<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 23, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
CENTRAL PARKING CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
TENNESSEE 7521 62-1052916
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) No.)
</TABLE>
2401 21ST AVENUE SOUTH, SUITE 200
NASHVILLE, TENNESSEE 37212
(615) 297-4255
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
MONROE J. CARELL, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CENTRAL PARKING CORPORATION
2401 21ST AVENUE SOUTH, SUITE 200
NASHVILLE, TENNESSEE 37212
(615) 297-4255
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
<TABLE>
<S> <C>
MARK MANNER RANDALL H. DOUD
HARWELL HOWARD HYNE GABBERT & MANNER, P.C. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FIRST AMERICAN CENTER 919 THIRD AVENUE
NASHVILLE, TENNESSEE 37238 NEW YORK, NEW YORK 10022
(615) 256-0500 (212) 735-3000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement and the
effective time of the merger of Central Merger Sub, Inc. with and into Allright
Holdings, Inc., as described in the Agreement and Plan of Merger, dated as of
September 21, 1998.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share................. 7,600,000 shares N/A $85,894,000 $23,878.53
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the estimated number of shares of Central Parking Corporation
Common Stock issuable pursuant to the Merger Agreement, as defined herein.
(2) Estimated in accordance with Rule 457(f)(2) and (3) solely for the purpose
of calculating the registration fee, based on the book value of the
securities of Allright Holdings, Inc. as of June 30, 1998.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
[CENTRAL PARKING LOGO] [ALLRIGHT LOGO]
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The Boards of Directors of Central Parking Corporation and Allright Holdings,
Inc. have agreed on a merger of a subsidiary of Central Parking and Allright, so
that Allright will become an indirect, wholly owned subsidiary of Central
Parking. Following the merger, Central Parking will be the largest parking
services company in the United States. The combined company will be named
"Central Parking Corporation" and will be headquartered in Nashville, Tennessee.
It will have approximately 4,755 parking facilities with approximately 1,568,000
spaces in 35 states, the District of Columbia, Canada, Chile, Puerto Rico, the
United Kingdom, the Republic of Ireland, Spain, Germany, Mexico and Malaysia.
If the merger is completed, Allright shareholders will receive an estimated
aggregate amount of 7.6 million shares of Central Parking common stock, subject
to adjustment depending on a final purchase price calculation immediately prior
to the merger. Central Parking shareholders will continue to own their existing
shares of Central Parking common stock after the merger. We estimate that upon
completion of the merger, about 20.4% of the outstanding stock of Central
Parking will be owned by former Allright shareholders, and that about 79.6% will
be owned by those persons who are Central Parking shareholders just before the
merger is completed.
To be completed, the merger must be approved by the holders of a majority of the
outstanding shares of each company. Central Parking has scheduled a special
meeting of its shareholders to approve the merger agreement, the issuance of
Central Parking common stock pursuant to the merger agreement, and an amendment
to Central Parking's charter to increase the number of shares of authorized
common stock from 50 million to 100 million shares, although the charter
amendment is not required to complete the merger. Allright has scheduled a
special meeting of its shareholders to approve the merger agreement.
Shareholders of Central Parking and Allright representing a sufficient number of
shares to approve the transaction have previously agreed to vote in favor of the
merger agreement. Therefore, there will be a quorum at each of the meetings and
sufficient votes cast for approval of the merger agreement to ensure its passage
without the vote of any other Central Parking or Allright shareholder. See
"Central Parking Special Meeting" and "Allright Special Meeting."
The common stock of Central Parking and Allright should be represented as fully
as possible at each of the meetings. Whether or not you plan to attend your
special meeting, please take the time to vote by completing and mailing the
enclosed proxy card to us. If you sign, date and mail your proxy card without
indicating how you want to vote, your proxy will be counted as a vote in favor
of the merger. If you do not return your card, the effect will be a vote against
the merger.
The dates, times and places of the meetings are as follows:
FOR CENTRAL PARKING SHAREHOLDERS:
January , 1999 a.m. (Central Standard Time)
2401 21st Avenue South, Third Floor
Nashville, Tennessee 37212
FOR ALLRIGHT SHAREHOLDERS:
January , 1999 a.m. (Central Standard Time)
1313 Main Street
Houston, Texas 77002
This Joint Proxy Statement/Prospectus provides you with detailed information
about the proposed merger. You can also get information about Central Parking
from documents which Central Parking has filed with the Securities and Exchange
Commission. We encourage you to read this entire document carefully.
We strongly support this strategic combination between Central Parking and
Allright and join with the other members of our respective Boards of Directors
in enthusiastically recommending that you vote in favor of the merger.
SEE "RISK FACTORS" BEGINNING ON PAGE 22 OF THIS JOINT PROXY STATEMENT/PROSPECTUS
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY CENTRAL PARKING
AND ALLRIGHT SHAREHOLDERS WITH RESPECT TO THE PROPOSALS DESCRIBED HEREIN AND THE
SECURITIES BEING OFFERED HEREBY.
THE SECURITIES ISSUABLE IN THE MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The information in this Joint Proxy Statement/Prospectus is not complete and may
be changed. We may not issue these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This Joint Proxy
Statement/Prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
<TABLE>
<S> <C>
/s/ MONROE J. CARELL, JR. /s/ WILLIAM S. BENJAMIN
- ----------------------------------------------------- -----------------------------------------------------
Monroe J. Carell, Jr. William S. Benjamin
Chairman and Chief Executive Officer President
Central Parking Corporation Allright Holdings, Inc.
</TABLE>
Joint Proxy Statement/Prospectus Dated December , 1998 and First Mailed to
Shareholders on December , 1998.
<PAGE> 3
CENTRAL PARKING CORPORATION
2401 21ST AVENUE SOUTH, SUITE 200
NASHVILLE, TENNESSEE 37212
(615) 297-4255
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY , 1999
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of Central Parking
Corporation, a Tennessee corporation ("Central Parking"), will be held at
Central Parking's headquarters, 2401 21st Avenue South, Third Floor, Nashville,
Tennessee, on January , 1999, at :00 a.m. (Central Standard Time) (the
"Central Parking Special Meeting") for the following purposes:
1. The approval of an Agreement and Plan of Merger (the "Merger Agreement") by
and among Central Parking, Central Merger Sub, Inc. ("Central Parking Sub"),
Allright Holdings, Inc. ("Allright"), Apollo Real Estate Investment Fund II,
L.P. and AEW Partners, L.P., dated as of September 21, 1998, pursuant to which
Central Parking Sub will be merged with and into Allright (the "Merger"), and
the issuance of Central Parking common stock as contemplated by the Merger
Agreement (the "Merger Proposal").
2. The approval of an amendment to the Central Parking Amended and Restated
Charter to increase the number of shares of authorized common stock from 50
million to 100 million (the "Charter Amendment Proposal"). Approval of the
Charter Amendment Proposal is not required to complete the Merger.
3. Such other business as may properly come before the Central Parking Special
Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on December , 1998 as
the record date (the "Record Date") for determining the holders of the common
stock of Central Parking entitled to notice of and to vote at the Central
Parking Special Meeting and any adjournment or postponement thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF
THE MERGER PROPOSAL AND "FOR" APPROVAL OF THE CHARTER AMENDMENT PROPOSAL.
Approval of the Merger Proposal and the Charter Amendment Proposal requires the
affirmative vote of a majority of the shares of Central Parking common stock
entitled to be cast. Holders of outstanding shares of common stock of Central
Parking sufficient to approve the Merger Proposal have previously agreed that
they will vote their shares of Central Parking common stock in favor of the
Merger Proposal. Therefore, there will be a quorum at the Central Parking
Special Meeting and sufficient votes cast for approval of the Merger Proposal to
ensure such proposal's passage without the vote of any other Central Parking
shareholder.
The common stock of Central Parking should be represented as fully as possible
at the Central Parking Special Meeting. Therefore, please sign and return the
enclosed proxy at your earliest convenience. You may, of course, revoke your
proxy at any time before it is voted at the meeting. However, signing and
returning the proxy will assure your representation at the Central Parking
Special Meeting if you do not attend.
By Order of the Board of Directors
/s/ HENRY J. ABBOTT
--------------------------------------
Henry J. Abbott
Secretary
Nashville, Tennessee
December , 1998
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY.
<PAGE> 4
ALLRIGHT HOLDINGS, INC.
C/O ALLRIGHT CORPORATION
1313 MAIN STREET
HOUSTON, TEXAS 77002
(713) 222-2505
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY , 1999
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of Allright
Holdings, Inc., a Delaware corporation ("Allright"), will be held at Allright's
headquarters, 1313 Main Street, Houston, Texas on January , 1999, at
:00 a.m. (Central Standard Time) (the "Allright Special Meeting")
for the following purposes:
1. The adoption of an Agreement and Plan of Merger (the "Merger Agreement"),
dated as of September 21, 1998, by and among Central Parking Corporation,
Central Merger Sub, Inc., Allright, Apollo Real Estate Investment Fund II, L.P.
and AEW Partners, L.P.
2. Such other business as may properly come before the Allright Special Meeting
or any adjournment or postponement thereof.
Allright has fixed the close of business on December , 1998 as the record date
(the "Record Date") for determining the holders of Allright common stock
entitled to notice of and to vote at the Allright Special Meeting and any
adjournments or postponements thereof.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO ADOPT THE MERGER
AGREEMENT WHICH IS DESCRIBED IN DETAIL IN THE ACCOMPANYING JOINT PROXY
STATEMENT/PROSPECTUS.
Adoption of the Merger Agreement requires the affirmative vote of the holders of
a majority of the outstanding shares of Allright common stock at the Allright
Special Meeting. Holders of outstanding shares of common stock of Allright
sufficient to adopt the Merger Agreement have previously agreed that they will
vote their shares of Allright common stock in favor of the Merger Agreement.
Therefore, there will be a quorum at the Allright Special Meeting and sufficient
votes cast for adoption of the Merger Agreement to ensure its passage without
the vote of any other Allright shareholder.
A list of the holders of Allright common stock entitled to vote at the Allright
Special Meeting will be open to examination during ordinary business hours, at
the location of the Allright Special Meeting for ten days preceeding the
Allright Special Meeting.
The common stock of Allright should be represented as fully as possible at the
Allright Special Meeting. Therefore, please sign and return the enclosed proxy
at your earliest convenience. You may, of course, revoke your proxy at any time
before it is voted at the meeting. However, signing and returning the proxy will
assure your representation at the Allright Special Meeting if you do not attend.
By Order of the Board of Directors
/s/ MARC L. DAVIDSON
--------------------------------------
Marc L. Davidson
Secretary
Houston, Texas
December , 1998
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Questions and Answers about the Merger...................... 1
Summary..................................................... 5
Selected Historical and Unaudited Pro Forma Combined
Financial Data............................................ 14
Comparative Per Share Data.................................. 19
Risk Factors................................................ 22
Integration of Acquisitions............................... 22
Fixed Merger Consideration Despite Potential Changes in
Stock Prices........................................... 22
Need For Government Approvals; Possible Operating
Restrictions........................................... 23
Ability to Manage Growth.................................. 23
Obligations of Central Parking to Register Stock.......... 24
Restricted Access to Capital; Increased Indebtedness...... 24
Incurrence of Significant Transaction Charges............. 24
Dependence on Management Contracts and Leases............. 25
Dependence on Property Performance........................ 25
Competition............................................... 26
Variations in Quarterly Operating Results................. 26
Foreign Currency Exchange Rates........................... 26
Dependence on Key Management.............................. 26
Environmental and Other Regulations....................... 27
Labor Unions; Potential Work Stoppage..................... 27
Volatility of Market Price for Central Parking Common
Stock.................................................. 27
The Merger.................................................. 29
General................................................... 29
Central Parking's Reasons for the Merger; Recommendation
of the Central Parking Board of Directors.............. 32
Background of the Business Relationship and the Merger.... 33
Allright's Reasons for the Merger; Recommendation of the
Allright Board of Directors............................ 34
Opinion of Central Parking's Financial Advisor............ 36
Forward-Looking Statements May Prove Inaccurate........... 41
Accounting Treatment...................................... 42
Certain Federal Income Tax Consequences................... 42
Appraisal Rights.......................................... 43
Regulatory Matters........................................ 47
Federal Securities Laws Consequences; Resale
Restrictions........................................... 47
Conduct of the Business if the Merger is not
Consummated............................................ 48
Certain Transactions; Interests of Certain Persons in the
Merger................................................. 48
Comparative Price Range of Common Stock and Dividend
Policy.................................................... 52
Unaudited Pro Forma Combined Financial Statements........... 53
Central Parking's Management's Discussion and Analysis of
Financial Condition and Results of Operations............. 67
The Merger Agreement........................................ 78
The Merger................................................ 78
Closing; Effective Time................................... 78
Certificate of Incorporation and Bylaws; Directors and
Officers............................................... 78
</TABLE>
i
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
Conversion of Securities; Merger Consideration............ 78
No Fractional Shares...................................... 80
Certain Adjustments....................................... 80
Treatment of Stock Options and Warrants................... 81
Representations and Warranties............................ 81
Certain Covenants......................................... 82
Conditions to Consummation of the Merger.................. 89
Termination; Non-Consummation............................. 91
Effect of Termination; Non-Competition.................... 91
Survival of Representations; Indemnification.............. 92
Miscellaneous............................................. 95
Registration Rights Agreement............................... 96
Registrable Securities.................................... 96
The Initial Underwriting.................................. 96
Shelf Registration........................................ 97
The Extra Underwriting.................................... 99
Incidental Registration................................... 100
Underwriter Limitations................................... 100
Central Parking Limitations............................... 101
Pricing Determinations.................................... 103
Kinney Registration Rights................................ 104
Sales of Registrable Securities........................... 104
Blackout Periods.......................................... 104
Selection of Underwriters................................. 105
Holdback Agreement........................................ 105
Registration Procedures................................... 106
Registration Expenses..................................... 106
Indemnification; Contribution............................. 106
Pledges of Registrable Securities......................... 106
Other Related Agreements.................................... 108
Transaction Support Agreements............................ 108
Noncompetition Agreement.................................. 109
Central Parking Special Meeting............................. 110
The Meeting............................................... 110
Purpose of the Meeting.................................... 110
Increase in the Authorized Shares of Common Stock......... 110
Voting.................................................... 111
Allright Special Meeting.................................... 113
The Meeting............................................... 113
Purpose of the Meeting.................................... 113
Voting.................................................... 113
Description of Central Parking.............................. 114
General................................................... 114
Industry.................................................. 114
Growth Strategy........................................... 115
Operating Strategy........................................ 116
Acquisitions.............................................. 119
Sales and Marketing....................................... 120
</TABLE>
ii
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C>
International Expansion................................... 121
Parking Facility Properties............................... 122
Operating Arrangements.................................... 123
Competition............................................... 124
Litigation and Insurance.................................. 125
Regulation................................................ 126
Principal Shareholders of Central Parking................... 127
Description of Allright..................................... 130
Business -- General....................................... 130
Operations; Structure..................................... 130
Strategy & Growth......................................... 132
MBE Partnerships.......................................... 134
Employees................................................. 134
No Established Trading Market; Dividends.................. 134
International Foreign Currency Exposure................... 135
Year 2000................................................. 135
Litigation................................................ 135
Certain Indemnification Rights............................ 135
Allright's Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 136
Principal Shareholders of Allright.......................... 143
Management of Allright Corporation.......................... 145
Management of the Combined Company.......................... 147
Description of Central Parking Capital Stock................ 150
Comparison of Rights of Holders of Central Parking Common
Stock and Allright Common Stock........................... 152
Legal Matters............................................... 155
Experts..................................................... 155
Where You Can Find More Information......................... 155
Central Parking Commission Filings........................ 156
Index to Financial Statements............................... F-1
Annex A -- Agreement and Plan of Merger
Annex B -- Fairness Opinion of The Blackstone Group, L.P.
Annex C -- Delaware General Corporation Law Section 262
</TABLE>
iii
<PAGE> 8
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: Why are Central Parking and Allright proposing the merger?
A: The merger will combine the management and operational expertise and
resources of two of the leading parking services companies in the United
States. The merger also will create the opportunity for cost savings and
increased efficiencies. Central Parking and Allright believe the combined
company will be better positioned to capitalize on growth opportunities in
the parking industry. To review the background and reasons for the merger in
greater detail, see page 32.
Q: When is the Central Parking special meeting?
A: The Central Parking special meeting will take place on January , 1999. At
the meeting, Central Parking shareholders will be asked to approve the
merger agreement and the related issuance of shares of Central Parking
common stock pursuant to the merger agreement. The shareholders also will be
asked to approve an amendment to the Central Parking charter to increase the
number of authorized shares of Central Parking common stock from 50 million
to 100 million, although approval of the charter amendment to increase such
authorized shares is not necessary in order to complete the merger.
Q: When is the Allright special meeting?
A: The Allright special meeting will take place on January , 1999. At the
meeting, Allright shareholders will be asked to adopt the merger agreement.
Q: As an Allright shareholder, what will I receive in the merger?
A: In the merger, Central Parking will issue to Allright shareholders an
estimated aggregate of 7.6 million shares of Central Parking common stock in
exchange for all of the outstanding Allright common stock. The actual number
of shares of Central Parking common stock that will be issued to Allright
shareholders will be determined at closing by an exchange ratio that is
based on (i) an assumed value of $46.00 per share of Central Parking common
stock; (ii) a base equity purchase price of Allright of $564,390,050,
adjusted as described below; and (iii) the number of shares of Allright
common stock, warrants and certain options outstanding as of the closing
date.
The following will be added to the $564,390,050 base equity purchase price:
- the aggregate exercise price of Allright warrants and certain Allright
options;
- certain Allright expenses related to this transaction below certain
levels;
- the purchase price and expenses related to the acquisition of certain
parking facilities or leases; and
- a percentage of certain gains on the sale of certain properties.
The following items will be deducted from the base equity purchase price:
- the principal amount of any long-term indebtedness or capitalized leases
of Allright, excluding current portions;
- Allright's working capital deficit above certain levels;
- certain Allright expenses related to this transaction above certain
levels;
- a percentage of certain losses on the sale of certain properties;
- the net proceeds from the sale of certain assets of Allright;
- certain Allright employee severance costs; and
1
<PAGE> 9
- a certain multiple of Allright's June 30, 1998 earnings before income
taxes, depreciation and amortization below a certain level.
The amounts of any adjustments to the purchase price will be determined as
of the closing date of the merger. See page 30 for additional information
regarding the exchange ratio.
Central Parking will not issue any fractional shares. Instead, you will
receive an amount of cash for any fraction of a share based on $46.00 per
share of Central Parking common stock.
For example: If you own 100 shares of Allright common stock, based on (i) an
assumed equity purchase price (after making all adjustments described above)
of $350,334,690 (estimated as of September 21, 1998) and (ii) 85,903 shares
of Allright common stock, warrants and certain options to purchase Allright
common stock (estimated to be outstanding on the closing date assuming the
exercise of all incentive stock options prior to that time), upon the
completion of the merger you will have the right to receive 8,865 shares of
Central Parking common stock with $36.80 in cash in place of fractional
shares of Central Parking common stock. This calculation is for illustrative
purposes only and does not represent what the actual exchange ratio will be.
For additional information regarding this calculation, see page 30.
Q: What happens as the market price of Central Parking common stock fluctuates?
A: Fluctuations in the market price of Central Parking common stock do not
affect the number of shares that will be received by Allright shareholders
in the merger. For purposes of calculating the exchange ratio, which will
determine the number of shares of Central Parking common stock to be
received by Allright shareholders in the merger, the per share value of
Central Parking common stock is $46.00. See "Risk Factors -- Fixed Merger
Consideration Despite Potential Changes in Stock Prices" on page 22. The
actual market price of Central Parking common stock may be either higher or
lower than $46.00 on and after the date the merger is consummated. For
example, as of December , 1998, the closing price of Central Parking
common stock on the New York Stock Exchange was $ .
Q: As a Central Parking shareholder, how will the merger affect me?
A: The merger will not affect the number of shares of common stock you own. We
estimate that following the merger, you and the other current Central
Parking shareholders will own approximately 79.6% of the common stock of
Central Parking.
Q: Why will Allright shareholders receive shares of Central Parking stock, but
Central Parking shareholders will not receive Allright shares?
A: As a result of the merger, Allright will become an indirect, wholly owned
subsidiary of Central Parking. Accordingly, the ownership of Allright
shareholders in Allright will entitle them to own a portion of the combined
company, which is represented by the shares of Central Parking stock that
they will receive in the merger.
Q: What do I need to do now?
A: Please complete and mail the proxy card to us as soon as possible. If you
sign, date and mail your proxy card without indicating how you wish to vote,
your proxy will be counted as a vote in favor of approval of the merger
agreement and with respect to Central Parking, a vote in favor of the
charter amendment. If you fail to return your proxy card and fail to vote at
the meeting, the effect will be a vote against the merger agreement and with
respect to Central Parking, a vote against the charter amendment.
2
<PAGE> 10
Q: What do I do if I want to change my vote?
A: If you are a Central Parking shareholder, you must deliver to Central
Parking prior to the Central Parking special meeting a later-dated, signed
proxy card or attend the Central Parking special meeting in person and vote.
If you are an Allright shareholder, you must deliver to Allright prior to
the Allright special meeting, a later-dated, signed proxy card or attend the
Allright special meeting in person and vote. We provide more detailed
information about voting on page 111 for Central Parking shareholders and on
page 113 for Allright shareholders. The boards of directors of both Central
Parking and Allright unanimously recommend voting in favor of the proposed
merger.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: You cannot vote shares held in "street name"-- only your broker can. If you
do not provide your broker with instructions on how to vote your shares,
your broker will not be permitted to vote them, and the effect will be a
vote against the merger.
Q: Will I owe any federal income tax as a result of the merger?
A: Allright shareholders will owe federal income tax only on gain realized in
the merger up to the amount of cash received for fractional shares of
Central Parking common stock. Central Parking shareholders will not be taxed
as a result of the merger.
Q: Does Central Parking pay dividends?
A: Currently, Central Parking pays a quarterly dividend of $0.015 per share of
Central Parking common stock. Central Parking's board of directors may
change that policy based on business conditions, Central Parking's financial
condition and earnings and other factors. Nevertheless, Central Parking has
paid dividends in each of the last twelve quarters.
Q: Should I send in my stock certificates now?
A: No. No one should send their stock certificates in now.
Allright shareholders: After the merger is completed, we will send you
written instructions on how to exchange your Allright common stock for
Central Parking common stock.
Central Parking shareholders: You will keep your shares of common stock and
so you should not send in your Central Parking certificates at all.
Q: When do you expect the merger to be completed?
A: We are working toward completing the merger as quickly as possible. In
addition to Central Parking shareholder approval and Allright shareholder
approval, Central Parking and Allright must also obtain certain regulatory
approvals. See "The Merger -- Regulatory Matters" on page 47. We hope to
complete the merger during January 1999.
Q: What are the conditions to the completion of the merger?
A: The merger is subject to certain conditions, including the following:
(1) approval of Central Parking shareholders;
(2) no law or court order prohibiting the merger;
(3) no material breach by Central Parking or Allright of their respective
representations, warranties or obligations under the merger agreement;
(4) approval for listing on the New York Stock Exchange of the shares of
Central Parking common stock to be issued in the merger;
3
<PAGE> 11
(5) termination or expiration of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, waiting period;
(6) no material adverse change to either Central Parking or Allright;
(7) tax advisors for both parties agree that the merger will be treated as a
tax-free reorganization;
(8) receipt of a letter from Central Parking's independent public
accountants that the merger will qualify as a pooling of interests; and
(9) receipt of a letter from Allright's independent public accountants that
Allright qualifies as a combining company for purposes of pooling of
interests accounting.
Q: What happens if the merger is not completed?
A: If the merger is not completed, it is expected that the respective
businesses and operations of Allright and Central Parking will continue to
be conducted substantially as they currently are being conducted, except
that Central Parking, generally speaking, will not solicit or enter into any
agreements to operate any facilities which Allright or any of its
subsidiaries operated or have binding agreements to operate as of the date
of the merger agreement or the date of termination of the merger agreement,
or employ or solicit any employee of Allright as of the date of the merger
agreement or the date of termination of the merger agreement. The term of
these restrictions shall be for three years if the merger is not completed
because of Central Parking's breach of the merger agreement or because of a
material adverse change to Allright, or for eighteen months if the merger is
not completed for any other reason. See "The Merger Agreement -- Effect of
Termination; Non-Competition" on page 91.
If the merger agreement is terminated due to a breach by either Central
Parking or Allright, the non-breaching party may have certain contractual
and legal rights under state law to sue for breach of contract. If the
merger agreement is terminated for certain specified events, the terminating
party may be entitled to indemnification for damages, costs and expenses
incurred as a result of the termination.
Q: Whom should I call with questions?
A: If you are a Central Parking shareholder and you have any questions about
the merger, please call Randy Hunley, Investor Relations at Central Parking,
at (615) 297-4255. If you are an Allright shareholder and you have any
questions about the merger, please call Timothy L. Grady, Chief Operating
Officer at Allright at (713) 222-2505.
4
<PAGE> 12
SUMMARY
This summary highlights selected information from this Joint Proxy
Statement/Prospectus and may not contain all of the information that is
important to you. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should read carefully this
entire document and the documents which are referred to herein. See "Where You
Can Find More Information" on page 155. We have included page references in
parentheses to direct you to a more complete description of the topics presented
in this summary.
THE COMPANIES (SEE PAGE 114 FOR CENTRAL PARKING AND PAGE 130 FOR ALLRIGHT)
CENTRAL PARKING CORPORATION
Central Parking Corporation
2401 21st Avenue South, Suite 200
Nashville, Tennessee 37212
(615) 297-4255
Central Parking is a leading provider of parking services, operating, as of
September 30, 1998, 2,440 parking facilities containing approximately 1,023,000
spaces in 35 states, the District of Columbia, Canada, Chile, Puerto Rico, the
United Kingdom, the Republic of Ireland, Spain, Germany, Mexico, and Malaysia.
Central Parking has a business development office in Amsterdam. Central Parking
operates both multi-level parking facilities and surface lots. It also provides
parking consulting, shuttle, valet, parking meter enforcement, and billing and
collection services. Central Parking operates parking facilities under three
general types of arrangements: management contracts, leases, and fee ownership.
As of September 30, 1998, Central Parking operated 1,302 parking facilities
under management contracts and 1,071 parking facilities under leases, and owned,
either independently or through joint ventures, 67 parking facilities.
Parking facilities operated by Central Parking include, among others, certain
terminals operated by BAA Heathrow International Airport (London), Corel Centre
(Ottawa), the Prudential Center (Boston), One Penn Plaza (New York), Ericsson
Stadium (Charlotte), Busch Stadium (St. Louis), Rockefeller Center (New York),
Coors Field (Denver), Cinergy Field (Cincinnati), Turner Stadium (Atlanta), and
various parking facilities owned by the Hyatt and Westin hotel chains, the Rouse
Company, Faison Associates, May Department Stores, Equity Office Properties, and
Crescent Real Estate.
ALLRIGHT HOLDINGS, INC.
Allright Holdings, Inc.
c/o Allright Corporation
1313 Main Street
Houston, TX 77002
(713) 222-2505
Allright is a holding company, the sole material asset of which is 100% of the
authorized, issued and outstanding shares of common stock of Allright
Corporation, which began operations in 1926. Allright Corporation is one of the
world's largest and most experienced full-service parking management companies.
As of September 30, 1998, Allright operated facilities in over one hundred
cities across the United States and Canada, including facilities in thirty-three
states, the District of Columbia, and two Canadian provinces. Allright operates
parking facilities under three different types of arrangements: management
contracts, leases and fee ownership. As of September 30, 1998, Allright operated
647 parking
5
<PAGE> 13
facilities under management contracts, 1,473 parking facilities under leases,
and owned, either independently or through joint ventures, 195 parking
facilities.
Parking facilities operated by Allright include, among others, the Sears Tower
(Chicago), Boston Common Underground (Boston), Tabor Center (Denver), Convention
Center (Cincinnati), Lincoln Center (New York) and Rich Stadium (Buffalo).
Recent acquisition and strategic ventures include Edison Parking Management,
L.P., National Garages, Inc., and Allied Parking.
THE CENTRAL PARKING SPECIAL MEETING (SEE PAGE 110)
The Central Parking special meeting will be held at a.m. (Central
Standard Time) on January , 1999 at Central Parking's headquarters, 2401 21st
Avenue South, Third Floor, Nashville, Tennessee 37212. At the Central Parking
special meeting, Central Parking shareholders will be asked to (i) approve the
merger agreement and the issuance of shares of Central Parking common stock
related thereto, (ii) approve an amendment to the Central Parking charter to
increase the number of authorized shares of Central Parking common stock from 50
million to 100 million, and (iii) vote on such other business as may properly
come before the Central Parking special meeting or any adjournment or
postponement thereof.
RECOMMENDATION TO CENTRAL PARKING SHAREHOLDERS (SEE PAGE 32)
The Central Parking board of directors believes that the merger is fair to you
and in your best interests and unanimously recommends that you vote "for"
approval of the merger agreement and the issuance of Central Parking common
stock related thereto. The Central Parking board of directors also unanimously
recommends that you vote "for" the amendment to the Central Parking charter to
increase the authorized shares of common stock from 50 million to 100 million.
CENTRAL PARKING'S REASONS FOR THE MERGER (SEE PAGE 32)
The merger will enhance Central Parking's position as a leading parking services
provider and will broaden Central Parking's geographical base. Central Parking
believes that the opportunity for cost savings and increased efficiencies of
merging with Allright, along with the resulting combination of management and
operational expertise and resources, will enhance Central Parking's overall
operations.
To review Central Parking's reasons for the merger in greater detail, see page
32.
CENTRAL PARKING RECORD DATE; VOTING POWER (SEE PAGE 111)
You are entitled to vote at the Central Parking special meeting if you owned
shares of Central Parking common stock as of the close of business on December
, 1998, the Central Parking record date.
There were shares of Central Parking common stock outstanding on the
Central Parking record date. Central Parking shareholders will have one vote at
the Central Parking special meeting for each share of Central Parking common
stock they own on the Central Parking record date.
6
<PAGE> 14
CENTRAL PARKING SHAREHOLDER VOTE REQUIRED TO APPROVE THE MERGER (SEE PAGE 111)
The favorable vote of the holders of a majority of the shares of Central Parking
common stock entitled to be cast is required to approve the merger agreement and
the issuance of Central Parking common stock related thereto. Your failure to
vote will have the effect of a vote against the merger.
Holders of outstanding shares of Central Parking common stock sufficient to
approve the merger agreement and the issuance of shares pursuant to the merger
agreement have previously agreed that they will vote their shares of Central
Parking common stock in favor of the merger agreement and the issuance of shares
pursuant to the merger agreement. Therefore, there will be a quorum at the
Central Parking special meeting and sufficient votes cast for approval of the
merger agreement and the issuance of shares pursuant to the merger agreement to
ensure passage without the vote of any other Central Parking shareholder.
CENTRAL PARKING SHAREHOLDER VOTE REQUIRED TO APPROVE THE CHARTER AMENDMENT (SEE
PAGE 110)
The favorable vote of the holders of a majority of the shares of Central Parking
common stock entitled to be cast is required to approve the charter amendment
increasing the number of authorized shares of common stock from 50 million to
100 million. Your failure to vote will have the effect of a vote against the
charter amendment.
THE ALLRIGHT SPECIAL MEETING (SEE PAGE 113)
The Allright special meeting will be held at a.m. (Central Standard Time)
on January, 1999 at 1313 Main Street, Houston, Texas 77002. At the Allright
special meeting, Allright shareholders will be asked to adopt the merger
agreement.
RECOMMENDATION TO ALLRIGHT SHAREHOLDERS (SEE PAGE 34)
The Allright board of directors believes that the merger is fair to you and in
your best interests and unanimously recommends that you vote "for" adoption of
the merger agreement.
ALLRIGHT'S REASONS FOR THE MERGER (SEE PAGE 34)
The aggregate consideration to be received by Allright's shareholders pursuant
to the merger represents, in Allright's board of directors' opinion, an
attractive price for the outstanding Allright common stock, and would enable
Allright's shareholders to participate in the growth of Central Parking's
business after the merger. In addition, the shares of Central Parking common
stock received by the Allright shareholders pursuant to the merger are expected
to be tradeable on the New York Stock Exchange.
To review Allright's reasons for the merger in greater detail, see page 34.
ALLRIGHT RECORD DATE; VOTING POWER (SEE PAGE 113)
You are entitled to vote at the Allright special meeting if you owned shares of
Allright common stock as of the close of business on December , 1998, the
Allright record date.
There were shares of Allright common stock outstanding on the
Allright record date. Allright shareholders will have one vote at the Allright
special meeting for each share of Allright common stock they owned on the
Allright record date.
7
<PAGE> 15
ALLRIGHT SHAREHOLDER VOTE REQUIRED TO APPROVE THE MERGER (SEE PAGE 113)
The affirmative vote of the holders of a majority of the outstanding shares of
Allright common stock is required to adopt the merger agreement. Your failure to
vote will have the effect of a vote against the merger agreement. The holders of
outstanding shares of Allright common stock sufficient to adopt the merger
agreement have previously agreed that they will vote their shares of Allright
common stock in favor of adoption of the merger agreement. Therefore, there will
be a quorum at the Allright special meeting and sufficient votes cast for
adoption of the merger agreement to ensure its passage without the vote of any
other Allright shareholder.
THE MERGER AGREEMENT (SEE PAGE 78)
The merger agreement (Annex A) is attached at the back of this Joint Proxy
Statement/Prospectus. We encourage you to read the merger agreement because it
is the legal document that governs the merger.
WHAT ALLRIGHT SHAREHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 30)
In the merger, Central Parking will issue to Allright shareholders an estimated
aggregate of 7.6 million shares of Central Parking common stock in exchange for
all of the outstanding Allright common stock. The base equity purchase price is
calculated as $564,390,050:
Plus
- the aggregate exercise price of Allright warrants and certain Allright
options;
- certain Allright expenses related to this transaction below certain
levels;
- the purchase price and expenses related to the acquisition of certain
parking facilities or leases; and
- a percentage of certain gains on the sale of certain properties;
Less
- the principal amount of any long-term indebtedness or capitalized leases
of Allright, excluding current portions;
- Allright's working capital deficit above certain levels;
- certain Allright expenses related to this transaction above certain
levels;
- a percentage of certain losses on the sale of certain properties;
- the net proceeds from the sale of certain assets of Allright;
- certain Allright employee severance costs; and
- a multiple of Allright's June 30, 1998 earnings before income taxes,
depreciation and amortization below a certain level.
The Central Parking common stock issued in the merger will be valued at $46.00
per share. To determine the number of shares of Central Parking common stock you
will receive for each share of Allright common stock, divide the Allright base
equity purchase price (after all adjustments) by $46.00, then divide that number
by the number of shares of Allright common stock, warrants and certain options
outstanding. The sample calculation on the following page is an illustration of
the calculation of the exchange ratio. THE CALCULATION OF THE EXCHANGE RATIO IS
SUBJECT TO VARIOUS ADJUSTMENTS AS OF THE CLOSING OF THE MERGER. THEREFORE, THE
ACTUAL FIGURES REQUIRED TO COMPLETE THE CALCULATION CANNOT ACCURATELY BE
DETERMINED UNTIL THAT TIME, AND THE ACTUAL FIGURES MAY BE SUBSTANTIALLY
DIFFERENT THAN THE FIGURES USED IN THE FOLLOWING ILLUSTRATION.
8
<PAGE> 16
<TABLE>
<S> <C>
Starting purchase price..................................... $564,390,050
+ the aggregate exercise price of Allright warrants and
certain Allright options;............................... 5,485,000
+ certain Allright expenses related to this
transaction(1);......................................... 1,000,000
+ the purchase price and expenses related to the
acquisition of certain parking facilities;.............. 47,237,640
+ a percentage of certain gains on the sale of certain
properties;............................................. --
- the principal amount of any long-term indebtedness or
capitalized leases of Allright(2);...................... (257,870,000)
- Allright's working capital deficit above certain
levels(3);.............................................. (1,780,000)
- certain Allright expenses related to this transaction
above certain levels(1);................................ --
- a percentage of certain losses on the sale of certain
properties;............................................. --
- the net proceeds from the sale of certain assets of
Allright;............................................... (7,800,000)
- certain Allright employee severance costs(4); and....... (328,000)
- a multiple of Allright's June 30, 1998 earnings before
income taxes, depreciation and amortization below a
certain level........................................... --
------------
Total equity purchase price................................. $350,334,690
------------
Total Central Parking common stock to be issued in the
merger (350,334,690 / 46)................................. 7,615,972
------------
Total shares of Allright common stock, warrants and certain
options to purchase Allright common stock(5).............. 85,903
------------
Exchange ratio (7,615,972 / 85,903)......................... 88.658
============
</TABLE>
- ---------------
(1) Assumes transaction expenses are $4,000,000.
(2) Assumes (i) acquisitions are financed through increased debt and (ii) the
net proceeds from permitted sales are used to reduce debt.
(3) Assumes working capital deficit is $7,780,000.
(4) Assumes total severance obligations exceed specified threshold.
(5) Estimated to be outstanding as of the closing date of the merger. Assumes
exercise of all Allright incentive stock options.
Central Parking will not issue any fractional shares in the merger. Instead,
each Allright shareholder otherwise entitled to a fractional share will receive
a cash payment equal to $46.00 times the fractional share such Allright
shareholder would be entitled to receive.
Allright shareholders should not send in their stock certificates for exchange
until instructed to do so later.
OWNERSHIP OF CENTRAL PARKING AFTER THE MERGER (SEE PAGE 127)
Central Parking will issue an estimated aggregate of 7.6 million shares of
Central Parking common stock to Allright shareholders in the merger. Based on
that number, following the merger, Allright shareholders will own approximately
20.4% of the outstanding Central Parking common stock (assuming all Allright and
Central Parking stock options are
9
<PAGE> 17
exercised). This information is based on the number of shares of Allright and
Central Parking common stock outstanding on December , 1998.
INTERESTS OF OFFICERS AND DIRECTORS IN THE MERGER (SEE PAGE 48)
Certain directors of Allright and officers of Allright Corporation have
employment agreements, stock options and other benefit plans and other
arrangements that may provide them with interests in the merger that are
different from, or in addition to, those of the other Allright shareholders.
Such interests relate to, among other things, (i) provisions in the merger
agreement related to the execution of retention, employment and management
continuity agreements in connection with the merger, (ii) the terms of certain
severance agreements and employment agreements between Allright and certain
members of management providing for, in certain circumstances, cash payments,
acceleration of options and other benefits upon a change of control of Allright
(which would include the merger), (iii) the terms of the Allright 1998 Employee
Stock Option Plan, which allows for the immediate exercise of all options
granted under the Allright 1998 Employee Stock Option Plan upon a change of
control of Allright (which would include the merger), and (iv) provisions in the
merger agreement relating to the assumption of certain employee benefit plans to
be assumed by Central Parking in connection with the merger. In addition,
certain current holders of Central Parking common stock as well as Allright
holders of Central Parking common stock after the merger will receive certain
registration rights relating to Central Parking common stock under a
registration rights agreement. See "The Merger -- Certain Transactions;
Interests of Certain Persons in the Merger" and "Registration Rights Agreement."
CONDITIONS TO THE MERGER (SEE PAGE 89)
The merger will be completed if certain conditions, including the following, are
met:
(1) the approval of Central Parking shareholders;
(2) the absence of any court order or law that prohibits the merger;
(3) the absence of a material breach by Central Parking or Allright of their
respective representations, warranties or obligations under the merger
agreement;
(4) the shares of Central Parking common stock to be issued in the merger
have been approved for listing on the New York Stock Exchange;
(5) the termination or expiration of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 waiting period;
(6) the absence of a material adverse change to either Central Parking or
Allright;
(7) the receipt of tax opinions from the parties' tax advisors stating that
the merger will be treated as a tax-free reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended;
(8) the receipt of a letter from Central Parking's independent public
accountants that the merger will qualify as a pooling of interests; and
(9) the receipt of a letter from Allright's independent public accountants
that Allright qualifies as a combining company for purposes of pooling
of interests accounting.
10
<PAGE> 18
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 91)
Central Parking and Allright may agree to terminate the merger agreement without
completing the merger. The merger agreement may also be terminated by either
party in certain other circumstances, as follows:
(1) the merger is not completed on or before January 19, 1999 (which date
will be extended in certain circumstances); however, neither Central
Parking nor Allright may terminate the merger agreement if its breach of
the merger agreement is the reason the merger has not been completed.
Also, if the only reason the merger has not closed is that the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
waiting period has not expired or been terminated, either party may
extend the time to March 20, 1999;
(2) the other party materially breaches its representations or agreements in
the merger agreement and such breach cannot be cured after a thirty-day
notice period; or
(3) a law or final court order permanently prohibits the merger.
EFFECT OF TERMINATION (SEE PAGE 91)
In the event the merger agreement is terminated for any reason, Central Parking
will, generally speaking, not solicit, or enter into any agreements to operate
any facilities which Allright or any of its subsidiaries operated or have
binding agreements to operate as of the date of the merger agreement or the date
of termination of the merger agreement. In addition, if a termination of the
merger agreement occurs, Central Parking will not employ or solicit any employee
of Allright as of the date of the merger agreement or the date of termination of
the merger agreement. The term of these restrictions is for three years if the
merger is not completed because of Central Parking's breach of the merger
agreement or because of a material adverse change to Allright, or for eighteen
months if the merger is not completed for any other reason. In the event of
termination for certain events, the terminating party may receive
indemnification for damages, costs and expenses incurred as a result of the
termination. If the merger agreement is terminated due to breach of its
provisions, the non-breaching party may have certain contractual rights and
legal rights under state law, including the right to sue the other party for
breach of contract.
REGULATORY APPROVALS (SEE PAGE 47)
Central Parking and Allright are both required to make filings with or obtain
approvals from certain regulatory authorities in connection with the merger,
including antitrust authorities. Central Parking and Allright made the required
Hart-Scott-Rodino filings on October 8, 1998. It is expected that Central
Parking and Allright will obtain all required regulatory approvals prior to the
special meetings.
ACCOUNTING TREATMENT (SEE PAGE 42)
The merger is expected to be accounted for by Central Parking as a pooling of
interests, which means that, for accounting and financial purposes, we will
treat our companies as if the merger had occurred on October 31, 1996, the date
Allright acquired Allright Corporation. The merger is conditioned on our receipt
of a letter from Central Parking's independent public accountants that the
merger will qualify as a pooling of interests and receipt of a letter from
Allright's independent public accountants stating their belief that Allright
qualifies as a combining company for purposes of pooling of interests
accounting.
11
<PAGE> 19
FAIRNESS OPINION OF CENTRAL PARKING'S FINANCIAL ADVISOR (SEE PAGE 36 AND ANNEX
B)
In deciding to approve the merger, Central Parking's board considered an opinion
from its financial advisor, The Blackstone Group, L.P., that the exchange ratio
is fair to the holders of Central Parking common stock from a financial point of
view. The Blackstone opinion does not constitute a recommendation to any holder
of Central Parking common stock or Allright common stock as to how to vote on
the proposed merger or any matter related thereto. Such opinion is attached as
Annex B to this Joint Proxy Statement/Prospectus. We encourage you to read the
opinion in its entirety.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES (SEE PAGE 42)
Central Parking's independent public accountants will deliver an opinion to the
effect that neither Central Parking nor its shareholders will recognize gain or
loss for federal income tax purposes as a result of the merger. Allright's tax
advisor will deliver an opinion to the effect that neither Allright nor its
shareholders will recognize gain or loss for federal income tax purposes as a
result of the merger. Receipt of these tax opinions is a condition to the
merger.
Tax matters are very complicated and the tax consequences of the merger to you
will depend on the facts of your own situation. You should consult your tax
advisors for a full understanding of the tax consequences of the merger to you.
CERTAIN RELATED AGREEMENTS (SEE PAGES 96 AND 108)
Registration Rights Agreement. The shares of Central Parking common stock
issued to the holders of Allright common stock in connection with the merger, as
well as certain shares of Central Parking common stock held by Monroe J. Carell,
Jr. and certain related parties, will be entitled to the registration rights set
forth in the registration rights agreement entered into in connection with the
merger. Pursuant to this agreement, the Allright shareholders will have the
right to sell up to $250 million worth of Central Parking common stock received
in the merger in one or more registered public offerings of Central Parking
common stock to be conducted subsequent to the merger, as well as the right to
sell up to all of the Central Parking common stock they received in the merger
pursuant to a "shelf" registration statement to be filed and kept continuously
effective by Central Parking. Monroe J. Carell, Jr. and certain related holders
will also have the right to sell up to $100 million worth of Central Parking
common stock in such offerings and up to an additional $150 million worth of
Central Parking common stock pursuant to such shelf registration statement. See
"Registration Rights Agreement."
Transaction Support Agreements. In connection with the merger, Central Parking,
The Carell Children's Trust, Monroe J. Carell, Jr., personally and on behalf of
certain trusts and foundations, and certain members of the Carell family, have
entered into transaction support agreements with Allright, and certain of its
shareholders, pursuant to which Monroe J. Carell, Jr., the trusts and
foundations and other Carell family members have each agreed, among other
things, (i) to vote their respective Central Parking common stock in favor of
approval of the merger and other related agreements and transactions, and (ii)
not to vote the Central Parking common stock in a manner which would otherwise
prevent or delay the consummation of the transactions contemplated by the merger
agreement.
Allright, Gregory P. Shay, Timothy L. Grady and CBA Mortgage Partners, L.P. have
entered into transaction support agreements with Central Parking and Central
Parking Sub, pursuant to which Messrs. Shay and Grady and CBA Mortgage Partners,
L.P. have each agreed,
12
<PAGE> 20
among other things, (i) to vote their respective Allright common stock in favor
of approval of the merger and other related agreements and transactions, and
(ii) not to vote the Allright common stock in a manner which would prevent or
delay the consummation of the transactions contemplated by the merger agreement.
The transaction support agreements do not prohibit Mr. Carell or Mr. Shay from
acting in accordance with their fiduciary duties as officers or directors of
Central Parking or Allright, respectively.
ALLRIGHT APPRAISAL RIGHTS (SEE PAGE 43 AND ANNEX C)
In connection with the merger, shareholders of Allright will be entitled to
demand appraisal rights in respect of their shares of Allright common stock
under Section 262 of the General Corporation Law of the State of Delaware,
subject to the satisfaction by such shareholders of the conditions for appraisal
rights pursuant to Section 262, including Section 262's requirement that the
shareholder (i) deliver to Allright, prior to the vote being taken on the merger
at the special meeting, written notice of his or her intent to demand payment
for his or her shares of Allright common stock if the merger is effected, and
(ii) not vote in favor of the merger. The full text of Section 262 is included
as Annex C to this Joint Proxy Statement/Prospectus. See "The
Merger -- Appraisal Rights" and Annex C.
