivery
thereof by the Initial Purchaser) is a legally valid and binding
obligation of AP Holdings, enforceable against AP Holdings in accordance
with its terms, except as the enforceability thereof may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws in effect which affect the enforcement of creditors' rights
generally, (ii) limited by general principles of equity (whether
considered in a proceeding at law or in equity), and (iii) limited by
securities laws prohibiting or limiting the availability of, and public
policy against, indemnification or contribution.
(h) AP Holdings has duly authorized the Indenture, and when AP
Holdings has duly executed and delivered the Indenture (assuming the due
authorization, execution and delivery thereof by the Trustee), the
Indenture will be the legally valid and binding obligation of each,
enforceable against each in accordance with its terms, except as the
enforceability thereof may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect which
affect the enforcement of creditors' rights generally, and (ii) limited by
general principles of equity (whether considered in a proceeding at law or
in equity).
(i) AP Holdings has duly authorized the Senior Discount Notes and,
when issued and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Initial Purchaser in
accordance with the terms hereof, will be the legally valid and binding
obligations of AP Holdings, enforceable against AP Holdings in
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<PAGE> 12
accordance with their terms, except as the enforceability thereof may be
(i) subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors' rights generally, and (ii) limited by general principles of
equity (whether considered in a proceeding at law or in equity).
(j) AP Holdings has duly authorized the New Senior Discount Notes
and, when issued and authenticated in accordance with the terms of the
Registered Exchange Offer and the Indenture, the New Senior Discount Notes
will be the legally valid and binding obligations of AP Holdings,
enforceable against AP Holdings in accordance with their terms, except as
the enforceability thereof may be (i) subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect which
affect the enforcement of creditors' rights generally and (ii) limited by
general principles of equity (whether considered in a proceeding at law or
in equity).
(k) The Registration Rights Agreement has been duly authorized and
when validly executed by AP Holdings will be (assuming the due execution
and delivery thereof by the Initial Purchaser) the legally valid and
binding obligation of each, enforceable against each in accordance with
their terms, except as the enforceability thereof may be (i) subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws in effect which affect the enforcement of creditors' rights generally
and (ii) limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(l) There is, and after giving effect to the Combination pursuant to
the terms of the Combination Agreement will be, (i) no action, suit,
proceeding or investigation before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign, now pending,
threatened, or, to the knowledge of AP Holdings, contemplated to which AP
Holdings is or may be a party or to which the business or property of AP
Holdings is or, after giving effect to the Combination pursuant to the
terms of the Combination Agreement, may be subject, (ii) no statute, rule,
regulation or order that has been enacted, adopted or issued by any
governmental agency or, to the best knowledge of AP Holdings, proposed by
any governmental body or (iii) no injunction, restraining order or order
of any nature issued by a federal or state court of competent jurisdiction
to which AP Holdings is or may be subject that, in the case of clauses
(i), (ii) and (iii) above, (1) is required to be disclosed in the Offering
Memorandum and that is not so disclosed, (2) could reasonably be expected
to have a Material Adverse Effect or (3) would interfere with or adversely
affect the issuance of the Senior Discount Notes.
(m) There are no holders of any security of AP Holdings who by
reason of the execution by AP Holdings of this Agreement or any other
Operative Document or the consummation of the transactions contemplated
hereby and thereby, have the right to request or demand that AP Holdings
register under the Act, or analogous foreign laws and regulations,
securities held by them.
(n) AP Holdings has delivered to the Initial Purchaser true and
correct executed copies of the Combination Agreement and all documents and
agreements related thereto
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and there have been no amendments, alterations, modifications or waivers
thereto or in the exhibits or schedules thereto, except as have been
delivered to the Initial Purchaser.
(o) AP Holdings is not, and after giving effect to the Combination
pursuant to the terms of the Combination Agreement will not be, involved
in any material labor dispute nor, to the knowledge of AP Holdings, is any
material dispute threatened which, if such dispute were to occur, could
have a Material Adverse Effect.
(p) AP Holdings has not violated any safety or similar law
applicable to its business, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or the rules and regulations promulgated thereunder, except for such
instances of noncompliance that, either singly or in the aggregate, could
not have a Material Adverse Effect.
(q) AP Holdings is, and after giving effect to the Combination
pursuant to the terms of the Combination Agreement will be, in compliance
with all applicable existing federal, state, local and foreign laws and
regulations (collectively, "Environmental Laws") relating to the
protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material (as defined below),
except for such instances of noncompliance that, either singly or in the
aggregate, could not have a Material Adverse Effect. The term "Hazardous
Material" means (i) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (iii) any petroleum or
petroleum product, (iv) any polychlorinated biphenyl and (v) any pollutant
or contaminant or hazardous, dangerous or toxic chemical, material, waste
or substance regulated under or within the meaning of any other
Environmental Law. Except as set forth in the Offering Memorandum, there
is no alleged liability, or, to the best knowledge and information of AP
Holdings, potential liability (including, without limitation, alleged or
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resource damages, property damages, personal
injuries, or penalties) of AP Holdings arising out of, based on, or
resulting from (1) the presence or release into the environment of any
Hazardous Material at any location currently or previously owned by AP
Holdings or at any location currently or previously used or leased by AP
Holdings, or (2) any violation or alleged violation of any Environmental
Law, except in each case with respect to clause (1) and (2), alleged or
potential liabilities that, singly or in the aggregate, could not have a
Material Adverse Effect.
(r) AP Holdings and APCOA have and, after giving effect to the
Combination pursuant to the terms of the Combination Agreement, will have,
such permits, licenses, franchises and authorizations of governmental or
regulatory authorities ("permits"), including, without limitation, under
any applicable Environmental Laws, as are necessary or will be necessary,
to own, lease and operate their respective properties and to conduct their
respective businesses in the manner described in the Offering Memorandum,
except
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<PAGE> 14
for those permits the absence of which could not reasonably be expected to
have a Material Adverse Effect; AP Holdings and, after giving effect to
the Combination pursuant to the terms of the Combination Agreement, will
have, fulfilled and performed all of its obligations with respect to such
permits, except for such obligations the failure of which to be fulfilled
or performed could not reasonably be expected to have a Material Adverse
Effect and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any such permit,
except for such event, that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect; and, except as
described in the Offering Memorandum, such permits contain no restrictions
that are or will be materially burdensome to AP Holdings.
(s) AP Holdings and APCOA own or possess free and clear of all Liens
or has the right to use free and clear of any rights of third parties that
adversely affect such use by AP Holdings APCOA and, after giving effect to
the Combination pursuant to the terms of the Combination Agreement, will
own or possess free and clear of all Liens or have the right to use free
and clear of any rights of third parties that adversely affect such use by
AP Holdings and APCOA, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively,
"Intellectual Property") presently employed by either of them or which are
proposed to be employed by either of them in connection with the
businesses now operated by either of them or which are proposed to be
operated by them, except where the failure to own or possess such
Intellectual Property could not, either singly or in the aggregate, have a
Material Adverse Effect. The use of such Intellectual Property in
connection with the business and operations of AP Holdings and APCOA does
not to AP Holdings' knowledge, infringe on the rights or claimed rights of
any person. No other person is, to AP Holdings' knowledge, infringing upon
any of the Intellectual Property of AP Holdings or has notified AP
Holdings or any of its Subsidiaries that it is claiming ownership of, or
the right to use any Intellectual Property owned by AP Holdings or APCOA.
AP Holdings and APCOA have taken all reasonable steps to protect the
Intellectual Property from infringement by any other person, except where
the failure to take such steps would not, individually or in the
aggregate, have a Material Adverse Effect on AP Holdings. Other than in
connection with the use of so-called "off-the-shelf" software and except
as otherwise disclosed in the Offering Memorandum, neither AP Holdings nor
APCOA is obligated or under any liability whatsoever to make any payment
in excess of $150,000 per fiscal year, in the aggregate, by way of
royalties, fees or otherwise to any persons with respect to the use of the
Intellectual Property. Neither AP Holdings nor APCOA has received (i) any
notice of infringement of or conflict with assessed rights of others with
respect to any Intellectual Property or (ii) any notice of an action or
proceeding seeking to limit, cancel or question the validity of any
Intellectual Property, which singly or in the aggregate, if the subject of
any unfavorable decision, ruling or finding, might have a Material Adverse
Effect on AP Holdings.
(t) All federal and state tax returns required to be filed by AP
Holdings or APCOA in any jurisdiction have been filed, and all material
taxes (including, without
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<PAGE> 15
limitation, withholding taxes, penalties and interest, assessments, fees
and other charges due or claimed to be due from any taxing authority) have
been paid other than those being contested in good faith and for which
adequate reserves have been provided. To the knowledge of AP Holdings,
there are, and after giving effect to the Combination pursuant to the
terms of the Combination Agreement will be, no material proposed
additional tax assessments against AP Holdings, APCOA or the assets or
property of AP Holdings or APCOA.
(u) AP Holdings and APCOA have and, after giving effect to the
Combination pursuant to the terms of the Combination Agreement, will have
all certificates, consents, exemptions, orders, permits, franchises,
licenses, authorizations, or other approvals (each, an "Authorization")
of and from, and has made all declarations and filings with and notices
to, all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals,
necessary or required to own, lease, license, operate and use their
respective properties and assets and to conduct their business in the
manner described in the Offering Memorandum except for such Authorizations
the absence of which could not reasonably be expected to have a Material
Adverse Effect on AP Holdings and except with respect to any parking
facility contracts with governmental entities; all such Authorizations are
and, after giving effect to the Combination pursuant to the terms of the
Combination Agreement, will be valid and in full force and effect; AP
Holdings and APCOA are in compliance with the terms and conditions of all
such Authorizations and with the rules and regulations of the regulatory
authorities and governing bodies having jurisdiction with respect thereto;
and neither AP Holdings nor APCOA has received any notice, or has any
knowledge or belief (or any basis therefor), that any governmental body or
agency is considering limiting, suspending or revoking any such
Authorization.
(v) Except as set forth in the Offering Memorandum and except as
could not reasonably be expected to have a Material Adverse Effect on AP
Holdings, (i) AP Holdings and APCOA have and, after giving effect to the
Combination pursuant to the terms of the Combination Agreement, will have
good and marketable title, free and clear of all Liens except Liens for
taxes not yet due and payable and Liens granted pursuant to and permitted
by the New Credit Facility, to all material property and assets described
in the Offering Memorandum as being owned by each of them. Except for
leases of parking facilities, all leases to which AP Holdings or APCOA is
a party are and, after giving effect to the Combination pursuant to the
terms of the Combination Agreement, will be legally valid and binding and,
to the best of AP Holdings' knowledge, no default has occurred or is
continuing thereunder which could reasonably be expected to have a
Material Adverse Effect on AP Holdings, and AP Holdings and APCOA enjoy
peaceful and undisturbed possession under all such leases to which AP
Holdings and APCOA are a party as lessee with such exceptions as do not
materially interfere with the use currently made by AP Holdings or APCOA,
as the case may be.
(w) AP Holdings maintains and, after giving effect to the
Combination pursuant to the terms of the Combination Agreement, will
endeavor to maintain adequate insurance customary for the parking
facilities management industry for its business and
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<PAGE> 16
the value of its properties (including, without limitation, public
liability insurance, third party property damage insurance and replacement
value insurance), and, to the best of AP Holdings' knowledge, all such
insurance is outstanding and in force as of the date hereof.
(x) The financial statements, together with related notes forming
part of the Offering Documents (and any amendment or supplement thereto),
present fairly the consolidated financial position, results of operations
and changes in financial position of AP Holdings on the basis stated in
the Offering Documents at the respective dates or for the respective
periods to which they apply, and such financial statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein and the other financial and
statistical information and data set forth in the Offering Documents (and
any amendment or supplement thereto) is, in all material respects,
accurately presented and prepared on a basis consistent with such
financial statements and the books and records of AP Holdings. The pro
forma financial data are, in all material respects, accurately presented
and prepared in good faith on the basis of the assumptions described
therein, and such assumptions are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(y) AP Holdings maintains and, after giving effect to the
Combination pursuant to the terms of the Combination Agreement, will
maintain a system of internal accounting controls sufficient to provide
assurance that: (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; and (iii) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto.
(aa) Subsequent to the dates for which information is given in the
Offering Documents and up to the Closing Date, unless set forth in the
Offering Memorandum or AP Holdings has notified the Initial Purchaser: (i)
AP Holdings has not incurred any liabilities or obligations, direct or
contingent, which are or, after giving effect to the Combination pursuant
to the terms of the Combination Agreement, could reasonably be expected to
have a Material Adverse Effect on AP Holdings, nor has either entered into
any material transactions not in the ordinary course of business; (ii)
there has not been any decrease in AP Holdings' capital stock or any
increase in long-term indebtedness to meet working capital requirements or
any material increase in short-term indebtedness of AP Holdings or any
payment of or declaration to pay any dividends or any other distribution
with respect to AP Holdings' capital stock; and (iii) there has not been
any event or series of events that could reasonably be expected to have a
Material Adverse Effect.
(ab) Prior to and immediately after the issuance of the Senior
Discount Notes and, after giving effect to the Combination pursuant to the
terms of the Combination Agreement, (i) the present fair saleable value of
the assets of AP Holdings and its subsidiaries exceeded and will exceed
the amount that will be required to be paid on, or
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<PAGE> 17
in respect of, the debts and other liabilities (including contingent
liabilities) of AP Holdings and its subsidiaries as they become absolute
and matured, (ii) the assets of AP Holdings and its subsidiaries do not
constitute and will not constitute unreasonably small capital to carry out
their businesses as conducted or as proposed to be conducted, and (iii) AP
Holdings and its Subsidiaries do not intend to, or believe that it will,
incur debts or other liabilities beyond its ability to pay such debts and
liabilities as they mature. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount that, in light of all the facts and circumstances
existing at such time, represents the amount than can reasonably be
expected to become an actual or matured liability.
(ac) Except as would not otherwise be unlawful, AP Holdings has not
(i) taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of any
security of AP Holdings to facilitate the sale or resale of the Notes or
(ii) since the date of the Preliminary Offering Memorandum (A) sold, bid
for, purchased, or paid anyone other than the Initial Purchaser any
compensation for soliciting purchases of, the Senior Discount Notes or (B)
paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of AP Holdings.
(ad) Neither AP Holdings nor any of its subsidiaries nor any agent
thereof acting on the behalf of them, has taken or will take any action
that might cause this Agreement or the issuance or sale of the Notes to
violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part
220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part
224) of the Board of Governors of the Federal Reserve System, in each case
as in effect now or as the same may hereafter be in effect on the Closing
Date.
(ae) Neither AP Holdings nor any of its subsidiaries is or, after
giving effect to the Combination pursuant to the terms of the Combination
Agreement, will be an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act of
1940, as amended.
(af) The accountants, Ernst & Young LLP and Altschuler, Melvoin and
Glasser, LLP, that have certified the financial statements and supporting
schedules included in the Offering Memorandum are independent public
accountants, as required by the Act and the Exchange Act. The historical
financial statements, together with related schedules and notes, set forth
in the Offering Memorandum comply as to form in all material respects with
the requirements applicable to registration statements on Form S-1 under
the Act.
(ag) When the Senior Discount Notes are issued and delivered
pursuant to this Agreement, such Senior Discount Notes will not be of the
same class (within the meaning of Rule 144A under the Act) as securities
of AP Holdings that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that are quoted in a
United States automated inter-dealer quotation system.
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(ah) Assuming (i) that the representations and warranties of the
Initial Purchaser in Section 7 hereof are true, (ii) that the Initial
Purchaser complied with their covenants as set forth in Section 7 hereof,
(iii) that none of the Eligible Purchasers is an affiliate of AP Holdings
and (iv) that each of the Eligible Purchasers is a QIB or is purchasing
the Senior Discount Notes pursuant to the exemption provided for under
Regulation S, the purchase and resale of the Senior Discount Notes
pursuant hereto (including pursuant to be Exempt Resales) is exempt from
the registration requirements of the Act. No form of general solicitation
or general advertising was used by AP Holdings or any of its
representatives (other than the Initial Purchaser, as to whom AP Holdings
makes no representation) in connection with the offer and sale of the
Senior Discount Notes, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Senior Discount Notes
have been issued and sold by AP Holdings within the six-month period
immediately prior to the date hereof.
(ai) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Securities to be purchased by the
Eligible Purchasers will not involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code with respect
to any employee benefit plan of AP Holdings. The representation made by AP
Holdings in the preceding sentence is made in reliance upon and subject to
the accuracy of, and compliance with, the representations and covenants
made or deemed made by the Eligible Purchasers as set forth in the
Offering Documents under the Section entitled "Notice to Investors."
(aj) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date contains, and as of the Closing Date will
contain, all the information specified in, and meeting the requirements
of, Rule 144A(d)(4) under the Act.
(ak) None of AP Holdings, its subsidiaries or any of its or their
affiliates or any person acting on its or their behalf has engaged or will
engage in any directed selling efforts within the meaning of Regulation S
with respect to the Senior Discount Notes, and AP Holdings, its
subsidiaries and its or their affiliates and all persons acting on its or
their behalf have complied or will comply with the offering restrictions
requirements of Regulation S in connection with the offering of the Senior
Discount Notes outside the United States.
(al) There is no "substantial U.S. market interest" as defined in
rule 902(n) of Regulation S for the Senior Discount Notes or any security
of the same class as the Senior Discount Notes.
(am) The sale of the Senior Discount Notes in offshore transactions
pursuant to Regulation S is not part of a plan or scheme to evade the
registration provisions of the Act.
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7. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE INITIAL PURCHASER.
The Initial Purchaser represents and warrants to AP Holdings as follows:
(a) The Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Senior Discount
Notes.
(b) The Initial Purchaser (i) is not acquiring the Senior Discount
Notes with a view to any distribution thereof that would violate the Act
or the securities laws of any state of the United States or any other
applicable jurisdiction and (ii) will be reoffering and reselling the
Senior Discount Notes only to QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and to persons
outside the United States in reliance on the exemption from the
registration requirements of the Act provided by Regulation S.
(c) No form of general solicitation or general advertising (within
the meaning of Regulation D under the Act) has been or will be used by the
Initial Purchaser or any of its representatives in connection with the
offer and sale of any of the Senior Discount Notes, including, but not
limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(d) The Initial Purchaser agrees that, in connection with the Exempt
Resales, it will solicit offers to buy the Senior Discount Notes only
from, and will offer to sell the Senior Discount Notes only to, Eligible
Purchasers. The Initial Purchaser further agrees that it will offer to
sell the Senior Discount Notes only to, and will solicit offers to buy the
Senior Discount Notes only from, persons who in purchasing such Senior
Discount Notes will be deemed to have represented and agreed (i) if such
Eligible Purchasers are QIBs, that they are purchasing the Senior Discount
Notes for their own account or accounts with respect to which they
exercise sole investment discretion and that they or such accounts are
QIBs, (ii) that such Senior Discount Notes will not have been registered
under the Act and may be resold, pledged or otherwise transferred, only
(1) (a) inside the United States to a person who the seller reasonably
believes is a "qualified institutional buyer" within the meaning of Rule
144A under the Act in a transaction meeting the requirements of Rule 144A,
(b) in a transaction meeting the requirements of Rule 144 under the Act,
(c) outside the United States to a foreign person in a transaction meeting
the requirements of Rule 904 under the Act or (d) in accordance with
another exemption from the registration requirements of the Act (and based
in the case of clauses (b) and (c) above upon an opinion of counsel if AP
Holdings so requests), (2) to AP Holdings or (3) pursuant to an effective
registration statement under the Act, in each case, in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction, and (iii) that the holder will, and each
subsequent holder is required to, notify any purchaser from it of the
security evidenced thereby of the resale restrictions set forth in (ii)
above. Accordingly, the Initial Purchaser represents and
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<PAGE> 20
agrees that neither it, its affiliates nor any persons acting on its or
their behalf has engaged or will engage in any directed selling efforts
within the meaning of Rule 901(b) of Regulation S with respect to the
Senior Discount Notes, and it, or its affiliates and all persons acting on
its or their behalf have complied and will comply with the offering
restrictions requirements of Regulation S.
(e) The Initial Purchaser represents and agrees that the Senior
Discount Notes offered and sold in reliance on Regulation S have been and
will be offered and sold only in offshore transactions and that such
securities have been and will be represented upon issuance by a global
security that may not be exchanged for definitive securities until the
expiration of the Restricted Period and only upon certification of
beneficial ownership of the securities by a non-U.S. person or a U.S.
person who purchased such securities in a transaction that was exempt from
the registration requirements of the Act, which U.S. person will acquire
an interest in a Transfer Restricted Security.
(f) Such Initial Purchaser agrees that, at or prior to confirmation
of a sale of Senior Discount Notes (other than a sale pursuant to Rule
144A), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases the Senior
Discount Notes from it during the Restricted Period a confirmation or
notice to substantially the following effect:
"The Senior Discount Notes covered hereby have not been
registered under the U.S. Securities Act of l933, as amended
(the "Securities Act") and may not be offered and sold within
the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date, except in
either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have the
same meanings assigned to them in Regulation S."
(g) The Initial Purchaser agrees not to cause any advertisement of
the Senior Discount Notes to be published in any newspaper or periodical
or posted in any public place and not to issue any circular relating to
the Senior Discount Notes, except such advertisements as include the
statements required by Regulation S.
(h) The sale of the Senior Discount Notes in offshore transactions
pursuant to Regulation S is not part of a plan or scheme to evade the
registration provisions of the Act.
(i) The Initial Purchaser is not a pension or welfare plan (as
defined in Section 3 of ERISA) and is not acquiring the Senior Discount
Notes on behalf of a pension or welfare plan.
(j) Prior to consummating the Eligible Resales, the Initial
Purchaser shall have delivered a copy of the Offering Memorandum and any
supplements or amendments thereto to each Eligible Purchasers.
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<PAGE> 21
(k) The Initial Purchaser also understands that AP Holdings and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant
to Sections 9(d) and (e) hereof, counsel to AP Holdings and counsel to the
Initial Purchaser will rely upon the accuracy and truth of the foregoing
representations and the Initial Purchaser hereby consents to such
reliance.
8. INDEMNIFICATION.
(a) AP Holdings agrees to indemnify and hold harmless (i) the
Initial Purchaser, its directors, its officers and each person, if any,
who controls the Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses reasonably incurred in connection
with investigating or defending any matter, including any action, that
could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum (or any amendment or
supplement thereto), the Preliminary Offering Memorandum or any Rule 144A
Information provided by AP Holdings to any holder or prospective purchaser
of Senior Discount Notes pursuant to Section 5(n) or caused by any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the
light of the circumstances under which they were made) not misleading,
except insofar as such losses, claims, damages, liabilities or judgments
are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to the Initial
Purchaser furnished in writing to AP Holdings by the Initial Purchaser;
provided, however, that the foregoing indemnity agreement with respect to
any Preliminary Offering Memorandum shall not inure to the benefit of the
Initial Purchaser who failed to deliver a Final Offering Memorandum (as
then amended or supplemented, provided by AP Holdings to the Initial
Purchaser in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the Closing Date) to the person asserting any
losses, claims, damages and liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Memorandum, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such material
misstatement or omission or alleged material misstatement or omission was
cured in the Final Offering Memorandum.
(b) The Initial Purchaser agrees to indemnify and hold harmless AP
Holdings and its directors and officers and each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) AP Holdings, to the same extent as the foregoing indemnity
from AP Holdings to the Initial Purchaser but only with reference to
information relating to the Initial Purchaser furnished in writing to AP
Holdings by the Initial Purchaser expressly for use in the Preliminary
Offering Memorandum or the Offering Memorandum.
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(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party shall assume the defense of
such action, including the employment of counsel reasonably satisfactory
to the indemnified party and the payment of all fees and expenses of such
counsel, as incurred (except that in the case of any action in respect of
which indemnity may be sought pursuant to both Sections 8(a) and 8(b), the
Initial Purchaser shall not be required to assume the defense of such
action pursuant to this Section 8(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such
counsel, except as provided below, shall be at the expense of the Initial
Purchaser). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the
indemnified party unless (i) the employment of such counsel shall have
been specifically authorized in writing by the indemnifying party, (ii)
the indemnifying party shall have failed to assume the defense of such
action or employ counsel reasonably satisfactory to the indemnified party
or (iii) the named parties to any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party,
and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are
different from or additional to those available to the indemnifying party
(in which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of the indemnified party). In any
such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all
indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Donaldson,
Lufkin & Jenrette Securities Corporation, in the case of the parties
indemnified pursuant to Section 8(a), and by AP Holdings, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and
all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii)
effected without its written consent if the settlement is entered into
more than thirty business days after the indemnifying party shall have
received a request from the indemnified party for reimbursement for the
fees and expenses of counsel (in any case where such fees and expenses are
at the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any
pending or threatened action in respect of which the indemnified party is
or could have been a party and indemnity or contribution may be or could
have been sought hereunder by the indemnified party, unless such
settlement, compromise or judgment (i) includes an unconditional release
of the indemnified party from all liability on claims that are or could
have been the subject matter of such action
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<PAGE> 23
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages, liabilities or judgments referred to herein, then
each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities and judgments (i)
in such proportion as is appropriate to reflect the relative benefits
received by AP Holdings, on the one hand, and the Initial Purchaser on the
other hand from the offering of the Senior Discount Notes or (ii) if the
allocation provided by clause 8(d)(i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(d)(i) above but also the relative fault
of AP Holdings, on the one hand, and the Initial Purchaser, on the other
hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any
other relevant equitable considerations. The relative benefits received by
AP Holdings, on the one hand and the Initial Purchaser, on the other hand,
shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Senior Discount Notes (after underwriting
discounts and commissions, but before deducting expenses) received by AP
Holdings, and the total discounts and commissions received by the Initial
Purchaser bear to the total price to investors of the Senior Discount
Notes, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of AP Holdings, on the one hand,
and the Initial Purchaser, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by AP Holdings, on the one
hand, or the Initial Purchaser, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
AP Holdings and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any matter, including any
action, that could have given rise to such losses, claims, damages,
liabilities or judgments. Notwithstanding the provisions of this Section
8, the Initial Purchaser shall not be required to contribute any amount in
excess of the amount by which the total discounts and commissions received
by the Initial Purchaser exceeds the amount of any damages which the
Initial Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be
23
<PAGE> 24
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
9. CONDITIONS OF THE INITIAL PURCHASER'S OBLIGATIONS. The several obligations of
the Initial Purchaser to purchase and pay for the Senior Discount Notes as
provided herein, shall be subject to the satisfaction of each of the following
conditions:
(a) All the representations and warranties of AP Holdings contained
in this Agreement shall be true and correct on the Closing Date, with the
same force and effect as if made on and as of the date hereof and the
Closing Date, respectively. AP Holdings shall have performed or complied
with its obligations and agreements and satisfied the conditions to be
performed, complied with or satisfied by it on or prior to the Closing
Date.
(b) (1) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchaser not later than 9:00 a.m., New York
City time, on the day following the date of this Agreement, or at such
later date and time as to which the Initial Purchaser may approve;
(2) No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued
by any governmental agency that would, as of the Closing Date,
prevent the issuance of the Senior Discount Notes;
(3) No injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction shall
have been issued as of the Closing Date or, to the best knowledge of
AP Holdings, threatened against, AP Holdings which would prevent the
issuance of the Senior Discount Notes; and
(4) No stop order preventing the use of the Offering
Documents, or any amendment or supplement thereto, or suspending the
qualification or exemption from qualification of the Senior Discount
Notes for sale in any jurisdiction designated by the Initial
Purchaser pursuant to Section 5(f) hereof shall have been issued and
no proceedings for that purpose shall have been commenced or shall
be pending, threatened or, to AP Holdings' knowledge contemplated.
(c) (1) (i) Since the date of the latest balance sheet in the
Offering Memorandum, there shall not have been any material adverse
change, or any development involving a prospective material adverse
change, in the assets, properties, business, results of operations,
condition (financial or otherwise) or prospects, whether or not arising in
the ordinary course of business, of AP Holdings and its subsidiaries,
taken
24
<PAGE> 25
as a whole, (ii) since the date of the latest balance sheet included in
the Offering Memorandum, there shall not have been any material change, or
any development that is reasonably likely to result in a material change,
in the capital stock or in the long-term debt, or material increase in
short-term debt, of AP Holdings and its subsidiaries, taken as a whole,
from that set forth in the Offering Memorandum and (iii) except as set
forth in the Offering Memorandum, neither AP Holdings nor any of its
subsidiaries shall have any liability or obligation, direct or contingent,
which is material to AP Holdings;
(2) AP Holdings shall not have any material liability or
obligation, direct or contingent, other than those reflected in the
Offering Memorandum; and
(3) The Initial Purchaser shall have received
certificates dated the Closing Date, signed on behalf of AP Holdings
by (i) the President and (ii) the Chief Financial Officer of AP
Holdings, confirming all matters set forth in Sections 9(a), (b) and
(c) hereof.
(d) On the Closing Date, the Initial Purchaser shall have received
an opinion (satisfactory to the Initial Purchaser and counsel to the
Initial Purchaser) dated the Closing Date, of Wachtell, Lipton, Rosen &
Katz, special counsel for AP Holdings, substantially to the effect that:
(1) AP Holdings (i) is duly organized and validly
existing as a corporation in good standing under the laws of
its jurisdiction and (ii) has all requisite corporate power
and authority to carry on its business as described in the
Offering Memorandum and to own, lease and operate its
properties.
(2) AP Holdings has all necessary corporate power and
authority to enter into and perform its obligations under the
Operative Documents.
(3) AP Holdings is not and after giving effect to the
Offering will not be, (i) in violation of its charter or
bylaws (ii) in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note
or any other evidence of indebtedness or in any other
agreement, indenture or instrument, in each case known to
counsel which is material to the conduct of the business of AP
Holdings, or by which AP Holdings or its property is bound, or
(iii) in violation of any local, state or federal law,
statute, ordinance, rule, regulation, requirement, judgment or
court decree (including, without limitation, environmental
laws, statutes, ordinances, rules, regulations, judgments or
court decrees) in each case under the Subject Laws (the laws
of the State of New York, the laws of the State of Delaware
and the laws of the United States (the "Subject Laws")),
applicable to AP Holdings, its subsidiaries or any of its
assets or properties (whether owned or leased), other than
violations or
25
<PAGE> 26
defaults that would not reasonably be expected to have a
Material Adverse Effect. To the best knowledge of such
counsel, there exists no condition that, with notice, the
passage of time or otherwise, would constitute a default under
any such document or instrument, except for such defaults that
would not reasonably be expected to have a Material Adverse
Effect.
