<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
OF 1934, FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 333-50433
------------------------------------
AP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 06-1269403
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
</TABLE>
900 N. MICHIGAN AVENUE
CHICAGO, ILLINOIS 60611-1542
(Address of principal executive offices)
(312) 274-2000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part II of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting and non-voting shares of common
stock held by non-affiliates of the registrant is not applicable as there is not
a public market for such stock. As of December 31, 1999, there were 7,920 shares
of common stock of the registrant outstanding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), which are intended to be covered
by the safe harbors created thereby. Those statements include, but may not be
limited to, the discussions of AP Holdings, Inc. ("AP Holdings") expectations
concerning its future profitability, the discussion of AP Holdings's strategic
relationships, discussions about Year 2000 compliance and AP Holdings operating
and growth assumptions regarding certain matters. Investors are cautioned that
forward-looking statements involve risks and uncertainties. Although AP
Holdings' believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate and, therefore, there can be no assurance that the forward-looking
statements included will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by AP
Holdings or any other person that the objective and plans of AP Holdings will be
achieved.
ITEM 1. BUSINESS
GENERAL
AP Holdings is a subsidiary of Holberg Industries, Inc. ("Holberg"), which
owns 84% of the outstanding voting stock of APCOA/Standard Parking, Inc.
("APCOA/Standard" or "the Company"), formerly known as APCOA, Inc. ("APCOA").
APCOA/Standard accounts for all of AP Holdings' assets and AP Holdings conducts
substantially all of its business through APCOA/Standard. APCOA/Standard 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. The Company manages 1,852 parking facilities, containing
approximately 1,000,000 parking spaces in over 200 cities across the United
States and Canada. The Company's gross customer collections, parking services
revenue, gross profit and net loss for the years ended December 31, 1999 and
1998 were $1,369.3 and $1,026.1 million, $247.9 and $195.5 million, $54.8 and
$40.3 million and ($16.2) and $(27.0) million, respectively.
The Company believes that its superior management services coupled with its
focus on increasing market share in select core cities helps to maximize
profitability per parking facility. 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 on-site, value-added services and amenities;
(ii) state-of-the-art information technology, including Client View(R), 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 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 130 locations at 67 airports, including many of the major airports
in North America.
The Company does not own any parking facilities and, as a result, the
Company assumes few of the risks of real estate ownership. The Company operates
its clients' parking properties through two types of arrangements: management
contracts and leases. 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 set 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
2
<PAGE> 3
December 31, 1999, the Company operated approximately 78% of its 1,852 parking
facilities under management contracts and approximately 22% under leases.
Renewal rates for the Company's management contracts and leases averaged
approximately 91% for the last three years.
THE COMBINATION
Pursuant to the Combination Agreement, dated as of January 15, 1998 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, the "Standard Owners") and APCOA, APCOA acquired (the
"Combination"), on March 30, 1998, all of the outstanding capital stock,
partnership and other equity interests of Standard Parking Corporation, an
Illinois corporation; Standard Auto Park, Inc., an Illinois Corporation;
Standard Parking Corporation MW, an Illinois corporation; Standard Parking,
L.P., a Delaware limited partnership; Standard Parking Corporation IL, an
Illinois corporation; and Standard/Wabash Parking Corporation, an Illinois
corporation (all such entities, collectively, "Standard") for consideration
consisting of $65.0 million in cash, 5.01 shares or 16%, of the common stock of
the Company outstanding as of January 15, 1998, and the assumption of certain
liabilities including a $5.0 million consulting and non-compete obligation for
one of the former owners of Standard, which represents the current value of the
payments to be made, as determined by consulting actuaries. In addition, on
March 30, 1998, APCOA paid to the Standard Owners $2.8 million, generally
representing Standard's earnings from January 1, 1998 through the date of the
Combination and Standard's cash on hand at such time.
In connection with the Standard acquisition, on March 30, 1998 the Company
issued $140 million principal amount of 9 1/4% Senior Subordinated Notes due
2008 in a Rule 144A private placement. Effective September 14, 1998 the Company
completed an offer to exchange all the outstanding Senior Subordinated Notes
with new notes with substantially identical terms that are registered under the
Securities Act of 1933.
Upon the closing of the Combination, the Company entered into a $40.0
million secured revolving Senior Credit Facility with The First National Bank of
Chicago. Borrowings under the Senior 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.
Also in connection with the Combination, AP Holdings contributed $40.7
million of cash to the Company in exchange for $40.7 million initial liquidation
preference of new preferred stock of the Company. The contribution was financed
through AP Holdings' offering of $70.0 million in aggregate principal amount of
its 11 1/4% Senior Discount Notes due 2008.
OTHER ACQUISITIONS AND AMALGAMATIONS
On January 22, 1998, the Company acquired the assets of Huger Parking
Company, LLC, d/b/a Dixie Parking, for $1.0 million in cash at closing and $3.3
million in notes payable. On May 1, 1998, the Company acquired the remaining 76%
interest in Executive Parking Industries LLC, through the acquisition of all of
the outstanding capital stock of S&S Parking, Inc., the sole asset of which was
such 76% interest in EPI, for $7.0 million in cash. In addition, on June 1,
1998, APCOA/Standard acquired all of the outstanding capital stock of Century
Parking, Inc., and Sentry Parking Corporation, for $5.2 million in cash at
closing and $1.0 million payable on the third anniversary of the closing date.
On September 1, 1998, APCOA/Standard acquired the operations of Virginia Parking
Service, Inc. in a stock purchase transaction for $3.1 million in cash,
including direct costs, and up to $1.3 million in notes payable over five years
with interest at the prime rate.
On April 1, 1999, the Company acquired the assets of Pacific Rim Parking,
Inc. ("Pacific Rim") in Los Angeles for $.75 million in cash and up to $.75
million in non-interest bearing notes payable over five years. On May 1, 1999
the Company acquired various contracts of System Parking Inc. in Atlanta for
$.25 million in cash. Effective as of July 1, 1999 the Company acquired all of
the outstanding stock of Universal Park Holdings, Inc., operating under the
names U-Park and Select Valet Parking, in Vancouver B.C. for Canadian $1.61
million plus a multiple of EBITDA on a future earnout as defined in the
agreement.
3
<PAGE> 4
All of these acquisitions have been accounted for under the purchase method
and their operating results have been included in the consolidated results since
their respective date of acquisition. The historical operating results of the
businesses prior to acquisition were not material relative to the consolidated
results of APCOA/Standard.
On January 5, 1998, APCOA Holdings Canada Inc, a wholly owned subsidiary of
APCOA, Inc. (now known as APCOA/Standard Parking, Inc.), formed under the laws
of the Province of Ontario, Canada, filed Articles of Amalgamation with the
Ministry of Consumer and Commercial Relations for the Province of Ontario,
Canada, pursuant to the Business Corporations Act of Ontario, amalgamating with
Mainarun Holdings Inc. APCOA Holdings Canada Inc. was the surviving company. On
July 20, 1998 APCOA Holdings Canada Inc. filed Articles of Amendment with the
Ministry of Consumer and Commercial Relations for the Province of Ontario,
Canada, pursuant to the Business Corporations Act of Ontario, changing the name
to Standard Parking of Canada LTD. On September 1, 1998, Standard Parking of
Canada filed Articles of Amalgamation pursuant to the Canada Business
Corporations Act amalgamating APCOA Parking Development & Management LTD with
Standard Parking of Canada LTD. Standard Parking of Canada LTD was the resulting
corporation.
INDUSTRY OVERVIEW
General. The International Parking Institute, a trade organization of
parking professionals, estimates that as of December 1998 there were
approximately 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.
Operating Arrangements. Parking facilities operate under two general types
of arrangements: management contracts and leases. The general terms and benefits
of these two types of arrangements are as follows:
Management Contracts. Under a management contract, the facility
manager generally receives a base monthly fee for managing the facility 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, leased facilities
generally require a longer commitment and a larger capital investment by
the parking facility operator than do managed facilities.
4
<PAGE> 5
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 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 among operators
provides opportunity to achieve accelerated 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.
Privatization of Government-Owned and Operated Facilities. Additional
growth in the industry has been a function of the trend for parking
facility 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. Because 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.
Stable Operating Portfolio. From 1994 to 1999, 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 on to the Company's clients, and (ii) maintaining low
minimum rental commitments under its non-cancelable leases. Additionally,
the Company's average management and lease contract renewal rate over the
last three years was approximately 91%.
Strategic Growth Through Acquisitions. The parking industry is highly
fragmented, with over 1,700 commercial parking operators. 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
targeted growth markets where the Company believes it can attain a
significant market share, and (ii) acquiring larger, regional parking
management companies. In less than two years since the combination, the
Company has successfully acquired and integrated five companies with 489
new facilities.
5
<PAGE> 6
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 130 parking
facilities at 67 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(R); 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.
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). The package 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. Each floor 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 musicals, classic movies and professional sports teams.
Books-To-Go(R) is an audiotape library which is provided
free-of-charge for monthly parkers.
Films-To-Go(C) is a videotape library which is provided free-of-charge
for monthly parkers.
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 service program is provided in conjunction with Midas
International Corporation. Parking customers can have their cars picked up
from the parking facility, serviced and returned before the end of the
business day.
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 and
vehicle escort service.
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(R), 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(R) uses location-specific information to
calculate the impact of pricing alternatives, optimize staffing levels, improve
forecasting
6
<PAGE> 7
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.
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, while the Company's facilities themselves compete
with nearby facilities for its parking customers, and in the labor market
generally for qualified employees. Moreover, the construction of new parking
facilities near the Company's existing facilities can adversely affect the
Company's business.
The Company competes for additional facilities with a variety of other
companies. Although there are relatively few large, national parking companies
that compete with the Company, the Company also faces competition from numerous
smaller, locally-owned independent operators, as well as from developers,
hotels, national financial services companies and other institutions that
self-manage both their own parking facilities as well as facilities owned by
others. Many municipalities and other governmental entities also operate their
own parking facilities, thus eliminating those facilities as potential
management or lease opportunities for the Company.
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 results 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.
7
<PAGE> 8
EMPLOYEES
AP Holdings does not have any paid employees. As of December 31, 1999, the
Company employed approximately 13,300 individuals, including approximately 8,000
full-time and 5,300 part-time employees. As of December 31, 1998, the Company
employed approximately 11,700 individuals, including approximately 7,000
full-time and 4,700 part-time employees. The Company believes that its employee
relations are good.
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(R) and Ambiance in Parking(R).
Proprietary software developed by the Company, such as Client View(R), Hand Held
Program(R), License Plate Inventory Program(R) and ParkStat(C) are registered in
the United States Copyright Office.
8
<PAGE> 9
ITEM 2. PROPERTIES
PARKING FACILITIES
The Company operates parking facilities in 39 states, Washington D.C. and
three provinces of Canada pursuant to management contracts or leases. The
Company does not currently own any parking facilities. The following table
summarizes certain information regarding the Company's facilities as of December
31, 1999:
<TABLE>
<CAPTION>
# OF LOCATIONS # 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............................. 22 22 24,701
British Columbia Richmond, Vancouver, Victoria
Whistler............................ 87 87 10,876 10,876
California Airports, Los Angeles, Long Beach,
Sacramento, San Diego, San
Francisco, and San Jose............. 8 433 441 25,182 195,707 220,889
Colorado Airports, Colorado Springs and
Denver.............................. 3 23 26 14,202 11,469 25,671
Connecticut Airports, Greenwich and Stamford.... 7 7 14 5,000 5,170 10,170
District of Columbia Washington, DC...................... 37 37 13,615 13,615
Delaware Wilmington.......................... 1 1 473 473
Florida Airports, Miami, Orlando and
Pensacola........................... 16 53 69 23,806 19,876 43,682
Georgia Airports and Atlanta................ 2 35 37 2,142 16,359 18,501
Hawaii Airports and Honolulu............... 3 55 58 2,393 19,262 21,655
Idaho Airports............................ 1 1 376 376
Illinois Airports and Chicago................ 9 186 195 30,540 102,160 132,700
Indiana Airports, Indianapolis and Ft.
Wayne............................... 1 19 20 1,234 6,290 7,524
Kansas Topeka.............................. 1 1 310 310
Kentucky Louisville.......................... 3 3 876 876
Louisiana Airports and New Orleans............ 1 44 45 1,302 13,057 14,359
Maine Airports and Portland............... 2 1 3 1,371 528 1,899
Maryland Baltimore, Bethesda and Towson...... 22 22 5,072 5,072
Massachusetts Airports, Boston, Cambridge and
Worchester 1 134 135 645 57,959 58,604
Michigan Airports, Detroit and Southfield.... 7 14 21 18,444 3,805 22,249
Minnesota Airports, Minneapolis and St.
Paul................................ 5 43 48 21,050 20,586 41,636
Missouri Airports and Kansas City............ 16 90 106 23,766 21,074 44,840
Montana Airports and Great
Nebraska Airports............................ 1 1 1,361 1,361
Nevada Las Vegas and Reno.................. 4 4 1,368 1,368
New York Airports, Buffalo and Rochester..... 9 14 23 8,807 23,701 32,508
North Carolina Charlotte........................... 1 1 818 818
North Dakota Airports............................ 2 2 1,415 1,415
Ohio Airports, Akron, Cleveland,
Cincinnati, Columbus and Toledo..... 12 96 108 14,791 43,004 57,795
Oklahoma Airports............................ 1 1 990 990
Ontario Airports, North York, Scarborough
and Toronto......................... 2 46 48 2,000 33,202 35,202
Oregon Airports............................ 4 4 2,664 2,664
Pennsylvania Airports and Wilkes Barre........... 2 1 3 1,331 431 1,762
Quebec Airports............................ 3 3 9,405 9,405
Rhode Island Providence.......................... 3 3 6,045 6,045
South Carolina Airports............................ 4 4 4,232 4,232
South Dakota Airports............................ 2 2 1,508 1,508
Tennessee Airports, Memphis and Nashville
Airports, Dallas, Forth Worth and... 2 17 19 3,077 6,502 9,579
Texas Houston............................. 3 79 82 4,341 67,719 72,060
Virginia Airports, Alexandria, Richmond and
Virginia Beach...................... 6 107 113 3,468 26,557 30,025
Washington Airports and Seattle................ 2 4 6 822 1,681 2,503
Wisconsin Airports and Milwaukee.............. 11 11 22 11,303 3,657 14,960
------------------------------------ --- ------ ----- ------- ------- ---------
Totals.............................. 155 1,697 1,852 246,350 765,816 1,012,166
==================================== === ====== ===== ======= ======= =========
</TABLE>
The Company has interests in 20 joint ventures that each operate between
one and three parking facilities. The Company is the general partner of nine
limited partnerships that each operates between one and twelve parking
facilities. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Summary of Operating Facilities."
9
<PAGE> 10
The Company leases approximately 40,000 square feet of office space for its
corporate offices in Chicago, Illinois. The lease expires in 2008, and includes
a renewal option for an additional five years. The lease also includes expansion
options for up to 9,000 additional square feet of space, and the Company has a
right of first refusal on 24,000 square feet more. The Company believes that the
leased facility, together with expansion options, is adequate to meet current
and foreseeable future needs.
The Company also leases regional offices. These lease agreements generally
include renewal and expansion options, and the Company believes that these
facilities are adequate to meet its current and foreseeable future needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various claims and legal proceedings which
consist principally of lease and contract disputes and includes litigation with
The County of Wayne relating to the management of parking lots at the Detroit
Metropolitan Airport. These claims and legal proceedings are considered
ordinary, routine, and incidental to the Company's business, and in the opinion
of management, the ultimate liability with respect these proceedings and claims
will not materially affect the financial position, operations, or liquidity of
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
There is no public trading market for the common stock of AP Holdings. AP
Holdings did not pay a dividend in respect of its common stock in 1999, 1998 or
1997. The indenture governing AP Holdings' Senior Discount Notes limits the
ability of AP Holdings and APCOA/Standard to pay cash dividends. Unless AP
Holdings meets certain financial ratios, neither AP Holdings nor the Company may
pay cash dividends except those payable in additional shares stock or proceeds
therefrom. AP Holdings paid dividends in respect of its preferred stock in
additional shares of preferred stock, aggregating $3.6 million, $3.2 million and
$3.7 million, in 1999, 1998 and 1997, respectively.
APCOA/Standard did not pay a cash dividend in respect of its common stock
in 1999, 1998 or 1997. By the terms of the Company's Revolving Credit Facility,
the Company is restricted from paying cash dividends on its capital stock until
September 30, 2003. From and after September 30, 2003, the Company may pay cash
dividends in respect of its Redeemable Preferred Stock of up to $8.5 million
annually, subject to certain conditions, to enable AP Holdings to service its
Senior Discount Notes. The Company paid dividends in respect of its Redeemable
Preferred Stock in additional shares of Redeemable Preferred Stock aggregating
$5.1 million, $3.5 million and $.89 million in 1999, 1998 and 1997,
respectively.
The indenture governing the Company's Senior Subordinated Notes also limits
the Company's ability to pay cash dividends. Unless the Company meets certain
financial ratios, it may not pay dividends in respect of its stock except for
those payable in additional shares of stock.
There are no restrictions on the ability of APCOA/Standard's wholly-owned
subsidiaries to pay cash dividends to APCOA/Standard.
10
<PAGE> 11
ITEM 6. SELECTED HISTORICAL FINANCIAL DATA
The following table presents selected historical consolidated financial
data at and for the years ended December 31, 1999, 1998, 1997, 1996 and 1995,
which have been derived from the audited financial statements of AP Holdings.
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" and the historical consolidated financial statements and notes
thereto included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1999 1998(1) 1997 1996 1995
---- ------- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Parking services revenue............. $ 247,899 $ 195,517 $117,704 $138,409 $143,723
Cost of parking services............. 193,094 155,230 94,846 116,158 122,398
General and administrative
expenses.......................... 32,453 23,506 13,528 13,017 12,121
Restructuring and other special
charges........................... 6,852 18,050 -- -- --
Depreciation and amortization........ 9,343 7,435 3,767 4,888 8,772
---------- ---------- -------- -------- --------
Operating income (loss)................ 6,157 (8,704) 5,563 4,346 432
Interest expense, net................ 21,136 14,541 3,243 2,877 2,705
Minority interest.................... 468 487 321 424 604
Income tax expense................... 752 430 140 106 240
Extraordinary loss................... -- 2,816 -- -- --
---------- ---------- -------- -------- --------
Net income (loss).................... $ (16,199) $ (26,978) $ 1,859 $ 939 $ (3,117)
========== ========== ======== ======== ========
OTHER DATA:
Gross customer collections........... $1,369,319 $1,026,085 $476,183 $430,696 $408,952
Capital expenditures................. 10,261 7,691 2,357 2,552 2,782
Net cash provided by (used in):
Operating activities.............. (17,709) (16,381) 931 2,042 4,340
Investing activities.............. (13,531) (96,025) (3,592) (3,349) (4,917)
Financing activities.............. 16,844 128,267 3,451 1,288 1,107
Effect of exchange rate changes... 428 -- -- -- --
Number of managed locations.......... 1,446 1,165 378 207 227
Number of leased locations........... 406 439 267 243 260
Number of total locations............ 1,852 1,604 645 450 487
Number of parking spaces............. 1,012,000 794,000 273,000 225,000 226,000
BALANCE SHEET DATA (AT END OF YEAR):
Cash and cash equivalents............ $ 5,215 $ 19,183 $ 3,322 $ 2,532 $ 2,551
Working capital (deficiency)......... (12,180) (9,119) (17,059) (19,455) (20,990)
Total assets................. 213,270 212,657 59,095 52,823 51,605
Total debt................... 216,749 193,605 38,283 32,795 30,461
Redeemable preferred stock........... 31,924 -- 8,728 7,841 7,045
Common stock of subsidiary subject to
Put/call rights................... 4,589 4,589 -- -- --
Stockholders' deficit................ (111,535) (59,020) (22,259) (23,231) (23,374)
</TABLE>
- ---------------
(1) Includes the results of Standard Parking effective March 30, 1998.
11
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of AP Holdings' results of operations should be
read in conjunction with the consolidated financial statements of AP Holdings
and the notes thereto included elsewhere herein.
OVERVIEW
APCOA/Standard operates facilities under two types of arrangements:
management contracts and leases. Under a management contract, APCOA/Standard
typically receives a base monthly fee for managing the property, and may also
receive an incentive fee based on the achievement of facility revenues above a
base amount. In some instances, APCOA/Standard also receives certain fees for
ancillary services. Typically, all of the underlying revenues, expenses and
capital expenditures under a management contract flow through to the property
owner, not to APCOA/Standard. Under lease arrangements, APCOA/Standard generally
pays to the property owner either a fixed annual rental, a percentage of gross
customer collections or a combination thereof. APCOA/Standard collects all
revenues under lease arrangements and is responsible for most operating
expenses, but it is typically not responsible for major maintenance or capital
expenditures. As of December 31, 1999, the Company operated approximately 78% of
its 1,852 parking facilities under management contracts and approximately 22%
under leases.
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/Standard 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/Standard is not responsible
for major capital expenditures or property taxes.
Cost of parking services -- management contracts. Cost of parking services
under management contracts is generally passed through to the facility owner,
therefore these costs are not included in the results of operations of the
Company. Several APCOA/Standard contracts, however, require APCOA/Standard to
pay for certain costs that 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, field offices and supervisory employees.
12
<PAGE> 13
SUMMARY OF OPERATING FACILITIES
The following table reflects the Company's facilities at the end of the
periods indicated taking into consideration the combination with Standard on a
pro forma basis:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
------------ ------------ ------------
(PRO FORMA)
<S> <C> <C> <C>
Managed Facilities...................................... 1,446 1,165 691
Leased Facilities....................................... 406 439 306
----- ----- ---
Total Facilities........................................ 1,852 1,604 997
===== ===== ===
</TABLE>
The Company's strategy is to add locations in core cities where a
concentration of locations improves customer service levels and operating
margins. In general, contracts added as set forth in the table above followed
this strategy.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Gross customer collections................................. $1,369,319 $1,026,085 $476,183
========== ========== ========
Parking services revenue:
Lease contracts.......................................... $ 196,441 $ 162,568 $ 99,594
Management contracts..................................... 51,458 32,949 18,110
---------- ---------- --------
247,899 195,517 117,704
Cost of parking services:
Lease contracts.......................................... 172,217 144,086 85,355
Management contracts..................................... 20,877 11,144 9,491
---------- ---------- --------
193,094 155,230 94,846
General and administrative expenses........................ 32,453 23,506 13,528
Restructuring and other special charges.................... 6,852 18,050 --
Depreciation and amortization.............................. 9,343 7,435 3,767
---------- ---------- --------
Operating (loss) income.................................... 6,157 (8,704) 5,563
Interest expense, net...................................... 21,136 14,541 3,243
Minority interest.......................................... 468 487 321
Income tax expense......................................... 752 430 140
Extraordinary loss......................................... -- 2,816 --
---------- ---------- --------
Net (loss) income.......................................... $ (16,199) $ (26,978) $ 1,859
========== ========== ========
</TABLE>
In analyzing gross margins of APCOA/Standard, it should be noted that the
cost of parking services for parking facilities under management contracts is
generally paid by the Company's clients. Margins for lease contracts vary
significantly not only due to operating performance, but also variability of
parking rates in different cities and space utilization by parking facility type
and location.
13
<PAGE> 14
FISCAL 1999 COMPARED TO FISCAL 1998
Gross Customer Collections. Gross customer collections consist of gross
receipts collected at all leased and managed properties, including
unconsolidated affiliates. Gross customer collections increased $343.2 million,
or 33.4%, to $1,369.3 million in fiscal 1999, compared to $1,026.1 million in
fiscal 1998. This increase is attributable $120.9 million to the combination
with Standard and $222.3 million to the addition of other locations during the
period and growth at existing locations.
Parking services revenue -- leases. Lease revenue increased $33.8 million,
or 20.8%, to $196.4 million in the year ended December 31, 1999 as compared to
$162.6 million in the year-ago period. This resulted from the net addition of 39
leases through the combination with Standard and a net loss of 72 leases that
were converted to management contracts or lost.
Parking services revenue -- management contracts. Management contract
revenue increased $18.6 million, or 56.2% to $51.5 million in 1999 as compared
to $32.9 million in 1998. During 1999, a net 281 management contracts were added
through internal growth and acquisitions.
Cost of parking services -- leases. Cost of parking for leases increased
$28.1 million, or 19.5% to $172.2 million for the year ended December 31, 1999
from $144.1 million during the year-ago period. This increase resulted from the
addition of 39 leases through the combination with Standard and a net reduction
of 72 leases through conversion to management contracts and lost contracts.
Gross margin for leases increased to 12.3% during 1999 compared to 11.4% during
1998. This increase resulted from improvement in operations, conversion of
leases to management contracts and the termination of marginal contracts.
Cost of parking services -- management contracts. Cost of parking for
management contracts increased $9.7 million, or 87.3% to $20.8 million in 1999
as compared to $11.1 million in 1998. This increase resulted from the net
addition in 1999 of 281 management contracts through internal growth and
acquisitions made in 1999. Gross margin for management contracts declined to
59.4% in the current year compared to 66.2% in the prior year. Most management
contracts have no cost of parking services related to them as all costs are
reimbursable to the Company. However, several contracts (primarily large airport
properties and several urban locations), require the Company to pay for certain
costs which are offset by larger management fees. The increase in cost of
parking management contracts was related to the addition of several contracts of
this type.
General and administrative expenses. General and administrative costs
increased $8.9 million, or 38.1%, to $32.4 million during 1999 as compared to
$23.5 million during 1998. The increase resulted from costs associated with the
acquired companies, inflation, and investment in the Company's infrastructure in
anticipation of future growth.
Restructuring and other special charges. AP Holdings and the Company
incurred $6.8 million of restructuring and other special charges during 1999.
The charge included (A) $1.6 million of severance costs, (B) $3.1 million of
integration costs related primarily to actions to facilitate the accounting
system consolidation and activities to realign and centralize administrative and
other support functions, (C) $2.1 million of expenses incurred for acquisition
activity that was terminated including the cost of a former APCOA/Standard
executive. The Company may incur additional restructuring charges in the future
related to its acquisition strategy. The Company incurred $18.1 million of
restructuring and other special charges during 1998 in connection with the
combination with Standard and the other acquisitions completed during 1998,
which were based upon a thorough analysis of the costs associated with
implementing the business plan of consolidating the Company's headquarters in
Chicago and costs related to APCOA/Standard staff reductions. The charge
included (A) $5.0 million of relocation costs in connection with the
headquarters relocation of the Company, the relocation of two major field
offices, moving the families of 20 Cleveland headquarters staff members to
Chicago and other relocations within the field organization, (B) $6.9 million in
severance costs consisting of cash compensation to 54 people and (C) the
write-off of $2.6 million related to abandoned and impaired assets that will no
longer be used in the business, (D) a $2.6 million increase in insurance
reserves resulting from a buyout of APCOA's insurance program in connection with
the combination of the APCOA and Standard insurance programs and (E) $1.0
million of other restructuring costs.
14
<PAGE> 15
Other income and expense. Interest expense, net of interest income, totaled
$21.1 million in the current year, up $6.6 million from 1998. This is the result
of debt financing incurred in connection with the combination with Standard and
other acquisitions and increased borrowings under the Company's Senior Credit
Facility. Minority interest was $0.5 for both years. Income taxes consist
primarily of Canadian income tax, and increased to $0.8 million in 1999 from
$0.4 million in 1998 as a result of the increase in Canadian income.
FISCAL 1998 COMPARED TO FISCAL 1997
Gross Customer Collections. Gross customer collections consist of gross
receipts collected at all leased and managed properties, including
unconsolidated affiliates. Gross customer collections increased $549.9 million,
or 115.5%, to $1,026.1 million in fiscal 1998 compared to $476.2 million in
fiscal 1997. This increase is attributable $417.4 million to the combination
with Standard and $132.5 million to the addition of other locations during the
period.
Parking services revenue -- leases. Lease revenue increased $63.0 million,
or 63.2%, to $162.6 million in the year ended December 31, 1998 as compared to
$99.6 million in the year-ago period. This resulted from the net addition of 30
leases through internal growth, and the net addition of 149 leases through the
combination with Standard and the other acquisitions completed in 1998 (see Note
B of the Notes to Consolidated Financial Statements).
Parking services revenue -- management contracts. Management contract
revenue increased $14.8 million, or 81.9%, to $32.9 million in 1998 as compared
to $18.1 million in 1997. During 1998, a net 228 management contracts were added
through internal growth and 584 were added as a result of the combination with
Standard and the other 1998 acquisitions.
Cost of parking services -- leases. Cost of parking for leases increased
$58.7 million, or 68.8%, to $144.1 million for the year ended December 31, 1998
from $85.4 million during the year-ago period. This increase resulted from the
addition of a net total of 179 new leases through internal growth and
acquisitions. Acquisition-related cost savings of $0.2 million were realized
during 1998. Gross margin for leases declined to 11.4% during 1998 compared to
14.3% during 1997. This decline resulted from the average gross margin on
acquired leases from the Standard and other 1998 acquisitions being
approximately 10%, which reduced the average lease gross margin.
Cost of parking services -- management contracts. Cost of parking for
management contracts increased by $1.6 million, or 17.4%, to $11.1 million in
1998 as compared to $9.5 million in 1997. Partially offsetting this increase
were acquisition-related cost savings of $0.7 million. Gross margin for
management contracts, however, improved to 66.2% in the current year compared to
47.6% in the prior year. This improvement results from the relative mix of
locations that were added compared to those already in the contract portfolio.
The locations added during 1998 for the most part do not carry any cost of
parking since all of these costs are paid by the clients. Some of the older
management contracts do carry some costs.
General and administrative expenses. General and administrative costs
increased $10.0 million, or 73.8%, to $23.5 million during 1998 as compared to
$13.5 million during 1997. This increase resulted from costs associated with the
acquired companies, inflation, and investment in the Company's infrastructure in
anticipation of future growth. Partially offsetting these increases were
acquisition-related cost savings of $1.2 million realized during 1998.
Restructuring and other special charges. The Company incurred $18.1 million
of Restructuring and other special charges during 1998 in connection with the
combination with Standard and the other acquisitions completed during 1998,
which were based upon a thorough analysis of the costs associated with
implementing the business plan of consolidating the Company's headquarters in
Chicago and costs related to APCOA/ Standard staff reductions. The charge
included (A) $5.0 million of relocation costs in connection with the
headquarters relocation of the Company, the relocation of two major field
offices, moving the families of 20 Cleveland headquarters staff members to
Chicago and other relocations within the field organization, (B) $6.9 million in
severance costs consisting of cash compensation to 54 people, (C) the write-off
of
15
<PAGE> 16
$2.6 million related to abandoned and impaired assets that will no longer be
used in the business, (D) a $2.6 million increase in insurance reserves
resulting from a buyout of APCOA's insurance program in connection with the
combination of the APCOA and Standard insurance programs and (E) $1.0 million of
other restructuring costs. Of the $15.5 million cash component of this
restructuring charge, $9.9 million had been disbursed through December 31, 1998.
Other income and expenses. Interest expense, net of interest income,
totaled $14.5 million in 1998, up $11.3 million from 1997. This is a result of
debt financing incurred in connection with the combination with Standard and
other acquisitions. In connection with the debt refinancing, an extraordinary
loss was recognized in the first quarter of 1998 of $2.8 million. This loss is
comprised of $2.1 million from a prepayment penalty for early extinguishment of
debt and $0.7 million from a write-off of the unamortized balance of deferred
financing costs associated with the extinguished debt. Minority interest for the
current year totaled $0.5 million, compared to $0.3 million for 1997, which is
reflective of increasing joint venture income. Income taxes consist primarily of
Canadian income tax, and have increased to $0.4 million from $0.1 million as a
result of increasing Canadian income.
COMPARISON OF RESULTS OF OPERATIONS ON A COMBINED BASIS
The following supplementary information is provided to enhance the analysis
of results of operations. The results presented below represent the combined
historical results of APCOA and Standard for the periods presented, without pro
forma adjustments for the impact of the acquisition of Standard. These combined
results do not purport to represent what the actual results would have been if
the acquisition had occurred at the beginning of 1998.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1999 1998
---- ----
(IN THOUSANDS)
<S> <C> <C>
Gross customer collections.................................. $1,369,319 $1,103,000
========== ==========
Parking services revenue:
Lease contracts........................................... $ 196,441 $ 174,613
Management contracts...................................... 51,458 35,463
---------- ----------
247,899 210,076
Cost of parking services:
Lease contracts........................................... 172,217 155,275
Management contracts...................................... 20,877 11,144
---------- ----------
193,094 166,419
General and administrative expenses......................... 32,453 25,524
---------- ----------
Operating income before depreciation, amortization and
restructuring and other special charges................... $ 22,352 $ 18,133
========== ==========
</TABLE>
FISCAL 1999 COMPARED TO FISCAL 1998
Gross customer collections. Gross customer collections increased $266.3
million, or 24.1% to $1,369.3 in 1999 as compared to $1,103.0 in 1998. This
resulted from the net addition of 248 new contracts during 1999.
Parking services revenue -- leases. Lease revenue increased $21.8 million,
or 12.5%, to $196.4 million in the year ended December 31, 1999 as compared to
$174.6 million in the year-ago period. This resulted from the acquisitions made
in 1998 and 1999 which was partially offset by a net reduction of 33 leases in
1999, many of which were converted to management contracts.
16
<PAGE> 17
Parking services revenue -- management contracts. Management contract
revenue increased $16.0 million, or 45.1%, to $51.5 million in 1999 as compared
to $35.5 million in 1998. During 1999, a net 281 management contracts were added
through internal growth and acquisitions made in 1999.
Cost of parking services -- leases. Cost of parking for leases increased
$16.9 million, or 10.9% to $172.2 million for the year ended December 31, 1999
from $155.3 million during the year-ago period. This increase resulted from
acquisitions made in 1998 and 1999. Gross margin for leases increased to 12.3%
during 1999 compared to 11.1% during 1998. This increase resulted from
improvement in operations, conversion of leases to management contracts and the
loss of marginal contracts.
Cost of parking services -- management services. Cost of parking for
management contracts increased by $9.7 million, or 87.3%, to $20.8 million in
1999 as compared to $11.1 million in 1998. This increase resulted from the net
addition of 281 management contracts through internal growth and acquisitions
made in 1999. Gross margin for management contracts declined to 59.4% in the
current year compared to 68.6% in the prior year. Most management contracts have
no cost of parking services related to them as all costs are reimbursable to the
Company. However, several contracts (primarily large airport properties and
several urban locations), require the Company to pay for certain costs which are
offset by larger management fees. The increase in cost of parking management
contracts was related to the addition of several contracts of this type.
General and administrative expenses. General and administrative costs
increased $6.9 million, or 27.1% to $32.4 million during 1999 as compared to
$25.5 million during 1998. This increase resulted from costs associated with the
acquired companies, inflation, and investment in the Company's infrastructure in
anticipation of future growth.
LIQUIDITY AND CAPITAL RESOURCES
As a result of day-to-day activity at the parking locations, APCOA/Standard
collects significant amounts of cash. Under lease contracts, this revenue is
deposited into local APCOA/Standard bank accounts, with a portion remitted to
the clients in the form of rental payments according to the terms of the leases.
Under management contracts, some clients require APCOA/Standard to deposit the
daily receipts into a local APCOA/Standard bank account. Others require the
deposit into a client account, and some have a segregated account for the
receipts and disbursements of the property.
Locations with revenues deposited into the APCOA/Standard banks enable the
Company to operate 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 Senior Credit Facility, all funds held for
future remittance to the clients are used to reduce the credit line until the
payments are made to the clients.
Locations with revenues deposited into client accounts or segregated
accounts can, depending upon timing of rent or net profit distributions, result
in significant amounts of cash being temporarily inaccessible to the Company for
use for operating needs. Additionally, the ability to utilize cash deposited
into local APCOA/Standard accounts is dependent upon the movement of that cash
into the Company's corporate account. For these reasons, the Company from time
to time carries significant cash balances, while utilizing its Senior Credit
Facility.
FISCAL 1999 COMPARED TO FISCAL 1998
AP Holdings had cash and cash equivalents of $5.2 million at December 31,
1999 compared to $19.2 million at December 31, 1998.
Net cash used in operating activities totaled $17.7 million for 1999
compared to cash used of $16.4 million for 1998. Cash used during 1999 included
$8.9 million of cash for restructuring and other special charges, $5.6 million
for the purchase of an insurance tail policy to cover claims for all years prior
to 1999 under APCOA's previous insurance program, and $2.2 million to affiliated
companies. Notes and accounts receivable increased $11.9 million in 1999
relating to acquired contracts and existing locations and were
17
<PAGE> 18
partially offset by increases in accounts payable of $6.8 million and decreases
in prepaid and other assets of $1.1 million and $2.4 million, respectively.
Cash used in investing activities totaled $13.5 million in 1999 compared to
$96.0 million in 1998. Cash used included the acquisitions of the assets of
Pacific Rim in Los Angeles for $0.8 million, various contracts of System Parking
in Atlanta for $0.3, the outstanding stock of Universal Park Holdings, Inc. in
Vancouver B.C. for $1.6 million and the buy-out of a lease in Los Angeles for
$0.4 million. In addition, cash used in investing activities included capital
expenditures of $10.3 million which were used for the investment in information
system enhancements, furnishing and improvement of the Company's combined office
space in Chicago, and capital investments to secure and/or extend leased
facilities.
Cash generated from financing activities totaled $16.8 million compared to
$128.3 million in 1998. The 1999 activity included $18.1 million in borrowings
from the revolving Senior Credit Facility and $1.3 million in joint venture
borrowings which was partially offset by repayments on long term borrowings and
joint venture borrowings of $2.2 million. In addition, the Company incurred
additional debt issuance costs of $0.3 million in connection with amendments to
the Company's Senior Credit Facility.
FISCAL 1998 COMPARED TO FISCAL 1997
AP Holdings had cash and cash equivalents of $19.2 million at December 31,
1998 compared to $3.3 million at December 31, 1997.
Net cash used in operating activities totaled $16.4 million for 1998
compared to cash provided of $0.9 million for 1997. Cash used during 1998
included $9.9 million of cash restructuring charges and increases in accounts
receivable relating to acquired contracts and existing locations of $14.1
million, partially offset by increases in accrued liabilities of $18.8 million.
This increase in accrued liabilities was driven primarily by increases in
accrued payroll and related taxes in keeping with the Company's growth, and
increased insurance reserves in connection with the buyout of APCOA's insurance
program, which was completed in January of 1999.
Cash used in investing activities totaled $96.0 million in 1998 compared to
$3.6 million in 1997. The change was a result of the acquisitions of Standard
and Dixie Parking by the Company in the first quarter of 1998, the acquisitions
of Executive Parking and Century Parking and Sentry Parking in the second
quarter, and the acquisition of Virginia Parking Service in the third quarter of
1998. In addition, the Company had $7.7 million of capital purchases in 1998.
Significant capital purchases included the furnishing and improvement of the
Company's combined office space in Chicago, investment in management information
system enhancements, and capital investments on leased facilities. On August 4,
1998, AP Holdings repurchased 10% of its common stock outstanding and all
warrants to purchase additional common stock held by Delaware North Companies
Incorporated ("Delaware North") for $4.0 million in cash. This transaction was
entered into pursuant to a put/call contained in the Stockholders' Agreement
dated April 1989. The repurchase was funded by an intercompany loan from the
Company.