CENTRAL PARKING APPRAISAL RIGHTS
Under Tennessee law, Central Parking shareholders do not have any right to an
appraisal of the value of their Central Parking shares in connection with the
merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (SEE PAGE 52)
Central Parking common stock is listed on the New York Stock Exchange. On
September 21, 1998, the last full trading day prior to the public announcement
of the proposed merger, Central Parking common stock closed at $46.125. On
December , 1998, Central Parking common stock closed at $ . Allright
common stock is not listed on an exchange and there is no public market for
Allright common stock.
LISTING OF CENTRAL PARKING COMMON STOCK
Central Parking has applied to list the shares of its common stock to be issued
in the merger on the New York Stock Exchange.
13
<PAGE> 21
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
Set forth below is selected historical and unaudited pro forma condensed
combined financial data of Central Parking and selected historical consolidated
financial data of Allright (the "Successor Company") and its predecessor,
Allright Corporation (the "Predecessor Company").
The Central Parking historical consolidated balance sheet and statement of
earnings data as of and for the five fiscal years ended September 30, 1997 were
derived from the audited consolidated financial statements of Central Parking.
The Central Parking historical consolidated balance sheet and statement of
earnings data as of and for the nine-month periods ended June 30, 1997 and 1998
were derived from the unaudited consolidated financial statements of Central
Parking. Central Parking's historical results of operations for the nine months
ended June 30, 1998 are not necessarily indicative of the actual results that
may be experienced for fiscal 1998.
The Allright Corporation historical consolidated balance sheet and statement of
earnings data as of and for the three fiscal years ended June 30, 1996, and for
the period from July 1, 1996 to October 30, 1996, were derived from the audited
consolidated financial statements of Allright Corporation. The Allright
historical consolidated balance sheet data as of June 30, 1997 and 1998, and the
historical consolidated statement of earnings data for the period from October
31, 1996 to June 30, 1997 and for the fiscal year ended June 30, 1998, were
derived from the audited historical consolidated financial statements of
Allright. On October 31, 1996, Allright Acquisition Company, Inc., a wholly
owned subsidiary of Allright, acquired Allright Corporation. Allright
Acquisition Company, Inc. merged with and into Allright Corporation at the
closing of the transaction. The acquisition was accounted for as a purchase, and
accordingly, the purchase price was allocated to the assets and liabilities of
Allright Corporation based on their estimated fair values at the acquisition
date. Accordingly, the consolidated financial statements of Allright are not
comparable to those of Allright Corporation, in material respects, since these
financial statements report financial position, results of operations and cash
flows of these two separate entities.
The selected unaudited pro forma information gives effect to Central Parking's
acquisitions in its fiscal year 1997 of Civic Parking LLC, Square Industries,
Inc., and Car Park Corporation, and Central Parking's acquisitions in its fiscal
year 1998 of Diplomat Parking Corporation, Kinney System Holding Corp., Central
Parking System of Louisiana, Inc., and Turner Parking Systems, Inc.,
collectively referred to herein as the "Purchase Acquisitions." All such
Purchase Acquisitions were accounted for using the purchase method of
accounting. The purchase method of accounting requires that all assets and
liabilities of the acquired companies be adjusted to their respective estimated
fair market values as of the dates of acquisition. The unaudited pro forma
information assumes the Purchase Acquisitions occurred October 1, 1996 with
respect to the statements of earnings for the year ended September 30, 1997 and
the nine months ended June 30, 1998. The selected unaudited pro forma
information also gives effect to the merger of a wholly owned subsidiary of
Central Parking with Allright using the pooling of interests method of
accounting. The pooling of interests method of accounting combines assets and
liabilities at their historical bases and restates the results of operations as
if the Central Parking subsidiary and Allright had merged as of October 31,
1996, the date that Allright, the Successor Company, acquired Allright
Corporation, the Predecessor Company. The selected unaudited pro forma
information is not necessarily representative of what Central Parking's results
of operations or financial position
14
<PAGE> 22
would have been had the Purchase Acquisitions and the merger in fact occurred on
the respective dates set forth in the "Unaudited Pro Forma Condensed Combined
Financial Statements," and is not intended to project the Central Parking's
results of operations or financial position for any future period or date.
The information set forth below should be read in conjunction with the
historical "Consolidated Financial Statements and Notes" thereto of Central
Parking, Allright Corporation, and Allright, the "Unaudited Pro Forma Condensed
Combined Financial Statements" and Notes thereto, and the respective
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" for Central Parking and Allright, all of which information is
included elsewhere herein.
15
<PAGE> 23
SELECTED HISTORICAL FINANCIAL DATA OF CENTRAL PARKING CORPORATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Revenues:
Parking...................... $69,589 $82,890 $94,383 $109,272 $180,886 $126,981 $231,988
Management contract.......... 25,829 29,278 31,772 34,044 42,090 30,397 42,611
------- ------- ------- -------- -------- -------- --------
Total revenues........... 95,418 112,168 126,155 143,316 222,976 157,378 274,599
Costs and expenses:
Cost of parking.............. 66,168 76,952 87,192 99,196 159,904 111,605 199,639
Cost of management
contracts.................. 9,087 9,812 9,650 9,769 11,793 9,163 11,328
General and administrative... 12,374 14,196 15,711 17,419 23,427 16,666 28,939
------- ------- ------- -------- -------- -------- --------
Total costs and
expenses............... 87,629 100,960 112,553 126,384 195,124 137,434 239,906
------- ------- ------- -------- -------- -------- --------
Operating earnings....... 7,789 11,208 13,602 16,932 27,852 19,944 34,693
------- ------- ------- -------- -------- -------- --------
Interest expense................. 243 39 0 0 4,582 2,937 6,243
Dividends on Convertible
Preferred Securities........... -- -- -- -- -- -- 1,684
Net gains on sales of property
and equipment.................. 1,122 2,214 81 1,192 3,137 8 --
Earnings before income taxes..... 8,650 14,143 15,507 21,068 32,412 21,235 32,338
Income taxes..................... 3,416 5,179 5,563 7,232 12,207 7,645 12,420
Net earnings..................... $ 5,234 $ 8,964 $ 9,944 $ 13,836 $ 20,205 $ 13,590 $ 19,918
Earnings per common share(1):
Basic........................ N/A N/A $ 0.43 $ 0.54 $ 0.78 $ 0.52 $ 0.73
Diluted...................... N/A N/A $ 0.43 $ 0.53 $ 0.77 $ 0.52 $ 0.72
OTHER DATA:
Depreciation and amortization.... $ 2,274 $ 2,594 $ 2,882 $ 3,420 $ 5,875 $ 4,179 $ 9,756
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, AS OF JUNE 30,
------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........ $ 3,193 $12,026 $10,218 $ 28,605 $ 9,979 $ 476 $ 20,582
Working capital (deficit)........ (4,466) 1,987 2,676 19,707 (9,231) (10,144) (19,754)
Total assets..................... 46,950 60,029 70,440 107,212 234,014 221,859 526,913
Long-term debt and capital lease
obligations, less current
portion........................ -- -- -- -- 73,252 82,178 64,359
Mandatorily redeemable
convertible preferred
securities of trust
subsidiary..................... -- -- -- -- -- -- 110,000
Shareholders' equity............. 23,249 31,861 41,360 76,793 96,851 90,441 246,793
</TABLE>
(1) Reflects the recapitalization of Central Parking on September 29, 1995,
three-for-two stock splits effective on each of March 19, 1996 and December
12, 1997, and the adoption of Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share."
16
<PAGE> 24
SELECTED HISTORICAL FINANCIAL DATA OF ALLRIGHT CORPORATION
AND ALLRIGHT HOLDINGS, INC.
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ALLRIGHT CORPORATION (PREDECESSOR COMPANY) ALLRIGHT HOLDINGS, INC.
--------------------------------------------- (SUCCESSOR COMPANY)
JULY 1, 1996 -----------------------------
YEAR ENDED JUNE 30, TO OCTOBER 31, 1996 YEAR ENDED
------------------------------ OCTOBER 30, TO JUNE 30,
1994 1995 1996 1996 JUNE 30, 1997 1998
-------- -------- -------- ------------ ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Total revenues............... $164,952 $172,997 $172,354 $60,079 $118,558 $217,384
Cost and expense:
Cost of parking............ 132,981 138,764 138,604 45,268 94,374 169,811
Depreciation and
amortization............. 6,322 6,446 6,257 2,019 5,328 10,810
General and
administrative........... 8,375 8,849 9,271 8,340 6,207 11,919
-------- -------- -------- ------- -------- --------
Total costs and
expenses........... 147,678 154,059 154,132 55,627 105,909 192,540
-------- -------- -------- ------- -------- --------
Operating earnings... 17,274 18,938 18,222 4,452 12,649 24,844
-------- -------- -------- ------- -------- --------
Interest expense............. 6,902 6,914 5,915 1,786 13,915 22,859
Net gains(losses) on sales of
property and equipment..... 979 690 1,101 110 (19) (710)
Earnings (loss) before income
taxes, cumulative effect of
accounting changes, and
extraordinary items........ 12,511 13,390 14,137 3,016 (715) 2,294
Income taxes................. 4,927 5,878 5,955 1,186 1,151 2,226
Income (loss) before
cumulative effect of
accounting change and
extraordinary item......... 7,584 7,512 8,182 1,830 (1,866) 68
Cumulative effect of
accounting change.......... 927 -- -- -- -- --
Extraordinary item,
defeasance of bonds........ -- -- -- -- (1,534) --
Net earnings (loss).......... $ 6,657 $ 7,512 $ 8,182 $ 1,830 ($ 3,400) $ 68
OTHER DATA:
Depreciation and
amortization, including
debt issue costs and
goodwill................... $ 6,322 $ 6,446 $ 6,257 $ 2,019 $ 7,048 $ 13,391
</TABLE>
<TABLE>
<CAPTION>
ALLRIGHT CORPORATION ALLRIGHT HOLDINGS, INC.
(PREDECESSOR COMPANY) (SUCCESSOR COMPANY)
---------------------------------- -----------------------------
AS OF JUNE 30,
------------------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- ------------ ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.... $ 16,652 $ 3,652 $ 7,754 $ 7,329 $ 19,655
Working capital (deficit).... (12,809) (30,884) (29,086) (10,494) (8,710)
Total assets................. 191,520 188,176 197,292 363,799 408,269
Long-term debt and capital
lease obligations, less
current portion............ 62,345 50,460 43,305 200,473 222,615
Shareholders' equity......... 90,231 91,468 104,025 75,414 85,894
</TABLE>
17
<PAGE> 25
UNAUDITED SELECTED PRO FORMA CONDENSED
COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA FULLY COMBINED
----------------------------------------
NINE MONTHS
FISCAL YEAR ENDED ENDED
SEPTEMBER 30, 1997(1) JUNE 30, 1998(2)
--------------------- ----------------
<S> <C> <C>
STATEMENT OF EARNINGS DATA:
Revenues:
Parking and management contract
revenues............................... $524,662 $493,562
Cost and expense:
Cost of parking and management
contracts.............................. 414,032 377,232
General and administrative................ 52,592 51,403
Amortization of goodwill and noncompete
agreements............................. 10,068 8,277
-------- --------
Total costs and expenses.......... 476,692 436,912
-------- --------
Operating earnings................ 47,970 56,650
-------- --------
Interest income............................. 3,621 3,306
Interest expense............................ 35,412 28,946
Dividends on mandatorily redeemable
convertible securities of a subsidiary
trust..................................... -- 1,684
Net gains (losses) on sales of property and
equipment................................. 2,339 (669)
Equity in partnership and joint venture
earnings.................................. 5,546 4,099
Earnings from continuing operations before
income taxes.............................. 23,344 32,538
Income taxes................................ 13,378 14,931
Earnings from continuing operations......... $ 9,966 $ 17,607
======== ========
Earnings from continuing operations per
common share(3)(4)(5):
Basic..................................... $ 0.31 $ 0.50
Diluted................................... $ 0.31 $ 0.49
OTHER DATA:
Depreciation and amortization............... $ 26,495 $ 24,326
======== ========
</TABLE>
18
<PAGE> 26
<TABLE>
<CAPTION>
PRO FORMA FULLY COMBINED
------------------------
AS OF JUNE 30, 1998
-------------------
<S> <C>
BALANCE SHEET DATA(6):
Cash and cash equivalents............................... $ 40,237
Working capital (deficit)............................... (49,344)
Total assets............................................ 938,102
Long-term debt and capital lease obligations, less
current portion....................................... 286,974
Mandatorily redeemable convertible securities of trust
subsidiary............................................ 110,000
Shareholders' equity.................................... 315,307
</TABLE>
- ---------------
(1) Reflects Central Parking's historical results of operations for its fiscal
year ended September 30, 1997 combined with Allright's historical results of
operations for the period from October 31, 1996 to June 30, 1997 as if the
merger had occurred on October 31, 1996. Also reflects the historical
results and pro forma adjustments for the Purchase Acquisitions made by
Central Parking during fiscal year 1997 and the first nine months of fiscal
of 1998 as if they had occurred on October 1, 1996. See "Unaudited Pro Forma
Condensed Combined Financial Statements" and Notes thereto for further
detail.
(2) Reflects Central Parking's historical results of operations for the nine
months ended June 30, 1998 combined with Allright's historical results of
operations for the nine months ended June 30, 1998 as if the merger had
occurred on October 31, 1996. Also reflects the historical results and pro
forma adjustments for the Purchase Acquisitions made by Central Parking
during the nine months ended June 30, 1998 as if they had occurred on
October 1, 1996.
(3) Reflects the three-for-two stock split on December 12, 1997.
(4) All earnings per share data for fiscal 1997 has been restated to reflect
Central Parking's adoption in the first quarter of fiscal 1998 of Statement
of Financial Accounting Standards No. 128, "Earnings per Share."
(5) Pro forma fully combined earnings from continuing operations per share
amounts give effect to the Purchase Acquisitions and assumes 7.6 million
shares of Central Parking common stock are issued to Allright shareholders
in the merger. The pro forma fully combined earnings from continuing
operations per share amounts for fiscal year 1997 assumes that the 7.6
million common shares were outstanding for the eight-month period Allright
historical operations were included in the pro forma fully combined
statement of earnings. See "Unaudited Pro Forma Condensed Combined Financial
Statements" and Notes thereto.
(6) Reflects Central Parking historical June 30 balance sheet information
combined with Allright historical June 30 balance sheet information.
COMPARATIVE PER SHARE DATA
Set forth below is per share data of Central Parking and Allright on an
historical and pro forma fully combined basis. The pro forma fully combined
information gives effect to the merger of a wholly owned subsidiary of Central
Parking and Allright, accounted for as a pooling of interests, assuming that the
outstanding shares of Allright are exchanged for 7.6 million shares of Central
Parking common stock. The pro forma fully combined information also gives effect
to the Purchase Acquisitions. The information set forth below should be read in
conjunction with Central Parking's, Allright Corporation's and Allright's
19
<PAGE> 27
historical Consolidated Financial Statements and the Notes thereto, the
"Unaudited Pro Forma Condensed Combined Financial Statements" and Notes thereto,
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for Central Parking and Allright included elsewhere herein.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED NINE MONTHS
SEPTEMBER 30, ENDED JUNE 30,
--------------------------- -----------------
CENTRAL PARKING CORPORATION 1995 1996 1997 1997 1998
HISTORICAL PER SHARE DATA: ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Income from continuing
operations(1)(2):
Basic............................. $ 0.43 $ 0.54 $ 0.78 $ 0.52 $ 0.73
Diluted........................... $ 0.43 $ 0.53 $ 0.77 $ 0.52 $ 0.72
Weighted average common shares, in
thousands(1)(2):
Basic............................. 23,058 25,793 25,991 25,988 27,373
Diluted........................... 23,058 26,078 26,330 26,303 27,838
Dividends per common share(1)....... $ -- $0.0500 $0.0575 $0.0425 $0.0450
Book value per common share(3)...... $ 1.79 $ 2.93 $ 3.68 $ 3.44 $ 8.36
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
JUNE 30,
----------------------
ALLRIGHT HOLDINGS, INC. HISTORICAL 1997 1998
PER SHARE DATA: --------- ---------
<S> <C> <C>
Income from continuing operations(4):
Basic................................................. N/A N/A
Diluted............................................... N/A N/A
Weighted average common shares, in thousands(4):
Basic................................................. N/A N/A
Diluted............................................... N/A N/A
Dividends per common share(5)........................... $ -- $ --
Book value per common share(6).......................... $1,020.20 $1,082.81
</TABLE>
<TABLE>
<CAPTION>
FISCAL NINE MONTHS
YEAR ENDED
UNAUDITED PRO FORMA FULLY COMBINED 1997 JUNE 30, 1998
PER SHARE DATA: ----------- -------------
<S> <C> <C>
Income from continuing operations(7):
Basic................................................. $ 0.31 $ 0.50
Diluted............................................... 0.31 0.49
Weighted average common shares, in thousands(7):
Basic................................................. 31,982 35,331
Diluted............................................... 32,321 35,796
Dividends per common share(8)........................... $0.0575 $0.0450
Book value per common share(9).......................... N/A $ 8.50
</TABLE>
- ---------------
(1) Reflects the recapitalization of Central Parking on September 29, 1995, and
three-for-two stock splits each effective on March 19, 1996 and December 12,
1997.
(2) All earnings per share data has been restated to reflect Central Parking's
adoption in the first quarter of fiscal 1998 of Statement of Financial
Accounting Standards No. 128 "Earnings per Share."
(3) Presented as of the end of the respective periods.
20
<PAGE> 28
(4) Information is not applicable given that Allright Corporation and Allright
were not public companies.
(5) Allright has not paid any dividends during the historical periods presented.
(6) Presented as of June 30, 1997 and 1998.
(7) Reflects the restatement of weighted average common shares outstanding
assuming the Purchase Acquisitions occurred October 1, 1996 and the merger
between a wholly owned subsidiary of Central Parking and Allright occurred
on October 31, 1996. Assumes 7.6 million common shares of Central Parking
are issued to shareholders of Allright. See "Unaudited Pro Forma Condensed
Combined Financial Statements" and Notes thereto, and Central Parking and
Allright historical consolidated financial statements for further
information.
(8) Reflects dividends at Central Parking's historical dividend rates for
historical and pro forma periods.
(9) Reflects the pro forma combined net assets at June 30, 1998 divided by the
pro forma combined common shares outstanding at June 30, 1998.
21
<PAGE> 29
RISK FACTORS
Central Parking shareholders and Allright shareholders should carefully consider
the following matters, together with the other information contained in this
Joint Proxy Statement/Prospectus (including the matters addressed in "The
Merger -- Forward-Looking Statements May Prove Inaccurate") before determining
whether to vote to approve the merger agreement.
INTEGRATION OF ACQUISITIONS
The merger involves the integration of two companies that have previously
operated independently. Allright is a significantly larger company than Central
Parking has integrated previously. No assurance can be given that Central
Parking will be able to integrate the operations of Allright without
encountering difficulties or experiencing the loss of key Central Parking or
Allright employees or customers, or that the benefits expected from such
integration will be realized. Moreover, the merger will require significant
integration of the two companies' information systems at a time when both
companies are taking steps to address their Year 2000 issues and Allright is in
the process of converting its information systems. In addition to the merger,
Central Parking completed three acquisitions in fiscal 1997 and four
acquisitions in fiscal 1998. As a result of the merger and these previous
acquisitions, Central Parking will have substantially increased the number of
persons employed by Central Parking, the number of facilities operated by
Central Parking, and the geographic markets serviced by Central Parking.
Although Central Parking believes that it can successfully integrate and manage
the acquired operations and achieve certain economies of scale, there can be no
assurance that the acquisitions will be integrated successfully into Central
Parking's operations, that cost savings or operating efficiencies will be
realized to the extent anticipated by Central Parking, or that the acquired
operations will achieve levels of profitability that justify Central Parking's
investments. Central Parking can give no assurance that any acquired facility or
company will be successfully integrated into its operations. Also, because of
the price paid by Central Parking or because of the performance of acquired
operations after such acquisitions, there can be no assurance that the results
of the acquired operations will not be dilutive to Central Parking's per share
earnings. Any acquisition contemplated or completed by Central Parking may
result in adverse short-term effects on Central Parking's reported operating
results, divert management's attention, introduce difficulties in retaining,
hiring and training key personnel, and introduce risks associated with
unanticipated problems or legal liabilities, some or all of which could have a
material adverse effect on Central Parking's financial condition and results of
operations.
Central Parking receives information regarding potential acquisitions from time
to time, however, there are currently no material acquisitions other than the
merger which Central Parking believes are more likely than not to occur. Central
Parking believes the stock market currently expects a continued significant rate
of acquisitions by Central Parking. There can be no assurance that Central
Parking will be able to consummate parking facility or company acquisitions in
the future at the rate currently expected, if at all.
FIXED MERGER CONSIDERATION DESPITE POTENTIAL CHANGES IN STOCK PRICES
Upon completion of the merger, each share of Allright common stock will be
converted into Central Parking common stock based on a calculation that assumes
a value of $46.00 per share of Central Parking common stock. The valuation of
the Central Parking common stock is fixed and will not be adjusted in the event
of any increase or decrease in the price of
22
<PAGE> 30
Central Parking common stock. The trading price of Central Parking common stock
on the closing date of the merger may vary from the fixed price of $46.00 per
share for purposes of the merger agreement. For example, during the twelve-month
period ending on December , 1998 (the most recent practicable date prior to
the printing of this Joint Proxy Statement/Prospectus), the closing price of
Central Parking common stock varied from a low of $ to a high of $
and on that date closed at $ (see "Volatility of Market Price for Central
Parking Common Stock" for further information). Such variations may be the
result of changes in the business, operations or prospects of Central Parking,
Allright or the combined company, market assessments of the likelihood that the
merger will be consummated and the timing thereof, regulatory considerations,
general market and economic conditions and other factors. If the market value of
Central Parking common stock is lower than $46.00 on the closing date of the
merger, then the fixed valuation of Central Parking common stock would result in
holders of Allright common stock receiving less aggregate consideration of
Central Parking common stock than they would have received if the market value
of Central Parking common stock on the closing date of the merger was equal to
or higher than $46.00 per share. Because the completion of the merger may occur
at a date later than the special meetings, there can be no assurance that the
price of Central Parking common stock on the date of the special meetings will
be indicative of the price at the completion of the merger. At the time of the
special meetings, Allright shareholders will not know the exact value of the
Central Parking common stock that they will receive when the merger is
completed. Thus, the market value of the Central Parking common stock received
in the merger could be less than $46.00 per share.
Allright shareholders are urged to obtain current market quotations for Central
Parking common stock.
NEED FOR GOVERNMENT APPROVALS; POSSIBLE OPERATING RESTRICTIONS
The consummation of the merger is conditioned upon the expiration or termination
of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. Central Parking and Allright both made the
filings required under Hart-Scott-Rodino on October 8, 1998. Central Parking and
Allright are seeking to obtain all required regulatory approvals prior to the
special meetings; however, no assurances can be given that all required
regulatory approvals will be obtained on that timetable or that restrictions on
the combined company will not be sought by governmental agencies as a condition
to obtaining such approvals. There can be no assurance that any operating
restrictions imposed would not adversely affect the value of the combined
company. See "The Merger -- Regulatory Matters."
ABILITY TO MANAGE GROWTH
Central Parking intends to continue to expand its business by adding management
contracts and leases and by acquiring additional parking facilities and
operators. Central Parking's growth will be affected by the results of
operations of added parking facilities, which will depend upon contract terms,
government licenses and approvals, and local competitive environments. The
nature of licenses and approvals, and the timing and likelihood of obtaining
them, vary widely from state to state and country to country. Central Parking's
growth will also be directly affected by Central Parking's ability to obtain
suitable financing and by the competitive environment for acquisitions. Some of
the acquired operations may be located in geographic markets in which Central
Parking has little or no presence. Successful integration
23
<PAGE> 31
and management of additional facilities will depend on a number of factors, many
of which are beyond Central Parking's control. Central Parking's growth plans
will also place significant demands on Central Parking's management and
operating personnel and will require Central Parking to improve its operational,
financial, and management information systems. As Central Parking continues to
expand its operations, its ability to maintain or exceed its historical
percentage growth rate may be adversely impacted. There can be no assurance that
this lowering of Central Parking's percentage growth rate will not adversely
affect the value of the combined company.
OBLIGATIONS OF CENTRAL PARKING TO REGISTER STOCK
In connection with the merger, Central Parking will issue an estimated aggregate
of 7.6 million shares of Central Parking common stock. After the merger, the
Central Parking common stock issued in the merger will be freely tradeable,
subject to volume limitations and other restrictions of Rules 144 and 145 under
the Securities Act for persons who are affiliates of Central Parking following
the merger or who were affiliates of Allright prior to the merger. This could
result in substantial sales of shares of Central Parking common stock after the
merger. In addition, Central Parking and Allright and certain affiliates entered
into a registration rights agreement. The registration rights agreement requires
Central Parking to register up to $250 million worth of Central Parking common
stock issued pursuant to the merger in one or more registered public offerings
and up to $100 million worth of Central Parking common stock currently held by
certain Central Parking shareholders. These offerings will also potentially
result in a large number of shares of Central Parking common stock being sold in
the market. The sale of a substantial number of shares of Central Parking common
stock in the market could result in a reduction in the market price for Central
Parking common stock. See "Registration Rights Agreement."
RESTRICTED ACCESS TO CAPITAL; INCREASED INDEBTEDNESS
The registration rights agreement provides certain limitations and restrictions
upon Central Parking's ability to issue new shares of Central Parking common
stock. Until shareholders of Allright have received gross proceeds of at least
$250 million from the sale of Central Parking common stock and certain current
shareholders of Central Parking have received at least $100 million from the
sale of Central Parking common stock in either registered offerings or
otherwise, Central Parking can not sell any shares of its common stock on its
own behalf, subject to certain exceptions. As a result, Central Parking may not
have access to the capital markets for a significant period of time. In
addition, as a result of the merger, Central Parking's indebtedness will
increase from approximately $45 million, as of October 16, 1998, to
approximately $310 million, which may reduce its ability to borrow additional
funds in the future. Thus, Central Parking may have limited sources to raise
additional funds if needed in its operations or for additional acquisitions.
There can be no assurance that the restrictions upon Central Parking's ability
to raise funds through common stock offerings or its increased debt level will
not have a material adverse effect on Central Parking. See "Registration Rights
Agreement."
INCURRENCE OF SIGNIFICANT TRANSACTION CHARGES
Central Parking and Allright expect to incur transaction costs related to the
Merger. Such costs are currently estimated to be approximately $14 million in
the aggregate. These costs are to reflect direct transaction costs, primarily
for investment banking, legal and accounting
24
<PAGE> 32
fees. This amount is a preliminary estimate and is therefore subject to change.
Additional unanticipated expenses may be incurred relating to the integration of
the businesses of Central Parking and Allright. Although it is expected that the
elimination of duplicative expenses as well as other efficiencies related to the
integration of the business of the two companies may offset these expenses over
time, there can be no assurance that such net benefit will be achieved in the
near term, or at all. There can be no assurance that combining the business of
Central Parking and Allright, even if achieved in an efficient and effective
manner, will result in combined results of operations and financial condition
superior to what would have been achieved by each company independently. See
"Unaudited Pro Forma Condensed Combined Financial Statements."
DEPENDENCE ON MANAGEMENT CONTRACTS AND LEASES
One source of Central Parking's and Allright's revenues and gross margin is
management contracts relating to parking facilities owned by unaffiliated
property owners.
Management contracts, in general, are for terms of one to three years, but are
cancelable by the property owner on short notice. There can be no assurance that
Central Parking will be able to maintain or renew its and Allright's management
contracts on favorable terms. The loss, or renewal on less favorable terms, of a
substantial number of management contracts could have a material adverse effect
on Central Parking's financial condition and results of operations.
Typically, for management contracts, Central Parking and Allright receive a
fixed fee and/or a small percentage of gross revenues generated by the facility,
whereas leases generally require the operator to make a fixed monthly payment
regardless of fees collected. Therefore, although management contracts provide a
fixed source of income, leases and owned properties can potentially generate
more income. See "-- Dependence on Property Performance." Under management
contracts, Central Parking and Allright also provide ancillary services such as
insurance, accounting, equipment leasing, and consulting. A material reduction
in the profit margins associated with these ancillary services provided under
management contracts, caused by, among other things, increases in costs or
claims associated with, or reductions in the number of clients purchasing
insurance or other ancillary services provided by Central Parking and Allright,
could have a material adverse effect on Central Parking's financial condition
and results of operations.
DEPENDENCE ON PROPERTY PERFORMANCE
Central Parking's and Allright's revenues and profitability are dependent on the
performance of the parking facilities they own, lease and manage. Central
Parking's and Allright's revenues from leased and owned parking facilities
consist of parking fees collected by such facilities. Leases generally are for
three to ten year terms. Although there is more potential for revenue from
leased and owned facilities than from management contracts, they also carry more
risk if there is a downturn in property performance or commercial real estate
occupancy rates.
Generally, performance of Central Parking's and Allright's parking facilities
depend, in part, on their ability to negotiate favorable contract terms, their
ability to control operating expenses, financial conditions prevailing generally
and in areas where parking facilities are located, the nature and extent of
competitive parking facilities in the area, weather conditions in areas where
parking facilities are located and the real estate market generally.
25
<PAGE> 33
COMPETITION
The parking industry is highly competitive. Central Parking's competitors range
from small single-lot operators to large regional and national multi-facility
operators, and include municipal and other governmental entities. In addition,
Central Parking competes for qualified management personnel with other parking
facility operators, with property management companies, and with property
owners. There can be no assurance that Central Parking will not encounter
increased competition in the future, due to, its ability to attract customers,
expand its business, or maintain profitable pricing levels, and which could have
a material adverse effect on Central Parking's financial condition or results of
operations. Central Parking competes for acquisitions with other parking
facility operators, real estate developers and real estate investment trusts.
There can be no assurance that Central Parking will not encounter increased
competition for acquisitions in the future and that such competition will not
have an adverse effect on Central Parking's ability to complete acquisitions or
on prices paid for acquisitions.
VARIATIONS IN QUARTERLY OPERATING RESULTS
Central Parking has experienced fluctuations in its quarterly revenues and
profitability. These fluctuations are caused by a variety of factors including
the timing of gains on sales of owned facilities, preopening costs, the effect
of weather on travel and transportation patterns, and local and national
economic conditions. There can be no assurance that fluctuations in revenues and
net earnings will not cause the market price of Central Parking common stock to
fluctuate substantially. Results for any particular quarter may not be
indicative of future results or results for the full fiscal year. See "Central
Parking's Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Quarterly Results."
FOREIGN CURRENCY EXCHANGE RATES
Central Parking operates in the United Kingdom, Germany, Mexico, the Republic of
Ireland, Chile, Malaysia, Canada, and Spain, maintains a business development
office in the Netherlands, and intends to expand its business in these and other
international locations. For the nine months ended June 30, 1998, revenues from
foreign operations represented 6.2% of Central Parking's total revenues. Of
these foreign revenues, revenues from United Kingdom operations represented
96.2% of such revenues, excluding earnings from joint ventures. Central Parking
receives revenues and incurs expenses in various foreign currencies in
connection with its foreign operations and, as a result, Central Parking is
subject to currency exchange rate fluctuations. Central Parking intends to
continue to invest in foreign leased or owned parking facilities, either
independently or through joint ventures, where appropriate, and may become
increasingly exposed to foreign currency fluctuations. Presently, Central
Parking has limited exposure to foreign currency risk and anticipates
implementing a hedge program if such risk materially increases.
DEPENDENCE ON KEY MANAGEMENT
The success of Central Parking and the integration of Allright are highly
dependent on the continued services of certain members of Central Parking's
management team and Allright's management team after the merger. The loss of
services of one or more members of Central Parking's or Allright's senior
management team could have a material adverse effect on Central Parking's
financial condition and results of operations. Although Central Parking and
Allright have historically been successful in retaining the services of their
senior manage-
26
<PAGE> 34
ment, there can be no assurance that Central Parking will be able to retain such
personnel in the future. Central Parking is a beneficiary of certain life
insurance policies on certain key executives ranging from $100,000 to
approximately $1.2 million.
ENVIRONMENTAL AND OTHER REGULATIONS
Under various federal, state, and local environmental laws, ordinances, and
regulations, a current or previous owner or operator of real property may be
liable for the cost 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 ownership
or operation of parking facilities, Central Parking may be potentially liable
for such costs including any such costs which are asserted against the
properties currently owned or operated by Allright. There can be no assurance
that a material environmental claim will not be asserted against Central Parking
or against its or Allright's owned or operated parking facilities. The cost of
defending against claims of liability, or of remediating a contaminated
property, could have a material adverse effect on Central Parking's financial
condition or results of operations.
Various other governmental regulations affect Central Parking's operation of
parking facilities, both directly and indirectly, including air and water
quality laws, licensing laws, and the Americans with Disabilities Act of 1990.
Under such act, all public accommodations, including parking facilities, are
required to meet certain federal requirements related to access and use by
disabled persons. Although management believes that the parking facilities it
owns and operates are in substantial compliance with these requirements, a
determination that Central Parking or the facility owner is not in compliance
with the Americans with Disabilities Act, or other regulatory laws, could result
in the imposition of fines or damage awards against Central Parking.
LABOR UNIONS; POTENTIAL WORK STOPPAGE
Approximately 3,900 employees of Central Parking and 591 employees of Allright
are represented by labor unions. There can be no assurance that Central Parking
or Allright will be able to renew existing labor union contracts on acceptable
terms. Employees could exercise their rights under the labor union contract,
which could include a strike or walk-out. In such cases, there are no assurances
that Central Parking or Allright would be able to staff sufficient employees for
its short-term needs. Any such labor strike or the inability of Central Parking
or Allright to negotiate a satisfactory contract upon expiration of the current
agreements could have a material adverse effect on Central Parking's or
Allright's business, financial condition or results of operations.
VOLATILITY OF MARKET PRICE FOR CENTRAL PARKING COMMON STOCK
From time to time, there may be significant volatility in the market price of
Central Parking common stock. Central Parking believes that the current market
price of Central Parking common stock reflects expectations that Central Parking
will be able to continue to operate its facilities profitably, add management
contracts and leases and acquire new facilities at a significant rate. If
Central Parking is unable to operate its facilities profitably or add new
facilities at a pace that reflects the expectations of the market, investors
could sell shares of Central Parking common stock at or after the time that it
becomes apparent that the expectations may not be realized, resulting in a
decrease in the market price of Central
27
<PAGE> 35
Parking common stock. In addition to quarterly operating results of Central
Parking, changes in earnings estimates by analysts, general conditions in the
economy, the financial markets, or the parking industry, or other developments
affecting Central Parking could cause the market price of Central Parking common
stock to fluctuate substantially. The stock market may experience extreme price
and volume fluctuations and such volatility may have a significant effect on the
market price of Central Parking common stock for reasons unrelated to Central
Parking's operating performance. See "Comparative Price Range of Common Stock
and Dividend Policy."
28
<PAGE> 36
THE MERGER
The discussion in this Joint Proxy Statement/Prospectus (this "Joint Proxy
Statement/Prospectus") of the merger discussed herein is subject to, and
qualified in its entirety by reference to, the Agreement and Plan of Merger (the
"Merger Agreement") by and among Central Parking Corporation, a Tennessee
corporation (together with its subsidiaries, "Central Parking"), Central Merger
Sub, Inc., a Tennessee corporation and wholly owned subsidiary of Central
Parking ("Central Parking Sub"), Allright Holdings, Inc., a Delaware corporation
(together with its subsidiaries, "Allright"), Apollo Real Estate Investment Fund
II, L.P., a Delaware limited partnership ("Apollo"), and AEW Partners, L.P., a
Delaware limited partnership ("AEW"), dated as of September 21, 1998, a copy of
which is attached to this Joint Proxy Statement/Prospectus as Annex A, and is
incorporated herein by reference. Pursuant to the Merger Agreement, Central
Parking Sub will merge with and into Allright, with Allright surviving the
merger as an indirect, wholly owned subsidiary of Central Parking (the
"Merger").
GENERAL
This Joint Proxy Statement/Prospectus is being furnished to shareholders of
Central Parking in connection with the solicitation of proxies by the Board of
Directors of Central Parking (the "Central Parking Board") for use at the
special meeting of Central Parking shareholders (including any adjournment or
postponement thereof) to be held on January , 1999 (the "Central Parking
Special Meeting"). At the Central Parking Special Meeting, shareholders of
Central Parking will be asked to consider and vote upon: (i) the approval of the
Merger Agreement and the issuance of Central Parking Common Stock (as defined
below) as contemplated by the Merger Agreement (the "Merger Proposal"), (ii) the
approval of an amendment to Central Parking's Amended and Restated Charter (the
"Central Parking Charter") to increase the number of authorized shares of common
stock, $0.01 par value per share (the "Central Parking Common Stock"), from 50
million to 100 million (the "Charter Amendment Proposal"), and (iii) other
matters properly brought before the Central Parking Special Meeting.
This Joint Proxy Statement/Prospectus is also being furnished to shareholders of
Allright in connection with the solicitation of proxies by the Board of
Directors of Allright (the "Allright Board") for use at the special meeting of
Allright shareholders (including any adjournment or postponement thereof) to be
held on January , 1999 (the "Allright Special Meeting," and together with the
Central Parking Special Meeting, the "Special Meetings"). At the Allright
Special Meeting, the Allright shareholders will be asked to consider and vote
upon: (i) the adoption of the Merger Agreement, and (ii) other matters properly
brought before the Allright Special Meeting.
This Joint Proxy Statement/Prospectus also constitutes the prospectus of Central
Parking filed with the Securities and Exchange Commission (the "Commission") as
a part of a Registration Statement on Form S-4 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to an estimated 7.6 million shares of Central Parking Common Stock to be
issued to shareholders of Allright pursuant to the Merger Agreement.
The Merger Agreement provides, on the terms and subject to the conditions set
forth therein, (i) for the Merger and (ii) that each share of Allright common
stock, $0.10 par value per share (the "Allright Common Stock"), outstanding
immediately prior to the Effective Time
29
<PAGE> 37
(as defined below) (other than shares owned by Allright as treasury stock or by
Central Parking or any subsidiary of Central Parking) will be converted into
such number of shares determined by (x) dividing the Equity Purchase Price (as
defined below) by $46.00 and (y) dividing that quotient by the number of shares
of Allright Common Stock, warrants and certain options to purchase Allright
Common Stock outstanding (the "Exchange Ratio").
The total equity purchase price ("Equity Purchase Price") of Allright is
$564,390,050, adjusted as follows:
- Approved acquisitions. For acquisitions completed after April 30, 1998,
the amount of cash consideration used and transaction expenses and
capital expenditures incurred for such acquisitions will be added to the
purchase price.
- Transaction expenses. If the expenses incurred by Allright in connection
with the Merger exceed $5 million, the excess will be subtracted from the
purchase price and if such expenses are under $5 million, the shortfall
will be added to the purchase price.
- Working capital. If Allright's working capital deficit is more than $6
million, the deficit amount above $6 million will be subtracted from the
purchase price.
- EBITDA. If Allright's June 30, 1998 earnings before income taxes,
depreciation and amortization ("EBITDA") (with certain adjustments to be
made to EBITDA pursuant to the Merger Agreement) is below $34.0 million,
the amount below $34.0 million times sixteen (16) will be subtracted from
the purchase price.
- Options and warrants. The aggregate exercise price of outstanding and
unexercised Allright warrants and non-qualified options will be added to
the purchase price.
- Permitted sales. The net proceeds from any permitted sale, lease or
transfer of any property or assets will be subtracted from the purchase
price.
- Assumed debt. The principal amount of any long-term debt or capitalized
leases assumed by Central Parking will be subtracted from the purchase
price.
- Excess severance. If Allright's contractual severance obligations exceed
a certain amount, the excess will be subtracted from the purchase price.
- Other. A percentage of certain gain or loss from divestitures made by
Allright will be added or subtracted, respectively, from the purchase
price.
30
<PAGE> 38
For a more detailed description of the Equity Purchase Price, see "The Merger
Agreement -- Conversion of Securities; Merger Consideration." The following is
an illustration of the calculation of the Exchange Ratio. The calculation is for
illustrative purposes only. THE CALCULATION OF THE EXCHANGE RATIO IS SUBJECT TO
VARIOUS ADJUSTMENTS AS OF THE CLOSING OF THE MERGER. THEREFORE, THE ACTUAL
FIGURES REQUIRED TO COMPLETE THE CALCULATION CANNOT ACCURATELY BE DETERMINED
UNTIL THAT TIME, AND THE ACTUAL FIGURES MAY BE SUBSTANTIALLY DIFFERENT THAN THE
FIGURES USED IN THE FOLLOWING ILLUSTRATION.
<TABLE>
<S> <C>
Starting purchase price..................................... $ 564,390,050
+ the aggregate exercise price of Allright warrants and
certain Allright options;............................... 5,485,000
+ certain Allright expenses related to this
transaction(1);......................................... 1,000,000
+ the purchase price and expenses related to the
acquisition of certain parking facilities;.............. 47,237,640
+ a percentage of certain gains on the sale of certain
properties;............................................. --
- the principal amount of any long-term indebtedness or
capitalized leases of Allright(2);...................... (257,870,000)
- Allright's working capital deficit above certain
levels(3);............................................. (1,780,000)
- certain Allright expenses related to this transaction
above certain levels(1);................................ --
- a percentage of certain losses on the sale of certain
properties;............................................. --
- the net proceeds from the sale of certain assets of
Allright;............................................... (7,800,000)
- certain Allright employee severance costs(4); and....... (328,000)
- a multiple of Allright's June 30, 1998 EBITDA below a
certain level........................................... --
-------------
Total equity purchase price................................. $ 350,334,690
-------------
Total Central Parking common stock to be issued in the
Merger (350,334,690 / 46)................................. 7,615,972
-------------
Total shares of Allright common stock, warrants and certain
options to purchase Allright Common Stock(5).............. 85,903
-------------
Exchange ratio (7,615,972 / 85,903)......................... 88.658
=============
</TABLE>
- ---------------
(1) Assumes transaction expenses are $4,000,000.
(2) Assumes (i) acquisitions are financed through debt and (ii) the net proceeds
from permitted sales are used to reduce debt.
(3) Assumes working capital deficit is $7,780,000.
(4) Assumes total severance obligations exceed specified threshold.
(5) Estimated to be outstanding as of closing date of the Merger. Assumes
exercise of all Allright incentive stock options.
The Merger will become effective (the "Effective Time") at the time of filing of
articles of merger with the Secretary of State of the State of Delaware (or at
such later time as is specified in the articles of merger), which is expected to
occur as soon as practicable after the last of the conditions precedent to the
Merger set forth in the Merger Agreement has been satisfied or waived. The
Effective Time is expected to occur as soon as practicable after the Special
Meetings.
In connection with the Merger Agreement, certain parties also (i) entered into a
Registration Rights Agreement, dated as of September 21, 1998, by and among
Central Parking, Apollo, AEW, and certain affiliates of Central Parking (the
"Registration Rights Agreement"),
31
<PAGE> 39
(ii) entered into various transaction support agreements dated as of September
21, 1998, by and among Central Parking, Allright and certain shareholders of
either Central Parking or Allright (collectively, the "Transaction Support
Agreements"), and (iii) agreed to enter into a non-competition agreement to be
dated as of the closing, by and among Central Parking, AEW, Apollo and certain
other entities (the "Non-Competition Agreement" and collectively with the
Registration Rights Agreement and the Transaction Support Agreements, the
"Related Agreements").
CENTRAL PARKING'S REASONS FOR THE MERGER; RECOMMENDATION OF THE CENTRAL PARKING
BOARD OF DIRECTORS
On September 21, 1998, the Central Parking Board (i) determined that the terms
of the Merger Agreement and the transactions contemplated thereby, including the
Merger and the issuance of the Central Parking Common Stock pursuant to the
Merger, and the terms of Related Agreements, are fair to and in the best
interests of Central Parking and its shareholders, (ii) approved the Merger
Agreement, the Related Agreements and the transactions contemplated thereby and
(iii) recommended that Central Parking shareholders approve the Merger
Agreement.
In reaching the foregoing conclusions and recommendations, the Central Parking
Board considered a number of factors, including the following:
- the Merger is expected to enhance Central Parking's position as one of
the world's leading parking services providers;
- the opportunity for cost savings and increased efficiencies by combining
the operations of the two companies, especially in cities where both
companies have operations;
- the combination of management and operational expertise and resources of
the two companies is expected to create the opportunity for revenue
synergies and is expected to better position Central Parking to
capitalize on growth opportunities in the parking industry;
- Central Parking will gain access to the Allright brand name, which is a
leading national brand;
- the Merger will give Central Parking access to Allright's owned
properties, which historically have provided more durable cash flows than
leased or managed properties and offer development potential;
- Central Parking's geographic base will be broadened by the Merger, which
will add locations in the midwest, southwest and California to Central
Parking's existing locations; and
- the potential for new business through relationships with Apollo, AEW and
their respective affiliates, each of which has extensive real estate
contacts and assets.
In addition to the factors outlined above, the Central Parking Board made its
determination after careful consideration of, and based on, certain additional
factors, information and reports, including the following:
(i) reports from management and legal and accounting advisors on the
specific terms of the relevant agreements, including the Merger Agreement
and the Related
32
<PAGE> 40
Agreements, and other matters, including the fact that the Merger is
expected to be accounted for as a pooling of interests;
(ii) the companies' respective historical financial conditions, results
of operations and estimated future results (including those of Central
Parking as a stand-alone entity), current financial market conditions and
historical market prices; trading information for Central Parking Common
Stock; the consideration to be paid to Allright shareholders in the Merger;
and the percentage of the combined company to be owned by Central Parking
shareholders following the Merger; and
(iii) the financial and other analysis presented by Central Parking's
financial advisor, The Blackstone Group, L.P. ("Blackstone"), including the
oral opinion of Blackstone (subsequently confirmed in writing) that the
Exchange Ratio was fair to the Central Parking shareholders from a
financial point of view as of the date of such opinion. See "-- Opinion of
Central Parking's Financial Advisor."
The Central Parking Board also considered (i) the risk that the benefits sought
in the Merger would not be obtained, (ii) the risk that the Merger would not be
consummated, (iii) the effect of the public announcement of the Merger on
revenues, customer and supplier relationships, operating results and ability to
retain employees, and on the trading price of Central Parking Common Stock, (iv)
the potentially substantial management time and effort that will be required to
consummate the Merger and integrate the operations of the two companies, (v) the
impact of the Merger on Central Parking and Allright employees, (vi) the impact
of the Registration Rights Agreement on Central Parking's ability to raise
capital, and (vii) other matters described under "Risk Factors" and "--Forward
Looking Statements May Prove Inaccurate."