(4) None of the execution, delivery or performance by AP
Holdings of this Agreement and the other Operative Documents
and by AP Holdings will conflict with or constitute a breach
of any of the terms or provisions of any of the terms or
provisions of, or a default under, or result in the imposition
of a lien or encumbrance on any properties of AP Holdings, or
an acceleration of indebtedness pursuant to, (1) the charter
or bylaws of AP Holdings, (2) to the best of its knowledge,
any bond, debenture, note, indenture, mortgage, deed of trust
or other agreement or instrument in each case known to such
counsel and which is material in the conduct of the business
of AP Holdings, by which AP Holdings or its property is bound,
or (3) any law or administrative regulation, in each case
under the Subject Laws applicable to AP Holdings or any of its
assets or properties, or to the knowledge of such counsel any
judgment, order or decree of any court or governmental agency
or authority entered in any proceeding to which AP Holdings
was or is now a party or to which any of its properties may be
subject except as would not reasonably be expected to have a
Material Adverse Effect.
(5) This Agreement has been duly authorized and, when
validly executed by AP Holdings (assuming the due execution
and delivery thereof by the Initial Purchaser) will be a
legally valid and binding obligation of AP Holdings,
enforceable against AP Holdings in accordance with its terms,
except that (i) such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, (whether general or specific) or similar laws now
or hereafter in effect relating to or affecting creditors'
rights and remedies generally, (ii) such enforceability may be
limited by the effects of general principles of equity and by
the discretion of the court before which any proceeding
therefor may be brought (whether such proceeding is at law or
in a bankruptcy proceeding), (iii) rights to contribution or
indemnification may be limited by the laws, rules or
regulations or any governmental authority or agency thereof or
by public policy, and (iv) waivers as to usury, stay or
extension laws may be unenforceable.
(6) AP Holdings has duly authorized the Indenture, and
when AP Holdings has duly executed and delivered the Indenture
(assuming the due authorization, execution and delivery
thereof by the Trustee), the Indenture will be the legally
valid and binding obligation of AP Holdings, enforceable
against AP Holdings in accordance with its terms, except that
(i) such enforceability may be limited by bankruptcy,
insolvency,
26
<PAGE> 27
fraudulent conveyance, reorganization, moratorium, (whether
general or specific) or similar laws now or hereafter in
effect relating to or affecting creditors' rights and remedies
generally, (ii) such enforceability may be limited by the
effects of general principles of equity and by the discretion
of the court before which any proceeding therefor may be
brought (whether such proceeding is at law or in a bankruptcy
proceeding), (iii) rights to contribution or indemnification
may be limited by the laws, rules or regulations or any
governmental authority or agency thereof or by public policy,
and (iv) waivers as to usury, stay or extension laws may be
unenforceable.
(7) The Registration Rights Agreement has been duly
authorized and when validly executed by AP Holdings will be
(assuming the due execution and delivery thereof by the
Initial Purchaser) the legally valid and binding obligation of
AP Holdings, enforceable against AP Holdings in accordance
with its terms, except that (i) such enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, (whether general or specific) or
similar laws now or hereafter in effect relating to or
affecting creditors' rights and remedies generally, (ii) such
enforceability may be limited by the effects of general
principles of equity and by the discretion of the court before
which any proceeding therefor may be brought (whether such
proceeding is at law or in a bankruptcy proceeding), (iii)
rights to contribution or indemnification may be limited by
the laws, rules or regulations or any governmental authority
or agency thereof or by public policy, and (iv) waivers as to
usury, stay or extension laws may be unenforceable.
(8) To the best knowledge of such counsel, there is and,
after giving effect to the Combination pursuant to the terms
of the Combination Agreement, will be (i) no action, suit,
proceeding or investigation before or by any court, arbitrator
or governmental agency, body or official, domestic or foreign,
now pending, threatened, or contemplated to which AP Holdings
is or may be a party or to which the business or property of
AP Holdings is or, after giving effect to the Combination
pursuant to the terms of the Combination Agreement, may be
subject, (ii) no statute, rule, regulation or order that has
been enacted, adopted or issued by any governmental agency or
proposed by any governmental body or (iii) no injunction,
restraining order or order of any nature issued by a federal
or state court of competent jurisdiction to which AP Holdings
is or may be subject that, in the case of clauses (i), (ii)
and (iii) above, (1) is required to be disclosed in the
Offering Memorandum and that is not so disclosed, (2) might
have a Material Adverse Effect or (3) would interfere with or
adversely affect the issuance of the Senior Discount Notes.
(9) To the best knowledge of such counsel, there are no
holders of any security of AP
27
<PAGE> 28
Holdings who by reason of the execution by AP Holdings of this
Agreement or any other Operative Document or the consummation
of the transactions contemplated hereby and thereby, have the
right to request or demand that AP Holdings register under the
Act, or analogous foreign laws and regulations, securities
held by them.
(10) The statements under the captions "Description of
Notes," "Description of Indebtedness" and "The
Transactions--The Combination" in the Offering Memorandum,
insofar as such statements constitute a summary of legal
matters, documents or proceedings referred to therein, are
correct in all material respects.
(11) Neither AP Holdings nor any of its Subsidiaries nor
any agent thereof acting on the behalf of them, has taken or
will take any action that might cause this Agreement or the
issuance or sale of the Notes to violate Regulation G (12
C.F.R. Part 207), Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R.
Part 224) of the Board of Governors of the Federal Reserve
System, in each case as in effect now or as the same may
hereafter be in effect on the Closing Date.
(12) Neither AP Holdings nor APCOA is or, after giving
effect to the Combination pursuant to the terms of the
Combination Agreement, will be an "investment company" or a
company "controlled" by an investment company within the
meaning of the Investment Company Act of 1940, as amended.
(13) When the Senior Discount Notes are issued and
delivered pursuant to this Agreement, such Senior Discount
Notes will not be of the same class (within the meaning of
Rule 144A under the Act) as securities of AP Holdings that are
listed on a national securities exchange registered under
Section 6 of the Exchange Act or that are quoted in a United
States automated inter-dealer quotation system.
(14) The Indenture is not required to be qualified under
the Trust Indenture Act prior to the first to occur of (i) the
Registered Exchange Offer and (ii) the effectiveness of the
Shelf Registration Statement.
(15) Assuming (i) that the representations and
warranties of the Initial Purchaser in Section 7 hereof and
those of AP Holdings in this Agreement relating to (a) the
absence of general solicitation, (b) offerings of similar
securities, (c) AP Holdings' status as an investment company
and (d) whether the Senior Subordinated Notes are of the same
class as other securities of AP Holdings listed on a national
securities exchange registered under Section 6 of the Exchange
Act or that are quoted in a United States automated
inter-dealer quotation system are accurate and will be
complied with, (ii) that the Initial Purchaser complied with
their
28
<PAGE> 29
covenants as set forth in Section 7 hereof, (iii) that none of
the Eligible Purchasers is an affiliate of AP Holdings and
(iv) that each of the Eligible Purchasers is a QIB or is
purchasing in a transaction pursuant to Regulation S, the
purchase and resale of the Senior Discount Notes pursuant
hereto (including pursuant to the Exempt Resales) is exempt
from the registration requirements of the Act.
(16) The Offering Memorandum, as of its date, and each
amendment or supplement thereto, as of its date (except for
the financial statement and the notes thereto and schedules
and other financial, statistical and accounting data included
therein, as to which such counsel expresses no opinion),
complied as to form in all material respects with the
requirements of Rule 144A of the Act.
In addition, such counsel shall state that it has participated in
conferences with representatives of AP Holdings, representatives of the AP
Holdings' accountants, the Initial Purchaser's representatives and counsel for
the Initial Purchaser, at which conferences the contents of the Offering
Documents and related matters were discussed, and, although such counsel has not
independently verified and is not passing upon and assumes no responsibility for
the accuracy, completeness or fairness of the statements contained in the
Offering Documents (other than those that such counsel must opine on pursuant to
Section 9(d)(l5) of this Agreement), no facts have come to such counsel's
attention which led it to believe that the Offering Memorandum, on the date
thereof or on the date of such opinion, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no view with respect to the financial statements
and data and related notes, the financial statement schedules and other
financial, statistical and accounting data included in the Offering Documents).
(e) The Initial Purchaser shall have received on the Closing Date an
opinion, dated the Closing Date, of Latham & Watkins, in form and
substance satisfactory to the Initial Purchaser.
(f) The Initial Purchaser shall have received customary comfort
letters from (i) Ernst & Young LLP, independent public accountants for AP
Holdings and (ii) Altschuler, Melvoin and Glasser, LLP, independent public
accountants for Standard, in each case, dated as of the date of this
Agreement and as of the Closing Date, in form and substance satisfactory
to the Initial Purchaser and counsel to the Initial Purchaser, with
respect to the financial statements and certain financial information
contained in the Offering Memorandum.
(g) AP Holdings and the Trustee shall have entered into the
Indenture and the Initial Purchaser shall have received counterparts,
conformed as executed, thereof.
(h) AP Holdings and the Initial Purchaser shall have entered into
the Registration Rights Agreement for the benefit of the Initial Purchaser
and the benefit of
29
<PAGE> 30
the other Purchaser, in the form attached hereto as Exhibit A, and the
Initial Purchaser shall have received counterparts, conformed as executed,
thereof.
(i) AP Holdings shall have fully performed or complied with any of
the agreements herein contained and required to be performed or complied
with by AP Holdings on or prior to the Closing Date.
(j) Latham & Watkins shall have been furnished with such documents
and opinions, in addition to those set forth above, as they may reasonably
require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 9 and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective upon the execution
and delivery of this Agreement by the parties hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchaser by written notice to AP Holdings if any of
the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchaser's judgment, is material and adverse and, in the Initial
Purchaser's judgment, makes it impracticable to market the Senior Discount Notes
on the terms and in the manner contemplated in the Offering Memorandum, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of AP Holdings on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your the Initial Purchaser's
reasonable opinion materially and adversely affects, or will materially and
adversely affect, the business, prospects, financial condition or results of
operations of AP Holdings and its subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
(b) If on the Closing Date, any of the Initial Purchaser shall
fail or refuse to purchase Senior Discount Notes which it has agreed to purchase
hereunder on such date, and the aggregate principal amount of such Senior
Discount Notes that such defaulting Initial Purchaser agreed but failed or
refused to purchase does not exceed 10% of the total principal amount of such
Senior Discount Notes that all of the Initial Purchaser are obligated to
purchase on such Closing Date, the non-defaulting Initial Purchaser shall be
obligated to purchase the Senior Discount Notes that such defaulting Initial
Purchaser agreed but failed or
30
<PAGE> 31
refused to purchase on such date. If, on the Closing Date, any of the Initial
Purchaser shall fail or refuse to purchase Senior Discount Notes in an aggregate
principal amount that exceeds 10% of such total principal amount of the Senior
Discount Notes and arrangements satisfactory to the other Initial Purchaser and
AP Holdings for the purchase of such Senior Discount Notes are not made within
48 hours after such default, this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchaser or AP Holdings, except as
otherwise provided in this Section 10. In any such case that does not result in
termination of this Agreement, the Initial Purchaser or AP Holdings may postpone
the Closing Date for not longer than seven days, in order that the required
changes, if any, in the Offering Memorandum or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve the defaulting Initial Purchaser from liability in respect of any
default by the Initial Purchaser under this Agreement.
11. AGREEMENT OF THE INITIAL PURCHASER.
The Initial Purchaser agrees that upon their receipt of any written
notice from AP Holdings of the existence of any fact or the happening of any
event that requires the making of any additions to or changes in any offering
memorandum, registration statement or prospectus, or amendment or supplement
thereto, referred to in Section 5(d) hereof in order that such document will not
contain any untrue statement of a material fact or omission to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances existing as of the date such document was delivered, not
misleading, such Initial Purchaser shall forthwith discontinue disposition of
the applicable Notes pursuant to such document until (i) such Initial Purchaser
receives from AP Holdings copies of an amended or supplemented document that AP
Holdings states in writing may be used by such Initial Purchaser or (ii) such
Initial Purchaser is advised in writing by AP Holdings that the use of such
document may be resumed.
12. MISCELLANEOUS.
(a) Notices given pursuant to any provision of this Agreement shall
be addressed as follows: (i) if to AP Holdings, to AP Holdings, Inc., 800
Superior Avenue, Cleveland, Ohio 44114, Attention: Secretary and (ii) if
to the Initial Purchaser, to Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department or in any case to such other address as the person to
be notified may have requested in writing.
(b) The respective indemnities, contribution agreements,
representations, warranties and other statements set forth in or made
pursuant to this Agreement shall remain operative and in full force and
effect, and will survive delivery of and payment for the Senior Discount
Notes, regardless of (i) any investigation, or statement as to the results
thereof, made by or on behalf of any such person, (ii) acceptance of the
Senior Discount Notes and payment for them hereunder and (iii) termination
of this Agreement.
(c) Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon AP Holdings, the
Initial Purchaser, any controlling persons referred to herein and their
respective successors and assigns, all as
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<PAGE> 32
and to the extent provided in this Agreement, and no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include a purchaser of any of the
Senior Discount Notes from any of the Initial Purchaser merely because of
such purchase.
(d) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS
MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
(e) This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument. Please confirm that
the foregoing correctly sets forth the agreement between AP Holdings and
the Initial Purchaser.
(f) In any provision hereunder purporting to give effect to the
Combination, such statements are made with respect to facts known as of
the date hereof (and not future events other than the consummation of the
Combination) and are meant only to account for consummation of the
Combination in accordance with the terms of the Combination Agreement.
(g) All representations and warranties hereunder made by AP
Holdings, and the opinion of Wachtell, Lipton, Rosen & Katz is qualified
by the information contained in the Preliminary Offering Memorandum and
the Offering Memorandum.
[signature pages follow]
32
<PAGE> 33
Very truly yours,
AP HOLDINGS, INC.
By: /s/ Michael J. Celebrezze
-----------------------------
Name: Michael J. Celebrezze
Title: Treasurer
33
<PAGE> 34
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written by
Donaldson, Lufkin, Jenrette
Securities Corporation on behalf of
the Initial Purchasers.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Timothy White
----------------------------
Name: Timothy White
Title: Vice President
34
<PAGE> 35
SCHEDULE I
<TABLE>
<CAPTION>
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation................$40,682,600
</TABLE>
<PAGE> 36
EXHIBIT A
Form of Registration Rights Agreement
<PAGE> 1
Exhibit 4.1
Execution Copy
================================================================================
AP Holdings, Inc.
-----------------------------------
11 1/4% SENIOR DISCOUNT NOTES DUE 2008
------------------------------------
---------------
INDENTURE
DATED AS OF MARCH 30, 1998
--------------
State Street Bank and Trust Company
TRUSTEE
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
Trust Indenture Indenture Section
Act Section
310(a)(l) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.10
(c) 7.3; 7.10
311(a) N.A.
(b) 7.11
(c) 7.11
312(a) N.A.
(b) 2.5
(c) 10.3
313(a) 10.3
(b)(l) 7.6
(b)(2) 7.6
(c)(3) 7.6; 7.7
(d) 7.6; 10.2
(e) 7.6
314(a) 4.3; 10.5
(b) N.A.
(c)(1) 10.4
(c)(2) 10.4
(c)(3) N.A.
(d) N.A.
(e) 10.5
(f) N.A.
315(a) 7.1
(b) 7.5, 10.2
(c) 7.1
(d) 7.1
(e) 6.11
316(a) (last Sentence) 2.9
(a)(1)(A) 6.5
(a)(1)(B) 6.4
(a)(2) 2.13
(b) 6.7
(c) N.A.
317(a)(1) 6.8
(a)(2) 6.9
(b) 2.4
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318(a) 10.1
(b) N.A.
(c) 10.1
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
ii
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TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions................................................ 1
Section 1.2. Other Definitions.......................................... 16
Section 1.3. Incorporation by Reference of Trust Indenture Act.......... 16
Section 1.4. Rules of Construction...................................... 17
ARTICLE 2.
THE NOTES
Section 2.1. Form and Dating............................................ 17
Section 2.2. Execution and Authentication............................... 19
Section 2.3. Registrar and Paying Agent................................. 20
Section 2.4. Paying Agent to Hold Money in Trust........................ 20
Section 2.5. Holder Lists............................................... 21
Section 2.6. Transfer and Exchange...................................... 21
Section 2.7. Replacement Notes.......................................... 31
Section 2.8. Outstanding Notes.......................................... 31
Section 2.9. Treasury Notes............................................. 31
Section 2.10. Temporary Notes............................................ 32
Section 2.11. Cancellation............................................... 32
Section 2.12. Defaulted Interest......................................... 32
Section 2.13. Record Date................................................ 33
Section 2.14. Computation of Interest.................................... 33
Section 2.15. CUSIP Number............................................... 33
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.1. Notices to Trustee......................................... 33
Section 3.2. Selection of Notes To Be Redeemed or Purchased............. 33
Section 3.3. Notice of Redemption....................................... 34
Section 3.4. Effect of Notice of Redemption............................. 35
Section 3.5. Deposit of Redemption or Purchase Price.................... 35
Section 3.6. Notes Redeemed in Part..................................... 36
Section 3.7. Optional Redemption........................................ 36
Section 3.8. Mandatory Redemption....................................... 36
Section 3.9. Repurchase Offers.......................................... 36
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Page
ARTICLE 4.
COVENANTS
Section 4.1. Payment of Notes........................................... 38
Section 4.2. Maintenance of Office or Agency............................ 39
Section 4.3. Commission Reports......................................... 39
Section 4.4. Compliance Certificate..................................... 40
Section 4.5. Taxes...................................................... 41
Section 4.6. Stay, Extension and Usury Laws............................. 41
Section 4.7. Restricted Payments........................................ 41
Section 4.8. Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries................................... 44
Section 4.9. Incurrence of Indebtedness and Issuance of
Preferred Stock........................................... 45
Section 4.10. Assets Sales............................................... 47
Section 4.11. Transactions with Affiliates............................... 48
Section 4.12. Liens...................................................... 49
Section 4.13. Sale and Leaseback Transactions............................ 49
Section 4.14. Offer to Purchase Upon Change of Control................... 50
Section 4.15. Corporate Existence........................................ 51
Section 4.16. Limitation on Issuances of Capital Stock of Wholly
Owned Restricted Subsidiaries............................. 51
Section 4.17. Business Activities........................................ 51
Section 4.18. Payment for Consents....................................... 51
ARTICLE 5.
SUCCESSORS
Section 5.1. Merger, Consolidation of Sale of Assets.................... 52
Section 5.2. Successor Corporation Substituted.......................... 52
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.......................................... 53
Section 6.2. Acceleration............................................... 54
Section 6.3. Other Remedies............................................. 55
Section 6.4. Waiver of Past Defaults.................................... 56
Section 6.5. Control By Majority........................................ 56
Section 6.6. Limitation on Suits........................................ 56
Section 6.7. Rights of Holders of Notes to Receive Payment.............. 57
Section 6.8. Collection Suit by Trustee................................. 57
Section 6.9. Trustee May File Proofs of Claim........................... 57
Section 6.10. Priorities................................................. 58
Section 6.11. Undertaking for Costs...................................... 58
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Page
ARTICLE 7.
TRUSTEE
Section 7.1. Duties of Trustee.......................................... 58
Section 7.2. Rights of Trustee.......................................... 60
Section 7.3. Individual Rights of Trustee............................... 60
Section 7.4. Trustee's Disclaimer....................................... 61
Section 7.5. Notice of Defaults......................................... 61
Section 7.6. Reports by Trustee to Holders of the Notes................. 61
Section 7.7. Compensation and Indemnity................................. 61
Section 7.8. Replacement of Trustee..................................... 62
Section 7.9. Successor Trustee By Merger, Etc........................... 63
Section 7.10. Eligibility; Disqualification.............................. 63
Section 7.11. Preferential Collection of Claims Against Holdings......... 64
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant
Defeasance................................................ 64
Section 8.2. Legal Defeasance and Discharge............................. 64
Section 8.3. Covenant Defeasance........................................ 64
Section 8.4. Conditions to Legal or Covenant Defeasance................. 65
Section 8.5. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions............. 66
Section 8.6. Repayment to Holdings...................................... 67
Section 8.7. Reinstatement.............................................. 67
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of the Notes.................... 68
Section 9.2. With Consent of Holders of Notes........................... 68
Section 9.3. Compliance with Trust Indenture Act........................ 70
Section 9.4. Relocation and Effect of Consents.......................... 70
Section 9.5. Notation on or Exchange of Notes........................... 70
Section 9.6. Trustee to Sign Amendments, Etc............................ 70
ARTICLE 10.
MISCELLANEOUS
Section 10.1. Trust Indenture Act Controls............................... 71
Section 10.2. Notices.................................................... 71
Section 10.3. Communication by Holders of Notes with Other
Holders of Notes.......................................... 72
Section 10.4. Certificate and Opinion as to Conditions Precedent......... 72
Section 10.5. Statements Required in Certificate or Opinion.............. 72
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Page
Section 10.6. Rules by Trustee and Agents................................ 73
Section 10.7. No Personal Liability of Directors, Officers,
Employees and Stockholders................................ 73
Section 10.8. Governing Law.............................................. 73
Section 10.9. No Adverse Interpretation of Other Agreements.............. 73
Section 10.10. Successors................................................ 73
Section 10.11. Severability.............................................. 74
Section 10.12. Counterpart Originals..................................... 74
Section 10.13. Table of Contents, Headings, Etc.......................... 74
iv
<PAGE> 8
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFEROR
Exhibit C FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
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<PAGE> 9
Indenture, dated as of March 30, 1998, between AP Holdings, Inc., a
Delaware corporation ("Holdings") and State Street Bank and Trust Company, as
trustee (the "Trustee").
Holdings and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the holders of Holdings' 11 1/4%
Senior Discount Notes due 2008 (the "Senior Discount Notes") and the new 11 1/4%
Senior Discount Notes due 2008 (the "New Senior Discount Notes" and, together
with the Senior Discount Notes, the "Notes"). Of the $120,000,000 maximum
principal amount that can be outstanding hereunder at maturity of the Notes
covered hereby, $70,000,000 in principal amount at maturity are being issued in
the Offering on the date hereof:
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Accreted Value" means, for each $1,000 face amount of Notes, as of
any date of determination prior to March 15, 2003, the sum of (i) the initial
offering price of each Note and (ii) that portion of the excess of the principal
amount of each Note over such initial offering price which shall have been
accreted thereon through such date, such amount to be so accreted on a daily
basis and compounded semi-annually on each and at the rate of 11 1/4% per annum
from the date of issuance of the Notes through the date of determination.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial interests in a Global Note, the rules and procedures of
the Depositary that apply to such transfer and exchange.
<PAGE> 10
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business consistent with past practices (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of
Holdings and its Restricted Subsidiaries taken as a whole will be governed by
the provisions of the Indenture described above under the caption "--Change of
Control" and/or the provisions described above under the caption "--Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant), and (ii) the issue or sale by Holdings or any of its Restricted
Subsidiaries of Equity Interests of any of Holdings' Restricted Subsidiaries, in
the case of either clause (i) or (ii), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess of
$3.0 million or (b) for net proceeds in excess of $3.0 million. Notwithstanding
the foregoing: (i) a transfer of assets by Holdings to the Company's a Wholly
Owned Restricted Subsidiary of Holdings or the Company or by a Wholly Owned
Restricted Subsidiary of Holdings or the Company to the Company or to another
Wholly Owned Restricted Subsidiary of Holdings or the Company, (ii) an issuance
of Equity Interests by the Company or a Wholly Owned Restricted Subsidiary of
Holdings or the Company to Holdings or the Company's to another Wholly Owned
Restricted Subsidiary of Holdings or the Company, and (iii) a Restricted Payment
that is permitted by the covenant described above under the caption
"--Restricted Payments" will not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the board of directors of Holdings or any
authorized committee of such board of directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
2
<PAGE> 11
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any lender party to the New
Credit Facility or with any domestic commercial bank having capital and surplus
in excess of $500 million and a Thompson Bank Watch Rating of "B" or better,
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above, and (v) commercial paper having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation
and in each case maturing within six months after the date of acquisition.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of Holdings and its Subsidiaries, taken
as a whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act) other than the Principals or their Related Parties (as defined
below), (ii) the adoption of a plan relating to the liquidation or dissolution
of Holdings, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of Holdings (measured by voting power rather than number
of shares), (iv) the first day on which a majority of the members of the Board
of Directors of Holdings are not Continuing Directors or (v) Holdings
consolidates with, or merges with or into, any Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, or any Person consolidates with, or merges with or
into, Holdings, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of Holdings is converted into or exchanged for cash,
securities or other property, other than any such transaction where the Voting
Stock of Holdings outstanding immediately prior to such transaction is converted
into or exchanged for Voting Stock (other than Disqualified Stock) of the
surviving or transferee Person constituting a majority of the outstanding shares
of such Voting Stock of such surviving or transferee Person (immediately after
giving effect to such issuance).
"Commission" means the Securities and Exchange Commission.
"Company" means APCOA, Inc., a Delaware corporation.
3
<PAGE> 12
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus (iv) depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash expenses (excluding any such non-cash expense to the extent that
it represents an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of such
Person and its Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, plus (v) one-time charges related to the
Combination, to the extent that such charges were deducted in computing
Consolidated Net Income, plus (vi) in connection with any acquisition by
Holdings or a Restricted Subsidiary, projected quantifiable improvements in
operating results (on an annualized basis) due to cost reductions calculated in
good faith by Holdings or one of its Restricted Subsidiaries, as evidenced by
(A) in the case of cost reductions of less than $10.0 million, an Officers'
Certificate delivered to the Trustee and (B) in the case of cost reductions of
$10.0 million or more, a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee, minus (vii) non-cash items
increasing such Consolidated Net Income for such period. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent that a corresponding amount would be
permitted at the date of determination to be dividended to Holdings by such
Subsidiary without prior governmental approval (that has not been obtained), and
without direct or indirect restriction pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that
4
<PAGE> 13
Net Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to
Holdings or one of its Restricted Subsidiaries for purposes of Section 4.9
hereof."
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of Holdings who (i) was a member of such Board
of Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 10.2 hereof or such other address as to which
the Trustee may give notice to the Company.
"Credit Agent" means The First National Bank of Chicago, in its
capacity as Agent for the lenders party to the New Credit Facility or any
successor thereto or any person otherwise appointed.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Notes" means Notes that are in the form of EXHIBIT A-1
attached hereto (but without including the text referred to in footnotes 1 and 3
thereto).
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to Section 2.6 of this Indenture, and,
thereafter, "Depositary" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature; provided, however,
that any Capital Stock that would not qualify as Disqualified Stock but for
change of control provisions shall not constitute Disqualified Stock if the
provisions are not more favorable to the holders of such Capital Stock than the
provisions described under "-- Change of Control" applicable to the Holders of
the Notes.
"DLJ" means Donaldson, Lufkin & Jenrette Securities Corporation.
5
<PAGE> 14
"Euroclear" means Morgan Guaranty Trust Company of New York, the
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the offer by the Company to Holders to
exchange Senior Discount Notes for New Senior Discount Notes.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of Holdings and its
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date of the Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations) and (ii) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period, and (iii) to
the extent paid by such Person, any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the
product of (a) all dividend payments, whether or not in cash, on any series of
preferred stock of such Person or any of its Restricted Subsidiaries, other than
dividend payments on Equity Interests payable solely in Equity Interests of
Holdings, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that Holdings or any
of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by Holdings or
6
<PAGE> 15
any of its Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of the
four-quarter reference period and Consolidated Cash Flow for such reference
period shall be calculated without giving effect to clause (iii) of the proviso
set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Foreign Subsidiary" means any Subsidiary organized and existing
under the laws of a jurisdiction other than those of any state or commonwealth
in the Unites States of America.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of the Indenture.
"Global Notes" means the Rule 144A Global Note, the Regulation S
Temporary Global Notes and the Regulation S Permanent Global Notes.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency rates.
"Holberg" means Holberg Industries, Inc., a Delaware corporation,
the indirect parent of Holdings.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means AP Holdings, Inc., a Delaware corporation and the
parent (but not 100% owner) of APCOA, Inc.
7
<PAGE> 16
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness that does not require
current payments of interest, and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds an interest through
a Participant.
"Initial Purchaser" means Donaldson, Lufkin & Jenrette Securities
Corporation.
"Insolvency or Liquidation Proceedings" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to Holdings or to the creditors of
Holdings, as such, or to the assets of Holdings, or (ii) any liquidation,
dissolution, reorganization or winding up of Holdings, whether voluntary or
involuntary and involving insolvency or bankruptcy, or (iii) any assignment for
the benefit of creditors or any other marshalling of assets and liabilities of
Holdings.
"Institutional Accredited Investor" means an "accredited investor"
as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If Holdings or any Restricted Subsidiary of Holdings sells or otherwise disposes
of any Equity Interests of any direct or indirect Restricted Subsidiary of
Holdings such that, after giving effect to any such sale or disposition, such
Person is no longer a Restricted Subsidiary of Holdings, Holdings shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity
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Interests of such Restricted Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of Section 4.7 hereof."
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the city in which the principal Corporate
Trust Office of the Trustee is located or at a place of payment are authorized
by law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment shall be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by
Holdings or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"New Credit Facility" means that certain Credit Agreement, dated as
of the date of the Indenture, by and among APCOA, Inc., the lenders and other
parties thereto from time to time and The First National Bank of Chicago, as
agent, together with all related documents executed or delivered pursuant
thereto at any time (including, without limitation, all mortgages, guarantees,
security agreements and all other collateral and security documents), in each
case as such agreements may be amended (including any amendment and restatement
thereof),
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<PAGE> 18
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder provided
that such increase in borrowings is within the definition of Permitted
Indebtedness or is otherwise permitted under Section 4.7 hereof or adding
Subsidiaries as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness and other Obligations under such agreement or
agreements or any successor or replacement agreement or agreements, and whether
by the same or any other agent, lender or group of lenders.
"New Senior Discount Notes" means Holdings' 11 1/4% Senior Discount
Notes due 2008, which will be issued in exchange for Holdings' Senior Discount
Notes.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
Holdings nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of Holdings or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of Holdings or any of its Restricted
Subsidiaries.
"Note Custodian" means the Trustee when serving as custodian for the
Depositary with respect to the Notes in global form, or any successor entity
thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness, and in all cases whether now
outstanding or hereafter created, assumed or incurred and including, without
limitation, interest accruing subsequent to the filing of a petition in
bankruptcy at the rate provided in the relevant document, whether or not an
allowed claim, and any obligation to redeem or defease any of the foregoing.