Cash generated from financing activities totaled $128.3 million in 1998
compared to $3.5 million in 1997. The 1998 activity included $140.0 million of
proceeds from the issuance of debt, $40.7 million of proceeds from the issuance
of preferred stock, $32.3 million in debt repayments and $8.0 million for the
redemption of preferred stock. These transactions were consummated in connection
with the combination with Standard and other acquisitions.
OTHER LIQUIDITY AND CAPITAL RESOURCES INFORMATION
The Company's Senior Credit Facility ("the Facility) provides for
borrowings up to $40 million at variable rates based, at the Company's option,
either on LIBOR, the overnight federal funds rate, or the bank's base rate. From
time to time the company utilizes the Facility to provide readily-accessible
cash for working capital purposes. The Facility includes covenants that limit
the Company from incurring additional indebtedness, issuing preferred stock or
paying dividends, and contains certain other restrictions. At December 31, 1999,
the Company had $1.3 million of letters of credit outstanding under the
Facility. As of
18
<PAGE> 19
December 31, 1999, the Company was in compliance with the covenants contained in
the Senior Credit Facility or has obtained the necessary waivers on or before
March 30, 2000. The Facility was amended on March 30, 2000, with the principle
changes to the agreement providing for revisions to interest rates charged on
borrowings and certain financial covenants.
The Company's primary capital requirements 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 Senior
Credit Facility will be adequate to meet the Company's short-term liquidity
requirements prior to the maturity of its long-term indebtedness, although no
assurance can be provided in this regard.
The Company has lease commitments of $24.6 million for fiscal 2000. The
leased properties generate sufficient cash flow to meet the base rent payments.
If the Company identifies investment opportunities requiring cash in excess
of the Company's cash flows and existing cash, the Company may borrow under the
Senior Credit Facility, or may seek additional sources of capital including the
sale or issuance of common stock. From time to time the Company utilizes the
Facility to provide readily-accessible cash for working capital purposes. The
Company has begun to streamline its cash management and receivables collection
process by standardizing the procedures used by all acquired companies.
Management anticipates that this process will provide substantial additional
liquidity in 2000 and thus partially reduce reliance upon the Senior Credit
Facility as a working capital resource. The Company has in the past utilized
non-recourse financing to fund specific projects.
In January 1999, the Company completed the combination of the insurance
programs of APCOA and Standard into one program. In conjunction therewith, the
Company purchased an insurance policy to cover amounts previously self-insured
by APCOA and its affiliates. The APCOA insurance program had historically
included a self-insured retention component, which required the establishment of
reserves to reflect the estimated final settlement value of open claims. The
purchase of a tail policy to eliminate future exposure from retrospective
adjustments resulted in a use of cash of $5.6 million in January of 1999, $2.6
million of which was included in restructuring and other unusual charges. This
transaction provided an offsetting increase in availability of funds by allowing
the elimination of letters of credit in the amount of $4.7 million.
The Company has in the past and expects in the future to pursue a strategy
of growth through acquisition. In addition to the Standard acquisition, on
January 22, 1998, the Company acquired the assets of Huger Parking Company, LLC,
d/b/a Dixie Parking, for $1.0 million in cash and notes aggregating $3.25
million. On May 1, 1998, the Company acquired the remaining 76% interest in
Executive Parking Industries, LLC, through acquisition of its parent company for
$7.0 million in cash. On June 1, 1998, the Company completed the acquisition of
Century Parking and Sentry Parking for consideration consisting of $5.2 million
in cash at closing and $1.0 million payable on the third anniversary of the
closing date. In addition, on September 1, 1998 the Company acquired the capital
stock of Virginia Parking Services, Inc. for $2.7 million in cash including
direct costs, and up to $1.25 million in notes. On April 1, 1999, the Company
acquired the assets of Pacific Rim Parking, Inc. ("Pacific Rim") in Los Angeles
for $.75 million in cash and up to $.75 million in non-interest bearing notes
payable over five years. On May 1, 1999 the Company acquired various contracts
of System Parking Inc. in Atlanta for $.25 million in cash. Effective as of July
1, 1999 the Company acquired all of the outstanding stock of Universal Park
Holdings, Inc., operating under the names U-Park and Select Valet Parking, in
Vancouver B.C. for Canadian $1.61 million plus a multiple of EBITDA on a future
earnout as defined in the agreement. All of the acquisitions have been accounted
for under the purchase method and their operating results have been included in
the consolidated results since their respective date of acquisition.
YEAR 2000
In prior years, the Company discussed the nature and progress of its plans
to become Year 2000 ready. In late 1999, the Company completed its remediation
and testing of systems. As a result of those planning and implementation
efforts, the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company is not
aware of any material problems resulting from Year 2000 issues,
19
<PAGE> 20
with its products, its internal systems, or the products and services of third
parties. The Company will continue to monitor its mission critical computer
applications and those of its suppliers and vendors throughout the year 2000 to
ensure that any latent Year 2000 matters that may arise are addressed promptly.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure consists of risk related to
changes in interest rates. Historically, the Company has not used derivative
financial instruments for speculative or trading purposes.
The Company entered into a $40 million revolving variable rate Senior
Credit Facility (see Note D of the Notes to the Consolidated Financial
Statements). Interest expense on such borrowing is sensitive to changes in the
market rate of interest. If the Company were to borrow the entire $40 million
available under the Facility, a 1% increase in the average market rate would
result in an increase in the Company's annual interest expense of $0.4 million.
This amount is determined by considering the impact of the hypothetical
interest rates on the Company's borrowing cost, but does not consider the
effects of the reduced level of overall economic activity that could exist in
such an environment. Due to the uncertainty of the specific changes and their
possible effects, the foregoing sensitivity analysis assumes no changes in the
Company's financial structure.
AP Holdings' parent company is Holberg Industries, Inc. ("Holberg"); a
privately held diversified service company located in Greenwich, Connecticut.
Holberg also owns AmeriServe Food Distribution, Inc. ("AmeriServe"), one of the
nation's largest food service distributors servicing quick-service and casual
dining restaurants in the United States, Canada and Mexico. AmeriServe filed for
bankruptcy protection under Chapter 11 of the Bankruptcy Code on January 31,
2000.
AP Holdings and AmeriServe are separate and distinct companies with
independent sources of funding. However, the AmeriServe Chapter 11 filing is a
default under certain debt instruments of Holberg. As a result of such defaults,
the creditors of Holberg could take control of Holberg or its subsidiary, AP
Holdings, Inc. ("Holdings"). A change in control of Holberg or Holdings would
also constitute a change in control of APCOA under the APCOA/Standard debt
instruments and of Holdings under its bond indenture. In the event of such a
change in control of APCOA/Standard of Holdings, the terms of APCOA/Standard's
senior bank credit facility and subordinated bond indenture and of Holdings'
bond indenture permit the APCOA/Standard and Holdings creditors, if they believe
it were in their interest to do so, to call for immediate payment under such
instruments, and APCOA/Standard's or Holdings' failure to pay on such terms
would constitute a default thereunder. Holberg and its creditors are negotiating
to restructure the debt and eliminate the defaults created as a result of the
AmeriServe Chapter 11 filing. Although Holberg currently expects to complete the
restructuring of the debt, and further currently expects that its creditors will
not in any event seek to obtain control of Holberg, there can be no assurance
that Holberg will be successful in restructuring its debt and eliminating the
existing defaults, or that Holberg's creditors will not seek to obtain control
of Holberg, and should APCOA/Standard's or Holdings' indebtedness be accelerated
as a result of any action by Holberg's creditors, there is no assurance that
APCOA/Standard or Holdings would have sufficient funds to satisfy such
obligations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item are attached to and are
hereby incorporated into this Report.
20
<PAGE> 21
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 10. EXECUTIVE OFFICERS AND DIRECTORS
AP HOLDINGS
The following table sets forth certain information with respect to each
person who is an executive officer or director of AP Holdings, as indicated
below:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
John V. Holten........................................... 43 Director and Chairman
G. Walter Stuelpe, Jr.................................... 55 Director
Gunnar E. Klintberg...................................... 51 Director and Assistant Secretary
A. Petter Ostberg........................................ 38 Vice President
Michael J. Celebrezze.................................... 43 Treasurer
Robert N. Sacks.......................................... 47 Secretary
</TABLE>
John V. Holten. Mr. Holten has served as Chairman and Chief Executive
Officer of Holberg since its inception in 1986, and as a Director and Chairman
of APCOA since 1989. Mr. Holten was Managing Director of DnC Capital
Corporation, a merchant banking firm in New York City, from 1984 to 1986. Mr.
Holten received his M.B.A. from Harvard University in 1982 and he graduated from
the Norwegian School of Economics and Business Administration in 1980.
G. Walter Stuelpe, Jr. Mr. Stuelpe has been associated with APCOA for over
25 years, serving as its President from 1986 to February 1, 2000. Mr. Stuelpe
was elected to APCOA's Board in 1986 and continues to serve on the Company's
Board of Directors. 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 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 operation in the U.S., headquartered in New York City, from 1979
to 1983. Mr. Klintberg received his undergraduate degree from Dartmouth College
in 1972 and a degree in Business Administration and Economics from the
University of Uppsala, Sweden in 1974.
A. Petter Ostberg. Mr. Ostberg joined Holberg in 1994 and was appointed
Senior Vice President and Chief Financial Officer of Holberg in 1997. Mr.
Ostberg is currently a Vice President of APCOA/Standard. From 1990 to 1994 he
held various financial positions with New York Cruise Lines, Inc.
Michael J. Celebrezze. Mr. Celebrezze joined APCOA in 1984 as Manager,
Treasury and Financial Planning. Since then he has held the positions of Vice
President, Controller, Senior Vice President, Chief Financial Officer and
Treasurer, since the Combination, Mr. Celebrezze has served as Executive Vice
President, Chief Financial Officer and Treasurer of the Company. His
responsibilities include the operations of accounting, tax, corporate security,
finance and banking. Mr. Celebrezze graduated cum laude from Kent
21
<PAGE> 22
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 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 and as Executive Vice President since 1998. 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
The following table sets forth certain information with respect to each
person who is an executive officer or director of the Company:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
John V. Holten....................... 43 Director and Chairman
Myron C. Warshauer................... 60 Director, President and Chief Executive Officer
James A. Wilhelm..................... 46 Senior Executive Vice President, Chief Operations
Officer
Herbert W. Anderson, Jr.............. 41 Executive Vice President, Operations
Michael J. Celebrezze................ 43 Executive Vice President, Chief Financial Officer, and
Treasurer
Robert N. Sacks...................... 47 Executive Vice President, General Counsel and Secretary
Douglas R. Warshauer................. 32 Executive Vice President, Marketing/Business Development
Steven A. Warshauer.................. 45 Executive Vice President, Operations
Michael K. Wolf...................... 50 Executive Vice President, Chief Administrative Officer
and Associate General Counsel
Gunnar E. Klintberg.................. 51 Director and Vice President
Patrick J. Meara..................... 37 Director
A. Petter Ostberg.................... 38 Vice President
G. Walter Stuelpe, Jr................ 55 Director
</TABLE>
Myron C. Warshauer. Mr. Warshauer has served as a Director and as the Chief
Executive Officer of the Company since the consummation of the Combination. Mr.
Warshauer served as President and Chief Executive Officer of Standard from 1973
and, prior to such time, was associated with Standard since 1963. Since February
1, 2000, Mr. Warshauer has served as President and Chief Executive Officer of
the Company. 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.
James A. Wilhelm. Mr. Wilhelm served as Executive Vice
President -- Operations of the Company since the consummation of the Combination
and has served the Company as Senior Executive Vice President and Chief
Operations Officer since September 1, 1999. Mr. Wilhelm joined Standard in 1985,
serving as Executive Vice President since January 1, 1998. Prior to the
consummation of the Combination, Mr. Wilhelm was 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.
22
<PAGE> 23
Herbert W. Anderson, Jr. Mr. Anderson has served as Executive Vice
President, Operations of the Company since the consummation of the Combination.
Mr. Anderson joined APCOA in 1994, and 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.
Steven A. Warshauer. Mr. Warshauer has served as Executive Vice President,
Operations of the Company since the consummation of the Combination. Mr.
Warshauer joined Standard in 1982, initially servicing 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.
Douglas R. Warshauer. Mr. Warshauer has served as Executive Vice President,
Marketing/Business Development of the company since the consummation of the
Combination. 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 - Finance. Mr. Warshauer also holds a
Bachelors Degree with highest honors in Social Science from the University of
California at Berkeley.
Michael K. Wolf. Mr. Wolf has served as Executive Vice President - Chief
Administrative Officer of the Company since the consummation of the Combination.
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 Commentseditor of the Washington University Law
Quarterly. Upon graduation from law school, Mr. Wolf was elected to the Order of
the Coif.
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.
23
<PAGE> 24
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information for 1999, 1998 and 1997 with
regard to compensation for services rendered in all capacities. Information set
forth in the table reflects compensation earned by such individuals for services
with APCOA/Standard, APCOA, Standard or its respective subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
FISCAL OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
- --------------------------- ------ --------- -------- ------------ ------------
($) $ $ ($)
<S> <C> <C> <C> <C> <C>
Myron C. Warshauer.................. 1999 601,615(1) -- 33,087(3) 53,265(4)
Director and President,........... 1998 481,158(1) -- 24,041(3) 40,166(4)
Chief Executive Officer........... 1997 98,265 -- 41,229(3) 42,102(4)
G. Walter Stuelpe, Jr............... 1999 448,315(1) 287,200 189,057(5) 21,000(2)
Director.......................... 1998 426,901(1) 183,500 309,424(5) 16,145(2)
1997 413,953(1) 216,600 8,111(5) 21,000(2)
Michael K. Wolf..................... 1999 378,284(1) 20,000 -- 19,425(2)
Executive Vice President, Chief... 1998 424,480(1) -- -- --
Administrative Officer and........ 1997 376,400 -- -- --
Associate General Counsel James 1999 311,685(1) 75,000 -- 10,662(2)
A. Wilhelm...................
Senior Executive Vice 1998 306,846(1) -- -- --
President,.....................
Chief Operations Officer....... 1997 202,519(1) 100,000 -- --
Steven A. Warshauer................. 1999 301,514(1) 50,000 -- --
Executive Vice President - 1998 219,923(1) -- -- --
Operations.....................
1997 -- -- -- --
</TABLE>
- ---------------
(1) The amount shown includes amounts contributed by the Company to its 401(k)
plans under a contribution matching program.
(2) The amount shown reflects deposits made by APCOA/Standard 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, health insurance
premiums and legal fees related to estate planning.
(4) The amount shown reflects premiums paid by APCOA/Standard on behalf of Myron
C. Warshauer for life insurance policies to which Mr. Warshauer is entitled
to the cash surrender value.
(5) The amount shown includes car allowance, club dues, health and term life
insurance premiums, and in 1998, amounts paid by the Company to Mr. Stuelpe
in connection with his relocation to the Chicago area.
DIRECTOR COMPENSATION
Directors of AP Holdings and Directors of the Company do not receive
compensation for serving on AP Holdings' and the Company's Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee in the year ended
December 31, 1999. The Company intends to form a Compensation Committee in 2000.
The members of such committee have not yet been determined. During 1999, no
executive officer of the Company served as a member of the Compensation
Committee of another entity.
24
<PAGE> 25
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
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
25
<PAGE> 26
associated with any business or other endeavor that engages in construction,
ownership, leasing, design and/or management of parking lots, parking garages,
or other parking facilities or consulting with respect thereto, provided,
however, that Myron C. Warshauer may own or sell investments in certain parking
facilities ("Permitted Investments") during the Noncompetition Period, and may
own or sell any interest in any other real estate ("Other Real Estate") at any
time after the Employment Period for the remainder of the Noncompetition Period.
The Warshauer Employment Agreement provides that, if such Permitted Investment
or Other Real Estate includes a parking facility, Myron C. Warshauer shall
initiate negotiations, or, under certain circumstances, use reasonable and
good-faith efforts to cause such negotiations, with the Company in an attempt to
determine mutually agreeable terms pursuant to which the Company will manage or
lease the parking facility and, if such negotiations fail, that, under certain
circumstances, the Company shall have a right of first refusal with respect to
any management agreement or lease that may be negotiated with any independent
third party.
Pursuant to the Warshauer Employment Agreement, 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 the Company Common Stock equal to 1%
of the total number of shares of Company Common Stock. All such options will
have a term of ten years from the date of the grant. The Option Plan was to be
implemented within 120 days after the Closing Date.
As of February 29, 2000, Mr. Stuelpe's employment with the Company
terminated pursuant to a written settlement agreement and release. Under the
terms of the settlement agreement, the Company agreed to continue to pay Mr.
Stuelpe his Salary (as defined in the settlement agreement), in the normal
course, through June 30, 2001 and make one final lump sum payment in the amount
of $245,827.00 on July 1, 2001, in full satisfaction of any further obligation
of the Company to pay Salary to Mr. Stuelpe; provided, however, Mr. Stuelpe
shall be paid his 1999 bonus at the same time as the Company's other senior
executives receive their bonuses for calendar year 1999. The Company agreed, for
the period from March 1, 2000 to December 31, 2000 to (i) pay standard premium
charges for health continuation coverage, if Mr. Stuelpe should exercise his
right to elect such continuation coverage with the Company (ii) pay required
premiums, subject to contribution by Mr. Stuelpe in certain instances, so that
Mr. Stuelpe will continue to be covered by life insurance, accidental death and
dismemberment insurance, business travel accident insurance and long term
disability insurance, presently covered under the Company's group coverage (iii)
pay Mr. Stuelpe the Additional Contributions (as defined in the settlement
agreement) with respect to the Company's matching contributions for the 401(k)
Plan and the 401(k) Wrap Around Plan for calendar year 2000 (iv) continue to
provide Mr. Stuelpe with an automobile, in accordance with past practice and (v)
continue to pay, consistent with past practice, Mr. Stuelpe's dues and
assessments for various clubs and organizations to which he belongs.
The remaining outstanding balance of the Promissory Note (as defined in the
settlement agreement) shall be forgiven as of February 29, 2000. The Company
also agreed to pay a portion of Mr. Stuelpe's legal fees incurred in connection
with the settlement agreement.
As soon as practicable after the Effective Date (as defined in the
settlement agreement), the Company will assign to Mr. Stuelpe a certain life
insurance policy on Mr. Stuelpe's life, together with its cash surrender value
and paid up premiums through December 31, 2000, in full satisfaction of any and
all obligations of the Company under the Supplemental Pension Plan (as defined
in the settlement agreement). On April 1, 2000, the Company will pay Mr.
Stuelpe, $1,270,424, which represents the lump sum value of Mr. Stuelpe's
accrued benefits under the Key Executive Officers Retirement Plan (as defined in
the settlement agreement).
Mr. Stuelpe agrees he will not, from and after February 29, 2000, disclose
any confidential information of the Company if such disclosure would have a
materially adverse effect on the Company. For a period commencing on March 1,
2000 and ending December 31, 2001, Mr. Stuelpe shall not render services to, or
have any ownership interest in, any business which is competitive with the
Company.
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,
26
<PAGE> 27
subject to annual review, plus an annual bonus based on a percentage of the
annual base salary to be mutually agreed upon by the Company and Mr. Wolf, as
well as certain other benefits. Mr. Wolf shall hold all confidential information
in strict confidence and not publish or otherwise disclose any portion thereof
to any person whatsoever except with the prior written consent of the Company.
During the term of the employment agreement and for two years after its
termination (or eighteen months if such termination follows a Change in Control
(as defined in the agreement)), Mr. Wolf shall not render services to, or have
any ownership interest in, any business which is competitive with the Company in
certain geographic areas.
If Mr. Wolf's employment is terminated by reason of his death, the Company
is obligated to pay Mr. Wolf's estate an amount equal to the sum of (i) Mr.
Wolf's annual base salary through the end of the calendar month in which death
occurs and (ii) any earned and unpaid annual bonus, vacation pay and other
vested benefits.
If Mr. Wolf's employment is terminated by reason of his Disability (as
defined in the agreement), the Company is obligated to pay Mr. Wolf or his legal
representative (a) an amount equal to Mr. Wolf's annual base salary for the
duration of the employment period in effect on the date of termination, reduced
by amounts received under any disability benefit program and (b) any earned and
unpaid annual bonus and other vested benefits.
If Mr. Wolf's employment is terminated by the Company other than for death
or Disability and without Cause (as defined in the agreement), the Company is
required to continue (A) to pay Mr. Wolf for the remainder of the employment
period in effect immediately before the date of termination his annual base
salary and annual bonus(es) through the end of the then-current employment
period and (B) to provide Mr. Wolf and/or his family with certain other
benefits.
If Mr. Wolf's employment is terminated by the Company for any reason other
than Cause during the three-year period following a Change in Control (as
defined in the agreement), the Company is obligated to (x) pay Mr. Wolf an
amount ("Severance Pay") equal to the greater of (1) one and one-half times the
sum of (I) Mr. Wolf's current annual base salary plus (II) the amount of any
bonus paid to Mr. Wolf in the preceding twelve months and (2) the annual base
salary and annual bonuses through the end of the then-current employment period
and (y) continue to provide Mr. Wolf with certain other benefits for a certain
period of time. If Mr. Wolf terminates his employment voluntarily following a
Change in Control, he shall not be entitled to Severance Pay, provided, however,
that any such termination by Mr. Wolf for Good Reason (as defined in the
agreement) shall not be considered a voluntary termination and Mr. Wolf will be
treated as if he had been terminated by the Company other than for Cause.
Effective as of August 1, 1999, Mr. Wilhelm entered into a new employment
agreement with the Company. Mr. Wilhelm's new employment agreement with the
Company provides for a three-year term, scheduled to lapse on July 31, 2002,
default annual renewals and an annual base salary of not less than $300,000,
subject to annual review, plus an annual bonus based on an annual bonus program
to be established by the Company, as well as certain other benefits. Mr. Wilhelm
shall hold all confidential information in strict confidence and not publish or
otherwise disclose any portion thereof to any person whatsoever except with the
prior consent of the Company. During the term of the employment agreement and
for 18 months thereafter, Mr. Wilhelm has agreed not to solicit existing clients
of the Company or solicit any employees of the Company. These obligations are in
addition to Mr. Wilhelm's obligations regarding the Company's confidential
information. In consideration for Mr. Wilhelm's agreements regarding
confidential information and non-solicitation of the Company's clients and
employees, the Company has agreed to pay Mr. Wilhelm Salary Continuation
Payments (as defined in the agreement) for a period of 18 months following the
Date of Termination (as defined in the agreement).
If Mr. Wilhelm's employment is terminated for any reason, the Company is
obligated to pay Mr. Wilhelm or Mr. Wilhelm's estate, as applicable, an amount
equal to the sum of (a) Mr. Wilhelm's annual base salary through the date of
termination and (b) accrued but unused vacation pay and other vested benefits.
If Mr. Wilhelm's employment shall be terminated for Cause or Performance Reasons
(each term as defined in the agreement), the Company shall also pay Mr. Wilhelm
the Salary Continuation Payments.
27
<PAGE> 28
If Mr. Wilhelm shall voluntarily terminate his employment with the Company,
then the Company shall be obligated to pay Mr. Wilhelm (a) his annual base
salary through the date of termination, (b) any accrued but unused vacation pay
and other vested benefits and (c) Salary Continuation Payments for 18 months. If
Mr. Wilhelm terminates his employment voluntarily he shall not be entitled to
Severance Pay (as thereafter described); provided however, that any such
termination by Mr. Wilhelm for Good Reason ( as defined in the agreement) shall
not be considered a voluntary termination and Mr. Wilhelm will be treated as if
he had been terminated by the Company other than for Cause or Performance
Reasons.
If Mr. Wilhelm's employment is terminated by the Company other than for
death or disability, without Cause and not due to Performance Reasons, the
Company is required to (a) pay Mr. Wilhelm Severance Pay equal to the product of
two times the sum of (x) Mr. Wilhelm's current annual Salary, plus (y) the
amount of any Annual Bonus (as defined in the agreement) paid to Mr. Wilhelm for
the preceding calendar year, minus the aggregate amount of Salary Continuation
Payments, payable in equal monthly installments over a 24 month period
commencing on the Date of Termination, (b) pay Mr. Wilhelm Salary Continuation
Payments, and (c) provide Mr. Wilhelm and his family with certain other welfare
benefits.
Mr. Steven Warshauer'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 $300,000, 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. Warshauer, as well as
certain other benefits. Mr. Warshauer shall 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. Warshauer shall not render services to, or
have any ownership interest in, any business which is competitive with the
Company in certain geographical areas; provided, however, from and after such
time as Mr. Warshauer is no longer employed by the Company for any reason, he
may become involved in the operation and management of the Auditorium Garage
located in Chicago, as well as own an equity interest in this garage.
If Mr. Warshauer's employment is terminated by reason of his death, the
Company is obligated to pay Mr. Warshauer's estate an amount equal to the sum of
(i) Mr. Warshauer'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. Warshauer's employment is terminated by reason of his Disability (as
defined in the agreement), the Company is obligated to pay Mr. Warshauer or his
legal representative (a) an amount equal to Mr. Warshauer'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 program and (b) any earned and
unpaid annual bonus and other vested benefits.
If Mr. Warshauer'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. Warshauer 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. Warshauer and/or his family with
certain other benefits.
If Mr. Warshauer'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. Warshauer an
amount ("Severance Pay") equal to the greater (1) one and one-half times the sum
of (I) Mr. Warshauer's current annual base salary plus (II) the amount of any
bonus paid to Mr. Warshauer 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. Warshauer with certain other benefits for
a certain period of time. If Mr. Warshauer terminates his employment voluntarily
following a Change of Control, he shall not be entitled to Severance Pay,
provided, however, that any such termination by Mr. Warshauer for Good Reason
(as defined in the agreement) shall not be considered a voluntarily termination
and Mr. Warshauer will be treated as if he had been terminated by the Company
other than for Cause.
28
<PAGE> 29
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
AP HOLDINGS
The following table sets forth certain information regarding the beneficial
ownership of the common stock of AP Holdings, par value $0.01 per share ("AP
Holdings Common Stock"), by (i) each person known to AP Holdings to own
beneficially more than 5% of AP Holdings Common Stock, (ii) each director of AP
Holdings, (iii) each Named Executive Officer of AP Holdings, and (iv) all
executive officers and directors of AP Holdings, as a group. All information
with respect to beneficial ownership has been furnished to AP Holdings by the
respective stockholders of AP Holdings. Except as otherwise indicated in the
footnote, each beneficial owner has the sole power to vote and to dispose of all
shares held by such older.
<TABLE>
<CAPTION>
AMOUNT AND AMOUNT AND AMOUNT AND
NATURE OF PERCENT OF NATURE OF PERCENT OF NATURE OF PERCENT OF
BENEFICIAL SHARES BENEFICIAL SHARES BENEFICIAL SHARES
NAME AND ADDRESS OWNERSHIP OUTSTANDING OWNERSHIP OUTSTANDING OWNERSHIP OUTSTANDING
---------------- ---------- ----------- ---------- ----------- ---------- -----------
CLASS B COMMON STOCK*** CLASS A COMMON TOTAL COMMON SHARES
STOCK***
PRO FORMA**
<S> <C> <C> <C> <C> <C> <C>
Holberg Industries,
Inc.*.................... 7,260.00(1) 91.7% 2,523.10 67.90% 9,783.10 84.08%
Walter Stuelpe............. 276.59 3.5% -- 276.59 2.38%
Jim LaRocco................ 138.30 1.7% -- 138.30 1.19%
Other APCOA Management..... 245.11 3.1% -- 245.11 2.11%
John V. Holten............. --(2) -- --
ORKLA ASA*................. --(3) --
Lise Stolt-Nielsen
Holten*.................. -- 596.52 16.05% 596.52 5.13%
L & V Trust*............... -- 596.52 16.05% 596.52 5.13%
-------- -------- ---------
Total.................... 7,920.00 3,716.14 11,636.14
-------- -------- ---------
</TABLE>
- ---------------
* The address of Holberg is 545 Steamboat Road, Greenwich, Connecticut 06830.
The address of Orkla and the business address of Mr. Holten, Lise
Stolt-Nielsen Holten and L&V Trust is the same as that of Holberg. Lise
Stolt-Nielsen Holten is married to Mr. Holten and the L&V Trust is a trust
for the benefit of certain relatives of Mr. Holten, and of which he is a
trustee.
** There are no issued and outstanding shares of Class A Common Stock. The
above information as to beneficial ownership of Class A Common Stock and of
Total Common Stock on a combined basis assumes the conversion of all
outstanding shares of preferred stock of Holberg into shares of Class A
Common Stock, and the ownership percentages reflect the respective interests
that would result if all of such shares of Preferred Stock were converted,
and the corresponding issuance of all of the underlying shares of Class A
Common Stock. If fewer shares of Preferred Stock were converted, and fewer
shares of Class A Common Stock, the relative percentage ownership
represented by those shares of Class A Common Stock outstanding would be
greater.
*** The shares of Class A Common Stock and Class B Common Stock are identical
with the exception of voting rights. The shares of Class B Common Stock have
ten votes per share and the shares of Class A Common Stock have one vote per
share.
(1) Holberg also owns a portion of the AP Holdings Preferred Stock. See "Certain
Relationships and Related Party Transactions -- Stockholders' Equity."
(2) Mr. Holten owns all of the outstanding common stock of the corporate parent
of Holberg Industries, Inc. ("Holberg"), which parent entity owns
approximately 66% of the outstanding common stock of Holberg, which in turn
owns 91.67% of the outstanding common stock of AP Holdings.
(3) Orkla owns approximately 34% of the outstanding common stock of Holberg.
29
<PAGE> 30
THE COMPANY
<TABLE>
<CAPTION>
AMOUNT OF
NATURE OF PERCENT OF SHARES
NAME AND ADDRESS BENEFICIAL OWNERSHIP OUTSTANDING
- ---------------- -------------------- -----------------
<S> <C> <C>
AP Holdings................................... 26.3 shares of Common Stock 84.0%
John V. Holten**.............................. (1)
Orkla ASA ("Orkla")**......................... (2)
Dosher Partners, L.P.*........................ 1.25 shares of Common Stock(3) 4.0
Waverly Partners, L.P.*....................... 1.25 shares of Common Stock(4) 4.0
Myron C. Warshauer*........................... (3)(4)
SP Associates++............................... 2.5 shares of Common Stock(5) 8.0
G. Walter Stuelpe, Jr.*....................... (6)
James V. LaRocco, Jr.*........................ (7)
Directors and Executive Officers as a Group... (1)(3)(4)(6)(7)(8)
</TABLE>
- ---------------
* The address of AP Holdings, Dosher Partners, L.P., Waverly Partners,
L.P. and the business address of Messrs. Warshauer, Stuelpe and
LaRocco is 900 N. Michigan Avenue, Chicago, Illinois 60611-1542.
** The address of Orkla and the business address of Mr. Holten is 545
Steamboat Road, Greenwich, Connecticut 06830.
++ The address of SP Associates is 900 North Michigan Avenue, Chicago,
Illinois 60611-1542.
(1) Mr. Holten owns all of the outstanding common stock of the corporate
parent of Holberg Industries, Inc. ("Holberg"), which parent entity
owns approximately 66% of the outstanding common stock of Holberg,
which in turn owns 91.67% of the outstanding common stock of AP
Holdings.
(2) Orkla owns approximately 34% of the outstanding common stock of
Holberg.
(3) 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.
(4) Waverly Partners, L.P. ("Waverly") is a limited partnership in which
Myron C. Warshauer is general partner. Mr. Warshauer disclaims
beneficial ownership of the assets of Waverly, including the shares of
Common Stock held by it.
(5) SP Associates is a general partnership controlled by affiliates of JMB
Realty Corp.
(6) Mr. Stuelpe owns approximately 3.5% of the common stock of AP
Holdings.
(7) Mr. LaRocco owns approximately 1.8% of the common stock of AP
Holdings.
(8) Certain other executive officers of APCOA/Standard in the aggregate
own approximately 3.1% of the common stock of AP Holdings.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
COMPANY STOCKHOLDERS AGREEMENT
Upon consummation of the March 30, 1998 combination with Standard ("the
Combination"), the Company entered into a Stockholders Agreement (the
"Stockholders Agreement") with Dosher Partners, L.P. ("Dosher"), and SP
Associates (collectively, the "Standard Parties") and Holberg and AP Holdings
(collectively with the Standard Parties, the "Stockholders"). The Stockholders
Agreement provides, among other things, for (i) prior to the earliest of (a) the
seventh anniversary of the consummation of the Combination, (b) the termination
of Myron C. Warshauer's employment with the Company under certain circumstances
and (c) the consummation of an initial public offering of Company Common Stock
(as such offering will be defined in the Stockholders Agreement), certain
obligations of Holberg to allow Dosher the opportunity to acquire all, but not
less than all, of the Company Common Stock held by Holberg and/or its
30
<PAGE> 31
affiliates before Holberg may directly or indirectly sell an amount of Company
Common Stock which would constitute a Control Transaction (as defined in the
Stockholders Agreement); provided that, under certain circumstances, Holberg may
sell such shares to a party other than Dosher if the terms of such other party's
offer are more favorable to Holberg, (ii) until the consummation of an initial
public offering of Company Common Stock, certain rights of each Standard Party
to purchase shares of Company Common Stock to the extent necessary to maintain
such Standard Party's percentage ownership of the Company, (iii) the right of
the Standard Parties to participate in, and the right of Holberg to require the
Standard Parties to participate in, certain sales of Company Common Stock, (iv)
following the third anniversary of the consummation of the Combination and prior
to an initial public offering of Company Common Stock, certain rights of the
Company to purchase, and certain rights of the Standard Parties to require the
Company to purchase, shares of Company Common Stock at prices determined in
accordance with the Stockholders Agreement and (v) certain additional
restrictions on the rights of the Standard Parties to transfer shares of Company
Common Stock. The Stockholders Agreement also contains certain provisions
granting the Stockholders certain rights in connection with registrations of
Company Common Stock in certain offerings and provides for indemnification and
certain other rights, restrictions and obligations in connection with such
registrations.
Effective October 1, 1998, Dosher transferred a 4% interest in
APCOA/Standard common stock to Waverly Partners, L.P. ("Waverly"), a limited
partnership in which Myron C. Warshauer is general partner, Douglas Warshauer
individually is a limited partner and Douglas Warshauer as Trustee for the
Douglas Warshauer Family Trust is a limited partner. Waverly and each original
signatory to the Stockholders Agreement consented to the transfer pursuant to a
Consent and Joinder to Stockholders' Agreement dated as of October 1, 1998.
AP HOLDINGS STOCKHOLDERS AGREEMENT
AP Holdings is party to a Stockholders Agreement with Holberg, and each of
the members of APCOA management who is a stockholder of AP Holdings, which
provides for, among other things, (i) a board of directors consisting of three
or more Holberg nominees, and one management nominee, (ii) certain restrictions
on the sale, assignment, transfer, encumbrance or other disposition of the
common stock of AP Holdings, (iii) certain first offer, repurchase and put/call
rights (a summary of which is set forth below), with respect to the AP 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 AP Holdings
common stock, and (v) certain put/call rights with respect to the AP Holdings
common stock held by Delaware North. As of August 4, 1998, AP Holdings
repurchased the shares of its common stock and warrants formerly held by
Delaware North for $4.0 million in cash. In connection with such repurchase, the
Delaware North nominee to the AP Holdings Board of Directors resigned as a
director of AP Holdings.
The AP Holdings Stockholders Agreement provides that, subject to any direct
or indirect restrictions imposed by financing agreements or arrangements entered
into by AP Holdings or the Company, upon the termination of employment of a
management investor for death, retirement, complete disability, or otherwise,
(a) such management investor, or his estate or heir (in the case of death,
retirement or complete disability), shall have the right to cause AP Holdings
to, and (b) AP Holdings shall have the right to, repurchase such management
investor's AP Holdings common stock, at a purchase price, which, under some
circumstances, is partially payable in subordinated notes, equal to, (X) in the
case of a termination of employment for death, retirement or complete disability
or by AP Holdings without Cause (as defined in the AP Holdings Stockholders
Agreement) or a voluntary termination of employment by such management investor,
the greatest of, or (Y) in the case of a termination of employment by AP
Holdings for Cause, the lowest of, (i) the price per share paid by such
management investor for such AP Holdings common stock, (ii) the adjusted book
value per share of AP Holdings common stock and (iii) the sum, on a per share
basis, of (x) the product of the cash contribution from operations of AP
Holdings for the immediately preceding four fiscal quarters multiplied by 6.84
minus (y) the amount of debt reflected in AP Holdings most recent consolidated
financial statements.
31
<PAGE> 32
TAX SHARING AGREEMENT
The Company is a party to the Tax Sharing Agreement, dated April 28, 1989,
by and among Holberg, AP Holdings and the Company (the "Tax Sharing Agreement"),
which applies to each of Holberg's consolidated return years beginning with
1989. The Tax Sharing Agreement provides that each member of Holberg's
affiliated group, including the Company, will pay to Holberg the amount of
federal income tax that such member would be required to pay on a separate
return basis for the year in question, except that the amount that the Company
is required to pay to Holberg will not exceed the tax liabilities of the Company
on a separate return basis for all taxable years to which the Tax Sharing
Agreement applies and for which the Company joined in the Holberg consolidated
return, computed as if the Company had actually filed separate returns for all
such years and taking into account any net operating loss carryforward the
Company would have had if it had filed a separate return for all such years.
Holberg is not required to make a payment to the Company by virtue of the
utilization by the Holberg affiliated group of any net operating loss generated
by the Company. In the event that the consolidated federal income tax liability
of the Holberg affiliated group is adjusted for any taxable period, whether by
means of an amended return, claim for refund, or tax audit by the Internal
Revenue Service, the liability of the Company under the Tax Sharing Agreement
will be recomputed to give effect to such adjustments.
STOCKHOLDERS' EQUITY
Prior to the consummation of the Combination, Holberg held $8.7 million of
preferred stock of APCOA. A portion of the proceeds of the financing obtained in
conjunction with the combination with Standard (see Note B of the Notes to
Consolidated Financial Statements) was used to redeem $8.0 million of the
preferred stock. The remaining $0.7 million was contributed to the capital of
the Company.
The preferred stock issued by the Company to AP Holdings in conjunction
with the combination with Standard has the same maturity as the debt securities
of AP Holdings issued to finance the preferred stock contribution, has an
initial liquidation preference equal to the issue price of such debt securities,
increases in liquidation preference at the same rate as such debt securities
accrue interest, such that the liquidation preference of the preferred stock
will at all times be equal to the then principal amount of such debt securities,
and accrues cash dividends commencing at such times as such debt securities
commence to accrue cash interest, at the same rate as such debt securities.