In the judgment of the Central Parking Board, the potential benefits of the
Merger outweighed these considerations.
The foregoing discussion of the information and factors considered by the
Central Parking Board is not intended to be exhaustive but includes all material
factors considered. The Central Parking Board did not assign relative weight to
the above factors. Rather, it viewed its position and recommendation as being
based on the totality of the information presented and considered. In addition,
individual members of the Central Parking Board may have given different weight
to different factors.
THE CENTRAL PARKING BOARD UNANIMOUSLY RECOMMENDS THAT THE CENTRAL PARKING
SHAREHOLDERS VOTE "FOR" THE MERGER PROPOSAL.
BACKGROUND OF THE BUSINESS RELATIONSHIP AND THE MERGER
On January 12, 1998, Central Parking retained Blackstone to evaluate certain
strategic alternatives, including a possible transaction with Allright. On
January 30, 1998, Central Parking, Apollo and AEW entered into a confidentiality
agreement with respect to certain information regarding Allright to be provided
to Central Parking. On February 17, 1998, Monroe Carell Jr., Chairman and Chief
Executive Officer of Central Parking, and representatives of Blackstone met with
representatives of Apollo in a preliminary meeting in New York to explore the
feasibility of pursuing a transaction. Some general financial information was
exchanged following the meeting.
On April 28, 1998, certain executives of Central Parking and representatives of
Blackstone met with executives of Allright, Apollo and AEW and representatives
of Bear, Stearns & Co.
33
<PAGE> 41
Inc., financial advisors to Apollo and AEW, to discuss parameters for due
diligence and other activities leading to a possible transaction. On May 5,
1998, Central Parking sent a letter to Apollo and AEW requesting certain due
diligence materials, and on or about May 15, 1998, Allright sent Central Parking
a letter requesting certain due diligence materials. On May 19, 1998, Central
Parking and Allright entered into a confidentiality agreement covering certain
information regarding Central Parking provided to Apollo and AEW. During late
May and early June 1998, representatives of Central Parking and its advisors and
representatives of Apollo and AEW and their advisors reviewed due diligence
materials in data rooms set up by Central Parking and Allright. Numerous due
diligence meetings and phone conferences were conducted during the months of
June, July, August and September between representatives of Central Parking,
Apollo, AEW and Allright. Face to face negotiations took place on June 29, July
12, July 20, August 5 and August 24, 1998, in which representatives of Central
Parking, Apollo, AEW and Allright met in New York to discuss a number of issues
relating to the transaction, including due diligence and documentation matters.
At a special meeting held on September 3, 1998, the Central Parking Board met to
discuss the proposed terms and conditions of the transaction. At the meeting,
the status of the negotiations was reviewed; the results of Central Parking's
due diligence review were presented; representatives of Blackstone presented an
analysis of the financial terms of the proposed transaction; a representative of
Harwell Howard Hyne Gabbert & Manner, Central Parking's outside legal counsel,
outlined the terms of the proposed transaction and presented the Central Parking
Board's legal duties and responsibilities; and representatives of KPMG Peat
Marwick LLP, Central Parking's independent public accountants, discussed
applicable pooling and other accounting issues.
On September 9, 1998, representatives of Central Parking made a presentation
regarding the business of Central Parking to representatives of Apollo and AEW.
Negotiations between representatives of Central Parking and Apollo and AEW
continued until final agreement on terms of the Merger Agreement and the Related
Agreements was reached on September 21, 1998. During this period, the Central
Parking Board was kept informed of the progress of the negotiations. Pursuant to
unanimous consent resolutions dated as of September 21, 1998, the Central
Parking Board approved entering into the proposed Merger Agreement and Related
Agreements. The Merger Agreement, the Registration Rights Agreement and the
Transaction Support Agreements were signed on September 21, 1998. A press
release announcing the proposed Merger was issued on September 21, 1998.
ALLRIGHT'S REASONS FOR THE MERGER; RECOMMENDATION OF THE ALLRIGHT BOARD OF
DIRECTORS
After reviewing the terms of the Merger Agreement and the Related Agreements and
certain information concerning Central Parking, the Allright Board unanimously
determined that the Merger is advisable and in the best interests of Allright
and its shareholders. Accordingly, the Allright Board has unanimously adopted
the Merger Agreement, the Related Agreements, and the transactions contemplated
thereby and unanimously recommends that the holders of Allright Common Stock
vote "for" adoption of the Merger Agreement and the transactions contemplated
thereby at the Allright Special Meeting.
34
<PAGE> 42
In reaching its decision to adopt the Merger Agreement and the transactions
contemplated thereby, members of the Allright Board consulted with Allright's
management, as well as its legal counsel, accountants and financial advisor,
Bear, Stearns & Co. Inc., and considered a number of factors, including without
limitation, the following:
(i) the consideration to be received by Allright's shareholders in the
Merger, including the fact that the estimated aggregate consideration after
adjustments for holders of Allright Common Stock represents, in the
Allright Board's opinion, an attractive price based on Allright's
historical performance, and also represents a significant premium (on a per
share basis) over the price that Apollo, AEW and certain other investors
paid for Allright Common Stock in connection with the acquisition of
Allright Corporation by Allright in October 1996. See "The
Merger -- General;"
(ii) the fact that the issuance of shares of Central Parking Common
Stock in the Merger would be registered under the Securities Act and would
be subject to certain registration rights under the Registration Rights
Agreement and that the shares of Central Parking Common Stock were expected
to be tradeable on the New York Stock Exchange ("NYSE"), greatly increasing
the liquidity of Allright's shareholders;
(iii) the ability of Allright's shareholders to continue to participate
in the growth of the business conducted by Allright and Central Parking
after the Merger and to benefit from the potential appreciation in the
value of the Central Parking Common Stock, while obtaining tax-free
treatment for the shares of Central Parking Common Stock received as Merger
consideration. See "Certain Federal Income Tax Considerations;"
(iv) Central Parking's and Allright's respective businesses (including
the range of services provided), assets, liabilities, strategic objectives,
competitive positions and prospects. The integration and combination of
management, resources, and operational expertise of the two companies, as
well as the resulting broad geographical base of the combined company; and
(v) the changing nature of the parking services industry, including the
need to capitalize on opportunities for growth, cost savings, and increased
efficiencies. The Allright Board believed that the combined company would
be better able to take advantage of present as well as future growth
opportunities in the parking industry.
The Allright Board also considered the risks that (i) the Merger would not be
consummated, (ii) the value of the Central Parking Common Stock could fluctuate,
(iii) the benefits sought in the Merger would not be obtained, (iv) the impact
of the Merger on Allright employees, and (v) other matters described under "Risk
Factors" and "-- Forward Looking Statements May Prove Inaccurate."
The foregoing discussion of the information and factors considered and given
weight by the Allright Board is not intended to be exhaustive. In view of the
wide variety of factors considered in connection with its evaluation of the
terms of the Merger, the Allright Board did not find it practicable to, and did
not, quantify or otherwise attempt to assign relative weights to the specific
factors considered in reaching their determinations. In addition, individual
members of the Allright Board may have given different weights to different
factors.
THE ALLRIGHT BOARD UNANIMOUSLY RECOMMENDS THAT HOLDERS OF ALLRIGHT COMMON STOCK
VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT.
35
<PAGE> 43
OPINION OF CENTRAL PARKING'S FINANCIAL ADVISOR
On September 21, 1998, Blackstone delivered its written opinion (the "Blackstone
Opinion") to the Central Parking Board, stating that, as of the date of such
opinion and subject to the various considerations set forth in the opinion, the
Exchange Ratio is fair to the holders of Central Parking Common Stock from a
financial point of view.
The full text of the Blackstone Opinion dated as of September 21, 1998 is
attached hereto as Annex B and is incorporated herein by reference. Holders of
shares of Central Parking Common Stock are urged to, and should, read such
opinion in its entirety. The Blackstone Opinion is directed only to the fairness
of the Exchange Ratio to the holders of Central Parking Common Stock from a
financial point of view and does not constitute a recommendation to any holder
of Central Parking Common Stock as to how to vote on the proposed Merger or any
matter related thereto. The summary of the Blackstone Opinion as set forth in
this Joint Proxy Statement/Prospectus is qualified in its entirety by reference
to the full text of such opinion.
In connection with the Blackstone Opinion, Blackstone reviewed, among other
things, the Merger Agreement and the Related Agreements, certain publicly
available information concerning the business, financial condition, and
operations of Central Parking which was believed to be relevant; audited
financial statements prepared in accordance with generally accepted accounting
principles ("GAAP") for Allright for the fiscal years 1995, 1996, and 1997 and
unaudited financial statements for fiscal year 1998; certain internal financial
analyses and forecasts relating to Central Parking and Allright prepared by
their respective managements; and forecasts of certain cost synergies expected
to be achieved as a result of the Merger, which were prepared by Central
Parking's management (the "Synergies"). Blackstone also held discussions with
members of the senior management of Central Parking to understand Central
Parking's historical financial performance, prospects for the parking industry,
Central Parking's strategic goals and competitive positioning, and the strategic
merits of the Merger. Furthermore, Blackstone held discussions with
representatives from Apollo, AEW and Allright's management to understand
Allright's historical financial performance, strategic goals and competitive
positioning and management's fiscal year ending June 30, 1998 and calendar year
1998 financial projections. In addition, Blackstone reviewed the historical
market prices, operating statistics, and trading parameters for Central Parking
Common Stock, analyzed the respective contributions of certain income statement
and balance sheet items by Central Parking and Allright to the combined company,
compared certain financial and stock market information for Central Parking and
Allright with similar information for certain other companies the securities of
which are publicly traded, reviewed the financial terms of certain recent
business combinations in the parking industry, performed a discounted cash flow
analysis on Allright, reviewed the pro forma effect of the Merger on Central
Parking's earnings per share and balance sheet, and performed such other studies
and analyses which were believed by Blackstone to be relevant.
In arriving at its opinion, Blackstone relied without assuming responsibility
for independent verification upon the accuracy and completeness of all of the
financial and other information reviewed by it that was publicly available, that
was supplied or otherwise made available to it by Central Parking and Allright
or that was otherwise reviewed by it. Blackstone further relied upon the
assurances of the management of Central Parking that it was not aware of any
facts that would make such information provided by it inaccurate, incomplete or
misleading.
36
<PAGE> 44
Without limiting the generality of the foregoing, Blackstone assumed that the
financial forecasts prepared by Central Parking and Allright and provided to it,
including without limitation, forecasts of Synergies, were reasonably determined
on a basis reflecting the best currently available judgment and estimates of
Central Parking as to the future financial performance of Central Parking and
Allright. Blackstone expressed no view as to such financial forecasts or the
assumptions on which they were based. In addition, Blackstone did not conduct a
physical inspection of the properties and facilities of Central Parking or
Allright, nor did it make an independent evaluation or appraisal of the assets
and liabilities of Central Parking or Allright. Blackstone assumed that the
Merger contemplated by the Merger Agreement will be accounted for as a pooling
of interests under GAAP and that it will qualify as a tax-free reorganization
for U.S. federal income tax purposes under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Blackstone Opinion was
necessarily based upon economic, market, monetary and other conditions as they
existed and could be evaluated, and the information made available to it, as of
the date thereof. Furthermore, Blackstone expressed no opinion as to the prices
at which Central Parking Common Stock trades or would trade at any time.
Blackstone assumed that in the course of obtaining the necessary regulatory or
other consents or approvals (contractual or otherwise) for the Merger, no
restrictions, including any divestiture requirements or amendments or
modifications, would be imposed that would have a material adverse effect on the
contemplated benefits of the Merger.
The following is a brief summary of the analyses and examinations performed by
Blackstone that were presented to the Central Parking Board on September 3, 1998
(materials updated as of September 18, 1998) and were utilized by Blackstone in
preparation of the Blackstone Opinion.
Calculation of Consideration. As Allright will be receiving a fixed number of
shares in the Merger based on a $46.00 implied share price, the value of the
consideration received by Allright shareholders will vary with fluctuations in
the price of Central Parking's Common Stock. Blackstone reviewed the Merger
based on Central Parking Common Stock prices of: (1) $46.00 per share ("Price
Scenario 1"), (2) $46.75 per share -- Central Parking's closing price on
September 18, 1998 ("Price Scenario 2"), and (3) $44.066 per share -- Central
Parking's average price for the last 20 trading days as of September 18, 1998
("Price Scenario 3"). For the analyses described below, Blackstone used Price
Scenario 1.
Analysis of Selected Comparable Publicly Traded Companies. Blackstone compared
the transaction multiples for the acquisition of Allright (the "Acquisition
Multiple") to certain actual and estimated financial and stock market
information for Central Parking, the only pure-play publicly traded comparable
parking company, and to a group of service-oriented consolidator companies
comprised of Outdoor Systems Inc, Allied Waste Industries, US Filter Corp.,
Accustaff Inc., Consolidated Graphics Inc., Comfort Systems USA Inc., Lason
Inc., Service Experts Inc., Group Maintenance America Corp., Miller Industries,
Inc., and White Cap Industries Inc. (collectively, the "Comparable Companies").
Blackstone selected the Comparable Companies based on position within their
respective industry groups, size characteristics, acquisition history, and
growth prospects. The Institutional Brokers Estimate System ("IBES") 5-Year
Projected Growth Rate was approximately 26.7% for Central Parking, as compared
to an average of 27.3% for the Comparable Companies (with a range of 23.4% to
36.3%); Blackstone noted that Allright's compound annual EBITDA growth from June
30, 1996 to June 30, 1998 was 21.9%. Considering the acquisitive nature of the
Comparable Companies, Blackstone reviewed both latest twelve months ("LTM") and
37
<PAGE> 45
forward multiples (based on the average of available analyst estimates for
projected operating results) to more accurately reflect the contribution of
recent acquisitions. This analysis indicated that: (i) the ratio of Total
Enterprise Value ("TEV") (defined as the market value of common equity plus the
liquidation value of preferred equity, the principal amount of debt and minority
interest less cash and cash equivalents) to LTM EBITDA was approximately 16.1x
for the Acquisition Multiple as compared to 22.9x for Central Parking and an
average of approximately 12.7x for the Comparable Companies (with a range of
7.4x to 25.9x), (ii) the ratio of TEV to Projected 1998 EBITDA was approximately
14.1x for the Acquisition Multiple as compared to 22.3x for Central Parking and
an average of 10.0x for the Comparable Companies (with a range of 6.3x to
17.4x), (iii) the ratio of TEV to LTM Earnings Before Interest and Taxes
("EBIT") was approximately 21.4x for the Acquisition Multiple as compared to
32.4x for Central Parking and an average of approximately 17.1x for the
Comparable Companies (with a range of 8.7x to 31.6x), (iv) the ratio of TEV to
Projected 1998 EBIT was approximately 18.3x for the Acquisition Multiple as
compared to 28.0x for Central Parking and an average of approximately 13.2x for
the Comparable Companies (with a range of 7.3x to 25.2x), (v) price to LTM
earnings multiple, was approximately 139.8x for the Acquisition Multiple as
compared to 48.1x for Central Parking and an average for the Comparable
Companies of 23.3x (with a range of 13.2x to 46.7x), (vi) price to 1998 earnings
multiple, based on IBES mean estimates of 1998 EPS, was approximately 65.0x for
the Acquisition Multiple as compared to 47.2x for Central Parking and an average
for the Comparable Companies of 18.4x (with a range of 11.6x to 37.5x), (vii)
the ratio of debt plus preferred stock to Total Book Capitalization (defined as
debt plus preferred stock plus the book value of common equity) was
approximately 73.8% for Allright, as compared to 41.6% for Central Parking and
an average for the Comparable Companies of 41.7% (with a range of 24.2% to
65.9%), (viii) LTM EBITDA margin was approximately 17.0% for Allright, as
compared to 19.7% for Central Parking and an average for the Comparable
Companies of approximately 17.0% (with a range of 7.8% to 46.3%), (ix) LTM EBIT
margin was approximately 12.7% for Allright, as compared to 13.9% for Central
Parking and an average for the Comparable Companies of approximately 12.1% (with
a range of 6.0% to 29.1%) and (x) LTM Net Income margin was approximately 1.2%
for Allright, as compared to 7.8% for Central Parking and an average for the
Comparable Companies of approximately 5.3% (with a range of 2.8% to 7.8%). In
its analysis, Blackstone placed greater emphasis on the total enterprise value
multiples because of Allright's higher leverage ratios relative to both Central
Parking and the Comparable Companies.
Analysis of Selected Precedent Transactions. Blackstone reviewed and analyzed
selected financial, operating and stock market information relating to completed
parking industry merger and acquisition transactions with total enterprise
values of above $50 million since January 1, 1992, which were deemed by
Blackstone to be comparable and relevant. The transactions analyzed by
Blackstone include Apcoa, Inc.'s merger with Standard Parking, Central Parking's
acquisition of Kinney System Holding Corp., Chase Capital Partners' acquisition
of SunPark, Inc., First Union Management's acquisition of Imperial Parking,
Central Parking's acquisition of Square Industries, Inc., Apollo and AEW's
acquisition of Allright, and Onex Corp.'s acquisition of Imperial Parking, Ltd.
(collectively, the "Comparable Transactions"). Blackstone compared certain
financial and market statistics for the Comparable Transactions with those for
the Merger. The analysis showed that the Merger has: (i) a TEV to LTM EBITDA
multiple of 16.1x as compared to an average of 11.7x for the Comparable
Transactions (with a range of 9.0x to 16.3x), (ii) a TEV to LTM EBIT multiple of
21.4x as compared to an average for the Comparable Transactions of 16.8x (with
38
<PAGE> 46
a range of 12.1x to 23.4x), and (iii) an Equity Value to LTM Net Income multiple
of 139.8x as compared to an average for the Comparable Transactions of 25.4x
(with a range of 13.2x to 42.6x). In its analysis, Blackstone placed greater
emphasis on the total enterprise value multiples because of Allright's higher
leverage ratios relative to both Central Parking and the Comparable Companies.
Relative Contribution Analysis. Pro forma for the Merger, holders of Central
Parking Common Stock would own an approximate 79.7% stake and holders of
Allright Common Stock would own an approximate 20.3% stake of the combined
company. Blackstone calculated and analyzed the relative contribution of Central
Parking and Allright to the combined company with respect to Fiscal Year ending
September 30, 1997 and Fiscal Year ending September 30, 1998 for income
statement items and September 30, 1997 and June 30, 1998 (April 30, 1998 for
Allright) for balance sheet items. Blackstone analyzed the following items: (i)
revenues, (ii) EBITDA, (iii) EBIT, (iv) net income, (v) total assets, (vi) book
value, (vii) net property, plant and equipment ("PP&E"), and (viii) total debt.
All forecasts for this analysis were provided by the respective managements of
Central Parking and Allright, and the analysis did not take into account any
potential cost savings or synergies as a result of, or any other effects from,
the Merger. The relative contribution analysis indicated that Central Parking
would contribute to the combined company approximately: (i) 54.8% of 1997
revenues and 63.5% of 1998 forecasted revenues, (ii) 55.6% of 1997 EBITDA and
64.0% of 1998 forecasted EBITDA, (iii) 58.7% of 1997 EBIT and 65.3% of 1998
forecasted EBIT, (iv) 89.1% of 1998 forecasted net income (in 1997, Allright's
net income was negative), (v) 39.5% of 1997 total assets and 57.2% of 1998
forecasted total assets, (vi) 57.8% of 1997 book value and 75.9% of 1998
forecasted book value, (vii) 25.7% of 1997 net PP&E and 33.5% of 1998 forecasted
net PP&E and (viii) 26.9% of 1997 total debt and 45.3% of 1998 forecasted total
debt.
Pro Forma Merger Analysis. Blackstone analyzed the pro forma impact of the
Merger on the earnings per share of Central Parking's Common Stock for the
fiscal years 1999, 2000 and 2001. Blackstone assumed the 1998 Fiscal Year
management forecast for Central Parking and used Central Parking's IBES EPS
estimates and long-term growth rates for Fiscal Year 1999, 2000 and 2001
projections. Blackstone, in conjunction with Central Parking management, assumed
a range of EBITDA growth rates to derive Allright's projections. Blackstone also
assumed the after-tax income statement and cash flow statement contribution of
the Synergies as previously described and that the Merger would be accounted for
as a pooling of interests transaction, and that the Merger would be effected at
the Exchange Ratio. This analysis indicated that the Merger would be mildly
accretive to Central Parking's earnings per share in Fiscal Year 1999 and
significantly accretive to Central Parking's earnings per share in Fiscal Years
2000 and 2001.
Discounted Cash Flow Valuation. In order to determine a range of values for
Allright based upon a discounted cash flow analysis, Blackstone assumed the
Allright projections, a range of discount rates of 8.0% to 11.0% and a range of
EBITDA exit multiples from 8.0 times to 12.0 times. Blackstone calculated
Allright's total enterprise value to be from $436 million to $670 million,
excluding the Synergies and $515 million to $749 million, including the
Synergies.
As a whole, the above-outlined analyses supported Blackstone's conclusion that
the Exchange Ratio is fair to holders of Central Parking Common Stock from a
financial point of view.
The summary set forth above does not purport to be a complete description of the
presentation by Blackstone to the Central Parking Board or the analyses
performed by
39
<PAGE> 47
Blackstone in arriving at the Blackstone Opinion. The preparation of a fairness
opinion involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of these methods to the
particular circumstances and, therefore, such an opinion is not readily suited
to summary description. The preparation of a fairness opinion does not involve a
mathematical evaluation or weighing of the results of the individual analyses
performed, but requires Blackstone to exercise its professional
judgment -- based on its experience and expertise -- in considering a wide
variety of analyses taken as a whole. Each of the analyses conducted by
Blackstone was carried out in order to provide a different perspective on the
transaction and add to the total mix of information available. Blackstone did
not form a conclusion as to whether any individual analysis, considered in
isolation, supported or failed to support an opinion as to fairness. Rather, in
reaching its conclusion, Blackstone considered the results of the analyses in
light of each other and ultimately reached its opinion based on the results of
all analyses taken as a whole.
The analyses were prepared solely for the purpose of Blackstone providing the
Blackstone Opinion to the Central Parking Board as to the fairness of the
Exchange Ratio from a financial point of view to holders of Central Parking
Common Stock and do not purport to be appraisals or necessarily reflect the
prices at which businesses or securities actually may be sold, which are
inherently subject to uncertainty. Any estimates incorporated in the analyses
performed by Blackstone are not necessarily indicative of actual past or future
values or results, which may be significantly more or less favorable than any
such estimates. No public company utilized as a comparison is identical to
Central Parking or Allright and none of the comparable acquisition transactions
or other business combinations utilized as a comparison are identical to the
Merger. Accordingly, an analysis of Comparable Companies and Comparable
Transactions is not mathematical; rather it involves complex considerations and
judgments concerning companies and other factors that could affect the public
trading value of the Comparable Companies or company to which they are being
compared. Similarly, analyses based upon forecasts of future results are not
necessarily indicative of actual future results, which may be significantly more
or less favorable than suggested by such analyses. Because such analyses are
inherently subject to uncertainty, being based upon numerous factors or events
beyond the control of Central Parking and Allright or their respective advisors,
none of Central Parking, Allright, Blackstone or any other person assumes
responsibility if future results or actual values are materially different from
those forecasts or assumptions.
As described above, the Blackstone Opinion and the Blackstone presentation to
the Central Parking Board was only one of many factors taken into consideration
by the Central Parking Board in making its determination to approve the Merger
Agreement. In addition, the terms of the Merger Agreement were determined
through negotiations between Central Parking and Allright and were approved by
the Central Parking Board. Although Blackstone provided advice to Central
Parking during the course of these negotiations, the decision to enter into the
Merger Agreement and to accept the Exchange Ratio was solely that of the Central
Parking Board.
Central Parking retained Blackstone because of its experience and expertise to
act as its financial advisor in connection with its evaluation of Central
Parking's strategic alternatives. Blackstone has an internationally recognized
merger and acquisition advisory business. Blackstone has also advised on other
merger and acquisition transactions in the parking industry. Blackstone, as part
of its investment banking business, is continually engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions.
40
<PAGE> 48
Blackstone is familiar with Central Parking, having provided certain investment
banking services to Central Parking from time to time, and having acted as its
financial advisor in connection with, and having participated in certain of the
negotiations leading to, the Merger.
Through a letter agreement dated April 21, 1997 (the "Blackstone Engagement
Letter"), Central Parking engaged Blackstone to represent it in potential future
transactions. The Blackstone Engagement Letter was amended on January 12, 1998
with regard to representation during the Merger and further modified on
September 9, 1998 (the "Amendment"). Pursuant to these documents, Central
Parking has agreed to pay Blackstone: (i) an initial fee of $100,000 on the date
of execution of the Blackstone Engagement Letter, (ii) an additional retainer
fee of $100,000 payable on each six-month anniversary of January 12, 1998 during
the term of the Blackstone Engagement Letter, (iii) a $500,000 fee should an
opinion be rendered by Blackstone, (iv) an additional transaction fee in an
amount equal to (a) the greater of $1.25 million or the following percentages of
the consideration (defined as the value of all cash, securities and other
properties, paid or payable, directly or indirectly in connection with the
Merger): On the first $250 million -- 1.4% plus 1.0% on the amount over $250
million, and (v) less any of the foregoing fees, including opinion fees, paid to
Blackstone (but not credited twice in the event of more than one transaction).
Blackstone's fee shall be capped at $7.5 million. In addition, Central Parking
has agreed to reimburse Blackstone for its reasonable out-of-pocket expenses,
including the fees and disbursements of its attorneys, and to indemnify
Blackstone and certain related persons against certain liabilities, including
certain liabilities under the federal securities laws, arising out of its
engagement.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document, and documents that have been incorporated herein by reference,
include various forward-looking statements about Central Parking, Allright and
the combined company that are subject to risks and uncertainties.
Forward-looking statements include the information concerning future results of
operations of Central Parking, Allright and the combined company after the
effective time of the Merger, set forth under "Questions and Answers About The
Merger," "Summary," "-- Background of the Business Relationship and the Merger,"
"-- Central Parking's Reasons for the Merger; Recommendation of the Central
Parking Board," "-- Allright's Reason for the Merger; Recommendation of the
Allright Board" "-- Opinion of Central Parking's Financial Advisor" and those
preceded by, followed by or that otherwise include the words "believes,"
"expects," "anticipates," "intends," "estimates" or similar expressions. For
those statements, Central Parking and Allright claim the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
You should understand that the following important factors, in addition to those
discussed elsewhere in this document and the documents which are incorporated by
reference (See "Where You Can Find More Information"), could affect the future
financial results of Central Parking, Allright and the combined company and
could cause actual results to differ materially from those expressed in
forward-looking statements contained or incorporated by reference in this
document:
- successfully implementing the Merger as well as past and future
acquisitions in light of challenges in retaining key employees,
synchronizing business processes and efficiently integrating facilities,
marketing, and operations;
41
<PAGE> 49
- successful implementation of Central Parking's operating and growth
strategy, including possible strategic acquisitions;
- fluctuations in quarterly operating results caused by a variety of
factors including the timing of gains on sales of owned facilities,
preopening costs, the effect of weather on travel and transportation
patterns, and local, national and international economic conditions;
- the ability of Central Parking to form and maintain its strategic
relationships with certain large real estate owners and operators;
- global and/or regional economic factors and potential changes in laws and
regulations, including, without limitation, changes in federal, state and
international laws regulating the environment; and
- a significant delay in the expected closing of the Merger.
ACCOUNTING TREATMENT
The Merger is expected to be accounted for by Central Parking as a pooling of
interests which means that, for accounting and financial purposes, the companies
will be treated as if the Merger was consummated on October 31, 1996, the date
Allright acquired Allright Corporation. Allright is deemed to be the successor
company to Allright Corporation for accounting purposes. The Merger is
conditioned on receipt of a letter from Central Parking's independent public
accountants that the Merger will qualify as a pooling of interests and receipt
of a letter from Allright's independent public accountants stating their belief
that Allright qualifies as a combining company for purposes of pooling of
interests accounting.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary description of the material federal income tax
consequences of the Merger. This summary is not a complete description of all
the consequences of the Merger. Each shareholder's individual circumstances may
affect the tax consequences of the Merger to him or her. In addition, no
information is provided herein with respect to the tax consequences of the
Merger under applicable foreign, state or local laws. In consequence, each
Allright shareholder is advised to consult his or her own tax advisor as to the
specific tax consequences of the Merger to him or her.
Neither Central Parking nor Allright has requested or will receive an advance
ruling from the Internal Revenue Service as to the federal income tax
consequences of the Merger. It is a condition to the obligation of the parties
to proceed with the Merger that Allright shall have received an opinion from
Skadden, Arps, Slate, Meagher & Flom LLP, its counsel, and Central Parking shall
have received an opinion from KPMG Peat Marwick LLP, its tax advisor, concerning
certain of the federal income tax consequences of the Merger. Those opinions,
which are based, in part, on certain customary representations made to the
parties' representatives by the management of Central Parking and of Allright,
state that the material federal income tax consequences of the Merger, under
currently applicable law, are as follows:
(i) the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code;
(ii) no gain or loss will be recognized by Central Parking, Central
Parking Sub or Allright as a result of the Merger;
42
<PAGE> 50
(iii) no gain or loss will be recognized by the shareholders of Allright
on the exchange of their Allright Common Stock for Central Parking Common
Stock pursuant to the Merger (except with respect to cash received in lieu
of a fractional share interest in Central Parking Common Stock); and
(iv) the tax basis of the Central Parking Common Stock received by
shareholders who exchange their Allright Common Stock for Central Parking
Common Stock in the Merger will be the same as the tax basis of Allright
Common Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received).
No gain or loss will be recognized by Central Parking, Central Parking Sub or
Allright by reason of their participation in the Merger. The tax basis of the
Allright assets immediately after the Effective Time of the Merger will be the
same as the basis of those assets in Allright's hands immediately prior to the
Effective Time. The holding period of Allright's assets immediately after the
Effective Time of the Merger will include the holding period of such assets held
by Allright immediately prior to the Effective Time of the Merger. Holders of
Allright options or warrants should consult with their tax advisor regarding the
tax impact on the exercise of the options or warrants.
The federal income tax discussion set forth above is included for general
information only. No request has been submitted to the Internal Revenue Service
for a ruling with respect to the tax consequences to Allright shareholders as a
result of the Merger. Allright shareholders are urged to consult their own tax
advisors for more specific and definitive advice as to the federal income tax
consequences to them of the surrender of their shares of Allright Common Stock
pursuant to the Merger, as well as advice as to the application and effect of
state, local and foreign income and other tax laws and possible amendments to
such laws.
APPRAISAL RIGHTS
Pursuant to Section 262 of the Delaware General Corporation Law (the "DGCL"),
any holder of Allright Common Stock who does not wish to accept the
consideration to be paid pursuant to the Merger Agreement may elect to have the
fair value of such shareholder's shares (the "Appraisal Shares") of Allright
Common Stock (exclusive of any element of value arising from the accomplishment
or expectation of the Merger) judicially determined and paid to such shareholder
in cash, together with a fair rate of interest, if any, provided that such
shareholder complies with the provisions of Section 262. The following
discussion is not a complete statement of the law pertaining to appraisal rights
under Delaware law, and is qualified in its entirety by the full text of Section
262, which is provided in its entirety as Annex C to this Joint Proxy
Statement/Prospectus. All references in Section 262 and in this summary to a
"shareholder" are to the record holder of the shares of Allright Common Stock as
to which appraisal rights are asserted.
Under Section 262, where a proposed merger is to be submitted for approval at a
meeting of shareholders, a constituent corporation must notify each of its
shareholders of record who were such as of the record date for such meeting and
for whom appraisal rights are available, not less than 20 days prior to the
meeting, that appraisal rights are available, and must include in such notice a
copy of Section 262. This Joint Proxy Statement/Prospectus constitutes such
notice to shareholders of Allright. Any shareholder who wishes to exercise such
appraisal rights or who wishes to preserve the right to do so should review
carefully Annex C to this Joint Proxy Statement/Prospectus because failure to
comply with the
43
<PAGE> 51
procedures specified in Section 262 timely and properly will result in the loss
of appraisal rights. Moreover, because of the complexity of the procedures for
exercising the right to seek appraisal of the Allright Common Stock, Allright
believes that shareholders who consider exercising such rights should seek the
advice of counsel.
Any holder of Allright Common Stock wishing to exercise the right to dissent
from the Merger and demand appraisal under Section 262 of the DGCL must satisfy
each of the following conditions:
(i) Such shareholder must deliver to Allright a written demand for
appraisal of such shareholder's shares before the vote on the Merger
Agreement at the Allright Special Meeting. This written demand for
appraisal must be in addition to and separate from any proxy or vote
against the Merger Agreement; merely voting against, abstaining from voting
or failing to vote in favor of adoption of the Merger Agreement will not
constitute a demand for appraisal within the meaning of Section 262.
(ii) Such shareholder must not vote for adoption of the Merger
Agreement. A failure to vote will satisfy this requirement, but a vote in
favor of the Merger Agreement, by proxy or in person, or the return of a
signed proxy that does not specify a vote against adoption of the Merger
Agreement or a direction to abstain in connection with the proposal, will
constitute a waiver of such shareholder's right of appraisal and will
nullify any previously filed written demand for appraisal because, in the
absence of express contrary instructions, such shares of Allright Common
Stock will be voted in favor of the proposal. Accordingly, a shareholder
who desires to perfect appraisal rights with respect to any of such
shareholder's shares of Allright Common Stock must, as one of the
procedural steps involved in such perfection, either (i) refrain from
executing and returning the enclosed proxy card and from voting in person
in favor of the proposal to approve the Merger Agreement, or (ii) check
either the "Against" or the "Abstain" box next to the proposal on such card
or affirmatively vote in person against the proposal or register in person
an abstention with respect thereto.
(iii) Such shareholder must continuously hold such shares from the date
of making the demand through the Effective Time. Accordingly, a shareholder
who is the record holder of shares of Allright Common Stock on the date the
written demand for appraisal is made but who thereafter transfers such
shares prior to the Effective Time will lose any right to appraisal in
respect of such shares.
A demand for appraisal should be executed by or on behalf of the shareholder of
record, fully and correctly, as such shareholder's name appears on such stock
certificates, should specify the shareholder's name and mailing address, the
number of shares of Allright Common Stock owned and that such shareholder
intends thereby to demand appraisal of such shareholder's Allright Common Stock.
If the shares are owned of record in a fiduciary capacity, such as by a trustee,
guardian or custodian, execution of the demand should be made in that capacity,
and if the shares are owned of record by more than one person as in a joint
tenancy or tenancy in common, the demand should be executed by or on behalf of
all owners. An authorized agent, including one or more joint owners, may execute
a demand for appraisal on behalf of a shareholder; however, the agent must
identify the record owner or owners and expressly disclose the fact that, in
executing the demand, the agent is acting as agent for such owner or owners. A
record holder such as a broker who holds shares as nominee for several
beneficial owners may exercise appraisal rights with respect to the shares held
for one or more beneficial owners while not exercising such rights with respect
to the
44
<PAGE> 52
shares held for one or more beneficial owners; in such case, the written demand
should set forth the number of shares as to which appraisal is sought, and where
no number of shares is expressly mentioned the demand will be presumed to cover
all shares held in the name of the record owner. Shareholders who hold their
shares in brokerage accounts or other nominee forms and who wish to exercise
appraisal rights are urged to consult with their brokers to determine the
appropriate procedures for the making of a demand for appraisal by such a
nominee.
A shareholder who elects to exercise appraisal rights should mail or deliver a
written demand to: Allright Holdings, Inc., c/o Allright Corporation, 1313 Main
Street, Houston, Texas 77002, Attention: General Counsel.
Within ten days after the Effective Time, Allright must give written notice that
the Merger has become effective to each shareholder who has complied with
Section 262. Any shareholder entitled to appraisal rights may, within 20 days
after the date of mailing such notice, demand in writing from Allright the
appraisal of such shareholder's shares. Within 120 days after the Effective
Time, but not thereafter, either Allright or any shareholder who has complied
with the requirements of Section 262 may file a petition in the Delaware Court
of Chancery demanding a determination of the value of the shares of Allright
Common Stock held by all dissenting shareholders. Allright does not presently
intend to file such a petition, and shareholders seeking to exercise appraisal
rights should not assume that Allright will file such a petition or that
Allright will initiate any negotiations with respect to the fair value of such
shares. Accordingly, shareholders who desire to have their shares appraised
should initiate any petitions necessary for the perfection of their appraisal
rights within the time periods and in the manner prescribed in Section 262.
Inasmuch as Allright has no obligation to file such a petition, the failure of a
shareholder to do so within the period specified could nullify such
shareholder's previous written demand for appraisal. In any event, at any time
within 60 days after the Effective Time (or at any time thereafter with the
written consent of Allright), any shareholder who has demanded appraisal has the
right to withdraw the demand and to accept payment of the consideration provided
in the Merger Agreement.
Within 120 days after the Effective Time, any shareholder who has complied with
the provisions of Section 262 to that point in time will be entitled to receive
from Allright, upon written request, a statement setting forth the aggregate
number of shares not voted in favor of the Merger Agreement and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Allright must mail such statement to the shareholder
within 10 days of receipt of such request.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Chancery Court will determine which shareholders are
entitled to appraisal rights and will appraise the "fair value" of their shares,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. The costs of the action may be
determined by the Delaware Chancery Court and taxed upon the parties as the
Delaware Chancery Court deems equitable. Upon application of a dissenting
shareholder, the Delaware Chancery Court may also order that all or a portion of
the expenses incurred by any shareholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, be charged pro rata against the value of all of
the shares entitled to appraisal. SHAREHOLDERS CONSIDERING SEEKING APPRAISAL
SHOULD BE AWARE THAT THE FAIR VALUE OF THEIR SHARES AS DETERMINED UNDER SECTION
45
<PAGE> 53
262 COULD BE MORE THAN, THE SAME AS, OR LESS THAN THE CONSIDERATION THEY WOULD
RECEIVE PURSUANT TO THE MERGER AGREEMENT IF THEY DID NOT SEEK APPRAISAL OF THEIR
SHARES AND THAT INVESTMENT BANKING OPINIONS ARE NOT OPINIONS AS TO FAIR VALUE
UNDER SECTION 262.
In determining fair value, the Delaware Chancery Court is to take into account
all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court
discussed the factors that could be considered in determining fair value in an
appraisal proceeding, stating that "proof of value by any techniques or methods
which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered, and that "fair price
obviously requires consideration of all relevant factors involving the value of
a company." The Delaware Supreme Court stated that, in making this determination
of fair value, the court must consider market value, asset value, dividends,
earnings prospects, the nature of the enterprise and any other facts which could
be ascertained as of the date of the merger that throw any light on future
prospects of the merged corporation. In Weinberger, the Delaware Supreme Court
stated that "elements of future value, including the nature of the enterprise,
which are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered." Section 262 provides that fair value
is to be "exclusive of any element of value arising from the accomplishment or
expectation of the merger." In Cede & Co. v. Technicolor, Inc., the Delaware
Supreme Court stated that such exclusion is a "narrow exclusion [that] does not
encompass known elements of value."
Any shareholder who has duly demanded an appraisal in compliance with Section
262 will not, after the Effective Time, be entitled to vote the shares subject
to such demand for any purpose or be entitled to the payment of dividends or
other distributions on those shares (except dividends or other distributions
payable to holders of record of shares as of a record date prior to the
Effective Time).
At any time within 60 days after the Effective Time, any shareholder will have
the right to withdraw such demand for appraisal and to accept the terms offered
in the Merger; after this period, the shareholder may withdraw such demand for
appraisal only with the consent of Allright. If no petition for appraisal is
filed with the Delaware Chancery Court within 120 days after the Effective Time,
or if such shareholder has withdrawn such demand for appraisal as discussed in
the preceding sentence, shareholders' rights to appraisal shall cease, and all
holders of shares of Allright Common Stock will be entitled to receive the
Merger consideration. Any shareholder may withdraw such shareholder's demand for
appraisal by delivering to the Company a written withdrawal of such
shareholder's demand for appraisal and acceptance of the Merger, except that (i)
any such attempt to withdraw made more than 60 days after the Effective Time
will require written approval of Allright and (ii) no appraisal proceeding in
the Delaware Chancery Court shall be dismissed as to any shareholder without the
approval of the Delaware Chancery Court, and such approval may be conditioned
upon such terms as the Delaware Chancery Court deems just. If (i) Allright does
not approve a shareholder's request to withdraw a demand for appraisal when such
approval is required or (ii) the Delaware Chancery Court does not approve the
dismissal of an appraisal proceeding, the shareholder would be entitled to
receive only the appraised value determined in any such appraisal proceeding,
which value could be lower than the value of the Merger Consideration.
Failure to comply strictly with the procedures set forth in Section 262 of the
DGCL will result in the loss of a shareholder's statutory appraisal rights.
46
<PAGE> 54
REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the rules promulgated thereunder by the Federal Trade Commission
(the "FTC"), the Merger may not be consummated until notifications have been
given and certain information has been furnished to the FTC and the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
and specified waiting period requirements have expired or been terminated.
Central Parking and Allright filed the required notification and report forms
under the HSR Act with the FTC and the Antitrust Division on October 8, 1998.
Unless the FTC or the Antitrust Division grants early termination of the waiting
period (which Central Parking and Allright have requested) or the FTC or the
Antitrust Division issues a request for additional information on or before
11:59 p.m. on November 7, 1998, the waiting period will expire at 11:59 p.m. on
November 7, 1998. If the FTC or Antitrust Division issues requests for
additional information to Central Parking and Allright, the waiting period will
expire 20 days after Central Parking and Allright have substantially complied
with such requests for additional information, unless an earlier termination of
the waiting period is granted by the FTC. The FTC and the Antitrust Division
have the authority to challenge the Merger on antitrust grounds before or after
the Merger is completed. Each state in which Central Parking and Allright has
operations may also challenge the Merger under state or federal antitrust laws.
Central Parking and Allright are seeking to obtain all required regulatory
approvals prior to the Special Meetings. See "Risk Factors -- Need for
Government Approvals; Possible Operating Restrictions" for further information.
FEDERAL SECURITIES LAWS CONSEQUENCES; RESALE RESTRICTIONS
This Joint Proxy Statement/Prospectus does not cover resales of Central Parking
Common Stock to be received by the holders of Allright Common Stock upon
consummation of the Merger and no person is authorized to make any use of this
Joint Proxy Statement/Prospectus in connection with any such resale.
All shares of Central Parking Common Stock issued pursuant to the Merger will be
freely transferable, except that shares of Central Parking Common Stock received
by persons who are deemed to be "affiliates" (as such term is defined under the
Securities Act) of Allright may be resold by them only in transactions permitted
by the resale provisions of Rule 145 (or Rule 144 in the case of such persons
who become affiliates of Central Parking) or as otherwise permitted under the
Securities Act. Persons who may be deemed to be affiliates of Allright or
Central Parking generally include individuals or entities that control, are
controlled by, or are under common control with, such party and may include
certain officers and directors of Allright or Central Parking as well as
significant shareholders.
CONDUCT OF THE BUSINESS IF THE MERGER IS NOT CONSUMMATED
If the Merger is not consummated, it is expected that the respective businesses
and operations of Allright or Central Parking will continue to be conducted
substantially as they currently are being conducted. Pursuant to the Merger
Agreement, Central Parking has agreed, generally speaking, that if the Merger is
terminated for any reason, Central Parking will not solicit or enter into any
agreements to operate any facilities which Allright or any of its subsidiaries
operated or have binding agreements to operate as of the date of the Merger
Agreement or the date of termination of the Merger Agreement. In addition, if a
termination of the Merger Agreement occurs, Central Parking will not employ or
solicit any employee of
47
<PAGE> 55
Allright as of the date of the Merger Agreement or the date of termination of
the Merger Agreement. The term of these restrictions are for three years if the
Merger is not completed because of Central Parking's breach of the Merger
Agreement or because of a material adverse change to Allright, or for eighteen
months if the Merger is not completed for any other reason. The non-compete
provision contained in the Merger Agreement could have a material adverse effect
on Central Parking's business. See "The Merger Agreement -- Effect of
Termination; Non-Competition."
CERTAIN TRANSACTIONS; INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors and executive officers of Central Parking and Allright, as
well as others, have interests in the Merger in addition to their interests
solely as Central Parking shareholders and Allright shareholders.
Officers and Directors of the Surviving Corporation and Central Parking. The
Merger Agreement provides that the directors and officers of Central Parking
Sub, some of which are also directors and officers of Central Parking, will
become the directors and officers of the surviving corporation after the
Effective Time, including Monroe J. Carell, Jr., James H. Bond, Stephen A.
Tisdell and Henry J. Abbott. See "The Merger Agreement -- Certificate of
Incorporation and Bylaws; Directors and Officers." The Merger Agreement also
provides that, upon consummation of the Merger, Apollo and AEW will each be
entitled to designate one individual to the Central Parking Board. See "The
Merger Agreement -- Certain Covenants -- Central Parking Board of Directors."
AEW intends to designate Marc L. Davidson as its nominee to the Central Parking
Board and Apollo intends to designate William S. Benjamin as its nominee to the
Central Parking Board.
Options. The Merger Agreement provides that each option granted by Allright
(each an "Allright Option") to purchase shares of Allright Common Stock
outstanding and unexercised prior to the Merger shall automatically be converted
into a right to receive an option to purchase Central Parking Common Stock. The
amount of options to purchase Central Parking Common Stock into which each
Allright Option will be converted will be the product of the number of shares of
Allright Common Stock subject to the original Allright Option times the Exchange
Ratio. Certain agreements pursuant to which Allright Options were granted,
including the 1998 Plan (as defined below), provide for the acceleration of
vesting of a certain number of Allright Options upon a change of control of
Allright. On the date hereof, the number of unexercised Allright Options held by
each of the five most highly compensated executive officers of Allright
(including the chief executive officer) (the "Allright Executive Officers") is:
Mr. Shay (2,917), Mr. Grady (740), Mr. Dane (105), Mr. Chen (110) and Mr. Stone
(105). Certain of such Allright Options may be exercised prior to the Merger.
Retention/Employment/Management Continuity Agreements. In addition to any
employment agreement or management continuity agreement to be entered into as
discussed below, certain members of Allright management, including certain of
the Allright Executive Officers, have entered into retention agreements with
Allright, which provide for a certain lump sum cash payment to be made to such
employees upon consummation of the Merger. An employee will forfeit such payment
if the employee is no longer employed by Allright prior to the closing date of
the Merger. The amount of payments to be made under the retention agreements for
the Allright Executive Officers are expected to be: Mr. Dane ($600,000), Mr.