"Offering" means the issuance and sale by Holdings to the Initial
Purchaser of the Senior Discount Notes.
"Offering Memorandum" means the Offering Memorandum, dated March 25,
1998, relating to Holdings' offering and placement of the Senior Discount Notes.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
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"Officers' Certificate" means a certificate signed on behalf of
Holdings by two officers of Holdings, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of Holdings, that meets the requirements of Section
10.4 and 10.5 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.4 and 10.5 hereof. The counsel may be an employee of or counsel to Holdings,
any Subsidiary of Holdings or the Trustee.
"Participant" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"Permitted Business" means any of the businesses and any other
businesses related to the businesses engaged in by Holdings and its respective
Restricted Subsidiaries on the date of the Indenture.
"Permitted Investments" means (a) any Investment in the Company or
in a Wholly Owned Restricted Subsidiary of Holdings that is engaged in a
Permitted Business; (b) any Investment in Cash Equivalents; (c) any Investment
by Holdings or any Restricted Subsidiary of Holdings in a Person, if as a result
of such Investment (i) such Person becomes a Wholly Owned Restricted Subsidiary
of Holdings that is engaged in a Permitted Business or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, Holdings or a Wholly
Owned Restricted Subsidiary of Holdings that is engaged in a Permitted Business;
(d) any Restricted Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 4.10 hereof; (e) any acquisition of assets solely in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of Holdings;
(f) loans and advances made after the date of the Indenture to Holberg
Industries, Inc. not to exceed $10.0 million at any time outstanding; (g) make
and permit to remain outstanding travel and other like advances in the ordinary
course of business consistent with past practices to officers and employees of
Holdings or a Subsidiary of the Company or Holdings; (h) other Investments made
after the date of the Indenture in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause; and (i) that are at the time
outstanding, not to exceed $10.0 million.
"Permitted Liens" means (i) Liens securing Obligations of Holdings
and its Restricted Subsidiaries under the New Credit Facility that were
permitted by the terms of the Indenture to be incurred; (ii) Liens in favor of
Holdings; (iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with Holdings or any Restricted Subsidiary of
Holdings; provided that such
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Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with Holdings; (iv) Liens on property existing at
the time of acquisition thereof by Holdings or any Restricted Subsidiary of
Holdings, provided that such Liens were in existence prior to the contemplation
of such acquisition; (v) Liens to secure the performance of bids, tenders,
contracts, statutory obligations, surety or appeal bonds, performance bonds or
other obligations of a like nature incurred in the ordinary course of business;
(vi) Liens existing on the date of the Indenture; (vii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (viii) Liens incurred in the ordinary course of business of
Holdings or any Restricted Subsidiary of Holdings with respect to obligations
that do not exceed $7.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by Holdings or
such Restricted Subsidiary; (ix) Liens on assets of Unrestricted Subsidiaries
that secure Non-Recourse Debt of Unrestricted Subsidiaries; (x) Liens on the
daily revenues in favor of Persons other than Holdings and its Restricted
Subsidiaries who are parties to parking facility agreements for the amounts due
to them pursuant thereto; (xi) Liens arising by applicable law in respect of
employees' wages, salaries or commissions not overdue; and (xii) Liens arising
out of judgments or awards not in excess of $5.0 million with respect to which
Holdings or such Subsidiaries are prosecuting an appeal or a proceeding or
review and the enforcement of such lien is stayed pending such appeal or review.
"Permitted Refinancing Indebtedness" means any Indebtedness of
Holdings or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Holdings or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on, the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses incurred in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by Holdings
or by the Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Principals" means Holberg Industries, Inc. and John V. Holten.
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"Private Placement Legend" means the legend initially set forth on
the Senior Discount Notes in the form set forth in Section 2.6(g) hereof.
"Public Equity Offering" means a public offering of Equity Interests
(other than Disqualified Stock) of Holdings that result in net proceeds to
Holdings of at least $25.0 million.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A under the Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, between Holdings and the Initial
Purchaser.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Notes" means the Regulation S Temporary Global
Notes or the Regulation S Permanent Global Notes as applicable.
"Regulation S Permanent Global Notes" means the permanent global
notes that are deposited with and registered in the name of the Depositary or
its nominee, representing a series of Notes sold in reliance on Regulation S.
"Regulation S Temporary Global Notes" means the temporary global
notes that are deposited with and registered in the name of the Depositary or
its nominee, representing a series of Notes sold in reliance on Regulation S.
"Related Party" with respect to any Principal means (A) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (B) or trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
"Responsible Officer" when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Beneficial Interest" means any beneficial interest of a
Participant or Indirect Participant in the Rule 144A Global Note or the
Regulation S Global Note.
"Restricted Broker Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Restricted Global Notes" means the Rule 144A Global Notes and the
Regulation S Global Notes, all of which shall bear the Private Placement Legend.
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"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means a permanent global note that is
deposited with and registered in the name of the Depositary or its nominee,
representing a series of Notes sold in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Discount Notes" means Holdings' 11 1/4% Senior Discount
Notes due 2008.
"Senior Subordinated Notes" means the 9 1/4% Senior Subordinated
Notes due 2008 of APCOA, Inc.
"Senior Subordinated Note Guarantees" means the guarantees by
certain Restricted Subsidiaries of the Company of the Obligations under the
Senior Subordinated Notes.
"Senior Subordinated Note Indenture" means the Indenture relating to
APCOA's Senior Subordinated Notes.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
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"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb), as amended, as in effect on the date hereof.
"Transfer Restricted Securities" means Notes or beneficial interests
therein that bear or are required to bear the Private Placement Legend.
"Trustee" means State Street Bank and Trust Company until a
successor replaces it in accordance with the applicable provisions of this
Indenture, and thereafter means the successor.
"Unrestricted Global Notes" means one or more Global Notes that do
not and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; and (d) has not guaranteed
or otherwise directly or indirectly provided credit support for any Indebtedness
of the Company or any of its Restricted Subsidiaries. Any such designation by
the Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by the covenant
described above under the caption "Certain Covenants--Restricted Payments." If,
at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under the caption
"Incurrence of Indebtedness and Issuance of Preferred Stock," the Company shall
be in default of such covenant). The Board of Directors of the Company may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.9 hereof and
(ii) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
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"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person, provided that for purposes of
this Indenture, the Company and any Wholly Owned Subsidiary of the Company will
be deemed a Wholly Owned Subsidiary of Holdings.
SECTION 1.2. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"............................... 4.11
"Asset Sale Offer".................................... 4.10
"Change of Control Offer"............................. 4.14
"Change of Control Payment"........................... 4.14
"Change of Control Payment Date"...................... 4.14
"Covenant Defeasance"................................. 8.3
"Custodian"........................................... 6.1
"DTC"................................................. 2.3
"Event of Default".................................... 6.1
"Excess Proceeds"..................................... 4.10
"incur"............................................... 4.9
"Legal Defeasance".................................... 8.2
"Offer Amount"........................................ 3.9
"Offer Period"........................................ 3.9
"Paying Agent"........................................ 2.3
"Payment Default"..................................... 6.1
"Permitted Debt"...................................... 4.9
"Purchase Date"....................................... 3.9
"Registrar"........................................... 2.3
"Repurchase Offer".................................... 3.9
"Restricted Payments"................................. 4.7
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in, and made a part of, this Indenture.
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The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means Holdings and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by the Commission rule
under the TIA have the meanings so assigned to them therein.
SECTION 1.4. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein;
(2) an accounting term not otherwise defined herein has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement or
successor sections or rules adopted by the Commission from
time to time.
ARTICLE 2.
THE NOTES
SECTION 2.1. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of EXHIBIT A-1 or EXHIBIT A-2 attached hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its authentication.
The Notes initially shall be issued in denominations of $l,000 and integral
multiples thereof.
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The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and Holdings and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
(a) Global Notes. Notes offered and sold to QIBs in reliance
on Rule 144A shall be issued initially in the form of Rule 144A Global Notes,
which shall be deposited on behalf of the purchasers of the Notes represented
thereby with a custodian of the Depositary, and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by Holdings and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the Rule 144A Global Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee as hereinafter provided.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel, duly executed by Holdings and
authenticated by the Trustee as hereinafter provided. The "40-day restricted
period" (as defined in Regulation S) shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Note (except to the extent
of any beneficial owners thereof who acquired an interest therein pursuant to
another exemption from registration under the Securities Act and who will take
delivery of a beneficial ownership interest in a Rule 144A Global Note, all as
contemplated by Section 2.6(a)(ii) hereof), and (ii) an Officers' Certificate
from Holdings certifying as to the same matters covered in clause (i) above.
Following the termination of the 40-day restricted period, beneficial interests
in the Regulation S Temporary Global Note shall be exchanged for beneficial
interests in Regulation S Permanent Global Note pursuant to the Applicable
Procedures. Simultaneously with the authentication of Regulation S Permanent
Global Note, the Trustee shall cancel the Regulation S Temporary Global Note.
The aggregate principal amount of the Regulation S Temporary Global Notes and
the Regulation S Permanent Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions and transfers of interests. Any endorsement of a Global Note to
reflect the amount of any increase or decrease in the amount of outstanding
Notes represented thereby shall be made by the Trustee or the Note Custodian, at
the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.6 hereof.
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The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations" and "Instructions to Participants" of Cedel shall be applicable to
interests in the Regulation S Temporary Global Notes and the Regulation S
Permanent Global Notes that are held by Participants through Euroclear or Cedel.
The Trustee shall have no obligation to notify Holders of any such procedures or
to monitor or enforce compliance with the same.
Except as set forth in Section 2.6 hereof, the Global Notes may be
transferred, in whole and not in part, only to another nominee of the Depositary
or to a successor of the Depositary or its nominee.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to Rule 144A Global Notes and Regulation S Permanent Global Notes deposited
with or on behalf of the Depositary.
Holdings shall execute and the Trustee shall, in accordance with
this Section 2.1(b), authenticate and deliver the Global Notes that (i) shall be
registered in the name of the Depositary or the nominee of the Depositary and
(ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Participants shall have no rights either under this Indenture with
respect to any Global Note held on their behalf by the Depositary or by the Note
Custodian as custodian for the Depositary or under such Global Note, and the
Depositary may be treated by Holdings, the Trustee and any agent of Holdings or
the Trustee as the absolute owner of such Global Note for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
Holdings, the Trustee or any agent of Holdings or the Trustee from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and its Participants, the
operation of customary practices of such Depositary governing the exercise of
the rights of an owner of a beneficial interest in any Global Note.
(c) Definitive Notes. Notes issued in certificated form shall
be substantially in the form of EXHIBIT A-1 attached hereto (but without
including the text referred to in footnotes 1 and 3 thereto).
SECTION 2.2. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for Holdings by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially as
set forth in EXHIBIT A-1 or EXHIBIT A-2 hereto.
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The Trustee shall, upon a written order of Holdings signed by an
Officer directing the Trustee to authenticate the Notes and certifying that all
conditions precedent to the issuance of the Notes contained herein have been
complied with, authenticate Notes for original issue up to the aggregate
principal amount stated in paragraph 4 of the Notes. The Trustee shall, upon
written order of Holdings signed by an Officer, authenticate New Senior Discount
Notes for original issuance in exchange for a like principal amount of Senior
Discount Notes exchanged in the Exchange Offer or otherwise exchanged for New
Senior Discount Notes pursuant to the terms of the Registration Rights
Agreement. The aggregate principal amount of Notes outstanding at any time may
not exceed such amount except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to
Holdings to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holdings or an
Affiliate of Holdings.
SECTION 2.3. REGISTRAR AND PAYING AGENT.
Holdings shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii) an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
Holdings may appoint one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. Holdings may change any Paying
Agent or Registrar without notice to any Holder. Holdings shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If Holdings fails to appoint or maintain another entity as Registrar
or Paying Agent, the Trustee shall act as such. Holdings or any of its
Subsidiaries may act as Paying Agent or Registrar.
Holdings initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
Holdings initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
Holdings initially appoints the Trustee to act as the Registrar and Paying Agent
with respect to the Definitive Notes.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
Holdings shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
shall notify the Trustee of any default by Holdings in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. Holdings at any time may require a Paying
Agent to pay all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than Holdings or a Subsidiary) shall have no
further liability for the money. If Holdings or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit
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of the Holders all money held by it as Paying Agent. Upon the occurrence of
events specified in Section 6.1 (viii) and (ix) hereof, the Trustee shall serve
as Paying Agent for the Notes.
SECTION 2.5. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, Holdings shall furnish to the Trustee at least seven (7)
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and Holdings shall otherwise comply with TIA ss. 3 12(a).
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture and the procedures of
the Depositary therefor, which shall include restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Beneficial interests in a Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Global Note in
accordance with the transfer restrictions set forth in the legend in subsection
(f) of this Section 2.6. Transfers of beneficial interests in the Global Notes
to Persons required to take delivery thereof in the form of an interest in
another Global Note shall be permitted as follows:
(i) Rule 144A Global Note to Regulation S Global Note. It,
at any time, an owner of a beneficial interest in a Rule
144A Global Note deposited with the Depositary (or the
Trustee as custodian for the Depositary) wishes to
transfer its beneficial interest in such Rule 144A
Global Note to a Person who is required or permitted to
take delivery thereof in the form of an interest in a
Regulation S Global Note, such owner shall, subject to
the Applicable Procedures, exchange or cause the
exchange of such interest for an equivalent beneficial
interest in a Regulation S Global Note as provided in
this Section 2.6(a)(i). Upon receipt by the Trustee of
(1) instructions given in accordance with the Applicable
Procedures from a Participant directing the Trustee to
credit or cause to be credited a beneficial interest in
the Regulation S Global Note in an amount equal to the
beneficial interest in the Rule 144A Global Note to be
exchanged, (2) a written order given in accordance with
the Applicable Procedures containing information
regarding the Participant account of the Depositary and
the Euroclear or Cedel account to be credited with such
increase, and (3) a certificate in the form of Exhibit
B-1 hereto given by the owner of such beneficial
interest stating that the transfer of such interest has
been made in compliance with the transfer restrictions
applicable to the
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Global Notes and pursuant to and in accordance with Rule
903 or Rule 904 of Regulation S, then the Trustee, as
Registrar, shall instruct the Depositary to reduce or
cause to be reduced the aggregate principal amount at
maturity of the applicable Rule 144A Global Note and to
increase or cause to be increased the aggregate
principal amount at maturity of the applicable
Regulation S Global Note by the principal amount at
maturity of the beneficial interest in the Rule 144A
Global Note to be exchanged or transferred, to credit or
cause to be credited to the account of the Person
specified in such instructions, a beneficial interest in
the Regulation S Global Note equal to the reduction in
the aggregate principal amount at maturity of the Rule
144A Global Note, and to debit, or cause to be debited,
from the account of the Person making such exchange or
transfer the beneficial interest in the Rule 144A Global
Note that is being exchanged or transferred.
(ii) Regulation S Global Note to Rule 144A Global Note. It,
at any time, after the expiration of the 40-day
restricted period, an owner of a beneficial interest in
a Regulation S Global Note deposited with the Depositary
or with the Trustee as custodian for the Depositary
wishes to transfer its beneficial interest in such
Regulation S Global Note to a Person who is required or
permitted to take delivery thereof in the form of an
interest in a Rule l44A Global Note, such owner shall,
subject to the Applicable Procedures, exchange or cause
the exchange of such interest for an equivalent
beneficial interest in a Rule 144A Global Note as
provided in this Section 2.6(a)(ii). Upon receipt by the
Trustee of (1) instructions from Euroclear or Cedel, if
applicable, and the Depositary, directing the Trustee,
as Registrar, to credit or cause to be credited a
beneficial interest in the Rule 144A Global Note equal
to the beneficial interest in the Regulation S Global
Note to be exchanged, such instructions to contain
information regarding the Participant account with the
Depositary to be credited with such increase, (2) a
written order given in accordance with the Applicable
Procedures containing information regarding the
participant account of the Depositary and (3) a
certificate in the form of EXHIBIT B-2 attached hereto
given by the owner of such beneficial interest stating
(A) if the transfer is pursuant to Rule 144A, that the
Person transferring such interest in a Regulation S
Global Note reasonably believes that the Person
acquiring such interest in a Rule 144A Global Note is a
QIB and is obtaining such beneficial interest in a
transaction meeting the requirements of Rule 144A and
any applicable blue sky or securities laws of any state
of the United States, (B) that the transfer complies
with the requirements of Rule 144 under the Securities
Act, (C) if the
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transfer is to an Institutional Accredited Investor that
such transfer is in compliance with the Securities Act
and a certificate in the form of EXHIBIT C attached
hereto and, if such transfer is in respect of an
aggregate principal amount of less than $250,000, an
Opinion of Counsel acceptable to Holdings that such
transfer is in compliance with the Securities Act or (D)
if the transfer is pursuant to any other exemption from
the registration requirements of the Securities Act,
that the transfer of such interest has been made in
compliance with the transfer restrictions applicable to
the Global Notes and pursuant to and in accordance with
the requirements of the exemption claimed, such
statement to be supported by an Opinion of Counsel from
the transferee or the transferor in form reasonably
acceptable to Holdings and to the Registrar and in each
case, in accordance with any applicable securities laws
of any state of the United States or any other
applicable jurisdiction, then the Trustee, as Registrar,
shall instruct the Depositary to reduce or cause to be
reduced the aggregate principal amount at maturity of
such Regulation S Global Note and to increase or cause
to be increased the aggregate principal amount at
maturity of the applicable Rule 144A Global Note by the
principal amount at maturity of the beneficial interest
in the Regulation S Global Note to be exchanged or
transferred, and the Trustee, as Registrar, shall
instruct the Depositary, concurrently with such
reduction, to credit or cause to be credited to the
account of the Person specified in such instructions a
beneficial interest in the applicable Rule 144A Global
Note equal to the reduction in the aggregate principal
amount at maturity of such Regulation S Global Note and
to debit or cause to be debited from the account of the
Person making such transfer the beneficial interest in
the Regulation S Global Note that is being exchanged or
transferred.
(b) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request to register the
transfer of the Definitive Notes or to exchange such Definitive Notes for an
equal principal amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested only
if the Definitive Notes are presented or surrendered for registration of
transfer or exchange, are endorsed and contain a signature guarantee or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney and contains a
signature guarantee, duly authorized in writing and the Registrar received the
following documentation (all of which may be submitted by facsimile):
(i) in the case of Definitive Notes that are Transfer
Restricted Securities, such request shall be accompanied
by the following additional information and documents,
as applicable:
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(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for
registration in the name of such Holder, without
transfer, or such Transfer Restricted Security is
being transferred to Holdings or any of its
Subsidiaries, a certification to that effect from
such Holder (in substantially the form of EXHIBIT
B-3 hereto); or
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A
under the Securities Act or pursuant to an
exemption from registration in accordance with
Rule 144 under the Securities Act or pursuant to
an effective registration statement under the
Securities Act, a certification to that effect
from such Holder (in substantially the form of
EXHIBIT B-3 hereto); or
(C) if such Transfer Restricted Security is being
transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 904 under the
Securities Act, a certification to that effect
from such Holder (in substantially the form of
EXHIBIT B-3 hereto);
(D) if such Transfer Restricted Security is being
transferred to an Institutional Accredited
Investor in reliance on an exemption from the
registration requirements of the Securities Act
other than those listed in subparagraphs (B) and
(C) above, a certification to that effect from
such Holder (in substantially the form of EXHIBIT
B-3 hereto), a certification substantially in the
form of EXHIBIT C hereto, and, if such transfer is
in respect of an aggregate principal amount of
Notes of less than $250,000, an Opinion of Counsel
acceptable to Holdings that such transfer is in
compliance with the Securities Act; or
(E) if such Transfer Restricted Security is being
transferred in reliance on any other exemption
from the registration requirements of the
Securities Act, a certification to that effect
from such Holder (in substantially the form of
EXHIBIT B-3 hereto) and an Opinion of Counsel from
such Holder or the transferee reasonably
acceptable to Holdings and to the Registrar to the
effect that such transfer is in compliance with
the Securities Act.
(c) Transfer of a Beneficial Interest in a Rule 144A Global
Note or Regulation S Permanent Global Note for a Definitive Note.
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(i) Any Person having a beneficial interest in a Rule 144A
Global Note or Regulation S Permanent Global Note may
upon request, subject to the Applicable Procedures,
exchange such beneficial interest for a Definitive Note.
Upon receipt by the Trustee of written instructions or
such other form of instructions as is customary for the
Depositary (or Euroclear or Cedel, if applicable), from
the Depositary or its nominee on behalf of any Person
having a beneficial interest in a Rule 144A Global Note
or Regulation S Permanent Global Note, and, in the case
of a Transfer Restricted Security, the following
additional information and documents (all of which may
be submitted by facsimile):
(A) if such beneficial interest is being transferred
to the Person designated by the Depositary as
being the beneficial owner, a certification to
that effect from such Person (in substantially the
form of EXHIBIT B-4 hereto);
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from the transferor
(in substantially the form of Exhibit B-4 hereto);
(C) if such beneficial interest is being transferred
to an Institutional Accredited Investor, pursuant
to a private placement exemption from the
registration requirements of the Securities Act
(and based on an opinion of counsel if Holdings so
requests), a certification to that effect from
such Holder (in substantially the form of EXHIBIT
B-4 hereto) and a certificate from the applicable
transferee (in substantially the form of EXHIBIT C
hereto); or
(D) if such beneficial interest is being transferred
in reliance on any other exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferor
(in substantially the form of Exhibit B-4 hereto)
and an Opinion of Counsel from the transferee or
the transferor reasonably acceptable to Holdings
and to the Registrar to the effect that such
transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian,
at the direction of the Trustee, shall, in
accordance with the standing instructions and
procedures existing between the Depositary and the
Note Custodian, cause the aggregate principal
amount of Rule 144A Global
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Notes or Regulation S Permanent Global Notes, as
applicable, to be reduced accordingly and,
following such reduction, Holdings shall execute
and, the Trustee shall authenticate and deliver to
the transferee a Definitive Note in the
appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Rule 144A Global Note or Regulation S
Permanent Global Note, as applicable, pursuant to this
Section 2.6(c) shall be registered in such names and in
such authorized denominations as the Depositary,
pursuant to instructions from its direct or Indirect
Participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered.
Following any such issuance of Definitive Notes, the
Trustee, as Registrar, shall instruct the Depositary to
reduce or cause to be reduced the aggregate principal
amount at maturity of the applicable Global Note to
reflect the transfer.
(d) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (g) of this Section 2.6), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(e) Transfer and Exchange of a Definitive Note for Beneficial
Interests in a Global Note. A Definitive Note may not be transferred or
exchanged for a beneficial interest in a Global Note.
(f) Authentication of Definitive Notes in Absence of
Depositary. If at any time:
(i) the Depositary for the Notes notifies Holdings that the
Depositary is unwilling or unable to continue as
Depositary for the Global Notes and a successor
Depositary for the Global Notes is not appointed by
Holdings within 90 days after delivery of such notice;
or
(ii) Holdings, at its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of
Definitive Notes under this Indenture,
then Holdings shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
deliver, Definitive Notes in an aggregate
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principal amount equal to the principal amount of the Global Notes in exchange
for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Note certificate evidencing Global
Notes and Definitive Notes (and all Notes issued in
exchange therefor or substitution thereof) shall bear
the legend (the "Private Placement Legend") in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF HOLDINGS THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a)
INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES
TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(a)(l), (2), (3) OR (7) OF THE SECURITIES ACT
(AN "INSTITUTIONAL ACCREDITED INVESTOR"), THAT PRIOR TO
SUCH TRANSFER, FURNISHED THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES LESS THAN $250,000,
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AN OPINION OF COUNSEL ACCEPTABLE TO HOLDINGS THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR
(e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN
THE CASE OF CLAUSE (b), (c), (d) OR (e), BASED UPON AN
OPINION OF COUNSEL IF HOLDINGS SO REQUESTS), (2) TO
HOLDINGS OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security
represented by a Global Note) pursuant to Rule 144 under
the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Note, the Registrar shall
permit the Holder thereof to exchange such
Transfer Restricted Security for a Definitive Note
that does not bear the legend set forth in (i)
above and rescind any restriction on the transfer
of such Transfer Restricted Security upon receipt
of a certification from the transferring holder
substantially in the form of EXHIBIT B-4 hereto;
and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer
Restricted Security shall not be required to bear
the legend set forth in (i) above, but shall
continue to be subject to the provisions of
Section 2.6(a) and (b) hereof; provided, however,
that with respect to any request for an exchange
of a Transfer Restricted Security that is
represented by a Global Note for a Definitive Note
that does not bear the legend set forth in (i)
above, which request is made in reliance upon Rule
144, the Holder thereof shall certify in writing
to the Registrar that such request is being made
pursuant to Rule 144 (such certification to be
substantially in the form of EXHIBIT B-4 hereto).
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(iii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security
represented by a Global Note) in reliance on any
exemption from the registration requirements of the
Securities Act (other than exemptions pursuant to Rule
144A or Rule 144 under the Securities Act) in which the
Holder or the transferee provides an Opinion of Counsel
to Holdings and the Registrar in form and substance
reasonably acceptable to Holdings and the Registrar
(which Opinion of Counsel shall also state that the
transfer restrictions contained in the legend are no
longer applicable):
(A) in the case of any Transfer Restricted Security
that is a Definitive Note, the Registrar shall
permit the Holder thereof to exchange such
Transfer Restricted Security for a Definitive Note
that does not bear the legend set forth in (i)
above and rescind any restriction on the transfer
of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer
Restricted Security shall not be required to bear
the legend set forth in (i) above, but shall
continue to be subject to the provisions of
Section 2.6(a) and (b) hereof.
(iv) Notwithstanding the foregoing, upon the consummation of
the Exchange Offer in accordance with the Registration
Rights Agreement, Holdings shall issue and, upon receipt
of an authentication order in accordance with Section
2.2 hereof, the Trustee shall authenticate (i) one or
more Unrestricted Global Notes in aggregate principal
amount equal to the principal amount of the Restricted
Beneficial Interests tendered for acceptance by persons
that are not (x) broker-dealers, (y) Persons
participating in the distribution of the Notes or (z)
Persons who are affiliates (as defined in Rule 144) of
Holdings and accepted for exchange in the Exchange Offer
and (ii) Definitive Notes that do not bear the Private
Placement Legend in an aggregate principal amount equal
to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the
Trustee shall cause the aggregate principal amount of
the applicable Restricted Global Notes to be reduced
accordingly and Holdings shall execute and the Trustee
shall authenticate and deliver to the Persons designated
by the Holders of Definitive Notes so accepted
Definitive Notes in the appropriate principal amount.
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(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in Global Notes have been exchanged for
Definitive Notes, redeemed, repurchased or cancelled, all Global Notes shall be
returned to or retained and cancelled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial interest
in a Global Note is exchanged for Definitive Notes, redeemed, repurchased or
cancelled, the principal amount of Notes represented by such Global Note shall
be reduced accordingly and an endorsement shall be made on such Global Note, by
the Trustee or the Notes Custodian, at the direction of the Trustee, to reflect
such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges,
Holdings shall execute and the Trustee shall
authenticate Global Notes and Definitive Notes at the
Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but Holdings may
require payment of a sum sufficient to cover any stamp
or transfer tax or similar governmental charge payable
in connection therewith (other than any such stamp or
transfer taxes or similar governmental charge payable
upon exchange or transfer pursuant to Sections 2.10,
3.6, 4.10, 4.14 and 9.5 hereto).
(iii) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or
Definitive Notes shall be the valid obligations of
Holdings, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration
of transfer or exchange.
(iv) The Registrar shall not be required: (A) to issue, to
register the transfer of or to exchange Notes during a
period beginning at the opening of fifteen (15) Business
Days before the day of any selection of Notes for
redemption under Section 3.2 hereof and ending at the
close of business on the day of selection, (B) to
register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part,
or (C) to register the transfer of or to exchange a Note
between a record date and the next succeeding interest
payment date.
(v) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and
Holdings may deem and treat the Person in whose name any
Note is registered as the absolute owner of such Note
for the purpose of receiving payment of principal of and
interest on such Notes and for all other purposes, and
neither
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the Trustee, any Agent nor Holdings shall be affected by
notice to the contrary.
(vi) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of
Section 2.2 hereof.
SECTION 2.7. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or Holdings and
the Trustee receives evidence to their satisfaction of the destruction, loss or
theft of any Note, Holdings shall issue and the Trustee, upon the written order
of Holdings signed by an Officer of Holdings, shall authenticate a replacement
Note if the Trustee's requirements are met. If required by the Trustee or
Holdings, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and Holdings to protect Holdings, the Trustee, any
Agent and any authenticating agent from any loss that any of them may suffer if
a Note is replaced. Holdings and the Trustee may charge for their expenses in
replacing a Note.
Every replacement Note is an additional obligation of Holdings and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.8. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section 2.8 as not outstanding. Except as set forth in Section 2.9 hereof, a
Note does not cease to be outstanding because Holdings or an Affiliate of
Holdings holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than Holdings, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.9. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by
Holdings, or by any Affiliate of Holdings shall be considered as though not
outstanding, except that for the purposes of
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determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes shown on the Trustee's register as
being owned shall be so disregarded. Notwithstanding the foregoing, Notes that
are to be acquired by Holdings or an Affiliate of Holdings pursuant to an
exchange offer, tender offer or other agreement shall not be deemed to be owned
by such entity until legal title to such Notes passes to such entity.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, Holdings may prepare
and the Trustee shall authenticate temporary Notes upon a written order of
Holdings signed by an Officer of Holdings. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that
Holdings considers appropriate for temporary Notes. Without unreasonable delay,
Holdings shall prepare and the Trustee shall upon receipt of a written order of
Holdings signed by an Officer authenticate Definitive Notes in exchange for
temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
SECTION 2.11. CANCELLATION.
Holdings at any time may deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder or which Holdings may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Trustee. All Notes surrendered for registration of
transfer, exchange or payment, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation. Subject to Section 2.7 hereof, Holdings may not
issue new Notes to replace Notes that it has redeemed or paid or that have been
delivered to the Trustee for cancellation. All cancelled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
Holdings, unless by a written order, signed by an Officer of Holdings, Holdings
shall direct that cancelled Notes be returned to It.
SECTION 2.12. DEFAULTED INTEREST.
If Holdings defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which date shall be at the earliest practicable
date but in all events at least five (5) Business Days prior to the payment
date, in each case at the rate provided in the Notes and in Section 4.1 hereof.