On December 29, 1999, AP Holdings' Board of Directors approved the
following recapitalization actions:
(a) Twenty thousand shares of Class A common stock, par value $.01 per
share, were authorized. No shares were issued. Each share issued will have
one vote.
(b) Each of the outstanding shares of common stock (7,920 shares) was
converted to 7,920 shares of Class B Common Stock, par value $.01 per
share. Twenty thousand shares of Class B common stock were authorized. Each
share issued will have ten votes. The previously issued common shares were
reclassified as Class B. Each Class B share is convertible into one Class A
share at any time.
(c) Twenty three thousand shares of Preferred Stock, par value $.01
per share, were authorized. Nine thousand shares were designated as Series
A Cumulative Preferred Stock. Dividends are payable quarterly at 13%. The
preferred shares are mandatorily redeemable on December 31, 2008 at a
redemption price of $9,000 per share, plus accrued and unpaid dividends.
Each Series A share is convertible into 1.04762 shares of Class A Common
Stock.
MANAGEMENT CONTRACTS AND RELATED ARRANGEMENTS WITH AFFILIATES
The Company had a management contract to operate one parking facility in
Chicago with an Illinois land trust that is beneficially owned by a partnership
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, utilities and
other direct operating costs ("property-level expenses") are paid by the
facility owner. Pursuant
32
<PAGE> 33
to the management contract, the Company received a management fee of
approximately $42,000 in 1999. However, certain subordination provisions in the
loan agreement between the facility owner and its lender would result in the
non-payment of this management fee if operating revenues are insufficient to
defray all operating expenses and debt service costs relating to the property.
The parking facility was sold to an unaffiliated third party on February 15,
2000. At closing, the Company's management contract was terminated, effective
immediately, in consideration for which the Company received a $550,000
termination fee.
The Company has a management contract with the Buckingham Plaza Limited
Partnership ("BPLP") to operate the parking facility at a condominium complex in
Chicago of which BPLP was the developer. Myron C. Warshauer and SP Associates
own an equity interest in one of BPLP's limited partners. The Company receives
an annual management fee of $18,000 pursuant to such management contract. The
Company estimates that such management fee is no less than would normally be
obtained through arms-length negotiations.
The Company has management contracts to operate two surface parking lots in
Chicago. Myron C. Warshauer, Steven A. Warshauer, Stanley Warshauer, Michael K.
Wolf and SP Associates own membership interests in a limited liability company
that is a member of the limited liability companies that own such surface
parking lots. The Company received a total of $133,000 in management fees for
such lots in 1999 under the applicable management contracts. The Company
estimates that such management fees are no less favorable than would normally be
obtained through arms-length negotiations The Company operates the Clark
Fullerton Self Park, a parking facility in which Myron C. Warshauer had a 50%
equity interest until the facility was sold to an unaffiliated third party in
January, 1999, in connection with which Mr. Warshauer sold his entire equity
interest. The Company continues to manage the parking facility pursuant to a
management contract that paid the Company a management fee of $23,500 for 1999.
Both before and after the sale, the facility owner has paid all of the
property-level expenses.
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 reimbursed the Company for the general and administrative costs
associated with providing these services approximately $25,000 in 1999.
The Company provides office and related support services for a parking
facility (the "Theater District Garage") that 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. Standard
Tremont reimburses the Company for the general and administrate costs associated
with providing these services, which reimbursement totaled $5,000 in 1999.
The Company pays 15.0% 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.
SP Associates is an affiliate of JMB Realty Corp., from which the Company
leases office space for its corporate offices in Chicago. Payments pursuant to
the lease agreement aggregated approximately $916,000 during 1999.
The Company purchases workers' compensation and health insurance covering
certain parking facilities from JMB Insurance Agency, Inc., an affiliate of JMB
Realty Corp. which in turn is an affiliate of SP Associates. The Company
estimates that the premiums and commissions paid for such insurance are
comparable to premiums it would pay for comparable coverage from an unrelated
third party. Additionally, the Company paid $25,000 to JMB Insurance Agency,
Inc. for consulting services during 1999.
In March of 1998, the Company acquired a lease for $1.4 million from an
entity which is 15% owned by certain members of the management group. The lease
is for a term of eleven years and calls for annual rent of $185,000 per year
plus percentage rent if the property achieves certain earnings levels. In 1999,
APCOA/ Standard earned $64,400 in net lease revenue under this agreement. The
Company believes the terms of this agreement are no less favorable than would
normally be obtained through arms-lengths negotiations.
33
<PAGE> 34
LIABILITY INSURANCE
Until January 1999, the Company participated in a master insurance program
with Holberg which served to reduce the insurance costs of the combined group.
In connection with the insurance program, during 1998 the Company placed $2.2
million on deposit with an affiliate for insurance collateral purposes.
In January of 1999, the Company completed the combination of its insurance
programs into one program. In connection therewith the Company purchased
coverage for its previously self-insured layer, and a tail policy to eliminate
future exposure from retrospective adjustments.
CONSULTING AGREEMENT WITH SIDNEY WARSHAUER
Consummation of the Combination was conditioned by Standard, among other
things, upon the execution of a Consulting Agreement (the "Agreement") between
the Company and Sidney Warshauer, the father of Myron C. Warshauer. Sidney
Warshauer is 84 years old.
The Agreement provides that Sidney Warshauer render such services as may be
requested, from time to time, by the Board of Directors of the Company (the
"Board") and/or the Chief Executive Officer of the Company, consistent with Mr.
Warshauer's past practices and experience, for a period beginning on the date of
the consummation of the Combination and ending on Sidney Warshauer's death.
Sidney Warshauer will receive, during such period, annual payments of $552,000
along with certain other benefits.
The Agreement provides that, from the date of the closing of the
Combination until his death, Sidney Warshauer will not disclose Company
confidential information or compete with the Company. The Agreement is not
terminable by the Company for any reason other than the death of Sidney
Warshauer, or a breach by Sidney Warshauer of his obligations under the
Agreement with respect to non-disclosure of Company confidential information or
his obligation to refrain from engaging in competition with the Company. The
parties intended that all payments under the Agreement represent additional
purchase price in the form of supplemental retirement benefits in recognition of
Sidney Warshauer's significant contributions to Standard. The actuarial value,
as of March 30, 1998, of the payments under the Agreement was approximately $5.0
million. See Note B of the Notes to the Consolidated Financial Statements.
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.
APCOA/Standard and Holberg and its affiliates periodically engage in
bi-lateral loans and advances. These loans and advances are interest bearing at
a variable rate that approximates the prime interest rate. The accumulated
interest is added to, or deducted from (as appropriate), the balance in the loan
or advance account. In connection with the Combination, APCOA made a $6.5
million non-cash distribution to Holberg of the receivable in such amount due
from Holberg to APCOA, at the date of the Combination.
34
<PAGE> 35
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Report:
1. Financial Statements.
Report of Independent Auditors
Audited Consolidated Financial Statements
Consolidated Balance Sheets at December 31, 1999 and 1998
For the years ended December 31, 1999, 1998 and 1997:
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. Financial statement schedule.
Schedule II -- Valuation and Qualifying Accounts
All other schedules are omitted since the required information is
not present or is not present in amounts sufficient to require
submission of the schedule, or because the information required is
included in the consolidated financial statements or the notes
thereto.
35
<PAGE> 36
3. Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1.1 Purchase Agreement, by and among AP Holdings and Donaldson,
Lufkin & Jenrette Securities Corporation, dated as of March
25, 1998 (incorporated by reference to Exhibit 1.1 to the
Registrant's Registration Statement Form S-4 No. 333-50433
filed April 17, 1998, August 11, 1998 and August 14, 1998,
(the "Registration Statement")).
2.1 Combination Agreement, dated as of January 15, 1998, by and
between APCOA, Inc. and the Standard Owners (incorporated by
reference to Exhibit 2.1 to the Registration Statement).
3.1 Restated Certificate of Incorporation of AP Holdings.
3.2 By-Laws of AP Holdings (incorporated by reference to Exhibit
3.2 to the Registration Statement).
4.1 Indenture, dated as of March 30, 1998, by and among AP
Holdings and State Street Bank and Trust Company, with
respect to the New Notes (incorporated by reference to
Exhibit 4.1 to the Registration Statement).
4.2 Form of New Note (included as Exhibit A to Exhibit 4.1).
4.3 Form of New Note Guarantee (included as Exhibit D to Exhibit
4.1).
4.4 Supplemental Indenture, dated as of January 12, 1999 by and
among APCOA LaSalle Parking Company, LLC, the Company and
State Street Bank and Trust Company (incorporated by
reference to Exhibit 4.4 to the Company's Annual Report on
Form 10-K filed for December 31, 1998).
4.5 Supplemental Indenture, dated as of September 21, 1998,
among Virginia Parking Service, Inc., the Company, and State
Street Bank and Trust Company (incorporated by reference to
Exhibit 4.5 to the Company's Annual Report on Form 10-K
filed for December 31, 1998).
4.6 Supplemental Indenture, dated as of July 6, 1998, among S&S
Parking, Century Parking, Inc. and Sentry Parking
Corporation, the Company, and State Street Bank and Trust
Company (incorporated by reference to Exhibit 4.6 to the
Company's Annual Report on Form 10-K filed for December 31,
1998).
4.7 First Amendment to the Senior Credit Facility dated November
12, 1999 by and among the Company, the Lenders and Bank One
NA, as agent for the Lenders (incorporated by reference to
Exhibit 4.7 to the Company's September 30, 1999 Form 10-Q).
4.8 Second Amendment to the Senior Credit Facility dated March
30, 2000 by and among the Company, the Lenders and Bank One
N.A., as agent for the Lenders.
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 (incorporated by reference to Exhibit 10.2 to the
Registration Statement).
10.3 Stockholders' Agreement, dated as of March 30, 1998, by and
among Dosher Partners, L.P., SP Associates, Holberg, AP
Holdings and the Company (incorporated by reference to
Exhibit 10.3 to the Registration Statement).
10.4 Stockholders Agreement, dated as of April 14, 1989, by and
among AP Holdings, Holberg, and each member of the
management of the Company who is a stockholder of AP
Holdings (incorporated by reference to Exhibit 10.4 to the
Registration Statement).
10.5 Tax Sharing Agreement, dated as of April 28, 1989, as
amended as of March 30, 1998, by and among Holberg, AP
Holdings and the Company (incorporated by reference to
Exhibit 10.5 to the Registration Statement).
10.6 Employment Agreement between the Company and Myron C.
Warshauer (incorporated by reference to Exhibit 10.6 to the
Registration Statement).
10.7 Employment Agreement between the Company and G. Walter
Stuelpe, Jr. (incorporated by reference to Exhibit to the
Registration Statement).
10.8 Executive Transition Agreement between the Company and James
V. LaRocco, Jr. (incorporated by reference to Exhibit 10.8
to the Registration Statement).
</TABLE>
36
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.12 Employment Agreement between the Company and Michael K. Wolf
(incorporated by reference to Exhibit 10.12 to the
Registration Statement).
10.13 Deferred Compensation Agreement between the Company and
Michael K. Wolf (incorporated by reference to Exhibit 10.13
to the Registration Statement).
10.14 Company Retirement Plan for Key Executive Officers
(incorporated by reference to Exhibit 10.14 to the
Registration Statement).
10.15 Consulting Agreement between the Company and Sidney
Warshauer (incorporated by reference to Exhibit 10.1 to the
Registration Statement).
10.17 Consent and Joinder to Stockholders' Agreement dated as of
October 1, 1998 by and among the Company, Dosher Partners,
L.P., SP Associates, Holberg, AP Holdings and Waverly.
(incorporated by reference to Exhibit 10.17 to the Company's
Annual Report on Form 10-K filed for December 31, 1998).
10.18 Employment Agreement between the Company and James A.
Wilhelm.
10.19 Employment Agreement between the Company and Steven
Warshauer.
10.20 Settlement Agreement and Release between the Company and C.
Walter Stuelpe Jr.
21.1 Subsidiaries of AP Holdings (incorporated by reference to
Exhibit 21.1 to the Registration Statement).
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 (incorporated by reference to
Exhibit 25.1 to the Registration Statement).
27.1 Financial Data Schedule.
</TABLE>
37
<PAGE> 38
INDEX TO HISTORICAL FINANCIAL STATEMENTS
AP HOLDINGS, INC.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... 39
Consolidated Balance Sheets as of December 31, 1999 and
1998...................................................... 40
Consolidated Statements of Operations for each of the three
years in the period ended December 31, 1999............... 41
Consolidated Statements of Stockholders' Equity (Deficit)
for each of the three years in the period ended December
31, 1999.................................................. 42
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1999............... 43
Notes to Consolidated Financial Statements.................. 44
</TABLE>
38
<PAGE> 39
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
Board of Directors
AP HOLDINGS, INC.
We have audited the accompanying consolidated balance sheets of AP
Holdings, Inc. ("AP Holdings") as of December 31, 1999 and 1998, 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, 1999. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of AP
Holdings' management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 amount 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 consolidated financial position of AP Holdings at
December 31, 1999 and 1998, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedule, 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
Chicago, Illinois
March 30, 2000
39
<PAGE> 40
AP HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1999 1998
--------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 5,215 $ 19,183
Notes and accounts receivable, less allowances of $2,301
in 1999 and $1,743 in 1998.............................. 42,715 32,639
Prepaid expenses and supplies............................. 1,645 2,806
--------- --------
Total current assets.................................... 49,575 54,628
Leaseholds and equipment:
Equipment................................................. 13,866 10,878
Leasehold improvements.................................... 20,734 18,663
Leaseholds................................................ 42,703 41,417
Construction in progress.................................. 5,498 2,549
--------- --------
82,801 73,507
Less accumulated depreciation and amortization............ 50,142 45,889
--------- --------
32,659 27,618
Other Assets:
Advances and deposits..................................... 2,040 3,318
Cost in excess of net assets acquired, less accumulated
amortization of $8,132 and $5,558 in 1999 and 1998,
respectively............................................ 114,923 108,741
Intangible and other assets, less accumulated amortization
of $2,997 and $1,472 in 1999 and 1998, respectively..... 14,073 17,943
Due from affiliates....................................... -- 409
--------- --------
131,036 130,411
--------- --------
Total assets............................................ $ 213,270 $212,657
========= ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.......................................... $ 25,289 $ 18,184
Accrued rent.............................................. 7,812 7,262
Compensation and payroll withholdings..................... 10,621 11,067
Property, payroll and other taxes......................... 3,554 4,955
Accrued insurance and expenses............................ 13,151 20,340
Current portion of long-term borrowings................... 1,328 1,939
--------- --------
Total current liabilities............................... 61,755 63,747
Long-term borrowings, excluding current portion:
Obligations under credit agreements....................... 158,100 144,957
Senior Discount Notes, 11 1/4%, due 2008.................. 49,280 44,174
Other..................................................... 8,041 2,535
--------- --------
215,421 191,666
Other long-term liabilities................................. 11,116 11,675
Redeemable preferred stock.................................. 31,924 --
Common stock of subsidiary subject to put/call rights; 5.01
shares issued and outstanding............................. 4,589 4,589
Stockholders' Deficit:
Preferred stock, 12% prior to 12/29/99, cumulative, par
value $.01 per share, 9,000 shares authorized, 2,970.74
at December 31, 1998 issued and outstanding............. -- 28,364
Class A voting common stock, $.01 par value per share,
20,000 shares authorized, no shares outstanding......... -- --
Class B voting common stock, $.01 par value per share,
20,000 shares authorized, 8,800 shares issued, 7,920
shares outstanding...................................... 1 1
Additional paid-in capital................................ 2,088 2,088
Advances to and deposits with affiliates.................. (4,820) --
Accumulated other comprehensive income.................... 428 --
Accumulated deficit....................................... (109,232) (89,473)
--------- --------
Total stockholders' deficit............................. (111,535) (59,020)
--------- --------
Total liabilities and stockholders' deficit............. $ 213,270 $212,657
========= ========
</TABLE>
See Notes to Consolidated Financial Statements
40
<PAGE> 41
AP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
Gross customer collections................................. $1,369,319 $1,026,085 $476,183
========== ========== ========
Parking services revenue:
Lease contracts.......................................... $ 196,441 $ 162,568 $ 99,594
Management contracts..................................... 51,458 32,949 18,110
---------- ---------- --------
247,899 195,517 117,704
Costs and expenses:
Cost of parking services:
Lease contracts.......................................... 172,217 144,086 85,355
Management contracts..................................... 20,877 11,144 9,491
---------- ---------- --------
193,094 155,230 94,846
General and administrative............................... 32,453 23,506 13,528
Restructuring and other special charges.................. 6,852 18,050 --
Depreciation and amortization............................ 9,343 7,435 3,767
---------- ---------- --------
Total costs and expenses.............................. 241,742 204,221 112,141
---------- ---------- --------
Operating income (loss).................................... 6,157 (8,704) 5,563
Other expenses (income):
Interest expense......................................... 21,849 15,792 3,713
Interest income.......................................... (713) (1,251) (470)
---------- ---------- --------
21,136 14,541 3,243
Income (loss) before minority interest, income taxes and
extraordinary item....................................... (14,979) (23,245) 2,320
Minority interest.......................................... 468 487 321
Income tax expense......................................... 752 430 140
---------- ---------- --------
Income (loss) before extraordinary item.................... (16,199) (24,162) 1,859
Extraordinary item......................................... -- 2,816 --
---------- ---------- --------
Net income (loss).......................................... (16,199) (26,978) 1,859
Preferred stock dividends.................................. (3,560) (3,163) (3,697)
---------- ---------- --------
Net loss available for common stockholders................. $ (19,759) $ (30,141) $ (1,838)
========== ========== ========
</TABLE>
See Notes to Consolidated Financial Statements.
41
<PAGE> 42
AP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
COMMON
PREFERRED STOCK STOCK
-------------------- -------------- ACCUMULATED
NUMBER NUMBER ADVANCE TO AND OTHER ADDITIONAL
OF PAR OF PAR DEPOSITS WITH COMPREHENSIVE PAID-IN ACCUMULATED
SHARES VALUE SHARES VALUE AFFILIATES INCOME CAPITAL DEFICIT
--------- -------- ------ ----- -------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance (deficit) at
January 1, 1997.......... 2,487.94 $ 22,391 7,898 $1 $ -- $ -- $7,871 $ (57,350)
Net income................. 1,859
Preferred stock
dividends................ 312.26 2,810 (3,697)
Increase common stock and
warrants subject to
put/call rights to
current value............ (144)
Issuance of common stock... 22
--------- -------- ----- -- ------- ---- ------ ---------
Balance (deficit) at
December 31, 1997........ 2,800.20 25,201 7,920 1 -- -- 7,871 (59,332)
Net loss................... (26,978)
Preferred stock
dividends................ 170.54 3,163 (3,163)
Non-cash distribution to
affiliate................ (6,511)
Contribution to capital.... 728
--------- -------- ----- -- ------- ---- ------ ---------
Balance (deficit) at
December 31, 1998........ 2,970.74 28,364 7,920 1 -- -- 2,088 (89,473)
Net loss................... (16,199)
Cumulative translation
adjustment............... 428
----
Comprehensive loss.........
Preferred stock
dividends................ 395.56 3,560 (3,560)
Advances to and deposits
with affiliates.......... (4,820)
Conversion of preferred
stock to mandatorily
redeemable preferred
stock.................... (3,366.30) (31,924)
--------- -------- ----- -- ------- ---- ------ ---------
Balance (deficit) at
December 31, 1999........ -- $ -- 7,920 $1 $(4,820) $428 $2,088 $(109,232)
========= ======== ===== == ======= ==== ====== =========
<CAPTION>
TOTAL
---------
<S> <C>
Balance (deficit) at
January 1, 1997.......... $ (27,087)
Net income................. 1,859
Preferred stock
dividends................ (887)
Increase common stock and
warrants subject to
put/call rights to
current value............ (144)
Issuance of common stock...
---------
Balance (deficit) at
December 31, 1997........ (26,259)
Net loss................... (26,978)
Preferred stock
dividends................ --
Non-cash distribution to
affiliate................ (6,511)
Contribution to capital.... 728
---------
Balance (deficit) at
December 31, 1998........ (59,020)
Net loss................... (16,199)
Cumulative translation
adjustment............... 428
---------
Comprehensive loss......... (15,771)
---------
Preferred stock
dividends................ --
Advances to and deposits
with affiliates.......... (4,820)
Conversion of preferred
stock to mandatorily
redeemable preferred
stock.................... (31,924)
---------
Balance (deficit) at
December 31, 1999........ $(111,535)
=========
</TABLE>
See Notes to Consolidated Financial Statements.
42
<PAGE> 43
AP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------
1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $(16,199) $(26,978) $ 1,859
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operations:
Depreciation and amortization............................. 9,343 7,435 3,767
Provision for impairment of assets........................ -- 2,600 --
Interest accreted on long-term borrowings................. 5,106 3,491 --
Changes in operating assets and liabilities, net of
acquisitions:
Notes and accounts receivable.......................... (11,949) (14,133) (3,495)
Prepaid assets......................................... 1,089 477 273
Other assets........................................... 2,425 (816) 216
Accounts payable....................................... 6,802 (4,834) 294
Accrued liabilities.................................... (12,115) 18,776 (2,982)
Due from affiliates.................................... (2,211) (2,399) 999
-------- -------- -------
Net cash provided by (used in) operating activities......... (17,709) (16,381) 931
INVESTING ACTIVITIES
Purchase of leaseholds and equipment........................ (10,261) (7,691) (2,357)
Purchase of leaseholds and equipment by joint ventures...... (339) (828) (480)
Increase in other assets.................................... -- (461) (906)
Businesses acquired, net of cash acquired................... (3,181) (87,045) 151
Proceeds from disposition of leaseholds and equipment....... 250 -- --
-------- -------- -------
Net cash used in investing activities....................... (13,531) (96,025) (3,592)
FINANCING ACTIVITIES
Proceeds from long-term borrowings.......................... 18,100 180,683 4,269
Payments on long-term borrowings............................ (1,660) (32,298) (829)
Proceeds from joint venture borrowings...................... 1,281 -- 400
Payments on joint venture borrowings........................ (558) (530) (389)
Payments of debt issuance costs............................. (319) (7,588) --
Redemption of redeemable preferred stock.................... -- (8,000) --
Redemption of common stock subject to put/call rights....... -- (4,000) --
-------- -------- -------
Net cash provided by financing activities................... 16,844 128,267 3,451
-------- -------- -------
Effect of exchange rate changes on cash and cash
equivalents............................................... 428 -- --
Increase (decrease) in cash and cash equivalents............ (13,968) 15,861 790
-------- -------- -------
Cash and cash equivalents at beginning of year.............. 19,183 3,322 2,532
-------- -------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 5,215 $ 19,183 $ 3,322
======== ======== =======
</TABLE>
See Notes to Consolidated Financial Statements.
43
<PAGE> 44
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
NOTE A. SIGNIFICANT ACCOUNTING POLICIES
AP Holdings, Inc. ("AP Holdings"), is a subsidiary of Holberg Industries,
Inc. ("Holberg"), and owns 84% of the voting stock of APCOA/Standard Parking,
Inc. ("APCOA/Standard" or "the Company"), formerly known as APCOA, Inc.
("APCOA"). APCOA/Standard and its subsidiaries and affiliates manage, operate
and develop parking properties throughout the United States and Canada. The
Company is a majority-owned subsidiary of AP Holdings, Inc. ("AP Holdings"). The
Company provides on-site management services at multi-level and surface
facilities in the two major markets of the parking industry: urban parking and
airport parking. The Company manages approximately 1,852 parking facilities,
containing approximately 1,000,000 parking spaces in over 200 cities across the
United States and Canada.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of the Company, its wholly owned subsidiaries, and joint
ventures in which the Company has more than 50% ownership interest. Minority
interest recorded in the consolidated statement of operations is the joint
venture partner's noncontrolling interest in consolidated joint ventures.
Minority interest included in the consolidated balance sheets was $5 and $147 at
December 31, 1999 and 1998, 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
sheets were $315 and $32 at December 31, 1999 and 1998, 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.
PARKING REVENUE -- The Company recognizes gross receipts from leased
locations and management fees earned from management contract properties as
parking revenue as the related services are provided. Also included in parking
revenue were $2,116 in 1999, $127 in 1998 and $1,207 in 1997 from gains on sales
of parking contracts in the ordinary course of business.
COST OF PARKING SERVICES -- The Company recognizes costs for leases and
nonreimbursed costs from managed facilities as cost of parking services. Cost of
parking services consists primarily of rent and payroll related costs.
ADVERTISING COSTS -- Advertising costs are expensed as incurred and are
included in general and administrative expenses. Advertising expenses aggregated
$402, $343 and $440 for 1999, 1998 and 1997, respectively.
CASH AND CASH EQUIVALENTS -- Cash equivalents represent funds temporarily
invested in money market instruments with maturities of one to five days. Cash
equivalents are stated at cost, which approximates market value.
LEASEHOLDS AND EQUIPMENT -- Leaseholds, equipment and leasehold
improvements are stated at cost. Leaseholds (cost of parking contracts) are
amortized on a straight-line basis over the average contract life of 7 years.
Equipment is depreciated on the straight-line basis over the estimated useful
lives of approximately 5 years on average. Leasehold improvements are amortized
on the straight-line basis over the terms of the respective leases or the
service lives of the improvements, whichever is shorter (average of
approximately 7 years). Depreciation and amortization includes losses on
abandonments of leaseholds of $105, $260 and $478 in 1999, 1998 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.
44
<PAGE> 45
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
LONG LIVED ASSETS -- The Company accounts for long-lived assets in
accordance with the provisions of SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
Statement requires that long-lived assets and certain identifiable intangibles
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future net cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognized is
measured by the amount which the carrying amount of the assets exceed the fair
value of the assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell.
The Company periodically reviews the carrying value of long-lived assets,
including goodwill, contract and lease rights, and non-compete agreements, to
determine if the net book values of such assets continue to be recoverable over
the remainder of the original estimated useful life. In performing this review
for recoverability, the Company estimates the future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of the
expected net future cash flows (undiscounted and without interest charges) is
less than the carrying amount of the asset, an impairment loss is recognized
based on the estimated diminution of value. If the assets involved are to be
held and used in the operations of the Company, consideration is also given to
actions or remediations the Company might take in order to achieve the original
estimates of cash flows.
INTANGIBLE ASSETS -- Transaction costs incurred to acquire certain parking
businesses and establish parking joint ventures ($576 at December 31, 1999) are
being amortized on a straight-line basis over ten years, the estimated life of
the underlying parking contracts. Debt issuance costs of $6,576 and $7,020 at
December 31, 1999 and 1998 respectively, are amortized over the terms of the
credit agreements using the straight-line method which approximates the interest
method. Additionally, $4,720 and $6,317 of intangibles at December 31, 1999 and
1998 respectively, consisting primarily of a covenant not to compete, (see Note
B) are being amortized on a straight-line basis over the term of the respective
agreements which range from 5 to 10 years.
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. The Company's 9.25% Senior
Subordinated Notes are included in the Consolidated Balance Sheet at $140,000,
which represents the aggregate face value of the notes. Market value at December
31, 1999 aggregated $98,000. Other long-term assets and debt have a carrying
value that approximates fair value.
FOREIGN CURRENCY TRANSLATION -- The functional currency of the Company's
foreign operations is the local currency. Accordingly, assets and liabilities of
the Company's foreign operations are translated from foreign currencies into
U.S. dollars at the rates in effect on the balance sheet date while income and
expenses are translated at the weighted-average exchange rates for the year.
Adjustments resulting from the translations of foreign currency financial
statements are accumulated and classified as a separate component of
stockholders' equity.
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.
RECENT ACCOUNTING PRONOUNCEMENTS -- In June 1998, the FASB issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities (Statement
133), which is required to be adopted on January 1, 2001. Statement 133 requires
all derivatives to be recognized in the balance sheet as either assets or
liabilities at fair value. Derivatives that are not hedged must be adjusted to
fair value through income. In addition, all
45
<PAGE> 46
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
hedging relationships must be designated, reassessed and documented pursuant to
the provisions of SFAS No. 133. Management believes the adoption of this
statement will not have a material effect on the Company.
RECLASSIFICATIONS -- Certain amounts previously presented in the financial
statements of prior periods have been reclassified to conform to current year
presentation.
NOTE B. ACQUISITIONS
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 Corp. and certain of its affiliates ("Standard").
On March 30, 1998, APCOA acquired Standard for consideration consisting of
$65,000 in cash, 16% of the common stock of APCOA outstanding as of January 15,
1998 and the assumption of certain liabilities, including a $5,000 consulting
and non-compete obligation for one of the former owners of Standard, which
represents the current value of the payments to be made, as determined by
consulting actuaries. In addition, on March 30, 1998, APCOA paid to the Standard
owners $2,822, generally representing Standard's earnings from January 1 through
the date of the acquisition and Standard's cash on hand at such time. Financing
of the acquisition included a contribution from AP Holdings of $40,683, in
exchange for redeemable preferred stock, and other transactions as described
below and in Notes D and H.
The acquisition has been accounted for under the purchase method;
accordingly, Standard's results are included in the consolidated financial
statements of APCOA/Standard from the date of acquisition. Following is the
final purchase price allocation, based on the estimated fair value of assets
acquired and liabilities assumed.
<TABLE>
<S> <C>
Cash consideration.......................................... $65,000
5.01 shares of common stock issued, at calculated put/call
value..................................................... 4,589
Closing distribution to the Standard owners................. 2,822
Consulting and non-compete agreement with former owner...... 5,000
Direct acquisition costs.................................... 7,179
-------
Total purchase price........................................ $84,590
=======
Cash........................................................ $ 1,632
Notes and accounts receivable............................... 318
Prepaid expenses............................................ 180
Leaseholds and equipment.................................... 7,971
Consulting and non-compete agreement........................ 5,000
Cost in excess of net assets acquired....................... 77,557
Other assets................................................ 415
Accounts payable and accrued expenses....................... (3,855)
Other costs and liabilities................................. (4,628)
-------
$84,590
=======
</TABLE>
The put/call value above is based primarily upon a multiple of EBITDA, as
defined, of the Company. Under certain circumstances the Company can be required
to repurchase these shares, however in no case will the Company be obligated to
do so prior to March 2001. Direct acquisition costs incurred in connection with
the acquisition include investment banking fees of $3,289 and legal and other
professional fees of $3,890.
46
<PAGE> 47
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
The following unaudited pro forma results of operations for 1998 assume the
acquisition of Standard occurred on January 1, 1998.
<TABLE>
<CAPTION>
1998
--------
<S> <C>
Net revenue................................................. $210,075
Loss before extraordinary item.............................. (19,697)
</TABLE>
This pro forma information does not purport to be indicative of the results
that actually would have been obtained if the combination had taken place at the
beginning of the periods presented and is not intended to be a projection of
future results.
On January 22, 1998, the Company acquired the assets of Huger Parking
Company, LLC, d/b/a Dixie Parking, for $1,000 in cash at closing and $3,250 in
notes payable, of which $1,000 was repaid in March of 1998. The $2,250 balance
is payable over 20 years with interest based on prime. On May 1, 1998, the
Company acquired the remaining 76% interest in Executive Parking Industries LLC,
through the acquisition of all of the outstanding capital stock of S&S Parking,
Inc., the sole asset of which was such 76% interest in EPI, for $7,020 in cash.
In addition, on June 1, 1998, APCOA/Standard acquired all of the outstanding
capital stock of Century Parking, Inc., and Sentry Parking Corporation, for
$5,168 in cash at closing including direct acquisition costs and $1,000 payable
on the third anniversary of the closing date. On September 1, 1998,
APCOA/Standard acquired the operations of Virginia Parking Service, Inc. in a
stock purchase transaction for $3,114 in cash including direct costs, and up to
$1,250 in notes payable over five years with interest at the prime rate.
On April 1, 1999, the Company acquired the assets of Pacific Rim Parking,
Inc. ("Pacific Rim") in Los Angeles for $750 in cash and up to $750 in
non-interest bearing notes payable over five years. On May 1, 1999 the Company
acquired various contracts of System Parking Inc. in Atlanta for $250 in cash.
Effective as of July 1, 1999 the Company acquired all of the outstanding stock
of Universal Park Holdings, Inc., operating under the names U-Park and Select
Valet Parking, in Vancouver B.C. for Canadian $1,610 plus a multiple of EBITDA
on a future earnout as defined in the agreement.
All of these acquisitions have been accounted for under the purchase method
and their operating results have been included in the consolidated results since
their respective date of acquisition. The historical operating results of the
businesses prior to acquisition were not material relative to the consolidated
results of APCOA/Standard.
NOTE C. RESTRUCTURING AND OTHER SPECIAL CHARGES
During 1998, management performed an analysis of the costs associated with
implementing the business plan of consolidating the Company's headquarters in
Chicago and costs related to Company staff reductions. Included in
"restructuring and other special charges" in the accompanying consolidated
statement of
47
<PAGE> 48
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
operations for the years ended December 31, 1999 and 1998 are the following
(expenses are cash unless otherwise stated):
<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1999 1998
------ -------
<S> <C> <C>
Employee severance costs................................ $1,607 $ 6,900
Employee relocation costs............................... -- 5,000
Increase in insurance reserves.......................... -- 2,600
Impairment and abandonment of assets that will no longer
be used (non-cash expense)............................ -- 2,600
Incremental integration costs and other................. 3,070 950
Costs associated with terminated transactions........... 2,175 --
------ -------
$6,852 $18,050
====== =======
</TABLE>
In 1998, the employee severance costs consist of cash compensation and
related expenses to 54 people for whom employment was terminated. The employee
relocation costs are in connection with the relocation and consolidation of the
headquarters of the Company, the relocation of two major field offices, moving
Cleveland headquarters staff members to Chicago and other relocations within the
field organization. The $2,600 increase in insurance reserves results from a
buyout of the insurance program of APCOA in connection with the combination of
APCOA and Standard insurance programs. The impairment and abandonment of assets
that will no longer be used consists of the write-off of $2,600 of capitalized
costs and leasehold improvements. Other incremental integration costs associated
with the restructuring plan that do not qualify as exit costs are expensed as
incurred and included in "Restructuring and other special charges" in the
consolidated statements of operations. These integration costs relate primarily
to actions to facilitate the accounting system consolidation and activities to
realign and centralize administrative and other support functions. In 1999, the
employee severance costs relate primarily to a provision for key management
severance. The integration costs relate primarily to actions to facilitate the
accounting system consolidation and activities to realign and centralize
administrative and other support functions. The costs associated with terminated
transactions relate to expenses incurred for acquisition activity that was
terminated including the cost of a former APCOA/Standard executive.
NOTE D. BORROWING ARRANGEMENTS
Long-term borrowings consist of:
<TABLE>
<CAPTION>
AMOUNT OUTSTANDING
DECEMBER 31
INTEREST ----------------------
RATE(S) DUE DATE 1999 1998
------------ ---------- -------- --------
<S> <C> <C> <C> <C>
Senior Subordinated Notes................. 9.25% March 2008 $140,000 $140,000
Senior Discount Notes..................... 11.25% March 2008 49,280 44,174
Senior Credit Facility.................... Various March 2004 18,100 --
Joint venture debentures.................. 11.00-15.00% Various 5,854 4,993
Capital leases and other.................. Various Various 3,515 4,438
-------- --------
216,749 193,605
Less current portion...................... 1,328 1,939
-------- --------
$215,421 $191,666
======== ========
</TABLE>
48
<PAGE> 49
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
APCOA/Standard's 9 1/4% Senior Subordinated Notes were issued in September
of 1998 and are due in March of 2008. The Notes are registered with the
Securities and Exchange Commission. The issuance was exchanged for unregistered
notes with substantially identical terms, which had been issued earlier in 1998
to finance the acquisition of Standard and retire certain existing indebtedness,
and for general working capital purposes.
AP Holdings' 11 1/4% Senior Discount Notes were issued in September of 1998
and are due in March of 2008. The Discount Notes are registered with the
Securities and Exchange Commission. The issuance was exchanged for unregistered
notes with substantially identical terms, which had been issued earlier in 1998
to finance the purchase of new preferred stock of the Company.
The Company's Senior Credit Facility ("the Facility") provides for
borrowings of up to $40 million at variable rates based, at the Company's
option, either on LIBOR, the overnight federal funds rate, or the bank's base
rate. Borrowings outstanding at December 31, 1999 bore interest at 9.125% based
on the LIBOR rate. From time to time the Company utilizes the Facility to
provide readily-accessible cash for working capital purposes. The Facility
includes covenants that limit APCOA/Standard from incurring additional
indebtedness, issuing preferred stock or paying dividends, and contains certain
other restrictions. At December 31, 1999, borrowings against the Facility
aggregated $18,100, and letters of credit outstanding against the Facility
aggregated $1,250. As of December 31, 1999, the Company was in compliance with
the covenants contained in the Senior Credit Facility or has obtained the
necessary waivers on or before March 30, 2000. The Facility was amended on March
30, 2000, with the principle changes to the agreement providing for revisions to
interest rates charged on borrowings and certain financial covenants.
The Notes, Senior Discount Notes, and Senior Credit Facility contain
covenants that limit AP Holdings and APCOA/Standard from incurring additional
indebtedness and issuing preferred stock, restrict dividend payments, limit
transactions with affiliates and restrict certain other transactions.
Substantially all of AP Holdings and APCOA/Standard's net assets are restricted
under these provisions and covenants (See Note J).
Consolidated joint ventures have entered into four agreements for
stand-alone development projects providing nonrecourse funding. These joint
venture debentures are collateralized by the specific contracts that were funded
and approximate the net book value of the related assets.
The Company has entered into capital leases and various financing
agreements, which were used for the purchase of equipment and on November 1,
1997, the Company signed interest free promissory notes in the amount of $1,123
to purchase the remaining interest of an unconsolidated subsidiary. The notes
were paid in January 1998.
The Company paid interest of $15,778; $8,572 and $3,878 in 1999, 1998, and
1997, respectively.
The aggregate maturities of borrowings outstanding at December 31, 1999 are
as follows:
<TABLE>
<S> <C>
2000........................................................ $ 1,328
2001........................................................ 1,301
2002........................................................ 1,405
2003........................................................ 1,041
2004........................................................ 18,999
2005 and thereafter......................................... 192,675
--------
$216,749
========
</TABLE>
49
<PAGE> 50
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
NOTE E. INCOME TAXES
AP Holdings is included in the consolidated federal income tax return filed
with its affiliates and has a tax sharing agreement with the affiliates. AP
Holdings's income tax provision is determined on a separate return basis. Income
tax expense consists of foreign, state and local taxes.
At December 31, 1999, AP Holdings has net operating loss carryforwards of
$64,653 for income tax purposes that expire in years 2004 through 2019. Net
operating loss carryforwards have been utilized to eliminate federal income tax
expense in 1997.