Grady ($444,000), Mr. Chen ($40,000) and Mr. Stone ($65,000). Mr. Grady's
retention agreement also provides that if Mr. Grady's employment is terminated
48
<PAGE> 56
without cause by Allright prior to September 4, 1999, he shall be entitled to a
lump sum severance payment of $378,000. Mr. Grady's retention agreement further
provides that if the Merger Agreement is terminated for any reason, Mr. Grady
and Allright will negotiate in good faith for 60 days to enter into a new
employment agreement. If at the end of such sixty day period no employment
agreement has been entered into, Allright will pay Mr. Grady a lump sum cash
severance payment of $450,000.
Certain members of Allright management, including certain Allright Executive
Officers, are expected to enter into employment agreements at the Effective Time
with the surviving corporation. The employment agreements will provide that upon
consummation of the Merger, the employee will be entitled to receive a certain
payment from the surviving corporation. In addition, on the second anniversary
of the closing date of the Merger, the employee will be entitled to receive an
additional lump sum cash payment. The employee shall forfeit any right to
receive payments if terminated for cause or if the employee terminates his
employment other than for good reason. If the employee's employment is
terminated (a) by the employee for good reason, (b) by the employer other than
for cause, or (c) by the employee's death, any amounts due to the employee under
the employment agreement not yet paid shall be accelerated and become payable
within seven days following the employee's termination. The Allright Executive
Officers expected to enter into employment agreements and the payments expected
to be made thereunder are: Mr. Dane ($300,000 at closing and $300,000 at second
anniversary of closing) and Mr. Stone ($32,500 at closing and $32,500 at second
anniversary of closing).
Certain members of Allright management, including certain Allright Executive
Officers, are expected to enter into management continuity agreements at the
Effective Time with the surviving corporation. If an employee enters into an
employment agreement as discussed above, such employee will not also enter into
a management continuity agreement. The management continuity agreements are
expected to provide that the surviving corporation will pay to the employee a
lump sum cash payment on the six month anniversary of the closing date. The
employee shall forfeit any right to receive payments if terminated for cause or
if the employee terminates his employment. If the employee's employment is
terminated (a) by the employer other than for cause (including by reason of the
employee's disability), or (b) by the employee's death, any amounts due to the
employee under the management continuity agreement not yet paid shall be
accelerated and become payable within seven days following the employee's
termination. The Allright Executive Officers expected to enter into management
continuity agreements and the payments expected to be made thereunder are: Mr.
Grady ($444,000) and Mr. Chen ($40,000).
Employment/Severance Agreements. Allright has entered into an employment
agreement with Mr. Shay. Mr. Shay's employment agreement expires on March 1,
2001 (subject to earlier termination in certain circumstances), with automatic
one year renewal periods. Mr. Shay receives a base salary of $275,000 per year,
plus a certain bonus based upon performance measures, and is entitled to
participate in Allright's benefit plans. In addition, Mr. Shay was granted an
option to purchase 2917 shares of Allright Common Stock which vests at a rate of
61 shares per month. On the date of grant, the option price exceeded the value
of the Allright Common Stock. This option fully accelerates upon the occurrence
of certain events, including the Merger, and partially accelerates upon certain
other events, including Mr. Shay's termination other than for "Cause" (as
defined in the employment agreement). Mr. Shay's employment agreement contains a
provision restricting Mr. Shay's ability to compete with Allright for a period
of 18 months following Mr. Shay's termination of
49
<PAGE> 57
employment with Allright. In addition, Mr. Shay's employment agreement provides
Mr. Shay with the option, in lieu of $75,000 of annual base salary, to receive
options to purchase 75 shares of Allright common stock, prorated monthly, at an
exercise price of $1.00 per share, which are immediately exercisable.
Mr. Grady has also entered into an employment agreement with Allright. Mr.
Grady's employment agreement had an original expiration date of September 3,
1998, but was automatically extended as provided therein. Mr. Grady receives a
base salary of $210,000 per year, plus a certain bonus based upon performance
measures, and is entitled to participate in Allright's benefit plans. In
addition, Mr. Grady was granted an option to purchase 740 shares of Allright
Common Stock. On the date of grant, the option price exceeded the value of the
Allright Common Stock. Such options vest at a rate of 25% on each anniversary of
the employment agreement, with such grant being fully vested at the end of Mr.
Grady's fourth year of employment. In the event of a "Change of Control" (which
would include the Merger), the vesting of such options accelerates to permit the
immediate exercise of twice the number of shares which would otherwise have been
exercisable at the commencement of the Change of Control. Mr. Grady's employment
agreement contains a provision restricting Mr. Grady's ability to compete with
Allright for a period of 18 months following Mr. Grady's termination of
employment with Allright.
Messrs. Chen, Dane and Stone have each entered into a Non-Solicitation Agreement
with Allright, which contains certain non-solicitation provisions and certain
severance provisions. The severance provision provides, among other things, that
if the employee is terminated by Allright without "Cause" (as defined in the
agreement), the employer may choose to (i) pay the employee one year (six months
in the case of Mr. Chen) of his salary and benefits then in effect and the
employee shall remain subject to the non-solicitation provision contained in the
agreement for such time, or (ii) release the employee from the non-solicitation
provision contained in the agreement and not pay the employee any further
compensation.
Mr. Bernard M. Meyer, the former Chief Executive Officer of Allright
Corporation, entered into a letter agreement with Allright on December 15, 1997,
pursuant to which Mr. Meyer was awarded stock options to purchase 100 shares of
Allright Common Stock with an exercise price of $1,300 per share, and pursuant
to which Mr. Meyer receives certain other benefits.
Employee Benefit Plans. Pursuant to the Merger Agreement, from and after the
Effective Time, Central Parking has agreed to give all Allright employees full
credit, for eligibility, vesting, benefit accrual and determination of the level
of benefits, under any employee benefit plans or arrangements maintained by
Central Parking to the same extent recognized by Allright prior to the closing
date. In addition, Central Parking will waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Allright employees under any welfare
plans that such employees are eligible to participate in after the closing date,
subject to certain exceptions, and to provide each Allright employee with credit
for any co-payments and deductibles paid prior to the closing date in satisfying
any applicable deductible or out-of-pocket requirements under any welfare plans
that such employees are eligible to participate in after the closing date. For a
period of two years following the closing date, the coverage and benefits
provided to the Allright employees pursuant to employee benefit plans or
arrangements maintained by Central Parking will be no less favorable than those
provided to similarly situated employees of Central Parking. Central Parking has
also agreed to honor all bonus, severance, option and
50
<PAGE> 58
similar plans and arrangements of Allright. Pursuant to the Allright 1998
Employee Stock Option Plan (the "1998 Plan"), certain members of Allright
management received incentive stock options to purchase Allright Common Stock.
Any options issued under the 1998 Plan which are not vested prior to the closing
date will accelerate to permit the immediate vesting and exercise upon the
consummation of the Merger. The Allright Executive Officers who have received
options under the 1998 Plan include: Mr. Dane (105 options), Mr. Chen (110
options) and Mr. Stone (105 options).
Director and Officer Indemnification. Pursuant to the Merger Agreement, Central
Parking has assumed all arrangements providing rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors,
officers, employees or agents of Allright, and shall cause such rights to
continue in full force and effect, without amendment, for six years after the
Effective Time. For six years after the Effective Time, Central Parking or the
surviving corporation shall maintain in effect Allright's current directors' and
officers' liability insurance covering acts or omissions occurring prior to the
Effective Time with respect to those persons who are currently covered by such
directors' and officers' liability insurance policy on terms with respect to
such coverage and amount no less favorable in the aggregate currently covered by
such insurance, or in the alternative, Central Parking may purchase a "tail" on
Allright's existing insurance policy for a term of no less than six years. See
"The Merger Agreement -- Certain Covenants -- Indemnification, Exculpation and
Insurance."
Registration Rights. Certain current holders of Central Parking Common Stock
and certain holders of Central Parking Common Stock after the Merger will have
registration rights with respect to their Central Parking Common Stock pursuant
to the Registration Rights Agreement after consummation of the Merger. See
"Registration Rights Agreement."
Affiliate Transactions. Certain members of the Allright Board are employed by
AEW or its affiliates and certain members of the Allright Board are employed by
Apollo or its affiliates. Allright has entered into certain transactions with
certain affiliates of AEW and Apollo for the provision of parking services. In
addition, Central Parking has entered into certain transactions in the ordinary
course of business with Allright, Apollo and AEW for the provision of parking
services. All such transactions were entered into on an arm's length basis.
Blackstone Transactions. Affiliates of Blackstone from time to time have
participated or may in the future participate with AEW and/or Apollo and their
respective affiliates in various investment and other business opportunities in
the ordinary course of business. These various investment opportunities have
been unrelated to Blackstone's representation of Central Parking and are
immaterial to the Merger, Blackstone, Apollo and AEW.
51
<PAGE> 59
COMPARATIVE PRICE RANGE OF
COMMON STOCK AND DIVIDEND POLICY
Central Parking's Common Stock is listed on the NYSE under the symbol "CPC." The
following table sets forth, for the periods indicated, the high and low sales
prices for the Central Parking Common Stock as reported by the NYSE. Such
amounts reflect the three-for-two stock split in December 1997.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL 1997
First Quarter............................................... $24.58 $21.08
Second Quarter.............................................. 22.75 16.33
Third Quarter............................................... 23.25 15.92
Fourth Quarter.............................................. 32.92 22.17
FISCAL 1998
First Quarter............................................... $46.81 $31.42
Second Quarter.............................................. 49.38 38.44
Third Quarter............................................... 48.44 40.31
Fourth Quarter.............................................. 52.63 41.31
FISCAL 1999
First Quarter (through October 16, 1998).................... $48.69 $34.56
------ ------
</TABLE>
On September 21, 1998, the last full trading day before the Merger was
announced, the last reported sale price of the Central Parking Common Stock on
the NYSE was $46.125 per share. On December , 1998, the last practicable day
before the printing of this Joint Proxy Statement/Prospectus, the last reported
sale price of the Central Parking Common Stock on the NYSE was $ per
share and there were approximately 7,000 holders of the Central Parking Common
Stock, based on the number of record holders and the number of individual
participants represented by security position listings.
Allright Common Stock is not traded on any exchange and there is no public
market for the outstanding shares of Allright Common Stock. Allright has not
paid any dividends on its capital stock during the last two fiscal years. See
"Description of Allright -- No Established Trading Market; Dividends."
Since April 1997, Central Parking has distributed a quarterly cash dividend of
$0.015 per share of Central Parking Common Stock. Central Parking had previously
declared a dividend of $0.0125 per share of Central Parking Common Stock
following the end of each quarter since its initial public offering in October
1995. The Central Parking Board currently intends to declare a cash dividend
each quarter depending on Central Parking's profitability and capital necessary
to finance operations and expansion. Central Parking reserves the right,
however, to retain all or a substantial portion of its earnings to finance the
operation and expansion of Central Parking's business. As a result, the future
payment of dividends will depend upon, among other things, Central Parking's
profitability, capital requirements, financial condition, growth, business
opportunities, and other factors that the Central Parking Board may deem
relevant, including restrictions in any then-existing credit agreement. Central
Parking's credit facility contains certain restrictions on Central Parking's
ability to pay dividends; however, Central Parking does not believe these
restrictions limit its ability to pay currently anticipated cash dividends. In
addition, Central Parking Finance Trust (the "Trust"), a Delaware statutory
business trust, of which all of the common stock is owned by Central Parking,
issued preferred securities (the "Trust Issued Preferred Securities") which
prohibit the payment of dividends on Central Parking Common Stock if the
quarterly distributions on the Trust Issued Preferred Securities are not made
for any reason.
52
<PAGE> 60
UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements are
derived from the historical consolidated financial statements of Central
Parking, the historical financial statements of the Purchase Acquisitions, and
the historical consolidated financial statements of Allright. Central Parking's
fiscal year ends on September 30. Allright's fiscal year ends on June 30.
The unaudited pro forma condensed combined financial statements give effect to
Central Parking's acquisitions in its fiscal year 1997 of Civic Parking LLC
("Civic"), Square Industries, Inc ("Square") and Car Park Corporation ("Car
Park"), and Central Parking's acquisitions in its fiscal year 1998 of Diplomat
Parking Corporation ("Diplomat"), Kinney System Holding Corp. ("Kinney"),
Central Parking System of Louisiana, Inc ("CPS-Louisiana") and Turner Parking
Systems Inc ("Turner"). These Purchase Acquisitions were accounted for using the
purchase method of accounting. The purchase method of accounting requires that
all assets and liabilities of the acquired companies be adjusted to their
respective estimated fair market values as of the dates of acquisition. The
unaudited pro forma condensed combined financial statements also give effect to
the Merger using the pooling of interests method of accounting. The pooling of
interests method of accounting combines assets and liabilities at their
historical bases and restates the results of operations as if Central Parking
and Allright had been combined as of October 31, 1996, the date that Allright
acquired Allright Corporation.
The unaudited pro forma condensed combined balance sheet combines the historical
consolidated balance sheets of Central Parking and Allright as of June 30, 1998,
and assumes the Merger occurred on such date. The unaudited pro forma condensed
combined statement of earnings for the fiscal year ended September 30, 1997,
combines the historical (a) consolidated results of operations of Central
Parking for its fiscal year ended September 30, 1997, (b) results of operations
of Civic for the three-month period ended December 31, 1996, (c) consolidated
results of operations of Square for the period from October 1, 1996 through
January 17, 1997, (d) results of operations of Car Park for the period from
October 1, 1996 through May 29, 1997, (e) results of operations of Diplomat for
the twelve-month period ended September 30, 1997, (f) consolidated results of
operations of Kinney for its fiscal year ended December 31, 1997, (g) results of
operations of CPS-Louisiana for the twelve-month period ended September 30,
1997, (h) results of operation of Turner for its fiscal year ended December 31,
1997, and (i) consolidated results of operation of Allright for the eight-month
period from October 31, 1996 through June 30, 1997. The unaudited pro forma
condensed combined statement of operations for the nine-month period ended
September 30, 1998, combines the historical (a) consolidated results of
operation of Central Parking for its three fiscal quarters ended June 30, 1998,
(b) consolidated results of operations of Kinney for the period from October 1,
1997 through February 11, 1998, (c) results of operations of CPS-Louisiana for
the period from October 1, 1997 through March 30, 1998, (d) results of operation
of Turner for the period from October 1, 1997 through March 31, 1998, and (e)
consolidated results of operation of Allright for the nine-month period ended
June 30, 1998. Certain reclassifications have been made to Allright's historical
consolidated financial statements to conform to Central Parking's presentation.
The unaudited pro forma condensed combined statements of earnings were prepared
assuming that the Purchase Acquisitions were consummated on October 1, 1996, and
gives effect to the financing of the Purchase Acquisitions and certain estimated
operational and financial combination benefits which are a direct result of the
Square and Kinney acquisitions. The unaudited pro forma condensed combined
statements of earnings do not include nonrecurring Merger-related charges. The
unaudited pro forma condensed combined financial statements
53
<PAGE> 61
do not give effect to any cost savings which may be realized following the
Merger. The assumptions and adjustments which are deemed appropriate by Central
Parking management are described in the accompanying notes to unaudited pro
forma condensed combined financial statements.
The unaudited pro forma financial statements are provided for informational
purposes. They are not necessarily representative of what Central Parking's
consolidated results of operations or financial position would have been had the
Purchase Acquisitions and the Merger in fact occurred on the respective dates of
the Purchase Acquisitions and the Merger, set forth in the Notes to the
Unaudited Pro Forma Condensed Combined Financial Statements, and are not
intended to project Central Parking's consolidated results of operations or
financial position for any future period or date. The information set forth
below should be read in conjunction with the Central Parking's, Allright
Corporation's, and Allright's Consolidated Financial Statements and Notes and
the respective "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for Central Parking and Allright, all of which are
included elsewhere herein.
54
<PAGE> 62
CENTRAL PARKING CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1998
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CENTRAL
HISTORICAL PARKING
-------------------------- EFFECTS OF PRO FORMA
CENTRAL PARKING ALLRIGHT MERGER COMBINED
--------------- -------- ---------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 20,582 $ 19,655 $ -- $ 40,237
Accounts receivable and current portion of notes
receivable............................................. 25,985 6,034 -- 32,019
Prepaid expenses......................................... 13,014 4,528 -- 17,542
Income tax receivable.................................... -- -- 2,920 2,920
Deferred income taxes.................................... 1,279 -- -- 1,279
-------- -------- -------- --------
Total current assets............................... 60,860 30,217 2,920 93,997
Investments, at amortized cost............................. 4,978 -- -- 4,978
Notes receivable, less current portion..................... 31,039 21,414 -- 52,453
Property, equipment, and leasehold improvements, net....... 127,839 264,330 -- 392,169
Contract and lease rights, net............................. 11,165 44,699 -- 55,864
Goodwill, net.............................................. 239,879 32,293 -- 272,172
Investment in partnerships and joint ventures.............. 31,641 3,032 -- 34,673
Other assets............................................... 19,512 12,284 -- 31,796
-------- -------- -------- --------
$526,913 $408,269 $ 2,920 $938,102
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital lease
obligations............................................ $ 1,191 $ 656 $ -- $ 1,847
Management and other accounts payable.................... 55,471 14,457 -- 69,928
Accrued expenses......................................... 23,502 23,814 23,800 71,116
Income taxes payable..................................... 450 -- -- 450
-------- -------- -------- --------
Total current liabilities.......................... 80,614 38,927 23,800 143,341
Long-term debt and capital lease obligations............... 64,359 222,615 -- 286,974
Other long-term liabilities................................ 15,802 -- -- 15,802
Deferred compensation...................................... 3,740 7,562 -- 11,302
Deferred income taxes...................................... 5,605 30,168 (3,500) 32,273
Minority interest.......................................... -- 23,103 -- 23,103
-------- -------- -------- --------
Total liabilities.................................. 170,120 322,375 20,300 512,795
Company-obligated mandatorily redeemable securities of
subsidiary whose sole assets are convertible subordinated
debentures of the Company................................ 110,000 -- -- 110,000
Shareholders' equity:
Common stock, $.01 par value; 50,000,000 (historical) and
100,000,000 (pro forma) shares authorized, 29,503,487
(historically) and 37,103,487 (pro forma) issued and
outstanding, respectively.............................. 296 1 74 371
Additional paid-in capital............................... 164,163 89,734 (74) 253,823
Foreign currency translation adjustment.................. 315 (509) -- (194)
Retained earnings........................................ 82,538 (3,332) (17,380) 61,826
Deferred compensation on restricted stock................ (519) -- -- (519)
-------- -------- -------- --------
Total shareholders' equity......................... 246,793 85,894 (17,380) 315,307
-------- -------- -------- --------
$526,913 $408,269 $ 2,920 $938,102
======== ======== ======== ========
</TABLE>
55
<PAGE> 63
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF EARNINGS
YEAR ENDED SEPTEMBER 30, 1997
(ALL AMOUNTS ARE EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMBINED COMBINED ALLRIGHT
CENTRAL PARKING PURCHASE PRO FORMA CENTRAL PARKING HISTORICAL
HISTORICAL ACQUISITIONS PURCHASE PRO FORMA 10/31/96- EFFECT OF
9/30/97 HISTORICAL(1) ADJUSTMENTS(2) CONSOLIDATED 6/30/97(3) MERGER(4)
--------------- ------------- -------------- --------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Parking and management
contracts...................... $222,976 $185,651 $ (2,448) $406,179 $118,483 $ --
Cost and expenses:
Cost of parking and management
contracts...................... 171,697 152,834 (1,169) 323,362 90,670 --
General and administrative....... 22,507 27,252 (11,671) 38,088 14,504 --
Amortization of goodwill and
noncompete agreements.......... 920 -- 8,413 9,333 735 --
Acquisition costs................ -- 2,864 (2,864) -- -- --
-------- -------- -------- -------- -------- --------
Total costs and expenses... 195,124 182,950 (7,291) 370,783 105,909 --
-------- -------- -------- -------- -------- --------
Operating earnings (loss)........ 27,852 2,701 4,843 35,396 12,574 --
Other income (expenses):
Interest income.................. 1,842 1,539 (493) 2,888 733 --
Interest expense................. (4,582) (4,842) (12,073) (21,497) (13,915) --
Net gains (losses) on sales of
property and equipment......... 3,137 (779) -- 2,358 (19) --
Equity in partnership and joint
venture earnings............... 4,163 851 457 5,471 75 --
Other............................ -- (1,169) 612 (557) (163) --
-------- -------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before income taxes...... 32,412 (1,699) (6,654) 24,059 (715) --
Income tax expense................ 12,207 2,507 (2,487) 12,227 1,151 --
-------- -------- -------- -------- -------- --------
Earnings (loss) from continuing
operations..................... $ 20,205 $ (4,206) $ (4,167) $ 11,832 $ (1,866) $ --
======== ======== ======== ======== ======== ========
Basic weighted average common
shares outstanding............... 25,991 26,943
======== ========
Basic earnings from continuing
operations per common share...... $ 0.78 $ 0.44
======== ========
Diluted weighted average common
shares and potential diluted
common shares.................... 26,330 27,282
======== ========
Diluted earnings from continuing
operations per common share...... $ 0.77 $ 0.43
======== ========
<CAPTION>
CENTRAL PARKING
PRO FORMA
FULLY COMBINED
---------------
<S> <C>
Revenues:
Parking and management
contracts...................... $524,662
Cost and expenses:
Cost of parking and management
contracts...................... 414,032
General and administrative....... 52,592
Amortization of goodwill and
noncompete agreements.......... 10,068
Acquisition costs................ --
--------
Total costs and expenses... 476,692
--------
Operating earnings (loss)........ 47,970
Other income (expenses):
Interest income.................. 3,621
Interest expense................. (35,412)
Net gains (losses) on sales of
property and equipment......... 2,339
Equity in partnership and joint
venture earnings............... 5,546
Other............................ (720)
--------
Earnings (loss) from
continuing operations
before income taxes...... 23,344
Income tax expense................ 13,378
--------
Earnings (loss) from continuing
operations..................... $ 9,966
========
Basic weighted average common
shares outstanding............... 31,982
========
Basic earnings from continuing
operations per common share...... $ 0.31
========
Diluted weighted average common
shares and potential diluted
common shares.................... 32,321
========
Diluted earnings from continuing
operations per common share...... $ 0.31
========
</TABLE>
56
<PAGE> 64
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED JUNE 30, 1998
(ALL AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMBINED COMBINED
PURCHASE PRO FORMA CENTRAL PARKING
CENTRAL PARKING ACQUISITIONS PURCHASE PRO FORMA ALLRIGHT EFFECT OF
HISTORICAL HISTORICAL(1) ADJUSTMENTS(2) CONSOLIDATED HISTORICAL(3) MERGER(4)
--------------- ------------- -------------- --------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Parking and management
contracts.................... $274,599 $52,723 -- $327,322 $166,240 $ --
Costs and expenses:
Cost of parking and management
contracts.................... 210,967 43,468 58 254,493 122,739 --
General and administrative..... 24,319 5,891 (1,972) 28,238 23,165 --
Amortization of goodwill and
non-compete agreements....... 4,620 -- 2,772 7,392 885 --
-------- ------- ------- -------- -------- -------
Total costs and
expenses............... 239,906 49,359 858 290,123 146,789 --
-------- ------- ------- -------- -------- -------
Operating earnings............. 34,693 3,364 (858) 37,199 19,451 --
-------- ------- ------- -------- -------- -------
Other income (expenses):
Interest income................ 1,894 526 (78) 2,342 964 --
Interest expense............... (6,243) (1,526) (3,811) (11,580) (17,366) --
Dividends on company-obligated
mandatorily redeemable
convertible securities of a
subsidiary trust............. (1,684) -- -- (1,684) -- --
Net gains (losses) on sales of
property and equipment....... -- -- -- -- (669) --
Minority interest.............. -- -- -- -- (218) --
Equity in partnership and joint
venture earnings............. 3,678 164 133 3,975 124 --
-------- ------- ------- -------- -------- -------
Earnings from continuing
operations before
income taxes........... 32,338 2,528 (4,614) 30,252 2,286 --
Income tax expense.............. 12,420 838 (545) 12,713 2,218 --
-------- ------- ------- -------- -------- -------
Earnings from continuing
operations................... $ 19,918 $ 1,690 $(4,069) $ 17,539 $ 68 $ --
======== ======= ======= ======== ======== =======
Basic weighted average common
shares outstanding............. 27,373 27,731
======== ========
Basic earnings from continuing
operations per common share.... $ 0.73 $ 0.63
======== ========
Diluted weighted average common
shares and dilutive potential
common shares.................. 27,838 28,196
======== ========
Diluted earnings from continuing
operations per common share.... $ 0.72 $ 0.62
======== ========
<CAPTION>
CENTRAL PARKING
PRO FORMA
FULLY COMBINED
---------------
<S> <C>
Revenues:
Parking and management
contracts.................... $493,562
Costs and expenses:
Cost of parking and management
contracts.................... 377,232
General and administrative..... 51,403
Amortization of goodwill and
non-compete agreements....... 8,277
--------
Total costs and
expenses............... 436,912
--------
Operating earnings............. 56,650
--------
Other income (expenses):
Interest income................ 3,306
Interest expense............... (28,946)
Dividends on company-obligated
mandatorily redeemable
convertible securities of a
subsidiary trust............. (1,684)
Net gains (losses) on sales of
property and equipment....... (669)
Minority interest.............. (218)
Equity in partnership and joint
venture earnings............. 4,099
--------
Earnings from continuing
operations before
income taxes........... 32,538
Income tax expense.............. 14,931
--------
Earnings from continuing
operations................... $ 17,607
========
Basic weighted average common
shares outstanding............. 35,331
========
Basic earnings from continuing
operations per common share.... $ 0.50
========
Diluted weighted average common
shares and dilutive potential
common shares.................. 35,796
========
Diluted earnings from continuing
operations per common share.... $ 0.49
========
</TABLE>
57
<PAGE> 65
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
PRO FORMA CONDENSED COMBINED BALANCE SHEET
The Merger has been accounted for as a pooling of interests. Under the Merger
Agreement, Allright agrees to exchange all shares of outstanding Allright Common
Stock in exchange for an estimated 7.6 million shares of Central Parking Common
Stock. As a result of the Merger, the par value of stock exchanged for the net
assets of Allright must be recorded in the combination.
The accompanying unaudited pro forma condensed combined balance sheet reflects
certain nonrecurring charges directly attributable to the Merger. Central
Parking's estimate of such expenses includes:
<TABLE>
<S> <C>
Transaction Costs......................................... $14,000,000
Employment Contract and Severance Costs................... 9,800,000
-----------
Total........................................... $23,800,000
===========
</TABLE>
The severance and employment costs and $6.25 million of the transaction costs
have been tax effected using an assumed federal and state combined rate of 40%.
The employment contract and severance costs include (i) $5.3 million payable by
Allright at the consummation of the Merger in accordance with management
retention agreements which Allright has entered into with certain members of
management and which will be payable upon consummation of the Merger (the
"Retention Agreements"), (ii) $2.0 million related to the initial payments to be
made pursuant to the employment agreements which is expected to be entered into
with certain members of Allright management and which will be effective upon
consummation of the Merger (the "Employment Agreements"), and (iii) $2.5 million
of severance payments to certain other Allright employees. In addition to these
charges, Central Parking management expects to recognize as expense subsequent
to the consummation of the Merger approximately $1.3 million related to
management continuity agreements Central Parking expects to enter into with
certain members of Allright management (the "Management Continuity Agreements")
and $2.0 million related to the remaining payments pursuant to the Employment
Agreements. The costs related to the Management Continuity Agreements and the
second installments of the Employment Agreements will be recognized as expense
over the related service periods of six months and twenty-four months,
respectively, unless an employee is entitled to earlier payment under their
contract. Additional merger-related charges may be recognized by Central Parking
after the consummation of the Merger. Such items could relate to additional
severance payments, the write-off of Allright deferred debt issuance costs
should the related debt be refinanced by Central Parking, and other integration
related expenses.
58
<PAGE> 66
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
(1) The historical financial results of the Purchase Acquisitions presented in
the unaudited pro forma condensed combined statement of earnings for the year
ended September 30, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
CPS OF
SQUARE CIVIC CARPARK DIPLOMAT KINNEY LA.
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
10/1/96 - 10/1/96 - 10/1/96- 10/1/96- 1/1/97- 10/1/96-
1/17/97 12/31/96 5/29/97 9/30/97 12/31/97 9/30/97
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Parking and management contracts..................... $ 22,298 $ 2,448 $1,552 $18,916 $134,946 $1,913
Cost and expenses:
Cost of parking and management contracts............. 18,763 1,313 1,303 15,995 111,453 1,411
General and administrative........................... 2,654 173 69 7,095 16,026 564
Amortization of goodwill and noncompete agreements... -- -- -- -- --
Acquisition costs.................................... 2,864 -- -- -- --
-------- ------- ------ ------- -------- ------
Total costs and expenses........................ 24,281 1,486 1,372 23,090 127,479 1,975
-------- ------- ------ ------- -------- ------
Operating earnings (loss)............................ (1,983) 962 180 (4,174) 7,467 (62)
Other income (expenses):
Interest income...................................... -- 2 -- 18 1,498 19
Interest expense..................................... 203 (1,008) -- -- (4,037) --
Dividends on mandatorily redeemable convertible
securities of a subsidiary trust................... -- -- -- -- -- --
Net gains (losses) on sales of property and
equipment.......................................... -- -- -- -- (779) --
Equity in partnership and joint venture earnings..... -- -- -- -- 836 15
Other................................................ (964) -- (205) -- --
-------- ------- ------ ------- -------- ------
Earnings (loss) from continuing operations
before income taxes........................... (2,744) (44) 180 (4,361) 4,985 (28)
Income tax expense................................... 68 -- -- 233 2,219 (13)
-------- ------- ------ ------- -------- ------
Earnings (loss) from continuing operations...... $ (2,812) $ (44) $ 180 $(4,594) $ 2,766 $ (15)
======== ======= ====== ======= ======== ======
<CAPTION>
TURNER COMBINED
HISTORICAL PURCHASE
1/1/97- ACQUISITIONS
12/31/97 HISTORICAL
---------- ------------
<S> <C> <C>
Revenues:
Parking and management contracts..................... $3,578 $185,651
Cost and expenses:
Cost of parking and management contracts............. 2,596 152,834
General and administrative........................... 671 27,252
Amortization of goodwill and noncompete agreements... -- --
Acquisition costs.................................... -- 2,864
------ --------
Total costs and expenses........................ 3,267 182,950
------ --------
Operating earnings (loss)............................ 311 2,701
Other income (expenses):
Interest income...................................... 2 1,539
Interest expense..................................... -- (4,842)
Dividends on mandatorily redeemable convertible
securities of a subsidiary trust................... -- --
Net gains (losses) on sales of property and
equipment.......................................... -- (779)
Equity in partnership and joint venture earnings..... -- 851
Other................................................ -- (1,169)
------ --------
Earnings (loss) from continuing operations
before income taxes........................... 313 (1,699)
Income tax expense................................... -- 2,507
------ --------
Earnings (loss) from continuing operations...... $ 313 $ (4,206)
====== ========
</TABLE>
59
<PAGE> 67
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
(2) The combined pro forma adjustments related to the Purchase Acquisitions for
the year ended September 30, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
SQUARE CIVIC CARPARK DIPLOMAT KINNEY CPS OF LA.
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Parking and management
contracts................. -- $ (2,393)(H) -- -- -- --
$ (55)(I)
Costs and expenses:
Cost of parking and
management contracts...... (23)(A) (1,195)(H) -- -- 167(N) --
(85)(A)
(33)(I)
General and
administrative............ (97)(D) (173)(H) -- (4,969)(L) (5,588)(E) --
(1,164)(E) 320(P)
Amortization of goodwill and
noncompete agreements..... 342(B) -- 137(B) 816(K) 6,289(O) 469(V)
Acquisition costs........... (2,864)(C) -- -- -- -- --
------- ----------- -------- -------- --------- --------
Total costs and
expenses.............. (3,806) (1,486) 137 (4,153) 1,188 469
------- ----------- -------- -------- --------- --------
Operating earnings (loss)... 3,806 (962) (137) 4,153 (1,188) (469)
Other income (expenses):
Interest income............. -- (283)(J) -- -- (210)(Q) --
Interest expense............ (1,357)(F) 586(F) (158)(F) (1,355)(M) (9,597)(S) --
(192)(R)
Dividends on mandatorily
redeemable convertible
securities of a subsidiary
trust..................... -- -- -- -- -- --
Net gains (losses) on sales
of property and
equipment................. -- -- -- -- -- --
Equity in partnership and
joint venture earnings.... -- 513(H) -- -- (56)(T) --
Other....................... 612(D) -- -- -- -- --
------- ----------- -------- -------- --------- --------
Earnings (loss) from
continuing operations
before income taxes... 3,061 (146) (295) 2,798 (11,243) (469)
Income tax expense.......... 180(G) (72)(G) 8(G) (515)(G) (2,206)(U) --
------- ----------- -------- -------- --------- --------
Earnings (loss) from
continuing
operations............ $ 2,881 $ (74) $ (303) $ 3,313 $ (9,037) $ (469)
======= =========== ======== ======== ========= ========
<CAPTION>
COMBINED
TURNER PRO FORMA
PRO FORMA PURCHASE
ADJUSTMENTS ADJUSTMENTS
----------- -----------
<S> <C> <C>
Revenues:
Parking and management
contracts................. -- $(2,448)
Costs and expenses:
Cost of parking and
management contracts...... -- (1,169)
General and
administrative............ -- (11,671)
Amortization of goodwill and
noncompete agreements..... 360(W) 8,413
Acquisition costs........... -- (2,864)
----- -------
Total costs and
expenses.............. 360 (7,291)
----- -------
Operating earnings (loss)... (360) 4,843
Other income (expenses):
Interest income............. -- (493)
Interest expense............ -- (12,073)
Dividends on mandatorily
redeemable convertible
securities of a subsidiary
trust..................... -- --
Net gains (losses) on sales
of property and
equipment................. -- --
Equity in partnership and
joint venture earnings.... -- 457
Other....................... -- 612
----- -------
Earnings (loss) from
continuing operations
before income taxes... (360) (6,654)
Income tax expense.......... 118(G) (2,487)
----- -------
Earnings (loss) from
continuing
operations............ $(478) $(4,167)
===== =======
</TABLE>
The adjustments reflected in the pro forma condensed combined statements of
earnings are as follows for the year ended September 30, 1997.
(A) To reflect the net change in depreciation resulting from the fair
value adjustments and changes in estimated asset lives.
(B) To record amortization of goodwill and noncompete agreements using
25 and 5 year lives, respectfully.
(C) To eliminate the effect of acquisition costs reflected in Square's
historical results of operations which were directly related to Square's
sale to Central Parking.
(D) To eliminate the effect of Square's (i) scheduled amortization of
deferred expenses and financing costs, and (ii) write-off of $612,000 of
deferred financing costs directly related to the acquisition.
(E) To record the effect of estimated cost savings relating to general
and administrative expenses, including excess personnel, to be eliminated
in connection with the Square acquisition.
(F) To reflect interest on acquisition-related borrowings. Interest is
calculated at an average rate of 6.75%.
60
<PAGE> 68
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
(G) To record estimated federal and state income taxes at a combined
rate of 37.7% of estimated taxable income.
(H) To reflect the elimination of 100% ownership of Civic as a result of
the sale of a 50% interest to Equity Office Holdings-St. Louis Parking, LLC
and to record a 50% joint venture interest as equity in partnership and
joint venture earnings.
(I) To eliminate the revenues and expenses related to a bus lot not
acquired, but included in the historical financial statements of Civic for
the period October 1 through December 31, 1996.
(J) To reflect a decrease in income earned on cash investments used for
purposes of the acquisition of Civic.
(K) To record amortization of goodwill and noncompete agreements using
25 and 5 year lives, respectively.
(L) To eliminate the effect of expense related to compensatory stock
options granted to a Diplomat stockholder directly related to the
acquisition of Diplomat by Central Parking.
(M) To reflect interest on Diplomat acquisition-related borrowings.
Interest is calculated at an average interest rate of 6.25%.
(N) To reflect the net change in depreciation resulting from the fair
value adjustments.
(O) To reflect amortization of goodwill related to Kinney using a 30
year life.
(P) To reflect expense associated with the five-year consulting
contracts with the former shareholders of Kinney.
(Q) To reflect amortization of the adjustment to fair value on note
receivable due from New York City over remaining ten year term of the note.
(R) To reflect amortization of the deferred financing fees over the five
year term of the related acquisition debt. Amortization of deferred
financing fees related to debt that was repaid at closing is removed.
(S) To reflect interest expense on acquisition-related borrowings.
Interest is calculated at a rate of 6.875%. Interest expense on debt repaid
at closing is removed.
(T) To eliminate the effect of losses from equity in partnership
earnings for partnerships that were not transferred in the acquisition of
Kinney and to record amortization over a 30 year period relating to the
$3,826,000 purchase accounting write-up on the investment in unconsolidated
subsidiary acquired.
(U) To record estimated federal and state income taxes at Kinney's
combined rate of 43.25% of estimated taxable income.
(V) To reflect amortization of goodwill related to CPS-Louisiana using a
5 year life.
61
<PAGE> 69
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
(W) To reflect amortization of goodwill related to Turner using a 10
year life.
(3) Allright historical results of operations includes results from October 31,
1996 (the date of acquisition of Allright Corporation by Allright) to June 30,
1997. See Selected Historical Financial Data for Allright Corporation
(Predecessor Company) historical results prior to October 31, 1996.
(4) The effect of the Merger for purposes of the Unaudited Pro Forma Condensed
Combined Statement of Earnings for the year ended September 30, 1997 excludes
certain nonrecurring merger expenses directly attributable to the Merger.
Central Parking has estimated that such expenses will include:
<TABLE>
<S> <C>
Transaction Costs......................................... $14,000,000
Employment Contract and Severance Costs................... 9,800,000
-----------
Total........................................... $23,800,000
===========
</TABLE>
The employment contract and severance costs include (i) $5.3 million payable by
Allright at the consummation of the Merger in accordance with the Retention
Agreements, (ii) $2.0 million related to the initial payments to be made
pursuant to the Employment Agreements, and (iii) $2.5 million of severance
payments to certain other Allright employees. In addition to these charges,
Central Parking management expects to recognize as expense subsequent to the
consummation of the Merger approximately $1.3 million related to the Management
Continuity Agreements and $2.0 million related to the remaining payments
pursuant to the Employment Agreements. The costs related to the Management
Continuity Agreements and the second installments of the Employment Agreements
will be recognized as expense over the related service periods of six months and
twenty-four months, respectively, unless an employee is entitled to earlier
payment under their contract. Additional merger-related charges may be
recognized by Central Parking after the consummation of the Merger. Such items
could relate to additional severance payments, the write-off of Allright
deferred debt issuance costs should the related debt be refinanced by Central
Parking, and other integration related expenses.
The related impact on pro forma fully combined basic and diluted weighted
average shares outstanding assumes 7.6 million shares are issued to shareholders
of Allright in the Merger and gives effect to the Purchase Acquisitions. Given
that the results of Allright are included only for the period from October 31,
1996 to June 30, 1997 (i.e., eight months of operations), the 7.6 million shares
have been weighted only for the period for which Allright's historical operating
results are included in the Central Parking fiscal year 1997 pro forma fully
combined statements of earnings (approximately 66% of the year) for purposes of
computing pro forma fully combined earnings from continuing operations per share
amounts for fiscal year 1997.
62
<PAGE> 70
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS FOR THE NINE MONTHS ENDED
JUNE 30, 1998
(1) The historical financial results of the Purchased Acquisitions presented in
the unaudited pro forma condensed combined statements of earnings for the nine
months ended June 30, 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
CPS OF COMBINED
KINNEY LOUISIANA TURNER PURCHASE
HISTORICAL HISTORICAL HISTORICAL ACQUISITIONS
10/1/97 - 2/11/98 10/1/97 - 3/30/98 10/1/97 - 3/31/98 HISTORICAL
----------------- ----------------- ----------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Parking and management
contracts............ $50,012 $801 $1,910 $52,723
Costs and expenses:
Cost of parking and
management
contracts............ 41,484 585 1,399 43,468
General and
administrative....... 5,150 303 438 5,891
Amortization of
goodwill and
noncompete
agreements........... -- -- -- --
------- ---- ------ -------
Total costs and
expenses...... 46,634 888 1,837 49,359
------- ---- ------ -------
Operating earnings
(loss)............... 3,378 (87) 73 3,364
Other income (expenses):
Interest income........ 522 3 1 526
Interest expense....... (1,510) (16) -- (1,526)
Dividends on
mandatorily
redeemable
convertible
securities of a
subsidiary trust..... -- -- -- --
Net gains (losses) on
sales of property and
equipment............ -- -- -- --
Equity in partnership
and joint venture
earnings............. 129 35 -- 164
------- ---- ------ -------
Earnings (loss)
from
continuing
operations
before income
taxes......... 2,519 (65) 74 2,528
Income tax expense..... 838 -- -- 838
------- ---- ------ -------
Earnings (loss)
from
continuing
operations.... $ 1,681 $(65) $ 74 $ 1,690
======= ==== ====== =======
</TABLE>
63
<PAGE> 71
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
(2) The Combined Pro Forma adjustments for the nine months ended June 30, 1998
are as follows (in thousands):
<TABLE>
<CAPTION>
CPS OF COMBINED
KINNEY LOUISIANA TURNER PRO FORMA
PRO FORMA PRO FORMA PRO FORMA PURCHASE
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
----------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Parking and management
contracts............ $ -- $ -- $ -- $ --
Cost and expenses:
Cost of parking and
management
contracts............ 58(A) -- -- 58
General and
administrative....... (2,095)(C) -- -- (1,972)
123(D)
Amortization of goodwill
and noncompete
agreements........... 2,358(B) 234(B) 180(B) 2,772
------- ----- ----- -------
Total costs and
expenses..... 444 234 180 858
------- ----- ----- -------
Operating earnings
(loss)............... (444) (234) (180) (858)
Other income (expenses):
Interest income......... (78)(E) -- -- (78)
Interest expense........ 327(F) -- -- (3,811)
(4,138)(G)
Dividends on mandatorily
redeemable
convertible
securities of a
subsidiary trust..... -- -- -- --
Net gains (losses) on
sales of property and
equipment............ --
Equity in partnership
and joint venture
earnings............. 133(H) -- -- 133
------- ----- ----- -------
Earnings (loss)
from
continuing
operations
before income
taxes........ (4,200) (234) (180) (4,614)
------- ----- ----- -------
Income tax expense...... (545)(I) -- -- (545)
------- ----- ----- -------
Earnings (loss) from
continuing
operations........... $(3,655) $(234) $(180) $(4,069)
======= ===== ===== =======
</TABLE>
The adjustments reflected in the pro forma condensed combined statements of
earnings are as follows for the nine months ended June 30, 1998:
(A) To reflect the net change in depreciation resulting from the fair
value adjustments and changes in estimated asset lives.
64
<PAGE> 72
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
(B) To record amortization of goodwill using a 30 year life for Kinney,
a 5 year life for CPS-Louisiana and a 10 year life for Turner.
(C) To record the effect of estimated cost savings relating to general
and administrative expenses, including excess personnel, to be eliminated
in connection with the Kinney acquisition.
(D) To record the expense associated with the five-year consulting
agreements entered into in connection with the former shareholders of
Kinney.
(E) To record amortization of adjustment to fair value of certain notes
receivable.
(F) To reflect the elimination of deferred financing fees and debt paid
off in the transaction, net of amortization of financing fees on the
additional borrowings to fund the acquisition.
(G) To reflect interest expense on acquisition related borrowings.
Interest is calculated at a rate of 6.875%. Interest expense on debt repaid
at closing is removed.
(H) To eliminate earnings on partnerships and joint ventures not
acquired in the acquisition.
(I) To record estimated federal and state income taxes at a combined
rate of 43.25% of estimated taxable income.
The basic and diluted weighted average shares outstanding on a pro forma
consolidated basis were also adjusted for the issuance of 882,422 shares in
connection with the acquisition of Kinney, 16,842 shares issued in connection
with the acquisition of the additional 50% of CPS-Louisiana, and 52,631 shares
issued in connection with the acquisition of Turner as if such shares were
outstanding for the nine months ended June 30, 1998.
(3) Allright historical results of operations for the nine months ended June 30,
1998 reflect the historical results of operations for Allright from October 1,
1997 through June 30, 1998.
(4) The effect of the proposed merger for purposes of the Unaudited Pro Forma
Condensed Combined Statement of Earnings for the nine months ended June 30, 1998
excludes certain nonrecurring merger expenses directly attributable to the
Merger. Central Parking has estimated that such expenses will include:
<TABLE>
<S> <C>
Transaction Costs......................................... $14,000,000
Employment and Severance Costs............................ 9,800,000
-----------
Total........................................... $23,800,000
===========
</TABLE>
The employment contract and severance costs include (i) $5.3 million payable by
Allright at the consummation of the Merger in accordance with the Retention
Agreements, (ii) $2.0 million related to the initial payments to be made
pursuant to the Employment Agreements, and (iii) $2.5 million of severance
payments to certain other Allright employees. In addition to these charges,
Central Parking management expects to recognize as expense subsequent to the
consummation of the Merger, approximately $1.3 million related to Management
Continuity Agreements and $2.0 million related to the remaining payments
65
<PAGE> 73
CENTRAL PARKING CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
pursuant to the Employment Agreements. The costs related to the Management
Continuity Agreements and the second installments of the Employment Agreements
will be recognized as expense over the related service periods of six months and
twenty-four months, respectively, unless an employee is entitled to earlier
payment under their contracts. Additional merger-related charges may be
recognized by Central Parking after the consummation of the Merger. Such items
could relate to additional severance payments, the write-off of Allright
deferred debt issuance costs should the related debt be refinanced by Central
Parking, and other integration related expenses.
The related impact on pro forma fully combined weighted average shares and
earnings from continuing operations per share gives effect to the Purchase
Acquisitions and assumes 7.6 million shares are issued to shareholders of
Allright in the Merger.
66
<PAGE> 74
CENTRAL PARKING'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of Central Parking's results of operations and
financial condition should be read in conjunction with the Consolidated
Financial Statements and Notes thereto, which are included herein.
OVERVIEW
Central Parking operates parking facilities under three types of arrangements:
leases, fee ownership and management contracts.
Parking revenues consist of Central Parking's revenues from leased and owned
facilities. Cost of parking relates to both leased and owned facilities and
includes rent, payroll and related benefits, depreciation (if applicable),
maintenance, insurance, and general operating expenses.