Holdings shall fix or cause to be fixed each such special record date and
payment date, and shall promptly thereafter, notify the Trustee of any such
date. At least fifteen (15) days before the special record date, Holdings (or
the Trustee, in the name and at the expense of Holdings) shall mail or cause to
be mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
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SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders
of the Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture
SECTION 2.14. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
SECTION 2.15. CUSIP NUMBER.
Holdings in issuing the Notes may use a "CUSIP" number, and if it
does so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. Holdings shall
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.1. NOTICES TO TRUSTEE.
If Holdings elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at
least 45 days but not more than 60 days before a redemption date (unless a
shorter period is acceptable to the Trustee) an Officers' Certificate setting
forth (i) the Section of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
If Holdings is required to make an offer to purchase Notes pursuant
to Section 4.10 or 4.14 hereof, it shall furnish to the Trustee, at least 45
days before the scheduled purchase date, an Officers' Certificate setting forth
(i) the section of this Indenture pursuant to which the offer to purchase shall
occur, (ii) the terms of the offer, (iii) the principal amount of Notes to be
purchased, (iv) the purchase price, (v) the purchase date and (vi) and further
setting forth a statement to the effect that (a) Holdings or one its
Subsidiaries has affected an Asset Sale and there are Excess Proceeds
aggregating more than $15.0 million or (b) a Change of Control has occurred, as
applicable.
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED OR PURCHASED.
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee in compliance with
the requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and
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appropriate; provided that no Notes of $1,000 or less shall be redeemed in part.
Notices of redemption shall be mailed by first class mail at least 30 but not
more than 60 days before the redemption date to each Holder of Notes to be
redeemed at its registered address. Notices of redemption may not be
conditional. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
SECTION 3.3. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date,
Holdings shall mail or cause to be mailed by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price for the Notes and accrued
interest, and Liquidated Damages, if any;
(3) if any Note is being redeemed in part, the portion
of the principal amount of such Notes to be
redeemed and that, after the redemption date, upon
surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion
shall be issued upon surrender of the original
Note;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be
surrendered to the Paying Agent to collect the
redemption price;
(6) that, unless Holdings defaults in making such
redemption payment, interest and Liquidated
Damages, if any, on Notes called for redemption
ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for
redemption are being redeemed; and
(8) that no representation is made as to the
correctness or accuracy of the CUSIP number, if
any, listed in such notice or printed on the
Notes.
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At Holdings' request, the Trustee shall give the notice of
redemption in Holdings' name and at Holdings' expense; provided, however, that
Holdings shall have delivered to the Trustee, at least 45 days prior to the
redemption date (or such shorter period as shall be acceptable to the Trustee),
an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in the notice as provided in the
preceding paragraph. The notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note shall not affect the validity of the
proceeding for the redemption of any other Note.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price plus accrued and unpaid interest and
Liquidated Damages, if any, to such date. A notice of redemption may not be
conditional.
SECTION 3.5. DEPOSIT OF REDEMPTION OR PURCHASE PRICE.
On or before 10:00 a.m. (New York City time) on each redemption date
or the date on which Notes must be accepted for purchase pursuant to Section
4.10 or 4.14, Holdings shall deposit with the Trustee or with the Paying Agent
money sufficient to pay the redemption price of and accrued and unpaid interest
and Liquidated Damages, if any, on all Notes to be redeemed or purchased on that
date. The Trustee or the Paying Agent shall promptly return to Holdings upon its
written request any money deposited with the Trustee or the Paying Agent by
Holdings in excess of the amounts necessary to pay the redemption price of
(including any applicable premium), accrued interest and Liquidated Damages, if
any, on all Notes to be redeemed or purchased.
If Notes called for redemption or tendered in an Asset Sale Offer or
Change of Control Offer are paid or if Holdings has deposited with the Trustee
or Paying Agent money sufficient to pay the redemption or purchase price of,
unpaid and accrued interest and Liquidated Damages, if any, on all Notes to be
redeemed or purchased, on and after the redemption or purchase date interest and
Liquidated Damages, if any, shall cease to accrue on the Notes or the portions
of Notes called for redemption or tendered and not withdrawn in an Asset Sale
Offer or Change of Control Offer (regardless of whether certificates for such
securities are actually surrendered). If a Note is redeemed or purchased on or
after an interest record date but on or prior to the related interest payment
date, then any accrued and unpaid interest and Liquidated Damages, if any, shall
be paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption shall not be so
paid upon surrender for redemption because of the failure of Holdings to comply
with the preceding paragraph, interest shall be paid on the unpaid principal and
Liquidated Damages, if any, from the redemption or purchase date until such
principal and Liquidated Damages, if any, is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case, at the rate
provided in the Notes and in Section 4.1 hereof.
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SECTION 3.6. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, Holdings shall
issue and, upon Holdings' written request, the Trustee shall authenticate for
the Holder at the expense of Holdings a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
SECTION 3.7. OPTIONAL REDEMPTION.
(a) Except as set forth in the next paragraph, the Notes will
not be redeemable at Holdings' option prior to March 15, 2003. Thereafter, the
Notes will be subject to redemption at any time at the option of Holdings, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on March 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2003 ........................................ 105.625%
2004 ........................................ 103.750%
2005 ........................................ 101.875%
2006 and thereafter ......................... 100.000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to March
15, 2003 Holdings may redeem the Notes, in whole but not in part, at the option
of Holdings, at a redemption price of 111.25% of the Accreted Value (determined
at the date of redemption), with the net cash proceeds of a Public Equity
Offering; provided that such redemption shall occur within 45 days of the date
of the closing of such Public Equity Offering.
SECTION 3.8. MANDATORY REDEMPTION.
Except as set forth under Sections 3.9, 4.10 and 4.14 hereof,
Holdings shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
SECTION 3.9. REPURCHASE OFFERS.
In the event that Holdings shall be required to commence an offer to
all Holders to repurchase Notes (a "Repurchase Offer") pursuant to Section 4.10
hereof, an "Excess Proceeds Offer," or pursuant to Section 4.14 hereof, a
"Change of Control Offer," Holdings shall follow the procedures specified below.
A Repurchase Offer shall commence no earlier than 30 days and no
later than 60 days after a Change of Control (unless Holdings is not required to
make such offer pursuant to Section 4.14(c) hereof) or an Excess Proceeds Offer
Triggering Event (as defined below), as the case may be, and remain open for a
period of twenty (20) Business Days following its commencement and no longer,
except to the extent that a longer period is required by applicable
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law (the "Offer Period"). No later than five (5) Business Days after the
termination of the Offer Period (the "Purchase Date"), Holdings shall purchase
the principal amount of Notes required to be purchased pursuant to Section 4.10
hereof, in the case of an Excess Proceeds Offer, or 4.14 hereof, in the case of
a Change of Control Offer (the "Offer Amount") or, if less than the Offer Amount
has been tendered, all Notes tendered in response to the Repurchase Offer.
Payment for any Notes so purchased shall be made in the same manner as interest
payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest and
Liquidated Damages, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest or Liquidated Damages, if any, shall be payable to Holders who tender
Notes pursuant to the Repurchase Offer.
Upon the commencement of a Repurchase Offer, Holdings shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to such Repurchase
Offer. The Repurchase Offer shall be made to all Holders. The notice, which
shall govern the terms of the Repurchase Offer, shall describe the transaction
or transactions that constitute the Change of Control or Excess Proceeds Offer
Triggering Event, as the case may be and shall state:
(a) that the Repurchase Offer is being made pursuant to this Section
3.9 and Section 4.10 or 4.14 hereof, as the case may be, and the
length of time the Repurchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless Holdings defaults in making such payment, any Note
accepted for payment pursuant to the Repurchase Offer shall cease to
accrue interest and Liquidated Damages, if any, after the Purchase
Date;
(e) that Holders electing to have a Note purchased pursuant to a
Repurchase Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note, duly completed, or transfer by book-entry transfer, to
Holdings, the Depositary, or the Paying Agent at the address
specified in the notice not later than the close of business on the
last day of the Offer Period;
(f) that Holders shall be entitled to withdraw their election if
Holdings, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder
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delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(g) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, Holdings shall select the Notes to
be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by Holdings so that only Notes in denominations
of $1,000, or integral multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer).
On or before 10:00 a.m. (New York City time) on each Purchase Date,
Holdings shall irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the Offer Amount, together with accrued and
unpaid interest and Liquidated Damages, if any, thereon, to be held for payment
in accordance with the terms of this Section 3.9. On the Purchase Date, Holdings
shall, to the extent lawful, (i) accept for payment, on a pro rata basis to the
extent necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Repurchase Offer, or if less than the Offer Amount has been
tendered, all Notes tendered, (ii) deliver or cause the Paying Agent or
depository, as the case may be, to deliver to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by Holdings in accordance with the
terms of this Section 3.9. Holdings, the Depositary or the Paying Agent, as the
case may be, shall promptly (but in any case not later than three (3) Business
Days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
Holdings for purchase, plus any accrued and unpaid interest and Liquidated
Damages, if any, thereon, and Holdings shall promptly issue a new Note, and the
Trustee, shall authenticate and mail or deliver such new Note, to such Holder,
equal in principal amount to any unpurchased portion of such Holder's Notes
surrendered. Any Note not so accepted shall be promptly mailed or delivered by
Holdings to the Holder thereof. Holdings shall publicly announce in a newspaper
of general circulation or in a press release provided to a nationally recognized
financial wire service the results of the Repurchase Offer on the Purchase Date.
Other than as specifically provided in this Section 3.9, any
purchase pursuant to this Section 3.9 shall be made pursuant to the provisions
of Sections 3.1, 3.2, 3.5 and 3.6 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
Holdings shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Holdings shall pay all Liquidated Damages, if any, in the same manner on
the dates and in the amounts set forth in
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the Registration Rights Agreement. Principal, premium and Liquidated Damages, if
any, and interest, shall be considered paid for all purposes hereunder on the
date the Paying Agent if other than Holdings or a Subsidiary thereof holds, as
of 10:00 a.m. (New York City time) money deposited by Holdings in immediately
available funds and designated for and sufficient to pay all such principal,
premium and Liquidated Damages, if any, and interest, then due.
Holdings shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY.
Holdings shall maintain in the Borough of Manhattan, the City of New
York an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee or Registrar) where Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon Holdings in
respect of the Notes and this Indenture may be served. Holdings shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time Holdings shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
Holdings may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve
Holdings of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. Holdings shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
Holdings hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of Holdings in accordance with Section 2.3 hereof.
SECTION 4.3. COMMISSION REPORTS.
From and after the earlier of the effective date of the Exchange
Offer Registration Statement or the effective date of the Shelf Registration
Statement, whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, Holdings shall furnish to the
Holders of Notes (i) all quarterly and annual financial information that would
be required to be contained in a filing with the Commission on Forms 10-Q and
10-K if Holdings were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by Holdings'
certified independent accountants and (ii) all current reports that
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would be required to be filed with the Commission on Form 8-K if Holdings were
required to file such reports. In addition, whether or not required by the rules
and regulations of the Commission, Holdings shall file a copy of all such
information and reports with the Commission for public availability (unless the
Commission will not accept such a filing) within the time periods that would
have been applicable had Holdings been subject to such rules and regulations and
make such information available to securities analysts and prospective investors
upon request. In addition, Holdings has agreed that, for so long as any Notes
remain outstanding, it shall furnish to the Holders, to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act. Holdings shall
at all times comply with TIA ss. 314(a).
The financial information to be distributed to Holders of Notes
shall be filed with the Trustee and mailed to the Holders at their addresses
appearing in the register of Notes maintained by the Registrar, within 90 days
after the end of Holdings' fiscal years and within 45 days after the end of each
of the first three quarters of each such fiscal year.
Holdings shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information and, if requested by
Holdings, the Trustee will deliver such reports to the Holders under this
Section 4.3.
SECTION 4.4. COMPLIANCE CERTIFICATE.
Holdings shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of Holdings and its Subsidiaries during the preceding fiscal year has
been made under the supervision of the signing Officers with a view to
determining whether each has kept, observed, performed and fulfilled its
obligations under this Indenture (including, with respect to any Restricted
Payments made during such year, the basis upon which the calculations required
by Section 4.7 hereof were computed, which calculations may be based on
Holdings' latest available financial statements), and further stating, as to
each such Officer signing such certificate, that, to the best of his or her
knowledge, each entity has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action Holdings is taking or proposes to take with respect thereto) and
that, to the best of his or her knowledge, no event has occurred and remains in
existence by reason of which payments on account of the principal of, premium or
Liquidated Damages, if any, or interest on the Notes is prohibited or if such
event has occurred, a description of the event and what action Holdings is
taking or proposes to take with respect thereto.
So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, in connection with the
year-end financial statements delivered pursuant to Section 4.3 hereof, Holdings
shall use its best efforts to deliver a written statement of Holdings'
independent public accountants (who shall be a firm of established national
reputation) that in making the examination necessary for certification of such
financial statements, nothing has come to their attention that would lead them
to believe that Holdings has
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violated any provisions of Article Four or Section 5.1 hereof or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation. In the event that such written statement of Holdings' independent
public accountants cannot be obtained, Holdings shall deliver an Officers'
Certificate certifying that it has used its best efforts to obtain such
statements and was unable to do so.
Holdings shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action Holdings is taking or proposes to take with respect
thereto.
SECTION 4.5. TAXES.
Holdings shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency all material taxes, assessments and governmental levies,
except such as are contested in good faith and by appropriate proceedings and
with respect to which appropriate reserves have been taken in accordance with
GAAP.
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.
Holdings covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and Holdings (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.7. RESTRICTED PAYMENTS.
From and after the date hereof Holdings shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend or make any other payment or distribution on account
of Holdings' or any of its Restricted Subsidiaries' Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving Holdings) or to the direct or indirect holders of Holdings' or any of
its Restricted Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of Holdings); (ii) purchase, redeem or otherwise acquire or
retire for value (including without limitation, in connection with any merger or
consolidation involving Holdings) any Equity Interests of Holdings or any direct
or indirect parent of Holdings; (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness of Holdings that is pari passu with or subordinated to the Notes
(other than Notes), except a payment of interest or principal at Stated
Maturity; or (iv) make any Restricted Investment (all
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such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) Holdings would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.9 hereof; and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by Holdings and its Subsidiaries after
the date hereof (excluding Restricted Payments permitted by clause (ii)
and (iii) of the next succeeding paragraph), is less than the sum of (i)
50% of the Consolidated Net Income of Holdings for the period (taken as
one accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of Holdings' most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by Holdings from the
issue or sale since the date of the Indenture of Equity Interests of
Holdings (other than Disqualified Stock) or of Disqualified Stock or debt
securities of Holdings that have been converted into such Equity Interests
(other than Equity Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of Holdings and other than Disqualified
Stock or convertible debt securities that have been converted into
Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made after the date of the Indenture is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (B) the initial amount of such Restricted
Investment plus (iv) if any Unrestricted Subsidiary (A) is redesignated as
a Restricted Subsidiary, the fair market value of such redesignated
Subsidiary (as determined in good faith by the Board of Directors) as of
the date of its redesignation or (B) pays any cash dividends or cash
distributions to Holdings or any of its Restricted Subsidiaries, 50% of
any such cash dividends or cash distributions made after the date hereof.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions hereof; (ii)
the redemption, repurchase, retirement, defeasance or other acquisition of any
pari passu or subordinated Indebtedness or Equity Interests of Holdings in
exchange for, or out of the net cash proceeds of the substantially concurrent
sale or issuance (other than to a Restricted Subsidiary of Holdings) of, other
Equity Interests of Holdings (other than any Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition shall be
excluded from clause (c)(ii) of the preceding paragraph; (iii) the defeasance,
redemption,
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repurchase or other acquisition of pari passu or subordinated Indebtedness with
the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;
(iv) the payment of any dividend by a Restricted Subsidiary of Holdings to the
holders of its Equity Interests on a pro rata basis; (v) the declaration or
payment of dividends to Holberg for expenses incurred by Holberg in its capacity
as a holding company that are attributable to the operations of Holdings and its
Restricted Subsidiaries, including, without limitation, (a) customary salary,
bonus and other benefits payable to officers and employees of Holberg, (b) fees
and expenses paid to members of the Board of Directors of Holberg, (c) general
corporate overhead expenses of Holberg, (d) foreign, federal, state or local tax
liabilities paid by Holberg, (e) management, consulting or advisory fees paid to
Holberg not to exceed $2.0 million in any fiscal year, and (f) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of Holdings or Holberg held by any member of Holdings' (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement in effect as of the date of the Indenture;
provided, however, the aggregate amount paid pursuant to the foregoing clauses
(a) through (f) does not exceed $8.0 million in any fiscal year; (vi)
Investments in any Person (other than Holdings or a Wholly-Owned Restricted
Subsidiary) engaged in a Permitted Business in an amount taken together with all
other Investments made pursuant to this clause (vi) that are at the time
outstanding not to exceed $5.0 million; (vii) other Investments in Unrestricted
Subsidiaries having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (vii) that are at that time
outstanding, not to exceed $2.0 million; (viii) payments to Holberg pursuant to
the tax sharing agreement among Holberg and other members of the affiliated
corporations of which Holberg is the common parent; (ix) the designation of
certain of the Company's Subsidiaries as Unrestricted Subsidiaries immediately
prior to the date of the Indenture; (x) the redemption in connection with the
Transactions of the preferred stock of the Company held by Holberg; (xi) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of Holdings or the Company held by any member of Holdings' or
the Company's (or any of their Restricted Subsidiaries') management pursuant to
any management equity subscription agreement or stock option agreement or in
connection with the termination of employment of any employees or management of
Holdings or the Company or their Subsidiaries; provided that the aggregate price
paid for all such repurchased, redeemed, acquired or retired Equity Interests
shall not exceed $2.0 million in the aggregate plus the aggregate cash proceeds
received by Holdings or the Company after the date of the Indenture from any
reissuance of Equity Interests by Holdings or the Company to members of
management of Holdings or the Company and their Restricted Subsidiaries; and
(xii) other Restricted Payments in an aggregate amount not to exceed $10.0
million.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default;
provided that in no event shall the business currently operated by the Company
be transferred to or held by an Unrestricted Subsidiary. For purposes of making
such determination, all outstanding Investments by Holdings and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this covenant. All such outstanding Investments will be
deemed to constitute Investments in an amount equal to
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the fair market value of such Investments at the time of such designation (as
determined in good faith by the Board of Directors). Such designation shall only
be permitted if such Restricted Payment would be permitted at such time and if
such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by Holdings or such Subsidiary,
as the case may be, pursuant to the Restricted Payment. The fair market value of
any non-cash Restricted Payment shall be determined in good faith by the Board
of Directors whose resolution with respect thereto shall be delivered to the
Trustee such determination to be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $10.0 million. Not later than the date of making any
Restricted Payment, Holdings shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "Restricted
Payments" were computed, together with a copy of any fairness opinion or
appraisal required by the Indenture.
SECTION 4.8. DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
Holdings shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
Holdings or any of its Restricted Subsidiaries (1) on its Capital Stock or (2)
with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to Holdings or any of its Restricted
Subsidiaries, (ii) make loans or advances to Holdings or any of its Restricted
Subsidiaries or (iii) transfer any of its properties or assets to Holdings or
any of its Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of (a) Existing Indebtedness as in effect on the
date hereof, (b) the New Credit Facility as in effect as of the date hereof, and
any amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive in the aggregate (as
determined by the Credit Agent in good faith) with respect to such dividend and
other payment restrictions than those contained in the New Credit Facility as in
effect on the date hereof, (c) this Indenture and the Notes, (d) any applicable
law, rule, regulation or order, (e) any instrument governing Indebtedness or
Capital Stock of a Person acquired by Holdings or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms hereof to be
incurred, (f) by reason of customary non-assignment provisions in leases entered
into in the ordinary course of business and consistent with past practices, (g)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) above
on the property so acquired, (h) Permitted Refinancing
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Indebtedness, provided that the material restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced (i) contracts for the sale of assets, including without
limitation customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary, and (j)
restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business.
SECTION 4.9. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
Holdings shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and Holdings
will not issue any Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that
Holdings may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if the Fixed Charge Coverage Ratio for Holdings' most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Restricted Subsidiaries of Holdings of
revolving indebtedness and letters of credit pursuant to New Credit Facility;
provided that the aggregate principal amount of all revolving Indebtedness (with
letters of credit being deemed to have a principal amount equal to the maximum
potential liability of the Restricted Subsidiaries of Holdings thereunder)
outstanding under the New Credit Facility after giving effect to such incurrence
does not exceed $40.0 million less the aggregate amount of all Net Proceeds of
Asset Sales applied to permanently repay revolving credit Indebtedness under the
New Credit Facility (to the extent accompanied by a corresponding commitment
reduction) pursuant to Section 4.10 hereof;
(ii) the incurrence by Holdings and its Restricted Subsidiaries of
the Existing Indebtedness;
(iii) the incurrence by Holdings and its Restricted Subsidiaries of
Indebtedness represented by the Notes offered in the Offering, the Senior
Subordinated Notes and the Senior Subordinated Note Guarantees;
(iv) the incurrence by Holdings or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the purpose
of financing all or any part of the purchase
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price or cost of construction or improvement of property, plant or equipment
used in the business of Holdings or such Restricted Subsidiary (whether through
the direct purchase of assets or the Capital Stock of any Person owning such
Assets), in an aggregate principal amount not to exceed $7.5 million;
(v) the incurrence by Holdings or any of its Restricted Subsidiaries
of Indebtedness in connection with the acquisition of assets or a new Restricted
Subsidiary; provided that such Indebtedness was incurred by the prior owner of
such assets or such Restricted Subsidiary prior to such acquisition by Holdings
or one of its Subsidiaries and was not incurred in connection with, or in
contemplation of, such acquisition by Holdings or one of it Subsidiaries;
provided further that the principal amount (or accreted value, as applicable) of
such Indebtedness, together with any other outstanding Indebtedness incurred
pursuant to this clause (vi), does not exceed $5.0 million;
(vi) the incurrence by Holdings or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness that was
permitted by this Indenture to be incurred under the first paragraph hereof and
clauses (i), (ii), (iii), (iv), (v) or (xv) of this Section 4.9;
(vii) the incurrence by Holdings or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among Holdings and any of
its Wholly Owned Restricted Subsidiaries of Holdings or the Company; provided,
however, that (i) if Holdings is the obligor, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes and (ii)(A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person other
than Holdings or a Wholly Owned Restricted Subsidiary of Holdings and (B) any
sale or other transfer of any such Indebtedness to a Person that is not either
Holdings or a Wholly Owned Restricted Subsidiary of Holdings shall be deemed, in
each case, to constitute an incurrence of such Indebtedness by Holdings or such
Restricted Subsidiary, as the case may be;
(viii) the incurrence by Holdings or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging currency risk or interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be outstanding;
(ix) the guarantee by Holdings or any of its Restricted Subsidiaries
of Indebtedness of Holdings or a Restricted Subsidiary of Holdings that was
permitted to be incurred by another provision of this covenant;
(x) the incurrence by Holdings' Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of Holdings
not permitted by this clause (x);
(xi) indebtedness incurred by Holdings or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters of
credit issued in the ordinary
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course of business, including without limitation to letters of credit in respect
to workers' compensation claims or self-insurance, or other Indebtedness with
respect to reimbursement type obligations regarding workers' compensation
claims; provided, however, that upon the drawing of such letters of credit or
the incurrence of such Indebtedness, such obligations are reimbursed within 30
days following such drawing or incurrence;
(xii) Indebtedness arising from agreements of Holdings or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, asset or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or a Subsidiary for the purpose of financing such
acquisition; provided that the maximum aggregate liability of all such
Indebtedness shall at no time exceed 50% of the gross proceeds actually received
by Holdings and its Restricted Subsidiaries in connection with such disposition;
(xiii) obligations in respect of performance and surety bonds and
completion guarantees provided by Holdings or any Restricted Subsidiary in the
ordinary course of business;
(xiv) guarantees incurred in the ordinary course of business in an
aggregate principal amount not to exceed $5.0 million; and
(xv) the incurrence by Holdings or any of its Restricted
Subsidiaries of additional Indebtedness, including Attributable Debt incurred
after the date of the Indenture, in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (xv), not to exceed $35.0 million.
For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xv) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.9,
Holdings shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.9 and such item of Indebtedness
will be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest and the accretion of
accreted value will not be deemed to be an incurrence of Indebtedness for
purposes of this Section 4.9.
SECTION 4.10. ASSETS SALES
Holdings will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) Holdings (or the Restricted
Subsidiary, as the case may be) receives consideration at the time of such Asset
Sale at least equal to the fair market value (evidenced by a resolution of the
Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) of the assets or Equity Interests issued or sold or otherwise disposed
of and (ii) at least 80% of the consideration therefor received by Holdings or
such Restricted Subsidiary is in the form of cash; provided that the amount of
(x) any liabilities (as shown on Holdings' or such Restricted Subsidiary's most
recent balance sheet), of Holdings or any Restricted Subsidiary
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(other than contingent liabilities and liabilities that are by their terms
subordinated to the Notes or any guarantee thereof) that are assumed by the
transferee of any such assets pursuant to a customary novation agreement that
releases Holdings or such Restricted Subsidiary from further liability and (y)
any securities, notes or other obligations received by Holdings or any such
Restricted Subsidiary from such transferee that are converted by Holdings or
such Restricted Subsidiary into cash within 180 days (to the extent of the cash
received), shall be deemed to be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, Holdings may apply such Net Proceeds, at its option, (a) to permanently
repay Senior Debt, (and to correspondingly reduce commitments with respect
thereto in the case of revolving borrowings), or (b) to the acquisition of a
controlling interest in another business, the making of a capital expenditure or
the acquisition of other long-term assets and parking facility agreements, in
each case, in a Permitted Business. Pending the final application of any such
Net Proceeds, Holdings may temporarily reduce the revolving Indebtedness under
the New Credit Facility or otherwise invest such Net Proceeds in any manner that
is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are
not applied or invested as provided in the first sentence of this paragraph will
be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $15.0 million, Holdings will be required to make an offer to
all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the Accreted Value thereof on the
date of purchase (if such date of purchase is prior to March 15, 2003) or 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase (if such date of purchase is on
or after March 15, 2003), in each case, in accordance with Section 3.9 hereof.
To the extent that the aggregate amount of Notes tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds, Holdings may use any remaining
Excess Proceeds for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
Holdings shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction") unless (i)
such Affiliate Transaction is on terms that are no less favorable to Holdings or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by Holdings or such Restricted Subsidiary with an
unrelated Person and (ii) Holdings delivers to the Trustee (a) with respect to
any Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (b) with respect to any Affiliate Transaction or series of related
Affiliate
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Transactions involving aggregate consideration in excess of $10.0 million, an
opinion as to the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing; provided that the following shall not be deemed
Affiliate Transactions: (n) the Company's lease on behalf of Holberg of a plane
under arrangements consistent with past practices, (o) the Company's payment of
the fees and expenses of the Offering, (p) on or about the Effective Date, the
Company's cancellation and forgiveness of approximately $4.5 million advance
previously made to Holberg; (q) any employment agreement entered into by
Holdings or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of Holdings or such Restricted
Subsidiaries, (r) transactions between or among Holdings and/or its Restricted
Subsidiaries, (s) Permitted Investments and Restricted Payments that are
permitted by the provisions of Section 4.7 hereof, (t) customary loans,
advances, fees and compensation paid to, and indemnity provided on behalf of,
officers, directors, employees or consultant of Holdings or any of its
Restricted Subsidiaries, (u) annual management fees paid to Holberg not to
exceed $5.0 million in any one year, (v) transactions pursuant to any contract
or agreement in effect on the date hereof as the same may be amended, modified
or replaced from time to time so long as any such amendment, modification or
replacement is no less favorable to Holdings and its Restricted Subsidiaries
than contract or agreement as in effect on the Issue Date or is approved by a
majority of the disinterested directors of Holdings, (w) transactions between
Holdings or its Restricted Subsidiaries on the one hand, and Holberg on the
other hand, involving the procuring or provision of financial or advisory
services by Holberg; provided that fees and expenses payable to Holberg do not
exceed the usual and customary fees and expenses for similar services, (x)
transactions between Holdings or its Restricted Subsidiaries on the one hand,
and DLJ or its Affiliates on the other hand, involving the provision of
financial, advisory, lending, placement or underwriting services by DLJ;
provided that fees payable to DLJ do not exceed the usual and customary fees of
DLJ for similar services, (y) the insurance arrangements between Holdings and
its Subsidiaries and an Affiliate of Holberg that are not less favorable to
Holdings or any of its Subsidiaries than those that are in effect on the date
hereof provided such arrangements are conducted in the ordinary course of
business consistent with past practices, and (z) payments under the tax sharing
agreement among Holberg and other members of the affiliated group of
corporations of which it is the common parent.
SECTION 4.12. LIENS.
Holdings shall not and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind securing trade payables or Indebtedness of
Holdings that is subordinate to or pari passu with the Notes (other than
Permitted Liens) upon any of their property or assets, now owned or hereafter
acquired.
SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS.
Holdings shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
Holdings may, and may permit its Restricted Subsidiaries to, enter into a sale
and leaseback transaction if (i) Holdings could have (a) incurred Indebtedness
in an amount equal to the Attributable Debt relating to such sale and
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leaseback transaction pursuant to Section 4.9 hereof and (b) incurred a Lien to
secure such Indebtedness pursuant to Section 4.12 hereof, (ii) the gross cash
proceeds of such sale and leaseback transaction are at least equal to the fair
market value (as determined in good faith by the Board of Directors and set
forth in an Officers' Certificate delivered to the Trustee) of the property that
is the subject of such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is permitted by, and Holdings, to
the extent it receives the proceeds of such transaction, applies the proceeds of
such transaction in compliance with, Section 4.10 hereof.
SECTION 4.14. OFFER TO PURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of Notes
will have the right to require Holdings to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the Accreted Value thereof on the date of purchase (if such
date of purchase is prior to March 15, 2003) or 101% of the aggregate principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase (if such date of purchase is after March 15,
2003) (the "Change of Control Payment"). Within 30 days following any Change of
Control, Holdings will mail a notice to each Holder describing the transaction
or transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by
Section 3.9 hereof and described in such notice. Holdings shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
On the Change of Control Payment Date, Holdings shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by
Holdings. The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof.
The Change of Control provisions described above will be applicable
whether or not any other provisions of this Indenture are applicable. Except as
described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders of the Notes to require that Holdings
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
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Holdings shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth herein applicable to a Change of Control Offer made by Holdings and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
SECTION 4.15. CORPORATE EXISTENCE.