A reconciliation of AP Holdings' reported income tax expense to the amount
computed by multiplying income (loss) before minority interest and income taxes
by the effective federal income tax rate is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -----
<S> <C> <C> <C>
Statutory provision (benefit)............................... $(5,252) $(8,826) $ 680
Benefit from carryforward of net operating losses........... -- -- (680)
Change in valuation allowance............................... 5,252 8,826 --
Foreign, state and local income taxes....................... 752 430 140
------- ------- -----
Income tax expense.......................................... $ 752 $ 430 $ 140
======= ======= =====
</TABLE>
Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
Company's deferred tax assets and liabilities as of December 31, 1999 and 1998
are as follows:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Net operating loss carryforwards............................ $25,215 $15,173
Casualty/liability insurance................................ -- 990
Accrued compensation........................................ 2,569 3,179
Other, net.................................................. 1,589 2,450
------- -------
29,373 21,792
Book over tax depreciation and amortization................. (1,124) 318
------- -------
28,249 22,110
Less: valuation allowance for deferred tax assets........... 28,249 22,110
------- -------
Net deferred tax assets..................................... $ -- $ --
======= =======
</TABLE>
For financial reporting purposes, a valuation allowance for deferred tax
assets will continue to be recorded until realization is more likely than not.
NOTE F. BENEFIT PLANS
The Company offers deferred compensation arrangements for certain key
executives and sponsors an employees' savings and retirement plan in which
certain employees are eligible to participate. Subject to their continued
employment by the Company, employees offered supplemental pension arrangements
will receive a defined monthly benefit upon attaining age 65. At December 31,
1999 and 1998, the Company has accrued $3,890 and $4,415, respectively,
representing the present value of the future benefit payments. Participants in
the savings and retirement plan may elect to contribute a portion of their
compensation to the plan. The Company, in turn, contributes an amount in cash or
other property as required by the plan. Expenses related to these plans amounted
to $750, $663 and $612 in 1999, 1998 and 1997, respectively.
50
<PAGE> 51
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
The Company also contributes to two multi-employer defined contribution and
nine multi-employer defined benefit plans which cover certain union employees.
Expenses related to these plans were $815, $732 and $418 in 1999, 1998 and 1997,
respectively.
NOTE G. LEASES
The Company operates parking facilities under operating leases expiring on
various dates, generally prior to the year 2012. Certain of the leases contain
options to renew at the Company's discretion.
At December 31, 1999, the Company was committed to install in future years,
at an estimated cost of $444, 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, 1999, the Company's
minimum rental commitments, under all non-cancelable leases with remaining terms
of more than one year, are as follows:
<TABLE>
<S> <C>
2000........................................................ $24,642
2001........................................................ 23,785
2002........................................................ 19,816
2003........................................................ 13,293
2004........................................................ 9,933
2005 and thereafter......................................... 37,035
</TABLE>
Rent expense, including percentage rents, was $133,962, $105,452 and
$69,113 in 1999, 1998 and 1997, respectively.
NOTE H. STOCKHOLDERS' EQUITY
On December 29, 1999, AP Holdings' Board of Directors approved the
following recapitalization actions:
(a) Twenty thousand shares of Class A common stock, par value $.01 per
share, were authorized. No shares were issued. Each share issued will have
one vote.
(b) Each of the outstanding shares of common stock (7,920 shares) was
converted to 7,920 shares of Class B Common Stock, par value $.01 per
share. Twenty thousand shares of Class B common stock were authorized. Each
share issued will have ten votes. The previously issued common shares were
reclassified as Class B. Each Class B share is convertible into one Class A
share at any time.
(c) Twenty three thousand shares of Preferred Stock, par value $.01
per share, were authorized. Nine thousand shares were designated as Series
A Cumulative Preferred Stock. Each Series A share is convertible into
1.04762 shares of Class A Common Stock. Dividends are payable quarterly at
13%. The preferred shares are mandatorily redeemable on December 31, 2008
at a redemption price of $9 per share, plus accrued and unpaid dividends.
Accordingly, the Preferred Stock was reclassified to Redeemable Preferred
Stock as of December 29, 1999.
NOTE I. CONTINGENCY AND RELATED PARTY TRANSACTIONS
AP Holdings' parent company is Holberg Industries, Inc. ("Holberg"); a
privately held diversified service company located in Greenwich, Connecticut.
Holberg also owns AmeriServe Food Distribution, Inc. ("AmeriServe"), one of the
nation's largest food service distributors servicing quick-service and casual
dining restaurants in the United States, Canada and Mexico. AmeriServe filed for
bankruptcy protection under Chapter 11 of the Bankruptcy Code on January 31,
2000.
51
<PAGE> 52
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
AP Holdings and AmeriServe are separate and distinct companies with
independent sources of funding. However, the AmeriServe Chapter 11 filing is a
default under certain debt instruments of Holberg. As a result of such defaults,
the creditors of Holberg could take control of Holberg or its subsidiary, AP
Holdings, Inc. ("Holdings"). A change in control of Holberg or Holdings would
also constitute a change in control of APCOA under the APCOA/Standard debt
instruments and of Holdings under its bond indenture. In the event of such a
change in control of APCOA/Standard of Holdings, the terms of APCOA/Standard's
senior bank credit facility and subordinated bond indenture and of Holdings'
bond indenture permit the APCOA/Standard and Holdings creditors, if they believe
it were in their interest to do so, to call for immediate payment under such
instruments, and APCOA/Standard's or Holdings' failure to pay on such terms
would constitute a default thereunder. Holberg and its creditors are negotiating
to restructure the debt and eliminate the defaults created as a result of the
AmeriServe Chapter 11 filing. Although Holberg currently expects to complete the
restructuring of the debt, and further currently expects that its creditors will
not in any event seek to obtain control of Holberg, there can be no assurance
that Holberg will be successful in restructuring its debt and eliminating the
existing defaults, or that Holberg's creditors will not seek to obtain control
of Holberg, and should APCOA/Standard's or Holdings' indebtedness be accelerated
as a result of any action by Holberg's creditors, there is no assurance that
APCOA/Standard or Holdings would have sufficient funds to satisfy such
obligations.
Due from affiliates includes an amount due from Holberg of $2,620 as the
result of various transactions between the Company and Holberg including net
cash transferred and reimbursement of certain expenses paid by APCOA/Standard on
AP Holdings behalf. Interest is recorded on amounts due based on current
investment rates of return.
Until January 1999, the Company participated in a master insurance program
with Holberg which served to reduce the insurance costs of the combined group.
In connection with the insurance program, during 1998 the Company placed $2,200
on deposit with a Holberg affiliate for insurance collateral purposes.
Due to the current financial situation of AmeriServe and its potential
impact on Holberg and indirectly AP Holdings, the Company has reclassified the
$4,820 of advances to and deposits with these affiliates from a long-term asset
to stockholders' equity. Such reclassification was made due to uncertainty
regarding the ability of the affiliates to repay such amounts without
potentially receiving distributions from the Company.
Other Related Party Transactions
In connection with the acquisition of Standard in 1998, the Company made a
$6,511 non-cash distribution to Holberg of a receivable for that amount due from
Holberg to the Company.
The Company used $8,728 of proceeds from the financing obtained in
connection with the acquisition of Standard to redeem $8,000 of preferred stock
held by Holberg. The remaining $728 was contributed by Holberg to the capital of
the Company.
NOTE J. SUBSIDIARY GUARANTORS
All of the Company's direct or indirect wholly owned domestic subsidiaries,
including Standard, other than inactive subsidiaries, fully, unconditionally,
jointly and severally guarantee the Senior Subordinated Notes discussed in Note
D. Separate financial statements of the guarantor subsidiaries are not
separately presented because, in the opinion of management, such financial
statements are not material to investors. The non-guarantor subsidiaries include
joint ventures, wholly owned subsidiaries of the Company organized under the
laws of foreign jurisdictions and inactive subsidiaries, all of which are
included in the consolidated financial
52
<PAGE> 53
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
statements. The following is summarized combining financial information for
APCOA/Standard, the guarantor subsidiaries of the Company and the non-guarantor
subsidiaries of the Company:
<TABLE>
<CAPTION>
APCOA/ GUARANTOR NON-GUARANTOR
STANDARD SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
-------- ------------ ------------- ----------- --------
<S> <C> <C> <C> <C> <C>
1999
Balance Sheet Data:
Cash and cash equivalents................ $ 2,569 $ 1,963 $ 683 $ -- $ 5,215
Notes and accounts receivable............ 34,973 2,606 5,136 -- 42,715
Current assets........................... 39,130 4,608 5,837 -- 49,575
Leaseholds and equipment, net............ 17,204 9,263 6,192 -- 32,659
Cost in excess of net assets acquired,
net.................................... 19,536 92,590 2,797 -- 114,923
Investment in subsidiaries............... 102,639 -- -- (102,639) --
Total assets............................. 187,655 112,225 16,029 (102,639) 213,270
Accounts payable......................... 15,860 5,962 3,467 -- 25,289
Current liabilities...................... 41,423 10,439 9,893 -- 61,755
Long-term borrowings, excluding current
portion................................ 160,667 371 5,103 -- 166,141
Redeemable preferred stock............... 49,280 -- -- -- 49,280
Common stock subject to put/call
rights................................. 4,589 -- -- -- 4,589
Total stockholders' equity (deficit)..... (76,402) 98,889 541 (102,639) (79,611)
Total liabilities and stockholders'
equity................................. 187,655 112,225 16,029 (102,639) 213,270
Income Statement Data:
Parking revenue.......................... $107,555 $ 99,551 $40,793 $ -- $247,899
Gross profit............................. 25,149 24,278 5,378 -- 54,805
Restructuring and other special
charges................................ 5,577 -- -- -- 5,577
Depreciation and amortization............ 4,492 3,828 1,023 -- 9,343
Operating income (loss).................. 10,839 (7,219) 3,812 -- 7,432
Interest expense (income) net............ 15,225 (86) 545 -- 15,684
Equity in earnings of subsidiaries....... (4,700) -- -- 4,700 --
Net income (loss)........................ (9,472) (7,133) 2,433 4,700 (9,472)
Cash Flows Data:
Net cash used in operating activities.... $(15,769) $ (1,740) $ (200) $ -- $(17,709)
Investing activities:
Purchase of leaseholds and equipment..... (7,126) (3,135) -- -- (10,261)
Purchase of leaseholds and equipment by
joint ventures......................... -- -- (339) -- (339)
Businesses acquired...................... (3,181) -- -- -- (3,181)
Other.................................... 250 -- -- -- 250
-------- -------- ------- --------- --------
Net cash used in investing activities...... (10,057) (3,135) (339) -- (13,531)
Financing activities:
Proceeds from long-term borrowings....... 18,100 -- -- -- 18,100
Payments on long-term borrowings......... (1,660) -- -- -- (1,660)
Proceeds from joint venture borrowings... 1,281 1,281
Payments on joint venture borrowings..... (558) (558)
Payments of debt issuance costs.......... (319) -- -- -- (319)
-------- -------- ------- --------- --------
Net cash provided by (used in) financing
activities............................... 16,844 -- -- -- 16,844
Effect of exchange rate changes............ 428 -- -- -- 428
</TABLE>
53
<PAGE> 54
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
APCOA/ GUARANTOR NON-GUARANTOR
STANDARD SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
-------- ------------ ------------- ----------- --------
<S> <C> <C> <C> <C> <C>
1998
Balance Sheet Data:
Cash and cash equivalents................ $ 10,784 $ 7,177 $ 1,222 $ -- $ 19,183
Notes and accounts receivable............ 27,406 3,657 1,576 -- 32,639
Current assets........................... 38,886 11,968 3,774 -- 54,628
Leaseholds and equipment, net............ 12,129 10,086 5,403 -- 27,618
Cost in excess of net assets acquired,
net.................................... 18,966 88,961 814 -- 108,741
Investment in subsidiaries............... 107,293 -- -- (107,293) --
Total assets............................. 193,411 118,881 11,770 (107,293) 216,769
Accounts payable......................... 11,235 6,390 559 -- 18,184
Current liabilities...................... 40,757 16,022 6,968 -- 63,747
Long-term borrowings, excluding current
portion................................ 142,716 277 4,499 -- 147,492
Redeemable preferred stock............... 44,174 -- -- -- 44,174
Common stock subject to put/call
rights................................. 4,589 -- -- -- 4,589
Total stockholders' equity (deficit)..... (48,710) 101,544 (449) (107,293) (54,908)
Total liabilities and stockholders'
equity................................. 193,411 118,881 11,770 (107,293) 216,769
Income Statement Data:
Parking revenue.......................... $ 82,764 $ 76,087 $36,666 $ -- $195,517
Gross profit............................. 20,034 18,173 2,080 -- 40,287
Restructuring and other special
charges................................ 18,050 -- -- -- 18,050
Depreciation and amortization............ 3,533 2,955 947 -- 7,435
Operating income (loss).................. (9,782) 807 271 -- (8,704)
Interest expense (income), net........... 10,311 (12) 639 -- 10,938
Equity in earnings of subsidiaries....... (46) -- -- 46 --
Net income (loss)........................ (23,375) 809 (855) 46 (23,375)
Cash Flows Data:
Net cash provided by (used in) operating
activities............................. $(25,729) $ 3,816 $ 1,532 $ -- $(20,381)
Investing activities:
Purchase of leaseholds and equipment... (5,387) (1,476) (828) -- (7,691)
Purchase of leaseholds and equipment by
joint ventures....................... -- -- (828) -- (828)
Businesses acquired.................... (90,863) 3,818 -- -- (87,045)
Other.................................. (461) -- -- -- (461)
-------- -------- ------- --------- --------
Net cash provided by (used in) investing
activities............................. (96,711) 2,342 (1,656) -- (96,025)
Financing activities:
Proceeds from long-term borrowings..... 140,000 -- -- -- 140,000
Payments on long-term borrowings....... (32,298) -- (530) -- (32,828)
Payments of debt issuance costs........ (7,588) -- -- -- (7,588)
Proceeds from issuance of preferred
stock................................ 40,683 -- -- -- 40,683
Redemption of redeemable preferred
stock...................................... (8,000) -- -- -- (8,000)
-------- -------- ------- --------- --------
Net cash provided by financing
activities............................. 132,797 -- (530) -- 132,267
</TABLE>
54
<PAGE> 55
AP HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997
- ----
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Notes and accounts receivable................... $10,587 $ 326 $ 2,893 $ -- $ 13,806
Current assets.................................. 12,801 1,292 4,161 -- 18,254
Leaseholds and equipment, net................... 6,246 227 5,867 -- 12,340
Cost in excess of net assets acquired, net...... 16,190 1,432 835 -- 18,457
Investment in subsidiaries...................... 3,652 -- -- (3,652) --
Total assets............................ 46,000 3,477 13,270 (3,652) 59,095
Accounts payable................................ 13,574 1,756 1,071 -- 16,401
Current liabilities............................. 26,593 2,178 6,542 -- 35,313
Long-term borrowings, excluding current
portion...................................... 28,747 -- 5,434 -- 34,181
Redeemable preferred stock...................... 8,728 -- -- -- 8,728
Total stockholders' equity (deficit).... (20,229) 1,219 403 (3,652) (22,259)
Total liabilities and stockholders'
equity................................ 46,000 3,477 13,270 (3,652) 59,095
Income Statement Data:
Parking revenue................................. $80,079 $3,439 $34,186 $ -- $117,704
Gross profit.................................... 18,400 940 3,518 -- 22,858
Depreciation and amortization................... 2,836 65 866 -- 3,767
Operating income................................ 4,451 419 693 -- 5,563
Interest expense (income), net.................. 2,654 -- 589 -- 3,243
Equity in earnings of subsidiaries.............. 202 -- -- (202) --
Net income (loss)............................... 1,859 419 (217) (202) 1,859
Cash Flows Data:
Net cash provided by (used in) operating
activities................................... $ (173) $ 704 $ 400 $ -- $ 931
Investing activities:
Purchase of leaseholds and equipment............ (2,357) -- (480) -- (2,837)
Other........................................ (1,467) 81 631 -- (755)
Net cash provided by (used in) investing
activities................................... (3,824) 81 151 -- (3,592)
Financing activities:
Proceeds from long-term borrowings........... 4,269 -- 400 -- 4,669
Payments on long-term borrowings............. (685) -- (533) -- (1,218)
Net cash provided by (used in) financing
activities................................... 3,584 -- (133) -- 3,451
</TABLE>
NOTE K. LEGAL PROCEEDINGS
In the normal course of business, the Company is involved in disputes,
generally regarding the terms of lease agreements. In the opinion of management,
the outcome of these disputes and litigation will not have a material adverse
effect on the consolidated financial position or operating results of the
Company.
55
<PAGE> 56
AP HOLDINGS, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
----------------------
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER ACQUISITIONS AT END
OF YEAR EXPENSES ACCOUNTS BALANCE DEDUCTIONS(1) YEAR
---------- ---------- -------- ------------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Deducted from asset accounts
Allowance for doubtful accounts... $ 315 $139 -- -- $(11) $ 443
Year ended December 31, 1998:
Deducted from asset accounts
Allowance for doubtful accounts... 443 317 -- 1,000 (17) 1,743
Year ended December 31, 1999:
Deducted from asset accounts
Allowance for doubtful Accounts... 1,743 873 -- -- (315) 2,301
</TABLE>
- ---------------
(1) Represents uncollectible account written off, net of recoveries.
56
<PAGE> 57
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AP HOLDINGS, INC.
By: /s/ JOHN V. HOLTEN
------------------------------------
John V. Holten
Chairman and Director
Date 3/30/00
-----------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ Chairman and Director 3/30/00
- ---------------------------------------------
John V. Holten
/s/ Treasurer (Principal Financial and 3/30/00
- --------------------------------------------- Accounting Officer)
Michael J. Celebrezze
/s/ Director 3/30/00
- ---------------------------------------------
G. Walter Stuelpe, Jr.
/s/ Assistant Secretary and Director 3/30/00
- ---------------------------------------------
Gunnar E. Klintberg
/s/ Attorney-in-Fact 3/30/00
- ---------------------------------------------
Robert N. Sacks
</TABLE>
57
<PAGE> 58
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1.1 Purchase Agreement, by and among AP Holdings and Donaldson,
Lufkin & Jenrette Securities Corporation, dated as of March
25, 1998 (incorporated by reference to Exhibit 1.1 to the
Registrant's Registration Statement Form S-4 No. 333-50433
filed April 17, 1998, August 11, 1998 and August 14, 1998,
(the "Registration Statement")).
2.1 Combination Agreement, dated as of January 15, 1998, by and
between APCOA, Inc. and the Standard Owners (incorporated by
reference to Exhibit 2.1 to the Registration Statement).
3.1 Restated Certificate of Incorporation of AP Holdings.
3.2 By-Laws of AP Holdings (incorporated by reference to Exhibit
3.2 to the Registration Statement).
4.1 Indenture, dated as of March 30, 1998, by and among AP
Holdings and State Street Bank and Trust Company, with
respect to the New Notes (incorporated by reference to
Exhibit 4.1 to the Registration Statement).
4.2 Form of New Note (included as Exhibit A to Exhibit 4.1).
4.3 Form of New Note Guarantee (included as Exhibit D to Exhibit
4.1).
4.4 Supplemental Indenture, dated as of January 12, 1999 by and
among APCOA LaSalle Parking Company, LLC, the Company and
State Street Bank and Trust Company (incorporated by
reference to Exhibit 4.4 to the Company's Annual Report on
Form 10-K filed for December 31, 1998).
4.5 Supplemental Indenture, dated as of September 21, 1998,
among Virginia Parking Service, Inc., the Company, and State
Street Bank and Trust Company (incorporated by reference to
Exhibit 4.5 to the Company's Annual Report on Form 10-K
filed for December 31, 1998).
4.6 Supplemental Indenture, dated as of July 6, 1998, among S&S
Parking, Century Parking, Inc. and Sentry Parking
Corporation, the Company, and State Street Bank and Trust
Company (incorporated by reference to Exhibit 4.6 to the
Company's Annual Report on Form 10-K filed for December 31,
1998).
4.7 First Amendment to the Senior Credit Facility dated November
12, 1999 by and among the Company, the Lenders and Bank One
NA, as agent for the Lenders (incorporated by reference to
Exhibit 4.7 to the Company's September 30, 1999 Form 10-Q).
4.8 Second Amendment to the Senior Credit Facility dated March
30, 2000 by and among the Company, the Lenders and Bank One
N.A., as agent for the Lenders.
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 (incorporated by reference to Exhibit 10.2 to the
Registration Statement).
10.3 Stockholders' Agreement, dated as of March 30, 1998, by and
among Dosher Partners, L.P., SP Associates, Holberg, AP
Holdings and the Company (incorporated by reference to
Exhibit 10.3 to the Registration Statement).
10.4 Stockholders Agreement, dated as of April 14, 1989, by and
among AP Holdings, Holberg, and each member of the
management of the Company who is a stockholder of AP
Holdings (incorporated by reference to Exhibit 10.4 to the
Registration Statement).
10.5 Tax Sharing Agreement, dated as of April 28, 1989, as
amended as of March 30, 1998, by and among Holberg, AP
Holdings and the Company (incorporated by reference to
Exhibit 10.5 to the Registration Statement).
10.6 Employment Agreement between the Company and Myron C.
Warshauer (incorporated by reference to Exhibit 10.6 to the
Registration Statement).
</TABLE>
58
<PAGE> 59
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.7 Employment Agreement between the Company and G. Walter
Stuelpe, Jr. (incorporated by reference to Exhibit to the
Registration Statement).
10.8 Executive Transition Agreement between the Company and James
V. LaRocco, Jr. (incorporated by reference to Exhibit 10.8
to the Registration Statement).
10.12 Employment Agreement between the Company and Michael K. Wolf
(incorporated by reference to Exhibit 10.12 to the
Registration Statement).
10.13 Deferred Compensation Agreement between the Company and
Michael K. Wolf (incorporated by reference to Exhibit 10.13
to the Registration Statement).
10.14 Company Retirement Plan for Key Executive Officers
(incorporated by reference to Exhibit 10.14 to the
Registration Statement).
10.15 Consulting Agreement between the Company and Sidney
Warshauer (incorporated by reference to Exhibit 10.1 to the
Registration Statement).
10.17 Consent and Joinder to Stockholders' Agreement dated as of
October 1, 1998 by and among the Company, Dosher Partners,
L.P., SP Associates, Holberg, AP Holdings and Waverly.
(incorporated by reference to Exhibit 10.17 to the Company's
Annual Report on Form 10-K filed for December 31, 1998).
10.18 Employment Agreement between the Company and James A.
Wilhelm.
10.19 Employment Agreement between the Company and Steven
Warshauer.
10.20 Settlement Agreement and Release between the Company and C.
Walter Stuelpe Jr.
21.1 Subsidiaries of AP Holdings (incorporated by reference to
Exhibit 21.1 to the Registration Statement).
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 (incorporated by reference to
Exhibit 25.1 to the Registration Statement).
27.1 Financial Data Schedule.
</TABLE>
59
<PAGE> 1
EXHIBIT 3.1
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "AP HOLDINGS, INC.", FILED IN THIS OFFICE ON THE TWENTY-NINTH
DAY OF DECEMBER, A.D. 1999, AT 9 O'CLOCK A.M.
[SEAL]
/s/ EDWARD J. FREEL
------------------------------
Edward J. Freel, Secretary of State
2162526 8100 AUTHENTICATION: 0335338
001148789 DATE: 03-23-00
<PAGE> 2
RESTATED CERTIFICATE OF INCORPORATION
OF
AP HOLDINGS, INC.
AP HOLDINGS, INC., a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:
(1) The name of the Corporation is AP Holdings, Inc. The original
Certificate of Incorporation of the Corporation was filed on June 2, 1988. The
name under which the Corporation was originally incorporated is AP Holdings,
Inc.
(2) This Restated Certificate of Incorporation amends and restates in
its entirety the Certificate of Incorporation of the Corporation.
(3) Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, the text of the Certificate of Incorporation is hereby
amended and restated to read in its entirety as follows:
FIRST: The name of the corporation (which is hereinafter referred to as
the "Corporation") is:
AP Holdings, Inc.
SECOND: The address of the Corporation's registered office in the State
of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation shall be to engage in any lawful
act or activity for which corporations may be organized and incorporated under
the General Corporation Law of the State of Delaware (the "DGCL").
FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is 63,000 shares, of
which 20,000 shall be Class A common stock, par value $0.01 per share (the
"Class A Common Stock"), 20,000 shall be Class B common stock, par value $0.01
per share (the "Class B Common Stock" and, together with the Class A Common
Stock, the "Common Stock"), and 23,000 shares shall be preferred stock, par
value $0.01 per share (the "Preferred Stock").
Upon the filing (the "Effective Time") of this Restated Certificate of
Incorporation pursuant to the DGCL without further act on the part of the
holders of the Old Common Stock (as defined below) or the Corporation, (i) each
share of the Corporation's common stock, par value $.01 per share, issued and
outstanding as of the Effective Time (the "Old Common Stock") shall be
reclassified as and changed into one share of Class B Common Stock, all such
shares of Class B Common Stock to have such terms and provisions as set forth
herein. Each holder of record of a certificate for one or more shares of Old
Common Stock as of the Effective Time shall be
<PAGE> 3
entitled to receive as soon as practicable, and upon surrender of such
certificate to the officer or agent having charge of the stock transfer books
for shares of the Corporation, a certificate or certificates representing one
share of Class B Common Stock for each one share of Old Common Stock represented
by the certificate of such holder immediately prior to the Effective Time. The
shares of Class B Common Stock represented by certificates issued pursuant to
this paragraph shall be validly issued, fully paid and nonassessable.
A. Common Stock. The powers, preferences and rights, and the
qualifications, limitations and restrictions of each class of the Common Stock
are as follows:
1. Voting. (a) At each annual or special meeting of stockholders,
in the case of any written consent of stockholders, and for all other purposes,
each holder of record of Class A Common Stock on the relevant record date shall
be entitled to one (1) vote for each share of Class A Common Stock standing in
such person's name on the stock transfer records of the Corporation and each
holder of record of Class B Common Stock on the relevant record date shall be
entitled to ten (10) votes for each share of Class B Common Stock standing in
such person's name on the stock transfer records of the Corporation. Except as
otherwise provided in this Article FOURTH with respect to the voting rights of
the holders of Series A Stock (as defined herein) and except as otherwise
provided by law, or by resolution or resolutions adopted by the Board of
Directors of the Corporation (hereinafter referred to as the "Board")
designating the rights, powers and preferences of any series of Preferred Stock,
the Common Stock shall have the exclusive right to vote for the election of
directors and for all other purposes. Except as otherwise provided in this
Article FOURTH with respect to the voting rights of the holders of Series A
Stock and except as otherwise provided by law or by resolution or resolutions
adopted by the Board designating the rights, powers and preferences of any
series of Preferred Stock, the holders of Class A Common Stock and the holders
of Class B Common Stock shall vote as a single class on all matters with respect
to which a vote of the stockholders of the Corporation is required under
applicable law, the Restated Certificate of Incorporation of the Corporation, or
the By-Laws of the Corporation, or on which a vote of stockholders is otherwise
duly called for by the Corporation, including, but not limited to, the election
of directors, matters concerning the sale, lease or exchange of all or
substantially all of the property and assets of the Corporation, mergers or
consolidations with another corporation or corporations, dissolution of the
Corporation, amendments to the Restated Certificate of Incorporation of the
Corporation, and for all other purposes. Except as provided in this Article
FOURTH or by applicable law, whenever the Restated Certificate of Incorporation
of the Corporation or the By-Laws of the Corporation provide for the necessity
of an "affirmative vote of the stockholders entitled to cast at least a majority
(or any other greater percentage) of the votes which all stockholders are
entitled to cast thereon," or a "majority (or any other greater percentage) of
the voting stock," or language of similar effect, any and all such language
shall mean that the Class A Common Stock and the Class B Common Stock shall vote
as one class and that a majority (or any other greater percentage) consists of a
majority (or such other greater percentage) of the total number of votes
entitled to be cast in accordance with the provisions of this Article FOURTH.
Neither the holders of Class A Common Stock nor the holders of Class B Common
Stock shall have cumulative voting rights.
(b) Unless the affirmative vote or consent of the holders of a
greater number of shares of Class B Common Stock shall then be required by law
or this Restated Certificate of
-2-
<PAGE> 4
Incorporation, and in addition to any other vote required by law or this
Restated Certificate of Incorporation, the affirmative vote or written consent
of the holders of at least a majority of all of the outstanding shares of Class
B Common Stock, voting separately as a class, shall be necessary for
authorizing, effecting or validating the amendment, alteration or repeal
(including any amendment, alteration or repeal by operation of merger or
consolidation) of any of the provisions of this Restated Certificate of
Incorporation or of any certificate amendatory thereof or supplemental thereto
(including any Certificate of Designations or any similar document relating to
any class or series of Preferred Stock) which would adversely affect the
preferences, rights, powers or privileges of the Class B Common Stock.
(c) The Corporation may, as a condition to counting the votes cast
by any holder of Class B Common Stock at any annual or special meeting of
stockholders, in the case of any written consent of stockholders, or for any
other purpose, require the furnishing of such affidavits or other proof as it
may reasonably request to establish that the Class B Common Stock held by such
holder has not, by virtue of the provisions of Article FOURTH paragraph (A)(4),
been converted into Class A Common Stock.
2. Dividends. Subject to the rights of the holders of any series of
Preferred Stock, and subject to any other provisions of the Restated Certificate
of Incorporation of the Corporation, holders of Class A Common Stock and Class B
Common Stock shall be entitled to receive such dividends and other distributions
in cash, stock or property of the Corporation as may be declared thereon by the
Board from time to time out of assets or funds of the Corporation legally
available therefor. If at any time a dividend or other distribution in cash or
other property (other than dividends or other distributions payable in Common
Stock or options or warrants to purchase Common Stock or securities convertible
into or exchangeable for Common Stock) is paid on Class A Common Stock or Class
B Common Stock, a like dividend or other distribution in cash or other property
will also be paid on Class B Common Stock or Class A Common Stock, as the case
may be, in an equal amount per share. If at any time a dividend or other
distribution payable in Common Stock or options or warrants to purchase Common
Stock or securities convertible into or exchangeable for Common Stock is paid on
Class A Common Stock or Class B Common Stock, a like dividend or other
distribution will also be paid on Class B Common Stock or Class A Common Stock,
as the case may be, in an equal amount per share, provided that, for this
purpose, if shares of Class A Common Stock, or options or warrants to purchase
Class A Common Stock or securities convertible into or exchangeable for Class A
Common Stock, are paid on Class A Common Stock and shares of Class B Common
Stock, or options or warrants to purchase Class B Common Stock or securities
convertible into or exchangeable for Class B Common Stock, are paid on Class B
Common Stock, in an equal amount per share of Class A Common Stock and Class B
Common Stock, such dividend or other distribution shall be deemed to be a like
dividend or other distribution. In the case of any split, subdivision,
combination or reclassification of Class A Common Stock or Class B Common Stock,
the shares of Class B Common Stock or Class A Common Stock, as the case may be,
shall also be split, subdivided, combined or reclassified so that the number of
shares of Class A Common Stock and Class B Common Stock outstanding immediately
following such split, subdivision, combination or reclassification shall bear
the same relationship to each other as did the number of shares of Class A
Common Stock and Class B Common Stock outstanding immediately prior to such
split, subdivision, combination or reclassification.
-3-
<PAGE> 5
3. Liquidation, Dissolution, Mergers, etc. In the event of any
liquidation, dissolution or winding up (either voluntary or involuntary) of the
Corporation, the holders of Class A Common Stock and the holders of Class B
Common Stock shall be entitled to receive the assets and funds of the
Corporation available for distribution, after payments to creditors and to the
holders of any Preferred Stock of the Corporation that may at the time be
outstanding, in proportion to the number of shares held by them, respectively,
without regard to class. In the event of any corporate merger, consolidation,
purchase or acquisition of property or stock, or other reorganization in which
any consideration is to be received by the holders of Class A Common Stock or
the holders of Class B Common Stock, the holders of Class A Common Stock and the
holders of Class B Common Stock shall receive the same consideration on a per
share basis; provided, however, that, if such consideration shall consist in any
part of voting securities (or of options or warrants to purchase voting
securities, or of securities convertible into or exchangeable for voting
securities), the holders of Class B Common Stock may receive, on a per share
basis, voting securities with ten (10) times the number of votes per share as
those voting securities to be received by the holders of Class A Common Stock
(or options or warrants to purchase, or securities convertible into or
exchangeable for, voting securities with ten (10) times the number of votes per
share as those voting securities issuable upon exercise of the options or
warrants, or into which the convertible or exchangeable securities may be
converted or exchanged, received by the holders of Class A Common Stock).
4. Transfer Restriction; Change of Control of Holders. (a) No
person who is the record owner of shares of Class B Common Stock (hereinafter
called a "Class B Holder") may transfer, and the Corporation shall not register
the transfer of, such shares of Class B Common Stock, except to a Permitted
Transferee of such Class B Holder. For the purposes hereof, a "Permitted
Transferee" shall mean:
(i) In the case of a Class B Holder who is a natural person,
such Class B Holder's "Permitted Transferee" means (A) the present or former
spouse of such Class B Holder, a lineal descendant of such Class B Holder or the
present or former spouse of such Class B Holder, and the present or former
spouse of any such lineal descendent, (B) the trustee of a trust (including a
voting trust) principally for the benefit of such Class B Holder and/or persons
who are direct or indirect Permitted Transferees of such Class B Holder,
provided that such trust may grant a general or special power of appointment to
such Class B Holder and/or any persons who are direct or indirect Permitted
Transferees of such Class B Holder, and may permit trust assets to be used to
pay taxes, legacies and other obligations of the trust or the estate of such
Class B Holder and/or any persons who are direct or indirect Permitted
Transferees of such Class B Holder, payable by reason of the death of such Class
B Holder and/or any persons who are direct or indirect Permitted Transferees of
such Class B Holder, and (C) the executor, administrator, guardian or personal
representative of the estate of such Class B Holder.
(ii) In the case of any Class B Holder, such Class B Holder's
"Permitted Transferee" means, in addition to any other Permitted Transferee
hereunder, (A) a corporation, limited liability company or partnership
controlled by such Class B Holder and/or persons who are direct or indirect
Permitted Transferees of such Class B Holder, provided that if control of such a
corporation, limited liability company or partnership (or of any survivor of a
merger or consolidation of such a corporation, limited liability company or
partnership), is acquired by any person who is not within such class of persons,
all shares of Class B Common Stock then held by
-4-
<PAGE> 6
such corporation, limited liability company or partnership, as the case may be,
shall be automatically converted, without further act on the part of the holder
thereof or the Corporation, into the number of shares of Class A Common Stock
into which such shares of Class B Common Stock are convertible pursuant to the
terms hereof, and stock certificates formerly representing such shares of Class
B Common Stock shall thereupon and thereafter represent such number of shares of
Class A Common Stock into which such shares of Class B Common Stock were
converted pursuant to the terms hereof, and (B) the estate of a bankrupt or
insolvent Class B Holder.
(iii) In the case of a Class B Holder which is a trustee
pursuant to a trust, such Class B Holder's "Permitted Transferee" means (A) the
person who contributed the shares of Class B Common Stock in question to such
trust, and (B) a direct or indirect Permitted Transferee of the person who
contributed the shares of Class B Common Stock in question to such trust.
(iv) In the case of a Class B Holder which is a corporation or
limited liability company, such Class B Holder's "Permitted Transferee" means
any direct or indirect stockholder of such corporation or limited liability
company, and any direct or indirect Permitted Transferee of such stockholder,
and the survivor of any merger or consolidation of such corporation or limited
liability company, provided that if control of such a corporation or limited
liability company (or of any survivor of a merger or consolidation of such a
corporation or limited liability company) is acquired by any person who is not
within such class of persons, whether as a result of a merger or consolidation
or otherwise, all shares of Class B Common Stock then held by such corporation
or limited liability company shall be automatically converted, without further
act on the part of the holder thereof or the Corporation, into the number of
shares of Class A Common Stock into which such shares of Class B Common Stock
are convertible pursuant to the terms hereof, and stock certificates formerly
representing such shares of Class B Common Stock shall thereupon and thereafter
represent such number of shares of Class A Common Stock into which such shares
of Class B Common Stock were converted pursuant to the terms hereof.
(v) In the case of a Class B Holder which is a partnership,
such Class B Holder's "Permitted Transferee" means any direct or indirect
partner of such partnership, and any direct or indirect Permitted Transferee of
such partner, and the survivor of a merger or consolidation of such partnership,
provided that if control of such a partnership (or of any survivor of a merger
or consolidation of such a partnership) is acquired by any person who is not
within such class of persons, whether as a result of a merger or consolidation
or otherwise, all shares of Class B Common Stock then held by such partnership
shall be automatically converted, without further act on the part of the holder
thereof or the Corporation, into the number of shares of Class A Common Stock
into which such shares of Class B Common Stock are convertible pursuant to the
terms hereof, and stock certificates formerly representing such shares of Class
B Common Stock shall thereupon and thereafter represent such number of shares of
Class A Common Stock into which such shares of Class B Common Stock were
converted pursuant to the terms hereof.
(vi) In the case of a Class B Holder which is the estate of a
deceased Class B Holder, or which is the estate of a bankrupt or insolvent Class
B Holder, such Class B Holder's "Permitted Transferee" means a direct or
indirect Permitted Transferee of such deceased, bankrupt or insolvent Class B
Holder.
-5-
<PAGE> 7
(vii) In the case of any Class B Holder, such Class B Holder's
"Permitted Transferee" means, without limitation of the foregoing, any direct or
indirect Permitted Transferee of a Permitted Transferee of such Class B Holder.
(b) Notwithstanding anything to the contrary set forth herein, but
subject to the provisions of Article FOURTH paragraph (A)(4)(d), in the event of
any direct or indirect transfer of beneficial ownership of any Class B Common
Stock which, had such transfer also been a transfer of record ownership of such
Class B Common Stock, would not have been to a Permitted Transferee, all of such
shares of Class B Common Stock shall be automatically converted, without further
act on the part of the holder thereof or the Corporation, into the number of
shares of Class A Common Stock into which such shares of Class B Common Stock
are convertible pursuant to the terms hereof, and stock certificates formerly
representing such shares of Class B Common Stock shall thereupon and thereafter
represent such number of shares of Class A Common Stock into which such shares
of Class B Common Stock were converted pursuant to the terms hereof.
(c) Notwithstanding anything to the contrary set forth herein, any
event which would result in the automatic conversion of Class B Common Stock
into Class A Common Stock shall not result in such conversion if the record
holder of such Class B Common Stock is a corporation, limited liability company
or partnership as to which both investment and voting discretion with respect to
the Class B Common Stock held by such corporation, limited liability company or
partnership is directly or indirectly exercised, both before and after such
event, by such record holder or any Permitted Transferee of such record holder;
provided that no transaction or event intended to avoid the automatic conversion
provisions of this Article FOURTH paragraph (A)(4) shall in any event be
entitled to the benefit of this Article FOURTH subparagraph (A)(4)(c).