Parking revenues from leased facilities were $103.0 million and $166.6 million
for fiscal 1996 and 1997, respectively. For the nine months ended June 30, 1997
and 1998, parking revenues from leased facilities were $117.2 million and $218.7
million, respectively. Leases generally provide for a contractually established
payment to the facility owner which is either a fixed annual amount, a
percentage of gross revenues, or a combination thereof. As a result, Central
Parking's revenues and profits in its lease arrangements are dependent upon the
performance of the facility. Leased facilities require a longer commitment and a
larger capital investment by Central Parking than managed facilities but
generally provide a longer-term source of revenue and a greater opportunity for
revenue and earnings growth. Under its leases, Central Parking is typically
responsible for all facets of the parking operations, except for structural,
mechanical, electrical maintenance or repairs, or property taxes. Lease
arrangements are typically for terms of three to ten years, with renewal
options.
Parking revenues from owned facilities were $6.3 million and $14.3 million for
fiscal 1996 and 1997, respectively. For the nine months ended June 30, 1997 and
1998, parking revenues from owned facilities were $9.7 million and $13.3
million, respectively. Ownership of parking facilities, either independently or
through joint ventures, typically requires a larger capital investment than
managed or leased facilities, but provides maximum control over the operation of
the parking facility and the greatest profit potential of the three types of
operating arrangements. As the owner, all changes in facility revenue and
expenses flow directly to Central Parking. Additionally, Central Parking has the
potential to realize appreciation in the value of the underlying real estate if
the property is sold. Central Parking assumes complete responsibility for all
aspects of each owned property, including all structural, mechanical, and
electrical maintenance, repairs and property taxes. Joint venture operations are
accounted for under the equity method and are reflected through equity in
partnership and joint venture earnings.
Management contract revenues were $34.0 million and $42.1 million for fiscal
1996 and 1997, respectively. For the nine months ended June 30, 1997 and 1998,
management contract revenues were $30.4 million and $42.6 million, respectively.
Management contract revenues consist of management fees (both fixed and
percentage of revenues) and fees for ancillary services such as insurance,
accounting, equipment leasing, and consulting. The cost of such management
contracts includes insurance premiums and claims and other indirect overhead.
Central Parking's responsibilities under a management contract include hiring,
training, and staffing parking personnel and providing collections, accounting,
recordkeeping, insurance,
67
<PAGE> 75
and facility marketing services. In general, Central Parking is not responsible
under its management contracts for structural, mechanical, or electrical
maintenance or repairs, for providing security or guard services, or for paying
property taxes. The typical management contract is for a term of one to three
years and generally is renewable for successive one-year terms.
Central Parking's renewal rates for each of the last five fiscal years were in
excess of 91%. Central Parking's management contract clients have the option of
obtaining insurance independently or purchasing insurance from Central Parking
under the management contract. Because of its size and claims experience,
Central Parking can purchase such insurance at discounts to comparable market
rates and, management believes, at lower rates than Central Parking's clients
can generally obtain on their own. Accordingly, Central Parking generates
profits on the insurance provided under its management contracts. See
"Description of Central Parking -- Litigation and Insurance."
A summary of the facilities operated by Central Parking as of June 30, 1998 is
as follows:
<TABLE>
<CAPTION>
PERCENT
OF TOTAL
MANAGED LEASED OWNED TOTAL FACILITIES SPACES
------- ------ -------- ----- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Total U.S. and Puerto
Rico............... 1,161 949 67 2,177 90.5% 891,400
----- ----- -------- ----- ---- -------
United Kingdom....... 78 80 -- 158 6.6% 54,600
Mexico(1)............ 35 26 -- 61 2.5% 32,100
Germany(1)........... -- 4 -- 4 0.2% 1,300
Canada............... 3 1 -- 4 0.2% 8,900
Spain................ -- 1 -- 1 -- 500
----- ----- -------- ----- ---- -------
Total
foreign.. 116 112 -- 228 9.5% 97,400
----- ----- -------- ----- ---- -------
Total
facilities.. 1,277 1,061 67 2,405 988,800
===== ===== ======== ===== =======
</TABLE>
- ---------------
(1) Operated through 50% owned joint ventures.
68
<PAGE> 76
The table below sets forth certain information regarding Central Parking's
managed, leased and owned facilities in the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED SEPTEMBER 30, ENDED JUNE 30,
--------------------------- --------------
1995 1996 1997 1998
-------- ----- -------- --------------
<S> <C> <C> <C> <C>
MANAGED FACILITIES:(1)
Beginning of period.......... 626 715 770 877
Acquired during period....... -- -- 36 303
Added during period.......... 120 114 164 171
Deleted during
period(2)(3)(4)........... (31) (59) (93) (74)
-------- ----- -------- --------
End of period................ 715 770 877 1,277
-------- ----- -------- --------
Renewal rate(4).............. 95.0% 92.4% 91.1% 91.6%
LEASED FACILITIES:(1)
Beginning of period.......... 436 485 552 709
Acquired during period....... -- -- 82 314
Added during period(3)....... 65 94 99 74
Deleted during period(4)..... (16) (27) (24) (36)
-------- ----- -------- --------
End of period................ 485 552 709 1,061
-------- ----- -------- --------
OWNED FACILITIES:(1)(5)
Beginning of period.......... 26 31 37 58
Acquired during period(2).... -- -- 20 8
Purchased during period...... 5 6 5 1
Sold during period........... -- -- (4) --
-------- ----- -------- --------
End of period................ 31 37 58 67
-------- ----- -------- --------
Total facilities (end
of period)........ 1,231 1,359 1,644 2,405
======== ===== ======== ========
PERCENTAGE GROWTH IN NUMBER OF
FACILITIES:
Managed...................... 14.2% 7.7% 13.9% 45.6%
Leased....................... 11.2 13.8 28.4 49.6
Owned........................ 19.2 19.4 56.8 15.5
Total facilities..... 13.1 10.4 21.0 46.3
</TABLE>
- ---------------
(1) Includes 34 managed, 29 leased and 14 owned facilities operated under joint
venture agreements.
(2) Fiscal 1996 and 1997 include four facilities that Central Parking previously
managed and subsequently purchased.
(3) Includes Central Parking's lease in fiscal 1996 and 1997 of one facility and
11 facilities, respectively, that were previously managed.
(4) Excluded from the renewal rate calculation in the above table at September
30, 1997 are six managed on-street locations and two leased on-street
locations which are reflected as current year deletions.
(5) Includes Central Parking's corporate headquarters in Nashville, Tennessee.
Net gains derived from sales of property and equipment were $1.2 million and
$3.1 million for fiscal 1996 and 1997, respectively. For the nine months ended
June 30, 1997 and 1998 net
69
<PAGE> 77
gains from sales of property and equipment were $8,000 and there were no gains
for the nine months ended June 30, 1998.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information derived
from Central Parking's consolidated financial statements expressed (except as
indicated) as a percentage of total revenues.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED SEPTEMBER 30, ENDED JUNE 30,
------------------------ ---------------
1995 1996 1997 1997 1998
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Parking revenues............................ 74.8% 76.2% 81.1% 80.7% 84.5%
Management contract revenues................ 25.2 23.8 18.9 19.3 15.5
----- ----- ----- ----- -----
Total revenues.................... 100.0 100.0 100.0 100.0 100.0
Cost of parking as a percentage of parking
revenues.................................. 92.4 90.8 88.4 87.9 86.1
Cost of management contracts as a percentage
of management contract revenues........... 30.4 28.7 28.0 30.1 26.6
General and administrative expenses......... 12.5 12.2 10.1 10.2 8.8
Amortization of goodwill and non-compete
agreements................................ -- -- 0.4 0.4 1.7
----- ----- ----- ----- -----
Operating earnings.......................... 10.8 11.8 12.5 12.7 12.6
Interest income (expense), net.............. 1.2 1.6 (1.3) (1.1) (1.6)
Dividends on company -- obligated
mandatorily redeemable convertible
securities of a wholly-owned subsidiary
trust..................................... -- -- -- -- (0.6)
Net gains on sales of property and
equipment................................. -- 0.8 1.4 -- --
Other....................................... 0.3 0.5 1.9 1.9 1.4
----- ----- ----- ----- -----
Earnings before income taxes................ 12.3 14.7 14.5 13.5 11.8
Income taxes................................ 4.4 5.0 5.5 4.9 4.5
----- ----- ----- ----- -----
Net earnings...................... 7.9% 9.7% 9.0% 8.6% 7.3%
===== ===== ===== ===== =====
</TABLE>
Nine Months Ended June 30, 1998 Compared to Nine Months Ended June 30, 1997
Parking revenues for the nine months ending June 30, 1998 increased to $232.0
million from $127.0 million in the nine months ending June 30, 1997, an increase
of $105.0 million, or 82.7%. Of the $105.0 million increase, $82.2 million, or
78.3% of the increase, resulted from the acquisition of Square, Car Park,
Diplomat, Kinney, and Turner. The remaining increase of $22.8 million, or 21.7%,
is a result of the net addition of 142 leased and owned locations over the same
quarter in fiscal 1997 as well as a combination of rate increases and higher
utilization of parking spaces at existing facilities. Revenues from foreign
operations increased to $17.0 million from $13.4 million, an increase of $3.6
million or 26.5%. The increase in foreign revenues was a result of the addition
of 53 leased locations as well as rate increases and higher utilization of
parking spaces at existing facilities.
Management contract revenues for the nine months ending June 30, 1998 increased
to $42.6 million from $30.4 million in the nine months ending June 30, 1997, an
increase of $12.2
70
<PAGE> 78
million or 40.2%. Of the $12.2 million increase, $5.4 million, or 44.4%,
resulted from the addition of 343 management locations through the acquisitions
of Square, Car Park, Diplomat, Kinney and Turner. The remaining increase of $6.8
million, or 55.6%, is attributed to the net addition of 142 management contracts
and increased management fees on existing locations.
Cost of parking in the nine months ending June 30, 1998 increased to $199.6
million from $111.6 million in the nine months ending June 30, 1997, an increase
of $88.0 million or 78.9%. Rent expense increased $55.7 million and payroll
increased $17.0 million, principally as a result of new locations from
acquisitions and increases in existing locations. Cost of parking as a
percentage of parking revenues decreased to 86.1% in the nine months ending June
30, 1998 from 87.9% in the nine months ending June 30, 1997. This decrease of
180 basis points was attributable predominately to greater economies of scale
resulting from synergies realized from recent acquisitions.
Cost of management contracts in the nine months ending June 30, 1998 increased
to $11.3 million from $9.2 million in the comparable period in 1997, an increase
of $2.1 million or 23.6%. The increase in cost reflects higher insurance claims
and unemployment taxes associated with the increase in the number of managed
facilities.
General and administrative expenses increased to $24.3 million for the nine
months ending June 30, 1998 from $16.1 million in the nine months ending June
30, 1997, an increase of $8.2 million or 51.1%. The increase is primarily
attributable to increased incentive compensation resulting from increased
profits and start-up costs associated with the opening of new locations and
joint ventures. General and administrative expenses as a percentage of revenues
were 8.9% for the nine months ending June 30, 1998 compared to 10.2% for the
nine months ending June 30, 1997. The decrease was attributable to spreading
fixed expenses over a broader revenue base and the implementation of bonus
limits on certain key executives.
Interest income increased to $1.9 million for the nine months ending June 30,
1998, from $1.2 million in the nine months ending June 30, 1997, an increase of
$700 thousand or 57.1%. The increase in interest income is a result of higher
investment balances outstanding during the nine month period.
Interest expense increased to $6.2 million for the nine months ending June 30,
1998 from $2.9 million in the nine months ending June 30, 1997. The increase in
interest expense was attributable to the increase in indebtedness under Central
Parking's revolving credit facility. The weighted average balance outstanding
was $94.3 million during the nine months ended June 30, 1998 at a weighted
average interest rate of 6.8%. For the fiscal period 1997, the weighted average
balance outstanding was $97.8 million for the period during which Central
Parking had debt outstanding, beginning December 31, 1996, at an average
interest rate of 7.1%. Additionally, Central Parking recorded dividends on
Central Parking-obligated mandatorily redeemable convertible securities of a
subsidiary trust in the amount of $1.7 million during the nine months ended June
30, 1998.
Income taxes increased to $12.4 million for the nine months ending June 30, 1998
from $7.6 million in the nine months ending June 30, 1997, an increase of $4.8
million or 62.5%. The effective tax rate for the nine months ending June 30,
1998 was 38.4% compared to 36.0% for the same period in 1997. The increase in
the effective tax rate is attributable to a combination of decreasing interest
income on tax exempt investments in 1997, an increase in non-tax deductible
goodwill amortization and an increase in effective state income tax rates.
71
<PAGE> 79
Year Ended September 30, 1997 Compared to Year Ended September 30, 1996
Parking revenues in fiscal 1997 increased to $180.9 million from $109.3 million
in fiscal 1996, an increase of $71.6 million, or 65.5%. Of the $71.6 million
increase, $41.0 million, or 57.3% of the increase, resulted from the addition of
leased and owned locations of Square and Car Park. The remaining increase of
$30.6 million, or 42.7%, is from a combination of the net addition of 76
locations, increased rates and higher utilization of parking spaces at existing
facilities.
Management contract revenues in fiscal 1997 increased to $42.1 million from
$34.0 million in fiscal 1996, an increase of $8.1 million, or 23.6%. Of the $8.1
million increase, $2.8 million, or 34.6% of the increase, resulted from the
Square and Car Park acquisitions. The remaining increase of $5.3 million, or
65.4%, is attributable to the net addition of 71 locations and increased
management fees on existing locations.
Revenues from foreign operations increased to $18.1 million in 1997 from $13.2
million in 1996. The increase of 37.4% in revenues from foreign operations
resulted primarily from the net addition of 20 locations in the United Kingdom
and increased revenues on existing locations.
Cost of parking in fiscal 1997 increased to $159.9 million from $99.2 million in
fiscal 1996, an increase of $60.7 million, or 61.2%. Rent expense increased
$31.9 million, principally as a result of new locations from acquisitions and
additional percentage rent on existing locations. Of the remaining $28.8 million
increase in cost of parking, payroll expense accounted for $12.5 million. The
payroll expense increase was attributable to a combination of acquisitions, new
locations and increases on existing payroll. Cost of parking, as a percentage of
parking revenues, decreased to 88.4% in fiscal 1997 from 90.8% in fiscal 1996.
This decrease of 240 basis points was attributable predominantly to the
spreading of a number of fixed costs, primarily rent and property costs, over a
larger revenue base.
Cost of management contracts in fiscal 1997 increased to $11.8 million from $9.8
million in the comparable period in 1996, an increase of $2.0 million, or 20.7%.
This increase was attributable to an increase in the number of managed locations
and higher costs incurred at existing locations associated with increased
revenues. Cost of management contracts, as a percentage of management contract
revenues, decreased to 28.0% in fiscal 1997 from 28.7% in fiscal 1996. The
decrease in the percentage of management contract cost as a percentage of
management contract revenue is a result of increased management fees from a
combination of new and existing locations. The decrease in renewal rate for
management contracts to 91.1% in 1997, from 92.4% in 1996, is primarily
attributable to the loss of one large contract which included 9 management
locations. This trend is not expected to continue.
General and administrative expenses in fiscal 1997 increased to $23.4 million
from $17.4 million in fiscal 1996, an increase of $6.0 million, or 34.5%. This
increase was primarily a result of an increase in payroll expense of $4.2
million, associated with the additional general and administrative expenses of
acquired operations, as well as opening of additional managed, leased, and owned
locations and additional incentive compensation payments as a result of
increased profits.
Interest income in fiscal 1997 decreased to $1.8 million from $2.3 million in
fiscal 1996. This decrease of $461,000 was primarily attributable to decreased
cash and cash equivalents during the year. Interest expense totaled $4.6 million
in 1997 compared to zero in 1996. The increased interest expense was a result of
borrowing to fund additional asset purchases and
72
<PAGE> 80
acquisitions during the year. The weighted average balance outstanding for the
period during which Central Parking had debt outstanding, beginning December 31,
1996, was approximately $88.7 million at a weighted average interest rate of
7.1%.
Equity in partnership and joint venture earnings for fiscal 1997 increased to
$4.2 million from $641,000 in fiscal 1996. The increase of $3.5 million resulted
primarily from the acquisition of a 50% joint venture interest in Civic ($2.9
million) and increases in joint venture earnings of the Mexican joint venture
($514,000 in 1997 versus $152,000 in 1996).
Central Parking's effective income tax rate was 37.7% for fiscal 1997 compared
to 34.3% for fiscal 1996. The rate increase was attributable to the increase in
Central Parking's federal income tax rate, the comparative decrease in the
amount of tax exempt income, the addition of nondeductible goodwill amortization
and the increase in the effective state income tax rate.
QUARTERLY RESULTS
Central Parking experiences fluctuations in its quarterly revenues and
profitability. These fluctuations are caused by a variety of factors, including
the timing of gains on sales of owned properties; preopening costs; the effect
of weather on travel and transportation patterns; and local and national
economic conditions. The following table sets forth certain quarterly statement
of earnings data for each of Central Parking's last eight fiscal quarters for
which Central Parking has published information and the percentage of net
revenues represented by the line items presented (except in the case of per
share amounts). The quarterly statement of earnings data set forth below was
derived from unaudited financial statements of Central Parking and includes all
adjustments, consisting only of normal recurring adjustments, which Central
Parking considers necessary for a fair presentation thereof.
<TABLE>
<CAPTION>
FISCAL
1996 FISCAL 1997 FISCAL 1998
------- ------------------------------------- ----------------------------
FOURTH FIRST SECOND THIRD FOURTH FIRST SECOND THIRD
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- ------- ------- ------- ------- ------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues........ $36,881 $41,423 $55,925 $60,030 $65,598 $71,189 $91,222 $112,188
Operating earnings.... 4,332 5,129 7,109 7,706 7,908 8,804 12,034 13,855
Earnings before income
taxes............... 5,139 6,000 6,993 8,242 11,177 9,099 10,316 12,923
Net earnings.......... $ 3,436 $ 3,899 $ 4,416 $ 5,275 $ 6,615 $ 5,642 $ 6,328 $ 7,948
Basic earnings per
common share........ $ 0.13 $ 0.15 $ 0.17 $ 0.20 $ 0.25 $ 0.22 $ 0.24 $ 0.27
Diluted earnings per
common share........ $ 0.13 $ 0.15 $ 0.17 $ 0.20 $ 0.25 $ 0.21 $ 0.23 $ 0.27
As a percentage of
total revenues:
Operating
earnings.......... 11.7% 12.4% 12.7% 12.8% 12.1% 12.4% 13.2% 12.3%
Earnings before
income taxes...... 13.9 14.5 12.5 13.7 17.0 12.8 11.3 11.5
Net earnings........ 9.3 9.4 7.9 8.8 10.1 7.9 6.9 7.1
</TABLE>
The quarterly operating information for fiscal 1996 and 1997 were affected by
the acquisition of Civic, Square, and Car Park, and net gains on sales of
property and equipment of $3.1 million in the fourth quarter of fiscal 1997. The
quarterly operating information for fiscal 1998 was affected by the acquisitions
of Diplomat, Kinney, CPS-Louisiana, and Turner.
73
<PAGE> 81
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for fiscal 1997 was $21.9 million, an
increase of $2.4 million from the net cash of $19.5 million provided by
operating activities during the same period in fiscal 1996. During the nine
months ended June 30, 1997 and 1998, Central Parking generated cash flow from
operating activities of $5.1 million and $37.5 million, respectively. The
increase was primarily attributable to increased net earnings.
Net cash used in investing activities was $92.0 million for fiscal 1997. The
acquisitions of Square and Car Park utilized cash of $50.0 million, net of cash
acquired; investments in partnerships, primarily Civic, were $46.3 million; and
property and equipment purchases represented $6.3 million. These investment
activities were partially offset by the sale of a property for $9.3 million that
was acquired in the Square transaction and the sale of a free-standing parking
garage for approximately $13.2 million, of which $3.0 million of proceeds were
cash. No gain or loss was recognized on the sale of the Square property and a
gain of $3.1 million was recognized on the sale of the free-standing parking
garage.
Net cash provided by financing activities for fiscal 1997 was $51.3 million. Net
borrowing from Central Parking's revolving credit facility represented $70.8
million which was used to fund, in part, the acquisitions of Square, Civic and
Car Park and to refinance $18.9 million of debt assumed in the acquisition of
Square.
Depending on the timing and magnitude of Central Parking's future investments
(either in the form of leased or purchased properties, joint ventures, or
acquisitions), the working capital necessary to satisfy current obligations is
anticipated to be generated from operations and Central Parking's credit
facility over the next twelve months. If Central Parking identifies investment
opportunities requiring cash in excess of Central Parking's cash flows and the
existing credit facility, Central Parking may seek additional sources of
capital, including the sale or issuance of Central Parking Common Stock or
convertible stock, subject to limitations set forth in the Registration Rights
Agreement, or amending the credit facility to obtain additional indebtedness.
During the nine months ended June 30, 1998 and 1997, Central Parking generated
cash flow from operating activities of $37.5 million and $5.1 million,
respectively, an increase of $32.4 million. The increase is primarily
attributable to increased net earnings of $6.3 million, increased goodwill and
non-compete amortization of $4.1 million, increased depreciation of $1.4
million, and increased changes in net operating assets and liabilities of $19.3
million.
Central Parking utilized cash of $210.4 million, net of cash acquired, in the
first nine months of fiscal 1998 for acquisitions compared to $50.6 million for
the first nine months of fiscal 1997. The acquisitions were funded from credit
facilities described herein.
Central Parking purchased properties during the nine months ended June 30, 1998,
and 1997 in the amounts of $21.4 million and $6.2 million, respectively. During
the first nine months of the 1997 fiscal year, Civic Parking, which consists of
four parking garages totaling approximately 7,500 parking spaces, was acquired
for $91.0 million. Of the $91.0 million, $46.0 million was held for resale to a
joint venture partner and $45.0 million was recorded as an investment in joint
ventures. The purchase was funded partially through available cash and the
drawing under a revolving credit facility in the amount of $67.2 million. In
April 1997, Central Parking consummated the sale of 50% of Civic to its joint
venture partner for $46.0 million.
74
<PAGE> 82
At June 30, 1998, Central Parking had available $140.3 million under the Credit
Facility (as defined below).
On February 11, 1998, Central Parking established a credit facility providing
for an aggregate availability of up to $300 million consisting of a five-year
$200 million revolving credit facility, including a sublimit of $25 million for
standby letters of credit, and a $100 million five-year term loan with scheduled
repayments of $25 million per year, beginning in year two (the "Credit
Facility"). The Credit Facility bears interest until June 30, 1998 at a rate of
LIBOR plus 1.25%. On June 30, 1998, the interest rate on the Credit Facility and
the commitment fee on the unused portion reverted to a grid pricing based upon
the achievement of various financial ratios. The Credit Facility contains
certain covenants including those that require Central Parking to maintain
certain financial ratios, restrict further indebtedness and limit the amount of
dividends payable. Central Parking used the Credit Facility to replace Central
Parking's prior revolving credit facility and to finance the Kinney acquisition.
At June 30, 1998, the amount outstanding under this Credit Facility was $53.5
million and the interest rate was 7.0%.
During the nine months ended June 30, 1998, Central Parking received net
proceeds from an offering of 2,137,500 shares of Central Parking Common Stock of
$89.3 million. Concurrent with the common stock offering, Central Parking
received net proceeds from a private placement of company-obligated mandatorily
redeemable convertible securities of $106.0 million, which was subsequently
registered. Central Parking used the proceeds of these offerings to repay
amounts outstanding under the Credit Facility, including such indebtedness
arising from the Kinney acquisition, and ultimately to finance the Kinney and
Turner acquisitions.
On September 2, 1998, Central Parking received a "best efforts" commitment which
expires January 31, 1999, to establish a new credit facility providing for an
aggregate of up to $400 million (the "New Credit Commitment") consisting of a
five-year $200 million revolving credit facility including a sublimit of $25
million for standby letters of credit, and a $200 million five-year term loan
with scheduled repayment consisting of $50 million per year, beginning in year
two. The New Credit Commitment will bear interest at either prime rate plus 0.5%
or LIBOR plus a margin of 1.00% and after three months revert to grid pricing at
a margin of 0.25% to 1.25% based upon Central Parking achieving a number of
financial ratios or ratings. The New Credit Commitment will contain certain
covenants including those that require Central Parking to maintain certain
financial ratios, restrict further indebtedness and limit the amount of
dividends paid. Central Parking intends to use the New Credit Commitment to
replace Central Parking's Credit Facility and to refinance the existing debt of
Allright.
International Foreign Currency Exposure
Central Parking operates wholly owned subsidiaries in the United Kingdom,
Malaysia, Canada and the Netherlands. Additionally, Central Parking operates
through joint ventures in Germany and Mexico and subsequent to September 30,
1997 formed a joint venture to operate in Spain. Central Parking intends to
invest in foreign leased or owned facilities, usually through joint ventures,
and may become increasingly exposed to foreign currency fluctuations. Central
Parking, in limited circumstances, has denominated contracts in U.S. dollars to
limit currency exposure. Presently, Central Parking has limited exposure to a
foreign currency risk and has no hedge programs. For the nine months ended June
30, 1998, revenues from United Kingdom operations represented 96.2% of total
revenues generated by
75
<PAGE> 83
foreign operations, excluding earnings from joint ventures. Central Parking
anticipates implementing a hedge program in the event such risk materially
increases.
Civic Loan
In March 1998, Civic obtained financing with a financial institution for $60
million. Central Parking received net proceeds of $30.3 million from this
transaction which reduced Central Parking's carrying value of its investment in
partnerships and joint ventures. The proceeds from the refinancing were used to
pay down the Credit Facility.
IMPACT OF INFLATION AND CHANGING PRICES
The primary sources of revenues to Central Parking are parking revenues from
owned and leased locations and management contract revenue (net of expense
reimbursements) on managed parking facilities. Central Parking believes that
inflation has had a limited impact on its overall operations for fiscal years
ended September 30, 1996, 1997 and nine months ended June 30, 1997 and 1998.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued SFAS No. 129,
"Disclosure of Information about Capital Structure." This pronouncement is
effective for fiscal years beginning after December 15, 1997 and requires the
reporting of comprehensive income within the financial statements. Management
does not anticipate that the pronouncement will significantly impact the
presentation of Central Parking's consolidated financial statements.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
supersedes SFAS No. 14. This pronouncement is effective for fiscal years
beginning after December 15, 1997. Management is evaluating the impact of
reporting operating segment information on Central Parking's consolidated
financial statements.
In February 1998, the Financial Accounting Standards Board issued SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits," which
amends SFAS Nos. 87, 88 and 106. This pronouncement is effective for fiscal
years beginning after December 15, 1997. Management does not anticipate that the
pronouncement will significantly impact the presentation of Central Parking's
consolidated financial statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which supercedes
SFAS Nos. 80, 105 and 119. This Statement is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. Management does not anticipate
that the pronouncement will significantly impact Central Parking's consolidated
financial statements.
YEAR 2000
Central Parking has considered the impact of Year 2000 issues on its computer
systems and applications and has developed remediation plans. These plans are
part of Central Parking's ongoing business strategies to incorporate advanced
technologies in its information systems, and were contemplated in advance of
Year 2000 issues. The expenditures for system upgrades will be accounted for as
regular capital expenditures, and will not have a significant impact
76
<PAGE> 84
on Central Parking's operations or liquidity. Central Parking has previously
expensed or fully depreciated all system hardware and software that in
management's estimation is not Year 2000 compliant.
Central Parking uses some fee calculation devices that compute parking fees and
statistical data, and also automate the ingress and egress control mechanisms at
certain parking facilities. Based on contacts with the vendors of such
equipment, Central Parking expects them to make available reasonably priced
upgrades to address Year 2000 compatibility issues. In the event a failure of
such equipment were to occur due to processing incompatibilities in the Year
2000, manual override systems are in place at all locations. Given the minimal
technological requirement to operate such facilities, management believes all
material operations could adequately be performed manually. Such contingency
plans are currently deployed in the events of power failures or other business
interruptions at locations where these devices are located.
Central Parking is in the process of upgrading local and wide area information
networks, computer hardware, software, and connection devices to comply with
Year 2000 issues. The vendors of such computer equipment have warranted that
their systems will appropriately process information beyond Year 2000. In
addition, Central Parking has processed test data to independently verify the
processing capabilities of such computer hardware and software with regard to
Year 2000. Central Parking expects that the conversion of all system critical
functions will be completed no later than the end of the first calendar quarter
of 1999. Management expects this conversion timetable to provide adequate
opportunity to fully test and address any unforeseen Year 2000 issues.
77
<PAGE> 85
THE MERGER AGREEMENT
The following summary of the material provisions of the Merger Agreement does
not purport to be complete and is qualified in its entirety by reference to the
Merger Agreement, a copy of which is attached as Annex A to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference. Holders of Central
Parking Common Stock and Allright Common Stock are urged to read the Merger
Agreement carefully. Capitalized terms used in this section but not defined in
this Joint Proxy Statement/Prospectus shall have the meanings attributed to them
in the Merger Agreement.
THE MERGER
Pursuant to the Merger Agreement and on the terms and conditions set forth in
the Merger Agreement, Central Parking Sub will be merged with and into Allright,
with Allright continuing as the surviving corporation. Following the Merger,
Allright will be an indirect, wholly owned subsidiary of Central Parking.
CLOSING; EFFECTIVE TIME
The closing of the Merger shall take place on the second business day following
the satisfaction or waiver of the conditions to the Merger (the "Closing Date"),
or at such other time as the parties may agree. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware. See "-- Conditions to Consummation of the
Merger."
CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS
The Certificate of Incorporation and Bylaws of Allright, as in effect at the
Effective Time, shall continue as the Certificate of Incorporation and Bylaws of
the surviving corporation, until thereafter amended as provided therein. The
directors and officers of Central Parking Sub at the Effective Time shall be the
directors and officers of the surviving corporation, until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
CONVERSION OF SECURITIES; MERGER CONSIDERATION
At the Effective Time, by virtue of the Merger and without any action on the
part of the holders thereof, each share of Allright Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares held in
treasury, as described below), shall be cancelled and converted into and
represent the number of shares of Central Parking Common Stock equal to the
Exchange Ratio. All capital stock held in the treasury of Allright or held by
any of Allright's subsidiaries shall be cancelled and cease to exist and no
payment shall be made in respect thereof. At the Effective Time, all rights of
outstanding shares of Allright Common Stock shall cease to exist, other than the
right to receive Central Parking Common Stock.
The Exchange Ratio equals (i) the Equity Purchase Price (as defined below),
divided by (ii) $46.00, divided by (iii) the number of shares of Allright Common
Stock outstanding as of the Effective Time plus the number of shares of Allright
Common Stock issuable pursuant to outstanding Allright Options and outstanding
and unexercised warrants granted by Allright to purchase shares of Allright
Common Stock (each an "Allright Warrant") immediately prior to the Effective
Time. The outstanding Allright Common Stock excludes any shares of
78
<PAGE> 86
Allright Common Stock issued or issuable to a seller in exchange for assets in
connection with an acquisition permitted under the Merger Agreement,
The "Equity Purchase Price" equals $564,390,050:
Plus:
<TABLE>
<S> <C>
(i) the Acquisition Expenses (as defined below),
(ii) the excess, if any, of $5 million over the Covered
Transaction Expenses (as defined below),
(iii) the Working Capital Adjustment (as defined below),
(iv) the aggregate exercise price of all outstanding and
unexercised Allright Warrants or Allright Options which are
not ISOs (as defined below) as of the Closing Date, and
(v) any Divestiture Gain (as defined below),
Less:
(i) the principal amount of any long-term debt and capitalized
lease obligations of Allright, excluding current portions,
as of the Closing Date and assumed by Central Parking or
Central Parking Sub pursuant to the Merger,
(ii) the excess, if any, of the Covered Transaction Expenses (as
defined below) over $5 million,
(iii) any EBITDA Adjustment (as defined below),
(iv) any Divestiture Loss (as defined below),
(v) any net proceeds from the permitted sale, lease, transfer or
disposition of any property or assets, and
(vi) any Excess Severance (as defined below).
</TABLE>
The calculation of the Equity Purchase Price will be set forth in a closing
statement, that will be prepared by Allright based on its good faith estimates
of the amounts indicated and provided to Central Parking for its review and
approval (which shall not be unreasonably withheld), not less than five business
days prior to the Closing Date. Allright shall use its best efforts to deliver
to Central Parking as soon as possible (but no later than fifteen business days
prior to the Closing Date), Allright's audited financial statements for the
fiscal year ended June 30, 1998, Allright's Actual EBITDA (as defined below),
the Acquired Facility EBITDA (as defined below) and the Non-Acquired EBITDA (as
defined below).
The "Acquisition Expenses" means the aggregate amount paid by Allright through
the Closing in respect of any and all acquisitions of parking facilities after
April 30, 1998 and any and all capital expenditures incurred in connection with
such acquisitions and leases entered into after April 30, 1998.
"Covered Transaction Expenses" include, without duplication, any and all
out-of-pocket expenses of Allright, Apollo and AEW, incurred in connection with
the Merger or the other transactions contemplated by the Merger Agreement, to
the extent that such expenses have been paid or are accrued on the closing
statement. AEW and Apollo will list all such expenses on the closing statement.
The "Working Capital Adjustment" equals: (i) the amount of working capital
surplus or deficit of Allright and its consolidated subsidiaries as set forth on
its most recent available balance sheet (which shall not be dated more than 50
calendar days prior to the Closing Date), reduced by the amount of any portion
of any acquisitions not financed from additional debt or equity proceeds
subsequent to such balance sheet date and which shall be determined in
accordance with GAAP applied on a consistent basis with Allright's historical
financial
79
<PAGE> 87
statements, plus (ii) $6 million. Any items reflected as Covered Transaction
Expenses or as an adjustment pursuant to any other item above used to calculate
the Equity Purchase Price shall be excluded in calculating the working capital
deficit or surplus for the purposes of determining the Working Capital
Adjustment. The Working Capital Adjustment may only be a negative number or
zero.
"EBITDA Adjustment" equals (i) if Allright's EBITDA (as defined below)
calculated from Allright's audited financial statements for the fiscal year
ended June 30, 1998 ("Allright's Actual EBITDA"), minus the EBITDA attributable
to those parking facilities acquired by Allright or any subsidiary after April
30, 1998, to the extent the EBITDA attributable to such parking facilities was
included in Allright's Actual EBITDA (the "Acquired Facility EBITDA", and the
difference between Allright's Actual EBITDA and the Acquired Facility EBITDA,
the "Non-Acquired EBITDA"), is equal to or greater than $34.0 million, $0, and
(ii) if the Non-Acquired EBITDA is less than $34.0 million the difference
between the $34.0 million and the Non-Acquired EBITDA (the "EBITDA Shortfall"),
times 16.
For purposes of computing Allright's Actual EBITDA, the EBITDA shall be derived
in accordance with GAAP consistently applied from Allright's audited financial
statements for the fiscal year ended June 30, 1998 and shall not include the
following expenses: the Covered Transaction Expenses and expenses incurred in
connection with the Merger, payments made for the retention, employment and
management continuity agreement bonuses and any other charges related to
Allright Options or Allright Warrants used to compute the Exchange Ratio, or
charges for asset impairments and expenses associated with other liabilities
mutually agreed to by Allright and Central Parking. In addition, Allright's
Actual EBITDA shall not include any gains or losses attributable to the sale of
any assets, and any minority interest expense deducted to calculate EBITDA shall
be reinstated when computing Allright's Actual EBITDA. The details used to
calculate Allright's Actual EBITDA shall be included as part of the closing
statement.
"Divestiture Gain" equals thirty-five percent multiplied by the difference
between (i) the appraised value of such property or operations, as determined by
an appraiser, and (ii) 16 times the EBITDA for such property or operations at
such facility for such property's or facility's prior fiscal year. If such
number is a negative number, such amount is a "Divestiture Loss."
"Excess Severance" equals the excess of the aggregate severance obligations of
Allright or its subsidiaries (excluding any reasonable and customary severance
obligations contained in provisions of any employment or severance agreement
entered into in connection with any acquisition of a parking facility or
parking-related entity after the date of the signing of the Merger Agreement)
over $6.3 million.
NO FRACTIONAL SHARES
No fractional shares of Central Parking Common Stock shall be issued pursuant to
the Merger Agreement. In lieu of any such fractional share of Central Parking
Common Stock, Central Parking shall pay to each former Allright shareholder
$46.00 times the fractional share of Central Parking Common Stock to which such
holder would otherwise be entitled.
CERTAIN ADJUSTMENTS
If after the date of the Merger Agreement and on or prior to the Closing Date,
Central Parking issues additional shares through any reclassification,
recapitalization, split-up, combi-
80
<PAGE> 88
nation or exchange of shares, or any dividend payable in stock or other
securities is declared with a record date within such period, or any similar
event occurs, the number of shares to which an Allright shareholder is entitled
to receive will be adjusted accordingly to provide the same economic effect as
contemplated by the Merger Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend or similar event.
TREATMENT OF STOCK OPTIONS AND WARRANTS
At the Effective Time, each Allright Option which is outstanding and unexercised
will cease to represent an Allright Option and will be converted automatically
into an option to purchase shares of Central Parking Common Stock (each, a
"Central Parking Option"). The number of shares of Central Parking Common Stock
to be subject to the new Central Parking Option shall be equal to the product of
the number of shares of Allright Common Stock subject to the original Allright
Option and the Exchange Ratio, provided that any fractional shares of Central
Parking Common Stock resulting from such multiplication shall be rounded down to
the nearest share. The exercise price per share of Central Parking Common Stock
under the new Central Parking Option shall be equal to the exercise price per
share of Allright Common Stock under the original Allright Option divided by the
Exchange Ratio, provided that the resulting exercise price shall be rounded up
to the nearest cent. The duration and other terms of the Central Parking Options
shall be the same as the Allright Options except that all references to Allright
shall be deemed to be references to Central Parking. At the Effective Time, the
Allright Options Plan shall be assumed by Central Parking and, following the
Effective Time, Central Parking shall take all steps necessary to provide that
shares of Central Parking Common Stock issuable upon the exercise of all
outstanding Central Parking Options shall be covered by an effective
registration statement as soon as practicable after the Effective Time.
If any Allright Options are intended to be "incentive stock options" (as defined
in Section 422 of the Code)("ISOs"), the exercise price, the number of shares
and the terms and conditions of exercise of the Central Parking Options issued
in exchange therefor shall be determined in order to comply with Section 424(a)
of the Code.
At the Effective Time, each outstanding and unexercised Allright Warrant shall
cease to represent a right to acquire shares of Allright Common Stock and shall
be converted automatically into a warrant to purchase shares of Central Parking
Common Stock (each, a "Central Parking Warrant"). The number of shares of
Central Parking Common Stock subject to the Central Parking Warrant shall equal
the number of shares of Allright Common Stock subject to the original Allright
Warrant times the Exchange Ratio, rounded down to the nearest share. The
exercise price per share of Central Parking Common Stock under the new Central
Parking Warrant shall be equal to the exercise price per share of Allright
Common Stock under the original Allright Warrant divided by the Exchange Ratio,
rounded up to the nearest cent.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains certain customary mutual representations and
warranties relating to, among other things, (i) due organization, good standing
and requisite power and authority; (ii) enforceability; (iii) identity and
structure of subsidiaries; (iv) non-contravention; (v) governmental consents;
(vi) capital structure; (vii) organization and qualification of subsidiaries;
(viii) financial statements and, for Central Parking, Commission filings; (ix)
absence of undisclosed liabilities; (x) absence of certain changes or events;
(xi) litigation
81
<PAGE> 89
matters; (xii) certain items regarding employee benefits and employee plans;
(xiii) properties and contracts; (xiv) certain tax matters; (xv) compliance
matters; (xvi) environmental matters; (xvii) labor and employment matters;
(xviii) insurance matters; (xix) accounting treatment of the Merger; and (xx)
for Allright, intellectual property matters.
CERTAIN COVENANTS
Conduct of Business by Allright. Allright has covenanted and agreed that,
except (i) in certain circumstances as previously disclosed in writing to
Central Parking; (ii) with the consent of Central Parking; or (iii) as
contemplated by the Merger Agreement,
(a) Allright will operate in the ordinary course of business, consistent
with past practice;
(b) Allright will not change its Certificate of Incorporation or Bylaws
or other constituent documents of Allright or any of its subsidiaries;
(c) Allright will not, except in the ordinary course of business
consistent with past practices, materially increase the compensation
payable or to become payable to any officer, employee, consultant or agent
or grant any bonus or retirement or similar benefit or arrangement;
(d) subject to certain exceptions, Allright will not make a capital
expenditure or commitment to make a capital expenditure in excess of $1.2
million in the aggregate per quarter;
(e) Allright will not enter into or renew a lease which involves the
payment of more than $500,000 annual rent (in the event that Central
Parking refuses to consent to any proposed lease pursuant to this clause
(e), Central Parking will not enter into any transaction concerning the
subject matter of such proposed lease);
(f) Allright will not acquire any business or acquire any equity
interest in any person not an affiliate for more than $100,000 individually
or $1.0 million in the aggregate with all other such acquisitions (in the
event that Central Parking refuses to consent to any proposed transaction
pursuant to this clause (f), Central Parking will not enter into a
transaction concerning the subject matter of such proposed transaction);
(g) except for borrowings under credit facilities or lines of credit
existing on September 21, 1998 or incurred to finance permitted
expenditures or acquisitions permitted pursuant to clauses (d), (e) or (f)
above, Allright will not incur any indebtedness or issue any debt
securities or assume, guarantee or endorse, or otherwise become responsible
for the obligations of any person, or make any loans, advances or capital
contributions to, any person other than its wholly owned subsidiaries,
except in the ordinary course of business consistent with past practice;
(h) to the extent reasonably practicable, Allright will maintain the
business organization of Allright and its subsidiaries, the opportunity for
Central Parking to retain the services of the present employees of Allright
and the goodwill of the customers and others having business relations with
Allright;
(i) Allright will not take any action or fail to take any action that
would, or would be reasonably likely to, result in any of Allright's
representations and warranties set forth in the Merger Agreement not being
true in all material respects;
82
<PAGE> 90
(j) Allright will use its reasonable best efforts to comply with all
material legal requirements applicable to it and to the conduct of its
business;
(k) after consultation with Arthur Andersen LLP, Allright will not sell,
lease, transfer or dispose of any properties not in the ordinary course of
business and provided such sale does not, in the reasonable opinion of
Arthur Andersen, jeopardize the Merger from being qualified as a pooling of
interests transaction; and
(l) Allright and its subsidiaries will not declare any dividend or make
any distribution with respect to their capital stock or partnership
interest which is not made to minority interest holders or partners
pursuant to existing agreements, or which is not in the ordinary course of
business.
In the event Central Parking does not provide a written refusal for Allright to
enter into any transaction proposed above within five business days after
receiving notification of such proposal (with data reasonably requested by
Central Parking to evaluate such proposal), Central Parking shall be deemed to
have consented to such proposed transaction, and Allright may enter into any
such proposed transaction as if Central Parking had provided its written
consent.
Conduct of Business by Central Parking. Central Parking has covenanted and
agreed that, except (i) in certain circumstances as previously disclosed in
writing to Allright; (ii) with the consent of Allright; or (iii) as contemplated
by the Merger Agreement,
(a) Central Parking will operate in the ordinary course of business
consistent with past practice;
(b) Central Parking will not change the Central Parking Charter or
Bylaws or other constituent documents of Central Parking or any
subsidiaries;
(c) Central Parking will not spend more than $20 million individually or
$75 million in the aggregate to purchase or otherwise acquire real estate
or fixed or capital assets, except for any such asset acquired in
connection with normal replacement and maintenance programs properly
charged to current operations or pursuant to or as required by existing
contractual obligations and except as to the renewal of presently existing
leases which are scheduled to expire according to their respective terms;
(d) Central Parking will not take any action to acquire any business or
acquire any equity interest in any person not an affiliate for more than
$20 million individually or $75 million in the aggregate with all other
such acquisitions (in the event that Allright refuses to consent to any
proposed transaction pursuant to this clause (d), Allright shall refrain
from entering into a transaction concerning the subject matter of such
proposed transaction);
(e) except for borrowings under credit facilities or lines of credit
existing on September 21, 1998 or incurred to finance expenditures or
acquisitions permitted pursuant to clauses (c) or (d) above, or pursuant to
the transactions contemplated by the Merger Agreement, Central Parking will
not incur any indebtedness or issue any debt securities or assume,
guarantee or endorse, or otherwise become responsible for the obligations
of any person, or make any loans, advances or capital contributions to, any
person other than its wholly owned subsidiaries, except in the ordinary
course of business consistent with past practice;
83
<PAGE> 91
(f) Central Parking will not take any action or fail to take any action
that would, or would be reasonably likely to, result in any of Central
Parking's and Central Parking Sub's representations and warranties set
forth in the Merger Agreement not being true in all material respects;
(g) Central Parking will use its reasonable best efforts to comply with
all material legal requirements applicable to it and to the conduct of its
business;
(h) after consultation with KPMG Peat Marwick LLP, Central Parking will
not sell, lease transfer or dispose of any of its properties to the extent
such sale may, in the reasonable opinion of KPMG Peat Marwick LLP,
jeopardize the Merger from being qualified as a pooling of interests
transaction; and
(i) other than regular quarterly dividends distributed in the normal
course of business, Central Parking will not declare, set aside or pay any
dividends on (whether in cash, stock or other securities), make any other
distributions in respect of, or enter into any agreement with respect to
the voting of, any of its capital stock or the capital stock, partnership
interests, membership interests or other equity, as the case may be, of its
subsidiaries, or split, combine, issue, authorize for issuance, exchange or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities, except for (x) issuances of Central Parking Common
Stock to a seller or sellers for acquisitions permitted under clause (d)
above, (y) upon the exercise of any stock options for Central Parking
Common Stock that are, in each case, outstanding as of September 21, 1998
in accordance with their present terms or (z) the issuance of Central
Parking Common Stock or Central Parking Options under any plans in the
ordinary course of business.
In the event Allright does not provide a written refusal for Central Parking to
enter into any transaction above within five business days after receiving
notification of such proposal (with data reasonably requested by Allright to
evaluate such proposal), Allright shall be deemed to have consented to such
proposed transaction (other than transactions pursuant to clause (i) of the
above paragraph, for which affirmative consent is necessary) and Central Parking
may enter into any such proposed transaction as if Allright had provided written
consent.