Subject to Section 4.14 and Article 5 hereof, as the case may be,
Holdings shall do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence and the corporate, partnership
or other existence of each of its Subsidiaries in accordance with the respective
organizational documents (as the same may be amended from time to time) of
Holdings or any such Subsidiary and the rights (charter and statutory), licenses
and franchises of Holdings and its Subsidiaries; provided that Holdings shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors of Holdings shall determine that the preservation thereof is
no longer desirable in the conduct of the business of Holdings and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
SECTION 4.16. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF WHOLLY OWNED
RESTRICTED SUBSIDIARIES.
Holdings (i) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of Holdings to, transfer, convey, sell, lease or otherwise
dispose of any Capital Stock of any Wholly Owned Subsidiary of Holdings to any
Person (other than Holdings or a Wholly Owned Restricted Subsidiary of
Holdings), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Stock of such Wholly Owned Restricted
Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with Section 4.10 hereof
and (ii) will not permit any Wholly Owned Restricted Subsidiary of Holdings to
issue any of its Equity Interests (other than, if necessary, shares of its
Capital Stock constituting directors' qualifying shares) to any Person other
than to Holdings or a Wholly Owned Restricted Subsidiary of Holdings or
employees of the Company in connection with employee incentive plans or programs
by the Company's Board of Directors.
SECTION 4.17. BUSINESS ACTIVITIES.
Holdings shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than a Permitted Business, except to such
extent as would not be material to Holdings and its Restricted Subsidiaries
taken as a whole.
SECTION 4.18. PAYMENT FOR CONSENTS.
Neither Holdings nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or
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provisions hereof or the Notes unless such consideration is offered to be paid
or is paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 5.
SUCCESSORS
SECTION 5.1. .MERGER, CONSOLIDATION OF SALE OF ASSETS.
Holdings shall not consolidate or merge with or into (whether or not
Holdings is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless (i) Holdings is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than Holdings)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any such consolidation or
merger (if other than Holdings) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of Holdings under the Notes and this Indenture;
(iii) immediately after such transaction no Default or Event of Default exists;
(iv) except in the case of a merger of Holdings with or into a Wholly Owned
Restricted Subsidiary of Holdings, Holdings or the entity or Person formed by or
surviving any such consolidation or merger (if other than Holdings), or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made will, at the time of such transaction and after giving pro forma
effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of the Section 4.9 hereof
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of Holdings in accordance with Section 5.1 hereof, the successor corporation
formed by such consolidation or into or with which Holdings is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to Holdings), and shall exercise every right
and power of Holdings under this Indenture with the same effect as if such
successor Person had been named as Holdings herein; provided, that, (i) solely
for the purposes of computing Consolidated Net Income for purposes of clause (b)
of the first paragraph of Section 4.7 hereof, the Consolidated Net Income of any
person other than Holdings and its Subsidiaries shall be included only for
periods subsequent to the effective time of such merger, consolidation,
combination or transfer of assets; and (ii) in the case of any sale, assignment,
transfer, lease, conveyance, or other disposition of less than all of the assets
of the
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predecessor Company, the predecessor Company shall not be released or discharged
from the obligation to pay the principal of or interest and Liquidated Damages,
if any, on the Notes.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
Each of the following constitutes an "Event of Default":
(i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes;
(ii) default in payment when due of principal of or premium, if
any, on the Notes;
(iii) failure by Holdings to comply with the provisions described
under Sections 4.10 or 4.14 or Article 5 hereof;
(iv) failure by Holdings for 30 days after notice from the Trustee
or at least 25% in principal amount of the Notes then
outstanding to comply with the provisions described under
Sections 4.7 or 4.9 hereof;
(v) failure by Holdings for 60 days after notice from the Trustee
or at least 25% in principal amount of the Notes then
outstanding to comply with any of its other agreement in this
Indenture or the Notes;
(vi) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by Holdings or
any of its Subsidiaries (or the payment of which is guaranteed
by Holdings or any of its Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the
date hereof, which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case,
the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $15.0 million or
more;
(vii) failure by Holdings or any of its Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of
60 days;
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(viii) Holdings or any of its Significant Subsidiaries or any group
of Subsidiaries that, taken as a whole would constitute a
Significant Subsidiary, pursuant to or within the meaning of
any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
(c) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become
due; or
(ix) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against Holdings or any of its
Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an
involuntary case;
(b) appoints a Custodian of Holdings or any of its
Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or
substantially all of the property of the Company
or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary; or
(c) orders the liquidation of Holdings or any of its
Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
SECTION 6.2. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Upon such declaration,
the principal of (or, if prior to March 15, 2003,
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the Accreted Value of), premium, if any, and accrued and unpaid interest on the
Notes shall be due and payable immediately. Notwithstanding the foregoing, in
the case of an Event of Default as described in clause (viii) or (ix) of Section
6.1 hereof, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce this Indenture or the
Notes except as provided in this Indenture.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of Holdings
with the intention of avoiding payment of the premium that Holdings would have
had to pay if Holdings then had elected to redeem the Notes pursuant to the
optional redemption provisions of Section 3.7(a) hereof, an equivalent premium
shall also become and be immediately due and payable to the extent permitted by
law upon the acceleration of the Notes. If an Event of Default occurs prior to
March 15, 2003 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of Holdings with the intention of avoiding the
prohibition on redemption of the Notes prior to March 15, 2003, then the amount
payable in respect of such Notes for purposes of this paragraph for each of the
twelve-month periods beginning on March 15 of the years indicated below shall be
set forth below, expressed as percentages of the Accreted Value and Liquidated
Damages, if any, to the date of payment:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1998 .......................... 111.250%
1999 .......................... 110.125%
2000 .......................... 109.000%
2001 .......................... 107.875%
2002 .......................... 106.750%
</TABLE>
SECTION 6.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Holdings is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and Holdings is required upon becoming
aware of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
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SECTION 6.4. WAIVER OF PAST DEFAULTS.
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under this Indenture (including any acceleration (other than an automatic
acceleration resulting from an Event of Default under clause (viii) or (ix) of
Section 6.1 hereof) except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes (other than as a result
of an acceleration), which shall require the consent of all of the Holders of
the Notes then outstanding.
SECTION 6.5. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust power conferred on it. However, (i) the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability, and (ii) the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction. In case an Event of Default shall occur (which shall not be cured),
the Trustee will be required, in the exercise of its power, to use the degree of
care of a prudent man in the conduct of his own affairs. Notwithstanding any
provision to the contrary in this Indenture, the Trustee is under no obligation
to exercise any of its rights or powers under this Indenture at the request of
any Holder of Notes, unless such Holder shall offer to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
SECTION 6.6. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default or the Trustee receives such
notice from Holdings;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested,
the provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.
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A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium, if any, interest,
and Liquidated Damages, if any, on the Note, on or after the respective due
dates expressed in the Note (including in connection with an offer to purchase),
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(i) or (ii) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against Holdings for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to Holdings
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
securities or property payable or deliverable upon the conversion or exchange of
the Notes or on any such claims and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
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SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, interest, and Liquidated Damages, if any,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium, if any, interest, and
Liquidated Damages, if any, respectively;
Third: without duplication, to the Holders for any other Obligations
owing to the Holders under this Indenture and the Notes; and
Fourth: to Holdings or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of
a Note pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing of which
a Responsible Officer of the Trustee has knowledge, the
Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill
in its exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
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(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture or the TIA and
the Trustee need perform only those duties that are
specifically set forth in this Indenture or the TIA and
no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section 7.1;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is
subject to paragraphs (a), (b), (c), (e), (f) and Section 7.2
of this Section 7.1.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The
Trustee shall be under no obligation to exercise any of its
rights and powers under this Indenture at the request of any
Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with
Holdings. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by
law.
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SECTION 7.2. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely on the truth of the
statements and correctness of the opinions contained in, and
shall be protected from acting or refraining from acting upon,
any document believed by it to be genuine and to have been
signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or
both. The Trustee shall not be liable for any action it takes
or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. Prior to taking, suffering
or admitting any action, the Trustee may consult with counsel
of the Trustee's own choosing and the written advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized
or within the rights or powers conferred upon it by this
Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from Holdings shall be
sufficient if signed by an Officer of Holdings.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders unless such Holders
shall have offered to the Trustee reasonable security or
indemnity satisfactory to the Trustee against the costs,
expenses and liabilities that might be incurred by it in
compliance with such request or direction.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner of Notes and may otherwise deal with Holdings or any Affiliate of Holdings
with the same rights it would have if it were not Trustee. However, in the event
that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue as
Trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
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SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for Holding's use of the proceeds from the Notes or any money paid
to Holdings or upon Holding's direction under any provision of this Indenture,
it shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.
SECTION 7.5. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to a Responsible Officer of the Trustee, the Trustee shall mail to
Holders of Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
on any Note pursuant to Section 6.1(i) or (ii) hereof, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders
of the Notes.
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b). The Trustee shall also transmit by mail all reports as required by TIA
ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to Holdings and filed with the Commission and each stock
exchange on which Holdings has informed the Trustee in writing the Notes are
listed in accordance with TIA ss. 313(d). Holdings shall promptly notify the
Trustee when the Notes are listed on any stock exchange and of any delisting
thereof.
SECTION 7.7. COMPENSATION AND INDEMNITY.
Holdings shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. To the
extent permitted by law, the Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. Holdings shall reimburse
the Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
Holdings shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture
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against Holdings (including this Section 7.7) and defending itself against any
claim (whether asserted by Holdings or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify Holdings
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify Holdings shall not relieve Holdings of its obligations hereunder.
Holdings shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and Holdings shall pay the reasonable fees
and expenses of such counsel. Holdings need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of Holdings under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure Holdings' payment obligations in this Section 7.7, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal, interest
and Liquidated Damages, if any, on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture and the resignation or removal of
the Trustee.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1 (viii) or (ix) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.8.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying Holdings. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and Holdings in writing. Holdings may remove the Trustee
if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, Holdings shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by Holdings.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, Holdings, or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Holdings. Thereupon, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and the duties of the Trustee under
this Indenture. The successor Trustee shall mail a notice of its succession to
the Holders of the Notes. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided that all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, Holdings' obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee or any Agent consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act shall be
the successor Trustee or any Agent, as applicable.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities. The Trustee and its direct parent shall at all
times have a combined capital surplus of at least $50.0 million as set forth in
its most recent annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
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SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST HOLDINGS.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
Holdings may, at the option of their respective Boards of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE.
Upon Holdings' exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, Holdings shall, subject to the satisfaction of
the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from their respective obligations with respect to all outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, Legal Defeasance means that Holdings
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all their
respective other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of Holdings, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive payments in respect of the principal
of, premium, if any, and interest and Liquidated Damages, if any, on such Notes
when such payments are due from the trust referred to in Section 8.4(a); (b)
Holding's obligations with respect to such Notes under Sections 2.2, 2.3, 2.4,
2.5, 2.6, 2.7, 2.10 and 4.2 hereof; (c) the rights, powers, trusts, duties and
immunities of the Trustee including without limitation thereunder Section 7.7,
8.5 and 8.7 hereof and Holding's obligations in connection therewith and (d) the
provisions of this Article 8. Subject to compliance with this Article 8,
Holdings may exercise its option under this Section 8.2 notwithstanding the
prior exercise of its option under Section 8.3 hereof.
SECTION 8.3. COVENANT DEFEASANCE.
Upon Holdings' exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, Holdings shall, subject to the satisfaction of
the conditions set forth in Section 8.4 hereof, be released from its obligations
under the covenants contained in Sections 3.9, 4.5, 4.7, 4.8, 4.9, 4.10, 4.11,
4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and 5.1 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter,
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"Covenant Defeasance"), and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Notes, Holdings or any of its Subsidiaries may omit
to comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section 6.1 hereof, but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby. In
addition, upon Holdings' exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, subject to the satisfaction of the conditions
set forth in Section 8.4 hereof, Sections 6.1(iii) through (v) hereof shall not
constitute Events of Default.
SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) Holdings must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in U.S.
dollars, non-callable Government Securities, or a combination
thereof, in such amounts as shall be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium and Liquidated
Damages, if any, and interest on the outstanding Notes on the
stated maturity or on the applicable redemption date, as the
case may be, and Holdings must specify whether the Notes are
being defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.2 hereof, Holdings
shall have delivered to the Trustee an opinion of counsel in
the United States reasonably acceptable to the Trustee
confirming that (A) Holdings has received from, or there has
been published by, the Internal Revenue Service a ruling or
(B) since the date hereof, there has been a change in the
applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of counsel shall
confirm that, the Holders of the outstanding Notes shall not
recognize income, gain or loss for federal income tax purposes
as a result of such Legal Defeasance and shall be subject to
federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal
Defeasance had not occurred;
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(c) in the case of an election under Section 8.3 hereof, Holdings
shall have delivered to the Trustee an opinion of counsel in
the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes shall not
recognize income, gain or loss for federal income tax purposes
as a result of such Covenant Defeasance and shall be subject
to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default
or Event of Default resulting from the borrowing of funds to
be applied to such deposit) or insofar as Events of Default
from bankruptcy or insolvency events are concerned, at any
time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under any
material agreement or instrument (other than this Indenture)
to which Holdings or any of its Subsidiaries is a party or by
which Holdings or any of its Subsidiaries is bound;
(f) Holdings shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the
deposit, the trust funds shall not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally;
(g) Holdings shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by Holdings
with the intent of preferring the Holders of Notes over the
other creditors of Holdings with the intent of defeating,
hindering, delaying or defrauding creditors of Holdings or
others; and
(h) Holdings shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including Holdings acting as Paying Agent) as the
Trustee may determine, to
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the Holders of such Notes of all sums due and to become due thereon in respect
of principal, premium, if any, interest and Liquidated Damages, if any, but such
money need not be segregated from other funds except to the extent required by
law.
Holdings shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to Holdings from time to time upon the written
request of Holdings and be relieved of all liability with respect to any money
or non-callable Government Securities held by it as provided in Section 8.4
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.4(a) hereof), are in
excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.6. REPAYMENT TO HOLDINGS.
Any money deposited with the Trustee or any Paying Agent, or then
held by Holdings, in trust for the payment of the principal of, premium, if any,
interest or Liquidated Damages, if any, on any Note and remaining unclaimed for
one year after such principal, and premium, if any, or interest or Liquidated
Damages, if any, has become due and payable shall be paid to Holdings on its
written request or (if then held by Holdings) shall be discharged from such
trust; and the Holder of such Note shall thereafter, as an unsecured general
creditor, look only to Holdings for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of Holdings as trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of Holdings cause to be published once, in the New
York Times and The Wall Street Journal (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to Holdings.
SECTION 8.7. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations of Holdings under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof,
as the case may be; provided, however, that, if Holdings makes any payment of
principal of, premium, if any, interest or Liquidated
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Damages, if any, on any Note following the reinstatement of its obligations,
Holdings shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF THE NOTES.
Notwithstanding Section 9.2 of this Indenture, without the consent
of any Holder of Notes Holdings and the Trustee may amend or supplement this
Indenture or the Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(c) to provide for the assumption of Holdings' obligations to the
Holders of the Notes in the case of a merger, or consolidation
pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of
the Notes;
(e) to issue additional Notes hereunder; provided that the
aggregate principal amount at maturity; or
(f) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under
the TIA.
Upon the written request of Holdings accompanied by a resolution of
its Board of Directors of Holdings authorizing the execution of any such amended
or supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 9.6 hereof, the Trustee shall join with Holdings in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.2, this Indenture or the
Notes may be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer, for Notes), and any existing default or compliance with any
provision of this Indenture or the Notes may be waived with the
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consent of the Holders of a majority in principal amount of the then outstanding
Notes (including consents obtained in connection with or a tender offer or
exchange offer for the Notes).
Upon the request of Holdings accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 9.6 hereof, the Trustee shall
join with Holdings in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may, but shall not be obligated to, enter into such amended or
supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.2 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof. After an amendment, supplement or waiver under this Section 9.2 becomes
effective, Holdings shall mail to the Holders of each Note affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
Holdings to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amended or supplemental indenture
or waiver.
Subject to Sections 6.2, 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may amend
or waive compliance in a particular instance by Holdings with any provision of
this Indenture or the Notes. However, without the consent of each Holder
affected, an amendment, or waiver may not (with respect to any Note held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption of
the Notes (other than provisions relating to Sections 3.9,
4.10 and 4.14 hereof);
(c) reduce the rate of or change the time for payment of interest
on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes
(except a rescission of acceleration of the Notes by the
Holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in Section 6.4 or 6.7 hereof;
(g) waive a redemption or repurchase payment with respect to any
Note (other than a payment required by Section 4.10 or 4.14
hereof); or
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(h) make any change in the amendment and waiver provisions of this
Article 9.
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall
be set forth in an amended or supplemental indenture that complies with the TIA
as then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. When an amendment, supplement or waiver becomes effective in
accordance with its terms, it thereafter binds every Holder.
Holdings may, but shall not be obligated to, fix a record date for
determining which Holders of the Notes must consent to such amendment,
supplement or waiver. If Holdings fixes a record date, the record date shall be
fixed at (i) the later of 30 days prior to the first solicitation of such
consent or the date of the most recent list of Holders of Notes furnished for
the Trustee prior to such solicitation pursuant to Section 2.5 hereof or (ii)
such other date as Holdings shall designate.
SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. Holdings in exchange
for all Notes may issue and the Trustee shall authenticate new Notes that
reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
Holdings may not sign an amendment or supplemental indenture until their
respective Boards of Directors approve it. In signing or refusing to sign any
amended or supplemental indenture the Trustee shall be entitled to receive and
(subject to Section 7.1 hereof) shall be fully protected in relying upon, in
addition to the documents required by Section 11.4 hereof, an Officers'
Certificate and an Opinion of Counsel stating that the execution of such amended
or supplemental indenture is authorized or permitted by this Indenture, that it
is not inconsistent herewith, and that it will be valid and binding upon
Holdings in accordance with its terms.
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ARTICLE 10.
MISCELLANEOUS
SECTION 10.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 10.2. NOTICES.
Any notice or communication by Holdings, the Subsidiary Guarantors
or the Trustee to the others is duly given if in writing and delivered in Person
or mailed by first class mail (registered or certified, return receipt
requested), telecopier or overnight air courier guaranteeing next day delivery,
to the others' address:
If to Holdings:
AP Holdings, Inc.
800 Superior Avenue
Cleveland, Ohio 44114
Telecopier No.: (216) 523-8080
Attention: Secretary
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6188
Telecopier No.: (212) 403-2000
Attention: Adam O. Emmerich
If to the Trustee:
State Street Bank and Trust Company
225 Asylum Street
Hartford, Connecticut 06103
Telecopier No.: (860) 244-1897
Attention: Corporate Trust Department
Holdings or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier promising next Business Day delivery.
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Any notice or communication to a Holder shall be mailed by first
class mail or by overnight air courier promising next Business Day delivery to
its address shown on the register kept by the Registrar. Any notice or
communication shall also be so mailed to any Person described in TIA ss. 313(c),
to the extent required by the TIA. Failure to mail a notice or communication to
a Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If Holdings mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 10.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes.
Holdings, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).
SECTION 10.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by Holdings to the Trustee to take
any action under this Indenture (other than the initial issuance of the Senior
Discount Notes), Holdings shall furnish to the Trustee upon request:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 10.5 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been
satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 10.5 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 10.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
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(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such
covenant or condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 10.6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of
Holdings, as such, shall have any liability for any obligations of Holdings or
any Subsidiary Guarantor under the Notes, this Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Notes by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
SECTION 10.8. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE AND THE NOTES.
SECTION 10.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of Holdings or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 10.10. SUCCESSORS.
All agreements of Holdings in this Indenture and the Notes shall
bind their respective successors and assigns. All agreements of the Trustee in
this Indenture shall bind its successors and assigns.
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SECTION 10.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[SIGNATURES ON FOLLOWING PAGE]
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SIGNATURES
Dated as of March 30, 1998 HOLDINGS, INC.
By: /s/ G. Walter Stuelpe, Jr.
---------------------------
Name: G. Walter Stuelpe, Jr.
Title: President and Chief Executive Officer
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Michael M. Hopkins
-------------------------------
Name: Michael M. Hopkins
Title: Vice President
<PAGE> 84
EXHIBIT A
(Face of Senior Discount Note)
11 1/4% Senior Discount Notes due 2008
$001857AA9
No.____ CUSIP NO.
AP HOLDINGS, INC.
promises to pay to ____________________ or registered assigns, the
principal sum of _____________ Dollars on March 15, 2008.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
This is one of the
Senior Discount Notes referred to in the
within-mentioned Indenture:
Dated:
------------------------
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
------------------------
A-1-1
<PAGE> 85
(Back of Senior Discount Note)
11 1/4% Senior Discount Notes due 2008
[Unless and until it is exchanged in whole or in part for Senior Discount
Notes in definitive form, this Senior Discount Note may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary. Unless this certificate is presented by an
authorized representative of The Depository Trust Company (55 Water Street, New
York, New York) ("DTC"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the registered owner hereof, Cede & Co., has an
interest herein.](1)
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF HOLDINGS THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED STATES TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 OF THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF THE SECURITIES
ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR"), THAT PRIOR TO SUCH TRANSFER,
FURNISHED THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS
- ----------
(1) This paragraph should be included only if the Senior Discount Note is issued
in global form.
A-1-2
<PAGE> 86
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO HOLDINGS THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR (e) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND, IN THE CASE OF CLAUSE (b), (c), (d) or (e), BASED
UPON AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS), (2) TO HOLDINGS OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE.](2)
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Holdings, Inc., a Delaware corporation, or its successor
("Holdings"), promises to pay interest on the principal amount of
this Senior Discount Note at the rate of 11 1/4% per annum and shall
pay the Liquidated Damages, if any, payable pursuant to Section 5 of
the Registration Rights Agreement referred to below. Holdings will
pay interest and Liquidated Damages, if any, in United States
dollars (except as otherwise provided herein) semi-annually in
arrears on March 15 and September 15, commencing on September 15,
2003, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest
on the Senior Discount Notes shall accrue from the most recent date
to which interest has been paid or, if no interest has been paid,
from March 15, 2003; provided that if there is no existing Default
or Event of Default in the payment of interest, and if this Senior
Discount Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date (but
after March 15, 2003), interest shall accrue from such next
succeeding Interest Payment Date, except in the case of the original
issuance of Senior Discount Notes, in which case interest shall
accrue from the date of authentication. Holdings shall pay interest
(including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to 1% per
annum in excess of the then applicable interest rate on the Senior
Discount Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated
Damages (without regard to any applicable grace period) at the same
rate to the extent lawful. Interest shall be computed on the basis
of a 360-day year comprised of twelve 30-day months.
- ----------
(2) This paragraph should be removed upon the exchange of Senior
Discount Notes for New Senior Discount Notes in the Exchange Offer or upon the
registration of the Senior Discount Notes pursuant to the terms of the
Registration Rights Agreement.
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<PAGE> 87
2. METHOD OF PAYMENT. Holdings will pay interest on the Senior Discount
Notes (except defaulted interest) and Liquidated Damages, if any, on
the applicable Interest Payment Date to the Persons who are
registered Holders of Senior Discount Notes at the close of business
on the July 1 or January 1 next preceding the Interest Payment Date,
even if such Senior Discount Notes are cancelled after such record
date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest.
The Senior Discount Notes shall be payable as to principal, premium
and Liquidated Damages, if any, and interest at the office or agency
of Holdings maintained for such purpose within or without the City
and State of New York, or, at the option of Holdings, payment of
interest and Liquidated Damages, if any, may be made by check mailed
to the Holders at their addresses set forth in the register of
Holders; provided that payment by wire transfer of immediately
available funds shall be required with respect to principal of,
premium and Liquidated Damages, if any, and interest on, all Global
Notes and all other Senior Discount Notes the Holders of which shall
have provided written wire transfer instructions to Holdings and the
Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender
for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, shall act as Paying Agent
and Registrar. Holdings may change any Paying Agent or Registrar
without notice to any Holder. Holdings or any of its Subsidiaries
may act in any such capacity.
4. INDENTURE. Holdings issued the Senior Discount Notes under an
Indenture dated as of March 30, 1998 ("Indenture") among Holdings
and the Trustee. The terms of the Senior Discount Notes include
those stated in the Indenture and those made a part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Codess.ss. 77aaa-77bbbb) (the "TIA"). The Senior Discount Notes are
subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. The Senior Discount
Notes issued in the Offering are general unsecured Obligations of
Holdings limited to $120,000 in aggregate principal amount at
maturity.
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the Senior Discount
Notes shall not be redeemable at Holdings' option prior to March 15,
2003. Thereafter, the Senior Discount Notes shall be subject to
redemption at the option of Holdings, in whole or in part, upon not
less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below
together with accrued and unpaid interest and any Liquidated
Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on July 15 of the
years indicated below:
A-1-4
<PAGE> 88
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003 ........................... 105.625%
2004 ........................... 103.750%
2005 ........................... 101.875%
2006 and thereafter ............ 100.000%
</TABLE>
Notwithstanding the foregoing, at any time Holdings may redeem
the Senior Discount Notes, in whole but not in part, at the option
of Holdings at a redemption price of 111.25% of the Accreted Value
(determined at the date of redemption), with the net proceeds of a
Public Equity Offering; provided that such redemption shall occur
within 45 days of the date of the closing of such Public Equity
Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, Holdings shall not
be required to make mandatory redemption or sinking fund payments
with respect to the Senior Discount Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior Discount Notes will have the right to require Holdings to
repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Senior Discount Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer
price in cash equal to 101% of the Accreted Value thereof on the
date of purchase (if such date of purchase is prior to March 15,
2003) or 101% of the aggregate principal amount thereof plus accrued
and unpaid interest and Liquidated Damages, if any, thereon, to the
date of purchase (if such date of purchase is on or after March 15,
2003). Within 30 days following any Change of Control, Holdings will
mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control setting forth the
procedures governing the Change of Control Offer required by the
Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0
million, Holdings will be required to make an offer to all Holders
of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the Accreted
Value thereof on the date of purchase (if such date of purchase is
prior to March 15, 2003) or 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date of purchase (if such date of purchase is on or
after March 15, 2003), in each case in accordance with the
procedures set forth in the Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer
is less than the Excess Proceeds, Holdings may use any remaining
Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes
A-1-5
<PAGE> 89
surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a
pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.
(c) Holders of the Senior Discount Notes that are the subject of an
offer to purchase will receive a Change of Control Offer or Asset
Sale Offer from Holdings prior to any related purchase date and may
elect to have such Senior Discount Notes purchased by completing the
form titled "Option of Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each
Holder whose Senior Discount Notes are to be redeemed at its
registered address. Senior Discount Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Senior Discount Notes held by a Holder are
to be redeemed. On and after the redemption date, interest and
Liquidated Damages, if any, ceases to accrue on the Senior Discount
Notes or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Discount Notes are in
registered form without coupons in initial denominations of $1,000
and integral multiples of $1,000. The transfer of the Senior
Discount Notes may be registered and the Senior Discount Notes may
be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and Holdings may
require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. Holdings need not exchange or register
the transfer of any Senior Discount Note or portion of a Senior
Discount Note selected for redemption, except for the unredeemed
portion of any Senior Discount Note being redeemed in part. Also, it
need not exchange or register the transfer of any Senior Discount
Notes for a period of 15 days before a selection of Senior Discount
Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Discount
Note may be treated as its owner for all purposes.
11. AMENDMENT SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture and the Senior Discount Notes may be
amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Senior Discount Notes then
outstanding (including, without limitation, consents obtained in
connection with a purchase of or, tender offer or exchange offer for
Senior Discount Notes), and any existing Default or Event of Default
or compliance with any provision of the Indenture or the Senior
Discount Notes may be waived with the consent of the Holders of a
majority in principal amount of the then
A-1-6
<PAGE> 90
outstanding Senior Discount Notes (including consents obtained in
connection with a tender offer or exchange offer for Senior Discount
Notes).
Without the consent of any Holder of Senior Discount Notes,
Holdings and the Trustee may amend or supplement the Indenture or
the Senior Discount Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Senior Discount Notes
in addition to or in place of certificated Senior Discount Notes, to
provide for the assumption of Holdings' obligations to Holders of
Senior Discount Notes in the case of a merger or consolidation, to
make any change that would provide any additional rights or benefits
to the Holders of Senior Discount Notes or that does not adversely
affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust
Indenture Act or to allow any Subsidiary to guarantee the Senior
Discount Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages,
if any, with respect to the Senior Discount Notes; (ii) default in
payment when due of the principal of or premium, if any, on the
Senior Discount Notes; (iii) failure by Holdings or any Restricted
Subsidiary to comply with the provisions described in Sections 4.10,
4.14 or 5.1 of the Indenture; (iv) failure by Holdings or any
Restricted Subsidiary for 30 days after notice from the Trustee or
at least 25% in principal amount of the Senior Discount Notes to
comply with the provisions described in Sections 4.7 and 4.9, of the
Indenture; (v) failure by Holdings or any Subsidiary for 60 days
after notice from the Trustee or the Holders of at least 25% in
principal amount of the Senior Discount Notes then outstanding to
comply with its other agreements in the Indenture or the Senior
Discount Notes; (vi) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by Holdings
or any of their its Subsidiaries (or the payment of which is
guaranteed by Holdings or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date
of the Indenture, which default (A) (i) is caused by a failure to
pay when due at final stated maturity (giving effect to any grace
period related thereto) any principal of or premium, if any, or
interest on such Indebtedness (a "Payment Default") or (ii) results
in the acceleration of such Indebtedness prior to its express
maturity and (B) in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $15.0 million
or more; (vii) failure by Holdings or any of its Subsidiaries to pay
final judgments aggregating in excess of $5.0 million, which
judgments are not paid discharged or stayed within 60 days after
their entry; and (viii) certain events of bankruptcy or insolvency
with respect to Holdings, any of its Significant Subsidiaries or any
group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary.
A-1-7
<PAGE> 91
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then
outstanding Senior Discount Notes may declare all the Senior
Discount Notes to be due and payable immediately. In the case of an
Event of Default arising from certain events of bankruptcy or
insolvency, with respect to Holdings or any of its Significant
Subsidiaries all outstanding Senior Discount Notes will become due
and payable without further action or notice. Holders of the Senior
Discount Notes may not enforce the Indenture or the Senior Discount
Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then
outstanding Senior Discount Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from
Holders of the Senior Discount Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines
that withholding notice is in their interest.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform
services for Holdings, or its respective Affiliates, and may
otherwise deal with Holdings or its respective Affiliates as if it
were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder, of Holdings, as such, shall have any
liability for any obligations of Holdings under the Senior Discount
Notes or the Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder of
Senior Discount Notes by accepting a Senior Discount Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Senior Discount Notes.