(d) Notwithstanding anything to the contrary set forth herein, any
Class B Holder may pledge such Class B Holder's shares of Class B Common Stock
to a pledgee pursuant to a bona fide pledge of such shares as collateral
security for any indebtedness or other obligation of any person, provided that,
even if such shares are registered in the name of the pledgee or its nominee
(which registration is hereby expressly permitted and shall not be considered a
transfer hereunder), such shares shall remain subject to the provisions of this
Article FOURTH paragraph (A)(4). In the event of foreclosure or other final
disposition by the pledgee (unless the transferee is otherwise a direct or
indirect Permitted Transferee of such Class B Holder), such pledged shares of
Class B Common Stock shall be automatically converted, without further act on
the part of the holder thereof or the Corporation, into the number of shares of
Class A Common Stock into which such shares of Class B Common Stock are
convertible pursuant to the terms hereof, and stock certificates formerly
representing such shares of Class B Common Stock shall thereupon and thereafter
represent such number of shares of Class A Common Stock into which such shares
of Class B Common Stock were converted pursuant to the terms hereof.
(e) For purposes of this Article FOURTH:
(i) The relationship of any person that is derived by or
through legal adoption shall be considered a natural one.
-6-
<PAGE> 8
(ii) Each joint owner of shares of Class B Common Stock shall
be considered a "Class B Holder" of such shares.
(iii) A minor for whom shares of Class B Common Stock are held
pursuant to a Uniform Gifts to Minors Act or similar law shall be considered a
Class B Holder of such shares.
(iv) The term "beneficial ownership" (including, with a
correlative meaning, the term "beneficially own"), shall have the meaning
assigned such term in Rules 13d-3 and 13d-5 under the Securities and Exchange
Act of 1934, as amended, except that a person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time.
(v) Unless otherwise specified, the term "person" means both
natural persons and legal entities.
(vi) The term "transfer" means any direct or indirect transfer
(including by sale, assignment, gift, bequest, appointment or otherwise), and
shall also include, with respect to any holder of Class B Common Stock, any
direct or indirect change in control of such person.
(vii) The term "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
applied to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
person or entity, whether through the ownership of voting securities, by
contract or otherwise.
(f) Notwithstanding anything to the contrary herein, the
Corporation shall not register the transfer of any shares of Class B Common
Stock, unless the transferee and the transferor of such Class B Common Stock
have furnished such affidavits and other proof as the Corporation may reasonably
request to establish that such proposed transferee is a Permitted Transferee.
In addition, upon any purported transfer of shares of Class B Common Stock not
permitted hereunder, all shares of Class B Common Stock purported to be so
transferred shall be automatically converted, without further act on the part of
the holder thereof or the Corporation, into the number of shares of Class A
Common Stock into which such shares of Class B Common Stock are convertible
pursuant to the terms hereof, and stock certificates formerly representing such
shares of Class B Common Stock shall thereupon and thereafter represent such
number of shares of Class A Common Stock into which such shares of Class B
Common Stock were converted pursuant to the terms hereof, and the Corporation
shall register such shares of Class A Common Stock in the name of the person to
whom such shares of Class B Common Stock were purported to be transferred.
(g) The Corporation shall include on the certificates for shares of
Class B Common Stock a legend referring to the restrictions on transfer and
registration of transfer imposed by this Article FOURTH paragraph (A)(4).
5. Power to Sell and Purchase Shares. The Corporation shall have
the power to issue and sell all or any part of any class of stock herein or
hereafter authorized to such persons, and for such consideration, as the Board
shall from time to time, in its discretion, determine,
-7-
<PAGE> 9
whether or not greater consideration could be received upon the issue or
sale of the same number of shares of another class, and as otherwise permitted
by law. The Corporation shall have the power to purchase any class of stock
herein or hereafter authorized from such persons, and for such consideration, as
the Board shall from time to time, in its discretion, determine, whether or not
less consideration could be paid upon the purchase of the same number of shares
of another class, and as otherwise permitted by law.
6. Automatic Conversion of Class B Common Stock. In the event
that an Initial Public Offering (as defined below) shall have been consummated
and the number of shares of Class B Common Stock issued and outstanding at any
time following the consummation of such Initial Public Offering shall constitute
less than ten percent (10%) of the total number of shares of Class A Common
Stock and Class B Common Stock issued and outstanding at such time, then,
without further act on the part of the holder thereof or the Corporation, all
shares of Class B Common Stock then issued and outstanding shall be
automatically converted into the number of shares of Class A Common Stock into
which such shares of Class B Common Stock are convertible pursuant to the terms
hereof, and stock certificates formerly representing such shares of Class B
Common Stock shall thereupon and thereafter represent such number of shares of
Class A Common Stock into which such shares of Class B Common Stock were
converted pursuant to the terms hereof. For purposes of the immediately
preceding sentence, any shares of Class A Common Stock or Class B Common Stock
repurchased or otherwise acquired by the Corporation shall no longer be deemed
"outstanding" from and after the date of repurchase. As used in this Restated
Certificate of Incorporation, "Initial Public Offering" shall mean any bona fide
sale of shares of Common Stock by the Corporation (including in connection with
a merger or other reorganization transaction) pursuant to an effective
registration statement under the Securities Act of 1933, as amended (other than
a registration statement on Form S-8 or any successor form), covering at least
20% of the fully-diluted shares of Common Stock and in which gross proceeds of
at least $20 million are realized.
7. Conversion of Class B Common Stock. Each share of Class B
Common Stock shall be convertible at any time and from time to time, at the
option of the holder thereof, into one share of Class A Common Stock. Any such
conversion may be effected by any holder of Class B Common Stock by
surrendering such holder's certificate or certificates for the Class B Common
Stock to be converted, duly endorsed, at the office of the Corporation or any
transfer agent for the Class B Common Stock, together with a written notice to
the Corporation at such office that such holder elects to convert all or a
specified number of shares of Class B Common Stock represented by such
certificate and stating the name or names in which such holder desires the
certificate or certificates for Class A Common Stock to be issued. If so
required by the Corporation, any certificate for shares surrendered for
conversion shall be accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder of such shares or the duly
authorized representative of such holder. Promptly thereafter, the Corporation
shall issue and deliver to such holder or such holder's nominee or nominees, a
certificate or certificates for the number of shares of Class A Common Stock to
which such holder shall be entitled as herein provided. Such conversion shall be
deemed to have been made at the close of business on the date of receipt by the
Corporation or any such transfer agent of the certificate or certificates,
notice and, if required, instruments of transfer referred to above, and the
person or persons entitled to receive the Class A Common Stock issuable on such
conversion shall be treated for all purposes as the record holder or holders of
such Class A Common Stock on that
-8-
<PAGE> 10
date. A number of shares of Class A Common Stock equal to the number of shares
of Class B Common Stock outstanding from time to time shall be set aside and
reserved for issuance upon conversion of shares of Class B Common Stock. Shares
of Class A Common Stock shall not be convertible into shares of Class B Common
Stock.
8. Rights Otherwise Identical. Except as expressly set forth
herein, the rights, powers and preferences, and the qualifications, limitations
and restrictions thereof, of the holders of Class A Common Stock and the holders
of Class B Common Stock shall be in all respects identical.
B. Preferred Stock.
The Preferred Stock may be issued from time to time in one or more
series. The Board is hereby authorized to fix by resolution the voting rights,
if any, designations, powers, preferences and the relative, participation,
optional or other rights, if any and the qualifications, limitations or
restrictions thereof, of any unissued series of Preferred Stock and to fix
the number of shares constituting such series, and to increase or decrease the
number of shares of any such series (but not below the number of shares thereof
then outstanding).
1. Series A Cumulative Preferred Stock. Of the total number of
shares of Preferred Stock authorized, 9,000 shares shall constitute a series of
Preferred Stock of the Corporation, to be designated and known as "Series A
Cumulative Preferred Stock" (the "Series A Stock").
(a) Rank. The Series A Stock shall, with respect to dividend rights
and rights on liquidation, rank (i) junior to, or on a parity with, as the case
may be, any other series of the Preferred Stock established by the Board, the
terms of which shall specifically provide that such series shall rank senior to,
or on parity with, as the case may be, the Series A Stock with respect to
dividend rights and rights on liquidation, and (ii) prior to any other equity
securities of the Corporation, including all classes of the Common Stock of the
Corporation. (All of such equity securities of the Corporation to which the
Series A Stock rank prior, including all classes of the Common Stock, are at
times collectively referred to herein as the "Junior Securities".)
(b) Dividends. (i) The holders of the Series A Stock shall be
entitled to receive, when and as declared by the Board, to the extent permitted
under the DGCL, dividends payable quarterly on the last day of January, April,
July and October (each such day being a "dividend payment date"). Such dividends
shall be paid to the holders of record at the close of business on the date
specified by the Board at the time such dividend is declared; provided, however,
that such date shall not be more than 60 days nor less than 10 days prior to the
respective dividend payment date. Each of such quarterly dividends (whether
payable in cash or in stock) shall be fully cumulative and shall accrue (whether
or not declared, whether or not the Corporation has earnings or profits, and
whether or not there are funds legally available for the payment of such
dividends), without interest, from the first day of the quarter in which such
dividend may be payable as herein provided, except that with respect to the
first quarterly dividend, such dividend shall accrue from the date of the
issuance of the Series A Stock. The per annum dividend rate on outstanding
shares shall be 13% ($1,170) per share in cash; provided, however, dividend
payments may be made at the sole discretion of the Corporation by issuing
additional shares of the
-9-
<PAGE> 11
Series A Stock at the rate of .13 of a share for each $1,170 of such dividend
otherwise payable in cash. The Corporation shall take all actions required or
permitted under the DGCL to permit the payment of dividends on the Series A
Stock, including, without limitation, through the revaluation of its assets in
accordance with the DGCL, to make or keep funds legally available for the
payment of dividends.
(ii) All dividends paid with respect to shares of the Series A
Stock pursuant to paragraph (b)(i) shall be paid pro rata to the holders
entitled thereto.
(iii) Each fractional share of the Series A Stock outstanding
shall be entitled to a ratably proportionate amount of all dividends accruing
with respect to each outstanding share of the Series A Stock pursuant to
paragraph (b)(i) hereof, and all of such dividends with respect to such
outstanding fractional shares shall be fully cumulative and shall accrue
(whether or not declared), without interest, and shall be payable in the same
manner and at such times as provided for in paragraph (b)(i) hereof with respect
to dividends on each outstanding share of the Series A Stock.
(iv) Notwithstanding anything contained herein to the contrary,
no cash dividends on shares of the Series A Stock shall be declared by the Board
or paid or set apart for payment by the Corporation at such time as the terms
and provisions of any agreement of the Corporation, including any agreement
relating to its indebtedness, specifically prohibits such declaration, payment
or setting apart for payment; provided, however, that nothing herein contained
shall in any way or under any circumstance be construed or deemed to require the
Board to declare or the Corporation to pay or set apart for payment any
dividends on shares of the Series A Stock at any time, whether permitted by any
of such agreements or not.
(v) If at any time the Corporation shall have failed to pay all
dividends which have accrued on any outstanding shares of any other series of
the Preferred Stock having cumulative dividend rights ranking prior to or on
parity with the shares of the Series A Stock at the times such dividends are
payable, no cash dividend shall be declared by the Board or paid or set apart
for payment by the Corporation on shares of the Series A Stock unless prior to
or concurrently with such declaration, payment or setting apart for payment, all
accrued and unpaid dividends on all outstanding shares of such other series of
the Preferred Stock shall have been or be declared, paid or set apart for
payment, without interest; provided, however, that in the event such failure to
pay accrued dividends is with respect only to the outstanding shares of the
Series A Stock and any outstanding shares of any other series of the Preferred
Stock having cumulative dividend rights on parity with the shares of the Series
A Stock, cash dividends may be declared, paid or set apart for payment, without
interest, pro rata on shares of the Series A Stock and shares of such other
series of the Preferred Stock so that the amount of any cash dividends declared,
paid or set apart for payment on shares of the Series A Stock and shares of such
other series of the Preferred Stock shall in all cases bear to each other the
same ratio that, at the time of such declaration, payment or setting apart for
payment, all accrued but unpaid cash dividends on shares of the Series A Stock
and shares of such other series of the Preferred Stock bear to each other. Any
dividend not paid pursuant to paragraph (b)(i) hereof or this paragraph (b)(v)
shall be fully cumulative and shall accrue (whether or not declared), without
interest, as set forth in paragraph (b)(i) hereof.
-10-
<PAGE> 12
(vi) (A) Holders of shares of the Series A Stock shall be
entitled to receive the dividends provided for in paragraph (b)(i) hereof in
preference to any in priority over any dividends upon any of the Junior
Securities.
(B) So long as any shares of the Series A Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment any
dividend on any of the Junior Securities or any warrants, rights, calls or
options exercisable for any of the Junior Securities, or make any distribution
in respect thereof, either directly or indirectly, and whether in cash,
obligations or shares of the Corporation or other property (other than pursuant
to the conversion rights set forth herein and other than distributions or
dividends in stock to the holders of such stock), and shall not permit any
corporation or other entity directly or indirectly controlled by the Corporation
to purchase or redeem any of the Junior Securities, or any warrants, rights,
calls or options exercisable for any of the Junior Securities, unless prior to
or concurrently with such declaration, payment, setting apart for payment,
purchase or distribution, as the case may be, all accrued and unpaid cash
dividends on shares of the Series A Stock not paid on the dates provided for in
paragraph (b)(i) hereof (including if not paid pursuant to the terms and
conditions of paragraph (b)(i) or paragraph (b)(v) hereof) shall have been or be
paid; provided, however, that nothing herein contained shall limit or restrict
the Corporation or any corporation or other entity directly or indirectly
controlled by the Corporation from purchasing, redeeming or otherwise retiring
any securities of the Corporation, including any Junior Securities and any
warrants, rights, calls or options exercisable for any of the Junior Securities,
(I) issued to any individual who was or is an employee or officer of the
Corporation or any of its subsidiaries or (II) that are subject to any
stockholders agreement, any agreement providing for put/call rights or any
similar agreement to which the Corporation or any of its subsidiaries is a
party, which agreement provides for such purchase, redemption or retirement.
(vii) Subject to the foregoing provisions of this paragraph
(b), the Board may declare and the Corporation may pay or set apart for payment
dividends and other distributions on any of the Junior Securities, and pay
purchase or otherwise redeem any of the Junior Securities or any warrants,
rights or options exercisable for any of the Junior Securities, and the holders
of the shares of the Series A Stock shall not be entitled to share therein.
(c) Liquidation Preference. (i) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of the Series A Stock then outstanding shall
be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to $9,000 for each
share outstanding plus an amount in cash equal to all accrued but unpaid
dividends thereon to the date fixed for liquidation, before any payment shall be
made or any assets distributed to the holders of any of the Junior Securities;
provided, however, that the holders of outstanding shares of the Series A Stock
shall not be entitled to receive such liquidation payment until the liquidation
payments on all outstanding shares of any other series of the Preferred Stock
having liquidation rights ranking prior to the shares of the Series A Stock
shall have been paid in full. If the assets of the Corporation are not
sufficient to pay in full the liquidation payments payable to the holders of
outstanding shares of the Series A Stock and any outstanding shares of any other
series of the Preferred Stock having liquidation rights on parity with the
shares of the Series A Stock, then the holders of all such shares shall share
ratably in such distribution of assets in accordance with the amount which would
be payable on such distribution if the amounts to which
-11-
<PAGE> 13
the holders of outstanding shares of the Series A Stock and the holders of
outstanding shares of such other series of the Preferred Stock are entitled were
paid in full. The consolidation or merger of the Corporation with another entity
shall not be deemed a voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation and shall not give rise to any
rights provided for in this paragraph (c).
(ii) The liquidation payment with respect to each fractional
share of the Series A Stock outstanding or accrued but unpaid shall be equal to
a ratably proportionate amount of the liquidation payment with respect to each
outstanding share of Series A Stock.
(d) Redemption. (i) Optional. The Corporation may redeem the Series
A Stock, at any time in whole or from time to time in part, at a redemption
price of $9,000 per share, together with accrued and unpaid dividends thereon to
the date fixed for redemption, without interest.
(ii) Mandatory. On December 31, 2008, the Corporation shall
redeem (subject to the legal availability of funds therefor) all outstanding
shares of Series A Stock at a redemption price of $9,000 per share, together
with accrued and unpaid dividends thereon to the date fixed for redemption.
(e) Procedure for Redemption.
(i) In the event the Corporation shall redeem shares of the
Series A Stock, notice of such redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 days nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at such
holder's address as the same appears on the stock register of the Corporation.
Each such notice shall state: (1) the redemption date; (2) the number of shares
of the Series A Stock to be redeemed and, if less than all the shares held by
such holder are to be redeemed, the number of shares to be redeemed from such
holder; (3) the redemption price; (4) the place or places where certificates for
such shares are to be surrendered for payment of the redemption price; and (5)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date.
(ii) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the redemption price of the shares called for
redemption) dividends on the shares of the Series A Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the redemption
price) shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board shall so require and the notice shall so state), such
shares shall be redeemed by the Corporation at the redemption price aforesaid.
In case fewer than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
(f) Conversion. (i) Conversion Right. Each holder of a share or
shares of Series A Stock shall have the right at any time, or from time to time
(prior to the tenth day prior
-12-
<PAGE> 14
to the date fixed for redemption if such share shall be called for redemption
pursuant to paragraph (d)), at the option of such holder, to convert such
shares into shares of Class A Common Stock on and subject to the terms and
conditions hereinafter set forth. Subject to the provisions for adjustment
hereinafter set forth, each share of Series A Stock shall be convertible into
1.04762 fully paid and nonassessable shares of Class A Common Stock (such ratio,
as adjusted from time to time pursuant to paragraph (g), the "Conversion
Ratio").
(ii) Conversion Procedures. In order to exercise the conversion
right, the holder of any shares of Series A Stock to be converted in whole or in
part shall surrender the certificate representing such shares of Series A Stock
(the "Series A Stock Certificate") at the office of the Corporation, and shall
give written notice of conversion to the Corporation at the office of the
Corporation that the holder elects to convert such shares of Series A Stock
represented by the Series A Stock Certificate so surrendered or the portion
thereof specified in said notice. Such notice shall also state the name or names
(with addresses) in which the certificate or certificates for shares of Class A
Common Stock which shall be issuable upon such conversion shall be issued, and
shall be accompanied by transfer taxes, if required. Each Series A Stock
Certificate surrendered for conversion shall, unless the shares issuable on
conversion are to be issued in the same name as the registration of such
Series A Stock Certificate, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Corporation duly executed
by, the holder or such holder's duly authorized attorney.
As promptly as practicable after the surrender of such Series A
Stock Certificate and the receipt of such notice and funds, if any, as
aforesaid, the Corporation shall issue and shall deliver to such holder, or on
his written order, a certificate or certificates for the number of shares of
Class A Common Stock issuable upon the conversion of such shares of Series A
Stock represented by the Series A Stock Certificate so surrendered or portion
thereof in accordance with the provisions of this paragraph (f). In case less
than all of the shares of Series A Stock represented by a Series A Stock
Certificate surrendered for conversion are to be converted, the Corporation
shall deliver to or upon the written order of the holder of such Series A Stock
Certificate a new Series A Stock Certificate representing the shares of Series A
Stock not converted. If any holder of Series A Stock fails to notify the
Corporation of the number of shares of Series A Stock which such holder wishes
to convert, such holder shall be deemed to have elected to convert all shares
represented by the certificate or certificates surrendered for conversion.
Each conversion shall be deemed to have been effected on the
date on which such Series A Stock Certificate shall have been surrendered and
such notice shall have been received by the Corporation, as aforesaid, and the
person in whose name any certificate or certificates for shares of Class A
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock books of
the Corporation shall be closed shall constitute the person in whose name the
certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock books are open, but such conversion
shall be at the Conversion Ratio as in effect on the date upon which such Series
A Stock Certificate shall have been surrendered.
All shares of Series A Stock that shall have been surrendered
for conversion as herein provided shall no longer be deemed to be outstanding
and all rights with respect to
-13-
<PAGE> 15
such shares, including the rights, if any, to receive notices and to vote, shall
forthwith cease, except only the right of the holders thereof, subject to the
provisions of this paragraph (f), to receive shares of Class A Common Stock in
exchange therefor.
No payments or adjustments in respect of dividends on shares of
Series A Stock surrendered for conversion or on account of any dividend on the
Class A Common Stock issued upon conversion shall be made upon the conversion of
any shares of Series A Stock.
In the event any shares of Series A Stock shall be called for
redemption, the right to convert such shares of Series A Stock shall terminate
at the close of business on the tenth day prior to the date fixed for
redemption.
The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued stock, for the
purpose of effecting the conversion of shares of Series A Stock, such number of
its duly authorized shares of Class A Common Stock (or treasury shares) as shall
from time to time be sufficient for the conversion of all outstanding shares of
Series A Stock into Class A Common Stock at any time. The Corporation shall,
from time to time and in accordance with the DGCL, cause the authorized number
of shares of Class A Common Stock to be increased if the aggregate number of
authorized shares of Class A Common Stock remaining unissued and not reserved
for issuance in any other connection shall not be sufficient for the conversion
of all outstanding shares of Series A Stock into Class A Common Stock at any
time.
(g) Adjustments.
(i) Common Stock Dividends, Subdivisions, Combinations. In case
the Corporation shall (A) pay or make a dividend or other distribution on its
Common Stock in shares of Common Stock, (B) subdivide or split the outstanding
shares of its Common Stock into a larger number of shares or (C) combine the
outstanding shares of its Common Stock into a smaller number of shares, then in
each such case the Conversion Ratio shall be adjusted to equal the number of
such shares to which the holder of one share of Series A Stock would have been
entitled upon the occurrence of such event had such share of Series A Stock been
converted immediately prior to the happening of such event or, in the case of a
stock dividend or other distribution, prior to the record date for determination
of stockholders entitled thereto. An adjustment made pursuant to this paragraph
(g)(i) shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event in the case of a dividend
or distribution and immediately after the effective date in the case of a
subdivision, split or combination.
(ii) Reorganization or Reclassification. In case of any capital
reorganization or any reclassification of the capital stock of the Corporation
(whether pursuant to a merger or consolidation or otherwise), each share of
Series A Stock shall thereafter be convertible into the number of shares of
stock or other securities or property receivable upon such capital
reorganization or reclassification of capital stock, as the case may be, by a
holder of the number of shares of Class A Common Stock into which such share of
Series A Stock was convertible immediately prior to such capital reorganization
or reclassification of capital stock; and, in any case, appropriate adjustment
(as determined in good faith by the Board) shall be made for the
-14-
<PAGE> 16
application of the provisions of this paragraph (g) with respect to the rights
and interests thereafter of the holders of Series A Stock to the end that the
provisions set forth in this paragraph (g) shall thereafter be applicable, as
nearly as reasonably practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the conversion of shares of
Series A Stock.
(iii) Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Corporation with, or merger of the Corporation into, any
other Person, any merger of another Person into the Corporation (other than a
merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Class A Common Stock) or any sale or
transfer of all or substantially all of the assets of the Corporation to the
Person formed by such consolidation or resulting from such merger or which
acquires such assets, as the case may be, each share of Series A Stock shall
thereafter be convertible into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by a
holder of the number of shares of Class A Common Stock into which, a share of
Series A Stock may have been converted immediately prior to such consolidation,
merger, sale or transfer. Adjustments for events subsequent to the effective
date of such a consolidation, merger, sale or transfer of assets shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
paragraph (g). In any such event, effective provisions shall be made in the
certificate or articles of incorporation of the resulting or surviving
corporation, in any contract of sale, merger, conveyance, lease, transfer or
otherwise so that the provisions set forth in this paragraph (g) for the
protection of the rights of the holders of the Series A Stock shall thereafter
continue to be applicable; and any such resulting or surviving corporation shall
expressly assume the obligation to deliver, upon exercise, such shares of stock,
other securities, cash and property. The provisions of this paragraph (g)(iii)
shall similarly apply to successive consolidations, mergers, sales, leases or
transfers.
(iv) Distributions of Assets or Securities Other than Common
Stock. In case the Corporation shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any of its capital stock (other than
Common Stock), rights or warrants to purchase any of its securities (other than
those referred to in paragraph (g)(v) below), cash, other assets or evidences of
its indebtedness, then in each such case the Conversion Ratio shall be adjusted
by multiplying the Conversion Ratio immediately prior to the date of such
dividend or distribution by a fraction, of which the numerator shall be the Fair
Market Value per share of Common Stock at the record date for determining
stockholders entitled to such dividend or distribution, and of which the
denominator shall be such Fair Market Value per share less the Fair Market Value
of the portion of the securities, cash, assets or evidences of indebtedness so
distributed applicable to one share of Common Stock.
(v) Below Market Distributions or Issuances of Common Stock. In
case the Corporation shall issue Common Stock (or options, rights or warrants to
purchase shares of Common Stock (collectively, "Options") or other securities
convertible into or exchangeable or exercisable for shares of Common Stock (such
other securities, collectively, "Convertible Securities")) at a price per share
(or having an effective exercise, exchange or conversion price per share
together with the purchase price thereof) less than the Fair Market Value per
share of Common Stock on the date such Common Stock (or Options or Convertible
Securities), is sold or issued (provided that no sale of securities pursuant to
an underwritten public offering shall be
-15-
<PAGE> 17
deemed to be for less than Fair Market Value), then in each such case the
Conversion Ratio shall thereafter be adjusted by multiplying the Conversion
Ratio immediately prior to the date of issuance of such Common Stock (or Options
or Convertible Securities) by a fraction, the numerator of which shall be (A)
the sum (I) of the number of Common Share Equivalents represented by all
securities outstanding immediately prior to such issuance and (II) the number of
additional Common Share Equivalents represented by all securities so issued
multiplied by (B) the Fair Market Value of a share of Common Stock immediately
prior to the date of such issuance, and the denominator of which shall be (X)
the product of (I) the Fair Market Value of a share of Common Stock immediately
prior to the date of such issuance and (II) the number of Common Share
Equivalents represented by all securities outstanding immediately prior to such
issuance plus (Y) the aggregate consideration received by the Corporation for
the total number of securities so issued plus, (Z) in the case of Options or
Convertible Securities, the additional consideration required to be received by
the Corporation upon the exercise, exchange or conversion of such securities;
provided that no adjustment shall be required in respect of issuances of Common
Stock (or options to purchase Common Stock) pursuant to stock option or other
employee benefit plans in effect on the date hereof, or approved by the Board
after the date hereof. Notwithstanding anything herein to the contrary, (X) no
further adjustment to the Conversion Ratio shall be made upon the issuance or
sale of Common Stock pursuant to the exercise of any Options or the conversion
or exchange of any Convertible Securities, if in each case the adjustment in the
Conversion Ratio was made as required hereby upon the issuance or sale of such
Options or Convertible Securities or no adjustment was required hereby at the
time such Option or Convertible Security was issued; and (Y) no adjustment to
the Conversion Ratio shall be made upon the issuance or sale of Common Stock (or
Options or Convertible Securities) to any Person or group that, at the time of
such issuance or sale, is not (A) an Affiliate of the Corporation or (B) a
holder, directly or indirectly of five percent (5%) of the outstanding equity
securities of the Corporation, provided that this clause (B) shall be of no
force or effect from and after an Initial Public Offering.
(vi) Above Market Repurchases of Common Stock. If at any time
or from time to time the Corporation or any subsidiary thereof shall repurchase,
by self-tender offer or otherwise, any shares of Common Stock of the Corporation
(or any Options or Convertible Security) at a weighted average purchase price in
excess of the Fair Market Value thereof, on the business day immediately prior
to the earliest of (A) the date of such repurchase, (B) the commencement of an
offer to repurchase or (C) the public announcement of either (such date being
referred to as the "Determination Date"), the Conversion Ratio shall be adjusted
by multiplying the Conversion Ratio immediately prior to such Determination Date
by a fraction, the numerator of which shall be the product of (W) the number of
Common Share Equivalents represented by all securities outstanding immediately
prior to such Determination Date minus the number of Common Share Equivalents
represented by the securities repurchased or to be purchased by the Corporation
or any Subsidiary thereof in such repurchase and (X) the Fair Market Value of a
share of Common Stock immediately prior to such Determination Date, and the
denominator of which shall be (Y) the product of (I) the number of Common Share
Equivalents represented by all securities outstanding immediately prior to the
Determination Date and (II) the Fair Market Value of a share of Common Stock
immediately prior to such Determination Date minus (Z) the sum of (I) the
aggregate consideration paid by the Corporation in connection with such
repurchase and (II) in the case of Options or Convertible Securities, the
additional consideration required to be received by the Corporation upon the
exercise, exchange or conversion of such securities.
-16-
<PAGE> 18
Notwithstanding anything herein to the contrary, no adjustment to Conversion
Ratio shall be made upon the repurchase, by self-tender or otherwise, of Common
Stock (or any Options or Convertible Security) from any Person (or group) that,
at the time of such repurchase, is not (A) an Affiliate of the Corporation or
(B) a holder, directly or indirectly, of five percent (5%) of the outstanding
equity securities of the Corporation, provided that this clause (B) shall be of
no force or effect from and after an Initial Public Offering.
(vii) Readjustment of Conversion Ratio. If (A) the purchase
price provided for in any Option or the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities or the
rate at which any Convertible Securities, in each case as referred to in
paragraphs (g)(iv) and (g)(v) above, are convertible into or exchangeable for
Common Stock shall change at any time (other than under or by reason of
provisions designed to protect against dilution upon an event which results in a
related adjustment pursuant to this paragraph (g)), or (B) any of such Options
or Convertible Securities shall have irrevocably terminated, lapsed or expired,
the Conversion Ratio then in effect shall forthwith be readjusted (effective
only with respect to any conversion of Series A Stock after such readjustment)
to the Conversion Ratio which would then be in effect had the adjustment made
upon the issuance, sale, distribution or grant of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration or conversion rate, as the case may be (in the case of any event
referred to in clause (A) of this paragraph (g)(vii)) or had such adjustment not
been made (in the case of any event referred to in clause (B) of this paragraph
(g)(vii)).
(viii) Consideration. If any shares of Common Stock, Options or
Convertible Securities shall be issued, sold or distributed for cash, the
consideration received in respect thereof shall be deemed to be the amount
received by the Corporation therefor, before deduction therefrom of any
reasonable, customary and adequately documented expenses incurred in connection
therewith. If any shares of Common Stock, Options or Convertible Securities
shall be issued, sold or distributed for a consideration other than cash, the
amount of the consideration other than cash received by the Corporation shall be
deemed to be the Fair Market Value of such consideration, before deduction of
any reasonable, customary and adequately documented expenses incurred in
connection therewith. If any shares of Common Stock, Options or Convertible
Securities shall be issued in connection with any merger in which the
Corporation is the surviving corporation, the amount of consideration therefor
shall be deemed to be the Fair Market Value of such portion of the assets and
business of the non-surviving corporation as shall be attributable to such
Common Stock, Options or Convertible Securities, as the case may be. If any
Options shall be issued in connection with the issuance and sale of other
securities of the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued without consideration.
(ix) No Impairment. The Corporation will not, by amendment of
this Restated Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this paragraph (g) and in the taking of all such action as
may be necessary or appropriate in order to protect the conversion rights of the
holders of the Series A Stock against impairment.
-17-
<PAGE> 19
(x) Conversion Ratio Adjustment Deferred. Notwithstanding the
foregoing provisions of this paragraph (g), no adjustment to the Conversion
Ratio shall be required unless such adjustment would require an increase or
decrease in such Conversion Ratio of at least 1%; provided, however, that any
adjustments which by reason of this paragraph (g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
(xi) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Ratio pursuant to this paragraph
(g), the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
(xii) Proceedings Prior to Any Action Requiring Adjustment. As
a condition precedent to the taking of any action which would require an
adjustment pursuant to this paragraph (g), the Corporation shall take any action
which may be necessary, including obtaining regulatory approvals or exemptions,
in order that the Corporation may thereafter validly and legally issue as fully
paid and nonassessable all shares of Class A Common Stock which the holders of
Series A Stock are entitled to receive upon conversion thereof.
(xiii) Additional Conversion Ratio Adjustments. The Corporation
may make such increases in the Conversion Ratio, in addition to those required
by this paragraph (g), as it considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. The
Corporation from time to time may increase the Conversion Ratio by any amount
for any period of time if the period is at least twenty (20) days, the increase
is irrevocable during the period and the Board shall have made a determination
that such increase would be in the best interest of the Corporation, which
determination shall be conclusive. Whenever the Conversion Ratio is increased
pursuant to the preceding sentence, the Corporation shall mail to holders of
record of Series A Stock a notice of the increase at least fifteen (15) days
prior to the date the increased Conversion Ratio takes effect, and such notice
shall state the increased Conversion Ratio and the period it will be in effect.
(xiv) Certain Definitions. The following terms, as used in this
paragraph (g), have the following meanings:
"Affiliate" shall have the meaning given to such term in Rule 12b-2
promulgated under the Securities and Exchange Act of 1934, as amended.
"Closing Price" on any day with respect to any class of Common
Stock means (A) if shares of such class of Common Stock then are listed and
traded on the New York Stock Exchange, Inc. ("NYSE"), the Closing Price for a
share of such class of Common Stock on such day as reported on the NYSE
Composite Transactions Tape; (B) if shares of such class of Common Stock then
are not listed and traded on the NYSE, the Closing Price for a share of such
class of Common Stock on such day as reported by the principal national
securities exchange on
-18-
<PAGE> 20
which shares of such class of Common Stock are listed and traded; (C) if shares
of such class of Common Stock then are not listed and traded on any such
securities exchange, the last reported sale price on such day for a share of
such class of Common Stock on the National Market of the NASD Automated
Quotation System ("NASDAQ"); or (D) if shares of such class of Common Stock then
are not traded on the NASDAQ National Market, the average of the highest
reported bid and the lowest reported asked price for a share of such class of
Common Stock on such day as reported by NASDAQ.
"Common Share Equivalent" means, with respect to any security of
the Corporation and as of a given date, a number which is, (A) in the case of a
share of Common Stock, one, (B) in the case of all or a portion of any right,
warrant or other security which may be exercised for a share or shares of Common
Stock, the number of shares of Common Stock receivable upon exercise of such
security (or such portion of such security) and (C) in the case of any security
convertible or exchangeable into a share or shares of Common Stock, the number
of shares of Common Stock that would be received if such security were converted
or exchanged on such date.
"Fair Market Value" as at any date of determination means the fair
market value of the business, securities (and with respect to a share of a class
of Common Stock if shares of such class of Common Stock are not publicly traded,
shall mean a proportionate amount of the Fair Market Value of the Corporation),
property or services in question as of such date, as determined in good faith by
the Board; provided that if, at any date of determination of the Fair Market
Value of a class of Common Stock, shares of such class of Common Stock shall
then be publicly traded, the Fair Market Value of a share of such class of
Common Stock outstanding on such date shall be the Market Price.
"Market Price" as at any date of determination with respect to any
class of Common Stock means the average of the daily Closing Prices of a share
of such class of Common Stock for the twenty (20) consecutive trading days
ending on the most recent trading day prior to the date of determination.
"NASD" means The National Association of Securities Dealers, Inc.
"Person" means an individual, partnership, corporation, trust,
joint stock corporation, association, joint venture, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
(h) Voting Rights.
(i) The holders of record of Series A Stock shall not be
entitled to any voting rights except as hereinafter provided in this paragraph
(h).
(ii) The holder of each share of Series A Stock shall be
entitled to the number of votes equal to the number of shares (or pro rata
portions thereof) of Class A Common Stock into which each share of Series A
Stock could be converted pursuant to paragraph (f) hereof on the record date
for the vote or for written consent of stockholders, if applicable, multiplied
by the number of shares of Series A Stock held of record on such date by such
holder. The holder of each share of Series A Stock shall be entitled to notice
of any stockholders' meeting in
-19-
<PAGE> 21
accordance with the By-Laws of the Corporation and shall vote with holders of
the Common Stock, voting together as single class, upon all matters submitted to
a vote of stockholders, in addition to any vote required with respect to those
matters required to be submitted to a class or series vote pursuant to the terms
hereof or by law. Fractional votes shall be permitted.
(iii) So long as any shares of the Series A Stock are
outstanding, the Corporation will not without the affirmative vote or consent at
an annual or special meeting of stockholders of the holders:
(A) of at least a majority of the outstanding shares of
Series A Stock (excluding treasury shares and shares held be
subsidiaries) voting as a separate class create any class or series of
shares ranking prior to the Series A Stock either as to dividends or
upon liquidation, or amend, alter or repeal (whether by merger,
consolidation or otherwise) the Corporation's Restated Certificate of
Incorporation to affect adversely the voting powers (except as such
powers may be limited by the voting rights given to additional shares
of any class), rights or preferences of the Series A Stock; or
(B) of at least a majority of the outstanding classes of
Series A Stock (excluding treasury shares and shares held by
subsidiaries) voting as a separate class create any class or series of
shares ranking on a parity with the Series A Stock either as to
dividends or upon liquidation.
FIFTH: Unless and except to the extent that the By-Laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.
SIXTH; In furtherance and not in limitation of the powers
conferred by law, the Board is expressly authorized and empowered to make, alter
and repeal the By-Laws of the Corporation by a majority vote at any regular or
special meeting of the Board or by written consent, subject to the power of the
stockholders of the Corporation to alter or repeal any By-Laws made by the
Board.
SEVENTH: A. A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except to the extent such exemption
from liability or limitation thereof is not permitted under the General
Corporation Law of the State of Delaware as the same exists or may hereafter be
amended. Any repeal or modification of the foregoing sentence shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
B. 1. Each person who was or is made a party or is threatened
to be made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he, or a person of whom he is the legal
representative, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action or inaction in an official
capacity as a director, officer, employee or agent or in any other capacity
while serving as a
-20-
<PAGE> 22
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the DGCL, as the same exists
or may hereafter be amended (but, in the case of any such amendment, to the
fullest extent permitted by law, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorney's fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his heirs,
executors and administrators; provided that, except as provided in this
paragraph (B), the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board. The right to indemnification conferred in this paragraph (B) shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided that, if the DGCL, requires, the payment of such expenses
incurred by a director or officer in his or her capacity as a director or
officer of the Corporation (and not in any other capacity in which service was
or is rendered by such person while director or officer, including, without
limitation, service to any employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Article SEVENTH or
otherwise. The Corporation may, by action of the Board, provide indemnification
to employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
2. If a claim under subparagraph (B)(l) is not paid in full
by the Corporation within 30 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall also be entitled to be paid the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the DGCL for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including the Board, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the DGCL, nor
an actual determination by the Corporation (including the Board, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
3. The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition conferred
in this paragraph (B) shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute,
-21-
<PAGE> 23
provision of this Restated Certificate of Incorporation, By-Law, agreement,
vote of stockholders or disinterested directors or otherwise.
4. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the DGCL.
EIGHTH: The Corporation reserves the right at any time or from
time to time to amend, alter, change or repeal any provisions contained in this
Restated Certificate of Incorporation, and any other provisions authorized by
the laws of the State of Delaware at the time in force may be added or inserted,
in the manner now or hereafter prescribed by law; and all rights, preferences
and privileges of whatever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Restated Certificate of
Incorporation in its present form or as hereafter amended are granted subject to
the right reserved in this Article EIGHTH.
NINTH: Whenever a compromise or arrangement is proposed between
the Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
****
(4) This Restated Certificate of Incorporation has been duly
adopted in accordance with Sections 242 and 245 of the DGCL.
-22-
<PAGE> 24
IN WITNESS WHEREOF, said AP Holdings, Inc. has caused this certificate
to be signed by A. Petter Ostberg, its Vice President, this ____ day of
December, 1999.
AP HOLDINGS, INC.
By:
---------------------------------------
Name: A. Petter Ostberg
Title: Vice President
-23-
<PAGE> 1
EXHIBIT 4.4
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of March 30, 2000
(this "Amendment"), is among APCOA/STANDARD PARKING, INC., a Delaware
corporation (the "Company"), the Lenders set forth on the signature pages hereof
(collectively, the "Lenders") and BANK ONE, NA, as agent for the Lenders (in
such capacity, the "Agent").
RECITALS
A. The Company, the Guarantors, the Agent and the Lenders are
parties to a Credit Agreement dated as of March 30, 1998 (as clarified by letter
agreement dated March 30, 1999, and amended by a First Amendment to Credit
Agreement dated as of November 12, 1999, the "Credit Agreement").
B. The Company desires to amend the Credit Agreement, and the
Agent and the Lenders are willing to do so in accordance with the terms hereof.
TERMS
In consideration of the premises and of the mutual agreements
herein contained, the parties agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set
forth in Article III hereof, the Credit Agreement shall be amended as follows:
1.1 The definition of "Applicable Margin" in Section 1.1
shall be amended by deleting the table set forth therein and the paragraph
following such table and inserting the table and paragraph set forth below in
place thereof:
<TABLE>
<CAPTION>
APPLICABLE MARGIN FOR ALL ADVANCES AND FEES
--------------------------------------------------------------------------
Adjusted Total Debt to Adjusted Corporate Base LIBOR Loan and Letter of
Adjusted EBITDA Ratio Rate Loan Credit Fees Commitment Fees
- ---------------------- ----------------------- ------------------------ ---------------
<S> <C> <C> <C>
> or = to 6.5:1.0 225 bps 350 bps 75 bps
> or = to 6.0:1.0 but < 6.50:1.0 175 bps 300 bps 62.5 bps
> or = to 5.5:1.0 but < 6.0:1.0 150 bps 275 bps 62.5 bps
> or = to 5.0:1.0 but < 5.5:1.0 125 bps 250 bps 62.5 bps
> or = to 4.5:1.0 but < 5.0:1.0 100 bps 225 bps 50 bps
< 4.5:1.0 75 bps 200 bps 50 bps
</TABLE>
Notwithstanding anything in this Agreement to the contrary, as of the Second
Amendment Effective Date the Applicable Margin shall be based on an Adjusted
Total Debt to Adjusted EBITDA Ratio of greater than or equal to 6.5:1.0 pursuant
to the above table until adjusted for the first time after the Second Amendment
Effective Date.
1.2 The following definitions are hereby added to
Section 1.1 in appropriate alphabetical order:
<PAGE> 2
"Second Amendment" shall mean the Second Amendment
to this Agreement dated as of March 30, 2000.
"Second Amendment Effective Date" shall mean the date
of the Second Amendment.
1.3 Section 2.1(c) is amended by adding the following to
the end thereof: "and (iii) the aggregate principal amount of Revolving Credit
Loans shall not exceed $35,000,000 at any time."
1.4 Section 5.1(g) is amended by adding the following to
the end thereof: "At all times on and after the date requested by the Agent in
its discretion and to the extent practical as determined by the Agent, the
Company and the Guarantors shall direct all clients and other account debtors to
make all payments in connection with any obligations of the Company or any
Guarantor directly to a lock-box account, which account shall be a non-interest
bearing account over which the Agent shall have the power of application and
withdrawal, and all amounts received in such lock-box account shall be applied
to the Lender Indebtedness on such terms required by the Agent, and the Company
and the Guarantors shall promptly execute such lock-box agreements, dominion of
funds agreements and related agreements in connection therewith, each in form
and substance satisfactory to the Agent.
1.5 Sections 5.2(a), (b) and (c) shall be amended and
restated as follows:
(a) Adjusted Total Debt to Adjusted EBITDA Ratio.
Permit or suffer the Adjusted Total Debt to Adjusted EBITDA Ratio to be
greater than (i) 6.95 to 1.0 at any time from and including the
Effective Date to and including September 29, 1999, (ii) 6.75 to 1.0 at
any time from and including September 30, 1999 to and including
December 31, 1999, (iii) 8.0 to 1.0 at any time from and including
January 1, 2000 to and including September 30, 2000, (iv) 6.50 to 1.0
at any time from and including October 1, 2000 to and including March
30, 2001, (v) 6.35 to 1.00 at any time from and including March 31,
2001 to and including June 29, 2001, (vi) 6.20 to 1.00 at any time from
and including June 30, 2001 to and including September 29, 2001, (vii)
6.00 to 1.00 at any time from and including September 30, 2001 to and
including December 30, 2001, (viii) 5.80 to 1.00 at any time from and
including December 31, 2001 to and including March 30, 2002 or (ix)
5.50 to 1.0 at any time thereafter.
(b) Interest Coverage Ratio. Permit or suffer the
Interest Coverage Ratio to be less than (i) 1.5 to 1.0 as of the end of
any fiscal quarter of the Company ending on or before December 31,
1999, (ii) 1.30 to 1.0 as of the end of the fiscal quarter of the
Company ending March 31, 2000, (iii) 1.27 to 1.0 as of the end of each
of the fiscal quarters of the Company ending June 30, 2000 and
September 30, 2000, (iv) 1.45 to 1.0 as of the end of the fiscal
quarter of the Company ending December 31, 2000, (v) 1.6 to 1.0 as of
the end of each of the fiscal quarters of the Company ending March 31,
2001 and June 30, 2001, (vi) 1.65 to 1.0 as of the end of any fiscal
quarter of the Company ending on or after September 30, 2001 but on or
before March 31, 2002, or (vii) 1.75 to 1.0 as of the end of any fiscal
quarter of the Company ending thereafter.
(c) Fixed Charge Coverage Ratio. Permit or suffer the
Fixed Charge Coverage Ratio to be less than (i) 0.9 to 1.0 as of the
end of any fiscal quarter of the Company ending on or before March 31,
1999, (ii) 1.0 to 1.0 as of the end of any fiscal quarter ending on or
after June 30, 1999 but on or before December 31, 1999, (iii) 0.92 to
1.0 as of the end of the fiscal quarter of the Company ending March 31,
2000, (iv) 0.91 to
<PAGE> 3
1.0 as of the end of each of the fiscal quarters of the Company ending
June 30, 2000 and September 30, 2000, (v) 1.05 to 1.0 as of the end of
any fiscal quarter of the Company ending on or after December 31, 2000
but on or before March 31, 2002 or (vi) 1.10 to 1.0 as of the end of
any fiscal quarter of the Company ending thereafter.
1.6 Section 5.2(d)(x) is amended by deleting reference
therein to "14%" and substituting "5%" in place thereof.
1.7 Section 5.2(f) shall be amended and restated as
follows:
(f) Merger; Acquisitions; Etc. Make any Acquisition;
nor merger or consolidate or amalgamate with any other Person or take
any other action having a similar effect; provided, however, that this
Section 5.2(f) shall not prohibit (i) any merger of any Subsidiary with
or into another Subsidiary or any merger of any Subsidiary into the
Company, provided that (A) there is no Unmatured Event or Event of
Default either before or after such merger, (B) if any such merger
involves the Company or a Guarantor, the Company shall be the surviving
corporation and (C) any such merger involves the Company or any
Guarantor, the net worth of the Company or such Guarantor involved in
such merger immediately after the merger would be equal to or greater
than its net worth immediately preceding such merger, or (ii) any
Acquisition completed prior to the Second Amendment Effective Date and
identified on Schedule 5.2(f) hereto.
1.8 Section 5.2(g)(i) is amended by deleting reference
therein to "10%" and substituting "1%" in place thereof.
1.9 Section 5.2(i) is amended by adding the following
after the phrase "covenants and conditions in this Agreement" in each place such
phrase appears: "without giving effect to any amendment or modification of
Sections 5.2(a), (b) or (c) made at any time after the Effective Date which
would make the covenants contained therein less restrictive on the Company and
its Subsidiaries".
1.10 Sections 5.2 (j) is amended and restated as
follows:
(j) Investments, Loans and Advances. Purchase or
otherwise acquire any Capital Stock of or other ownership interest in,
or debt securities of or other evidence of Indebtedness of, any other
Person; nor make any loan or advance of any of its funds or property or
make any other extension of credit to, or make any other investment or
contribution or acquire any interest whatsoever in, any other Person;
nor incur any Contingent Liability except to the extent permitted under
Section 5.2(d); nor permit any Subsidiary to do any of the foregoing;
other than:
(i) extensions of trade credit made in the ordinary course of
business on customary
<PAGE> 4
credit terms and commission, relocation, travel and similar advances
made to officers and employees in the ordinary course of business,
provided that advances to officers and employees for purposes other
than commission, relocation and travel shall not exceed $250,000 in
aggregate amount outstanding at any time,
(ii) investments in Cash Equivalents,
(iii) investments, loans and advances in and to any existing
Guarantor,
(iv) those investments, loans, advances and other
transactions described in Schedule 5.2(j) hereto, having the same
terms as existing on the date of this Agreement, but no extension or
renewal thereof shall be permitted,
(v) investments, loans and advances in an aggregate amount
outstanding not to exceed $1,000,000 to Affiliates of the Company
(excluding, among others, Holberg and its Affiliates other than the
Company or a Guarantor, and such investments, loans and advances may
not be sent directly or indirectly to or for the benefit of Holberg or
its Affiliates other than the Company or a Guarantor) described on
Schedule 5.2(j)-2 or otherwise approved by the Agent, provided that
both before and after giving effect to any such investment, loan and
advance (w) no Unmatured Event or Event of Default shall exist or shall
have occurred and be continuing, (x) the representations and warranties
contained in the Loan Documents shall be true and correct in all
material respects as if made on the date such investment, loan or
advance is made, and (y) the aggregate amount of cash and Cash
Equivalents on hand of the Company plus the amount that the Company is
able to borrow in Revolving Credit Loans after giving effect to such
investment, loan or advance is and will be at least $5,000,000 above
the amount of working capital required for the Company over such twelve
month period of time, as demonstrated to the Agent's reasonable
satisfaction by such pro forma financial statements and projections as
required by the Agent, and
(vi) acquiring and owning stock, obligations or securities
received in settlement of debts owing to the Company or its
Subsidiaries or as consideration for Asset Sales otherwise permitted
under Section 5.2(g).
1.11 Section 5.2(p) is amended (a) by adding the
following: "Without giving effect to any amendment or modifications of
Sections 5.2 (a), (b), (c) made at anytime after the effective date
which would make the covenants contained therein less restrictive on
the Company and its Subsidiaries." After the phrase "Sections 5.2 (a),
(b), (c) "appearing in Section 5.2 (p) and (b) by adding the following
to the end thereof. In addition to the foregoing the Company also will
not pay, or permit any Subsidiary or, to the extent the Company is able
to do so, any other Affiliate, to pay, directly or indirectly, any
management, consulting, investment banking, advisory or other fees or
payments under any leases, any expense reimbursement or similar
payments or any other payments of any kind (including, without
limitation, any amounts paid or payable by the Company or any of its
Subsidiaries to Holberg in respect of overhead expense allocations
among members of the affiliate corporate group) to Holberg or any
Affiliates thereof other than the Company or any Guarantor: provided,
however, that the Company and its Subsidiaries may reimburse Holberg
for any payments made by Holberg for out of pocket expenses actually
incurred by the Company and which reimbursements are in the ordinary
course of business and consistent with past practices.
1.12 Section 5.2(q) shall be amended by adding the
following to the end thereof: "Notwithstanding anything in this Section 5.2(q)
to the contrary, the Net Capital Expenditures (i) for the four consecutive
fiscal quarters of the Company ending March 31, 2000 shall be allowed up to, but
not in excess of, $5,638,000, (ii) for the four consecutive fiscal quarters of
the Company ending June 30, 2000 shall be allowed up to, but not in excess of,
$5,010,000, and (iii) for the four consecutive fiscal quarters of the Company
ending September 30, 2000 shall be allowed up to, but not in excess of,
$5,333,000.
<PAGE> 5
1.13 Schedule 5.2(j) attached hereto is substituted for
Schedule 5.2(j) to the Credit Agreement and Schedule 5.2(j)-2 attached hereto is
added as Schedule 5.2(j)-2 to the Credit Agreement.
1.14 The restructuring charges taken in connection with
the Standard Acquisition to the extent such charges do not exceed $18,500,000
for the Calculation Period ending December 31, 1998, do not exceed $5,577,000
for the Calculation Period ending December 31, 1999 and do not exceed $700,000
for the Calculation Period ending December 31, 2000 shall be deemed "consistent
with the restructuring charges identified in the Pro Forma Financial
Statements" for purposes of clause I(xii)(A) of the definition of Adjusted
EBITDA contained in Section 1.1 of the Credit Agreement, provided that no other
restructuring charges shall be deemed "consistent with the restructuring
charges identified in the Pro Forma Financial Statements" for purposes of clause
I(xii)(A) of such definition of Adjusted EBITDA or for any other purpose without
the prior written approval of the Required Lenders.
ARTICLE II. REPRESENTATIONS AND AGREEMENTS. The Company
represents and warrants to, and agrees with, the Agent and the Lenders that:
2.1 The execution, delivery and performance of this
Amendment are within its powers, have been duly authorized and are not in
contravention of any statute, law or regulation known to it or of any terms of
its Articles of Incorporation or By-laws, or of any material agreement or
undertaking to which it is a party or by which it is bound.
2.2 This Amendment is the legal, valid and binding
obligations of the Company and each Guarantor enforceable against each in
accordance with the respective terms thereof.
2.3 After giving effect to the amendments contained
herein, the representations and warranties contained in Article IV of the Credit
Agreement are true in all material respects on and as of the date hereof with
the same force and effect as if made on and as of the date hereof.
2.4 After giving effect to the amendments contained
herein, no Event of Default or Unmatured Default exists or has occurred and is
continuing on the date hereof.
2.5 The Company and Parent have not, and will not
without the prior written consent of the Lenders, consummate the Company
Acquisition.
2.6 The aggregate amount of any payment, transfer or
other consideration paid or otherwise transferred in any way to Holberg or any
of Holberg's Affiliates (other than the Company or Guarantor), whether directly
or indirectly, and whether constituting any management, consulting, investment
banking, advisory or other fees or payments under any leases or any expense
reimbursement or similar payments or any other payments of any kind (including,
without limitation, any amounts paid or payable by the Company or any of its
Subsidiaries in respect of overhead expense allocations among the members of the
affiliate corporate group) or constituting any loans, advances, dividends,
distributions, forgiveness of debt or other transfer of any kind to Holberg or
any of Holberg's Affiliates (other than the Company or Guarantor) since
September 30, 1999 is equal to $570,000.
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment
shall become effective as of the date hereof when each of the following
conditions is satisfied or waived by the Lenders:
3.1 The Company, the Guarantors and the required Lenders
shall have signed this Amendment.
3.2 The Company and the Guarantors shall have delivered
such resolutions, officer's certificates and legal opinions as the Agent may
request.
3.3 The Company shall have paid to the Agent, for the
benefit of the Lenders, an amendment fee equal to 15 basis points on the amount
of the Commitment of each Lender.
3.4 The Company and the Guarantors and Firstar Bank
shall have executed such agreements satisfactory to the Agent pursuant to which
the Agent is granted a first priority security interest in all bank accounts of
the Company and the Guarantors and such other rights with respect thereto as
required by the Agent.
<PAGE> 6
3.5 The Company shall have delivered to the Agent such
other documents and satisfied such other conditions, if any, as requested by the
Agent.
ARTICLE IV. MISCELLANEOUS.
4.1 References in the Credit Agreement or in any other
Loan Document to the Credit Agreement shall be deemed to be references to the
Credit Agreement as amended hereby and as further amended from time to time.
4.2 The Company agrees to pay and to save the Agent
harmless for the payment of all reasonable documented costs and expenses arising
in connection with this Amendment, including the reasonable documented fees of
counsel to the Agent in connection with preparing this Amendment and the related
documents.
4.3 The Company and each Guarantor acknowledge and agree
that, to the best of their knowledge, the Agent and the Lenders have fully
performed all of their obligations under all documents executed in connection
with the Credit Agreement. The Company and each Guarantor represent and warrant
that they are not aware of any claims or causes of action against the Agent or
any Lender.
4.4 The Lenders and the Agent waive the Event of Default
(the "Existing Default") caused by the breach of Section 5.2(a), (b) and (j)
which occurred prior to the date hereof to the extent described by the Company
to the Lenders prior to the date hereof, provided that it is acknowledged and
agreed that this is a one time waiver only for the Existing Default, and shall
not waive any other breach at any other time of Section 5.2(a), (b) or (j) or
any other term or covenant of the Credit Agreement.
4.5 Except as expressly amended hereby, the Company and
each Guarantor agree that the Credit Agreement, the Notes, the Security
Documents and all other documents and agreements executed by the Company in
connection with the Credit Agreement in favor of the Agent or any Lender are
ratified and confirmed, as amended hereby, and shall remain in full force and
effect in accordance with their terms and that they are not aware of any set
off, counterclaim, defense or other claim or dispute with respect to any of the
foregoing. Terms used but not defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. This Amendment may be signed upon any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument, and telecopied signatures shall be
effective as originals.
<PAGE> 7
IN WITNESS WHEREOF, the parties signing this Amendment have
caused this Amendment to be executed and delivered as of the day and year first
above written.
APCOA/STANDARD PARKING, INC.
By:
------------------------------
Its:
-----------------------------
BANK ONE, NA, as a Lender and as
Agent, formerly known as The
First National Bank of Chicago
By:
------------------------------
Its:
-----------------------------
LASALLE BANK NATIONAL ASSOCIATION
By:
------------------------------
Its:
-----------------------------
<PAGE> 8
CONSENT AND AGREEMENT
As of the date and year first above written, each of the
undersigned hereby:
(a) fully consents to the terms and provisions of the above
Amendment and the consummation of the transactions contemplated hereby and
agrees to all terms and provisions of the above Amendment applicable to it;
(b) agrees that each Guaranty and all other agreements executed
by any of the undersigned in connection with the Credit Agreement or otherwise
in favor of the Agent or the Lenders (collectively, the "Security Documents")
are hereby ratified and confirmed and shall remain in full force and effect, and
each of the undersigned acknowledges that it has no setoff, counterclaim or
defense with respect to any Security Document;
(c) acknowledges that its consent and agreement hereto is a
condition to the Banks' obligation under this Amendment and it is in its
interest and to its financial benefit to execute this consent and agreement;
(d) agrees that it will not make any payment, transfer or give or
transfer any other consideration in any way to Holberg or any of Holberg's
Affiliates (other than the Company or Guarantor), whether directly or
indirectly, and whether constituting any management, consulting, investment
banking, advisory or other fees or payments under any leases or any expense
reimbursement or similar payments or any other payments of any kind (including,
without limitation, any amounts paid or payable by the Company or any of its
Subsidiaries in respect of overhead expense allocations among the members of the
affiliate corporate group) or constituting any loans, advances, dividends,
distributions, forgiveness of debt or other transfer of any kind to Holberg or
any of Holberg's Affiliates (other than the Company or Guarantor): provided,
however, that the Parent may make payments or transfers to Holberg if such
payments or transfers are solely from new common equity proceeds or new
Indebtedness (which new Indebtedness incurred by the Parent after the Second
Amendment Effective Date shall not exceed $3,000,000 in aggregate amount until
the Company is in compliance with all covenants contained in the Credit
Agreement without giving effect to the above Amendment or any amendment or
modification thereafter and no Event of Default or Unmatured Event has occurred
and in continuing) received by the Parent after the Second Amendment Effective
Date from the owners of the Parent or other Persons (but not from the Company or
any Guarantor, directly or indirectly) and that any such transaction could not
result in the Company or any Guarantor making any additional payments or
transfers of any kind to the Parent or incurring any additional obligations of
any kind; and
(e) the Parent agrees that it will not incur any Indebtedness
(except as described above in clause (d) in excess of $3,000,000 until after
the Company is in compliance with all covenants contained in the Credit
Agreement without giving effect to the above Amendment or any amendment or
modification thereafter and no Event of Default or Unmatured Event has occurred
and is continuing or grant any Liens on any of its assets other than in favor
of the Company.
A-1 AUTO PARK, INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
AP HOLDINGS, INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Treasurer
APCOA CAPITAL CORPORATION
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
<PAGE> 9
APCOA-HAWAII, INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
EVENTS PARKING CO., INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Treasurer
HAWAII PARKING MAINTENANCE, INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
METROPOLITAN PARKING SYSTEM, INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Treasurer
SENTINEL PARKING CO. OF OHIO, INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
TOWER PARKING, INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
STANDARD AUTO PARK, INC.
By:
-----------------------------
Name: Michael J. Celebrezze
Title: Vice President
<PAGE> 10
STANDARD PARKING CORPORATION
By:
-----------------------------
Name: Michael J. Celebrezze
Title: Vice President
APCOA LASALLE PARKING, LLC
By: APCOA/Standard Parking Inc.
as Manager
By:
-----------------------------
Name: Michael J. Celebrezze
Title: Senior Vice President
S & S PARKING, INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
STANDARD PARKING CORPORATION, IL
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
CENTURY PARKING, INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
SENTRY PARKING CORPORATION
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
VIRGINIA PARKING SERVICES, INC.
By:
------------------------------
Name: Michael J. Celebrezze
Title: Vice President
<PAGE> 11
Schedule 5.2(j)
Investments, Loans, and Advances
Investments existing as of the Second Amendment Effective Date in Joint Ventures
in an aggregate amount of $273,200
<PAGE> 12
Schedule 5.2(j)-2
Permitted Affiliates
Joint Ventures of the Company, provided that such Joint Venture shall exclude
Holberg, the Parent or any Person in which Holberg or the Parent has any direct
or indirect interest other than solely due to any ownership interest in the
Company.
-12-
<PAGE> 1
EXHIBIT 10.18
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "agreement") is made and entered into effective
as of August 1, 1999, by and between APCOA/STANDARD PARKING, INC., a Delaware
corporation (the "Company") and JAMES A. WILHELM ("Executive").
RECITALS
A. Prior to the effective date hereof, Executive was employed by the
Company. The Company is in the business of operating private and public parking
facilities for itself, its subsidiaries, affiliates and others, and as a
consultant and/or manager for parking facilities operated by others throughout
the United States (the Company and its subsidiaries and affiliates, and other
Company-controlled businesses engaged in parking garage management (in each case
including their predecessor's or successor's) are referred to hereinafter as the
"Parking Companies").
B. In the course of Executive's employment previously and hereunder,
Executive has had and will have access to highly confidential and proprietary
information of the Parking Companies and their clients, including without
limitation the information referred to in Paragraph 5.
C. The Company and Executive desire to continue Executive's
employment relationship with the Company and to amend and restate the terms of
Executive's employment agreement, on and subject to the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of (i) the foregoing premises, (ii)
the mutual covenants and agreements herein contained, (iii) the severance rights
provided to Executive as set forth herein (iv) the salary continuation payment
payable on termination and, (v) the increased non-qualified pension benefits
provided to Executive by separate agreement, the Company and Executive hereby
covenant and agree as follows:
I. Performance of Service. Executive's employment with the Company
shall be subject to the following:
(a) The Company agrees to employ Executive in the position of
Executive Vice President. The Company reserves the right to change the title and
duties of Executive from time to time; provided, however, that Executive shall
not, without his consent, be assigned duties substantially inconsistent with the
foregoing.
(b) Executive agrees to faithfully and efficiently perform his duties
and devote his full working time and his best efforts to the business and
affairs of the Company.
<PAGE> 2
(c) Executive's duties may include providing services for any one or
more of the Parking Companies, and Executive shall hold such other positions in
such other Parking Companies as may be assigned to him from time to time.
Executive acknowledges that the relative time and effort that he will need to
devote to any of the Parking Companies will vary from time to time as required
by the respective business needs of the Company and such other Parking Companies
as may be in existence from time to time. Executive may also be called upon by
the Company to perform consulting or other advisory services for various clients
of the Company and/or the other Parking Companies from time to time.
(d) Notwithstanding the foregoing provisions of this Paragraph 1,
Executive may engage in activities other than those required under this
Agreement, such as management of personal investments, activities involving
professional, charitable, educational, religious and similar types of
organizations, speaking engagements, membership on the boards of directors of
other organizations, and similar type activities to the extent that such other
activities do not interfere with the performance of Executive's duties under
this Agreement, or conflict in any material way with the Company's business.
2. Compensation. Subject to the terms of this Agreement, while
he is employed by the Company, the Company shall compensate Executive for
Executive's services as follows:
(a) Salary. Executive shall receive a base salary at the rate of not
less than $300,000 per annum (the "Salary"), payable in accordance with the
normal payroll practices of the Company as in effect from time to time (but not
less frequently then monthly). The Salary shall be subject to periodic review
and, in the sole discretion of the Company, may be adjusted without affecting
any of the other provisions of this Agreement.
(b) Bonus. For each calendar year during the term of this Agreement,
the Executive shall be eligible to receive an annual bonus (the "Annual Bonus"),
based upon the terms and conditions of an annual bonus program to be established
by the Company.
(c) Equity Plan. In the event the Company adopts an equity incentive
plan or program (the "Equity Plan") for its key executives, the Executive shall
be entitled to participate in the Equity Plan from and after the effective date
thereof in accordance with the terms and conditions of such plan.
(d) Business Expenses. Executive shall be reimbursed by the Company
for those business expenses authorized by the Company and for those which are
necessarily and reasonably incurred on behalf of the Company and which may
properly be deducted by the Company as business expenses for federal tax
purposes.
(e) Vacations. Executive shall be entitled to four (4) weeks of annual
vacation, to be taken in accordance with the Company's vacation policy as in
effect from time to time and shall be taken at times which do not unreasonably
interfere with Executives duties.
2
<PAGE> 3
(f) Benefits. Executive and/or Executive's family, as the case may be,
shall be eligible for participation and shall receive all benefits under group
medical, dental, term life and disability insurance and other welfare benefit
plans, practices, policies and programs provided by the Company, as in effect
from time to time, on the same terms and conditions as those applicable to peer
Executives.
(g) [Intentionally Deleted]
(h) Annuity. Executive may become entitled to certain non-qualified
annuity, retirement and/or death benefits pursuant to a separate written
Deferred Compensation Agreement dated as of August 1, 1999 (the "Deferred
Compensation Agreement") entered into between Executive and the Company (as
successor in interest to Standard Parking, L.P.). Notwithstanding anything in
the Deferred Compensation Agreement to the contrary, upon the death of Executive
either: (i) while employed by the Company before attaining age 65 or (ii) prior
to Executive acquiring ownership of one or more of the annuity policies
identified on Schedule I attached hereto pursuant to either Paragraph 4(i) or
4(j) hereof, the Company shall pay to the beneficiary or beneficiaries
designated by Executive, or to his estate if there is no named beneficiary, an
amount equal to the full death benefits payable under the annuity policies
identified on Schedule I attached hereto, less an amount (the "Reduction
Amount") equal to the greater of (i) the Guaranteed Cash Value (as defined
below) of such annuity policies owned by the Company immediately preceding
Executive's date of death or (ii) the aggregate amount of premiums or other sums
paid by the Company or in connection with the maintenance of such policies from
their respective dates of issuance. The "Guaranteed Cash Value" of an annuity
policy shall mean the present value, as of the last anniversary of such policy
for which premiums have been paid, of future benefits provided by the policy, as
such present value is determined in accordance with or as indicated in the table
of values set forth in the policy, less any outstanding loans and loan interest.
Upon the death of Executive either: (i) after attaining age 65, if Executive's
employment with the Company continues until he attains age 65 or (ii) any time
subsequent to Executive acquiring ownership of one or more of the annuity
policies identified on Schedule 1 attached hereto pursuant to either Paragraph
4(i) or Paragraph 4(j) hereof, the Company shall pay to the beneficiary or
beneficiaries designated by Executive, or to his estate if there is no named
beneficiary, an amount equal to the full death benefits payable under the
annuity policies acquired by Executive pursuant to either Paragraph 4(i) or
Paragraph 4(j) hereof, without any Reduction Amount with respect to such annuity
policies.
3. Employment Period. The Company shall employ the Executive, and the
Executive shall serve the Company, on the terms and conditions set forth in this
Agreement, for a period of three (3) years beginning August 1, 1999 and ending
July 31, 2002 (the "Employment Period"). The Employment Period shall
automatically extend for additional terms of one (1) year each (individually
referred to as a "Renewal Period" and in the plural as the "Renewal Periods")
unless the Company or Executive shall have given notice in writing of their
intention not to renew the Agreement not less than three (3) months prior to the
expiration of the Employment Period or any applicable Renewal Period. The
Employment Period, as extended by one or more Renewal Periods, shall hereinafter
be deemed to be the Employment Period. Notwithstanding any such termination,
Paragraph 5 of this Agreement shall remain in full force and effect.
3
<PAGE> 4
4. Rights Upon Termination. Executive's right to payment and benefits
under this Agreement for periods after the Date of Termination shall be
determined in accordance with the following provisions of this Paragraph 4:
(a) The "Date of Termination" means the date of the Executive's death,
the Disability Effective Date, the date on which the termination of the
Executive's employment by the Company for Cause or Performance Reasons, as set
forth in the notice from the Company is effective, or the date on which the
Executive gives the Company notice of a termination of employment, as the case
may be. After Executive's termination occurs for any reason, in addition to any
other obligations hereunder, the Company shall pay Executive:
(i) Executive's Salary for the period ending with the Date of
Termination;
(ii) payment for unused vacation days accrued for the year in
which Executive's termination occurs, as determined in accordance with
Company's policy as in effect from time to time; and
(iii) any other payments or benefits to be provided to Executive
by the Company pursuant to any employee benefit plans or arrangements
adopted by the Company, to the extent such amounts are due from the
Company. Except as may otherwise be expressly provided to the contrary
in this Agreement, nothing in this Agreement shall be construed as
requiring Executive to be treated as employed by the Company for
purposes of any employee benefit plan following the Date of
Termination.
(b) If Executive's termination occurs for any reason other than
the circumstances set forth in Paragraphs 4(c) or 4(d) below, then, except as
required by law or otherwise expressly provided in this Agreement or agreed to
in writing between Executive and the Company, and except for Salary Continuation
Payments that are to be made as provided in Paragraph 5(g), the Company shall
have no obligation to make any payments or provide any benefits for periods
after the Date of Termination.
(c) If Executive is terminated by the Company for any reason other
than Cause or Performance Reasons, then, in addition to the amounts payable in
accordance with Paragraph 4(a), and subject to the last sentence of this
Paragraph 4(c), Executive shall be entitled to the following:
(i) During the 24-month period following his termination, and
except to the extent prohibited under the terms of any applicable
insurance policy, he shall continue to be covered under the Company's
welfare benefit plans to the same extent and on the same terms as
those benefits are provided to the Company's active employees.
(ii) He shall receive from the Company an amount (the
"Severance Pay") equal to the product of two times the sum of (x) the
Executive's current annual Salary, plus (y) the amount of any Annual
Bonus paid to Executive for the preceding calendar year, minus the
aggregate amount of Salary Continuation Payments. The Severance Pay
shall be paid over the 24-month period commencing on the Date of
Termination in equal monthly or
4
<PAGE> 5
more frequent installments in accordance with the Company's normal
payroll practices, then in effect.
(iii) He shall receive from the Company the Salary Continuation
Payments in accordance with Paragraph 5(g).
The Company's obligation to provide welfare benefit coverage and make Severance
Payments and Salary Continuation Payments under this Paragraph 4(c) shall cease
with respect to periods after the earlier to occur of the date of Executive's
death, Permanent Disability (hereinafter defined in Paragraph 4(i)) or the date,
if any, of the breach by Executive of the provisions of Paragraph 5.
(d) If Executive terminates his employment hereunder voluntarily, then
Executive shall be entitled only to the Salary Continuation Payments provided in
Paragraph 5(g) and the amounts payable in accordance with Paragraph 4(a), and
Executive shall not be entitled to Severance Pay; provided, however, that if
Executive terminates his employment for Good Reason (as defined below), such
termination shall not be considered a voluntary termination by Executive and
Executive shall be treated as if he had been terminated by the Company pursuant
to Paragraph 4(c) above. "Good Reason" means,
(i) without the express written consent of the Executive, (1)
the assignment to the Executive of duties inconsistent in any
substantial respect with the Executive's position, authority or
responsibilities within the Company, or (2) any other substantial
adverse change in such position (including titles, authority or
responsibilities) or significant reduction in Salary and/or Annual
Bonus;
(ii) any failure by the Company to comply with any of the
provisions of this Agreement, other than an insubstantial and
inadvertent failure remedied by the Company promptly after receipt of
notice thereof given by the Executive; or
(iii) the Company requires or otherwise takes such action as
would require the Executive's relocation.
(e) For purposes of this Agreement, the term "Cause" shall mean:
(i) the Executive knowingly and willfully engages in or
manifests his intent to engage in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise; or
(ii) the Executive engages in egregious misconduct involving
serious moral turpitude to the extent that, in the reasonable judgment
of the Company, Executive's credibility and reputation no longer
conform to the standard of the Company's executives.
(f) For purposes of this Agreement, the term "Performance Reasons"
shall mean:
(i) a material breach by Executive of the terms of this
Agreement; or
5
<PAGE> 6
(ii) Executive's gross misconduct or gross negligence in the
performance of his duties.
(g) In the event that it shall be necessary for Executive to engage in
litigation in connection with the enforcement of his rights under Paragraphs (c)
and (d) of this Paragraph 4, he shall be entitled to recover from the Company
the reasonable attorney's fees and other costs incurred in such legal action, in
addition to any other relief to which he may be entitled; provided, however,
that Executive ultimately prevails in such litigation.
(h) (Intentionally Deleted)
(i) If Executive's employment is terminated hereunder prior to
attaining age 55 for reasons other than Cause or Performance Reasons and under
the circumstances set forth in the immediately following paragraph of this
subsection (i), Executive has the right to purchase from the Company any one or
more of the annuity policies identified on Schedule I attached hereto, provided
that Executive gives written notice to the Company within 60 days following the
Date of Termination of his intent to exercise such right of purchase and payment
therefor is made to the Company within 120 days following the Date of
Termination. From and after the time of any such purchase by Executive, the
Company shall have no further obligations of any kind with respect to or by
reason of the purchased policies or the Deferred Compensation Agreement, whether
regarding the payment of any amounts (premiums or deferred compensation or any
other amounts) or otherwise.
If Executive's employment terminates for reasons other than Cause
or Performance Reasons, Executive may purchase any one or more of the
scheduled policies by paying the Company an amount equal to the greater of (i)
the applicable cash value of such policies, without deduction for any penalties
or charges applicable upon surrender thereof, or (ii) the aggregate amount of
premiums or other sums paid by the Company in connection with the maintenance of
such policies from their respective dates of issuance. The "applicable cash
value" of the policies means the then total cash value of the policies if
termination of employment occurs prior to Executive attaining age 47, and the
then guaranteed cash value if termination of employment occurs on or after
Executive attains age 47. If requested in writing by Executive, the Company
agrees to cooperate with Executive in borrowing against the cash value of the
policies in order to provide Executive with funds sufficient to pay the Company
the amount due hereunder. From and after the time of any such purchase by
Executive, the Company shall have no further obligations of any kind with
respect to or by reason of the purchased policies or the Deferred Compensation
Agreement, whether regarding the payment of any amounts (premiums, deferred
compensation or other amounts) or otherwise.
6
<PAGE> 7
(j)
(i) If Executive's employment is terminated hereunder prior
to or after attaining age 55 by reason of Executive's Permanent
Disability (as hereinafter defined), Executive may elect (a) to receive
from the Company, at no direct cost to Executive, an unconditional
assignment (the "Assignment") of 100% of the Company's ownership
interest in any one or more of the annuity policies identified on
Schedule 1 attached hereto (the "Assignment Option"), or (b) to
continue to have the Company maintain the annuity policies identified
on Schedule 1, at no cost to Executive ("Maintenance Option"). The
Assignment option shall be exercised, if at all, by written notice (the
"Exercise Notice") given by Executive to, and received by, the Company
not later than the first anniversary of the Date of Termination. The
Company shall execute and deliver the Assignment to Executive within
thirty (30) days following the Company's receipt of the Exercise
Notice. Unless and until the Company receives a timely Exercise Notice,
Executive shall be deemed to have elected to pursue the Maintenance
Option. From and after the time of any Assignment, the Company shall
have no further obligations of any kind with respect to or by reason of
such policies or the Deferred Compensation Agreement, whether regarding
the payment of any amounts (premiums, deferred compensation or any
other amounts) or otherwise. The term "Permanent Disability" shall mean
physical or mental disability which renders Executive incapable of
performing substantially all of the duties of his employment with the
Company, as such employment exists immediately prior to the
commencement of such disability (the "Disability Effective Date"),
which disability is likely to be permanent and continuing during the
remainder of Executive's lifetime.
(ii) If Executive's employment is terminated hereunder after
attaining age 55 for reasons other than Cause or Performance Reasons,
Executive may elect, (a) the Assignment Option, or (b) the Maintenance
Option, with the qualification that the cost of maintaining the annuity
policies following the Date of Termination shall be borne by Executive,
but subject to the Company Contribution. The "Company Contribution"
means that the Company shall be responsible for the cost of maintaining
the annuity policies for the equivalent number of years Executive
remains with the Company after age 55. For example, if Executive
remains with the Company for 5 years, until age 60, and then
voluntarily terminates his employment, the Company will be responsible
for the cost of maintaining the annuity policies for 5 years, until age
65. Executive shall exercise the Assignment Option and/or the
Maintenance Option in the same manner as provided in the preceeding
subparagraph (i) above. From and after the time of the assignment
pursuant to Executive's exercise of the Assignment Option, the Company
shall have no further obligation of any kind with respect to or by
reason of such policies or the Deferred Compensation Agreement, whether
regarding the payment of any amounts (premiums, deferred compensation
or any other amounts) or otherwise.