Special Meetings. Pursuant to the Merger Agreement, Central Parking has agreed
to give notice of, convene and hold a meeting of its shareholders in accordance
with the Tennessee Business Corporation Act ("TBCA") and the requirements of the
NYSE for the purpose of obtaining Central Parking shareholders' approval of the
Merger Agreement and the transactions contemplated thereby in accordance with
the TBCA and the rules and regulations of the NYSE.
Allright has agreed to either (i) give notice of, convene and hold a meeting of
its shareholders in accordance with the DGCL or (ii) obtain an action by written
consent, executed by the requisite percentage of Allright shareholders and in
accordance with the DGCL, for the purpose of obtaining Allright's shareholders
approval in connection with the Merger in accordance with the DGCL.
Investigation; Non-Solicitation. Each of Central Parking and Allright have
agreed to afford to one another's officers, employees, accountants, counsel and
other authorized representatives reasonable access during normal business hours
to its and its respective subsidiaries' properties, contracts, commitments,
books and records and any report, schedule or other document filed or received
by it pursuant to the requirements of federal or state securities laws
84
<PAGE> 92
and each has agreed to use its reasonable best efforts to cause its respective
representatives to furnish promptly to one another such additional financial and
operating data and other information as to its and its subsidiaries' respective
businesses and properties as the other may from time to time reasonably request
in writing; provided, however, that nothing requires either Central Parking or
Allright or any of their respective subsidiaries to disclose any information to
the other if such disclosure would cause competitive harm to such disclosing
party (in such party's reasonable judgment) or its affiliates if the
transactions contemplated by the Merger Agreement are not consummated, or would
be in violation of applicable laws or regulations of any governmental entity;
provided further, that notwithstanding the above, Allright has agreed to allow
Central Parking and its representatives reasonable access to information
concerning, and Allright has agreed to meet with Central Parking and its
representatives in connection with, (i) any $50,000 Leases, which are scheduled
to expire within six months of the Closing Date, (ii) any $50,000 Lease for
which Allright has knowledge (based on reasonable information) that the
respective landlord has asserted or has threatened to assert a breach of any
consent or assignment provision contained in such lease as a result of the
Merger, and (iii) the retention of key management personnel. A representative
appointed by Allright shall be present at any meeting between Allright,
Allright's subsidiaries or any of their respective employees, directors and
officers, on the one hand, and Central Parking, any of Central Parking's
subsidiaries or any of their respective employees, directors and officers, on
the other hand. Unless otherwise required by law and until the Effective Time,
the parties have agreed to hold any such information which is nonpublic in
confidence in accordance with the provisions of the Confidentiality Agreements
between Central Parking and Allright, dated as of January 30, 1998 and May 19,
1998 (the "Confidentiality Agreements"). AEW and Apollo have agreed to
reasonably cooperate, at Central Parking's request and expense, in connection
with the retrieval of records or other documentation which AEW and Apollo have
in their possession regarding Allright's ability to utilize any net operating
loss carry-forwards.
Approvals and Consents; Cooperation; Notification. The parties have agreed to
use their respective best efforts, and cooperate with each other, to obtain as
promptly as practicable all governmental and third party authorizations,
approvals, consents or waivers required in order to consummate the transactions
contemplated by the Merger Agreement, including, without limitation, the Merger.
The parties have agreed to take all actions necessary to file as soon as
practicable all notifications, filings and other documents required to obtain
all governmental authorizations, approvals, consents or waivers, including,
without limitation, under the HSR Act, and to respond as promptly as practicable
to any inquiries received from the FTC, the Antitrust Division of the Department
of Justice or any other governmental entity for additional information or
documentation and to respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other governmental entity
in connection therewith. The HSR Act filings were made by both Allright and
Central Parking on October 8, 1998.
If any divestiture of property or operations at a particular parking facility is
necessary in order to terminate the waiting period required by the HSR Act in
connection with the Merger, Central Parking and Allright agree to retain a
mutually agreeable real estate appraisal firm for the purpose of appraising
those facilities or operations which must be divested. In connection therewith,
the Equity Purchase Price as set forth above under "-- Conversion of Securities;
Merger Consideration" shall be adjusted for any Divestiture Gain or Divestiture
Loss. See "-- Conversion of Securities; Merger Consideration."
85
<PAGE> 93
Central Parking Board of Directors. Promptly after the Effective Time, the
Central Parking Board shall be expanded to eleven members. At such time, Apollo
and AEW shall each be entitled, in its sole discretion, to designate one
individual to the Central Parking Board, who shall serve in accordance with and
for the time period specified by the Certificate of Incorporation and Bylaws of
Central Parking. Apollo and AEW have indicated that their designees will be
William S. Benjamin and Marc L. Davidson, respectively. If at any time Apollo or
AEW, with their respective affiliates, individually own, directly or indirectly,
less than $50 million worth of outstanding Central Parking Common Stock, Central
Parking shall, at the next election of the Central Parking Board, have the right
to decrease the number of appointees to the Central Parking Board with respect
to such holder. For purposes of the foregoing, the value of the Central Parking
Common Stock held by Apollo and AEW, together with their respective affiliates,
shall be determined by multiplying the number of shares of Central Parking
Common Stock then beneficially owned by such holders by the average of the
closing sale prices per share of Central Parking Common Stock on the NYSE for
the prior 20 trading days.
Public Announcements. Other than disclosures required by federal securities
laws, the parties have agreed to consult with each other before issuing any
press release or otherwise making any public statement with respect to the
Merger Agreement and the transactions contemplated thereby and will not make any
such announcement if the other party thereto shall reasonably object.
Tax Treatment of Merger. It is the intent of the parties that the Merger be
treated for federal income tax purposes as a tax-free reorganization pursuant to
Section 368(a) of the Code and that the Merger Agreement shall constitute a
"Plan of Reorganization" for purposes of the Code, and the parties have agreed
(i) not to take any actions which would prevent the Merger from qualifying as
such a reorganization, (ii) to report the transactions under the Merger
Agreement consistent with such treatment and (iii) to take no positions that are
contrary thereto unless otherwise required by law.
Expenses; Severance. All out-of-pocket transaction costs and expenses incurred
by Central Parking or any of its subsidiaries in connection with the Merger
Agreement and the transactions contemplated thereby, whether or not the Merger
is consummated, shall be paid by Central Parking, and all Covered Transaction
Expenses incurred by Allright, any subsidiary, AEW and Apollo in connection with
the Merger Agreement and the transactions contemplated thereby, if the Merger is
consummated, shall be paid by Allright. If the Merger is not consummated,
Allright, its subsidiaries, AEW and Apollo shall be responsible for their own
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby. Notwithstanding the foregoing, if the Merger is not
consummated solely by reason of a material breach of this Agreement by Allright,
Allright has agreed to pay any and all out-of-pocket transaction costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby of Central Parking and Central Parking Sub up to a maximum
of $5 million. If the Merger is not consummated solely by reason of a material
breach of the Merger Agreement by Central Parking, Central Parking has agreed to
pay any and all out-of-pocket transaction costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
of Allright, any subsidiary, AEW and Apollo up to a maximum of $5 million.
Notwithstanding anything to the contrary herein, if the Merger is not
consummated as a result of the fact that either KPMG or Arthur Andersen failed
to issue a letter concerning the pooling of interests qualification of the
Merger, the party whose accountant was unable to deliver its pooling letter
86
<PAGE> 94
as required therein shall pay to the other party an amount of $2.5 million for
expenses incurred in connection with the execution of the Merger Agreement;
provided, neither party shall be liable for such expenses if it had not breached
a representation, warranty or covenant therein. If the Merger is consummated,
Central Parking shall be solely responsible for any obligation and payment to be
made under any severance agreement, retention agreement, stay-on bonus,
non-compete agreement, compensation plan or severance or retention provision of
any employment, non-compete or retention agreement which is incurred as a result
of the entering into of the Merger Agreement, including but not limited to
payments required to be made immediately after the Effective Time pursuant to
retention bonus agreements. Allright has agreed to use its reasonable best
efforts to cause certain persons to enter into the retention bonus agreements
and employment agreements and management continuity agreements with Allright.
Central Parking has agreed to cause Allright to enter into such employment
agreements and management continuity agreements at such time.
Employment Matters. Central Parking has agreed to honor Allright's existing
employee benefit plans, to the same extent that Allright and its subsidiaries
would be required to perform them in the event that the Merger was not
consummated. Central Parking has agreed to honor, comply with and perform all of
the respective terms and all obligations of Allright under any severance
agreement, retention agreement or employment agreement previously disclosed to
Central Parking. Central Parking has also agreed to provide severance to those
employees of Allright who will be terminated after the Closing Date and who do
not have severance agreements or severance provisions in any employment
agreements in effect with Allright as of the Closing Date on terms not less
favorable than it would provide to any of its similarly situated employees.
Individuals who are employed by Allright immediately prior to the Closing Date
shall remain employees of the surviving corporation immediately following the
Closing Date (each such employee, an "Affected Employee"); provided, however,
that nothing shall limit or otherwise restrict the ability of the surviving
corporation to terminate, lay-off or reduce the work hours with respect to the
employment of any Affected Employees following their initial continued
employment following the Effective Time. Affected Employees will be given full
credit, for purposes of eligibility, vesting, benefit accrual and determination
of the level of benefits under any employee benefit plans or arrangements
maintained by Central Parking or the surviving corporation, for such Affected
Employees' service with Allright to the same extent recognized by Allright
immediately prior to the Closing Date, provided however that the Affected
Employees' eligibility to participate in, and benefits under, such plans and
arrangements shall otherwise be determined under the terms of such plans.
Central Parking has agreed to (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Affected Employees under any welfare
benefit plans that such employees may be eligible to participate in after the
Closing Date, other than limitations or waiting periods that are already in
effect with respect to such employees and that have not been satisfied as of the
Closing Date under any welfare plan maintained for the Affected Employees
immediately prior to the Closing Date and (ii) provide each Affected Employee
with credit for any co-payments and deductibles paid prior to the Closing Date
in satisfying any applicable deductible or out-of-pocket requirements under any
welfare plans that such employees are eligible to participate in after the
Closing Date. For a period of two years immediately following the Closing Date,
the coverage and benefits provided to Affected Employees pursuant to employee
benefit plans or arrangements maintained by Central Parking or the surviving
corporation shall be, in the aggregate, not less favorable than those provided
to similarly situated employees of Central Parking and the surviving
corporation.
87
<PAGE> 95
Indemnification, Exculpation and Insurance. Central Parking and Central Parking
Sub agreed that all rights to indemnification and exculpation from liabilities
for acts or omissions occurring at or prior to the Effective Time now existing
in favor of the current or former directors, officers, employees or agents of
Allright as provided in its certificate of incorporation or bylaws and any
indemnification agreements or arrangements of Allright, the existence of which
does not cause a breach of the Merger Agreement shall be assumed by Central
Parking, shall survive the Merger and shall continue in full force and effect,
without amendment, for six years after the Effective Time; provided, however,
that all rights to indemnification in respect of any claim asserted or made
within such period shall continue until the final disposition of such claim.
Central Parking has agreed to cooperate in the defense of any such matter. In
addition, from and after the Effective Time, directors or officers of Allright
who become directors or officers of Central Parking or any subsidiary will be
entitled to the same indemnity rights and protections as are afforded to other
directors and officers of Central Parking or such subsidiary.
For six years after the Effective Time, Central Parking or the surviving
corporation has agreed to maintain in effect Allright's current directors' and
officers' liability insurance covering acts or omissions occurring prior to the
Effective Time with respect to those persons who are currently covered by such
directors' and officers' liability insurance policy on terms with respect to
such coverage and amount no less favorable in the aggregate than those of such
policy in effect on the date of the signing of the Merger Agreement; provided
that Central Parking may substitute policies of Central Parking containing terms
no less favorable to such directors or officers or, in the alternative, Central
Parking may purchase a "tail" on Allright's existing insurance policy for a term
of not less than six years.
NYSE Listing. Central Parking will use best efforts to cause the Central
Parking Common Stock issuable pursuant to the Merger to be approved for listing
on the NYSE, subject to official notice of issuance as promptly as practicable,
and in any event prior to the Closing Date.
Affiliates. Allright and Central Parking have agreed to use their reasonable
best efforts to cause all persons who, at the time of the Central Parking
Special Meeting, may be deemed to be affiliates of Allright as that term is used
under Rule 145 under the Securities Act and who will become the beneficial
owners of Central Parking Common Stock pursuant to the Merger, or affiliates of
Allright or Central Parking for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting Principles
Board ("APB 16") and applicable Commission rules and regulations, to execute
"affiliate letters" in customary form prior to the Effective Time. In addition,
Central Parking has agreed to use its reasonable best efforts to publish on the
earliest possible date after the end of the first month after the Effective Time
in which there are at least 30 days of post-Merger combined operations (which
month may be the month in which the Effective Time occurs), combined sales and
net income figures as contemplated by and in accordance with the terms of
Commission Accounting Series Release No. 135.
Pooling of Interests. Each of Allright and Central Parking have agreed to use
reasonable best efforts to cause the transactions contemplated by the Merger
Agreement and the Registration Rights Agreement, including the Merger, to be
accounted for as a pooling of interests under APB 16 and applicable Commission
rules and regulations, and such accounting treatment to be accepted by Central
Parking's accountants and by the Commission, and each of Allright and Central
Parking agreed not to take any action that would cause such
88
<PAGE> 96
accounting treatment not to be obtained. Any breach by the Central Parking
shareholders under the Transaction Support Agreements with respect to certain
obligations shall be deemed a breach of the Merger Agreement by Central Parking.
Conveyance Taxes. Allright and Central Parking have agreed to cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees or any similar taxes which become payable in
connection with the transactions contemplated by the Merger Agreement that are
required or permitted to be filed on or before the Effective Time. Allright has
agreed to pay any such taxes or fees imposed by any governmental entity, which
become payable in connection with the transactions contemplated by the Merger
Agreement, on behalf of the Allright shareholders and Central Parking
shareholders.
Registration Rights Agreement. Central Parking has agreed to not amend the
Registration Rights Agreement, or agree to give the Central Parking shareholders
additional registration rights at any time that AEW or Apollo shall have
registration rights under the Registration Rights Agreement, without the prior
written consent of AEW and Apollo.
CONDITIONS TO CONSUMMATION OF THE MERGER
Mutual Conditions. The respective obligations of each party to effect the
Merger are subject to the satisfaction or, where permissible, waiver of each of
the following conditions:
(a) the Central Parking shareholder approval shall have been obtained;
(b) none of Allright, Central Parking or Central Parking Sub shall be
subject to any order, decree, ruling or other action of a court of
competent jurisdiction which restrains, delays or otherwise prohibits the
transactions contemplated by this Agreement;
(c) the registration statement on Form S-4 shall have become effective
(reflecting pooling of interests accounting treatment) under the Securities
Act prior to the mailing of this Joint Proxy Statement/Prospectus by
Central Parking and no stop order or proceedings seeking a stop order shall
have been entered or be pending by the Commission;
(d) the shares of Central Parking Common Stock issuable to the Allright
shareholders pursuant to the Merger shall have been approved for listing on
the NYSE, subject to official notice of issuance; and
(e) any waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
Central Parking Conditions. The obligations of Central Parking and Central
Parking Sub to effect the Merger shall be subject to the following conditions:
(a) the representations and warranties of Allright set forth in the
Merger Agreement shall be true and correct when made and as of the Closing
Date (except to the extent that any such representation and warranty had by
its terms been made as of a specific date, in which case such
representation and warranty shall be true and correct as of such date), and
Allright shall have performed the obligations to be performed by it under
the Merger Agreement prior to the Closing Date, except where the failure to
be so true and correct, and all failures to perform and comply with such
obligations, does not and will not have, in the aggregate, an Allright
material adverse effect;
89
<PAGE> 97
(b) there shall not have occurred any Allright material adverse effect
since the date of the Merger Agreement;
(c) Central Parking shall have received an officer's certificate
evidencing compliance with certain matters;
(d) Central Parking shall have received an opinion from KPMG Peat
Marwick LLP, tax advisor to Central Parking, in form and substance
reasonably satisfactory to Central Parking, dated as of the Closing Date,
substantially to the effect that, among other things, the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a);
(e) Central Parking shall have received an opinion from Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to Allright, in form and substance
reasonably satisfactory to Central Parking and its counsel;
(f) Allright shall have delivered to Central Parking Allright's audited
financial statements prepared in accordance with GAAP for the fiscal year
ended June 30, 1998;
(g) Allright shall have provided to Central Parking a letter from Arthur
Andersen LLP, stating their belief that Allright qualifies as a "combining
company" in accordance with the criteria set forth in paragraph 46 of APB
16 and has not violated the criteria set forth in paragraph Nos. 47c, 47d
and 48c of APB 16 during the period extending from two years preceding the
initiation date of the Merger and the Closing Date, and KPMG Peat Marwick
LLP shall have delivered a letter to Central Parking, stating their belief
that there are no conditions which exist which would preclude Central
Parking from accounting for the Merger as a pooling of interests pursuant
to APB 16; and
(h) AEW and Apollo shall have executed and delivered to Central Parking
the Noncompetition Agreement.
Allright Conditions. The obligations of Allright to effect the Merger shall be
subject to the following conditions:
(a) the representations and warranties of Central Parking and Central
Parking Sub set forth in the Merger Agreement shall be true and correct
when made and as of the Closing Date (except to the extent that any such
representation and warranty had by its terms been made as of a specific
date, in which case such representation and warranty shall be true and
correct as of such date), and Central Parking and Central Parking Sub shall
have performed the obligations to be performed by each under the Merger
Agreement prior to the Closing Date, except where the failure to be so true
and correct, and all failures to perform and comply with such obligations,
does not and will not have, in the aggregate, a Central Parking material
adverse effect;
(b) there shall not have occurred any Central Parking material adverse
effect since the date of the Merger Agreement;
(c) Allright shall have received an officer's certificate evidencing
compliance with certain matters;
(d) Allright shall have received an opinion from Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to Allright, in form and substance reasonably
satisfactory to Allright, dated as of the Closing Date, substantially to
the effect that, among other
90
<PAGE> 98
things, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code;
(e) Allright shall have received an opinion from Harwell, Howard, Hyne,
Gabbert & Manner, P.C., counsel to Central Parking, in form and substance
reasonably satisfactory to Allright and its counsel; and
(f) Central Parking shall have provided to Allright a letter from KPMG
Peat Marwick LLP, stating their belief that no condition exists which would
preclude Central Parking from accounting for the Merger as a pooling of
interests pursuant to APB 16, and Arthur Andersen LLP shall have delivered
a letter to Allright, stating their belief that Allright qualifies as a
"combining company" in accordance with the criteria set forth in paragraph
46 of APB 16 and has not violated the criteria set forth in paragraph Nos.
47c, 47d and 48c of APB 16 during the period extending from two years
preceding the initiation date of the Merger and the Closing Date.
TERMINATION; NON-CONSUMMATION
The Merger Agreement may be terminated at any time prior to the Effective Time:
(a) by mutual agreement of all of the parties thereto; (b) by Allright or
Central Parking upon notice given to the other in the event that the other
shall, contrary to the terms of the Merger Agreement, fail or refuse to
consummate the transactions contemplated thereby or to take any other action
referred to therein necessary to consummate the transactions contemplated
thereby, after affording such defaulting party a thirty-day period after notice
in which to cure; (c) by Allright or Central Parking upon notice given to the
other if the Closing shall not have taken place on or before January 19, 1999
(which will be extended to February 8, 1999 if the Registration Statement is not
declared effective by January 19, 1999 solely because of Allright's failure to
deliver its June 30, 1998 audited financial statements by September 30, 1998) or
such later date as Allright and Central Parking shall have agreed; provided that
the failure of the Closing to occur on or before such date is not the result of
the breach of the covenants, agreements, representations or warranties hereunder
of the party seeking such termination, and provided further that if the Closing
has not taken place due solely to the fact that the waiting period under the HSR
Act shall not have expired or been terminated, the period referred to above may
be extended at the option of either Allright or Central Parking for an
additional 60 days; or (d) by Allright or Central Parking upon written notice to
the other party if any court or governmental authority of competent jurisdiction
shall have issued a final permanent order, enjoining or otherwise prohibiting
the transactions contemplated by the Merger Agreement.
EFFECT OF TERMINATION; NON-COMPETITION
In the event of the termination of the Merger Agreement, the Merger Agreement
shall forthwith become wholly void and of no further force and effect and, other
than in the event of a termination for certain breaches of the Merger Agreement,
there shall be no liability on the part of any of the parties hereto (with
certain exceptions), or their respective officers or directors. In the event of
the termination of the Merger Agreement arising from certain breaches of the
Merger Agreement, the terminating party shall be indemnified by the other party
for any or all damages, costs and expenses sustained or incurred as a result of
such termination. The obligations of the parties to the Merger Agreement under
certain sections of the Merger Agreement survive any termination. The terms of
the Confidentiality Agree-
91
<PAGE> 99
ments shall survive according to the terms contained therein, notwithstanding
the termination of the Merger Agreement.
Central Parking has agreed to not use any of the information obtained with
respect to Allright or any landlord of a property leased or managed by Allright
to compete, directly or indirectly, with Allright, whether with respect to
customers, suppliers, employees or with regard to pricing, distribution or
otherwise at any time after the date of the signing of the Merger Agreement
until the Effective Time. In addition, for a period of time as set forth below,
Central Parking has agreed to refrain from, directly and indirectly, making any
offer or proposal, or seeking or soliciting the opportunity, or responding to
any solicitation, or entering into any agreement to, operate, acquire, lease or
manage any parking facility which Allright operated, owned, leased or managed,
or is subject to a binding agreement (provided, in the case of a parking
facility subject to a binding agreement, only if such binding agreement was
disclosed to Central Parking) to do any of the foregoing, as of the date of the
Merger Agreement or the date of termination of the Merger Agreement, or
encouraging any owner, lessor, partner or customer with respect to such parking
facility to terminate or otherwise adversely modify its business relationship
with Allright in any matter whatsoever. In addition, for the time period set
forth below, Central Parking has agreed to refrain from directly or indirectly
employing, attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with Allright who was employed by
Allright either on the date of the Merger Agreement or on the date of
termination of the Merger Agreement. For the purposes above, in the event the
Merger is not consummated because the condition concerning the bring-down by
Allright of representations and warranties not being satisfied or the existence
of a Allright material adverse effect, or upon a material breach of the Merger
Agreement by Central Parking, the restrictions on Central Parking's ability to
conduct the above activities shall be for a period of three years, and if the
Merger is not consummated for any other reason, such restrictions shall be in
effect for a period of eighteen months.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
The representations, warranties and covenants of each of Allright, Central
Parking and Central Parking Sub made in the Merger Agreement shall survive until
the first anniversary of the Closing Date (the "Indemnity Period"), except for
certain representations and warranties made in connection with Allright's
financial statements and certain environmental matters, which shall not survive.
Generally, the representations, warranties and covenants shall not survive any
termination of the Merger Agreement. The parties intended to shorten the statute
of limitations and agreed that no claims or causes of action may be brought
against each of AEW, Apollo, Allright, Central Parking and Central Parking Sub
or any of its directors, officers, employees, affiliates, controlling persons,
agents or representatives based upon, directly or indirectly, any of the
representations, warranties or agreements contained in the Merger Agreement
after the Indemnity Period or, except as described in "-- Effect of Termination;
Noncompetition," any termination of the Merger Agreement.
From and after the Closing Date, AEW and Apollo have severally agreed to
indemnify and hold harmless, subject to the terms and conditions of the Merger
Agreement, Central Parking, the surviving corporation and their respective
directors, officers, employees, affiliates, controlling persons, agents and
representatives and their successors and assigns (collectively, the "Central
Parking Indemnitees") from and against all liability, demands, claims, actions
or causes of action, assessments, losses, damages, costs and expenses
(including,
92
<PAGE> 100
without limitation, reasonable attorneys' fees and expenses, but excluding any
such claims, losses or damages related to certain breaches of representations
and warranties concerning Allright's financial statements and certain
environmental matters) (collectively, "Central Parking Damages") asserted
against or incurred by any Central Parking Indemnitee as a result of or arising
out of a breach of any representation, warranty or covenant contained in the
Merger Agreement, when made and as of the Closing Date as though such
representation or warranty was made as of the Closing Date. Notwithstanding the
foregoing, AEW and Apollo shall not be liable for any breaches of
representations and warranties resulting in Central Parking Damages if Central
Parking or its representatives had knowledge of such breaches (based on
reasonable information) on the Closing Date. The obligations of AEW and Apollo
to indemnify the Central Parking Indemnitees with respect to a breach of a
representation, warranty or covenant contained in the Merger Agreement,
excluding breaches of certain representations and warranties concerning
Allright's financial statements and certain environmental matters, are subject
to the following limitations: (a) no indemnification shall be made by AEW or
Apollo unless the aggregate amount of Central Parking Damages exceeds $4
million, and then only for the amount by which the Central Parking Damages
exceed $4 million, and each of Apollo and AEW shall be liable for 50% of all
Central Parking Damages in excess of $4 million, in the aggregate, and not
exceeding $34 million, in the aggregate; provided, however, that AEW or Apollo
shall not be liable for the obligations of the other; and (b) AEW and Apollo
shall be obligated to indemnify the Central Parking Indemnitees only for those
claims giving rise to Central Parking Damages as to which the Central Parking
Indemnitees have given each of AEW and Apollo written notice thereof prior to
the end of the Indemnity Period.
From and after the Closing Date, Central Parking has agreed to indemnify and
hold harmless the shareholders of Allright as of the Closing Date (and, in the
case where such shareholders are not natural persons, their respective
directors, officers, employees, affiliates, controlling persons, agents and
representatives) and their permitted successors and assigns (collectively, the
"Allright Indemnitees") from and against all liability, demands, claims, actions
or causes of action, assessments, losses, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, "Allright Damages") asserted against or incurred by any Allright
Indemnitee as a result of or arising out of a breach of any representation,
warranty or covenant contained in the Merger Agreement, when made and as of the
Closing Date as though such representation or warranty was made as of the
Closing Date. Notwithstanding the foregoing, Central Parking shall not be liable
for any breaches of representations and warranties resulting in Allright Damages
if Allright had knowledge of such breaches (based on reasonable information) on
the Closing Date. The obligations of Central Parking to indemnify the Allright
Indemnitees with respect to a breach of a representation or warranty contained
in the Merger Agreement are subject to the following limitations: (a) no
indemnification shall be made by Central Parking unless the aggregate amount of
Allright Damages exceeds $4 million, and then only for the amount by which the
Allright Damages exceed $4 million and do not exceed $34 million, in the
aggregate; and (b) Central Parking shall be obligated to indemnify the Allright
Indemnitees only for those claims giving rise to Allright Damages as to which
the Allright Indemnitees have given Central Parking written notice thereof prior
to the end of the Indemnity Period.
From and after the Closing Date, AEW and Apollo have agreed to indemnify and
hold harmless the Central Parking Indemnitees from and against all liability,
demands, claims, actions or causes of action, assessments, losses, damages,
costs and expenses (including,
93
<PAGE> 101
without limitation, reasonable attorneys' fees and expenses, but excluding the
Central Parking Damages) (collectively, the "Environmental Damages" and,
together with the Central Parking Damages, the "Damages") asserted against or
incurred by any Central Parking Indemnitee solely with respect to those matters
contained in the report of Law Engineering & Environmental Services, Inc., dated
July 19, 1996 (the "Law Report"). The obligations of AEW and Apollo to indemnify
for these environmental matters terminate upon the thirty month anniversary of
the Closing Date (the "Environmental Indemnity Period"). The obligations of AEW
and Apollo to indemnify the Central Parking Indemnitees pursuant to this
paragraph are subject to the following limitations: (a) with respect to each
individual property, each of Apollo and AEW shall be liable up to a maximum of
25% of all Environmental Damages (the remaining 50% shall be the sole liability
and responsibility of Central Parking) described in the Law Report under the
column entitled "nominal cost" for that property, and in no event shall either
be liable for over $5 million, in the aggregate, for all properties, and in no
event shall AEW or Apollo be liable for the obligations of the other or Central
Parking hereunder; (b) AEW and Apollo shall be obligated to indemnify the
Central Parking Indemnitees only for those claims giving rise to Environmental
Damages as to which the Central Parking Indemnitees have given each of AEW and
Apollo written notice thereof prior to the end of the Environmental Indemnity
Period; and (c) no indemnification shall be made by AEW or Apollo for
environmental clean up costs incurred with respect to a particular property to
the extent such clean up costs are not (i) required to be incurred by the
Central Parking Indemnitees by a federal, state or local governmental or
regulatory agency or (ii) incurred by the Central Parking Indemnities in
connection with the sale or refinancing of such property to the extent required
by the buyer or the lender thereto, as the case may be.
All obligations for indemnification incurred by each of the indemnifying party
or parties, as the case may be, may be satisfied, by the payment of Central
Parking Common Stock in lieu of cash, provided, however, that Central Parking
shall satisfy any such obligation only through a payment of Central Parking
Common Stock to the extent required in order to qualify the Merger as a pooling
of interests transaction under APB 16. The value of a share of Central Parking
Common Stock delivered in lieu of cash shall be equal to the closing sale price
per share of Central Parking Common Stock on the NYSE on the Closing Date. In
addition, the amount of Damages and Allright Damages shall be net of (i) any
amounts recovered by the appropriate indemnitee under insurance policies, (ii)
any balance sheet reserves to the extent accounted for on the balance sheet
delivered in connection with the Working Capital Adjustment, and (iii) any
amounts recovered by the appropriate indemnitee pursuant to third party
indemnification agreements. The indemnitee must first seek recovery from such
insurance carrier or third party prior to seeking indemnification from an
indemnifying party. In addition, the indemnitee shall not adversely modify,
reduce coverage or terminate any existing insurance policy or third party
indemnification agreement prior to the expiration of the Indemnity Period or the
Environmental Indemnity Period, as applicable.
Subject to the terms and conditions set forth herein, AEW, Apollo and Central
Parking have agreed, with respect to an affiliated partnership (the
"Partnership"), of which an Allright subsidiary is a partner, that if the other
partners of the Partnership shall assert the right (the "Purchase Claim") to
purchase the entire interest of the Allright subsidiary which is a partner (the
"Allright Partner") in the Partnership, then Central Parking, AEW and Apollo
shall jointly make determinations regarding the defense or other disposition of
the Purchase
94
<PAGE> 102
Claim, including the terms of any disposition of the Allright Partner pursuant
to the Purchase Claim, and shall share in any Purchase Claim Costs (as defined
below) as follows: (i) each of AEW and Apollo shall be liable for 25% of the
first $4 million in Purchase Claim Costs up to a maximum obligation by each of
$1 million, and (ii) Central Parking shall be liable for 50% of the first $4
million in Purchase Claim Costs and 100% of any Purchase Claim Costs beyond $4
million. "Purchase Claim Costs" includes the difference, if any, between
approximately $2.3 million and the purchase price paid by such remaining partner
for the entire interest of the Allright Partner, determined in accordance with
the provisions of the Partnership Agreement of the Partnership plus any
documented out-of-pocket costs of Central Parking, AEW and Apollo in responding
to the Purchase Claim. Purchase Claim Costs shall not constitute Central Parking
Damages for any purposes under the Merger Agreement.
MISCELLANEOUS
Amendment. The Merger Agreement and schedules may be amended by the parties,
but only by an instrument or instruments in writing signed and delivered on
behalf of each of the parties.
Extension; Waiver. At any time prior to the Closing Date, any party to the
Merger Agreement may (a) extend the time for the performance of any of the
obligations or other acts of any of the other parties, (b) waive any inaccuracy
in the representations and warranties of any of the other parties contained in
the Merger Agreement, any schedule or in any document delivered pursuant
thereto, and (c) waive compliance with any of the agreements or conditions of
any of the other parties. Any agreement by a party to any such extension or
waiver shall be valid if in writing signed and delivered on behalf of such
party.
95
<PAGE> 103
REGISTRATION RIGHTS AGREEMENT
The following summary of the material provisions of the Registration Rights
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Registration Rights Agreement, a copy of which has been filed
as an Exhibit to the Form S-4 and is incorporated herein by reference. Holders
of Central Parking Common Stock and Allright Common Stock are urged to read the
Registration Rights Agreement carefully. Capitalized terms used in this section
but not defined in this Joint Proxy Statement/Prospectus shall have the meanings
attributed to them in the Registration Rights Agreement.
REGISTRABLE SECURITIES
The securities entitled to the benefits of the Registration Rights Agreement
are, collectively, (i) the shares of Central Parking Common Stock issued to the
holders of Allright Common Stock in connection with the Merger or pursuant to
options or warrants to purchase Allright Common Stock, subject to certain
adjustments described in the Registration Rights Agreement, and (ii) that number
of shares of Central Parking Common Stock that, when ultimately disposed of by
the Carell Holders in one or more transactions after the date of the
Registration Rights Agreement, will yield gross proceeds to the Carell Holders
of $250 million (excluding transfers by the Carell Holders required by the
Transaction Support Agreement by and among Monroe J. Carell, Jr., Central
Parking, Apollo, AEW (the "Exempted Transfers")) (the "Registrable Securities").
THE INITIAL UNDERWRITING
At any time after the date that Central Parking initially publishes financial
results reflecting the first thirty days of combined operations of Central
Parking and Allright after consummation of the Merger (the "Publication Date"),
and before the date nine months following the Publication Date (the "Initial
Underwriting Notice Period"), the Carell Holders, or holders of Allright Common
Stock who receive Central Parking Common Stock in the Merger (the "Allright
Holders" and, together with the Carell Holders, the "Holders") owning at least
80% of the Registrable Securities then owned by all the Allright Holders, shall
have the right to demand by written notice (an "Initial Underwriting Notice")
Central Parking to use its reasonable best efforts to register under the
Securities Act up to the Initial Underwriting Amount (as defined below) for such
Holder or Holders of Registrable Securities for resale by such Holder or Holders
in an Underwritten Offering (the "Initial Underwriting"). All Holders not
initially demanding the Initial Underwriting may still participate in the
Initial Underwriting by complying with certain provisions contained in the
Registration Rights Agreement. All rights to demand the Initial Underwriting
shall expire immediately after an Initial Underwriting Notice is properly
delivered to Central Parking, but shall be subject to certain reinstatement
provisions contained in the Registration Rights Agreement.
The Registrable Securities to be sold in the Initial Underwriting (including
pursuant to any underwriters' overallotment option) shall be allocated among the
various Holders participating in the Initial Underwriting up to but not
exceeding their respective Initial Underwriting Amounts in the following order
of priority: (A) subject to pro rata reduction to the extent that any
allocations are made pursuant to clause (C), each of Apollo and AEW shall be
entitled to receive (1) 50% of the first $100 million in gross proceeds (or, if
only one of them is participating, 100% of such gross proceeds), (2) 0% of the
next $50 million in gross proceeds, (3) 33 1/3% of the next $150 million in
gross proceeds (or, if only one of them is participating, 66 2/3% of such gross
proceeds), and (4) 50% of the next $50 million in gross proceeds (or, if
96
<PAGE> 104
only one of them is participating, 100% of such gross proceeds); (B) the Carell
Holders shall be entitled to receive (1) 0% of the first $100 million in gross
proceeds, (2) 100% of the next $50 million in gross proceeds, (3) 33 1/3% of the
next $150 million in gross proceeds, and (4) 0% of the next $50 million in gross
proceeds; and (C) any Allright Holders other than Apollo or AEW shall be
entitled to receive a percentage of the gross proceeds allocated to Apollo and
AEW under the Registration Rights Agreement equal to the percentage represented
by the number of Registrable Securities then held by such Allright Holder
divided by the number of Registrable Securities then held by all Allright
Holders participating in the Initial Underwriting. In the event that there shall
be gross proceeds in excess of $350 million and Central Parking shall determine
not to allocate such excess to shares of Central Parking Common Stock to be sold
by Central Parking, the Holders shall be allocated additional Registrable
Securities to be sold in proportion to their holding of all remaining
Registrable Securities.
"Initial Underwriting Amount" means (i) in the case of either Apollo or AEW,
$125 million (or such lesser amount, to the extent that other Allright Holders
participate in an Underwritten Offering which closes before the Initial
Liquidity Date (as defined below), or AEW and Apollo elect to distribute
Registrable Securities to Cheslock Bakker before the Initial Liquidity Date),
(ii) in the case of the Carell Holders, $100 million, and (iii) in the case of
any other Holders, the product of (x) the amount of Registrable Securities
received by such Holder at the Closing multiplied by (y) a fraction, the
numerator of which is the amount of Registrable Securities the Underwriters'
representative of the Initial Underwriting believes, at the time the Initial
Underwriting Notice is delivered to Central Parking must be sold to yield gross
proceeds of $125 million to Apollo (or, in the event that the Initial
Underwriting Notice is not delivered to Central Parking by the end of the
Initial Underwriting Notice Period, the amount of Registrable Securities that
would be need to be sold, based on the Market Value (as defined below) per share
of Central Parking Common Stock on the day before the last day of the Initial
Underwriting Notice Period, to yield gross proceeds of $125 million), and the
denominator of which is the amount of Registrable Securities received by Apollo
at the Closing.
"Initial Liquidity Date" means the earliest date on which each of Apollo, AEW
and the Carell Holders shall have received gross proceeds from the sale of
Registrable Securities following the date of the Registration Rights Agreement
at least equal to their respecting Initial Underwriting Amounts.
"Market Value" means the average, rounded to the nearest cent ($0.01), of the
closing price per share of Central Parking Common Stock on the NYSE for the
twenty (20) consecutive trading days ending on the trading day immediately
preceding the date in question.
SHELF REGISTRATION
Central Parking has agreed to use its reasonable best efforts to promptly
process, file and cause to become effective a Registration Statement on Form S-3
(the "Shelf") to cover resales of Registrable Securities, the initial filing to
be made not later than 30 days before the Shelf Registration Date (as defined
below) in the event that the Initial Underwriting is consummated or 30 days
after the Shelf Registration Date in the event that the Initial Underwriting
Notice is not given or the Initial Underwriting is abandoned. Each Allright
Holder which owns, on the date of the initial filing of the Shelf (the "Initial
Filing Date"), Registrable Securities (each such Holder, an "Eligible Holder")
shall have the right to resell such Registrable Securities under the Shelf until
the date that such Eligible Holder sells all
97
<PAGE> 105
of such Registrable Securities, whether or not under the Shelf (such Holder's
"Termination Date"). The Carell Holders shall have the right to resell that
amount of Registrable Securities under the Shelf which has an aggregate Market
Value, on the Initial Filing Date, of (a) $150 million, plus (b) the Initial
Underwriting Amount of the Carell Holders, less (c) the gross proceeds received
by the Carell Holders in all sales of Registrable Securities before the Initial
Filing Date (excluding gross proceeds received in the Exempted Transfers). The
Carell Holders shall lose their right to sell under the Shelf once they have
sold, in one or more transactions occurring after the Initial Filing Date,
whether under the Shelf or otherwise, at least that amount of shares of Central
Parking Common Stock equal to the amount of Registrable Securities of the Carell
Holders registered under the Shelf (the Carell Holders' "Termination Date").
Central Parking has agreed to use its reasonable best efforts to keep the Shelf
continuously effective and usable for resale of Registrable Securities until all
Eligible Holders lose their rights to resell Registrable Securities under the
Shelf.
Central Parking has agreed to include within the method of distribution for the
Shelf the possible distribution by the Allright Holders to their respective
investors of the Registrable Securities held by them. An Allright Holder may
distribute Registrable Securities to such investors before it receives gross
proceeds from or sells Registrable Securities equal to at least the Initial
Underwriting Amount, however, but may not transfer to its investors any
registration rights granted under the Registration Rights Agreement when
distributing Registrable Securities to such investors, unless Central Parking
has failed to cause the Shelf to become effective within 45 days after the Shelf
Registration Date.
In the event that an Allright Holder shall have received gross proceeds of at
least its Initial Underwriting Amount, or sold that amount of Registrable
Securities equal to at least its Initial Underwriting Amount, with respect to
one or more sales of Registrable Securities, it shall be restricted from
reselling Registrable Securities under the Shelf until the Carell Holders shall
have received gross proceeds of at least $100 million in one or more sales of
Registrable Securities, whether under the Shelf or otherwise, after the date of
the Registration Rights Agreement. In the event that the Carell Holders shall
have received gross proceeds of at least $100 million with respect to one or
more sales of Registrable Securities, whether under the Shelf or otherwise, they
shall be restricted from reselling Registrable Securities under the Shelf until
each of Apollo and AEW shall have received gross proceeds of at least its
Initial Underwriting Amount in one or more sales of Registrable Securities,
whether under the Shelf or otherwise, after the Closing. The foregoing
restrictions shall not, however, restrict the ability of any Holder to
distribute Registrable Securities to its investors.
Central Parking has the right, at any time after the Allright Holders,
collectively, own less than 7% of all the Registrable Securities received by the
Allright Holders in the Merger, to terminate the Shelf and promptly process and
file, and use its reasonable best efforts to cause to become effective, a
Registration Statement on Form S-3 (the "Second Shelf") to cover resales of all
Registrable Securities then registered for resale under the Shelf, as well as
other shares of Central Parking Common Stock, and any other securities of
Central Parking, that Central Parking desires to register for resale at such
time. Central Parking has agreed that it will cause the Second Shelf to remain
effective at least up to the date until which Central Parking would, under the
terms of the Registration Rights Agreement, be required to maintain the
effectiveness of the Shelf. Central Parking has further agreed that the Holders
shall not have any restrictions on their ability to resell Registrable
Securities under the Second Shelf which are greater than the restrictions on
their ability to resell Registrable Securities under the Shelf.
98
<PAGE> 106
"Shelf Registration Date" means (i) in the event that the Initial Underwriting
is consummated, the date set forth in the underwriting agreement for the Initial
Underwriting as the first day after the closing of the Initial Underwriting that
Central Parking, Apollo, AEW and the Carell Holders will be allowed to effect
open market sales of shares of Central Parking Common Stock without the consent
of the Underwriters' representative, (ii) in the event that the Initial
Underwriting Notice is not given prior to the date nine months following the
Publication Date, such date or (iii) in the event that the Initial Underwriting
Notice is given but the Initial Underwriting is abandoned with the concurrence
of Apollo, AEW and the Carell Holders, the date of such abandonment.
THE EXTRA UNDERWRITING
In the event that, as of the date of the giving of the Extra Underwriting Notice
referred to below, either Apollo or AEW shall have failed to receive gross
proceeds of at least its Initial Underwriting Amount from selling Registrable
Securities or the Carell Holders shall have failed to receive gross proceeds of
at least $100 million from selling Registrable Securities, each of (A) AEW
and/or Apollo, if AEW and/or Apollo shall have failed to receive such gross
proceeds, together with all other Allright Holders who have failed to sell that
amount of Registrable Securities equal to at least their respective Initial
Underwriting Amounts, by agreement of Allright Holders owning at least 60% of
the Registrable Securities then owned by all the Allright Holders, (B) and the
Carell Holders, if they have failed to receive gross proceeds of at least their
Initial Underwriting Amount, shall have the right, at any time commencing on the
Shelf Registration Date and ending on the twelve month anniversary of the Shelf
Registration Date (the "Extra Underwriting Notice Period"), to demand (a "Demand
Right"), by written notice (an "Extra Underwriting Notice"), Central Parking to
use its reasonable best efforts to register under the Securities Act up to the
Initial Underwriting Amount of such Holder or Holders, less the amount of gross
proceeds received by, or the amount of Registrable Securities sold by, such
Holder or Holders in any sales of Registrable Securities after the Shelf
Registration Date, for resale by such Holder or Holders in an Underwritten
Offering (the "Extra Underwriting"). All other Holders who then shall have
failed to receive gross proceeds of at least their respective Initial
Underwriting Amounts, or to sell that amount of Registrable Securities equal to
at least their respective Initial Underwriting Amounts, may participate in the
Extra Underwriting by complying with certain provisions of the Registration
Rights Agreement. All Demand Rights shall expire immediately after an Extra
Underwriting Notice is properly delivered to Central Parking, but shall be
subject to certain reinstatement provisions contained in the Registration Rights
Agreement.
The Registrable Securities to be sold in the Extra Underwriting (including
pursuant to any underwriters' overallotment option) shall be allocated among the
various Holders participating in the Extra Underwriting up to but not exceeding
their respective Initial Underwriting Amounts in the same order of priority as
established for the Initial Underwriting (except that the Initial Underwriting
Amount for each Holder shall be reduced to the extent such Holder sold
Registrable Securities after the date of the Registration Rights Agreement and
before the Extra Underwriting).
In the event that one or more Holders exercises its right to demand a Demand
Right, then each Eligible Holder (including the Holder or Holders exercising
such Demand Right and regardless of whether or not such Eligible Holder elects
to participate in the Extra Underwriting related to such Company Notice) may not
sell any Registrable Securities under
99
<PAGE> 107
the Shelf at any time after 30 days after receiving such Company Notice and
before the Extra Underwriting End Date. The above restrictions shall not,
however, restrict the ability of any Holder to distribute Registrable Securities
to its investors.
INCIDENTAL REGISTRATION
If at any time after Central Parking proposes to register any Central Parking
Common Stock under the Securities Act (other than in connection with any
acquisition or business combination transaction and other than in connection
with stock options and employee benefit plans and compensation) either in
connection with a primary offering for cash for the account of Central Parking,
a secondary offering or a combined primary and secondary offering, Central
Parking shall provide all Holders with the opportunity to register for resale
Registrable Securities held by such Holders.
UNDERWRITER LIMITATIONS
If, in connection with an underwritten offering other than the Initial
Underwriting or the Extra Underwriting, the Underwriters' representative of the
offering registered thereon shall inform Central Parking in writing that in its
opinion there is a Maximum Number (as defined below) of shares of Central
Parking Common Stock that may be successfully included therein; then (a) in the
event such Registration Statement relates to an offering initiated by Central
Parking of Central Parking Common Stock being offered for the account of Central
Parking, Central Parking may include in such registration the number of shares
it proposes to offer and, if such number is less than the Maximum Number, then
the number of shares of Central Parking Common Stock requested to be included in
such registration by any person other than Central Parking may be reduced, pro
rata in proportion to the number of shares of Central Parking Common Stock owned
by such persons requesting to participate in such offering, to the extent
necessary to reduce the respective total number of shares of Central Parking
Common Stock requested to be included in such offering to the Maximum Number,
and (b) in the event such a Registration Statement is initiated by any person
other than Central Parking or a Holder, such person shall have the right, in its
sole discretion, to include in such registration the number of shares of Central
Parking Common Stock it proposes to offer and, if such number is less than the
Maximum Number, then the number of shares of Central Parking Common Stock
requested to be included by any other person may be reduced pro rata in
proportion to the number of shares of Central Parking Common Stock owned by such
person, to the extent necessary to reduce the respective total number of shares
of Common Stock requested to be included in such offering to the Maximum Number.