15. AUTHENTICATION. This Senior Discount Note shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Senior Discount
Notes under the Indenture, Holders of Transferred Restricted
Securities (as defined in the Registration Rights Agreement) shall
have all the rights set forth in the Registration Rights Agreement,
dated as of the date hereof, among Holdings and the Initial
Purchaser (the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, Holdings
has caused CUSIP
A-1-8
<PAGE> 92
numbers to be printed on the Senior Discount Notes and the Trustee
may use CUSIP numbers in notices of redemption as a convenience to
the Holders. No representation is made as to the accuracy of such
numbers either as printed on the Senior Discount Notes or as
contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
Holdings shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
AP Holdings, Inc.
800 Superior Avenue
Cleveland, Ohio 44114
Telecopy: (216) 523-8080
Chief Financial Officer
A-1-9
<PAGE> 93
ASSIGNMENT FORM
To assign this Senior Discount Note, fill in the form below: (I) or (we)
assign and transfer this Senior Discount Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint___________________________________________________
to transfer this Senior Discount Note on the books of Holdings. The agent may
substitute another to act for him.
________________________________________________________________________________
Date:______________ Your Signature:__________________________
(Sign exactly as your name appears on the
face of this Senior Discount Note)
Signature Guarantee:
A-1-10
<PAGE> 94
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Discount Note purchased by
Holdings pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.14
If you want to elect to have only part of the Senior Discount Note
purchased by Holdings pursuant to Section 4.10 or Section 4.14 of the Indenture,
state the amount you elect to have purchased: $___________
Date:_______________ Your Signature:__________________________
(Sign exactly as your name appears on the
Senior Discount Note)
Tax Identification No.:__________________
Signature Guarantee.
A-1-11
<PAGE> 95
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
11 1/4% Senior Discount Notes due 2008
$_________
No.____ CUSIP NO.
AP HOLDINGS, INC.
promises to pay to ____________________ or registered assigns, the
principal sum of _____________ Dollars on March 15, 2008.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
AP HOLDINGS, INC.
By:__________________________
Name:
Title:
This is one of the
Senior Discount Notes referred to in the
within-mentioned Indenture:
Dated:_________________________
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:____________________________
A-2-1
<PAGE> 96
(Back of Regulation S Temporary Global Note)
11 1/4% Senior Discount Note due 2008
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR
DISCOUNT NOTES IN DEFINITIVE FORM, THIS SENIOR DISCOUNT NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) ("DTC"), TO Holdings OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF HOLDINGS THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED
STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
OF THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), THAT PRIOR TO SUCH TRANSFER, FURNISHED THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF
WHICH CAN BE
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<PAGE> 97
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO HOLDINGS THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND, IN THE CASE OF CLAUSES (b), (c), (d) OR
(e), BASED UPON AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS), (2) TO HOLDINGS
OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE SENIOR
DISCOUNT NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON
PRIOR TO THE EXCHANGE OF THIS SENIOR DISCOUNT NOTE FOR A REGULATION S TEMPORARY
GLOBAL NOTE AS CONTEMPLATED BY THE INDENTURE.](3)
Until this Regulation S Temporary Global Note is exchanged for
Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to
receive payments of interest or Liquidated Damages, if any, hereon although
interest and Liquidated Damages, if any, will continue to accrue; until so
exchanged in full, this Regulation S Temporary Global Note shall in all other
respects be entitled to the same benefits as other Senior Discount Notes under
the Indenture.
This Regulation S Temporary Global Note is exchangeable in whole or
in part for one or more Regulation S Permanent Global Notes or Rule 144A Global
Notes only (i) on or after the termination of the 40-day restricted period (as
defined in Regulation S) and (ii) upon presentation of certificates (accompanied
by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture.
Upon exchange of this Regulation S Temporary Global Note for one or more
Regulation S Permanent Global Notes or Rule 144A Global Notes, the Trustee shall
cancel this Regulation S Temporary Global Note.
This Regulation S Temporary Global Note shall not become valid or
obligatory until the certificate of authentication hereon shall have been duly
manually signed by the Trustee in accordance with the Indenture. This Regulation
S Temporary Global Note shall be governed
- ----------
(3) These paragraphs should be removed upon the exchange of Regulation S
Temporary Global Notes for Regulation S Permanent Global Notes pursuant to the
terms of the Indenture.
A-2-3
<PAGE> 98
by and construed in accordance with the laws of the State of the New York. All
references to "$," "Dollars," "dollars" or "U.S. $" are to such coin or currency
of the United States of America as at the time shall be legal tender for the
payment of public and private debts therein.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Holdings, Inc., a Delaware corporation, or its successor
("Holdings"), promises to pay interest on the principal amount of
this Senior Discount Note at the rate of 11 1/4% per annum and shall
pay the Liquidated Damages, if any, payable pursuant to Section 5 of
the Registration Rights Agreement referred to below. Holdings will
pay interest and Liquidated Damages, if any, in United States
dollars (except as otherwise provided herein) semi-annually in
arrears on March 15 and September 15, commencing on September 15,
2003, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest
on the Senior Discount Notes shall accrue from the most recent date
to which interest has been paid or, if no interest has been paid,
from March 15, 2003; provided that if there is no existing Default
or Event of Default in the payment of interest, and if this Senior
Discount Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date (but
after March 15, 2003), interest shall accrue from such next
succeeding Interest Payment Date, except in the case of the original
issuance of Senior Discount Notes, in which case interest shall
accrue from the date of authentication. Holdings shall pay interest
(including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to 1% per
annum in excess of the then applicable interest rate on the Senior
Discount Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated
Damages (without regard to any applicable grace period) at the same
rate to the extent lawful. Interest shall be computed on the basis
of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. Holdings will pay interest on the Senior Discount
Notes (except defaulted interest) and Liquidated Damages, if any, on
the applicable Interest Payment Date to the Persons who are
registered Holders of Senior Discount Notes at the close of business
on the March 1 or September 1 next preceding the Interest Payment
Date, even if such Senior Discount Notes are cancelled after such
record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Senior Discount Notes shall be payable as to
principal, premium and Liquidated Damages, if any, and interest at
the office or agency of Holdings maintained for such purpose within
or without the City and State of New York, or, at the option of
Holdings, payment of interest and Liquidated Damages, if any, may be
made by check mailed to the Holders at their addresses set forth in
the register of Holders; provided that payment by wire transfer of
immediately available funds shall be required with respect to
principal of, premium and
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<PAGE> 99
Liquidated Damages, if any, and interest on, all Global Notes and
all other Senior Discount Notes the Holders of which shall have
provided written wire transfer instructions to Holdings and the
Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender
for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, shall act as Paying Agent
and Registrar. Holdings may change any Paying Agent or Registrar
without notice to any Holder. Holdings or any of its Subsidiaries
may act in any such capacity.
4. INDENTURE. Holdings issued the Senior Discount Notes under an
Indenture dated as of March 30, 1997 ("Indenture") among Holdings
and the Trustee. The terms of the Senior Discount Notes include
those stated in the Indenture and those made a part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Codess.ss. 77aaa-77bbbb) (the "TIA"). The Senior Discount Notes are
subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. The Senior Discount
Notes are general unsecured Obligations of Holdings limited to
$120,000,000 in aggregate principal amount at maturity.
5. OPTIONAL REDEMPTION.
Except as set forth in the next paragraph, the Senior Discount
Notes shall not be redeemable at Holdings' option prior to March 15,
2003. Thereafter, the Senior Discount Notes shall be subject to
redemption at the option of Holdings, in whole or in part, upon not
less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below
together with accrued and unpaid interest and any Liquidated
Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on March 15 of the
years indicated below:
Year Percentage
---- ----------
2003 ........................... 105.625%
2004 ........................... 103.750%
2005 ........................... 101.875%
2006 and thereafter ............ 100.000%
Notwithstanding the foregoing, at any time Holdings may redeem
the Senior Discount Notes, in whole but not in part, at the option
of Holdings at a redemption price of 111.25% of the Accreted Value
(determined at the date of redemption), with the net proceeds of a
Public Equity Offering; provided that such redemption shall occur
within 45 days of the date of the closing of such Public Equity
Offering.
A-2-5
<PAGE> 100
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, Holdings shall not be
required to make mandatory redemption or sinking fund payments with
respect to the Senior Discount Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior Discount Notes will have the right to require Holdings to
repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Senior Discount Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer
price in cash equal to 101% of the Accreted Value thereof on the
date of purchase (if such date of purchase is prior to March 15,
2003) or 101% of the aggregate principal amount thereof plus accrued
and unpaid interest and Liquidated Damages, if any, thereon, to the
date of purchase (if such date of purchase is on or after March 15,
2003). Within 30 days following any Change of Control, Holdings will
mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control setting forth the
procedures governing the Change of Control Offer required by the
Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0
million, Holdings will be required to make an offer to all Holders
of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the Accreted
Value thereof on the date of purchase (if such date of purchase is
prior to March 15, 2003) or 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date of purchase (if such date of purchase is on or
after March 15, 2003), in each case in accordance with the
procedures set forth in the Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer
is less than the Excess Proceeds, Holdings may use any remaining
Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
(c) Holders of the Senior Discount Notes that are the subject of an
offer to purchase will receive a Change of Control Offer or Asset
Sale Offer from Holdings prior to any related purchase date and may
elect to have such Senior Discount Notes purchased by completing the
form titled "Option of Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each
Holder whose Senior
A-2-6
<PAGE> 101
Discount Notes are to be redeemed at its registered address. Senior
Discount Notes in denominations larger than $1,000 may be redeemed
in part but only in whole multiples of $1,000, unless all of the
Senior Discount Notes held by a Holder are to be redeemed. On and
after the redemption date, interest and Liquidated Damages, if any,
ceases to accrue on the Senior Discount Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Discount Notes are in
registered form without coupons in initial denominations of $1,000
and integral multiples of $1,000. The transfer of the Senior
Discount Notes may be registered and the Senior Discount Notes may
be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and Holdings may
require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. Holdings need not exchange or register
the transfer of any Senior Discount Note or portion of a Senior
Discount Note selected for redemption, except for the unredeemed
portion of any Senior Discount Note being redeemed in part. Also, it
need not exchange or register the transfer of any Senior Discount
Notes for a period of 15 days before a selection of Senior Discount
Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Discount
Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture and the Senior Discount Notes may be
amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Senior Discount Notes then
outstanding (including, without limitation, consents obtained in
connection with a purchase of or, tender offer or exchange offer for
Senior Discount Notes), and any existing Default or Event of Default
or compliance with any provision of the Indenture or the Senior
Discount Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Discount
Notes (including consents obtained in connection with a tender offer
or exchange offer for Senior Discount Notes).
Without the consent of any Holder of Senior Discount Notes, Holdings
and the Trustee may amend or supplement the Indenture or the Senior
Discount Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Senior Discount Notes in addition to or
in place of certificated Senior Discount Notes, to provide for the
assumption of Holdings' obligations to Holders of Senior Discount
Notes in the case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders
of Senior Discount Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the
requirements of the Commission in order to effect or
A-2-7
<PAGE> 102
maintain the qualification of the Indenture under the Trust
Indenture Act or to allow any Subsidiary to guarantee the Senior
Discount Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages,
if any, with respect to the Senior Discount Notes; (ii) default in
payment when due of the principal of or premium, if any, on the
Senior Discount Notes; (iii) failure by Holdings or any Restricted
Subsidiary to comply with the provisions described in Sections 4.10,
4.14 or 5.1 of the Indenture; (iv) failure by Holdings or any
Restricted Subsidiary for 30 days after notice from the Trustee or
at least 25% in principal amount of the Senior Discount Notes to
comply with the provisions described in Sections 4.7 and 4.9, of the
Indenture; (v) failure by Holdings or any Subsidiary for 60 days
after notice from the Trustee or the Holders of at least 25% in
principal amount of the Senior Discount Notes then outstanding to
comply with its other agreements in the Indenture or the Senior
Discount Notes; (vi) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by Holdings
or any of their its Subsidiaries (or the payment of which is
guaranteed by Holdings or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date
of the Indenture, which default (A) (i) is caused by a failure to
pay when due at final stated maturity (giving effect to any grace
period related thereto) any principal of or premium, if any, or
interest on such Indebtedness (a "Payment Default") or (ii) results
in the acceleration of such Indebtedness prior to its express
maturity and (B) in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $15.0 million
or more; (vii) failure by Holdings or any of its Subsidiaries to pay
final judgments aggregating in excess of $5.0 million, which
judgments are not paid discharged or stayed within 60 days after
their entry; and (viii) certain events of bankruptcy or insolvency
with respect to Holdings, any of its Significant Subsidiaries or any
group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding
Senior Discount Notes may declare all the Senior Discount Notes to
be due and payable immediately. In the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with
respect to Holdings or any of its Significant Subsidiaries all
outstanding Senior Discount Notes will become due and payable
without further action or notice. Holders of the Senior Discount
Notes may not enforce the Indenture or the Senior Discount Notes
except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding
Senior Discount Notes may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders of the Senior
Discount Notes notice of any continuing Default or Event of Default
(except a
A-2-8
<PAGE> 103
Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their
interest.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform
services for Holdings, the Subsidiary Guarantors or their respective
Affiliates, and may otherwise deal with Holdings, the Subsidiary
Guarantors or their respective Affiliates, as if it were not the
Trustee.
14. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder, of Holdings or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of
Holdings or any Subsidiary Guarantor under the Senior Discount Notes
or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Senior
Discount Notes by accepting a Senior Discount Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Senior Discount Notes.
15. AUTHENTICATION. This Senior Discount Note shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Senior Discount
Notes under the Indenture, Holders of Transferred Restricted
Securities (as defined in the Registration Rights Agreement) shall
have all the rights set forth in the Registration Rights Agreement,
dated as of the date hereof, among Holdings, the Subsidiary
Guarantors and the Initial Purchaser (the "Registration Rights
Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, Holdings
has caused CUSIP numbers to be printed on the Senior Discount Notes
and the Trustee may use CUSIP numbers in notices of redemption as a
convenience to the Holders. No representation is made as to the
accuracy of such numbers either as printed on the Senior Discount
Notes or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed thereon.
Holdings shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
A-2-9
<PAGE> 104
AP Holdings, Inc.
800 Superior Avenue
Cleveland, Ohio 44114
Telecopy: (216) 523-8080
Chief Financial Officer
A-2-10
<PAGE> 105
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Discount Note purchased by
Holdings pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.14
If you want to elect to have only part of the Senior Discount Note
purchased by Holdings pursuant to Section 4.10 or Section 4.14 of the Indenture,
state the amount you elect to have purchased: $___________
Date:_______________ Your Signature:__________________________
(Sign exactly as your name appears on the
Senior Discount Note)
Tax Identification No.:__________________
Signature Guarantee.
A-2-11
<PAGE> 106
SCHEDULE OF EXCHANGES FOR GLOBAL NOTES
The following exchanges of a part of this Regulation S Temporary Global
Note for other Global Notes have been made:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Signature of
Amount of Principal authorized
Amount of increase in Amount of this officer of
decrease in Principal Global Note Trustee or
Principal Amount of following such Senior
Amount of this this Global decrease (or Discount Note
Date of Exchange Global Note Note increase) Custodian
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
A-2-12
<PAGE> 107
Exhibit B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Pursuant to Section 2.6(a)(1) of the Indenture)
State Street Bank and Trust Company
225 Asylum Street
Hartford, Connecticut 06103
Re: 11 1/4% Senior Discount Notes due 2008 of AP Holdings, Inc.
Reference is hereby made to the Indenture, dated as of March 30,
1998 (the "Indenture"), between AP Holdings, Inc., a Delaware corporation (the
"Holdings") and State Street Bank and Trust Company, as trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to $ _________________ principal amount of
Senior Discount Notes which are evidenced by one or more Rule 144A Global Notes
and held with the Depositary in the name of ___________________ (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Senior Discount Notes to a Person who will take delivery thereof
in the form of an equal principal amount of Senior Discount Notes evidenced by
one or more Regulation S Global Notes, which amount, immediately after such
transfer, is to be held with the Depositary through Euroclear or Cedel or both.
In connection with such request and in respect of such Senior
Discount Notes, the Transferor hereby certifies that such transfer has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with Rule 903 or Rule 904 under the
United States Securities Act of 1933, as amended (the "Securities Act"), and
accordingly the Transferor hereby further certifies that:
(1) The offer of the Senior Discount Notes was not made to a person
in the United States;
(2) either:
(a) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any
person acting on its behalf reasonably believed and
believes that the transferee was outside the United
States; or
(b) the transaction was executed in, on or through the
facilities of a designated offshore securities market
and neither the Transferor nor any person acting on its
behalf knows that the transaction was prearranged with a
buyer in the United States;
B-1-1
<PAGE> 108
(3) no directed selling efforts have been made in contravention of
the requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration provisions of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest
being transferred as described above is to be held with the Depositary through
Euroclear or Cedel or both.
Upon giving effect to this request to exchange a beneficial interest
in a Rule 144A Global Note for a beneficial interest in a Regulation S Global
Note, the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Regulation S Global Notes pursuant to the Indenture and
the Securities Act and, if such transfer occurs prior to the end of the 40-day
restricted period associated with the initial offering of Senior Discount Notes,
the additional restrictions applicable to transfers of interest in the
Regulation S Temporary Global Note.
This certificate and the statements contained herein are made for
your benefit and the benefit of Holdings and Donaldson, Lufkin & Jenrette
Securities Corporation, the initial purchaser of such Senior Discount Notes
being transferred. Terms used in this certificate and not otherwise defined in
the Indenture have the meanings set forth in Regulation S under the Securities
Act.
[Insert Name of Transferor]
By:________________________________
Name:
Title:
Dated:
cc: AP Holdings, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
B-1-2
<PAGE> 109
Exhibit B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE
(Pursuant to Section 2.6(a)(ii) of the Indenture)
State Street Bank and Trust Company
225 Asylum Street
Hartford, Connecticut 06103
Re: 11 1/4% Senior Discount Notes due 2008 of AP Holdings, Inc.
Reference is hereby made to the Indenture, dated as of March 30,
1998 (the "Indenture"), between AP Holdings, Inc., a Delaware corporation (the
"Holdings") and State Street Bank and Trust Company, as trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to $__________ principal amount of Senior
Discount Notes which are evidenced by one or more Regulation S Global Notes and
held with the Depositary through Euroclear or Cedel in the name of
_________________ (the "Transferor"). The Transferor has requested a transfer of
such beneficial interest in the Senior Discount Notes to a Person who will take
delivery thereof in the form of an equal principal amount of Senior Discount
Notes evidenced by one or more Rule 144A Global Notes, to be held with the
Depositary.
In connection with such request and in respect of such Senior
Discount Notes, the Transferor hereby certifies that:
[CHECK ONE]
|_| such transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the Transferor hereby further
certifies that the Senior Discount Notes are being transferred to a Person
that the Transferor reasonably believes is purchasing the Senior Discount
Notes for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person
and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule
144A;
or
|_| such transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act;
or
B-2-1
<PAGE> 110
|_| such transfer is being effected pursuant to an exemption under the
Securities Act other than Rule 144A, Rule 144 or Rule 904 and the
Transferor further certifies that the Transfer complies with the transfer
restrictions applicable to beneficial interests in Global Notes and
Definitive Senior Discount Notes bearing the Private Placement Legend and
the requirements of the exemption claimed, which certification is
supported by (x) if such transfer is in respect of a principal amount of
Senior Discount Notes at the time of Transfer of $250,000 or more, a
certificate executed by the Transferee in the form of EXHIBIT C to the
Indenture, or (y) if such Transfer is in respect of a principal amount of
Senior Discount Notes at the time of transfer of less than $250,000, (1) a
certificate executed in the form of EXHIBIT C to the Indenture and (2) an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of
which the Transferor has attached to this certification), to the effect
that (1) such Transfer is in compliance with the Securities Act and (2)
such Transfer complies with any applicable blue sky securities laws of any
state of the United States;
or
|_| such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
or
|_| such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Discount Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the transferor or the transferee (a
copy of which the Transferor has attached to this certification) in form
reasonably acceptable to Holdings and to the Registrar, to the effect that
such transfer is in compliance with the Securities Act;
and such Senior Discount Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest
in Regulation S Global Notes for a beneficial interest in 144A Global Senior
Discount Notes, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Rule 144A Global Notes pursuant to the
Indenture and the Securities Act.
B-2-2
<PAGE> 111
This certificate and the statements contained herein are made for
your benefit and the benefit of Holdings and Donaldson, Lufkin & Jenrette
Securities Corporation, the initial purchaser of such Senior Discount Notes
being transferred. Terms used in this certificate and not otherwise defined in
the Indenture have the meanings set forth in Regulation S under the Securities
Act.
[Insert Name of Transferor]
By:
Name:
Title:
Dated:
cc: AP Holdings, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
B-2-3
<PAGE> 112
Exhibit B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE SENIOR SUBORDINATED NOTES
(Pursuant to Section 2.6(b) of the Indenture)
State Street Bank and Trust Company
225 Asylum Street
Hartford, Connecticut 06103
Re: 11 1/4% Senior Discount Notes due 2008 AP Holdings, Inc.
Reference is hereby made to the Indenture, dated as of March 30,
1998 (the "Indenture"), between AP Holdings, Inc., a Delaware corporation (the
"Holdings") and State Street Bank and Trust Company, as trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This relates to $ _______ principal amount of Senior Discount Notes
which are evidenced by one or more Definitive Senior Discount Notes in the name
of _____________ (the "Transferor"). The Transferor has requested an exchange or
transfer of such Definitive Senior Discount Note(s) in the form of an equal
principal amount of Senior Discount Notes evidenced by one or more Definitive
Senior Discount Notes, to be delivered to the Transferor or, in the case of a
transfer of such Senior Discount Notes, to such Person as the Transferor
instructs the Trustee.
In connection with such request and in respect of the Senior
Discount Notes surrendered to the Trustee herewith for exchange (the
"Surrendered Senior Discount Notes"), the Holder of such Surrendered Senior
Discount Notes hereby certifies that:
[CHECK ONE]
|_| the Surrendered Senior Discount Notes are being acquired for the
Transferor's own account, without transfer;
or
|_| the Surrendered Senior Discount Notes are being transferred to Holdings;
or
|_| the Surrendered Senior Discount Notes are being transferred pursuant to
and in accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the Transferor
hereby further certifies that the Surrendered Senior Discount Notes are
being transferred to a Person that the Transferor reasonably believes is
purchasing the Surrendered Senior Discount Notes for its own account, or
for one or more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional
B-3-1
<PAGE> 113
buyer" within the meaning of Rule 144A, in each case in a transaction
meeting the requirements of Rule 144A;
or
|_| the Surrendered Senior Discount Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
|_| the Surrendered Senior Discount Notes are being transferred pursuant to an
exemption under the Securities Act other than Rule 144A, Rule 144 or Rule
904 and the Transferor further certifies that the Transfer complies with
the transfer restrictions applicable to beneficial interests in Global
Notes and Definitive Senior Discount Notes bearing the Private Placement
Legend and the requirements of the exemption claimed, which certification
is supported by (x) if such transfer is in respect of a principal amount
of Senior Discount Notes at the time of Transfer of $250,000 or more, a
certificate executed by the Transferee in the form of EXHIBIT C to the
Indenture, or (y) if such Transfer is in respect of a principal amount of
Senior Discount Notes at the time of transfer of less than $250,000, (1) a
certificate executed in the form of EXHIBIT C to the Indenture and (2) an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of
which the Transferor has attached to this certification), to the effect
that (1) such Transfer is in compliance with the Securities Act and (2)
such Transfer complies with any applicable blue sky securities laws of any
state of the United States;
or
|_| the Surrendered Senior Discount Notes are being transferred pursuant to an
effective registration statement under the Securities Act;
or
|_| such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Discount Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the transferor or the transferee (a
copy of which the Transferor has attached to this certification) in form
reasonably acceptable to Holdings and to the Registrar, to the effect that
such transfer is in compliance with the Securities Act;
and the Surrendered Senior Discount Notes are being transferred in compliance
with any applicable blue sky securities laws of any state of the United States.
B-3-2
<PAGE> 114
This certificate and the statements contained herein are made for
your benefit and the benefit of Holdings and Donaldson, Lufkin & Jenrette
Securities Corporation, the initial purchaser of such Senior Discount Notes
being transferred. Terms used in this certificate and not otherwise defined in
the Indenture have the meanings set forth in Regulation S under the Securities
Act.
[Insert Name of Transferor]
By:_______________________________
Name:
Title:
Dated:
cc: AP Holdings, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
B-3-3
<PAGE> 115
Exhibit B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE OR REGULATION S
PERMANENT GLOBAL NOTE
TO DEFINITIVE SENIOR SUBORDINATED NOTE
(Pursuant to Section 2.6(c) of the Indenture)
State Street Bank and Trust Company
225 Superior Avenue
Hartford, Connecticut 06103
Re: 11 1/4% Senior Discount Notes due 2008 AP Holdings, Inc.
Reference is hereby made to the Indenture, dated as of March 30,
1998 (the "Indenture"), between AP Holdings, Inc., a Delaware corporation (the
"Holdings") and State Street Bank and Trust Company, as trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to $___________ principal amount of Senior
Discount Notes which are evidenced by a beneficial interest in one or more Rule
144A Global Notes or Regulation S Permanent Global Notes in the name of
________________ (the "Transferor"). The Transferor has requested an exchange or
transfer of such beneficial interest in the form of an equal principal amount of
Senior Discount Notes evidenced by one or more Definitive Senior Discount Notes,
to be delivered to the Transferor or, in the case of a transfer of such Senior
Discount Notes, to such Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Senior
Discount Notes surrendered to the Trustee herewith for exchange (the
"Surrendered Senior Discount Notes"), the Holder of such Surrendered Senior
Discount Notes hereby certifies that:
[CHECK ONE]
|_| the Surrendered Senior Discount Notes are being transferred to the
beneficial owner of such Senior Discount Notes;
or
|_| the Surrendered Senior Discount Notes are being transferred pursuant to
and in accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the Transferor
hereby further certifies that the Surrendered Senior Discount Notes are
being transferred to a Person that the Transferor reasonably believes is
purchasing the Surrendered Senior Discount Notes for its own account, or
for one or more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in each
case in a transaction meeting the requirements of Rule 144A;
B-4-1
<PAGE> 116
or
|_| the Surrendered Senior Discount Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
|_| the Surrendered Senior Discount Notes are being transferred pursuant to an
effective registration statement under the Securities Act;
or
|_| the Surrendered Senior Discount Notes are being transferred pursuant to an
exemption under the Securities Act other than Rule 144A, Rule 144 or Rule
904 and the Transferor further certifies that the Transfer complies with
the transfer restrictions applicable to beneficial interests in Global
Notes and Definitive Senior Discount Notes bearing the Private Placement
Legend and the requirements of the exemption claimed, which certification
is supported by (x) if such transfer is in respect of a principal amount
of Senior Discount Notes at the time of Transfer of $250,000 or more, a
certificate executed by the Transferee in the form of EXHIBIT C to the
Indenture, or (y) if such Transfer is in respect of a principal amount of
Senior Discount Notes at the time of transfer of less than $250,000, (1) a
certificate executed in the form of EXHIBIT C to the Indenture and (2) an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of
which the Transferor has attached to this certification), to the effect
that (1) such Transfer is in compliance with the Securities Act and (2)
such Transfer complies with any applicable blue sky securities laws of any
state of the United States;
or
|_| such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Discount Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the transferor or the transferee (a
copy of which the Transferor has attached to this certification) in form
reasonably acceptable to Holdings and to the Registrar, to the effect that
such transfer is in compliance with the Securities Act;
and the Surrendered Senior Discount Notes are being transferred in compliance
with any applicable blue sky securities laws of any state of the United States.
B-4-2
<PAGE> 117
This certificate and the statements contained herein are made for
your benefit and the benefit of Holdings and Donaldson, Lufkin & Jenrette
Securities Corporation, the initial purchaser of such Senior Discount Notes
being transferred. Terms used in this certificate and not otherwise defined in
the Indenture have the meanings set forth in Regulation S under the Securities
Act.
[Insert Name of Transferor]
By:_____________________________
Name:
Title:
Dated:
cc: AP Holdings, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
B-4-3
<PAGE> 118
Exhibit C
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
State Street Bank and Trust Company
225 Asylum Street
Hartford, Connecticut 06103
Re: 11 1/4% Senior Discount Notes due 2008 AP Holdings, Inc.
Reference is hereby made to the Indenture, dated as of March 30,
1998 (the "Indenture"), between AP Holdings, Inc., a Delaware corporation (the
"Holdings") and State Street Bank and Trust Company, as trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
In connection with our proposed purchase of $__________ aggregate
principal amount of:
(a) |_| Beneficial interests, or
(b) |_| Definitive Senior Discount Notes,
we confirm that:
1. We understand that any subsequent transfer of the Senior Discount
Notes of any interest therein is subject to certain restrictions and conditions
set forth in the Indenture and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Senior Discount Notes or any interest
therein except in compliance with, such restrictions and conditions and the
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Senior Discount
Notes have not been registered under the Securities Act, and that the Senior
Discount Notes and any interest therein may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that if we should
sell the Senior Discount Notes or any interest therein, (A) we will do so only
(1)(a) to a person who the Seller reasonably believes is a qualified
institutional buyer (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of 144A, (b) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (c) outside the United States
to a foreign person in a transaction meeting the requirements of Rule 904 of the
Securities Act, or (d) in accordance with another exemption from the
registration requirements of the Securities Act (and based upon an opinion of
counsel), (2) to Holdings or any of its subsidiaries or (3) pursuant to an
effective registration statement and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction and (B) we will, and each subsequent holder will be
required to, notify any purchaser from it of the security evidenced hereby of
the resale restrictions set forth in (A) above."
C-1
<PAGE> 119
3. We understand that, on any proposed resale of the Senior Discount
Notes or beneficial interests, we will be required to furnish to you and
Holdings such certifications, legal opinions and other information as you and
Holdings may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Senior Discount Notes
purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Senior Discount
Notes, and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Senior Discount Notes or beneficial
interests therein purchased by us for our own account or for one or more
accounts (each of which is an institutional "accredited investor") as to each of
which we exercise sole investment discretion.
6. We are not acquiring the Senior Discount Notes with a view to any
distribution thereof that would violate the Securities Act or the securities
laws of any State of the United States.