5. Protection of Company Assets.
(a) Trade Secret and Confidential Information. Executive recognizes
and acknowledges that the acquisition and operation of, and the providing of
consulting services for,
7
<PAGE> 8
parking facilities is a unique enterprise and that there are relatively few
firms engaged in these businesses in the primary areas in which the Parking
Companies operates. Executive further recognizes and acknowledges that as a
result of his employment with the Parking Companies, Executive has had and will
continue to have access to confidential information and trade secrets of the
Parking Companies that constitute proprietary information that the Parking
Companies are entitled to protect, which information constitutes special and
unique assets of the Parking Companies, including without limitation (i)
information relating to the Parking Companies' manner and methods of doing
business, including without limitation, strategies for negotiating leases and
management agreements; (ii) the identity of the Parking Companies' clients,
customers, lessors and locations, and the identity of any individuals or
entities having an equity or other economic interest in any of the Parking
Companies to the extent such identity has not otherwise been voluntarily
disclosed by any of the Parking Companies; (iii) the specific confidential terms
of management agreements, leases or other business agreements, including without
limitation the duration of, and the fees, rent or other payments due thereunder;
(iv) the identities of beneficiaries under land trusts; (v) the business,
developments, activities or systems of the Parking Companies, including without
limitation any marketing or customer service oriented programs in the
development stages or not otherwise known to the general public; (vi)
information concerning the business affairs of any individual or firm doing
business with the Parking Companies; (vii) financial data and the operating
expense structure pertaining to any parking facility owned, operated, leased or
managed by the Parking Companies or for which the Parking Companies have or are
providing consulting services; and (viii) other confidential information and
trade secrets relating to the operation of the Company's business (the matters
described in this sentence hereafter referred to as the "Trade Secret and
Confidential Information").
(b) Customer Relationships. Executive understands and acknowledges
that the Company has expended significant resources over many years to identify,
develop, and maintain its clients. Executive additionally acknowledges that the
Company's clients have had continuous and long-standing relationships with the
Company and that, as a result of these close, long-term relationships, the
Company possesses significant knowledge of its clients and their needs. Finally,
Executive acknowledges Executive's association and contact with these clients is
derived solely from his employment with the Company. Executive further
acknowledges that the Company does business throughout the United States and
that Executive personally has significant contact with the Company customers
solely as a result of his relationship with the Company in areas including:
Chicago, Los Angeles, and Phoenix.
(c) Confidentiality. With respect to Trade Secret and Confidential
Information, and except as may be required by the lawful order of a court of
competent jurisdiction, Executive agrees that he shall:
(i) hold all Trade Secret and 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;
(ii) use all reasonable precautions to assure that the
Trade Secret and Confidential Information are properly protected and
kept from unauthorized persons;
8
<PAGE> 9
(iii) make no use of any Trade Secret and Confidential
Information except as is required in the performance of his duties for
the Company; and
(iv) upon termination of his employment with the Company,
whether voluntary or involuntary and regardless of the reason or cause,
or upon the request of the Company, promptly return to the Company any
and all documents, and other things relating to any Trade Secret and
Confidential Information, all of which are and shall remain the sole
property of the Company. The term "documents" as used in the preceding
sentence shall mean all forms of written or recorded information and
shall include, without limitation, all accounts, budgets,
compilations, computer records (including, but not limited to, computer
programs, software, disks, diskettes or any other electronic or
magnetic storage media), contracts, correspondence, data, diagrams,
drawings, financial statements, memoranda, microfilm or microfiche,
notes, notebooks, marketing or other plans, printed materials, records
and reports, as well as any and all copies, reproductions or summaries
thereof.
Notwithstanding the above, nothing contained herein shall restrict
Executive from using, at any time after his termination of employment with the
Company, information which is in the public domain or knowledge acquired during
the course of his employment with the Company which is generally known to
persons of his experience in other companies in the same industry.
(d) Assignment of Intellectual Property Right. Executive agrees to
assign to the Company any and all intellectual property rights including
patents, trademarks, copyright and business plans or systems developed, authored
or conceived by Executive while so employed and relating to the business of the
Company, and Executive agrees to cooperate with the Company's attorneys to
perfect ownership rights thereof in the Company or any one or more of the
Company. This agreement does not apply to an invention for which no equipment,
supplies, facility or Trade Secret and Confidential Information of the Company
was used and which was developed entirely on Executive's own time, unless (i)
the invention relates either to the business of the Company or to actual or
demonstrably anticipated research or development of the Parking Companies, or
(ii) the invention results from any work performed by Executive for the Parking
Companies.
(e) Inevitable Disclosure. Based upon the Recitals to this Agreement
and the representations Executive has made in Paragraphs 5(a) and 5(b) above,
Executive acknowledges that the Company's business is highly competitive and
that it derives significant value from both its Trade Secret and Confidential
Information not being generally known in the marketplace and from their
long-standing near-permanent customer relationships. Based upon this
acknowledgment and his acknowledgments in Paragraphs 5(a) and 5(b), Executive
further acknowledges that he inevitably would disclose the Company's Trade
Secret and Confidential Information, including trade secrets, should Executive
serve as director, officer, manager, supervisor, consultant, independent
contractor, owner of greater than 1% of the stock, representative, agent, or
executive (where Executive's duties as an employee would involve any level of
strategic, advisory, technical, creative sales, or other similar input) for any
person, partnership, joint venture, firm, corporation, or other enterprise which
is a competitor of the Company engaged in providing parking facility management
services because it would be impossible for Executive to serve in any of the
above capacities for such a competitor of the
9
<PAGE> 10
Company without using or disclosing the Company's Trade Secret and Confidential
Information, including trade secrets.
(f) Non-Solicitation. Executive agrees that while he is employed by
the Company and for a period of eighteen (18) months after the Date of
Termination, Executive shall not, directly or indirectly:
(i) without first obtaining the express written permission of
the Company's General Counsel which permission may be withheld solely
in the Company's discretion, directly or indirectly contact or solicit
business from any client or customer of the Company with whom Executive
had any contact or about whom Executive acquired any Trade Secret or
Confidential Information during his employment with the Company or
about whom Executive has acquired any information as a result of his
employment with the Company. Likewise, Executive shall not, without
first obtaining the express written permission of the Company's General
Counsel which permission may be withheld solely in the Company's
discretion, directly or indirectly contact or solicit business from any
person responsible for referring business to the Company or who
regularly refers business to the Company with whom Executive had any
contact or about whom Executive acquired any Trade Secret or
Confidential Information during his employment with the Company or
about whom Executive has acquired any information as a result of his
employment with the Company. Executive's obligations set forth in this
subparagraph are in addition to those obligations and representations,
including those regarding Trade Secret and Confidential Information and
Inevitable Disclosure set forth elsewhere in this Agreement; or
(ii) take any action to recruit or to assist in the
recruiting or solicitation for employment of any officer, employee or
representative of the Parking Companies.
It is not the intention of the Company to interfere with the employment
opportunities of former employees except in those situations, described above,
in which such employment would conflict with the legitimate interests of the
Company. If the Executive, after the termination of his employment hereunder,
has any question regarding the applicability of the above provisions to a
potential employment opportunity, Executive acknowledges that it is his
responsibility to contact the Company so that the Company may inform Executive
of its position with respect to such opportunity.
(g) As additional consideration for the representation and
restrictions contained in Paragraph 5, the Company agrees to pay Executive as
follows (the "Salary Continuation Payments"):
(i) if Executive's termination occurs for any reason other
than Cause, the sum of $150,000 in equal monthly installments for up
to eighteen (18) months following the Date of Termination;
(ii) if Executive's termination occurs for Cause, the sum of
$50,000 in equal monthly installments for up to eighteen (18) months
following the Date of Termination.
10
<PAGE> 11
In the event Executive breaches this Agreement at any time during the 18-month
period following the Date of Termination, the Company's obligation to continue
any Salary Continuation Payments shall immediately cease and Executive agrees to
return to Company all Salary Continuation Payments paid up to that time.
(h) Remedies. Executive acknowledges that the Company would be
irreparably injured by a violation of the covenants of this Paragraph 5 and
agrees that the Company, or any one or more of the Parking Companies, in
addition to any other remedies available to it or them for such breach or
threatened breach, shall be entitled to a preliminary injunction, temporary
restraining order, or other equivalent relief, restraining Executive from any
actual or threatened breach of any of the provisions of this Paragraph 5. If a
bond is required to be posted in order for the Company or any one or more of the
Company to secure an injunction or other equitable remedy, the parties agree
that said bond need not exceed a nominal sum. This paragraph shall be applicable
regardless of the reason for Executive's termination of employment, and
independent of any alleged action or alleged breach of any provision hereby by
the Company. If at any time any of the provisions of this Paragraph 5 shall be
determined to be invalid or unenforceable by reason of being vague or
unreasonable as to duration, area, scope of activity or otherwise, then this
Paragraph 5 shall be considered divisible (with the other provisions to remain
in full force and effect) and the invalid or unenforceable provisions shall
become and be deemed to be immediately amended to include only such time, area,
scope of activity and other restrictions, as shall be determined to be
reasonable and enforceable by the court or other body having jurisdiction over
the matter, and Executive expressly agrees that this Agreement, as so amended,
shall be valid and binding as though any invalid or unenforceable provision had
not been included herein.
(i) Attorneys' Fees. In the event of litigation in connection with or
concerning the subject matter of this Agreement, the prevailing party shall be
entitled to recover all costs and expenses of litigation incurred by it,
including attorneys' fees and, in the case of the Company, reasonable
compensation for the services of its internal personnel.
6. Severability. The invalidity or unenforceability of any provision
of this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified). Nothing contained
in Paragraph 5(d) or this Paragraph 6 shall constitute an admission, nor create
an inference, that any provision of this Agreement or the application thereof to
any party or circumstance, is invalid or unenforceable.
7. Notices. Any notice which any party shall be required or shall
desire to serve upon the other shall be in writing and shall be delivered
personally or sent by registered or certified mail, postage prepaid, or sent by
facsimile or prepaid overnight courier, to the parties at the addresses set
forth below (or such other addresses as shall be specified by the parties by
like notice):
11
<PAGE> 12
In the case of Executive to:
James A. Wilhelm
321 Pinehurst Drive
Des Plaines, Illinois 60016
In the case of the Company to:
APCOA/Standard Parking, Inc.
900 North Michigan Avenue
Suite 1600
Chicago, Illinois 60611
Attention: General Counsel
8. Applicable Law. This Agreement shall be construed in accordance
with the laws and decisions of the State of Illinois, without regard to the
conflict of law provisions thereof
9. Nonalienation. The interests of Executive under this Agreement are
not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of
Executive or Executive's beneficiary.
10. Amendment. This Agreement may be amended or cancelled only by
mutual agreement of the parties in writing without the consent of any other
person.
11. Waiver of Breach. No waiver by any party hereto of a breach of any
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.
12. Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business. Executive's
duties hereunder are personal and may not be assigned.
13. Entire Agreement. Except as otherwise noted herein, this
Agreement, constitutes the entire agreement between the parties concerning the
subject matter hereof and supersedes all prior and contemporaneous agreements
and understandings, either oral or in writing, if any, between the parties
relating to the subject matter hereof.
14. Acknowledgement by Executive. Executive has read and fully
understands the terms and conditions set forth herein, has had time to reflect
on and consider the benefits and consequences of entering into this Agreement
and has had the opportunity to review the terms
12
<PAGE> 13
hereof with an attorney or other representative, if he so chooses. Executive has
executed and delivered this Agreement as his free and voluntary act, after
having determined that the provisions contained herein are of a material benefit
to him, and that the duties and obligations imposed on him hereunder are fair
and reasonable and will not prevent him from earning a livelihood following the
Date of Termination.
IN WITNESS WHEREOF, Executive and the Company have executed this
Agreement as of the day and year first written above.
APCOA/STANDARD PARKING, INC.
By: [SIG]
---------------------------
Its:
---------------------------
EXECUTIVE:
/s/ James A. Wilhelm
-------------------------------
James A. Wilhelm
13
<PAGE> 14
EXECUTIVE EMPLOYMENT AGREEMENT
JAMES A. WILHELM
SCHEDULE I
<TABLE>
<CAPTION>
INSURED INSURER POLICY # FACE VALUE(1)
<S> <C> <C> <C>
James A. Wilhelm Guardian Life 3060461 $100,000
James A. Wilhelm Guardian Life 3322652 $ 50,000
James A. Wilhelm Guardian Life 3515527 $140,000
James A. Wilhelm Guardian Life 4024974 $100,000
</TABLE>
- -------------------------------
(1) The "Face Value" is listed for identification purposes only. It is
acknowledged that the amount of the actual Death Benefits payable under any
given policy may be greater than the designated Face Value, and that the Death
Benefits so payable are not intended to be limited or constrained in any way by
reason of the above Face Value listing.
<PAGE> 15
DEFERRED COMPENSATION AGREEMENT
This Agreement is made and entered into as of August 1, 1999 by
and between APCOA/Standard Parking, Inc., a Delaware corporation (the
"COMPANY"), and James A. Wilhelm (the "EMPLOYEE").
RECITALS
A. The Company regards the Employee as important to the long-term
growth and profitability of the Company and has determined that it would be to
the advantage and interest of the Company to provide certain additional
compensation to the Employee if the Employee continues his employment with the
Company until his retirement or earlier death.
B. The Employee wishes to be assured that he or his family will be
entitled to a certain amount of additional compensation for some definite period
of time from and after his retirement from active service with the Company,
whether by reason of his death or otherwise.
C. The parties hereto wish to provide the terms and conditions upon
which the Company shall pay such additional compensation to the Employee or his
family after his retirement or death.
CLAUSES
Now, therefore, in consideration of the premises and of the mutual
promises contained herein, the parties hereto agree as follows:
1. DEFINITIONS.
(a) "ANNUAL RETIREMENT BENEFIT" means an amount equal to $112,500 per
annum which, subject to the conditions set forth herein, is to be
paid by the Company to the Employee during the period described
in Section 2 hereof.
<PAGE> 16
(b) "COMMENCEMENT DATE" means the first day of the third month
following the Retirement Date, which is May 1, 2019.
(c) "COMPUTATION DATE" means the May 1 nearest to the date of the
Employee's death.
(d) "DISABLED" OR "DISABILITY" means that the Employee is not able
to perform substantially all of the duties of his regular
occupation with the Company, except that after the first full
twenty-four (24) months of such disability, it means that the
Employee is not able to perform substantially all of the duties
of his occupation with the Company or any other occupation for
which he is or becomes fitted by education, training or
experience. The determination of whether the Employee is Disabled
shall be made by the Company and shall be final and binding upon
the Employee.
(e) "QUALIFYING DISABILITY PERIOD" means the time during which the
Employee is Disabled, but only if the Employee's Disability first
occurs while the Employee is in the employ of the Company on a
full time basis.
(f) "RETIREMENT BENEFITS" means the aggregate of all of the Annual
Retirement Benefit payments due to the Employee for the period
described in Section 2 hereof.
2
<PAGE> 17
(g) "RETIREMENT - DATE" means the date on which the Employee attains
age sixty-five (65).
2. RETIREMENT BENEFITS. In consideration of the Employee remaining
in its employ, as additional compensation, the Company agrees to pay to the
Employee an Annual Retirement Benefit on the Commencement Date and on each
anniversary of the Commencement Date until the first to occur of (a) fifteen
(15) such annual payments having been made or (b) the Employee's death.
Notwithstanding the foregoing, the Employee will not be entitled to any
Retirement Benefits unless the Employee remains in the employ of the Company on
a full-time basis without any break or interruption in service (other than a
break or interruption in service during a Qualifying Disability Period) from the
date hereof to the Retirement Date.
3. DEATH OF EMPLOYEE. Notwithstanding anything to the contrary
herein contained, upon the death of Employee, all of the Company's obligations
hereunder shall immediately cease and terminate (except for any unpaid
obligations that shall have accrued prior to Employee's death by reason of
paragraph 2 above), and the Company thereafter shall have no further obligation
hereunder of any kind or nature whatsoever.
4. TERMINATION OF EMPLOYMENT. The Company's obligations under
Section 2 are conditioned upon the continuous employment of Employment by the
Company (or by one of Its partners or affiliates) until his Retirement Date. If
the Employee's employment Is terminated prior to the Retirement Date for any
reason whatsoever, except as a result of the Employee's Disability,
3
<PAGE> 18
then the Employee shall not be entitled to any Retirement Benefits provided
under this Agreement and all of the Company's obligations hereunder shall
immediately lapse and terminate. If the Employee's employment is terminated on
account of his Disability, the Employee shall be entitled to the Retirement
Benefits on the terms and subject to the conditions set forth herein, but only
if his Disability continues until the earlier of (a) his Retirement Date, or (b)
the date on which he is re-employed by the Company in substantially the same
capacity and performing substantially all of the duties of his employment as at
the time the Disability began.
5. TAX WITHHOLDING. The Company shall report the full amount of the
Retirement Benefits as compensation to the Employee in the year in which such
amount are paid or as the Company may otherwise determine is required by law.
Such amounts will be reflected on the Form W-2 issued to the Employee and will
be subject to withholding for federal, state and local income and employment
taxes as determined by the Company.
6. ASSIGNMENT. The Employee shall not have any power or right to
transfer, assign, anticipate, pledge, hypothecate or otherwise encumber any part
or all of the amounts payable under this Agreement, nor shall such amounts be
subject to attachment, garnishment, levy, execution or other legal or equitable
process by any creditor of the Employee, and no such benefit shall be
transferrable by operation of law in the event of bankruptcy, insolvency or
death of the Employee. Any such attempted assignment, transfer or encumbrance
shall be null and void and shall terminate the Company's obligations under this
Agreement and the Company shall thereupon have no further liability to the
Employee.
4
<PAGE> 19
7. UNFUNDED ARRANGEMENT. It is the intention of the parties that this
Agreement shall constitute an unfunded and unsecured arrangement maintained for
the purpose of providing deferred compensation for a select member of the
Company's management and/or a highly compensated employee for purposes of Title
I of ERISA and for federal income tax purposes. Any and all reserves,
investments, insurance policies or other assets that may be set aside or
purchased by the Company to fund its obligations hereunder shall belong solely
to the Company, and the Employee shall not have any rights, claims or interest
therein. The Company's obligations hereunder shall be payable solely from the
assets of the Company. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall (a) require the Company to set aside any
reserves or other assets to fund its obligations hereunder or (b) create, or be
construed to create, a trust of any kind. There is no guaranty that the
Company's assets will be sufficient to pay the benefits contained herein. The
Employee agrees that no general or limited partner, employee or agent of the
Company (and no officer, director, employee, agent or shareholder of the
Company's general partner) shall be liable for any obligation of the Company of
any loss or claim incurred by the Employee in connection with this Agreement.
The Employee hereby releases the Company's general partner or general partners,
whether now serving or that may hereafter become admitted as a general partner,
from any and all liability to pay the Company's obligations under this Agreement
or to contribute or advance funds to the Company to enable it to satisfy such
liability.
8. SUBJECT TO CLAIMS OF CREDITORS. Payments to be made to the
Employee shall be made from assets which, for all purposes, shall continue to be
a part of the general assets of the
5
<PAGE> 20
Company, and no person shall have, by virtue of the provisions of this
Agreement, any interest in, preferred claim on or beneficial interest in any of
the Company's assets. The rights of the Employee to receive payments from the
Company under the provisions hereof shall be a mere unsecured contractual right
and shall be no greater than the right of any unsecured general creditor of the
Company.
9. NO PRIOR RIGHTS. This Agreement is not a contract of employment
and neither this Agreement nor any action taken hereunder shall be construed as
giving the Employee any right to be retained in the employ of the Company or any
of its partners or affiliates nor limit the right of the Company to discharge
the Employee. This Agreement provides solely for additional compensation for the
Employee's services, payable after the termination of his employment with the
Company and is not intended to be an employment contract.
10. INTEGRATION. This Agreement sets forth the entire agreement
between the parties with respect to the matters described herein and all prior
discussions and negotiations between them with respect to this subject matter
are hereby merged into this Agreement. This Agreement supersedes any and all
previous agreements between the parties or between the Employee and the general
partner of the Company, written or oral, relating to the subject matter hereof.
11. AMENDMENTS. This Agreement may not be amended, altered or
modified, except by a written instrument signed by the parties hereto, or their
respective successors or assigns, any may not be otherwise terminated except as
provided herein.
6
<PAGE> 21
12. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns, and the Employee and his
successors, assigns, heirs, executors, administrators and beneficiaries.
13. NOTICES. Any notice, consent or demand required or permitted to be
given under the provisions of this Agreement shall be in writing, and shall be
signed by the party giving or making the same. If such notice, consent or demand
is mailed to a party hereto, it shall be sent by United States certified mail,
return receipt requested, postage repaid, addressed to the Company at its
principal office or to the Employee at his last known residence address as shown
on the records of the Company. The date of such mailing shall be deemed the date
of notice, consent or demand.
14. ATTORNEY'S FEES. If any action at law or in equity, or any
arbitration proceeding, is brought to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to which he
may be entitled.
15. ILLINOIS LAW. This Agreement and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of Illinois. Both parties hereby consent to the exclusive jurisdiction of
any state or federal court located within Cook County, Illinois, which is the
location of the Company's principal office, and agree that any litigation or
other proceeding instituted hereunder shall be brought in such county and state.
The parties waive any
7
<PAGE> 22
objection they may have based on improper venue or forum non conveniens to the
conduct of any proceeding instituted in Cook County, Illinois.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
COMPANY:
APCOA/Standard Parking, Inc.,
a Delaware corporation
By: [sig]
---------------------------------------
Its:
-------------------------------------
EMPLOYEE:
/S/ James A. Wilhelm
---------------------------------------
JAMES A. WILHELM
<PAGE> 1
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of March
26,1998, is by and between Standard Parking, L.P., a Delaware limited
partnership (the "Company"), and Steven A. Warshauer (the "Executive").
WHEREAS, prior to the date hereof, the Executive has been employed by
the Company and the Company desires to have Executive continue in its employ;
and
WHEREAS, pursuant to that certain Combination Agreement, dated as of
January 15, 1998, between, among others, APCOA, Inc., a Delaware corporation ("
APCOA "), the Company and the equity holders of the Company, all of the equity
interests of the Company are being sold to APCOA; and
WHEREAS, the Company understands that APCOA intends to continue in the
business of operating private and public parking facilities for itself, its
affiliates (including the Company and its affiliates) and others, and as a
consultant and/or manager for parking facilities operated by others throughout
the United States (APCOA, its subsidiaries and affiliates (including the Company
and its subsidiaries and affiliates), and any other APCOA-controlled businesses
engaged in parking garage management (in each case including their predecessors
or successors) are referred to hereinafter as the "Parking Companies"); and
WHEREAS, the general partner of the Company has determined that it is
in the best interest of the Company to continue to employ the Executive as an
Executive Vice President, and the Executive desires to continue to serve the
Company in that capacity; and
18
<PAGE> 2
WHEREAS, the Company desires to continue to employ the Executive and
the Executive desires to continue to work for the Company on the terms and
conditions set forth herein.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. The Company shall employ the Executive, and the
Executive shall serve the Company, on the terms and conditions set forth in this
Agreement, for the period beginning on the date hereof (the "Effective Date")
and ending on the third anniversary hereof (the "Employment Period"), provided,
however, that commencing on the date two years after the Effective Date and on
each annual anniversary of such date (each annual anniversary thereof shall
hereinafter be referred to as the "Renewal Date"), unless previously terminated,
the Employment Period shall be automatically extended so as to terminate two
years from the Renewal Date, so that there is always between one and two years
remaining in the Employment Period, unless 90 days prior to the Renewal Date the
Company or the Executive shall terminate this Agreement by giving notice to the
other party that the Employment Period shall not be so extended (a "Notice of
Nonrenewal"). Notwithstanding any such termination, Section 6 of this Agreement
shall remain in full force and effect.
2. Position and Duties. During the Employment Period, the Executive
shall serve as an Executive Vice President, with the duties and responsibilities
currently associated with such position. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive shall devote full attention and time during normal
business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive under this
Agreement, use the Executive's reasonable best efforts to carry out such
responsibilities faithfully and efficiently.
-2-
<PAGE> 3
The Executive shall not, during the term of this Agreement, engage in any other
business activities that will interfere with the Executive's employment pursuant
to this Agreement. During the Employment Period, the Executive's services shall
be performed primarily in Chicago, Illinois.
3. Compensation. (a) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") of no less
than $300,000, payable in accordance with the normal payroll practices for
executives of the Company as in effect from time to time (but no less frequently
than monthly). Such Annual Base Salary shall be subject to review annually in
accordance with the review policies and practices for executives of the Company
as in effect at the time of any such review.
(b) Bonus. For each calendar year ending during the Employment Period,
the Executive shall be eligible to receive an annual bonus (the "Annual Bonus"),
based upon the terms and conditions of an annual bonus program to be established
by the Company. Any such annual bonus program shall provide that the Executive's
target bonus ("Target Annual Bonus") will be a percentage of the Annual Base
Salary mutually agreed upon by the Company and Executive.
(c) Equity Plan. In the event the Company adopts an equity incentive
plan or program (the "Equity Plan") for its key executives, the Executive shall
be entitled to participate in the Equity Plan from and after the effective date
thereof in accordance with the terms and conditions of such plan.
(d) Other Benefits. In addition to the foregoing, during the Employment
Period: (i) the Executive shall be entitled to participate in savings,
retirement, and fringe benefit plans,
-3-
<PAGE> 4
practices, policies and programs of the Company as in effect from time to time,
on the same terms and conditions as those applicable to peer executives; (ii)
the Executive shall be entitled to four weeks of annual vacation, to be taken in
accordance with the vacation policy as in effect from time to time; and (iii)
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in, and shall receive all benefits under medical,
dental, disability and other welfare benefit plans, practices, policies and
programs provided by the Company, as in effect from time to time, on the same
terms and conditions as those applicable to peer executives.
(e) Executive shall be reimbursed by the Company for business expenses
incurred on behalf of the Parking Companies in accordance with the policies and
practices of the Company as in effect from time to time.
4. Termination of Employment. (a) Death or Disabili1y. In the event of
the Executive's death during the Employment Period, the Executive's employment
with the Company shall terminate automatically. The Company, in its discretion,
shall have the right to terminate the Executive's employment because of the
Executive's Disability during the Employment Period. "Disability" means that (i)
the Executive 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
the Executive's, duties under this Agreement, as a result of physical or mental
illness or injury, and (ii) a physician selected by the Company or its insurers
has determined that the Executive's incapacity is total and permanent. A
termination of the Executive's employment by the Company for Disability shall be
communicated to the Executive by written notice, and shall be effective on the
30th day after receipt of such notice by the
-4-
<PAGE> 5
Executive (the "Disability Effective Date") unless the Executive returns to
full-time performance of the Executive's duties before the Disability Effective
Date.
(b) By the Company. In addition to termination for Disability, the
Company may terminate the Executive's employment during the Employment Period
for Cause or without Cause. "Cause" means:
(i) the continued and willful or deliberate failure of
the Executive substantially to perform the Executive's duties, or to
comply with the Executive's obligations, under this Agreement (other
than as a result of physical or mental illness or injury), or
(ii) illegal conduct or gross misconduct by the Executive,
in either case that is willful and results in material damage to the
business or reputation of the Company.
Upon the occurrence of events constituting Cause as defined in subsection (i) of
this paragraph (b), the Company shall give the Executive advance notice of any
such termination for Cause and shall provide the Executive with a reasonable
opportunity to cure.
(c) Voluntarily by the Executive. The Executive may terminate his
employment by giving written notice thereof to the Company.
(d) Date of Termination. The "Date of Termination" means the date
of the Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause as set forth
in notice from the Company is effective, or the date on which the Executive
gives the Company notice of a termination of employment, as the case may be.
After the Executive's termination occurs for any reason, in addition to any
other obligations hereunder, the Company shall pay the Executive:
-5-
<PAGE> 6
(i) the Executive's Annual Base Salary for the period
ending with the Date of Termination;
(ii) payment for unused vacation days accrued for the year
in which the Executive's termination occurs, as determined in
accordance with the Company policy as in effect from time to time; and
(iii) any other payments or benefits to be provided to the
Executive by the Company pursuant to any employee benefit plans or
arrangements adopted by the Company, to the extent such amounts are due
from the Company. Except as may otherwise be expressly provided to the
contrary in this Agreement, nothing in this Agreement shall be
construed as requiring Executive to be treated as employed by the
Company for purposes of any employee benefit plan following the Date of
Termination.
5. Additional Obligations of the Company upon Termination. (a) By
the Company Other Than for Cause, Death or Disability: If, during the Employment
Period, the Company terminates the Executive's employment, other than for Cause,
death or Disability, but excluding any termination of employment at the end of
the Employment Period (whether or not as a result of a Notice of Nonrenewal by
the Company), the Company shall, for the remainder of the Employment Period as
in effect immediately before the Date of Termination, continue to pay the
Executive the Annual Base Salary and Annual Bonus(es) through the end of the
then-current Employment Period, as and when such amounts would be paid in
accordance with Sections 3(a) and (b) above; provided, that the amount of each
of the Annual Bonus(es) so paid shall equal the Target Annual Bonus. The Company
shall also continue to provide for the same period welfare benefits to the
Executive and/or the Executive's family, at least as favorable as those
-6-
<PAGE> 7
that would have been provided to them under clause (d)(iv) of Section 3 of this
Agreement if the Executive's employment had continued until the end of the
Employment Period; provided, that during any period when the Executive is
eligible to receive such benefits under another employer-provided plan, the
benefits provided by the Company under this Section 5(a) may be made secondary
to those provided under such other plan. The payments provided pursuant to this
Section 5(a) are intended as liquidated damages for a termination of the
Executive's employment by the Company other than for Cause or Disability and
shall be the sole and exclusive remedy therefor.
(b) Death. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, the Company shall make,
within 30 days after the Date of Termination, a lump-sum cash payment to the
Executive's estate equal to the sum of (i) the Executive's Annual Base Salary
through the end of the calendar month in which death occurs, (ii) any earned and
unpaid Annual Bonus for any calendar year ended prior to the Date of
Termination, (iii) any accrued but unpaid vacation pay and (iv) any other vested
benefits to which the Executive is entitled, in each case to the extent not yet
paid.
(c) Disability. In the event the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period
in accordance with Section 4(a) hereof, the Company shall pay to the Executive
or the Executive's legal representative, as applicable, (i) the Executive's
Annual Base Salary for the duration of the Employment Period in effect on the
Date of Termination, provided that any such payments made to the Executive shall
be reduced by the sum of the amounts, if any, payable to the Executive under any
disability benefit plans of the Company or under the Social Security disability
insurance program, (ii) any earned and unpaid Annual Bonus for any calendar year
ended prior to the Date of Termination and (iii)
-7-
<PAGE> 8
any other vested benefits to which the Executive is entitled, in each case to
the extent not yet paid.
(d) Cause: Voluntary Termination. If the Executive's employment is
terminated by the Company for Cause or the Executive voluntarily terminates his
employment during the Employment Period, the Company shall pay the Executive
only those amounts specified in Section 5(d), in each case to the extent not yet
paid, and the Company shall have no further obligations under this Agreement.
(e) Termination After a Change in Control. (i) If Executive is
terminated by the Company during the three-year period following a Change in
Control (as defined in Section 5(f) below) for any reason other than Cause, then
Executive shall be entitled to the following:
(A) During the longer of (i) the 18-month period
following his termination and (ii) the remainder of the Employment
Period in effect at the date of termination, and except to the extent
prohibited under the terms of any applicable insurance policy, he shall
continue to be covered under the Company's welfare benefit plans to the
same extent and on the same terms as those benefits are provided to the
Company's active employees.
(B) He shall receive from the Company an amount (the
"Severance Pay") equal to the greater of (i) one and one-half times the
sum of (x) the Executive's current Annual Base Salary plus (y) the
amount of any bonus paid to Executive in the preceding twelve months
and (ii) the Annual Base Salary and Annual Bonuses through the end of
the then current Employment Period (provided, that the amount of each
of the Annual
-8-
<PAGE> 9
Bonuses so paid shall equal the Target Annual Bonus). The Severance Pay
amount shall be paid (a) if clause (i) in the previous sentence
applies, over the 18-month period commencing on the date Executive's
employment terminates, in equal monthly or more frequent installments
in accordance with the Company's payroll schedule or (b) if clause (ii)
in the previous sentence applies, as and when such amounts would be
paid in accordance with Sections 3(a) and (b) above.
The Company's obligation to provide welfare benefit coverage and make severance
payments under this Section 5(e) shall cease with respect to periods after the
earlier to occur of the date of Executive's death, or the date, if any, of the
breach by Executive of the provisions of Section 6.
(ii) If Executive terminates his employment hereunder voluntarily
following a Change in Control, then Executive shall not be entitled to Severance
Pay; provided, however, that if Executive terminates his employment for Good
Reason (as defined below) during the three-year period following a Change in
Control, such termination shall not be considered a voluntary termination by
Executive and Executive shall be treated as if he had been terminated by the
Company pursuant to paragraph (i) of this Section 5(e) above. "Good Reason"
means, in the event of or following a Change in Control:
(A) without the express written consent of the Executive,
(1) the assignment to the Executive of duties inconsistent in any
substantial respect with the Executive's position, authority or
responsibilities as held, exercised and assigned during the ninety (90)
day period immediately preceding the Change in Control, or (2) any
other substantial adverse change in such position (including titles,
authority or responsibilities)
-9-
<PAGE> 10
or significant reduction in salary, unless in either case the change is
warranted by an objective evaluation of Executive's performance or is
related to a bona fide company restructuring;
(B) any failure by the Company to comply with any of the
provisions of this Agreement, other than an insubstantial and
inadvertent failure remedied by the Company promptly after receipt of
notice thereof given by the Executive; or
(C) the Company requires or otherwise takes such action
as would reasonably require the Executive's relocation.
(f) For purposes of this Agreement, the term "Change in Control"
shall mean the first to occur of the date Myron C. Warshauer either (i) no
longer serves as Chief Executive Officer of the Company or (ii) no longer
retains, for whatever reason, primary responsibility for the daily management of
the Company and the ability to implement his management decisions with respect
to the Company.
(g) In the event that it shall be necessary for Executive to
engage in litigation in connection with the enforcement of his rights under
paragraphs (i) and (ii) of Section 5(e), he shall be entitled to recover from
the Company the reasonable attorney's fees and other costs incurred in such
legal action, in addition to any other relief to which he may be entitled;
provided, however, that Executive ultimately prevails in such litigation.
6. Protection of the Company Assets (Confidentiality.
Non-Competition and Other Matters). (a) Executive recognizes and acknowledges
that the acquisition and operation of, and the providing of consulting services
for, parking facilities is a unique enterprise and that there
-10-
<PAGE> 11
are relatively few firms engaged in these businesses in the primary areas in
which the Parking Companies operate. Executive further recognizes and
acknowledges that as a result of his employment with the Parking Companies,
Executive has had and will continue to have access to confidential information
and trade secrets of the Parking Companies that constitute proprietary
information that the Parking Companies are entitled to protect, which
information constitutes special and unique assets of the Parking Companies,
including, but not limited to, (i) information relating to the Parking
Companies' manner and methods of doing business, including, but not limited
to, strategies for negotiating leases and management agreements; (ii) the
identity of the Parking Companies' clients, customers, lessors and locations,
and the identity of any individuals or entities having an equity or other
economic interest in any of the Parking Companies to the extent such identity
has not otherwise been voluntarily disclosed by any of the Parking Companies;
(iii) the specific confidential terms of management agreements, leases or
other business agreements, including, but not limited to, the duration of, and
the fees, rent or other payments due thereunder; (iv) the identities of
beneficiaries under land trusts; (v) the business, developments, activities or
systems of the Parking Companies, including, but not limited to, any
marketing or customer service oriented programs in the development stages or
not otherwise known to the general public; (vi) information concerning the
business affairs of any individual or firm doing business with the Parking
Companies; (vii) financial data and the operating expense structure pertaining
to any parking facility owned, operated, leased or managed by the Parking
Companies or for which the Parking Companies have or are providing consulting
services; and (viii) other confidential information and trade secrets relating
to the operation of the Company's business (the matters described in this
sentence hereafter referred to as the "Trade Secrets").
-11-
<PAGE> 12
(b) Confidentiality. With respect to Trade Secrets, and except as
may be required by the lawful order of a court of competent jurisdiction, the
Executive agrees that he shall:
(i) hold all Trade Secrets in strict confidence and not
publish or otherwise disclose any portion thereof to any
person whatsoever except with the prior written consent of the
Parking Companies;
(ii) use all reasonable precautions to assure that the
Trade Secrets are properly protected and kept from
unauthorized persons;
(iii) make no use of any Trade Secrets except as is
required in the performance of his duties for the Parking
Companies; and
(iv) upon termination of his employment with the Parking
Companies, whether voluntary or involuntary and regardless of
the reason or cause, or upon the request of the Parking
Companies, promptly return to the Parking Companies any and
all documents, and other things relating to the Trade Secrets,
all of which are and shall remain the sole property of the
Parking Companies. The term "documents" as used in the
preceding sentence shall mean all forms of written or recorded
information and shall include, but not be limited to, all
accounts, budgets, compilations, computer records (including,
but not limited to, computer, programs, software, disks,
diskettes or any other electronic or magnetic storage media),
contracts, correspondence, data, diagrams, drawings, financial
statements, memoranda, microfilm or microfiche, notes,
notebooks, marketing or other plans, printed materials,
records and reports, as well as any and all copies,
reproductions or summaries thereof.
-12-
<PAGE> 13
Notwithstanding the above, nothing contained herein shall restrict Executive
from using, at any time after his termination of employment with the Company,
information which is in the public domain or knowledge acquired during the
course of his employment with the Company which is generally known to persons of
his experience in other companies in the same industry.
(c) Assignment of Intellectual Property Rights. The Executive
agrees to assign to the Company any and all intellectual property rights
including patents, trademarks, copyright and business plans or systems
developed, authored or conceived by the Executive while so employed and relating
to the business of the Parking Companies, and the Executive agrees to cooperate
with the Company's attorneys to perfect ownership rights thereof in the Company
or any one or more of the Parking Companies. This agreement does not apply to an
invention for which no equipment, supplies, facility or trade secret information
of the Parking Companies was used and which was developed entirely on the
Executive's own time, unless (i) the invention relates either to the business of
the Parking Companies or to actual or demonstrably anticipated research or
development of the Parking Companies, or (ii) the invention results from any
work performed by the Executive for the Parking Companies.