Notwithstanding the foregoing, in the event that Central Parking decides to
conduct an underwritten offering other than the Initial Underwriting and the
Extra Underwriting, and at such time any of Apollo, AEW or the Carell Holders
shall have failed to receive gross proceeds from the sale of Registrable
Securities since the date of the Registration Rights Agreement at least equal to
at least their respective Initial Underwriting Amounts, and if the Underwriters'
representative of such Underwritten Offering shall inform Central Parking in
writing that in its opinion there is a Maximum Number of shares of Central
Parking Common Stock that may be successfully included therein beyond the number
of shares to be sold by Central Parking, then each of the above Holders who
shall have so failed to receive such gross proceeds, and all other Holders who
shall have failed to sell that amount of Registrable Securities equal to their
respective Initial Underwriting Amounts, may include in such registration that
number of Registrable Securities which, in the opinion of the
100
<PAGE> 108
Underwriters' Representative, when sold would yield gross proceeds sufficient to
bring each such Holder's gross proceeds from the sale of Registrable Securities
after the date of the Registration Rights Agreement to such Holder's Initial
Underwriting Amount, or would allow each such Holder to sell an amount of
Registrable Securities which would bring each such Holder's amount of
Registrable Securities sold to its Initial Underwriting Amount. To the extent
that the Maximum Number is insufficient to accomplish the foregoing, the
Registrable Securities to be sold in such Underwritten Offering (including
pursuant to any underwriters' overallotment option) shall be allocated among the
various Holders participating in such Underwritten Offering up to but not
exceeding their respective Initial Underwriting Amounts in the same order of
priority established for the Initial Underwriting.
Any reduction of the shares of Central Parking Common Stock requested by a
Person to be included in any Registration Statement pursuant to the Registration
Rights Agreement shall be limited to the extent such reduction would place
Central Parking in breach of any of its contractual obligations existing as of
the date of the Registration Rights Agreement.
"Maximum Number" when used in connection with an underwritten offering, shall
mean the number of shares of Central Parking Common Stock that the Underwriters'
representative has informed Central Parking may be included as part of such
offering without materially and adversely affecting the success or pricing of
such offering.
CENTRAL PARKING LIMITATIONS
Central Parking has agreed that, until the earlier to occur of the Extra
Underwriting End Date (as defined below) and the Initial Liquidity Date, it will
not (i) sell any shares of Central Parking Common Stock other than (A) pursuant
to the Merger, (B) to the Carell Holders, to the extent the issuance of such
shares of Central Parking Common Stock is required by the Merger Agreement, (C)
pursuant to mergers, acquisitions and purchases involving Central Parking and/or
its affiliates whereby Central Parking issues shares of Central Parking Common
Stock which are not registered under the Securities Act and which either (1)
have an aggregate value of more than $10 million (where the value of a share of
Central Parking Common Stock issued pursuant to a given transaction is
determined based on the closing price per share of Central Parking Common Stock
on the trading day immediately preceding the date on which such transaction
occurred), or (2) are not transferable by the holders thereof for at least two
years from the respective dates of issuance, or (D) upon exercise of options or
conversion of other securities outstanding as of the date of the Registration
Rights Agreement, or options or other securities issued to employees, officers
and directors after the date of the Registration Rights Agreement in the
ordinary course of business consistent with past practice, with or without
registration under the Securities Act, without first providing for the sale of
Registrable Securities as contemplated by the Registration Rights Agreement,
(ii) permit any underwritten offering, not for the account of Central Parking,
involving the sale of shares of Central Parking Common Stock other than the
Initial Underwriting, the Extra Underwriting, the shelf registration statement
filed by Central Parking on Form S-3 on June 1, 1998, as such registration
statement may be amended from time to time, and any underwritten offering
required by the Kinney Registration Rights (as defined below), (iii) grant to
any Holder, or any person included within the Carell Holders, registration
rights not provided for in the Registration Rights Agreement, or waive any
conditions in the Registration Rights Agreement with respect to any Holder, or
any Person included within the Carell Holders, without waiving such conditions
with respect to all other Holders, (iv) otherwise facilitate a sale by any
person with the Holders of shares of Central Parking
101
<PAGE> 109
Common Stock, (v) grant registration rights to any person which would permit
such person to participate in the Initial Underwriting, the Shelf or the Extra
Underwriting, or to have such person's shares of Central Parking Common Stock
registered for resale, prior to the Initial Liquidity Date, or (vi) grant to any
person registration rights that contemplate Underwritten Offerings which
preclude the exercise of the customary "piggyback" rights granted to certain
Holders under the Registration Rights Agreement.
Furthermore, during the period of time beginning on the date of the Registration
Rights Agreement and ending on the Shelf Registration Date, or, in the event
that the Underwriters' representative of the Initial Underwriting provides
Central Parking with its written consent to a plan by Central Parking to conduct
an underwritten offering, or an offering of unregistered securities to a
purchaser of purchasers for reoffering to select investors (collectively,
"Offerings"), of Preferred Stock or Convertible Securities (as defined below)
during the Lockout Period (as hereinafter defined) related to the Initial
Underwriting, ending on the closing of the Initial Underwriting, Central Parking
may not sell any shares of Preferred Stock or Convertible Securities, and during
the period of time beginning on the day after the Shelf Registration Date and
ending on the earlier to occur of the Extra Underwriting End Date and the
Initial Liquidity Date, Central Parking may not sell shares of Preferred Stock
and/or Convertible Securities if, after consummation of such sale, the aggregate
market value of the Preferred Stock and/or Convertible Securities outstanding
(as calculated on the day such transaction is completed) is greater than the
lesser of (a) 20% of the aggregate market value of all outstanding equity
securities, Preferred Stock and Convertible Securities of Central Parking, and
the book value of all outstanding loan obligations and debt instruments of
Central Parking (excluding any Convertible Securities) (as calculated on the day
such transaction is completed), and (b) 50% of the market value (calculated as
of the day such transaction is completed) of the outstanding shares of Central
Parking Common Stock held by any shareholders of Central Parking other than the
Carell Holders, directors and executive officers of Central Parking, and all
other shareholders of Central Parking who then beneficially own at least 5% of
the outstanding shares of Central Parking Common Stock. All Holders who shall
have then failed to receive gross proceeds of at least their respective Initial
Underwriting Amounts, or to sell that amount of Registrable Securities equal to
at least their respective Initial Underwriting Amounts, may participate in such
Offering by complying with certain provisions of the Registration Rights
Agreement. In the event that one or more Holders elects to participate in an
Offering, Central Parking has agreed to include the offering of Registrable
Securities by such Holder or Holders in any "roadshow" marketing efforts
conducted by Central Parking in connection with such Offering. In the event, and
only in the event, that a Holder sells Registrable Securities in such an
Offering, such Holder shall be subject to restrictions on its ability to sell
shares of Central Parking Common Stock, to the extent that the Underwriters'
Representative, or, in the event such an Offering is not conducted on a "firm
commitment" underwritten basis, the substantial equivalent of an Underwriters'
representative (the "Lead Purchaser"), asks participating sellers to refrain
from selling shares of Central Parking Common Stock during a Lockout Period.
In the event that Holders participate in an Offering of Convertible Securities
or Preferred Stock, then the Extra Underwriting Notice Period shall be deemed
not to continue to run during that period of time beginning on the first date
that a Holder or Holders notifies Central Parking of its or their desire to
participate in such Offering, and ending on the date that the Underwriters'
representative or the Lead Purchaser of such Offering selects as the first day
that the participating sellers may sell shares of Central Parking Common Stock
after the
102
<PAGE> 110
closing of such Offering, or, in the event that such Offering is not
consummated, on the date such Offering is abandoned (an "Offering End Date").
Such extension of the Extra Underwriting Notice Period shall only be deemed to
occur, however, in the event that an Offering End Date occurs before the Initial
Liquidity Date. Participation in an Offering of Convertible Securities or
Preferred Stock by one or more Holders shall not be deemed to be an exercise of
a Demand Right or a right to demand the Initial Underwriting.
"Extra Underwriting End Date" means (i) in the event that the Extra Underwriting
is consummated, the date set forth in the underwriting agreement for the Extra
Underwriting as the first day after the closing of the Extra Underwriting that
Central Parking, Apollo, AEW and the Carell Holders will be allowed to effect
open market sales of shares of Central Parking Common Stock without the consent
of the Underwriters' Representative, (ii) in the event that the Extra
Underwriting Notice is not given prior to the date one year following the Shelf
Registration Date, such date or (iii) in the event that the Extra Underwriting
Notice is given but the Extra Underwriting is abandoned with the concurrence of
Apollo, AEW and the Carell Holders, the date of such abandonment.
"Kinney Registration Rights" means the registration rights provided for in the
registration rights agreement, dated February 12, 1998, by and among Central
Parking, Lewis Katz and Saul Schwartz (the "Kinney Holders").
"Convertible Securities" means any securities of Central Parking or any
affiliates thereof which are convertible into, or exchangeable for, shares of
common stock or common stock equivalents (excluding options and warrants which
are issued to employees, officers and directors in the ordinary course of
business consistent with past practice), the terms of which satisfy the
following conditions: (a) the per share price for converting such convertible
securities into, or exchanging such convertible securities for, shares of
Central Parking Common Stock must be at least 18% higher than the market price
per share of Central Parking Common Stock on the day before the issuance of such
convertible securities, (b) such convertible securities must not be convertible
into shares of Central Parking Common Stock at any time before the three year
anniversary of the issuance of such convertible securities, except with respect
to earlier conversions related to extraordinary transactions in accordance with
market practices, (c) such convertible securities must not, by their terms,
place any restrictions on the ability of Central Parking to satisfy its
obligations under the Registration Rights Agreement, or in any manner that will
adversely impact the ability of any of the Holders to exercise the rights
granted to them thereunder, and (d) the terms and provisions of such convertible
securities must be consistent with customary market practices.
PRICING DETERMINATIONS
The Carell Holders and representatives of the Allright Holders electing to
participate in the Initial Underwriting and/or the Extra Underwriting (such
representatives to be selected by Allright Holders owning a majority of the
Registrable Securities being offered by the Allright Holders for resale in such
Underwritten Offering), shall mutually determine the offering price per share
and underwriting discounts that shall apply in the Initial Underwriting and the
Extra Underwriting, subject to the right of (i) any such Holder to withdraw its
Registrable Securities from such Underwritten Offering should it be dissatisfied
with the proposed offering price per share or underwriting discount, and (ii)
any non-withdrawing Holders to include additional Registrable Securities in such
Underwritten Offering to replace shares withdrawn by another Holder. In the
event that Central Parking refuses to execute the
103
<PAGE> 111
underwriting agreement related to the Initial Underwriting or the Extra
Underwriting, and subsequently the Initial Underwriting or the Extra
Underwriting, as the case may be, is abandoned, then all rights to demand the
Initial Underwriting or the Extra Underwriting, as the case may be, shall be
restored, and the Initial Underwriting Notice Period or the Extra Underwriting
Notice Period, as the case may be, shall be reinstated for that amount of days
equal to the difference between (x) the amount of days comprising such period,
less (y) the amount of days that lapsed in such period before the Initial
Underwriting Notice or the Extra Underwriting Notice, as the case may be, was
delivered to Central Parking.
KINNEY REGISTRATION RIGHTS
The registration rights granted under the Registration Rights Agreement are
subordinate to the Kinney Registration Rights. In the event that the Kinney
Holders exercise a "demand" Kinney Registration Right during the Extra
Underwriting Notice Period and before the Extra Underwriting Notice is properly
delivered to Central Parking, or during the Initial Underwriting Notice Period
and before Central Parking receives a demand for the Initial Underwriting, then
the Extra Underwriting Notice Period or the Initial Underwriting Notice Period,
as the case may be, shall be deemed not to continue to run during that period of
time beginning on the date a "demand" Kinney Registration Right is exercised and
ending on the date that the Underwriters' Representative of the Underwritten
Offering related to such exercise selects as the first day that Central Parking
and the Kinney Holders may sell shares of Central Parking Common Stock after the
closing of such Underwritten Offering, or, in the event that such Underwritten
Offering is not consummated, on the date such Underwritten Offering is abandoned
(a "Kinney Offering End Date"). Such extension of the Extra Underwriting Notice
Period or the Initial Underwriting Notice Period shall only be deemed to occur,
however, in the event that a Kinney Offering End Date occurs before the Initial
Liquidity Date.
SALES OF REGISTRABLE SECURITIES
The Registration Rights Agreement provides that the following transfers of
Registrable Securities shall not be deemed to be "sales" of Registrable
Securities: (i) the transfers of shares among persons comprising an individual
Holder, (ii) certain pledges of shares, (iii) transfers of shares by Apollo and
AEW to CBA, (iv) the Exempted Transfers, (v) donations of shares by the Holders
which are made to certain charitable organizations, and (vi) any distribution of
shares by an Allright Holder to its investors.
BLACKOUT PERIODS
Central Parking shall be entitled to elect that a Registration Statement not be
usable, for a reasonable period of time, but not in excess of 30 days, with
respect to a Registration Statement relating to the Initial Underwriting, or 90
days, with respect to a Registration Statement related to any other sale of
Registrable Securities (a "Blackout Period"), if Central Parking determines in
good faith that the registration and distribution of Registrable Securities (or
the use of the Registration Statement or related Prospectus) would interfere
with any pending material financing, acquisition, corporate reorganization or
any other material corporate development involving Central Parking or any of its
subsidiaries or would require premature disclosure thereof. The Registration
Rights Agreement provides that the aggregate number of days included in all
Blackout Periods, when taken together with any Lockout Periods and Suspension
Periods (as defined below), during any consecutive 12
104
<PAGE> 112
months after the Publication Date shall not exceed 180 days (or such longer
period of time, to the extent that the Underwriters' Representative of the
Initial Underwriting requests a Lockout Period for Central Parking and the
Holders of longer than 90 days after the Initial Underwriting).
"Suspension Period" means a period of time in which Holders are not allowed to
effect sales of Registrable Securities by delivering a Prospectus included in a
Registration Statement which is required to be delivered by such Holder under
the Securities Act in connection with such sales, because Central Parking has
become aware that such Prospectus includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing. Central Parking has agreed to use its reasonable
best efforts to ensure that no Suspension Period exceeds 30 days.
SELECTION OF UNDERWRITERS
Subject to the right of Central Parking, the Carell Holders and representatives
of the Allright Holders electing to participate in the Initial Underwriting
and/or the Extra Underwriting, such representatives to be selected by Allright
Holders owning a majority of the Registrable Securities being offered for resale
by the Allright Holders in such underwritten offering, to jointly determine
otherwise, (i) Bear Stearns & Co. Inc. shall be the lead-managing underwriter of
the Initial Underwriting and the Extra Underwriting, shall manage the "book"
related to such underwritten offerings, and shall be the Underwriters'
representative of such underwritten offerings and (ii) NationsBanc Montgomery
Securities LLC and J.C. Bradford & Co. shall each be a co-managing underwriter
with respect to such underwritten offerings.
HOLDBACK AGREEMENT
If so requested by the Underwriters' representative in connection with an
offering of shares of Central Parking Common Stock covered by a registration
statement filed by Central Parking, the Holders participating in such
underwritten offering, and all other Holders who are Affiliates of Central
Parking at the time of such underwritten offering, shall agree not to effect any
sale or distribution (excluding distributions to their respective investors) of
the Registrable Securities other than pursuant to such underwritten offering,
including a sale pursuant to Rule 144, without the prior written consent of the
Underwriters' representative (which if given to any such Holder shall be deemed
to be given to all such Holders), during the 7-day period prior to, and during
the 90-day period beginning on, the date such registration statement or
amendment to such registration statement is declared effective under the
Securities Act by the Commission or, with respect to the Initial Underwriting,
for a longer period of time if so requested by the underwriters' representative
of the Initial Underwriting (any such period, a "Lockout Period"). The Holders
shall not be subject to Lockout Periods for longer than 97 days (or such longer
period of time, to the extent that the Underwriters' representative of the
Initial Underwriting requests a Lockout Period for Central Parking and the
Holders of longer than 90 days after the Initial Underwriting) during any
12-month period and shall not be subject to Lockout Periods, when taken together
with any Blackout Periods and Suspension Periods, during any consecutive 12
months after the Publication Date in excess of 180 days (or such longer period
of time, to the extent that the Underwriters' representative of the Initial
Underwriting requests a Lockout Period for Central Parking and the Holders of
longer than 90 days after the Initial Underwriting). A
105
<PAGE> 113
Holder shall no longer be subject to such restrictions following such Holder's
Termination Date.
If so requested by the underwriters' representative in connection with an
underwritten offering of any Registrable Securities, Central Parking shall also
agree not to effect any sale or distribution of shares of Central Parking Common
Stock without the prior written consent of the Underwriters' representative
(other than in connection with any acquisition or business combination
transaction and other than in connection with stock options and employee benefit
plans and compensation) during the 7-day period prior to, and during the 90-day
period beginning on, the date the registration statement or amendment to a
registration statement relating to such underwritten offering is declared
effective under the Securities Act by the Commission or, with respect to the
Initial Underwriting, for a longer period of time if so requested by the
underwriters' representative of Initial Underwriting, and shall use its
reasonable best efforts to obtain and enforce similar agreements from any other
persons if requested by the Underwriters' representative.
REGISTRATION PROCEDURES
The Registration Rights Agreement requires Central Parking to comply with
customary registration procedures when satisfying its obligations thereunder to
facilitate the resale of Registrable Securities by the Holders.
REGISTRATION EXPENSES
With respect to the Initial Underwriting and the Extra Underwriting but not any
other underwritten offering in which they may participate, the Holders
participating as sellers shall, on a pro-rata basis based on the amount of
Registrable Securities sold by each seller in such underwritten offering, pay
all expenses incident to the performance of or compliance by Central Parking
with its registration obligations under the Registration Rights Agreement (the
"Registration Expenses") incurred in connection with the Registrable Securities
sold by such Holders. Each such Holder will also be responsible for the payment
of its own underwriting discounts, commissions and transfer taxes, if any,
relating to the sale or disposition of such Registrable Securities and any of
its own expenses, including the fees and expenses of any counsel retained by it.
INDEMNIFICATION; CONTRIBUTION
The Registration Rights Agreement contains indemnification and contribution
obligations for both the Holders and Central Parking which are customary for
transactions of a similar nature.
PLEDGES OF REGISTRABLE SECURITIES
The Registration Rights Agreement provides that none of its provisions shall be
construed in any manner as to restrict the ability of any Holder to pledge all
or any portion of the Registrable Securities owned by such Holder, including the
registration rights related to such Registrable Securities granted thereunder,
to any lender; provided, that, in the event that one or more pledgees succeed to
all or a portion of the shares of Central Parking Common Stock, and the
registration rights related to such shares, formerly owned by a Holder, such
registration rights may only be exercised if the then holders of a majority of
such shares agree to exercise such right. Accordingly, with respect to the
exercise of any of the registration
106
<PAGE> 114
rights granted under the Registration Rights Agreement, the original Holder of
Registrable Securities, and all pledgees of such Holder's Registrable
Securities, shall be deemed to be, collectively, one Holder. No holder of any
such shares of Central Parking Common Stock, however, whether a Holder or a
pledgee, shall be under any obligation to sell, transfer or register any of the
shares of Central Parking Common Stock it then owns in the event that a majority
of such holders elects to exercise any registration right granted under the
Registration Rights Agreement.
107
<PAGE> 115
OTHER RELATED AGREEMENTS
The following summary of the material provisions of the Transaction Support
Agreements does not purport to be complete and is qualified in its entirety by
reference to the Transaction Support Agreements, forms of which have been filed
as Exhibits to the Form S-4 and are incorporated herein by reference. Holders of
Central Parking Common Stock and Allright Common Stock are urged to read the
form of these agreements carefully. Capitalized terms used under the heading
"-- Transaction Support Agreements" but not defined in this Joint Proxy
Statement/Prospectus shall have the meanings attributed to them in the
Transaction Support Agreements. In addition, the following summary of the
expected material provisions of the Noncompetition Agreement does not purport to
be complete.
TRANSACTION SUPPORT AGREEMENTS
Central Parking, Monroe J. Carell, Jr., personally and on behalf of the Monroe
Carell, Jr. Foundation, the Monroe Carell, Jr. 1994 Grantor Retained Annuity
Trust and the Monroe Carell, Jr. 1995 Grantor Retained Annuity Trust (such
foundations and trusts, collectively, the "Trusts"), and the Carell Children's
Trust c/o Equitable Trust Company (the "Carell Children's Trust") have entered
into transaction support agreements with Allright, Apollo, and AEW, with respect
to such Central Parking Common Stock, each dated September 21, 1998
(collectively, the "Central Parking Voting Support Agreements"). Pursuant to the
Central Parking Voting Support Agreements, Monroe J. Carell, Jr. (personally and
on behalf of the Trusts) and the Carell Children's Trust, which collectively own
beneficially and of record 17,959,164 shares of Central Parking Common Stock,
have each agreed, among other things, (i) to vote the Central Parking Common
Stock in favor of approval of the Merger, the Merger Agreement, the issuance of
shares of Central Parking Common Stock pursuant thereto, and with respect to any
consent solicited with respect to the Merger, (ii) to appear, in person or by
proxy, at all meetings of shareholders of Central Parking called with respect to
the Merger, the Merger Agreement and the issuance of stock, and at any
adjournment thereof, for the purpose of obtaining a quorum, (iii) not to vote
the Central Parking Common Stock in a manner which would prevent or delay the
consummation of the transactions contemplated by the Merger Agreement and (iv)
to take certain other action, if required, in order for the Merger to qualify as
a pooling of interests under APB 16. Central Parking has agreed to take any
action required on its part to permit compliance with the obligations set forth
in clause (iv) of this paragraph. The Central Parking Voting Support Agreements
do not prohibit Monroe J. Carell, Jr. from acting in accordance with his
fiduciary duties as an officer or director of Central Parking. Monroe J. Carell,
Jr. has also agreed to request a special meeting of Central Parking's
shareholders to vote on the Merger in the event that Central Parking or its
board of directors does not call a shareholders' meeting for the purpose of
approving the Merger.
Allright, Gregory P. Shay, the holder of 3,835.75 shares of Allright Common
Stock (assuming exercise of all options expected to be vested upon closing),
Timothy L. Grady, the holder of 370 shares of Allright Common Stock (assuming
exercise of all options expected to be vested upon closing) and CBA Mortgage
Partners, L.P. ("CBA"), the record and beneficial holder of 1,177 shares of
Allright Common Stock (through $0.01 exercise price warrants, which are
currently exercisable) have entered into transaction support agreements with
Central Parking and Central Parking Sub with respect to such Allright Common
Stock, each dated September 21, 1998 (collectively, the "Allright Voting Support
Agreements").
108
<PAGE> 116
The Allright Voting Support Agreements do not prohibit Mr. Shay from acting in
accordance with his fiduciary duties as a director of Allright. See "Principal
Shareholders of Allright."
Pursuant to the Allright Voting Support Agreements, Messrs. Shay and Grady and
CBA have each agreed, among other things, (i) to vote the Allright Common Stock
which they beneficially own in favor of approval of the Merger, the Merger
Agreement and with respect to any consent solicited with respect to the Merger,
(ii) to appear, in person or by proxy, at all meetings of shareholders of
Allright called with respect to the Merger, the Merger Agreement, and at any
adjournment thereof, for the purpose of obtaining a quorum, and (iii) not to
vote the Allright Common Stock in a manner which would prevent or delay the
consummation of the transactions contemplated by the Merger Agreement.
NONCOMPETITION AGREEMENT
At the Effective Time, Central Parking, AEW, Apollo and certain other entities
will enter into the Noncompetition Agreement, whereby Apollo, AEW and such other
entities (collectively, the "Bound Parties") will agree that they will not,
subject to certain exceptions, directly or indirectly, own a controlling
interest in, manage, or control any business or person competing with Central
Parking and/or its subsidiaries anywhere in the world. Subject to certain
exceptions, these restrictions shall expire for a Bound Party six months after
such Bound Party's designee no longer serves on Central Parking's Board (the
"Restricted Period").
Subject to certain exceptions, the Bound Parties will agree to not use in
connection with the business the names "Allright", "Edison", "National",
"Central Parking" or "Central" or any derivation thereof. In addition, during
the Restricted Period and 6 months thereafter (18 months in certain
circumstances), the Bound Parties will agree to not, directly or indirectly,
solicit any person who is, at the time of such solicitation, an employee of
Central Parking for employment in the management or operation of any competing
business, subject to customary exceptions.
109
<PAGE> 117
CENTRAL PARKING SPECIAL MEETING
THE MEETING
The Central Parking Special Meeting will be held on January , 1999, at
a.m. (Central Standard Time) at Central Parking's headquarters, 2401 21st Avenue
South, Third Floor, Nashville, Tennessee.
PURPOSE OF THE MEETING
At the Central Parking Special Meeting the shareholders of Central Parking will
be asked to vote on the following matters:
1. The approval of the Merger Proposal;
2. To amend the Central Parking Charter to increase the number of
authorized shares of Central Parking Common Stock from 50 million to 100
million for the reasons set forth below; and
3. Such other business as may properly come before the Central Parking
Special Meeting or any adjournment or postponement thereof.
INCREASE IN THE AUTHORIZED SHARES OF COMMON STOCK
The Central Parking Board has unanimously approved and directed that the
shareholders consider an amendment to Article VIII (1) of the Central Parking
Charter. The amendment to Article VIII (1) would increase the number of
authorized shares of Central Parking's Common Stock from 50 million to 100
million. If this proposal is approved by the shareholders at the Central Parking
Special Meeting, the amendments to Article VIII (1) will become effective upon
the filing of a Certificate with the Secretary of State of Tennessee, which
filing is expected to take place shortly after the Central Parking Special
Meeting. The Central Parking Board believes that the amendment is in the best
interests of Central Parking and recommends that all of its shareholders vote to
adopt the Charter Amendment Proposal. The approval of the Charter Amendment
Proposal is not required for the approval of the Merger Proposal.
The rights of the holders of Central Parking Common Stock under the Central
Parking Charter would remain unchanged. Article VIII (1) of the Central Parking
Charter, as further amended by the proposed amendment, is set forth below:
VIII
1. The maximum number of shares which the Corporation shall have the
authority to issue is one hundred million (100,000,000) shares of Common
Stock, having a par value of $0.01 per share, which shares shall not be
subject to any preemptive rights, and one million (1,000,000) shares of
preferred stock having a par value of $0.01 per share.
As of October 16, 1998, there were 29,575,982 shares of Central Parking Common
Stock issued and outstanding. In addition, 970,164 shares of Central Parking
Common Stock remain reserved for issuance under Central Parking's Restricted
Stock Plan and Central Parking's 1995 Incentive and Nonqualified Stock Option
Plan for Key Personnel; 342,560 shares remain reserved for issuance under
Central Parking's 1996 Employee Stock Purchase Plan; 89,500 shares remain
reserved for issuance under Central Parking's 1995 Nonqualified
110
<PAGE> 118
Stock Option Plan for Directors; and 361,560 shares are reserved for issuance
under Central Parking's Deferred Stock Unit Plan. Accordingly, at October 16,
1998 and assuming the issuance of an estimated 7.6 million shares pursuant to
the Merger, a balance of 11,163,491 authorized shares of Central Parking's
Common Stock were available for future use.
The Central Parking Board considers the proposed increase in the number of
authorized shares of Central Parking Common Stock desirable because it would
give Central Parking the necessary flexibility to issue Central Parking Common
Stock in connection with mergers and acquisitions, equity financings, stock
dividends and splits, benefit plans, and for other general corporate purposes.
These future issuances would be at the discretion of the Central Parking Board
without the expense and delay incidental to obtaining shareholder approval,
except as may be required by applicable law or by the rules of any stock
exchange on which Central Parking's securities may then be listed. For example,
the NYSE, on which the Central Parking Common Stock is listed, currently
requires shareholder approval as a prerequisite to listing shares in several
instances, including in connection with acquisitions where the present or
potential issuance of shares could result in an increase in the number of shares
of Central Parking Common Stock outstanding by 20% or more. Holders of Central
Parking Common Stock have no preemptive rights to subscribe to any additional
securities of any class that Central Parking may issue.
The authorized but unissued shares of Central Parking Common Stock could be used
by incumbent management to make more difficult a change in control of Central
Parking. Under certain circumstances such shares could be used to create voting
impediments or to frustrate persons seeking to effect a takeover or otherwise
gain control of Central Parking. For example, such shares could be privately
placed with purchasers who might side with the Central Parking Board in opposing
a hostile takeover bid.
The amendment could also have the effect of discouraging an attempt by another
person or entity, through the acquisition of a substantial number of shares of
Central Parking's Common Stock, to acquire control of Central Parking with a
view to imposing a merger, sale of all or any part of Central Parking's assets
or a similar transaction that may or may not be in the best interest of all of
the shareholders, because the issuance of new shares could be used to dilute the
stock ownership of a person or entity seeking to obtain control of Central
Parking. The amendment to the Central Parking Charter is not being proposed in
response to any effort known by management to acquire control of Central
Parking. At the date of this Joint Proxy Statement/Prospectus, Central Parking
has no plans, arrangements or understandings with respect to the issuance of the
shares of Central Parking Common Stock to be authorized. However, Central
Parking regularly considers equity offerings and acquisitions involving the
issuance of Central Parking Common Stock.
VOTING
Shareholders of record as of December , 1998 will be entitled to vote at the
Central Parking Special Meeting. At the close of business on that day, there
were outstanding shares of Central Parking Common Stock, of which Central
Parking's officers, directors and principal shareholders owned an aggregate of
of such shares (or approximately % of the outstanding shares on
, 1998) and have indicated that they intend to vote such shares
in favor of the Merger. Each share of Central Parking Common Stock is entitled
to one vote, which may be given in person or by proxy authorized in writing.
111
<PAGE> 119
To vote by proxy, a Central Parking shareholder should complete, sign, date and
return the enclosed proxy to the Secretary of Central Parking. The Central
Parking Board urges you to complete the proxy card whether or not you plan to
attend the Central Parking Special Meeting. If you attend the Central Parking
Special Meeting in person, you may, if you wish, vote in person on all matters
brought before the Central Parking Special Meeting even if you have previously
delivered your proxy. Any Central Parking shareholder who has given a proxy may
revoke it at any time prior to exercise by filing an instrument revoking it with
the Secretary of Central Parking, by duly executing a proxy bearing a later
date, or by attending the Central Parking Special Meeting and voting in person.
The mere presence at the Central Parking Special Meeting of a Central Parking
shareholder who has appointed a proxy will not revoke the appointment.
The affirmative vote of the majority of shares of Central Parking Common Stock
entitled to be cast at the Central Parking Special Meeting is required to
approve the Merger Proposal and the Charter Amendment Proposal. Holders of a
majority of Central Parking Common Stock sufficient to approve the Merger
Proposal have previously agreed that they will vote their shares at Central
Parking Common Stock in favor of the Merger Proposal. Therefore, there will be a
quorum at the Central Parking Special Meeting and sufficient votes cast for
approval and adoption of the Merger Proposal to ensure its passage without the
vote of any other Central Parking shareholder. Abstentions and broker non-votes
will be counted for purposes of determining the presence or absence of a quorum.
Proxies that reflect abstentions as to a particular proposal will be treated as
voted for the purpose of determining whether the proposal is approved or
rejected and will have the same effect as a vote against that proposal, while
proxies that reflect broker non-votes will not be counted as votes cast for
determining the outcome of the proposal.
112
<PAGE> 120
ALLRIGHT SPECIAL MEETING
THE MEETING
The Allright Special Meeting will be held on January , 1999, at a.m.
(Central Standard Time) at Allright Corporation's headquarters, 1313 Main
Street, Houston, Texas 77002.
PURPOSE OF THE MEETING
At the Allright Special Meeting, the shareholders of Allright will be asked to
vote on the following matters:
1. The adoption of the Merger Agreement; and
2. Such other business as may properly come before the Allright Special
Meeting or any adjournment or postponement thereof.
VOTING
Shareholders of record as of December , 1998 will be entitled to vote at the
Allright Special Meeting. At the close of business on that day, there were
outstanding shares of Allright Common Stock, each of which entitles
the registered holder thereof to one vote, which may be given in person or by
proxy authorized in writing.
The affirmative vote of the majority of shares of Allright Common Stock
outstanding at the Allright Special Meeting is required to adopt the Merger
Agreement. A majority of holders of Allright Common Stock sufficient to adopt
the Merger Agreement have previously agreed that they will vote their shares of
Allright Common Stock in favor of the Merger Agreement. Abstentions will be
counted for purposes of determining the presence or absence of a quorum. Proxies
that reflect abstentions will be treated as voted for the purpose of determining
whether the proposal is adopted or rejected and will have the same effect as a
vote against that proposal.
To vote by proxy, a shareholder should complete, sign, date and return the
enclosed proxy to the Secretary of Allright, c/o the Secretary of Allright
Corporation. The Allright Board urges you to complete the proxy card whether or
not you plan to attend the meeting. If you attend the meeting in person, you
may, if you wish, vote in person on all matters brought before the meeting even
if you have previously delivered your proxy. Any shareholder who has given a
proxy may revoke it at any time prior to exercise by filing an instrument
revoking it with the Secretary of Allright, c/o the Secretary of Allright
Corporation, by duly executing a proxy bearing a later date, or by attending the
meeting and voting in person. The mere presence at the meeting of a shareholder
who has appointed a proxy will not revoke the appointment.
113
<PAGE> 121
DESCRIPTION OF CENTRAL PARKING
GENERAL
Central Parking is a leading provider of parking services operating, as of
September 30, 1998, 2,440 parking facilities containing approximately 1,023,000
spaces in 35 states, the District of Columbia, Canada, Chile, Puerto Rico, the
United Kingdom, the Republic of Ireland, Spain, Germany, Mexico, and Malaysia.
Central Parking has a business development office in Amsterdam.
Central Parking provides parking management services at multi-level parking
facilities and surface lots. It also provides parking consulting, shuttle,
valet, parking meter enforcement, and billing and collection services. Central
Parking operates parking facilities under three general types of arrangements:
management contracts, leases, and fee ownership. As of September 30, 1998,
Central Parking operated 1,302 parking facilities under management contracts and
1,071 parking facilities under leases, and owned, either independently or
through joint ventures, 67 parking facilities.
INDUSTRY
The International Parking Institute estimates that there are 35,000 parking
facilities in the United States, which generate approximately $26.0 billion of
annual revenue, which is divided evenly between commercial and governmental
operators. The commercial parking services business is very fragmented,
consisting of a few national companies and approximately 1,000 small
privately-held local and regional operators. Central Parking believes that it
has the opportunity to consolidate portions of this fragmented, localized
industry by using its competitive advantages with regard to scale, financial
strength, technology, controls, and professionalism, all of which are becoming
increasingly important in the parking services business. For the same reasons,
Central Parking believes that it is well-positioned to be selected by municipal
and other governmental entities to operate their parking facilities and provide
parking-related services as such entities move toward outsourcing and
privatization.
Expansion of the Number of Parking Facilities Resulting from New
Construction. During the 1980's, the high level of construction activity in the
United States resulted in a significant increase in the number of parking
facilities. Since that time, as construction activity has slowed, growth of
certain parking service companies, including Central Parking, has been a result
of take-aways from other parking companies. New construction and acquisition of
additional facilities are essential to growth for parking service companies
because of the limitations on growth in revenues of existing operations.
Although 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.
Management believes that most commercial real estate developers and property
owners view services such as parking as potential profit centers rather than
cost centers. These parties outsource parking operations to parking management
companies in an effort to maximize profits and cash flow. Parking management
companies can increase profits, benefitting both the owners and themselves by
using managerial skills and experience, operating systems, and operating
controls unique to the parking industry.
Privatization of government parking operations and facilities provides new
opportunities for the parking industry. Industry estimates suggest that as much
as 50% of the revenues
114
<PAGE> 122
generated by the United States parking industry is generated by facilities
operated by municipalities and other governmental entities. Cities and municipal
authorities are beginning to retain private firms to operate facilities and
provide parking-related services in an effort to reduce operating budgets and
increase efficiency. Privatization in the United Kingdom has already provided
significant expansion opportunities for private parking companies. In the United
States, several cities have awarded or are considering awarding on-street
parking enforcement and parking meter service contracts to for-profit parking
companies such as Central Parking. For example, Central Parking has recently
been awarded contracts for collection of parking meter revenues in Miami Beach,
Florida and parking meter enforcement in Charlotte, North Carolina and Richmond,
Virginia.
GROWTH STRATEGY
Central Parking plans to continue to add facilities to its operations by
focusing its marketing efforts on adding facilities at the local level,
targeting real estate asset managers and developers with a national presence,
pursuing strategic acquisitions of other parking service operators, and
expanding its international operations. Set forth below are the key elements of
Central Parking's growth strategy.
Increase Market Presence. Central Parking continually seeks to
establish and increase its operations in new and existing markets through
take-aways of competitors' contracts, obtaining new management and lease
contracts, joint venture arrangements, and purchases of parking facilities.
Through emphasizing marketing at the local level and establishing
relationships with large-scale national asset managers and developers,
Central Parking expects to continue to expand its base of operations.
Management believes that Central Parking's relative size, financial
strength and systems, and automation capabilities give it a competitive
advantage in winning new business and make it an attractive partner for
joint venture and other opportunities. In addition, Central Parking
believes that its unique performance-based compensation system, which is
designed to reward managers for increasing the profitability of their
respective areas of responsibility, has been a key contributor to Central
Parking's growth.
Pursue Strategic Acquisitions. Central Parking intends to continue to
capitalize on the highly fragmented nature of the parking management
industry by acquiring other independent operators. Many of Central
Parking's competitors have limited access to capital or do not have the
systems or economies of scale to compete effectively. Central Parking's
acquisition strategy is to focus on opportunities that enable Central
Parking to become a stronger, more efficient provider in selected markets,
generate significant economies of scale and cost savings and increase cash
flow. Cost savings typically result from the elimination of duplicative
management functions as well as from efficiencies resulting from
implementing Central Parking's systems and professional management
techniques. Central Parking has a Senior Vice President dedicated
exclusively to acquisitions and development. During calendar year 1997,
Central Parking acquired Square (January 1997) in New York, Car Park (May
1997) in San Francisco, and Diplomat (October 1997) in Washington, D.C.
During calendar 1998, Central Parking acquired Kinney (February 1998);
which operates 403 parking facilities primarily in New York, Boston,
Philadelphia, and Washington, D.C., Turner (April 1998), which operates 34
parking facilities in Texas, Florida, California, Georgia and Washington,
D.C.; and Sterling (July 1998), which operates parking facilities in
Georgia, Florida, Virginia, California and Kentucky. In addition, Central
Parking purchased the remaining
115
<PAGE> 123
50% interest in CPS-Louisiana (March 1998), which operates parking
facilities in Louisiana.
Expand International Operations. Management believes that there are
significant international growth opportunities, particularly for
well-capitalized companies that are interested in making significant
investments in parking equipment and construction, either independently or
with foreign partners. Central Parking typically enters foreign markets
either through consulting projects or by forming joint ventures with
established local entities, both of which allow Central Parking to enter
foreign markets with reduced operating and investment risk. Since 1991,
Central Parking has established operations in the United Kingdom, Germany,
Mexico, Malaysia, Canada and Spain. Central Parking believes there are
significant expansion opportunities in these countries as well as other
countries.
OPERATING STRATEGY
Central Parking's primary objective is to increase the revenues and
profitability of its parking facilities through a variety of operating
strategies including the following:
Maintain Strict Cost Management and Cash Control. In order to provide
competitively priced services, Central Parking must contain costs. Managers
are trained to analyze staffing and cost control issues, and each facility
is carefully tracked on a monthly basis to determine whether financial
results are within budgeted ranges. Because of the substantial
performance-based component of their compensation, managers are
continuously motivated to contain the costs of their operations. Strict
cash control is also critical to Central Parking and its clients. Central
Parking's cash control procedures are based on a ticketing system
supervised by high level managers and include on-site spot checks, multiple
daily cash deposits, local audit functions, managerial oversight and
review, and internal audit procedures. It is Central Parking policy that
all tickets and gate counts are reconciled daily against cash collected.
Management believes its cash control procedures are effective in minimizing
the loss of revenues at parking facilities.
Emphasize Sales and Marketing Efforts. Central Parking's management is
actively involved in developing and maintaining business relationships and
in exploring opportunities for growth. A cornerstone of Central Parking's
culture is its incentive compensation system which rewards managers who are
able to develop new business. Central Parking's marketing efforts are
designed to expand its operations by developing and maintaining
relationships with major real estate developers and asset managers,
business and government leaders and other clients. Central Parking
encourages its managers to pursue new opportunities at the local level
while simultaneously selectively targeting key clients and projects at a
national level.
Leverage Established Market Presence and Corporate
Infrastructure. Central Parking has an established presence in multiple
markets, representing platforms from which it can build. Because of the
relatively fixed nature of corporate overhead and the resources that can be
shared in specific markets, Central Parking has the opportunity to expand
its profit margins as it grows its presence in established markets. Central
Parking has consistently reduced general and administrative expenses as a
percentage of total revenues. General and administrative expenses excluding
goodwill amortization as a percentage of total revenues were 12.5%, 12.2%,
and 10.1%, in fiscal 1995, 1996, and
116
<PAGE> 124
1997, respectively. For the nine months ended 1997 and 1998, general
administrative expenses excluding goodwill amortization as a percentage of
total revenues were 10.2% and 8.9%, respectively. Central Parking
anticipates this trend to continue as general and administrative costs are
spread over a larger revenue base.
Empower Local Managers; Provide Corporate Support. Central Parking has
achieved what management believes is a successful balance between
centralized and decentralized management. Because its business is
dependent, to some extent, on personal relationships, Central Parking
provides its managers with a significant degree of autonomy in order to
encourage prompt and effective responses to local market demands. In
conjunction with this local operational authority, Central Parking
provides, through its corporate office, services that typically are not
readily available to independent operators such as management support,
marketing and business expertise, training, and financial and information
systems. Central Parking retains centralized control over those functions
necessary to monitor service quality and cash control integrity and to
maximize operational efficiency. Services performed at the corporate level
include billing, quality improvement oversight, financial and accounting
functions, policy and procedure development, systems design, and corporate
acquisitions and development.
Utilize Performance-Based Compensation. Central Parking's
performance-based compensation system rewards managers at the general
manager level and above for the profitability of their respective areas of
responsibility. Each person participating in the incentive program
generally receives a substantial portion of his or her compensation from
this performance-based compensation system. Incentive compensation payments
typically range from 20% to 80% of total compensation.
Maintain Well-Defined Professional Management Organization. In order to
ensure professionalism and consistency in Central Parking's operations, to
provide a career path opportunity for its managers, and to achieve a
balance between autonomy and accountability, Central Parking has
established a highly structured management organization. Organized in six
levels, Central Parking has a total of 400 managers and hires approximately
50 per year.
Central Parking recruits primarily college graduates or people with
previous parking services or hospitality industry experience, and requires
that they complete a formal training program. Management believes that
Central Parking's management training program is a significant factor in
Central Parking's success. New managers in Central Parking's management
trainee program are assigned to a particular facility where they are
supervised as they manage one to five employees. The management trainee
program lasts approximately one year and teaches a wide variety of skills,
including organizational skills, basic management techniques, and basic
accounting. Upon successful completion of the program, management trainees
are promoted to facility manager in charge of a particular parking
facility. As facility managers, they report up through a hierarchical
structure of managers. As managers develop and gain experience, they have
the opportunity to assume expanded responsibility, to be promoted to higher
management levels and to increase the performance-based component of their
compensation. This well-defined structure provides a career path that is an
attractive opportunity for prospective new hires. In addition, the
well-planned training and advancement program has enabled Central Parking
to instill a high level of professionalism in its employees. A final
important benefit of Central Parking's organizational structure is that it
has
117
<PAGE> 125
allowed Central Parking to balance localized autonomy with accountability
and centralized support and control.
Automate Facilities. Central Parking's application of sophisticated
technology to its operations represents a competitive advantage over
smaller operators with more limited resources. Central Parking has
implemented computerized card tracking and accounting systems in certain of
its facilities and is experimenting with a variety of automated settlement
systems. Central Parking expects that these technology initiatives will
enhance revenue by increasing the efficiency and accuracy of payment
collections, reduce labor costs, and minimize lost revenue at parking
facilities.
Enhance Management Information Systems. In the last five years, Central
Parking has re-engineered and replaced its accounting and operations
software. Central to this effort has been the development of
industry-specific software models, such as the Parker Accounts Receivable
System, a proprietary software system used to generate a range of reports
related to receivables and to audit access control systems for Central
Parking's parking facilities. Central Parking's distributed systems, which
include payroll, revenue collection, and monthly line-item budgeting, allow
local management access to data pertinent to their operations, while
allowing corporate review of all data. Central Parking also provides
accounting services through a division that maintains separate financial
statements for large or complex facilities. Central Parking's management
believes continued improvement in its management information system
services will increase Central Parking's competitive advantage over smaller
and less automated competitors.
Strategically Expand Service Offerings. Central Parking provides
services that are complementary to parking facility management, with a
particular emphasis on consulting services. Other ancillary services
include parking meter enforcement, on-street parking services, car pooling
coordination, shuttle van operation, and transportation management. Recent
new ancillary services include contracts for collection of parking meter
revenues in Miami Beach, Florida and parking meter installation and
enforcement in Charlotte, North Carolina. These ancillary services do not
constitute a significant portion of Central Parking's revenues, but
management believes that the provision of ancillary services can be
important in obtaining new business and preparing Central Parking for
future changes in the parking industry. For example, Central Parking's
operations in the United Kingdom grew out of a single consulting
arrangement.
Focus on Retention of Patrons. In order for Central Parking to succeed,
its parking patrons must have a positive experience at Central Parking
facilities. Accordingly, Central Parking stresses the importance of having
well lighted, clean facilities, and cordial employees. Each facility
manager has primary responsibility for the environment at the facility, and
is evaluated on his or her ability to retain parking patrons. Central
Parking also monitors customer satisfaction through customer surveys and
"mystery parker" programs.
Maintain Disciplined Facility Site Selection Analysis. In existing
markets, the facility site selection process begins with identification of
a possible facility site and the analysis of projected revenues and costs
at the site by general managers and regional managers. The managers then
conduct an examination of a facility's potential demand based on traffic
patterns and counts, area demographics, and potential competitors. Pro
forma financial statements are then developed and a Central Parking
representative will meet with the property owner to discuss the terms and
structure of the agreement.