C-2
<PAGE> 120
You and Holdings are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
_____________________________
[Insert Name of Accredited
Investor]
By:__________________________
Name:
Title:
Dated: _______________, ____
C-3
<PAGE> 1
Exhibit 10.1
EXECUTION COPY
================================================================================
AP HOLDINGS, INC.
------------------------------------------
$70,000,000
11-1/4% SENIOR DISCOUNT NOTES DUE 2008
--------------------------------------
----------------------
REGISTRATION RIGHTS AGREEMENT
DATED AS OF MARCH 30, 1998
--------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and
entered into as of March 30, 1998, by and between AP Holdings, Inc., a Delaware
corporation ("AP Holdings") and Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser"), who has agreed to purchase AP Holdings'
11-1/4% Senior Discount Notes due 2008 (the "Senior Discount Notes") pursuant to
the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
March 25, 1998 (the "Purchase Agreement"), by and among AP Holdings and the
Initial Purchaser. In order to induce the Initial Purchaser to purchase the
Senior Discount Notes, AP Holding has agreed to provide the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchaser set forth in the Purchase
Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day in the City
of New York, or in the city of the corporate trust office of the Trustee, on
which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: New Senior Discount Notes
that are acquired by a Broker-Dealer in the Exchange Offer in exchange for
Senior Discount Notes that such Broker-Dealer acquired for its own account as a
result of market-making activities or other trading activities (other than
Senior Discount Notes acquired directly from AP Holdings or any of its
respective affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the New Senior
Discount Notes to be issued in the Exchange Offer, (b) the maintenance of such
Registration Statement con-
<PAGE> 3
tinuously effective and the keeping of the Exchange Offer open for a period not
less than the minimum period required pursuant to Section 3(b) hereof and (c)
the delivery by AP Holdings to the Registrar under the Indenture of New Senior
Discount Notes in the same aggregate principal amount as the aggregate principal
amount of Section Discount Notes tendered by Holders thereof pursuant to the
Exchange Offer.
Damages Payment Date: With respect to the Transfer Restricted Securities,
each Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by AP Holdings under the Act of the New
Senior Discount Notes pursuant to the Exchange Offer Registration Statement
pursuant to which AP Holdings shall offer the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities for New Senior Discount Notes in an aggregate
principal amount equal to the aggregate principal amount of the Transfer
Restricted Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser proposes
to sell the Senior Discount Notes (i) to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act or (ii) outside the
United States in reliance upon Regulation S under the Securities Act to non-U.S.
persons.
Global Note Holder: As defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated the Closing Date, among AP Holdings and
State Street Bank and Trust Company, as trustee (the "Trustee"), pursuant to
which the Notes are to be issued, as such Indenture is amended or supplemented
from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Offering Memorandum: As defined in the Purchase Agreement.
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<PAGE> 4
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person who
is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of AP Holdings relating
to (a) an offering of New Senior Discount Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities held by such
holders pursuant to the Shelf Registration Statement, in each case, (i) which is
filed pursuant to the provision of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibit and material incorporated by
reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Notes: The Senior Discount Notes and the New Senior Discount Notes.
New Senior Discount Notes: AP Holdings' 11 1/4% New Senior Discount Notes
due 2008 to be issued pursuant to the Indenture (i) in the Exchange Offer or
(ii) upon the request of any Holder of Senior Discount Notes covered by a Shelf
Registration Statement, in exchange for such Senior Discount Notes.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note has
been disposed of in accordance with a Shelf Registration Statement, (c) the date
on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer
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<PAGE> 5
Registration Statement (including delivery of Prospectus contained therein) or
(d) the date on which such Note is distributed to the public pursuant to Rule
144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
which securities of AP Holdings are sold to an underwriter for reoffering to the
public.
2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), AP Holdings shall (i) cause to be filed with the Commission, on or prior
to 30 days after the Closing Date, the Exchange Offer Registration Statement,
(ii) use their respective best efforts to cause such Exchange Offer Registration
Statement to become effective at the earliest possible time, but in no event
later than 120 days after the Closing Date, (iii) in connection with the
foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such Exchange Offer
Registration Statement to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the New Senior Discount
Notes to be made under the Blue Sky laws of such jurisdictions as are necessary
to permit Consummation of the Exchange Offer provided that in no event shall AP
Holdings be obligated to qualify to do business in any jurisdiction where it is
not now so qualified, or take any action which would subject it to the General
Service of Process in any jurisdiction where it is not now so subject, and (iv)
upon the effectiveness of such Exchange Offer Registration Statement, use its
reasonable best efforts to commence and Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of the
New Senior Discount Notes to be offered in exchange for the Senior Discount
Notes that are Transfer Restricted Securities and to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers as
contemplated by Section 3(c) below.
(b) AP Holdings shall use its respective best efforts to cause the
Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open, for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 20 Business Days. AP Holdings shall cause the Exchange Offer to comply with
all applicable federal and state securities laws. No securities other than the
Notes shall be included in the Exchange Offer Registration Statement. AP
Holdings shall use its best efforts to cause the Exchange Offer to be
Con-
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<PAGE> 6
summated on the earliest practicable date after the Exchange Offer Registration
Statement has become effective, but in no event later than 30 Business Days
thereafter.
(c) AP Holdings shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Senior Discount Notes that
are Transfer Restricted Securities and that were acquired for the account of
such Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Senior Discount Notes (other than Transfer
Restricted Securities acquired directly from AP Holdings or any affiliate of AP
Holdings) pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Act and must, therefore,
deliver a prospectus meeting the requirements of the Act in connection with the
initial sales of the New Senior Discount Notes received by such Broker-Dealer in
the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers that the Commission
may require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Notes held by any such Broker-Dealer except to the extent required by the
Commission.
AP Holdings shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of 120 days from the date on which the Exchange Offer is
Consummated.
AP Holdings shall provide sufficient copies of the latest version of such
Prospectus to such Restricted Broker-Dealers promptly upon request, and in no
event later than two days after such request, at any time during such 120-day
period in order to facilitate such sales.
4. SHELF REGISTRATION
(a) Shelf Registration. If (i) AP Holdings is not required to file an
Exchange Offer Registration Statement with respect to the New Senior Discount
Notes because the Exchange Offer is not permitted by applicable law (after the
procedures set forth in Section 6(a)(i) below have been complied with) or (ii)
if any Holder of Transfer Restricted Securities shall notify AP Holdings within
20 Business Days following the Consumma-
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<PAGE> 7
tion of the Exchange Offer that (A) such Holder is prohibited by law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the New Senior Discount Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and the Prospectus contained
in the Exchange Offer Registration Statement is not appropriate or available for
such resales by such Holder or (C) such Holder is a Broker-Dealer and holds
Senior Discount Notes acquired directly from AP Holdings or one of its
respective affiliates, then AP Holdings shall (x) cause to be filed on or prior
to the earlier of (1) 45 days after the date on which AP Holdings is notified by
the Commission or otherwise determines that they are not required to file the
Exchange Offer Registration Statement pursuant to clause (i) above and (2) 45
days after the date on which AP Holdings receives the notice specified in clause
(ii) above, a shelf registration statement pursuant to Rule 415 under the Act
(which may be an amendment to the Exchange Offer Registration Statement (in
either event, the "Shelf Registration Statement")), relating to all Transfer
Restricted Securities the Holders of which shall have provided the information
required pursuant to Section 4(b) hereof, and (y) use its best efforts to cause
such Shelf Registration Statement to be declared effective by the Commission at
the earliest possible time, but in no event later than 120 days after the date
on which AP Holdings becomes obligated to file such Shelf Registration
Statement. If, after AP Holdings has filed an Exchange Offer Registration
Statement which satisfies the requirements of Section 3(a) above, AP Holdings is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer shall not be permitted under applicable federal law,
then the filing of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above. Such an event shall have no effect
on the requirements of clause (y) above, or on the Effectiveness Target Date as
defined in Section 5 below. AP Holdings shall use its best effort to keep the
Shelf Registration Statement discussed in this Section 4(a) continuously
effective, supplemented and amended as required by and subject to the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least two years (as extended pursuant to Section 6(c)(i)) following the date on
which such Shelf Registration Statement first becomes effective under the Act or
such shorter period ending when all of the Transfer Restricted Securities
available for sale thereunder have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
AP Holdings in writing, within 20 days after receipt of a request therefor, such
information specified in Item 507 of Regulation S-K under the Act for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted
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<PAGE> 8
Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof
unless and until such Holder has provided all such information. Each Holder as
to which any Shelf Registration Statement is being effected agrees to furnish
promptly to AP Holdings all information required to be disclosed in order to
make the information previously furnished to AP Holdings by such Holder not
materially misleading.
5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the date specified for such filing in this
Agreement, (ii) any such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement (the "Effectiveness Target Date"), (iii) the Exchange Offer has
not been Consummated within 30 Business Days after the Effectiveness Target Date
with respect to the Exchange Offer Registration Statement or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded immediately by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself immediately declared effective (each such event referred to in clauses
(i) through (iv), a "Registration Default"), AP Holdings hereby agrees to pay to
each Holder of Transfer Restricted Securities, for the first 90-day period
immediately following the occurrence of such Registration Default, liquidated
damages in an amount equal to $.05 per week per $1,000 principal amount of Notes
constituting Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The amount of the
liquidated damages payable to each Holder shall increase by an additional $.05
per week per $1,000 in principal amount of Transfer Restricted Securities with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of liquidated damages of $.50 per week per
$1,000 principal amount of Transfer Restricted Securities held by such Holder.
Notwithstanding anything to the contrary set forth herein, (1) upon filing of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (i) above, (2) upon the effectiveness of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon Consummation of the
Exchange Offer, in the case of (iii) above, or (4) upon the filing of a
post-effective amendment to the Registration Statement or an additional
Registration Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable in the case of (iv) above, the liquidated damages
payable with respect to the Transfer Restricted Securities as a result of such
clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Global Note Holder by
wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities by wire transfer to the accounts specified by
them or by mailing checks
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<PAGE> 9
to their registered addresses if no such accounts have been specified on each
Damages Payment Date. Following the cure of all Registration Defaults relating
to any particular Transfer Restricted Securities, the accrual of liquidated
damages with respect to such Transfer Securities will cease. All obligations of
AP Holdings set forth in the preceding paragraph that are outstanding with
respect to any Transfer Restricted Security at the time such security ceases to
be a Transfer Restricted Security shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.
6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, AP Holdings shall comply with all applicable provisions of Section 6(c)
below, shall use its best efforts to effect such exchange and to permit the sale
of Broker-Dealer Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof (which shall be in a
manner consistent with the terms of this Agreement), and shall comply with all
of the following provisions:
(i) If, following the date hereof and prior to Consummation of the
Exchange Offer, there has been published a change in Commission policy
with respect to exchange offers such as the Exchange Offer, such that in
the reasonable judgment of counsel to AP Holdings there is a substantial
question as to whether the Exchange Offer is permitted by applicable
federal law or Commission policy, AP Holdings hereby agrees to seek a
no-action letter or other favorable decision from the Commission allowing
AP Holdings to Consummate an Exchange Offer for such Senior Discount
Notes. AP Holdings hereby agrees to pursue the issuance of such a decision
to the Commission staff level but shall not be required to take
commercially unreasonable action to effect a change of Commission policy.
In connection with the foregoing, AP Holdings hereby agrees, however, but
subject to the proviso set forth above, to take all such other actions as
are reasonably requested by the Commission or otherwise required in
connection with the issuance of such decision, including without
limitation to (A) participate in telephonic conferences with the
Commission, (B) deliver to the Commission staff an analysis prepared by
counsel to AP Holdings setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be permitted
and (C) diligently pursue a resolution (which need not be favorable) by
the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of AP Holdings,
prior to the Consummation of the Exchange Offer, a written representation
to AP Holdings (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the effect
that (A) it is not an affiliate of AP Holdings, (B) it is not en-
-8-
<PAGE> 10
gaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the New
Senior Discount Notes to be issued in the Exchange Offer and (C) it is
acquiring the New Senior Discount Notes in its ordinary course of
business. In addition, all such holders of Transfer Restricted Securities
shall otherwise cooperate in AP Holdings' preparation for the Exchange
Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer
and any such Holder using the Exchange Offer to participate in a
distribution of the securities to be acquired in the Exchange Offer (1)
could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of New Senior Discount Notes obtained by
such Holder in exchange for Senior Discount Notes acquired by such Holder
directly from AP Holdings or an affiliate thereof.
(iii) To the extent required by the Commission, prior to
effectiveness of the Exchange Offer Registration Statement, AP Holdings
shall provide a supplemental letter to the Commission (A) stating that AP
Holdings is registering the Exchange Offer in reliance on the position of
the Commission enunciated in Exxon Capital Holdings Corporation (available
May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and,
if applicable, any no-action letter obtained pursuant to clause (i) above,
(B) including a representation that AP Holdings has not entered into any
arrangement or understanding with any Person to distribute the New Senior
Discount Notes to be received in the Exchange Offer and that, to the best
of AP Holdings' information and belief, each Holder participating in the
Exchange Offer is acquiring the New Senior Discount Notes in its ordinary
course of business and has no arrangement or understanding with any Person
to participate in the distribution of the New Senior Discount Notes
received in the Exchange Offer and (C) any other undertaking or
representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement AP Holdings shall comply with all the provisions of
Section 6(c) below and shall use their respective best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or
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<PAGE> 11
methods of distribution thereof (as indicated in the information furnished to AP
Holdings pursuant to Section 4(b) hereof), and pursuant thereto AP Holdings will
prepare and file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in accordance with
the intended method or methods of distribution thereof within the time periods
and otherwise in accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus, to the extent that the
same are required to be available to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers), AP Holdings shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement,
as applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain
a material misstatement or omission or (B) not to be effective and usable
for resale of Transfer Restricted Securities during the period required by
this Agreement, AP Holdings shall file promptly an appropriate amendment
to such Registration Statement, (1) in the case of clause (A), correcting
any such misstatement or omission, and (2) in the case of either clause
(A) or (B), use their respective best efforts to cause such amendment to
be declared effective and such Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter. Notwithstanding the foregoing, at any time after
Consummation of the Exchange Offer, AP Holdings may allow the Shelf
Registration Statement to cease to be effective and usable if (x) the
Board of Directors of AP Holdings determines in good faith that it is in
the best interests of AP Holdings not to disclose the existence of or
facts surrounding any proposed or pending material corporate transaction
involving AP Holdings, and AP Holdings notifies the Holders within two
business days after the Board makes such determination, or (y) the
Prospectus contained in the Shelf Registration Statement contains an
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Pro-
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<PAGE> 12
spectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462 as applicable, under the Act in
a timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when the
same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement under the Act or of the suspension by any
state securities commission of the qualification of the Transfer
Restricted Securities, as applicable, for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, (D) of the existence of any fact or the happening of any event
that makes any statement of a material fact made in the Registration
Statement, the Prospectus, any amendment or supplement thereto or any
document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement in
order to make the statements therein not misleading, or that requires the
making of any additions to or changes in the Prospectus in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration Statement, or
any state securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky
laws, AP Holdings shall use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) furnish to the Initial Purchaser, each selling Holder named in
any Registration Statement or Prospectus and each of the underwriter(s) in
connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendment or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders and underwriter(s) in
connection with such sale, if any, for a period of at least five Business
Days, and AP Holdings will not file any such Registration Statement or
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<PAGE> 13
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by
reference) if the selling Holders of the Transfer Restricted Securities
covered by such Registration Statement or the underwriter(s) in connection
with such sale shall not have had an opportunity to participate in the
preparation thereof;
(v) prior to the filing of any document that is to be incorporated
by reference into a Registration Statement or Prospectus, provide copies
of such document to the selling Holders and to the underwriter(s) in
connection with such sale, if any, make AP Holdings' representatives
available for discussion of such document and other customary due
diligence matters, and include such information in such document prior to
the filing thereof as such selling Holders or uinderwriter(s), if any,
reasonably may request;
(vi) make available at reasonable times at AP Holdings principal
place of business for inspection by the selling Holders of Transfer
Restricted Securities, any managing underwriter participating in any
disposition pursuant to such Registration Statement and any attorney or
accountant retained by such selling Holders or any of such underwriter(s),
who shall certify to AP Holdings that they have a current intention to
sell Transfer Restricted Securities pursuant to a Shelf Registration
Statement, all pertinent financial and other pertinent information of AP
Holdings, as reasonably requested, and cause AP Holdings' officers,
directors and employees to respond to such inquiries as shall be
reasonable necessary; in the reasonable judgment of counsel to such
Holders, to conduct a reasonable investigation; provided, however, that
each such party shall be required to maintain in confidence and not to
disclose to any other person any information or records reasonably
designated by AP Holdings in writing as being confidential, until such
time as (A) such information becomes a matter of public record (whether by
virtue of its inclusion in such Registration Statement or otherwise), or
(B) such person shall be required so to disclose such information pursuant
to the subpoena or order of any court or other governmental agency or body
having jurisdiction over the matter (subject to the requirements of such
order, and only after such person shall have given AP Holdings prompt
prior written notice of such requirement), or (C) such information is
required to be set forth in such Registration Statement or the Prospectus
included therein or in an amendment or supplement to such Registration
Statement or an amendment or supplement to such Prospectus in order that
such Registration Statement, Prospectus, amendment or supplement, as the
case may be, does not contain an untrue statement of a material fact or
omit to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(vii) if requested by any selling Holders or the underwriter(s), as
applicable, in connection with such sale, if any, promptly include in any
Registration
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<PAGE> 14
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information that is required by the Act as
such selling Holders and underwriter(s), if any, may reasonably request to
have included therein, and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after AP
Holdings is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(viii) furnish to each selling Holder and each of the underwriter(s)
in connection with such sale, if any, without charge, at least one copy of
the Registration Statement, as first filed with the Commission, and of
each amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(ix) deliver to each selling Holder and each of the underwriter(s),
if any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; AP Holdings hereby consents to the use (in
accordance with law) of the Prospectus and any amendment or supplement
thereto by each of the selling Holders and each of the underwriter(s), if
any, in connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any amendment or
supplement thereto. Notwithstanding the foregoing, at any time after
Consummation of the Exchange Offer, AP Holdings may allow the Shelf
Registration Statement to cease to be effective and usable if (x) the
Board of Directors of AP Holdings determines in good faith that it is in
the best interests of AP Holdings not to disclose the existence of or
facts surrounding any proposed or pending material corporate transaction
involving AP Holdings, and AP Holdings notifies the Holders within two
business days after the Board makes such determination, or (y) the
Prospectus contained in the Shelf Registration Statement contains an
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(x) and take all such other actions in connection therewith in order
to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any Registration Statement contemplated by this
Agreement as may be reasonably requested by any Holder who holds at least
5% in aggregate principal amount of such class of Transfer Restricted
Securities or underwriter in connection with any sale or resale pursuant
to any Registration Statement contemplated by this Agreement, provided,
that, AP Holdings shall not be required to enter into any such agreement
more than once with respect to all of the Transfer Restricted Securities,
and in the case of a Shelf Registration Statement, may delay entering into
such agreement if the Board of Directors of AP Holdings determines in good
faith that it is in the best interest of AP Holdings not to disclose the
existence of
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<PAGE> 15
or facts surrounding any proposed or pending corporate transaction
involving AP Holdings; and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration
is an Underwritten Registration, AP Holdings shall:
(A) furnish to each selling Holder who holds at least 5% in
aggregate principal amount of such class of Transfer Restricted Securities
and each underwriter, if any, in such substance and scope as they may
request and as is customarily made in connection with an offering of debt
securities pursuant to a Registration Statement, upon the effectiveness of
the Shelf Registration Statement and to each Restricted Broker-Dealer upon
Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf of AP
Holdings by (x) the President or any Vice President and (y) a
principal financial or accounting officer of AP Holdings confirming,
as of the date thereof, the matters set forth in paragraphs (a)
through (c) of Section 9 of the Purchase Agreement and such other
similar matters as the Holders, underwriter(s) and/or Restricted
Broker-Dealers may reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for AP Holdings, covering
matters customarily covered in opinions requested in Underwritten
Offerings and dated the date of effectiveness of the Shelf
Registration Statement or the date of Consummation of the Exchange
Offer, as the case may be; and
(3) customary comfort letters, dated as of the date of
effectiveness of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may be, from AP
Holdings' independent accountants, in the customary form and
covering matters of the type customarily covered in comfort letters
to underwriters in connection with an offering of debt securities
pursuant to a Registration Statement, and affirming the matters set
forth in the comfort letters delivered pursuant to Section 9(f) of
the Purchase Agreement, without exception;
(B) set forth in full or incorporated by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement the indemnification
provisions and procedures of Section 8 hereof with respect to all parties
to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the selling Holders, the underwriter(s), if any,
and Restricted Broker-
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<PAGE> 16
Dealers, if any, to evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by AP Holdings pursuant to this clause (x).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any
time the representations and warranties of AP Holdings contemplated in
(A)(1) above cease to be true and correct, AP Holdings shall so advise the
underwriter(s), if any, selling Holders who hold at least 5% in aggregate
principal amount of such class of Transfer Restricted Securities and each
Restricted Broker-Dealer promptly and if requested by such Persons, shall
confirm such advice in writing;
(xi) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or Blue Sky
laws of such jurisdictions as the selling Holders or underwriter(s), if
any, may reasonably request and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that AP Holdings
shall not be required to register or qualify as a foreign corporation
where it is not now so qualified or to take any action that would subject
it to the service of process in suits or to taxation, other than as to
matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xii) issue, upon the request of any Holder of Senior Discount Notes
covered by any Shelf Registration Statement contemplated by this
Agreement, New Senior Discount Notes, having an aggregate principal amount
equal to the aggregate principal amount of Senior Discount Notes
surrendered to AP Holdings by such Holder in exchange therefor or being
sold by such Holder; such New Senior Discount Notes to be registered in
the name of such Holder or in the name of the purchaser(s) of such Notes,
as the case may be; in return, the Senior Discount Notes held by such
Holder shall be surrendered to AP Holdings for cancellation;
(xiii)in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and to enable such Transfer Restricted Securities to
be in such denominations and registered in such names as such Holders or
the underwriter(s), if any, may request at least two Business Days prior
to such sale of Transfer Restricted Securities;
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<PAGE> 17
(xiv) use their respective best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or
the underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xi)
above;
(xv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering
such Transfer Restricted Securities and provide the Trustee under the
Indenture with printed certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with the Depository Trust
Company;
(xvii)cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of
the NASD;
(xviii) otherwise use their respective best efforts to comply with
all applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period (A) commencing at the end of any fiscal
year in which Transfer Restricted Securities are sold to underwriters in a
firm or best efforts underwritten offering or (B) if not sold to
underwriters in such an offering, beginning with the first month of AP
Holdings' first fiscal quarter commencing after the effective date of the
Registration Statement;
(xix) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee
and the Holders of Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the
terms of the TIA; and execute and use their re-
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<PAGE> 18
spective best efforts to cause the Trustee to execute, all documents that
may be required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner; and
(xx) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security or Broker-Dealer Transfer Restricted Securities, as
applicable, that, upon receipt of the notice referred to in Section 6(c)(i) or
any notice from AP Holdings of the existence of any fact of the kind described
in Section 6(c)(iii)(D) hereof, such Holder will immediately discontinue
disposition of Transfer Restricted Securities pursuant to the applicable
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof, or
until it is advised in writing by AP Holdings that the use of the Prospectus may
be resumed, and has received copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus (the "Advice"). If so
directed by AP Holdings, each Holder will deliver to AP Holdings (at AP
Holdings' expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities that was current at
the time of receipt of either such notice. In the event AP Holdings shall give
any such notice, the time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall
be extended by the number of days during the period from and including the date
of the giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D)
hereof to and including the date when each selling Holder covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(xv) hereof or shall have
received the Advice.
AP Holdings may require each Holder of Transfer Restricted Securities or
Broker-Dealer Transfer Restricted Securities as to which any registration is
being effected to furnish to AP Holdings such information regarding such Holder
and such Holder's intended method of distribution of the applicable Transfer
Restricted Securities as AP Holdings may from time to time reasonably request in
writing, but only to the extent that such information is required in order to
comply with the Act. Each such Holder agrees to notify AP Holdings as promptly
as practicable of (i) any inaccuracy or change in information previously
furnished by such Holder to AP Holdings, or (ii) the occurrence of any event, in
either case, as a result of which any prospectus relating to such registration
contains or would contain an untrue statement of a material fact regarding such
Holder or such Holder's intended method of distribution of the applicable
Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities
or omits to state any material fact re-
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<PAGE> 19
garding such Holder or such Holder's intended method of distribution of the
applicable Transfer Restricted Securities or Broker-Dealer Transfer Restricted
Securities required to be stated therein or necessary to make the statements
therein not misleading and promptly to furnish to AP Holdings any additional
information required to correct and update any previously furnished information
or required so that such Prospectus shall not contain, with respect to such
Holder or the distribution of the applicable Transfer Restricted Securities or
Broker-Dealer Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
7. REGISTRATION EXPENSES
(a) All expenses incident to AP Holdings' performance of or compliance
with this Agreement will be borne by AP Holdings regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made by any Initial
Purchaser or Holder with the NASD (and, if applicable, the fees and expenses of
any "qualified independent underwriter") and its counsel that may be required by
the rules and regulations of the NASD); (ii) all fees and expenses of compliance
with federal securities and state Blue Sky or securities laws; (iii) all
expenses of printing (including printing certificates for the New Senior
Discount Notes to be issued in the Exchange Offer and printing of Prospectuses);
(iv) all fees and disbursements of counsel for AP Holdings and, in accordance
with Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all
messenger and delivery services and telephone expenses of AP Holdings; (vi) all
application and filing fees in connection with listing the Notes on a national
securities exchange or automated quotation system pursuant to the requirements
hereof and (vii) all fees and disbursements of independent certified public
accountants of AP Holdings (including the expenses of any special audit and
comfort letters required by or incident to such performance).
(b) AP Holdings will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of any of their respective
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by AP Holdings.
(c) In connection with any Registration Statement required by this
Agreement, as applicable (including, without limitation, the Exchange Offer
Registration Statement and the Shelf Registration Statement), AP Holdings will
reimburse the Initial Purchaser and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
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<PAGE> 20
8. INDEMNIFICATION
(a) AP Holdings agrees to indemnify and hold harmless the Initial
Purchaser, its directors, its officers and each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages,
liabilities or judgments (including, without limitation, any legal or other
expenses reasonably incurred in connection with investigating or defending any
matter, including any action, that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Offering Memorandum (or any
amendment or supplement thereto), the Preliminary Offering Memorandum or any
Rule 144A Information provided by AP Holdings to any holder or prospective
purchaser of Senior Discount Notes pursuant to Section 5(n) of the Purchase
Agreement or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to the Initial Purchaser
furnished in writing to AP Holdings by the Initial Purchaser; provided, however,
that the foregoing indemnity agreement with respect to any Preliminary Offering
Memorandum shall not inure to the benefit of the Initial Purchaser who failed to
deliver a Final Offering Memorandum (as then amended or supplemented, provided
by AP Holdings to the Initial Purchasers in the requisite quantity and on a
timely basis to permit proper delivery on or prior to the Closing Date) to the
person asserting any losses, claims, damages and liabilities and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such material
misstatement or omission or alleged material misstatement or omission was cured
in the Final Offering Memorandum.
(b) The Initial Purchaser agrees to indemnify and hold harmless AP
Holdings, and its respective directors and officers and each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) AP Holdings, to the same extent as the foregoing indemnity from AP
Holdings to the Initial Purchaser but only with reference to information
relating to the Initial Purchaser furnished in writing to AP Holdings by the
Initial Purchaser expressly for use in the Preliminary Offering Memorandum or
the Offering Memorandum.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party
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<PAGE> 21
shall assume the defense of such action, including the employment of counsel
reasonably satisfactory to the indemnified party and the payment of all fees and
expenses of such counsel, as incurred (except that in the case of any action in
respect of which indemnity may be sought pursuant to both Sections 8(a) and
8(b), the Initial Purchaser shall not be required to assume the defense of such
action pursuant to this Section 8(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such counsel,
except as provided below, shall be at the expense of the Initial Purchaser). Any
indemnified party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Donaldson, Lufkin
& Jenrette Securities Corporation, in the case of the parties indemnified
pursuant to Section 8(a), and by AP Holdings, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than thirty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
-20-
<PAGE> 22
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by AP
Holdings, on the one hand, and the Initial Purchaser on the other hand from the
offering of the Senior Discount Notes or (ii) if the allocation provided by
clause 8(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of AP Holdings, on the one hand, and
the Initial Purchaser, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by AP Holdings, on the one hand and the Initial Purchaser, on
the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Senior Discount Notes (after underwriting
discounts and commissions, but before deducting expenses) received by AP
Holdings, and the total discounts and commissions received by the Initial
Purchaser bear to the total price to investors of the Senior Discount Notes, in
each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault of AP Holdings, on the one hand, and the Initial
Purchaser, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by AP Holdings, on the one hand, or the Initial Purchaser, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
AP Holdings and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action, that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 8, the Initial
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total discounts and commissions received by the Initial Purchaser
exceeds the amount of any damages which the Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
-21-
<PAGE> 23
(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
9. RULE 144A
AP Holdings hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which AP
Holdings is not subject to Section 13 or 15(d) of the Securities Exchange Act,
to make available, upon request of any Holder of Transfer Restricted Securities,
to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities designated by such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Act in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144A.
10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, lock-up letters and other documents required
under the terms of such underwriting arrangements.
11. SELECTION OF UNDERWRITERS
For any Underwritten Offering of Notes, the investment banker or
investment bankers and manager or managers for any Underwritten Offering of
Notes, that will administer such offering will be selected by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities
included in such offering provided, however, that such investment bankers and
managers must be reasonably satisfactory to AP Holdings. Such investment bankers
and managers are referred to herein as the "underwriters."
12. MISCELLANEOUS
(a) Remedies. AP Holdings agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by them of the
provisions of this Agreement and hereby agree to waive the defense in any action
for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. AP Holdings will not on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as disclosed in the
Offering Memorandum, AP Holdings has not previously entered into any agreement
granting any registration rights with respect to
-22-
<PAGE> 24
its securities to any Person. The rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with the rights granted to the
holders of AP Holdings' securities under any agreement in effect on the date
hereof.
(c) Adjustments Affecting the Notes. AP Holdings will not take any action,
or voluntarily permit any change to occur, with respect to the Notes that would
materially and adversely affect the ability of the Holders to Consummate any
Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), AP Holdings has obtained the written consent
of the Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, AP Holdings has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
that does not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be given
by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture;
With a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Telecopier No.: (212) 751-4864
Attention: Philip E. Coviello, Jr.