(d) Covenants Not to Compete. The Executive agrees that while he
is employed by the Company and for a period of two (2) years after the date on
which such employment terminates (or eighteen (18) months after the date such
employment terminates if such termination follows a Change in Control), the
Executive shall not, directly or indirectly:
(i) have an ownership interest in (other than ownership
of 5% or less of the outstanding stock of any entity listed
on the New York or American Stock Exchange or included in the
National Association of Securities Dealers Automated Quotation
System)
-13-
<PAGE> 14
any corporation, firm, joint venture, partnership, proprietorship, or other
entity or association which manages, owns or operates a parking facility that is
competitive with the business of the Parking Companies in any of the
metropolitan areas in which, as of the time Executive's employment terminates,
the Parking Companies own, manage and/or operate one or more parking facilities
(hereinafter the "Metropolitan Areas");
(ii) become employed by, work for, consult with, or assist
any person, corporation, firm, joint venture, partnership,
proprietorship, or any other entity or association that is
engaged in a business which is competitive with the business
of the Parking Companies in the Chicago metropolitan area or
in any of the other Metropolitan Areas in which the Executive
has been responsible for performing supervisory or other
services on behalf of any of the Parking Companies within the
three (3) years immediately preceding the termination of his
employment;
(iii) contact or solicit business from any client or
customer of the Parking Companies or from any person who is
responsible for referring or who regularly refers business to
the Parking Companies; or
(iv) take any action to recruit or to assist in the
recruiting or solicitation for employment of any officer,
employee or representative of the Parking Companies.
It is not the intention of me Parking Companies to intertere with the employment
opportunities of former employees except in those situations, described above,
in which such employment would conflict with the legitimate interests of the
Parking Companies. If the Executive, after the termination of his employment
hereunder, has any question regarding the applicability of the above provisions
to a potential employment opportunity, the Executive acknowledges that it is
-14-
<PAGE> 15
his responsibility to contact the Company so that the Company may inform the
Executive of its position with respect to such opportunity. Notwithstanding
anything herein to the contrary, from and after such time as the Executive is no
longer employed by the Company for any reason, he may become involved in the
operation or management of the Auditorium Garage located at 525 South Wabash in
Chicago, Illinois. Notwithstanding anything herein to the contrary, the
Executive at any time may own an equity interest in Auditorium Garage, Inc.,
which owns the Auditorium Garage.
(e) Remedies. The Executive acknowledges that the Parking
Companies would be irreparably injured by a violation of the covenants of this
Section 6 and agrees that the Company, or any one or more of the Parking
Companies, in addition to any other remedies available to it or them for such
breach or threatened breach, shall be entitled to a preliminary injunction,
temporary restraining order, or other equivalent relief, restraining the
Executive from any actual or threatened breach of any of the provisions of this
Section 6. If a bond is required to be posted in order for the Company or any
one or more of the Parking Companies to secure an injunction or other equitable
remedy, the parties agree that said bond need not exceed a nominal sum. This
Section shall be applicable regardless of the reason for the Executive's
termination of employment, and independent of any alleged action or alleged
breach of any provision hereby by the Company. If at any time any of the
provisions of this Section 6 shall be determined to be invalid or unenforceable
by reason of being vague or unreasonable as to duration, area, scope of activity
or otherwise, then this Section 6 shall be considered divisible (with the other
provisions to remain in full force and effect) and the invalid or unenforceable
provisions shall become and be deemed to be immediately amended to include only
such time, area, scope of activity and other restrictions, as shall be
determined to be reasonable and enforceable by the court or other body having
jurisdiction over the matter, and the Executive
-15-
<PAGE> 16
expressly agrees that this Agreement, as so amended, shall be valid and binding
as though any invalid or unenforceable provision had not been included herein.
7. Successors. (a) This Agreement is personal to the Executive
and, without the prior written consent of the Company, shall not be assignable
by the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean both
the Company as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
8. Miscellaneous. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.
-16-
<PAGE> 17
(b) All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Steven A. Warshauer
962 Chaucer Lane
Highland Park, Illinois 60035
If to the Company:
Standard Parking, L.P.
200 East Randolph Street
Suite 4800
Chicago, Illinois 60601
Attention: Chief Executive Officer
with a copy to:
Holberg Industries, Inc.
545 Steamboat Road
Greenwich, Connecticut 06830
Attention: Chief Financial Officer
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 8. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
-17-
<PAGE> 18
(d) Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.
(f) The Executive and the Company acknowledge that this Agreement
supersedes any other agreement, whether written or oral, between them concerning
the subject matter hereof, including, but not limited to, any written or oral
employment agreement between the Company and the Executive.
(g) This Agreement may be executed in several counterparts, each
of which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
-18-
<PAGE> 19
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its general partner, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
/S/ Steven A. Warshauer
------------------------------------
STEVEN A. WARSHAUER
STANDARD PARKING, L.P.
By: Standard Parking Corporation
Its: General Partner
By:/s/ Myron C. Warshauer
---------------------------------
Its:President
--------------------------------
-19-
<PAGE> 1
EXHIBIT 10.20
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (the "Agreement") is made and
entered into by and between G. WALTER STUELPE, a natural person ("Stuelpe"), and
APCOA/STANDARD PARKING, INC., a Delaware corporation (together with its
predecessors in interest, the "Company").
W I T N E S E T H:
WHEREAS, Stuelpe was previously employed by the Company as its
President pursuant to a certain Executive Employment Agreement dated December
12, 1994 (the "Employment Agreement"); and
WHEREAS, Stuelpe's employment by the Company terminated as of 11:59
p.m. CST on February 29, 2000; (the "Termination Date") and
WHEREAS, Stuelpe and the Company desire to settle, inter alia, all
matters relating to Stuelpe's employment by the Company, the termination of such
employment, and the rights and obligations of Stuelpe and the Company under the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Date Agreement Becomes Legally Binding. This Agreement shall become
effective and legally binding on the Effective Date (as defined below), but only
if Stuelpe executes this Agreement no later than the twenty-first (21st) day
following the Submission Date (as defined below), subject to Stuelpe's right to
revoke this Agreement pursuant to Section 7(e) hereof.
2. Definitions. The following terms shall have the meanings set forth
below whenever used in this document:
<PAGE> 2
(a) Affiliate. The word "Affiliate" shall mean any corporation or
other organization that, directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under
common control with the Company.
(b) Beneficiary. "Beneficiary" shall mean any person who becomes
entitled to receive amounts pursuant to this Agreement because
of the death of Stuelpe.
(c) Board. "Board" shall mean the Company's duly elected Board of
Directors as constituted at any time.
(d) Business of the Company. "Business of the Company" shall mean
the business of leasing and managing open air parking lots and
indoor garages and ramps for the purpose of parking motor
vehicles on a leasehold, licensed, concession or management fee
basis throughout the United States and Canada under agreement
with municipalities, owners of properties, and/or otherwise,
whether conducted directly by the Company or through an
Affiliate.
(e) Effective Date. "Effective Date" shall mean the eighth (8th) day
following the day Stuelpe executes this Agreement.
(f) Employee Benefit Plans. "Employee Benefit Plans" shall mean the
plans, arrangements, and policies maintained by the Company
under which Stuelpe was provided employment-related benefits as
of the Termination Date.
2
<PAGE> 3
(g) Employment Agreement. "Employment Agreement" shall mean that
certain Executive Employment Agreement dated December 12, 1994,
by and between Stuelpe and the Company.
(h) 401(k) Plan. "401(k) Plan" shall mean the Apcoa/Standard Parking
401(k) Savings Plan, as amended.
(i) 401(k) Wrap Around Plan. "401(k) Wrap Around Plan" shall mean
the Apcoa, Inc. 401(k) Wrap Around Plan, as amended.
(j) Key Executive Officers Retirement Plan. "Key Executive Officers
Retirement Plan" shall mean the Apcoa, Inc. Retirement Plan for
Key Executive Officers, which was adopted by the Company on
April 14, 1989.
(k) Promissory Note. "Promissory Note" shall mean that certain
Promissory Note dated June 25, 1998, in the principal amount of
$250,000.00, executed by Stuelpe in favor of the Company.
(l) Salary. "Salary" shall mean, (i) as of the Termination Date and
for the remainder of calendar year 2000, an annual amount equal
to $449,074.00; and (ii) effective as of January 1, 2001, and
for the remainder of calendar year 2001, an annual amount equal
to $462,546.00.
(m) Submission Date. "Submission Date" shall mean the date this
Agreement is submitted to Stuelpe, as set forth on page 25
hereof.
(n) Supplemental Pension Plan. "Supplemental Pension Plan" shall
mean the Supplemental Pension Plan, Amended as of 9/1/93, which
is sponsored and maintained by the Company.
3
<PAGE> 4
(o) Termination Date. "Termination Date" shall mean February 29,
2000, the date Stuelpe ceased to be employed by the Company.
3. Termination of Employment. Stuelpe ceased to be employed by the
Company as of 11:59 p.m CST on the Termination Date. Until such time, Stuelpe
was employed by the Company as its President pursuant to terms of the Employment
Agreement.
4. Payments, Benefits, Etc. Provided by the Company to Stuelpe.
(a) Salary Continuation. Following the Termination Date, the Company
shall continue to pay to Stuelpe the Salary through June 30,
2001, at such times as it normally pays executive salaries.
(b) Payment in Lieu of Salary Continuation. On July 1, 2001, the
Company shall pay to Stuelpe an amount equal to $245,827.00,
which amount represents the commuted single lump-sum value of
the continued periodic payments of the Salary to Stuelpe from
July 1, 2001 through December 31, 2001, and such payment shall
be in lieu, and in full satisfaction, of any obligation of the
Company to continue to pay the Salary to Stuelpe in respect of
periods after June 30, 2001.
(c) Certain Employee Benefit Plans. For the period beginning on
March 1, 2000 and ending on December 31, 2000, but only if
Stuelpe exercises his right to elect health continuation
coverage under 26 U.S.C. ss.4980B, Stuelpe shall continue to
participate in the health insurance and medical expense
reimbursement plans of the Company in which he participated as
of the Termination Date (or any successor plans which cover the
Company's senior officers) as though he had remained employed by
the
4
<PAGE> 5
Company, and for such period of continued participation, the
Company shall pay such portion of the premiums normally charged
to former employees and shall pay to Stuelpe such additional
amounts as shall be necessary so that Stuelpe's costs for such
continued participation on an after-tax basis do not exceed the
costs he would have incurred had he remained employed by the
Company. For the period beginning on March 1, 2000 and ending on
December 31, 2000, the Company shall pay all premiums necessary
so that Stuelpe continues to be covered by life insurance,
accidental death and dismemberment insurance, business travel
accident insurance, and long-term disability insurance providing
coverage comparable to that which he received as of the
Termination Date under the Company's group term life insurance,
accidental death and dismemberment insurance, business travel
accident insurance and group and individual long-term disability
insurance plans (subject to Stuelpe's continuing to pay his
share of such premiums, if applicable, at the same rate as of
the Termination Date) and shall pay to Stuelpe such additional
amounts as shall be necessary so that Stuelpe's costs for such
continued participation on an after-tax basis do not exceed the
costs he would have incurred had he remained employed by the
Company. As soon as practicable after the Effective Date, the
Company shall pay to Stuelpe, in a single lump sum, an amount
(the "Additional Contributions") equal to the amount of the
Company's matching contributions which were made (or which will
be made) in respect of Stuelpe under the 401(k) Plan and the
5
<PAGE> 6
401(k) Wrap Around Plan for calendar year 1999 minus any such
contributions which were actually made for Stuelpe's benefit for
any period commencing after calendar year 1999 and based on his
elective contributions under the 401(k) Plan (but only to the
extent they were based on Stuelpe's compensation from the
Company for services performed in respect of any period
commencing after calendar year 1999), together with an
additional amount so that, on an after-tax basis determined
immediately after such amount is paid to Stuelpe, Stuelpe shall
be in the same position as though the Additional Contributions
had actually been made to the 401(k) Plan and the 401(k) Wrap
Around Plan in respect of calendar year 2000. The amount of the
payment to Stuelpe pursuant to the preceding sentence as well as
any other amounts required to satisfy the requirements of this
subsection (c) in respect of Stuelpe's after-tax position shall
be calculated at the Company's cost and expense by Ernst & Young
LLP, and its determination of such amounts shall be final and
binding upon both Stuelpe and the Company, and Stuelpe and the
Company shall each provide Ernst & Young LLP with such
information as it may reasonably request in order to calculate
such amounts.
(d) Continuation of Certain Fringe Benefits. From March 1, 2000
until December 31, 2000, the Company shall, consistent with its
past practices in respect of Stuelpe, continue to provide
Stuelpe with the automobile provided to him by the Company as of
the Termination Date and upon the same terms and conditions.
From March 1, 2000 until December 31,
6
<PAGE> 7
2000, the Company will, consistent with its past practices in
respect of Stuelpe, continue to pay dues, capital charges,
service/privilege fees, and assessments in respect of Stuelpe's
memberships in Mayfield Country Club, Mayfield, Ohio, the Union
Club, Cleveland, Ohio, Sand Ridge Golf Club, Chardon, Ohio and
the Double Eagle Club, Galena, Ohio.
(e) Promissory Note Forgiveness. The remaining outstanding principal
balance of the Promissory Note and any accrued and unpaid
interest thereon shall be forgiven in full as of the Termination
Date and, as soon after the Effective Date as is practicable,
the Company shall make Stuelpe whole on an after-tax basis for
any federal, state and local income taxes incurred by Stuelpe
with respect to such forgiveness (the "Tax Gross-Up Amount").
The Tax Gross-Up Amount shall be calculated at the Company's
cost and expense by Ernst & Young LLP, and its determination of
the Tax Gross-Up Amount shall be final and binding upon both
Stuelpe and the Company. Stuelpe and the Company shall each
provide Ernst & Young LLP with such information as it may
reasonably request in order to calculate the Tax Gross-Up
Amount.
(f) Stuelpe's Legal Fees. As soon as practicable following the
Effective Date, the Company shall pay (or reimburse Stuelpe's
payment of) all reasonable legal fees incurred by Stuelpe in
respect of the negotiation and preparation of this Agreement, up
to a maximum of $35,000 in the aggregate.
(g) Supplemental Pension Plan. As soon as practicable following the
Effective Date, the Company will deliver to Stuelpe, free and
clear of any
7
<PAGE> 8
claims of the Company and any policy loans, with premiums paid
up through December 31, 2000, and with its cash surrender value
intact, Policy No. CG5073054 issued on Stuelpe's life by
Connecticut General Life Insurance Company, and delivery of such
life insurance policy shall be in lieu, and in full
satisfaction, of all obligations and benefits under the
Supplemental Pension Plan.
(h) Expense Reimbursement. As soon as practicable following the
Effective Date, the Company shall reimburse Stuelpe for all
reasonable expenses he incurred relating to the conduct of the
Business of the Company prior to the Submission Date and for
which he has not previously been reimbursed. Any such expense
reimbursement shall be conditioned upon Stuelpe presenting to
the Company an itemized account of such expenses with supporting
documents. Reimbursable expenses shall include reasonable and
necessary expenses for entertainment, travel, meals and hotel
accommodations, and Stuelpe's operation of an automobile while
he was an employee of the Company, as described in the
Employment Agreement.
(i) Key Executive Officers Retirement Plan. On April 1, 2000, the
Company will pay to Stuelpe $1,270,424.00, which amount
represents the commuted single lump-sum value of Stuelpe's
accrued benefits under the Key Executive Officers Retirement
Plan, calculated as though Stuelpe had continued to accrue
benefits thereunder until December 31, 2000, and
8
<PAGE> 9
shall be in lieu, and in full satisfaction, of all obligations
and benefits under the Key Executive Officers Retirement Plan.
(j) 1999 Bonus. The Company shall pay Stuelpe a bonus for calendar
year 1999 in an amount determined pursuant to the formula set
forth in Exhibit B to the Employment Agreement. Such amount
shall be paid to Stuelpe at the same time as the Company's other
senior executives receive their bonuses for calendar year 1999,
but in no event later than April 15, 2000.
(k) Employee Benefit Plans -- In General. In connection with his
termination of employment, except as otherwise provided
hereunder, upon the termination of his active participation in
any Employee Benefit Plan or thereafter, Stuelpe shall receive
such benefits as he may be entitled to receive under the
respective Employee Benefit Plan in accordance with the terms of
such Employee Benefit Plan.
(l) Continued Indemnification. On and after the Termination Date,
the Company shall continue to indemnify Stuelpe to the full
extent permitted by law against liability claims arising out of
his activities as an employee or director of the Company at any
time and to provide him with continued coverage in respect of
such claims under any Directors and Officers insurance policy
the Company maintains to the maximum extent any Company officer
or director is covered.
(m) No Offsets. Except in respect of a claim against Stuelpe for
which the Company has not released Stuelpe pursuant to Section 8
hereof, the Company shall have no right to reduce any amount
payable to Stuelpe
9
<PAGE> 10
pursuant to this Agreement or fail to provide any other benefits
to Stuelpe pursuant to this Agreement for any reason (including,
without limitation, any alleged breach by Stuelpe of his
obligations hereunder). In the event the Company fails timely to
pay any amount to Stuelpe or provide any benefit to Stuelpe
required hereunder, upon demand by Stuelpe the Company shall
make such payment or provide such benefit together with interest
at the annual rate of 8% (calculated on the amount of the
payment or value of the benefit) from the date such payment was
to be made or benefit provided, and the Company shall pay in
full any attorneys' fees incurred by Stuelpe in enforcing his
right to receive such payment or benefit.
(n) Stuelpe's Personal Property. After the Termination Date, Stuelpe
shall be given reasonable access to the premises of the Company
and the Affiliates for the purpose of removing Stuelpe's
personal property and effects from such premises.
5. Consulting Services. After the Termination Date, in the event
Stuelpe provides consulting services relating to prospective acquisitions by the
Company or an Affiliate and/or other significant transactions in respect of the
Business of the Company, Stuelpe shall receive such compensation as the parties
shall have agreed upon in writing. Stuelpe shall, for all purposes, be an
independent contractor when performing any such consulting services, shall be
solely responsible for all taxes (including estimated tax payments) and
reporting of amounts he receives for services as a consultant, and shall not be
considered an "employee" for purposes of any benefit plans.
10
<PAGE> 11
6. Restrictive Covenants.
(a) Secret and Confidential Information. During his tenure as an
officer and employee of the Company, Stuelpe has had access to
and has gained knowledge with respect to the Company's trade
secrets, as they may exist from time to time, and confidential
information concerning its financial statements, operations,
sales and marketing activities and procedures, bidding
techniques, design and construction techniques, customer lists,
list of owners of parking facilities, and credit and financial
data concerning such persons (in the aggregate referred to
hereinafter as "Secret and Confidential Information"). Stuelpe
acknowledges that the Secret and Confidential Information
constitutes a valuable, special and unique asset of the Company
as to which the Company has the right to retain and hereby does
retain all of its proprietary interests. In recognition of this
fact, Stuelpe agrees that he will not, on and after the
Termination Date, disclose any of the Secret and Confidential
Information to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever (except as
necessary in the performance of consulting services under
Section 5 hereof) or make use of any of the Secret and
Confidential Information for his own purposes or those of
another but only if with respect to any such disclosure or use
there is a reasonable possibility that such disclosure or use
could have a materially adverse effect upon the Company. The
provisions contained in this subsection (a) shall also apply to
information obtained by Stuelpe, in the course of his employment
by or
11
<PAGE> 12
consulting relationship with the Company, with respect to the
Affiliates.
(b) Stuelpe's Inventions, Etc. On and after the Termination Date,
Stuelpe shall promptly disclose, grant and assign to the Company
for its sole use and benefit any and all inventions,
improvements, technical information and suggestions relating to
the Business of the Company (in the aggregate referred to as the
"Creations") which Stuelpe has conceived, developed or acquired
during his employment (whether or not during the usual working
hours) together with all patent applications, letters patent,
copyrights and reissues thereof that may, at any time be granted
for or upon any of the Creations. At all times on and after the
Termination Date, Stuelpe shall promptly execute any and all
documents requested to vest title to any and all of the
Creations in the Company and enable it to obtain and maintain
the entire right and title thereto throughout the world and
render to the Company, at the Company's expense, any and all
assistance required to protect its legal rights thereto.
(c) Noncompetition. Subject to the next sentence, Stuelpe covenants
and agrees that during the period commencing on March 1, 2000
and ending on December 31, 2001, he shall not have any direct or
indirect ownership or other financial interest in and will not,
directly or indirectly, engage in, or in any manner become
interested in (as principal, agent, consultant, advisor,
officer, director, employee or otherwise), any business which
competes with the Business of the Company in the geographic
market in which the Company is then operating nor will he
solicit business directly
12
<PAGE> 13
or indirectly on behalf of such competing business. The
restriction set forth in the preceding sentence shall not apply
to any transaction or arrangement involving Stuelpe to which the
Company consents in writing. Nothing herein shall preclude
Stuelpe from being a member of or serving as an officer or
director of any trade association or from owning, of record or
beneficially, in the aggregate up to five percent (5%) of any
issue of securities of a publicly traded company.
(d) Remedies. It is agreed by Stuelpe that the remedy at law for any
breach or threatened breach of the covenants set forth in this
Section 6 above will be inadequate and that any breach or
attempted breach would cause such immediate and permanent damage
as would be irreparable and the exact amount of which would be
impossible to ascertain. Stuelpe further agrees that in the
event of any such breach or threatened breach by him, in
addition to any and all other legal and equitable remedies
available, the Company may have any of such actions enjoined by
any court authorized by law to take such action. The
territorial, time and other limitations contained in this
Section 6 above are reasonable and properly required for the
adequate protection of the Business of the Company, and in the
event that any one or more of such territorial, time or other
limitation is found to be unreasonable or otherwise invalid in
any jurisdiction, in whole or in part, the parties acknowledge
and agree that such limitation shall remain valid in all other
jurisdictions.
13
<PAGE> 14
7. Stuelpe's Release of the Company, etc.; Right to Revoke Agreement.
(a) In General. In consideration of the payments and benefits set
forth in this Agreement, Stuelpe does hereby for himself and his
heirs, executors, representatives, successors, and assigns,
irrevocably release, acquit, and forever discharge the Company
and the Affiliates, and their respective successors and assigns,
together with their respective officers, directors,
shareholders, management, agents, employees, representatives,
and attorneys (collectively, "the Releasees"), of and from any
and all claims, liabilities, losses, demands, actions or causes
of action, damages, or suits at law or equity, of whatsoever
kind or nature, whether known or unknown, suspected or
unsuspected, including, but not limited to, all claims and/or
demands for back pay, reinstatement, hire or re-hire, front pay,
group insurance or employee benefits of whatsoever kind, claims
for monies and/or expenses, any claims arising out of or
relating to Stuelpe's employment with the Company or any of its
Affiliates, any claims of discrimination on any basis, whether
arising under federal, state or local law and in particular
including any claim for discrimination based upon race, color,
ethnicity, sex, age, national origin, religion, disability, or
any other unlawful criterion or circumstance, any claims for
breach of express/implied contract and/or sounding in
"promissory estoppel," any action alleging "wrongful
termination," any claims for violation of public policy, any
claims for emotional distress and/or mental pain and suffering,
any claims for
14
<PAGE> 15
defamation and/or tortious interference with actual and/or
prospective business relationships, any claims for failing to
obtain employment at any other company or with any other person
or employer, and demands for attorney's fees and legal expenses,
that Stuelpe had, now has, or may have in the future against the
Releasees, by reason of, or in any manner whatsoever connected
with, any matter or thing arising out of, or in any way
connected with, directly or indirectly, any act and/or omission
of the Releasees that has occurred prior to the Effective Date
(b) Age Discrimination Release. Stuelpe recognizes and understands
that, by executing this Agreement, he shall be releasing the
Releasees from any claims that he now has, may have, or
subsequently may have under the Age Discrimination in Employment
Act of 1967, 29 U.S.C. ss.621, et seq., as amended, by reason of
any matter or thing arising out of, or in any way connected
with, directly or indirectly, any acts or omissions which have
occurred prior to the Effective Date. In other words, by signing
this Agreement, Stuelpe will have none of the legal rights
against the aforementioned that he would otherwise have under
the Age Discrimination in Employment Act of 1967, 29 U.S.C.
ss.621, et seq., as amended. Stuelpe agrees and acknowledges
that this Agreement includes additional, separate, and discrete
consideration for his release, waiver, and discharge of claims
of age discrimination.
(c) Stuelpe's Representation. Stuelpe represents and warrants that,
prior to the Effective Date, no claim, demand, cause of action,
or obligation which is
15
<PAGE> 16
subject to this Agreement has been assigned or transferred to
any other person or entity, and no other person or entity has or
has had any interest in said claims, demands, causes of action,
or obligations, and that Stuelpe has the sole right to execute
this Agreement.
(d) Stuelpe's Right to Counsel; Consideration Period. The Company
hereby informs Stuelpe of his right to consult with his chosen
legal counsel before signing this Agreement. To ensure that
Stuelpe's execution of this Agreement is knowing and voluntary,
Stuelpe shall have until the twenty-first (21st) calendar day
following the Submission Date (the "Consideration Period") to
consider this Agreement. In executing this Agreement, Stuelpe
expressly acknowledges that he has had twenty-one (21) days to
consider this Agreement and that his execution of same is with
full knowledge of the consequences thereof and is of his own
free will.
(e) Stuelpe's Right to Revoke. For a period of seven (7) calendar
days following the end of the Consideration Period, Stuelpe may
revoke this Agreement by giving the Company notice revoking the
same. Such revocation of this Agreement by Stuelpe will
terminate this Agreement in its entirety and all rights and
obligations of the parties hereunder.
(f) Release a Bar to Stuelpe's Claims. Stuelpe acknowledges and
agrees that if he should hereafter make any claim or demand or
commence or threaten to commence any action, claim or proceeding
against the Releasees with respect to any cause, matter or thing
which is the subject of this Section 7, this release may be
raised as a complete bar to any such action, claim or
16
<PAGE> 17
proceeding, and the applicable Releasee may recover from Stuelpe
all costs incurred in connection with such action, claim or
proceeding, including attorneys' fees.
8. The Company's Release of Stuelpe, Etc. The Company, for itself and
its respective successors and assigns, hereby releases, acquits, and forever
discharges Stuelpe and his heirs, legal representatives, and assignees, jointly
and severally, from any and all claims, demands, damages, actions, and causes of
action which the Company has had, now has, or may have in the future, whether
known or unknown, suspected or unsuspected, by reason of, or in any manner
whatsoever connected with, or growing out of Stuelpe's employment relationship
with the Company. Notwithstanding the preceding sentence, the Company reserves
its rights and does not release Stuelpe and his heirs, legal representatives,
and assigns, jointly or severally, from any and all claims, demands, damages,
actions, and causes of action which the Company has had, now has, or may have in
the future, (i) by reason of any misconduct by Stuelpe during his employment
relationship with the Company or provision of consulting services under this
Agreement which was dishonest or fraudulent or arose from willful misconduct or
gross negligence and which materially harmed the Company or (ii) arising out of
or resulting from the breach of the provisions of this Agreement, including,
without limitation, claims for breach under Section 6. The Company represents
and warrants to Stuelpe that, as of the Submission Date, the Company does not
have actual knowledge of any such misconduct by Stuelpe as described in the
preceding sentence; provided, if the Company becomes aware of any such
misconduct on or after the Submission Date and prior to the Effective Date, it
shall immediately notify Stuelpe. For purposes of this Section 8, the word
"Company" shall be deemed to include all of the Affiliates, and the Company
shall
17
<PAGE> 18
cause the Affiliates to abide by the terms of this Section 8 as though
each Affiliate had actually executed this Agreement.
9. Arbitration. Any disputes between the parties with respect to the
meaning or interpretation of this Agreement or the amounts of any payments
hereunder which cannot be settled amicably by the parties hereto shall be
settled by arbitration in Cleveland, Ohio, in accordance with the rules of
arbitration of the American Arbitration Association and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall be deemed to possess the powers to issue mandatory
orders and restraining orders in connection with such arbitration; provided,
however, that nothing in this Section 9 shall be construed so as to deny the
Company the right and power to seek and obtain equitable relief in accordance
with Section 6(d) of this Agreement. In the event either party seeks to have any
dispute under this Agreement settled by arbitration, either party may submit to
the same arbitrator any other disputes between the parties whether under this
Agreement or any other agreement between the parties.
10. Post-Mortem Payments; Designation of Beneficiary. In the event of
Stuelpe's death, any amounts which would have been paid to Stuelpe hereunder had
he survived shall be paid to Stuelpe's beneficiary designated hereunder. At any
time after the execution of this Agreement, Stuelpe may prepare, execute, and
file with the Secretary of the Company a copy of the Designation of Beneficiary
form attached to this Agreement as Exhibit A. Stuelpe shall thereafter be free
to amend, alter or change such form; provided, however, that any such amendment,
alteration or change shall be made by filing a new Designation of Beneficiary
form with the Secretary of the Company. In the event Stuelpe fails to designate
a beneficiary, following his death all payments of the amounts which would have
been paid to Stuelpe's
18
<PAGE> 19
designated beneficiary pursuant to this Agreement shall instead be paid to
Stuelpe's spouse, if any, if she survives Stuelpe or, if there is no spouse or
she does not survive Stuelpe, to Stuelpe's estate.
11. Representation of the Company. The Company represents and warrants
to Stuelpe that (i) the Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware; (ii) the
Company has the power and authority to enter into and carry out this Agreement,
and there exists no contractual or other restriction upon its so doing; and
(iii) the Company's entering into and performing this Agreement has been duly
authorized in accordance with the Company's Certificate of Incorporation and
By-Laws, as applicable.
12. Miscellaneous.
(a) Status as Unsecured Creditor. The undertakings of the Company
hereunder constitute merely the unsecured promises of the
Company. No property of the Company is or shall be, by reason of
this Agreement, held in trust for Stuelpe. Stuelpe shall not
have, by reason of this Agreement, any right, title or interest
of any kind in or to any property of the Company.
(b) Announcements. The parties shall agree upon the content of any
public or private announcements including, without limitation,
any announcements to the Company's employees or the trade
concerning Stuelpe's termination of employment with the Company;
provided, that the Company may make such filings with the United
States Securities and Exchange Commission as may be required by
applicable law without the agreement of Stuelpe.
19
<PAGE> 20
(c) Tax Withholding. The Company may withhold from any amounts
payable to Stuelpe under this Agreement all amounts necessary to
satisfy the requirements of any state or federal statute
including, without limitation, the requirements of the United
States Internal Revenue Code. Stuelpe agrees that amounts paid
to him for consulting services pursuant to Section 5 will not be
subject to tax withholding or reporting by the Company and all
taxes thereon are his sole obligation.
(d) Entire Agreement; Supersession of Prior Agreements. This
Agreement constitutes the entire understanding and agreement
between the parties concerning the subject matter hereof and,
except as otherwise provided herein, supersedes in their
entirety any prior agreements between Stuelpe and the Company
including, without limitation, the Employment Agreement, the Key
Executive Officers Retirement Plan, the Promissory Note, the
Supplemental Pension Plan, and any term sheets with respect to
this Agreement, and shall exclusively govern the rights and
obligations of each party in respect of the other party. All
negotiations between the parties concerning the subject matter
hereof are superseded hereby, and there are no representations,
warranties, covenants, understandings or agreements, oral or
otherwise, in relation thereto between the parties other than
those incorporated herein. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by the Company and Stuelpe.
20
<PAGE> 21
(e) Waiver. Failure by either party at any time to enforce any
provision of this Agreement or to require performance by the
other party of any provision hereof shall in no way affect the
validity of this Agreement or any part hereof or the right of
such party thereafter to enforce its rights hereunder, nor shall
it be taken to constitute a waiver by such party of any default
or breach hereof by the other party.
(f) Time Periods, Etc. Any action required to be taken under this
Agreement within a certain number of days shall be taken within
that number of calendar days; provided, however, that if the
last day for taking such action falls on a weekend or a holiday,
the period during which such action may be taken shall be
automatically extended to the next business day. If the day for
taking any action under this Agreement falls on a weekend or a
holiday, such action may be taken on the next business day.
(g) Governing Law. This Agreement is executed in and shall be
construed in accordance with and governed by the laws of the
State of New York, without giving effect to the choice of law
provisions of New York or any other jurisdiction.
(h) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same document.
(i) Headings. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
21
<PAGE> 22
(j) No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties to
express their mutual intent, and no rule of strict construction
shall be applied against either party.
(k) Incorporation by Reference. The incorporation herein of any
terms by reference to another document shall not be affected by
the termination of any agreement set forth in such other
document or the invalidity of any provisions thereof.
(l) Gender; Number. The use of the feminine, masculine or neuter
pronoun shall not be restrictive as to gender and shall be
interpreted in all cases as the context may require. The use of
the singular or plural herein shall not be restrictive as to
number and shall be interpreted in all cases as the context may
require.
(m) Binding Effect; Assignment. This Agreement shall inure to the
benefit of and be binding upon the Stuelpe and the Company and,
as applicable, upon their respective legal representatives,
designated beneficiaries, and successors and assigns. Except in
respect of payments following Stuelpe's death, Stuelpe may not
assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Company.
(n) Severability. If any provision, term, clause or part thereof in
this Agreement is invalid, it shall not affect the remainder of
said provision, term or clause of this Agreement, but said
remainder shall be binding and effective against both parties
hereto.
22
<PAGE> 23
(o) Notices. All notices and other communications hereunder shall be
in writing, and shall be either personally delivered, or sent by
certified mail (return receipt requested), or sent by facsimile
transmission (with electronic or written confirmation of
receipt), and shall be deemed to have been duly given when
received. Notices shall be delivered or sent to the parties at
the following addresses and facsimile numbers (or at such other
address or facsimile number for a party as shall be specified by
like notice):
(i) If to the Company, to
APCOA/STANDARD PARKING, INC.
900 North Michigan Avenue, Suite 1600
Chicago, Illinois 60611
Attention: Chief Executive Officer
Facsimile: (312) 640-6165
With a copy to:
Karen G. Krueger, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Facsimile: (212) 403-2242
(ii) If to Stuelpe, to:
G. Walter Stuelpe
7000 Gates Road
Gates Mills, Ohio 44040
Facsimile: (440) 461-2229
23
<PAGE> 24
With a copy to:
Dale C. LaPorte, Esq.
Calfee, Halter & Griswold LLP
1400 McDonald Investment Center Building
800 Superior Avenue
Cleveland, Ohio 44114-2688
Facsimile: (216) 241-0816
(p) No Coercion by the Company. Stuelpe acknowledges and agrees that
his decision to execute this Agreement is entirely voluntary,
and hereby acknowledges that he has not been pressured, coerced,
or otherwise unduly influenced by the Company to execute this
Agreement.
(q) Confidentiality of Terms of Agreement, Etc. Except as compelled
by a court of competent jurisdiction, Stuelpe shall hold the
existence and terms of this Agreement in strict confidence and
shall not disclose such information to any persons except
Stuelpe's immediate family, legal counsel, and tax consultants,
all of whom shall be instructed to hold such information in
strict confidence. Except as compelled by a court of competent
jurisdiction, the Company shall hold the existence and terms of
this Agreement in strict confidence, and shall not disclose such
information to any persons except members of the Board, its
Chief Executive Officer, legal counsel and other professional
advisors, all of whom shall be instructed to hold such
information in strict confidence.
(r) Further Assurances. From time to time after the Effective Date,
upon request of the other party and without further
consideration, each party shall execute and deliver to the other
party any other document or instrument, and
24
<PAGE> 25
shall take any other action as may be reasonably requested of
it, to the extent necessary to give effect to the provisions of
this Agreement.
13. Withdrawal of the Company's Offer. In the event that Stuelpe does
not execute this Agreement by the twenty-first (21st) day following the
Submission Date, the offer of the Company set forth in this Agreement shall be
withdrawn, and this Agreement shall be of no force and effect.
________________________________________
DATE OF RECEIPT OF AGREEMENT SIGNATURE OF STUELPE
BY STUELPE: ACKNOWLEDGING RECEIPT OF
AGREEMENT:
________________________, 2000 ________________________________
G. WALTER STUELPE
RECEIPT WITNESSED BY:
________________________________
________________________________________
IMPORTANT!! IF STUELPE DOES NOT EXECUTE THIS AGREEMENT (BY SIGNING ON
THE FOLLOWING PAGE) BY THE 21ST DAY FOLLOWING THE DATE OF HIS RECEIPT
OF THE AGREEMENT (SEE ABOVE), THE COMPANY'S OFFER AS SET FORTH IN THIS
AGREEMENT SHALL BE WITHDRAWN AND THIS AGREEMENT SHALL BE OF NO FORCE
AND EFFECT.
25
<PAGE> 26
IN WITNESS WHEREOF, the Company by its duly authorized officer, and
Stuelpe have executed this Agreement on the dates set forth below.
DATE OF EXECUTION BY THE
COMPANY: APCOA/STANDARD PARKING, INC.
(the "Company")
________________________, 2000 BY:___________________________
TITLE:________________________
EXECUTION WITNESSED BY:
______________________________
DATE OF EXECUTION BY STUELPE:
______________________, 2000 ______________________________
G. WALTER STUELPE
("Stuelpe")
EXECUTION WITNESSED BY:
_______________________________
___________________________________
CAUTION TO STUELPE: READ THIS DOCUMENT CAREFULLY BEFORE SIGNING. THIS
DOCUMENT CONTAINS A RELEASE OF ALL CLAIMS AGAINST THE COMPANY AND
OTHERS (SEE SECTION 7) ARISING PRIOR TO THE EFFECTIVE DATE OF THE
AGREEMENT. THE EFFECTIVE DATE OF THE AGREEMENT IS EIGHT DAYS AFTER
STUELPE EXECUTES THE AGREEMENT (SEE PRECEDING PAGE).
26
<PAGE> 27
EXHIBIT A
DESIGNATION OF BENEFICIARY
On __________________, 2000, I, the undersigned, entered into a
Settlement Agreement and Release (the "Agreement") with
____________________________. Pursuant to the terms of the Agreement, I have the
right to designate a beneficiary to receive, in the event of my death, certain
payments pursuant to the Agreement. I, therefore, exercise this right and
designate ________________________________ to receive any such payments. Any and
all previous designations of beneficiary made by me are hereby revoked, and I
hereby reserve the right to revoke this designation of beneficiary.
_____________________________
G. WALTER STUELPE
Date: __________________, 2000
______________________________
Receipt of this Designation of Beneficiary form is acknowledged
by the undersigned Secretary of ________________________.
APCOA/STANDARD PARKING, INC.
By:___________________________
Secretary
Date:____________________, 2000
27
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-30-1999
<CASH> 5,215
<SECURITIES> 0
<RECEIVABLES> 45,016
<ALLOWANCES> (2,301)
<INVENTORY> 0
<CURRENT-ASSETS> 49,575
<PP&E> 82,801
<DEPRECIATION> 50,142
<TOTAL-ASSETS> 213,270
<CURRENT-LIABILITIES> 61,755
<BONDS> 215,421
31,924
0
<COMMON> 1
<OTHER-SE> (111,535)
<TOTAL-LIABILITY-AND-EQUITY> 213,270
<SALES> 247,899
<TOTAL-REVENUES> 247,899
<CGS> 193,094
<TOTAL-COSTS> 193,094
<OTHER-EXPENSES> 32,453
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,849
<INCOME-PRETAX> (14,979)
<INCOME-TAX> 752
<INCOME-CONTINUING> (16,199)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,199)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