(ii) if to AP Holdings:
AP Holdings, Inc.
800 Superior Avenue
Cleveland, Ohio 44114
Telecopier No.: (216) 523-8080
-23-
<PAGE> 25
Attention: Robert N. Sacks
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopier No.: (212) 403-2000
Attention: Adam O. Emmerich
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities directly from such Holder at a time when such
Holder could not transfer such Transfer Restricted Securities pursuant to a
Shelf Registration Statement. Each Holder of Transfer Restricted Securities
agrees to be bound by and comply with the terms and provisions of this
Agreement.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK WITHOUT
REGARD TO THE CONFLICT OF LAW RULES.
-24-
<PAGE> 26
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter.
[SIGNATURE PAGE FOLLOWS]
-25-
<PAGE> 27
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AP HOLDINGS, INC.
By: /s/ Michael J. Celebrezze
-----------------------------
Name: Michael J. Celebrezze
Title: Treasurer
-26-
<PAGE> 28
The foregoing Registration Rights Agreement
is hereby confirmed and accepted as of the
date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Timothy White
---------------------
Name: Timothy White
Title: Vice President
-27-
<PAGE> 1
EXHIBIT 12.1
AP HOLDINGS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN THOUSANDS, EXCEPT RATIO DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------- PRO FORMA
1993 1994 1995 1996 1997 1997
------- ------- ------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes and
minority interest.................. $(4,037) $(2,880) $(2,273) $1,469 $2,320 $(7,032)
Fixed charges........................ 2,966 3,129 4,216 4,261 4,611 29,354
------- ------- ------- ------ ------ -------
Earnings............................. $(1,071) $ 249 $ 1,943 $5,730 $6,931 $22,322
======= ======= ======= ====== ====== =======
Interest expense..................... $ 2,084 $ 2,437 $ 3,101 $3,409 $3,713 $18,931
Amortization of deferred financing
costs.............................. 361 198 574 228 180 720
Interest portion of rent expense..... 521 494 541 624 718 9,703
------- ------- ------- ------ ------ -------
Fixed charges........................ $ 2,966 $ 3,129 $ 4,216 $4,261 $4,611 $29,354
======= ======= ======= ====== ====== =======
Ratio of earnings to fixed charges... Note 1 Note 1 Note 1 1.3x 1.5x Note 1
======= ======= ======= ====== ====== =======
</TABLE>
- ---------------
Note 1: Earnings were inadequate to cover fixed charges by $4,037, $2,880,
$2,273 and $7,032 for the years ended December 31, 1993, 1994 and 1995 and the
pro forma year ended December 31, 1997, respectively.
<PAGE> 1
Exhibit 21.1
Subsidiaries of AP Holdings, Inc.
<TABLE>
<CAPTION>
Name of Entity Organized Under Laws of
- -------------- -----------------------
<S> <C>
APCOA, Inc. Delaware
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Experts" and
"Selected Historical Financial Data of Holdings" and to the use of our reports
dated February 3, 1998, in the Registration Statement (Form S-4) and related
Prospectus of AP Holdings, Inc. for the registration of $70,000,000 of 11 1/4%
Senior Discount Notes.
ERNST & YOUNG LLP
Cleveland, Ohio
April 13, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ALTSCHULER, MELVOIN AND GLASSER LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Experts" and
"Selected Historical Financial Data of Standard" and to the use of our reports
dated February 3, 1998, in the Registration Statement (Form S-4) and related
Prospectus of AP Holdings, Inc. for the registration of $70,000,000 of 11 1/4%
Senior Discount Notes.
ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
April 13, 1998
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
---------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) __
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
AP HOLDINGS, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 06-1269403
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 SUPERIOR AVENUE
CLEVELAND, OH 44114-2601
(Address of principal executive offices) (Zip Code)
11 1/4 % NEW SENIOR DISCOUNT NOTES DUE 2008
(Title of indenture securities)
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its
parent, State Street Corporation.
(See note on page 2.)
Item 3. through item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee
to commence business was necessary or issued is on file with
the Securities and Exchange Commission as Exhibit 2 to
Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-17940)
and is incorporated herein by reference thereto.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the documents
specified in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe, Inc.
(File No. 22-17940) and is incorporated herein by reference
thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4
to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Eastern
Edison Company (File No. 33-37823) and is incorporated herein
by reference thereto.
1
<PAGE> 3
5. A copy of each indenture referred to in item 4. if the obligor is in
default.
Not applicable.
6. The consents of united states institutional trustees required by
Section 321(b) of the act.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Hartford and The
State of Connecticut, on the 16th of April 1998
STATE STREET BANK AND TRUST COMPANY
By: /s/ MICHAEL M. HOPKINS
--------------------------------------
NAME MICHAEL M. HOPKINS
TITLE VICE PRESIDENT
2
<PAGE> 4
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by AP
HOLDINGS, INC. of its 11 1/4 % New Senior Discount Notes Due 2008, we hereby
consent that reports of examination by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Michael M. Hopkins
-----------------------------------
NAME MICHAEL M. HOPKINS
TITLE VICE PRESIDENT
Dated: April 16, 1998
3
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business September 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin .............................................. 1,380,475
Interest-bearing balances ....................................................................... 8,821,855
Securities .............................................................................................. 10,461,989
Federal funds sold and securities purchased under agreements to resell in
domestic offices of the bank and its Edge subsidiary ........................................... 6,085,138
Loans and lease financing receivables:
Loans and leases, net of unearned income ................................... 5,597,831
Allowance for loan and lease losses ........................................ 79,416
Allocated transfer risk reserve ............................................ 0
Loans and leases, net of unearned income and allowances ........................................ 5,518,415
Assets held in trading accounts ......................................................................... 917,895
Premises and fixed assets ............................................................................... 390,028
Other real estate owned. ................................................................................ 779
Investments in unconsolidated subsidiaries .............................................................. 34,278
Customers' liability to this bank on acceptances outstanding ............................................ 83,470
Intangible assets ....................................................................................... 227,659
Other assets ............................................................................................ 1,969,514
-----------
Total assets ............................................................................................ 35,891,495
===========
LIABILITIES
Deposits:
In domestic offices ............................................................................ 8,095,559
Noninterest-bearing ................................................ 5,962,025
Interest-bearing ................................................... 2,133,534
In foreign offices and Edge subsidiary ......................................................... 14,399,173
Noninterest-bearing ................................................ 86,798
Interest-bearing ................................................... 14,312,375
Federal funds purchased and securities sold under agreements to repurchase in
domestic offices of the bank and of its Edge subsidiary ........................................ 7,660,881
Demand notes issued to the U.S. Treasury and Trading Liabilities ........................................ 1,107,552
Other borrowed money .................................................................................... 589,733
Subordinated notes and debentures ....................................................................... 0
Bank's liability on acceptances executed and outstanding ................................................ 85,600
Other liabilities ....................................................................................... 1,830,593
Total liabilities ....................................................................................... 33,769,091
-----------
EQUITY CAPITAL
Perpetual preferred stock and related
surplus.................................................................................................. 0
Common stock ............................................................................................ 29,931
Surplus ................................................................................................. 437,183
Undivided profits and capital reserves/Net unrealized holding gains (losses) ............................ 1,660,158
Cumulative foreign currency translation adjustments ..................................................... (4,868)
Total equity capital .................................................................................... 2,122,404
-----------
Total liabilities and equity capital .................................................................... 35,891,495
</TABLE>
4
<PAGE> 6
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements of the Company for each of the three years in
the period ended December 31, 1997 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1995 JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1995 DEC-31-1996 DEC-31-1997
<EXCHANGE-RATE> 1 1 1
<CASH> 0 2,532,000 3,332,000
<SECURITIES> 0 0 0
<RECEIVABLES> 0 10,556,000 14,249,000
<ALLOWANCES> 0 (315,000) (443,000)
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 14,116,000 18,254,000
<PP&E> 0 56,582,000 55,715,000
<DEPRECIATION> 0 (44,906,000) (43,375,000)
<TOTAL-ASSETS> 0 52,823,000 59,095,000
<CURRENT-LIABILITIES> 0 33,571,000 35,313,000
<BONDS> 0 32,129,000 34,181,000
0 7,841,000 8,728,000
0 0 0
<COMMON> 0 1,000 1,000
<OTHER-SE> 0 (23,232,000) (22,260,000)
<TOTAL-LIABILITY-AND-EQUITY> 0 52,823,000 59,095,000
<SALES> 141,540,000 135,752,000 115,676,000
<TOTAL-REVENUES> 141,540,000 135,752,000 115,676,000
<CGS> 120,215,000 113,501,000 92,818,000
<TOTAL-COSTS> 120,215,000 113,501,000 92,818,000
<OTHER-EXPENSES> 20,893,000 17,905,000 17,295,000
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 3,101,000 3,409,000 3,713,000
<INCOME-PRETAX> (2,273,000) 1,469,000 2,320,000
<INCOME-TAX> 240,000 106,000 140,000
<INCOME-CONTINUING> (3,117,000) 939,000 1,859,000
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (3,117,000) 939,000 1,859,000
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
<PAGE> 1
LETTER OF TRANSMITTAL
AP HOLDINGS, INC.
OFFER TO EXCHANGE
ALL OUTSTANDING
11 1/4% SENIOR DISCOUNT NOTES DUE 2008
FOR
11 1/4% NEW SENIOR DISCOUNT NOTES DUE 2008
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12 MIDNIGHT, NEW YORK CITY TIME, ON , 1998,
UNLESS THE OFFER IS EXTENDED
STATE STREET BANK AND TRUST COMPANY
(the "Exchange Agent")
<TABLE>
<S> <C> <C>
By Mail By Facsimile Transmission: By Hand or Overnight Courier:
(registered or certified mail (617) 664-5395
recommended):
State Street Bank and
State Street Bank and Confirm by Telephone Trust Company
Trust Company or for Information Call: Corporate Trust Department
Corporate Trust Department (617) 664-5587 4th floor
P.O. Box 778 Attn: Kellie Mullen Two International Place
Boston, MA 02102-0078 Boston, MA 02110
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1998 (the "Prospectus") of AP Holdings, Inc. (the "Company") and
this Letter of Transmittal, which together constitute the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 11 1/4% New Senior
Discount Notes due 2008 (the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which the Prospectus is a part, for each $1,000
principal amount of its outstanding 11 1/4% Senior Discount Notes due 2008 (the
"Notes"), respectively. The term "Expiration Date" shall mean 12 Midnight, New
York City time, on , 1998, unless the Company, in its reasonable
judgment, extends the Exchange Offer, in which case the term shall mean the
latest date and time to which the Exchange Offer is extended. Capitalized terms
used but not defined herein have the meaning given to them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List on the next page the Notes to which this Letter of Transmittal
relates. If the space indicated is inadequate, the Certificate or Registration
Numbers and Principal Amounts should be listed on a separately signed schedule
affixed hereto.
<PAGE> 2
- --------------------------------------------------------------------------------
DESCRIPTION OF SENIOR DISCOUNT NOTES TENDERED HEREBY
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) OF CERTIFICATE AMOUNT PRINCIPAL
REGISTERED OWNER(S) OR REGISTRATION REPRESENTED AMOUNT
(PLEASE FILL IN) NUMBERS* BY NOTES TENDERED**
- ---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* NEED NOT BE COMPLETED BY BOOK-ENTRY HOLDERS.
** UNLESS OTHERWISE INDICATED, THE HOLDER WILL BE DEEMED TO HAVE TENDERED THE
FULL AGGREGATE PRINCIPAL AMOUNT REPRESENTED BY SUCH NOTES. ALL TENDERS MUST
BE IN INTEGRAL MULTIPLES OF $1,000.
- --------------------------------------------------------------------------------
This Letter of Transmittal is to be used (i) if certificates of Notes are
to be forwarded herewith, (ii) if delivery of Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository Trust
Company (the "Depository"), pursuant to the procedures set forth in "The
Exchange Offer -- Procedures for Tendering Notes" in the Prospectus or (iii)
tender of the Notes is to be made according to the guaranteed delivery
procedures described in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2. Delivery of
documents to a book-entry transfer facility does not constitute delivery to the
Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Notes are registered on the books of the Company or any other person
who has obtained a properly completed bond power from the registered holder. The
undersigned has completed, executed and delivered this Letter of Transmittal to
indicate the action the undersigned desires to take with respect to the Exchange
Offer. Holders who wish to tender their Notes must complete this letter in its
entirety.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
[ ] The Depository Trust Company
Account Number
Transaction Code Number
Holders whose Notes are not immediately available or who cannot deliver
their Notes and all other documents required hereby to the Exchange Agent on or
prior to the Expiration Date must tender their Notes according to the guaranteed
delivery procedure set forth in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2.
<PAGE> 3
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
Name of Eligible Institution that Guaranteed Delivery
-------------------------------------------------------------------------
If delivery by book-entry transfer:
Account Number
Transaction Code Number
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name
Address
<PAGE> 4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
such Notes tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such Notes as are being tendered hereby, including all rights to accrued
and unpaid interest thereon as of the Expiration Date. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent the true and lawful
agent and attorney-in-fact of the undersigned (with full knowledge that said
Exchange Agent acts as the agent of the Company in connection with the Exchange
Offer) to cause the Notes to be assigned, transferred and exchanged. The
undersigned represents and warrants that it has full power and authority to
tender, exchange, assign and transfer the Notes and to acquire New Notes
issuable upon the exchange of such tendered Notes, and that when the same are
accepted for exchange, the Company will acquire good and unencumbered title to
the tendered Notes, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim.
The undersigned represents to the Company that (i) the New Notes acquired
pursuant to the Exchange Offer are being obtained in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, and (ii) neither the undersigned nor any such other person has
an arrangement or understanding with any person to participate in the
distribution of such New Notes. If the undersigned or the person receiving the
New Notes covered hereby is a broker-dealer that is receiving the New Notes for
its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, the undersigned
acknowledges that it or such other person will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. The undersigned
and any such other person acknowledge that, if they are participating in the
Exchange Offer for the purpose of distributing the New Notes, (i) they cannot
rely on the position of the staff of the Securities and Exchange Commission
enunciated in Exxon Capital Holdings Corporation (available April 13, 1989),
Morgan Stanley & Co., Inc. (available June 5, 1991) or similar no-action letters
and, in the absence of an exemption therefrom, must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
the resale transaction and (ii) failure to comply with such requirements in such
instance could result in the undersigned or any such other person incurring
liability under the Securities Act for which such persons are not indemnified by
the Company. If the undersigned or the person receiving the New Notes covered by
this letter is an affiliate (as defined under Rule 405 of the Securities Act) of
the Company, the undersigned represents to the Company that the undersigned
understands and acknowledges that such New Notes may not be offered for resale,
resold or otherwise transferred by the undersigned or such other person without
registration under the Securities Act or an exemption therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered Notes or transfer ownership of such Notes on the account books
maintained by a book-entry transfer facility. The undersigned further agrees
that acceptance of any tendered Notes by the Company and the issuance of New
Notes in exchange therefor shall constitute performance in full by the Company
of its obligations under the Registration Rights Agreement and that the Company
shall have no further obligations or liabilities thereunder for the registration
of the Notes or the New Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the Notes tendered hereby
and, in such event, the Notes not exchanged will be returned to the undersigned
at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered Notes may be withdrawn at any time
prior to the Expiration Date.
<PAGE> 5
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instruction" in this Letter
of Transmittal, certificates for all New Notes delivered in exchange for
tendered Notes, and any Notes delivered herewith but not exchanged, will be
registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If a
New Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the New Note is to be mailed to someone other than
the person(s) signing this Letter of Transmittal or to the person(s) signing
this Letter of Transmittal at an address different than the address shown on
this Letter of Transmittal, the appropriate boxes of this Letter of Transmittal
should be completed. If Notes are surrendered by Holder(s) that have completed
either the box entitled "Special Registration Instructions" or the box entitled
"Special Delivery Instructions" in this Letter of Transmittal, signature(s) on
this Letter of Transmittal must be guaranteed by an Eligible Institution
(defined in Instruction 4).
<PAGE> 6
------------------------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS
To be completed ONLY if the New Notes are to be issued in the name of
someone other than the undersigned.
Name:
----------------------------------------------------
Address:
--------------------------------------------------
------------------------------------------------------------
Book-Entry Transfer Facility Account:
------------------------------------------------------------
Employer Identification or Social Security Number:
------------------------------------------------------------
(Please print or type)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the New Notes are to be sent to someone other
than the undersigned, or to the undersigned at an address other than that
shown under "Description of Notes Tendered Hereby."
Name:
----------------------------------------------------
Address:
--------------------------------------------------
------------------------------------------------------------
(Please print or type)
- --------------------------------------------------------------------------------
REGISTERED HOLDER(S) OF NOTES SIGN HERE
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(Signature(s) of Registered Holder(s))
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Notes or on a security position listing as the owner of the Notes or by
person(s) authorized to become registered holder(s) by properly completed bond
powers transmitted herewith. If signature is by attorney-in-fact, trustee,
executor, administrator, guardian, officer of a corporation or other person
acting in a fiduciary capacity, please provide the following information.
(Please print or type).
Name and Capacity (full title):
- --------------------------------------------------------------------------------
Address (including zip code):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.:
- --------------------------------------------------------------------------------
Dated:
- ---------------------------------
SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTION 4)
Authorized Signature:
-----------------------------------------------------------
(Signature of Representative of Signature Guarantor)
Name and Title:
- --------------------------------------------------------------------------------
Name of Plan:
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
-------------------------------------------------
(Please print or type)
Dated:
- ---------------------------------
<PAGE> 7
PAYOR'S NAME: AP HOLDINGS, INC.
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
PLEASE PROVIDE YOUR SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION
NUMBER ON THE FOLLOWING SUBSTITUTE FORM W-9 AND CERTIFY THEREIN THAT YOU ARE
SUBJECT TO BACKUP WITHHOLDING.
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW
SUBSTITUTE PART 2 -- CHECK THE BOX IF YOU ARE NOT SUBJECT TO -----------------------------
FORM W-9 BACKUP WITHHOLDING UNDER THE PROVISIONS OF SOCIAL SECURITY
SECTION 3406(A)(1)(C) OF THE INTERNAL REVENUE NUMBER OR EMPLOYEE
CODE BECAUSE (1) YOU ARE EXEMPT FROM BACKUP IDENTIFICATION NUMBER
DEPARTMENT OF THE TREASURY WITHHOLDING, (2) YOU HAVE NOT BEEN NOTIFIED THAT
INTERNAL YOU ARE SUBJECT TO BACKUP WITHHOLDING AS A RESULT
REVENUE SERVICE OF FAILURE TO REPORT ALL INTEREST OR DIVIDENDS OR
(3) THE INTERNAL REVENUE SERVICE HAS NOTIFIED YOU
THAT YOU ARE NO LONGER SUBJECT TO BACKUP
WITHHOLDING. [ ]
----------------------------------------------------------------------------------
PAYOR'S REQUEST FOR TAXPAYER CERTIFICATION: UNDER PENALTIES OF PERJURY, I PART 3 --
IDENTIFICATION CERTIFY THAT THE INFORMATION PROVIDED ON THIS AWAITING TIN [ ]
NUMBER ("TIN") FORM IS TRUE, CORRECT AND COMPLETE.
SIGNATURE: ------------------DATE:---------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO
YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS
NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED AN
APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR
(B) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I
UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER WITHIN 60
DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD,
UNTIL I PROVIDE A NUMBER.
<TABLE>
<S> <C>
- -------------------------------------------------------- -----------------------------------------------------
SIGNATURE DATE
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERM AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered Notes or confirmation of any book-entry transfer
to the Exchange Agent's account at a book-entry transfer facility of Notes
tendered by book-entry transfer, as well as a properly completed and duly
executed copy of this Letter of Transmittal or facsimile thereof, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Prospectus). The method of delivery of this
Letter of Transmittal, the Notes and any other required documents is at the
election and risk of the Holder, and except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
If such delivery is by mail, it is suggested that registered mail with return
receipt requested, properly insured, be used.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Notes for exchange.
Delivery to an address other than as set forth herein, or instructions via
a facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Notes, but whose Notes are not immediately
available and thus cannot deliver their Notes, the Letter of Transmittal or any
other required documents to the Exchange Agent (or comply with the procedures
for book-entry transfer) prior to the Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent
in the United States or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate number(s)
of such Notes and the principal amount of Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within three New York
Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof), together with the Notes (or a
confirmation of book-entry transfer of such Notes into the Exchange Agent's
account at the Depository) and any other documents required by the Letter
of Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Notes in proper form for
transfer (or a confirmation of book-entry transfer of such Notes into the
Exchange Agent's account at the Depository) and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within three New York Stock Exchange trading days after the Expiration
Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above. Any Holder who wishes to tender Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery relating to such
Notes prior to the Expiration Date. Failure to complete the guaranteed delivery
procedures outlined above will not, of itself, affect the validity or effect a
revocation of any Letter of Transmittal form properly completed and executed by
a Holder who attempted to use the guaranteed delivery procedures.
<PAGE> 9
3. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Notes evidenced by a submitted
certificate is tendered, the tendering Holder should fill in the principal
amount tendered in the column entitled "Principal Amount Tendered" of the box
entitled "Description of Notes Tendered Hereby." A newly issued Note for the
principal amount of Notes submitted but not tendered will be sent to such Holder
as soon as practicable after the Expiration Date. All Notes delivered to the
Exchange Agent will be deemed to have been tendered in full unless otherwise
indicated.
Notes tendered pursuant to the Exchange Offer may be withdrawn at any time
prior to the Expiration Date, after which tenders of Notes are irrevocable. To
be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Notes to
be withdrawn (the "Depositor"), (ii) identify the Notes to be withdrawn
(including the registration number(s) and principal amount of such Notes, or, in
the case of Notes transferred by book-entry transfer, the name and number of the
account at the Depository to be credited), (iii) be signed by the Holder in the
same manner as the original signature on this Letter of Transmittal (including
any required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Notes register the transfer
of such Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such notes are to be registered, if different from
that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Notes so withdrawn are validly retendered. Any Notes which have been
tendered but which are not accepted for exchange, will be returned to the Holder
thereof without cost to such Holder as soon as practicable after withdrawal,
rejection of tender or termination of Exchange Offer.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered Holder(s) of the
Notes tendered hereby, the signature must correspond with the name(s) as written
on the face of the certificates without alternation or enlargement or any change
whatsoever. If this Letter of Transmittal is signed by a participant in the
Depository, the signature must correspond with the name as it appears on the
security position listing as the owner of the Notes.
If any of the Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Notes registered in different names are tendered, it will be
necessary to complete, sign and submit as many separate copies of this Letter of
Transmittal as there are different registrations of Notes.
Signatures on this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the Notes
tendered hereby are tendered (i) by a registered Holder who has not completed
the box entitled "Special Registration Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of Notes (which term, for the purposes described herein, shall include a
participant in the Depository whose name appears on a security listing as the
owner of the Notes) listed and tendered hereby, no endorsements of the tendered
Notes or separate written instruments of transfer or exchange are required. In
any other case, the registered Holder (or acting Holder) must either properly
endorse the Notes or transmit properly completed bond powers with this Letter of
Transmittal (in either case, executed exactly as the name(s) of the registered
Holder(s) appear(s) on the Notes, and, with respect to a participant in the
Depository whose name appears on a security position listing as the owner of
Notes, exactly as the name of the participant appears on such security position
listing), with the signature on the Notes or bond power guaranteed by an
Eligible Institution (except where the Notes are tendered for the account of an
Eligible Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
<PAGE> 10
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the name and
address (or account at the Depository) in which the New Notes or substitute
Notes for principal amounts not tendered or not accepted for exchange are to be
issued (or deposited), if different from the names and addresses or accounts of
the person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification number or social security number of
the person named must also be indicated and the tendering Holder should complete
the applicable box.
If no instructions are given, the New Notes (and any Notes not tendered or
not accepted) will be issued in the name of and sent to the acting Holder of the
Notes or deposited at such Holder's account at the Depository.
6. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable to the
transfer and exchange of Notes to it or its order pursuant to the Exchange
Offer. If a transfer tax is imposed for any other reason other than the transfer
and exchange of Notes to the Company or its order pursuant to the Exchange
Offer, the amount of any such transfer taxes (whether imposed on the registered
Holder or any other person) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exception therefrom is not
submitted herewith, the amount of such transfer taxes will be collected from the
tendering Holder by the Exchange Agent.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Notes listed in this Letter of Transmittal.
7. WAIVER OF CONDITIONS.
The Company reserves the right, in its reasonable judgment, to waive, in
whole or in part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any Holder whose Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering as well as requests for
additional copies of the Prospectus and this Letter of Transmittal may be
directed to the Exchange Agent at the address and telephone number(s) set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to AP Holdings, Inc., 800 Superior Avenue,
Cleveland, Ohio, 44114-2601 telephone (216) 522-0700; Attention: Robert N.
Sacks.
10. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Notes not properly tendered or any Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right, in its reasonable judgment, to waive any defects,
irregularities or conditions of tender as to particular Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in this Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Notes must be cured within such time as the Company shall determine. Although
the Company intends to notify Holders of defects or irregularities with respect
to tenders of Notes, neither the Company, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification. Tenders
of Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holder as soon as practicable following the Expiration
Date.
<PAGE> 11
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Notes is required to
provide the Exchange Agent with such Holder's correct TIN on Substitute Form W-9
above. If such Holder is an individual, the TIN is the Holder's social security
number. The Certificate of Awaiting Taxpayer Identification Number should be
completed if the tendering Holder has not been issued a TIN and has applied for
a number or intends to apply for a number in the near future. If the Exchange
Agent is not provided with the correct TIN, the Holder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to such Holder with respect to tendered Notes may be subject to backup
withholding.
Certain Holders (including, among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. Such a Holder, who satisfies one
or more of the conditions set forth in Part 2 of the Substitute Form W-9 should
execute the certification following such Part 2. In order for a foreign Holder
to qualify as an exempt recipient, that Holder must submit to the Exchange Agent
a properly completed Internal Revenue Service Form W-9, signed under penalties
of perjury, attesting to that Holder's exempt status. Such forms can be obtained
from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder with
respect to Notes tendered for exchange, the Holder is required to notify the
Exchange Agent of his or her correct TIN by completing the form herein
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
Holder is awaiting a TIN) and that (i) each Holder is exempt, (ii) such Holder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of failure to report all interest or dividends
or (iii) the Internal Revenue Service has notified such Holder that he or she is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the Notes.
If Notes are in more than one name or are not in the name of the actual Holder,
consult the instructions on Internal Revenue Service Form W-9, which may be
obtained from the Exchange Agent, for additional guidance on which number to
report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, write "Applied For"
in the space for the TIN or Substitute Form W-9, sign and date the form and the
Certificate of Awaiting Taxpayer Identification Number and return them to the
Exchange Agent. If such certificate is completed and the Exchange Agent is not
provided with the TIN within 60 days, the Exchange Agent will withhold 31% of
all payments made thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS)
OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR
PRIOR TO THE EXPIRATION DATE.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: e.g.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: e.g., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
<CAPTION>
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
<S> <C> <C>
9. A valid trust, estate, or pension Legal entity (Do
trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. You may also enter your business or "doing
business as" name. Furnish the owner's social security number or the
employer identification number of the sole proprietorship.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at an office of the Social Security
Administration or the Internal Revenue Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part I, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and will
continue until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government or a political subdivision, agency or instrumentality
thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if (i) this interest is $600 or more, (ii) the
interest is paid in the course of the payer's trade or business and (iii)
you have not provided your correct taxpayer identification number to the
payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file tax returns.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING.--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--If you falsify certifications
or affirmations, you are subject to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR
TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE
Unless otherwise noted herein, all references to section numbers or to
regulations are references to the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
11 1/4% SENIOR DISCOUNT NOTES DUE 2008
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
AP HOLDINGS, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of AP Holdings, Inc. (the "Company") made pursuant to the
Prospectus, dated , 1998 (the "Prospectus"), if certificates for the
outstanding 11 1/4% Senior Discount Notes Due 2008 of the Company (the "Notes")
are not immediately available or if the procedure for book-entry transfer cannot
be completed on a timely basis or time will not permit all required documents to
reach the Exchange Agent prior to 12 midnight, New York time, on the Expiration
Date of the Exchange Offer. Such form may be delivered or transmitted by
telegram, telex, facsimile transmission, mail or hand delivery to State Street
Bank and Trust Company (the "Exchange Agent") as set forth below. In addition,
in order to utilize the guaranteed delivery procedure to tender Notes pursuant
to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent prior to 12
midnight, New York City time, on the Expiration Date. Capitalized terms not
defined herein are defined in the Prospectus.
STATE STREET BANK AND TRUST COMPANY, EXCHANGE AGENT
<TABLE>
<S> <C> <C>
By Mail By Facsimile Transmission: By Hand or Overnight Courier:
(registered or certified mail (617) 664-5395
recommended):
State Street Bank and
State Street Bank and Confirm by Telephone Trust Company
Trust Company or for Information Call: Corporate Trust Department
Corporate Trust Department (617) 664-5587 4th floor
P.O. Box 778 Attn: Kellie Mullen Two International Place
Boston, MA 02102-0078 Boston, MA 02110
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Notes Tendered:*
$
- ----------------------------------------------------------
Certificate Nos. (if available):
- ------------------------------------------------------------
Total Principal Amount Represented by Certificate(s):
$
- ----------------------------------------------------------
- ---------------
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
X___________________________________ _____________________________________
X___________________________________ _____________________________________
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number:
---------------------------------------------------------------
Must be signed by the holder(s) of Notes as their name(s) appear(s) on
certificates for Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. If Notes will be delivered by book-entry
transfer to The Depository Trust Company, provide account number.
Please print name(s) and address(es)
<TABLE>
<S> <C>
Name(s): ------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
Capacity:
------------------------------------------------------------
------------------------------------------------------------
Address(es):
------------------------------------------------------------
------------------------------------------------------------
Account Number:
------------------------------------------------------------
</TABLE>
<PAGE> 3
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the Notes being tendered hereby or confirmation of book-entry
transfer of such Notes into the Exchange Agent's account at The Depository Trust
Company, in proper form for transfer, together with any other documents required
by the Letter of Transmittal within three New York Stock Exchange trading days
after the Expiration Date.
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code & Telephone No.
- --------------------------------------------------------------------------------
Authorized Signature
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
(Please Type or Print)
Title
- --------------------------------------------------------------------------------
Date
- --------------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES OF NOTES WITH THIS FORM. CERTIFICATES OF NOTES
SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED LETTER OF
TRANSMITTAL.