118
<PAGE> 126
ACQUISITIONS
Central Parking's acquisition strategy focuses primarily on acquisitions that
will enable Central Parking to become a more efficient and cost-effective
provider in selected current markets. Central Parking believes it can recognize
economies of scale by making acquisitions in markets where Central Parking
already has a presence, which allows Central Parking to reduce the overhead cost
of the acquired company by consolidating its management with that of Central
Parking. In addition, Central Parking seeks acquisitions in attractive new
markets. Management believes acquisitions are an effective means of entering new
markets, thereby quickly obtaining both operating presence and management
personnel. Central Parking also believes it can improve acquired operations by
applying its sophisticated operating systems and professional management
techniques. Central Parking's acquisitions over the last two years, all of which
were accounted for under the purchase method of accounting, are as follows:
Civic Parking LLC. On December 31, 1996, Central Parking purchased for
cash Civic, which owns four parking garages in St. Louis: Kiener East,
Kiener West, Stadium East and Stadium West. The four garages, which had
previously been operated by Central Parking under management agreements,
have a total of 7,464 parking spaces. The purchase price was approximately
$91.0 million which was financed through working capital and $67.2 million
of borrowings under Central Parking's then-existing credit facility. Of the
$91.0 million, $46.0 million was held for resale to a joint venture partner
and $45.0 million was recorded as an investment in joint ventures. On April
16, 1997, Central Parking consummated the sale of 50% of Civic to its joint
venture partner, an affiliate of Equity Capital Holdings, LLC, for $46.0
million in cash. Central Parking continues to operate these garages
pursuant to a lease and operating agreement with Civic.
Square Industries, Inc. On January 18, 1997, Central Parking completed
a cash tender to acquire all of the outstanding shares of Square for $54.8
million, including transaction fees and other related expenses. In
addition, Central Parking assumed $23.2 million of existing Square debt.
The purchase price was financed through borrowings under Central Parking's
then-existing credit facility. At the time of the acquisition, Square
operated 116 parking facilities containing over 61,000 parking spaces,
located primarily in the Northeastern United States.
Car Park Corporation. On May 29, 1997, Central Parking acquired the
assets and related leases of Car Park for $3.5 million; consisting of 18
parking facilities with approximately 2,600 parking spaces located in the
San Francisco metropolitan region. The purchase price was financed through
$1.7 million of borrowings under Central Parking's then-existing credit
facility, and $1.8 million payable to the seller, which has been repaid in
full.
Diplomat Parking Corporation. On October 1, 1997, Central Parking
acquired the stock and certain assets of Diplomat for approximately $21.7
million in cash and notes payable. The acquisition was financed through
borrowings under Central Parking's then-existing credit facility. At the
time of the acquisition, Diplomat operated 164 parking facilities
containing over 37,000 parking spaces, located primarily in Washington D.C.
and Baltimore, Maryland.
Kinney System Holding Corp. On February 12, 1998, Central Parking
acquired Kinney, a privately-held company headquartered in New York City.
Kinney has been in the parking business for over 60 years. In addition to
enhancing Central Parking's
119
<PAGE> 127
market position in New York City, Kinney increases Central Parking's
presence in a number of other major metropolitan areas such as Boston,
Philadelphia and Washington, D.C. and broadens its geographic coverage in
the following nine states: Connecticut, Florida, Kentucky, Maryland,
Massachusetts, New Hampshire, New York, Pennsylvania and Virginia. Kinney
provides both self-parking and valet parking services, and provides parking
related services such as facility design and development and consulting
services.
Kinney operated 403 parking facilities containing approximately 168,800
spaces, including approximately 76,700 in the New York City metropolitan
area, 42,800 in Boston, 30,100 in Philadelphia and 10,300 in Washington,
D.C. Kinney's facility mix is comprised of 225 leased sites, 170 managed
sites and 8 owned sites. The parking facilities operated by Kinney include
Yankee Stadium, the Waldorf-Astoria, Port Authority Bus Terminal, World
Financial Center and the General Motors Building in New York City, The
Ritz-Carlton -- Boston, Government Center in Boston, Spectrum-
Philadelphia, and the Four Seasons Hotel of Washington, D.C.
Consideration for the Kinney acquisition was approximately $208.8
million, including $171.8 million in cash and other consideration, and
$37.0 million (882,422 shares) in Central Parking Common Stock. In
connection with this transaction, Central Parking assumed $8.1 million in
capital leases, refinanced $24.2 million in existing Kinney debt and
assumed $4.6 million of Kinney debt. Central Parking financed the Kinney
acquisition through borrowings under the Credit Facility, and ultimately
from the issuance of Central Parking Common Stock and Central Parking
obligations pursuant to the Trust Issued Preferred Securities.
Central Parking System of Louisiana, Inc. Central Parking has
historically owned 50% of CPS-Louisiana and on March 30, 1998 purchased the
remaining 50% from Property Service Corporation for $2.4 million in Central
Parking Common Stock (52,631 shares). CPS-Louisiana manages and operates
leased parking facilities, manages and operates parking facilities owned or
leased by other parties, and provides financial and other advisory
services.
Turner Parking Systems, Inc. On April 1, 1998, Central Parking
purchased substantially all of the assets of Turner, a privately-held
parking company headquartered in Dallas, Texas, for $3.8 million, including
$3.0 million in cash and $800,000 (16,842 shares) in Central Parking Common
Stock. Central Parking financed the cash portion of the Turner purchase
with borrowings under the Credit Facility.
Sterling Parking, Inc. On July 1, 1998, Central Parking purchased
substantially all of the assets of Sterling Parking, Inc. ("Sterling"), a
privately-held parking company headquartered in Atlanta, Georgia, for $4.48
million, including $2.24 million in cash and $2.24 million (54,358 shares)
in Central Parking Common Stock. Central Parking financed the cash portion
of the Sterling purchase with borrowings under the Credit Facility.
Sterling operates 31 parking facilities in Georgia, Florida, Virginia,
California, and Kentucky.
SALES AND MARKETING
Central Parking's sales and marketing efforts are designed to expand its
operations by developing and maintaining relationships with major real estate
developers and asset managers, business and government leaders, and other
clients. Central Parking encourages its
120
<PAGE> 128
managers to pursue new opportunities at the local level while simultaneously
selectively targeting key clients and projects at a national level.
Local. At the local level, Central Parking's sales and marketing efforts are
decentralized and directed towards identifying new expansion opportunities
within a particular city or region. Managers are trained to develop the business
contacts necessary to generate new opportunities and to monitor their local
markets for take-away and outsourcing opportunities. Central Parking provides
its managers with a significant degree of autonomy in order to encourage prompt
and effective responses to local market demands, which is complemented by
management support and marketing training through Central Parking's corporate
offices. In addition, a manager's compensation is dependent, in part, upon his
or her success in developing new business. By developing business contacts
locally, Central Parking's managers often get the opportunity to bid on projects
when asset managers and property owners are dissatisfied with current operations
and also learn in advance of possible new projects.
National. At the national level, Central Parking's marketing efforts are
undertaken primarily by upper-level management, which targets developers,
governmental entities, the hospitality industry, mixed-use projects, and medical
facilities. These efforts are directed at operations that generally have
national name recognition, substantial demand for parking related services, and
the potential for nationwide growth. For example, Central Parking's current
clients include, among other national real estate companies and hotel chains,
the Rouse Company, Faison Associates, Equity Office Properties, May Department
Stores, Crescent Real Estate, Westin Hotels, and Hyatt Hotels. Management
believes that providing high-quality, efficient services to such companies will
lead to additional opportunities as those clients continue to expand their
operations. Outsourcing by parking facility owners will continue to be a source
for additional facilities, and management believes Central Parking's experience
and reputation with large real estate asset managers give it a competitive
advantage in this area.
INTERNATIONAL EXPANSION
Central Parking's international operations began in the early 1990's with the
formation of an international division, which is now one of the fastest growing
areas of Central Parking. Central Parking typically enters foreign markets
either through consulting projects or by forming joint ventures with established
local entities. Consulting projects allow Central Parking to establish a
presence and evaluate the prospects for growth of a given market without
investing a significant amount of capital. Likewise, forming joint ventures with
local partners allows Central Parking to enter new foreign markets with reduced
operating and investment risks.
Operations in London began in 1991 with a single consulting agreement and since
then have grown to 159 facilities in the United Kingdom including two terminals
at Heathrow International Airport and parking meter enforcement and ticketing
services for three local governments that have privatized these services.
Central Parking began expansion into Mexico in July 1994 by forming a joint
venture with Fondo Opcion, an established Mexican developer, and now operates 32
facilities in Mexico. Central Parking also operates 20 facilities in Puerto
Rico, 4 facilities in Canada, one facility in Spain and has entered into a
management contract in Kuala Lumpur, Malaysia related to the operation of a
5,400 space parking facility servicing one of the largest development projects
in the world. Central Parking established a business development office in the
Netherlands in 1995 to pursue expansion into other European countries. In 1996,
Central Parking acquired a 50% equity interest in a
121
<PAGE> 129
joint venture which operates five facilities in Germany. In order to manage its
international expansion, Central Parking has allocated responsibilities for
international operations to an Executive Vice President.
PARKING FACILITY PROPERTIES
Central Parking's operations are currently organized into 12 regions, 11 in
North America (10 in the United States, one in Mexico) and one which is
comprised primarily of the United Kingdom and Continental Europe. Each region is
supervised by a regional manager who reports directly to one of the Senior Vice
Presidents. Regional managers oversee four to six general managers who each
supervise Central Parking's operations in a particular city. The following table
summarizes certain information regarding Central Parking's facilities as of
September 30, 1998.
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
OF TOTAL OF TOTAL
REGIONS CITIES LOCATIONS MANAGED LEASED OWNED SPACES SPACES
- ------- ------ ---------- -------- ------- ------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta.............. Atlanta, 146 90 56 -- 82,659 8.1%
Birmingham,
Charleston (SC),
Charlotte, Columbia
(SC), Jackson (MS),
Mobile
Denver............... Denver/Colorado 160 92 58 10 72,291 7.1
Springs, Des
Moines, Kansas
City,
Minneapolis-St.
Paul, Oklahoma
City, St. Louis
International........ United Kingdom -- 165 80 85 -- 62,805 6.1
Birmingham, London,
Oxford, Newcastle
Germany -- Berlin,
Dresden, Frankfurt
Spain and Malaysia
Florida.............. Jacksonville, 222 125 97 -- 89,946 8.8
Miami/Ft.
Lauderdale,
Orlando, Puerto
Rico, Tampa/St.
Petersburg
Los Angeles.......... Los Angeles, Orange 94 72 22 -- 51,340 5.0
County (CA),
Phoenix
Mid-Atlantic......... Baltimore, Norfolk, 352 201 142 9 142,798 14.0
Philadelphia,
Pittsburgh,
Richmond,
Washington (D.C.)
Mexico............... Cuernavaca, Mexico 61 34 27 -- 31,796 3.1
City
Mid Western.......... Charleston (WV), 120 79 40 1 72,914 7.1
Cincinnati,
Cleveland,
Columbus,
Indianapolis,
Milwaukee, Ottawa,
Toronto
Nashville............ Chattanooga, 263 112 129 22 56,141 5.5
Knoxville,
Lexington/
Frankfort,
Louisville,
Memphis, Nashville
(1)
</TABLE>
122
<PAGE> 130
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
OF TOTAL OF TOTAL
REGIONS CITIES LOCATIONS MANAGED LEASED OWNED SPACES SPACES
- ------- ------ ---------- -------- ------- ------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
New York............. Hartford, Jersey 379 139 225 15 142,655 14.0
City,
New York,
Providence,
Stamford
San Francisco........ Oakland, Salt Lake 63 37 26 -- 20,674 2.0
City, San
Francisco, Seattle
Texas................ Albuquerque, 279 180 89 10 134,402 13.1
Austin,
Corpus Christi,
Dallas, El Paso,
Houston, New
Orleans, San
Antonio, Tulsa
Other................ Boston, Chicago, 136 61 75 -- 62,141 6.1
Nashua
----- ----- ----- --- --------- -----
Total........ 2,440 1,302 1,071 67 1,022,562 100.0%
===== ===== ===== === ========= =====
</TABLE>
- ---------------
(1) Includes Central Parking's corporate headquarters in owned facilities.
OPERATING ARRANGEMENTS
Central Parking operates parking facilities under three general types of
arrangements: management contracts, leases, and fee ownership. As of September
30, 1998, Central Parking operated 1,302 parking facilities through management
contracts, leased 1,071 parking facilities, and owned 67 parking facilities,
either independently or in joint ventures with third parties. The following
table sets forth certain information regarding the number of managed, leased, or
owned facilities as of the specified dates:
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
---------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
Managed Facilities..................................... 770 877 1,302
Leased Facilities...................................... 552 709 1,071
Owned Facilities....................................... 37 58 67
----- ----- -----
Total........................................ 1,359 1,644 2,440
===== ===== =====
</TABLE>
The general terms and benefits of these types of arrangements are described as
follows:
Management Contracts. Management contract revenues consist of
management fees (both fixed and percentage of revenues) and fees for
ancillary services such as insurance, accounting, equipment leasing, and
consulting. The cost of management contracts includes insurance premiums
and claims and other indirect overhead. Central Parking's responsibilities
under a management contract as a facility manager include hiring, training,
and staffing parking personnel, and providing collections, accounting,
record keeping, insurance, and facility marketing services. In general,
Central Parking is not responsible under its management contracts for
structural, mechanical, or electrical maintenance or repairs, or for
providing security or guard services or for paying property taxes. The
typical management contract is for a term of one to three years and
generally is renewable for successive one-year terms. Although management
contracts typically are for relatively short terms, Central Parking's
renewal rates for each of the past five fiscal years were in excess of 91%.
With respect to insurance, Central Parking's clients have the option of
obtaining insurance on their own or having Central Parking provide
insurance as part of the services provided under the management contract.
Because of its
123
<PAGE> 131
size and claims experience, Central Parking can purchase such insurance at
significant discounts to comparable market rates and, management believes,
at lower rates than Central Parking's clients can generally obtain on their
own. Accordingly, Central Parking generates profits on the insurance
provided under its management contracts. See "-- Litigation and Insurance."
Leases. Central Parking's rent under leases is generally either a fixed
annual amount, a percentage of gross revenues, or a combination thereof.
Leased facilities generally require a longer commitment and a larger
capital investment by Central Parking than managed facilities but generally
provide a more stable source of revenue and a greater opportunity for
long-term revenue growth. The cost of parking includes rent, payroll and
related benefits, depreciation, maintenance, insurance, and general
operating expenses. Under its leases, Central Parking is typically
responsible for all facets of the parking operations, including pricing,
utilities, and ordinary and routine maintenance, but is generally not
responsible for structural, mechanical, or electrical maintenance or
repairs, or property taxes. Lease arrangements are typically for terms of
three to ten years, with a renewal term, and provide for a contractually
established payment to the facility owner regardless of the operating
earnings of the parking facility.
Fee Ownership. Ownership of parking facilities, either independently or
through joint ventures, typically requires a larger capital investment than
managed or leased facilities but provides maximum control over the
operation of the parking facility and the greatest profit potential of the
three types of operating arrangements. All changes in owned facility
revenue flow directly to Central Parking, and Central Parking has the
potential to realize benefits of appreciation in the value of the
underlying real estate if the property is sold. The ownership of a parking
facility brings Central Parking complete responsibility for all aspects of
the property, including all structural, mechanical, or electrical
maintenance or repairs.
Joint Ventures. Central Parking seeks joint venture partners who are
established local or regional developers pursuing financing alternatives
for development projects. Joint ventures typically involve a development
where the parking facility is a part of a larger multi-use project,
allowing Central Parking's joint venture partners to benefit from a capital
infusion to the project. Joint ventures offer the revenue growth potential
of ownership with a partial reduction in capital requirements. Central
Parking has interests in joint ventures that own or operate parking
facilities located in Nashville, Denver, Tulsa, St. Louis, Mexico City,
Berlin, Dresden, and Frankfort.
MBE Partnerships. Central Parking is currently a party to eleven
separate minority business enterprise partnerships. These are generally
partnerships formed by Central Parking and a minority businessperson to
manage a facility. Central Parking owns 60% to 70% of the partnership
interests in each partnership and typically receives management fees before
partnership distributions are made to the partners.
COMPETITION
The parking industry is fragmented and highly competitive, with few barriers to
entry. Central Parking faces direct competition for additional facilities to
manage, lease, or own and the facilities currently operated by Central Parking
face competition for employees and customers. Central Parking competes with a
variety of other companies to add new operations. Although there are relatively
few large, national parking companies that compete with Central
124
<PAGE> 132
Parking, developers, hotel companies, and national financial services companies
have the potential to compete with parking companies. Municipalities and other
governmental entities also operate parking facilities which compete with Central
Parking. Central Parking also faces competition from local owner-operators of
facilities who are potential clients for Central Parking's management services.
Construction of new parking facilities near Central Parking's existing
facilities could adversely affect Central Parking's business.
Management believes that it competes for clients based on rates charged for
services; ability to generate revenues for clients; ability to anticipate and
respond to industry changes; range of services; and ability to expand
operations. Central Parking has a reputation as a leader in the industry and as
a provider of high quality services. Central Parking is one of the largest
companies in the parking industry and is not limited to a single geographic
region. Central Parking also has the financial strength to make capital
investments as an owner or joint venture partner that smaller or more leveraged
companies do not have. Central Parking's size has also allowed it to centralize
administrative functions that give the decentralized managerial operations
cost-efficient support. Moreover, Central Parking has obtained broad experience
in managing and operating a wide variety of facilities over the past 30 years.
Additionally, Central Parking is able to attract and retain quality managers
through its incentive compensation system that directly rewards successful sales
and marketing efforts and places a premium on profitable growth.
LITIGATION AND INSURANCE
The ownership of property and provision of services to the public entails an
inherent risk of liability. Although Central Parking is engaged in routine
litigation incidental to its business, there is no legal proceeding to which
Central Parking is a party which, in the opinion of management, will have a
material adverse effect upon Central Parking's financial condition, results of
operations or liquidity. Central Parking takes steps to attempt to disclaim its
liability for personal injury and property damage claims by printing disclaimers
on its ticket stubs and by placing warning signs in the facilities it owns or
operates. Central Parking also carries liability insurance that management
believes meets industry standards; however, there can be no assurance that any
future legal proceedings (including any related judgments, settlements, or
costs) will not have a material adverse effect on Central Parking's financial
condition and results of operations.
Central Parking purchases comprehensive liability insurance covering parking
facilities owned, leased, and managed by Central Parking. Such comprehensive
liability insurance coverage is in the amount of $1.0 million per occurrence and
$1.0 million in the aggregate per facility. In addition, Central Parking
purchases group insurance with respect to all Central Parking employees, whether
such persons are employed at owned, leased, or managed facilities. Because of
the size of the operations covered, Central Parking purchases these policies at
prices that, management believes, represent a discount to the prices that would
be charged to parking facility owners on a stand-alone basis. Pursuant to its
management contracts, Central Parking charges its customers for insurance at
rates it believes approximate market rates based upon its review of the
applicable market. In each case, Central Parking's clients have the option of
purchasing their own policies, provided Central Parking is named as an
additional insured; however, because Central Parking's fees for insurance are
generally competitive with market rates, Central Parking's clients have
historically chosen to pay Central Parking's insurance fees. A reduction in the
number of clients that purchase insurance through Central Parking, however,
could have a material adverse effect on the
125
<PAGE> 133
operating earnings of Central Parking. In addition, although Central Parking's
cost of insurance has not fluctuated significantly in recent years, a material
increase in insurance costs due to increased claims experienced by Central
Parking could adversely affect the profit associated with insurance charges
pursuant to management contracts and could have a material adverse effect on the
operating earnings of Central Parking.
REGULATION
Central Parking's business is not substantially affected by federal governmental
regulation, although parking facilities are sometimes directly regulated by both
municipal and state authorities. The facilities in New York City are, for
example, subject to certain governmental restrictions concerning numbers of
cars, pricing, and certain prohibited practices. Central Parking is also
affected by laws and regulations (such as zoning ordinances) that are common to
any business that owns, leases or manages 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 Central Parking'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 cost 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 ownership
or operation of parking facilities, Central Parking may be potentially liable
for such costs. Although Central Parking is currently not aware of any material
environmental claims pending or threatened against it or any of its owned or
operated parking facilities, there can be no assurance that a material
environmental claim will not be asserted against Central Parking or against its
owned or operated parking facilities. The cost of defending against claims of
liability, or of remediating a contaminated property, could have a material
adverse effect on Central Parking's financial condition or results of
operations.
Various other governmental regulations affect Central Parking's operation of
parking facilities, both directly and indirectly, including the Americans with
Disabilities Act ("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. Management believes that
the parking facilities Central Parking owns and operates are in substantial
compliance with these requirements.
126
<PAGE> 134
PRINCIPAL SHAREHOLDERS OF CENTRAL PARKING
The table below sets forth certain information regarding the beneficial
ownership of the Central Parking Common Stock, as of the date hereof, and as
adjusted to reflect the Merger based on an assumed Exchange Ratio of 88.658 (see
"The Merger -- General") of (i) each person known to Central Parking to
beneficially own, or who is expected to beneficially own, more than 5% of the
Central Parking Common Stock, (ii) each current director of Central Parking and
each expected director of Central Parking after the Merger, (iii) Central
Parking's Chief Executive Officer and the four other most highly compensated
executive officers, and (iv) all directors and executive officers of Central
Parking as a group. Unless otherwise indicated, the persons listed below have
sole voting and investment power over the shares of Central Parking Common Stock
shown as beneficially owned by them.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO THE MERGER(1) THE MERGER
-------------------- --------------------
NUMBER PERCENT NUMBER PERCENT
---------- ------- ---------- -------
<S> <C> <C> <C> <C>
Monroe J. Carell, Jr.(2)(3)............ 10,820,393 36.6% 10,820,393 29.1%
The Carell Children's Trust(4)......... 7,167,572 24.2 7,167,572 19.3
Monroe Carell, Jr. Foundation(5)....... 149,999 * 149,999 *
Monroe Carell, Jr. 1994 Grantor
Retained Annuity Trust(2)(6)......... 1,720,877 5.8 1,720,877 4.6
AEW Partners, L.P.(7).................. 0 * 3,385,671 9.1
Apollo Real Estate Investment Fund II,
L.P.(8).............................. 0 * 3,385,671 9.1
James H. Bond(9)....................... 321,982 1.1 321,982 *
Emanuel J. Eads(10).................... 28,717 * 28,717 *
Jeff L. Wolfe(11)...................... 26,954 * 26,954 *
Alan J. Kahn(12)....................... 19,897 * 19,897 *
Cecil Conlee(13)....................... 22,205 * 22,205 *
John W. Eakin(14)...................... 25,993 * 25,993 *
Edward G. Nelson(15)................... 30,568 * 30,568 *
William C. O'Neil, Jr.(14)............. 31,618 * 31,618 *
P.E. Sadler(16)........................ 28,468 * 28,468 *
Lowell Harwood(17)..................... 24,927 * 24,927 *
Lewis Katz(18)......................... 672,822 2.3 672,822 1.8
William S. Benjamin(19)................ 0 * 0 *
Marc L. Davidson(20)................... 0 * 0 *
All directors and executive officers as
a group (19 persons) (21)............ 12,127,966 40.6% 12,127,966 32.4%
========== ==========
</TABLE>
- ---------------
* Indicates less than 1%
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares as of the date of this Joint Proxy
Statement/Prospectus that such person or group has the right to acquire
within 60 days after such date, or with respect to which such person
otherwise has or shares voting or investment power. For purposes of
computing beneficial ownership and the percentages of outstanding shares
held by each person or group of persons on a given date, shares which such
person or group has the right to acquire within 60 days after such date are
shares for which such person has beneficial ownership and are deemed to be
outstanding for purposes of
127
<PAGE> 135
computing the percentage for such person, but are not deemed to be
outstanding for the purpose of computing the percentage of any other
person.
(2) Address: 2401 21st Avenue South, Suite 200, Nashville, Tennessee 37212.
(3) Includes 13,241 shares held in Central Parking's Deferred Unit Plan, which
Plan contains a power of attorney pursuant to which Mr. Carell votes such
shares, options to purchase 15,560 shares granted pursuant to the Key
Personnel Plan, 1,850,899 shares held by two trusts with respect to which
Mr. Carell is trustee and is entitled to an annuity and 149,999 shares held
by the Monroe Carell, Jr. Foundation. See footnotes 5 and 6. Excludes
7,167,572 shares held by The Carell Children's Trust and 93,030 shares held
by trusts benefitting Mr. Carell's grandchildren, with respect to which Mr.
Carell disclaims beneficial ownership.
(4) The Carell Children's Trust is a trust created by Mr. Carell in 1987 for
the benefit of his children, the trustee of which is Equitable Trust
Company, 800 Nashville City Center, 511 Union, Nashville, Tennessee 37219.
(5) The Monroe Carell, Jr. Foundation is a charitable private foundation of
which Mr. Carell is president and a director.
(6) The Monroe Carell, Jr. 1995 Grantor Retained Annuity Trust and The Monroe
Carell, Jr. 1994 Grantor Retained Annuity Trust are trusts created in 1995
and 1994 respectively, of which Mr. Carell is trustee and from which Mr.
Carell is entitled to an annuity until September 1999 with the remainder
passing to his children.
(7) Address: 225 Franklin Street Boston, MA 02110. Shares owned by AEW may be
deemed beneficially owned by, its general partner, AEW/L.P., and the
general partner of AEW/L.P., AEW, Inc.
(8) Address: 1301 Avenue of the Americas, New York, NY 10019. Shares owned by
Apollo may be deemed beneficially owned by its general partner, Apollo Real
Estate Advisors II, L.P. ("AREA II"), and the general partner of AREA II,
Apollo Real Estate Capital Advisors II, Inc.
(9) Includes 267,750 shares of restricted stock granted in connection with Mr.
Bond's Performance Agreement, 2,250 shares held by his spouse, 1,125 shares
held by the Emily Bond Trust of which Mrs. Bond is trustee, 733 shares held
by his daughter and options to purchase 27,000 shares of Central Parking
Common Stock.
(10) Includes options to purchase 20,249 shares of Central Parking Common Stock.
(11) Includes options to purchase 20,249 shares of Central Parking Common Stock,
2,250 shares held by Mr. Wolfe's spouse, and 1,125 shares held by the
Patricia Wolfe Children's Trust of which Mr. Wolfe is trustee, and for
which Mr. Wolfe disclaims beneficial ownership.
(12) Includes options to purchase 15,749 shares of Central Parking Common Stock.
(13) Includes 718 shares of restricted stock granted in lieu of director
compensation pursuant to Central Parking's Restricted Stock Plan and
options to purchase 20,250 shares of Central Parking Common Stock.
(14) Includes 118 shares of restricted stock granted in lieu of director
compensation pursuant to Central Parking's Restricted Stock Plan and
options to purchase 20,250 shares of Central Parking Common Stock.
(15) Includes 4,500 shares held by Mr. Nelson's spouse, of which Mr. Nelson
disclaims beneficial ownership, 118 shares of restricted stock granted in
lieu of director compensation pursuant to Central Parking's Restricted
Stock Plan and options to purchase 20,250 shares of Central Parking Common
Stock.
128
<PAGE> 136
(16) Includes 582 shares of restricted stock granted in lieu of director
compensation pursuant to Central Parking's Restricted Stock Plan, options
to purchase 20,250 shares of Central Parking Common Stock granted pursuant
to the Director Stock Option Plan and 2,200 shares held by his spouse.
(17) Includes 1,177 shares of restricted stock granted in lieu of director
compensation pursuant to Central Parking's Restricted Stock Plan and
options to purchase 11,250 shares of Central Parking Common Stock.
(18) Includes 667,779 owned by a partnership of which Mr. Katz is a general
partner, options to purchase 5,000 shares of Central Parking Common Stock
and 43 shares of restricted stock granted in lieu of director compensation
pursuant to Central Parking's Restricted Stock Plan.
(19) Mr. Benjamin is expected to be Apollo's nominee to the Central Parking
Board after the Merger. The indicated number of shares for Mr. Benjamin
does not include shares to be acquired by Apollo in the Merger. Mr.
Benjamin is a principal of Apollo Real Estate Advisors II, L.P., the
general partner of Apollo, and disclaims beneficial ownership of all shares
not directly held by him.
(20) Mr. Davidson is expected to be AEW's nominee to the Central Parking Board
after the Merger. The indicated number of shares for Mr. Davidson does not
include shares to be acquired by AEW in the Merger. Mr. Davidson disclaims
beneficial ownership of all shares not directly held by him.
(21) Includes options to purchase 269,054 shares of Central Parking's Common
Stock, 270,624 shares of restricted stock and 13,241 shares held in Central
Parking's Deferred Unit Plan.
129
<PAGE> 137
DESCRIPTION OF ALLRIGHT
BUSINESS -- GENERAL
Allright is a holding company, the sole material asset of which is 100% of the
authorized, issued and outstanding shares of common stock, $0.10 par value, of
Allright Corporation. Beginning operations in 1926, Allright Corporation is one
of the world's largest and most experienced full-service parking management
companies. As of September 30, 1998, Allright operated approximately 2,315
facilities containing approximately 550,000 parking spaces, including 72
facilities in Canada containing approximately 30,000 parking spaces. As of
September 30, 1998, Allright operated facilities in over one hundred cities
across the United States and Canada, including facilities in thirty-three
states, the District of Columbia, and two Canadian provinces. Facilities
operated by Allright include such premier facilities as The Sears Tower Garage
in Chicago, Tabor Center Garage in Denver, Convention Center Garage in
Cincinnati, the Boston Commons Garage in Boston, the Lincoln Center Garage in
New York City and Rich Stadium in Buffalo.
OPERATIONS; STRUCTURE
Allright, in its name and through various subsidiaries and joint ventures,
operates parking facilities under three different types of arrangements: fee
ownership, leases, and management contracts. As of September 30, 1998, Allright,
directly or indirectly, owned 195 facilities, leased 1,473 facilities, and
operated 647 facilities through management contracts. The general terms of the
management contracts and leases to which Allright and its subsidiaries are a
party are similar to those to which Central Parking is a party as described
under "Description of Central Parking -- Operating Arrangements; Management
Contracts." Allright and its subsidiaries' management contract renewal rates for
the years ended June 30, 1996, 1997 and 1998, were 89%, 92% and 89%,
respectively.
The following table illustrates the number of facilities managed, leased, and
owned, directly and indirectly, by Allright in both the United States and Canada
as of September 30, 1998.
<TABLE>
<CAPTION>
PERCENT OF
TOTAL
MANAGED LEASED OWNED TOTAL FACILITIES SPACES
------- ------ ----- ----- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
United States.................. 624 1,426 193 2,243 97 515,198
Canada......................... 23 47 2 72 3 29,909
--- ----- --- ----- --- -------
Total................ 647 1,473 195 2,315 100 545,107
=== ===== === ===== === =======
</TABLE>
130
<PAGE> 138
Allright's facilities are currently organized into 4 divisions, and these
divisions are further subdivided into 16 regions. Thirteen of the regions are
supervised by a regional manager who reports directly to a divisional manager.
The following table summarizes certain information regarding Allright's
facilities as of September 30, 1998:
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER TOTAL OF TOTAL
DIVISION REGION CITIES OF LOCATIONS MANAGED LEASED OWNED SPACES SPACES
- -------- ------ ------ ------------ ------- ------ ----- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 A.... Birmingham, Chattanooga, 110 19 85 6 13,336 2.4%
Fort Myers, Gainesville,
Jacksonville, Knoxville,
Lynchburg, Mobile
1 B.... Atlanta, Charlotte, Miami, 122 19 83 20 19,969 3.7%
Savannah, Tampa, West
Palm Beach
1 C.... Cincinnati, Hebron, Dayton, 129 26 78 25 23,211 4.3%
Indianapolis, Newport
News, Roanoke, Roanoke
Airport, Winston-Salem
1 D.... Ann Arbor, Burlington, 116 107 9 -- 70,396 12.9%
Detroit, Holyoke, Lincoln,
Manchester, Montpelier,
Northampton, Pittsfield,
Pontiac, Richmond,
Scranton, Wilkes-Barre
2 A.... Long Beach, Los Angeles, 131 24 103 4 21,251 3.9%
San Diego
2 B.... Oakland, Reno, 119 33 85 1 16,825 3.1%
Sacramento, San Francisco
2 C.... Kansas City, Milwaukee, 166 34 116 16 34,014 6.2%
Milwaukee Airport,
Minneapolis, Omaha,
Seattle
3 A.... Baton Rouge, Little Rock, 301 56 222 23 32,932 6.0%
Louisville, Memphis,
Nashville, New Orleans,
Shreveport
3 B.... Austin, Beaumont, Dallas, 355 89 235 31 63,977 11.7%
El Paso, Fort Worth,
Houston, Lake Charles,
Peoria, Springfield
3 C.... Albuquerque, Corpus 208 50 139 19 60,495 11.1%
Christi, Denver, Denver
Airport, Las Vegas,
Phoenix, Phoenix Airport,
San Antonio, St. Louis
3 D.... Tulsa, Houston Airport 4 -- 1 3 2,601 0.5%
4 A.... Binghamton, Buffalo, 197 49 130 18 64,312 11.8%
Columbus, Poughkeepsie,
Poughkeepsie -- Transit,
Rochester, Rochester
Airport, Syracuse, Syracuse
Airport, Toledo
4 B.... Baltimore, Chicago, Jersey 171 28 121 22 31,709 5.8%
City, Newark, Philadelphia,
Washington D.C.
4 C.... Montreal, Ottawa, Toronto 72 23 47 2 29,909 5.5%
4 D.... Boston 11 1 5 5 2,302 0.4%
4 E.... Edison -- CT, Edison -- MD, 103 89 14 -- 57,868 10.6%
Edison -- NJ, Edison -- NY,
Edison -- PA, Edison -- VA
----- --- ----- --- ------- -----
TOTAL 2,315 647 1,473 195 545,107 100%
===== === ===== === ======= =====
</TABLE>
131
<PAGE> 139
STRATEGY & GROWTH
Management believes that Allright's size and experience are the cornerstones of
its success in the parking services industry. Technological applications to the
parking services industry and professional management strategies have
contributed to Allright's success. Since 1926, Allright Corporation's exclusive
business focus has been parking services. Over its seventy-two year history, the
company has accumulated an extraordinarily broad base of operational expertise
in virtually every segment of the parking industry. Allright's primary business
strategy has been to aggressively grow the company through both synergistic
acquisitions and the addition of new management contracts and leased facilities.
Allright's primary operating strategy has been to increase profitability of its
managed, leased, and fee owned facilities by focusing on core operations and
emphasizing: decentralized management; strict revenue control; advanced
management information technology; strategic marketing/sales programs; ancillary
parking services; and continual employee training programs. While implementing
both its operating and business strategies, Allright has always maintained a
basic philosophy focused on providing the highest quality of parking and client
service. As both an owner and operator, much of Allright's success stems from
its clear understanding that parking is a local business. Every facility has its
own uniqueness, and every client has its own needs and priorities.
In addition, the expertise and resources of Allright's controlling shareholders
have played a large part in Allright's growth. AEW is an investment partnership
managed by AEW Capital Management, L.P., a Boston-based full-service real estate
advisor, which represents pension funds, university endowments, retirement
programs, and other institutional investment groups. Apollo, a New York-based
real estate investment advisor, represents a broad spectrum of institutional
investors and has extensive experience with ownership and management of real
estate operating companies.
132
<PAGE> 140
As the chart below demonstrates, Allright has embarked on an aggressive growth
strategy:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
MANAGED FACILITIES:
Beginning of year.................................... 247 254 364
Acquired during year................................. 0 102 213
Added during year.................................... 35 54 98
Deleted during year.................................. (28) (46)* (40)
----- ----- -----
End of year.......................................... 254 364 635
----- ----- -----
Renewal rate......................................... 89% 92% 89%
LEASED FACILITIES:
Beginning of year.................................... 1,307 1,273 1,315
Acquired during year................................. 0 39 63
Added during year.................................... 112 161 269
Deleted during year.................................. (146) (158) (153)
----- ----- -----
End of year.......................................... 1,273 1,315 1,494
----- ----- -----
Renewal Rate........................................... 89% 88% 88%
----- ----- -----
OWNED FACILITIES:
Beginning of year.................................... 174 178 179
Acquired during year................................. 0 0 3
Purchased during year................................ 5 7 19
Sold during year..................................... 1 6 7
----- ----- -----
End of year.......................................... 178 179 194
----- ----- -----
Total facilities (end of year)............... 1,705 1,858 2,323
===== ===== =====
SUMMARY:
Managed.............................................. 254 364 635
Leased............................................... 1,273 1,315 1,494
Owned................................................ 178 179 194
----- ----- -----
Total facilities............................. 1,705 1,858 2,323
===== ===== =====
</TABLE>
- ---------------
* 25 of the locations in Toronto were combined into 1 location for accounting
purposes and, for purposes of this chart, are categorized as "deleted" during
the year.
Allright has completed thirty-nine acquisitions since AEW and Apollo acquired
control of Allright in October 1996 for a total purchase price of approximately
$90 million. Allright's acquisitions have included both fee asset acquisitions
as well as corporate acquisitions. Recent material corporate acquisitions and
strategic ventures include the following:
Edison Parking Management, L.P. (the "Edison Partnership"). The Edison
Partnership is a limited partnership formed in June 1997 to operate parking
facilities throughout the Northeast United States under the "Edison ParkFast"
name. The controlling persons of Allright's joint venture partner have been
operating parking facilities in the Northeast under the "Edison ParkFast" name
since 1955. As of September 30, 1998, the Edison Partnership operated
approximately 103 locations in the greater metropolitan New York City area,
Philadelphia, Baltimore, and northern New Jersey, including Lincoln Center, the
Metropolitan Museum of Art, Columbia Presbyterian Hospital and various office
buildings, apartment houses, hotels, retail centers, commuter terminals, and
entertainment facilities.
133
<PAGE> 141
National Garages, Inc. ("National"). In December 1997, Allright purchased
National. National was founded in 1925 as a single city operation in Detroit,
Michigan and has since grown to over two hundred managed locations, primarily in
the Mid-Western United States. National provides services to various businesses,
including municipal agencies, hospitals, airports, private developers, retail
establishments, and banks. National has maintained its reputation as a pioneer
in the parking industry through, among other things, its high-speed ramp
designs, its Park-and-Shop concept and its patent on the ticket spitter/gate
system.
Allied Parking ("Allied"). On October 1, 1998, Allright closed the acquisition
of six long-term leasehold interests and the trademark name Allied Parking. This
was the first of a staged acquisition that will result in Allright purchasing up
to thirteen long-term leasehold interests. Allied is a New York City based
parking operator whose markets cover commercial, hotel, and to a lesser extent
residential properties. The concentration of the Allied locations is in midtown
Manhattan with the exception of two locations downtown and two locations on the
upper east side.
MBE PARTNERSHIPS
Allright is currently a party to several separate minority business enterprise
partnerships formed by Allright or a subsidiary of Allright and a minority
business person to manage various facilities. Allright typically owns, directly
or indirectly, a controlling interest in each partnership and typically receives
management fees before partnership distributions are made to the partners.
EMPLOYEES
As of September 30, 1998, Allright, directly and indirectly, employed
approximately 5,140 individuals, including both full-time and part-time
employees. Management believes that Allright's employee relations are good.
Approximately 591 United States employees are represented by labor unions.
Cities in which some of Allright's direct or indirect employees are represented
by unions are Detroit, Philadelphia, New York City, Syracuse, Seattle,
Birmingham, and Chicago. Allright has not experienced any work stoppages within
the past five years.
NO ESTABLISHED TRADING MARKET; DIVIDENDS
Allright is a privately-held company and there is no established public trading
market for any class of Allright's securities. As of September 30, 1998, there
were approximately 60 holders of Allright Common Stock.
Allright has not historically paid dividends but has retained its earnings for
future growth. Certain restrictions on paying dividends were also placed upon
Allright pursuant to a credit agreement, which is expected to be satisfied in
full on the Closing Date from the proceeds from Central Parking's Credit
Facility or the proceeds from a new credit facility to be obtained by Central
Parking (for which Central Parking has received a commitment letter), and at
such time the restrictions set forth in Allright's credit agreement, including
the restriction on dividends, will be eliminated.
134
<PAGE> 142
INTERNATIONAL FOREIGN CURRENCY EXPOSURE
Allright operates subsidiaries in Canada. Currently, Allright has limited
exposure to foreign currency risk and has no hedge programs.
YEAR 2000
Allright is currently replacing its computer systems and applications by
incorporating advanced technology. Among other advances, the new computer
systems will be Year 2000 compliant. The expenditures for system replacement
will be accounted for as capital expenditures and will not have a significant
impact on Allright's operations or liquidity.
LITIGATION
Allright is involved in routine litigation relating to various contract
disputes, property damage and personal injury, none of which management of
Allright considers to be material to the business or operations of Allright.
CERTAIN INDEMNIFICATION RIGHTS
Nedinco Delaware Incorporated, a Delaware corporation, and Hang Lung Development
Company Ltd., a Hong Kong corporation, have agreed to indemnify Allright for
certain costs and liabilities incurred in connection with or arising out of the
operations of the Predecessor Company prior to October 31, 1996. As a result of
the indemnification, expenses related to items covered by the indemnification
are being paid directly by Nedinco Delaware Incorporated.
135
<PAGE> 143
ALLRIGHT'S MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the results of operations should be read in
conjunction with the Consolidated Financial Statements and Notes thereto.
OVERVIEW
Allright is a holding company, the sole material asset of which is 100% of the
authorized, issued and outstanding shares of common stock of Allright
Corporation, which began operations in 1926. Allright Corporation is one of the
world's largest and most experienced full-service parking management companies.
As of June 30, 1998, Allright operated facilities in over one hundred cities
across the United States and Canada, including facilities in thirty-three
states, the District of Columbia, and two Canadian provinces. Allright operates
parking facilities under three different types of arrangements -- management
contracts, leases and fee ownership. As of June 30, 1998, Allright operated 635
parking facilities under management contracts, 1,494 parking facilities under
leases, and owned either independently or through joint ventures, 194 parking
facilities.
On October 31, 1996, Allright Acquisition Company, Inc., a Delaware corporation
and wholly owned subsidiary of Allright, acquired all of the common stock (the
"Acquisition") of Allright Corporation from Nedinco Delaware Incorporated
("Nedinco"), a Delaware corporation, for approximately $226,334,000, including
acquisition-related expenses of approximately $3,267,000. The Acquisition was
financed with proceeds from a capital contribution of $65,850,000 from Allright
and the remainder was financed through a credit agreement (the "CSFB Credit
Agreement") with CS First Boston Mortgage Capital Corp. ("CSFB"). The
Acquisition was accounted for as a purchase, and the total purchase price was
allocated to assets acquired and liabilities assumed based on their relative
fair market values at the date of purchase and resulted in goodwill of
approximately $33,596,000.
136
<PAGE> 144
Amounts for fiscal 1997 reflect the pro forma results of operations of Allright
and the Predecessor Company, presented as if the Acquisition had been effected
July 1, 1996 (referred to herein as "fiscal pro forma 1997"). Unless otherwise
noted in the discussion below, the actual and fiscal pro forma 1997 financial
results are the same.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------
1996 1997(1) 1998
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Parking services revenues...................... $167,709 $173,476 $206,448
Management fee revenues........................ 4,645 5,161 10,936
Costs and expenses:
Cost of parking services....................... 138,604 139,642 169,811
Depreciation and amortization.................. 6,257 6,738 9,633
General and administrative expenses............ 9,271 9,047 11,919
Issuance of stock to management................ -- -- --
Amortization of goodwill....................... -- 1,125 1,177
-------- -------- --------
Income from parking operations................... 18,222 22,085 24,844
Interest expense................................. (5,915) (20,577) (22,859)
Interest and investment income................... 729 973 1,308
Minority interest................................ -- (163) (289)
Gain (loss) on sales of property................. 1,101 91 (710)
-------- -------- --------
Income (loss) before income taxes and
extraordinary item............................. 14,137 2,409 2,294
Income taxes..................................... (5,955) (3,328) (2,226)
-------- -------- --------
Income (loss) before Extraordinary item.......... 8,182 (919) 68
Extraordinary item............................... -- (1,534) --
-------- -------- --------
Net income (loss)................................ $ 8,182 $ (2,453) $ 68
======== ======== ========
</TABLE>
- ---------------
(1) Gives effect to the Acquisition as if it had been effected July 1, 1996. The
foregoing unaudited pro forma amounts are based upon certain assumptions and
estimates, including, but not limited to, (a) interest expense on debt
incurred to finance the Acquisition, (b) depreciation expense related to the
net increase in the values of garages, buildings and leaseholds, (c)
amortization of goodwill over 30 years associated with the Acquisition and
(d) the related tax effects of (a), (b) and (c). Additionally, the
nonrecurring charge to the Predecessor Company for the $5,500,000
compensation charge related to the equity commitment made by Nedinco was
excluded from the 1997 unaudited pro forma condensed results of operations.
The unaudited pro forma information set forth above is not necessarily
indicative of the results that actually would have been achieved had such
transactions been consummated as of July 1, 1996, or that may be achieved in
the future.
137
<PAGE> 145
RESULTS OF OPERATIONS
Year ended June 30, 1998 compared to fiscal pro forma year ended June 30, 1997
Parking service revenues and management fee revenues in fiscal 1998 increased to
$217.4 million from $178.6 million in fiscal pro forma 1997, an increase of
$38.8 million. Of the $38.8 million increase, $10.0 million resulted from
parking company acquisitions and individual lot acquisitions in fiscal 1998. A
combination of the net addition of 174 leased and managed locations and parking
rate increases on existing lots nationwide resulted in a $14.5 million increase
in revenue. The remaining increase of $14.3 million was primarily attributable
to a full 12 months of revenue, versus one month revenue in 1997, related to
Allright's 50 percent controlling interest in the Edison Partnership formed on
June 1, 1997, between Allright and Park Fast Parking Management L.P. ("Park
Fast").
Cost of parking services in fiscal 1998 increased to $169.8 million from $139.6
million in fiscal pro forma 1997, an increase of $30.2 million. Rent expense
increased $10.6 million, principally as a result of new locations from
acquisitions and additional percentage rent on existing locations. Payroll
expense increased by $6.3 million resulting from the additional personnel
associated with acquisitions, new locations and increases on existing payroll.
The remaining $13.3 million increase is primarily attributable to the Edison
Partnership. Cost of parking services as a percentage of operating revenues,
remained relatively consistent at 78.1% in fiscal 1998 compared to 78.2% in
fiscal pro forma 1997.
Depreciation and amortization in fiscal 1998 increased to $9.6 million from $6.7
million in fiscal pro forma 1997, an increase of $2.9 million. Of this increase,
$1.7 million is attributable to the amortization related to the Edison
Partnership management contracts. The remaining increase resulted primarily from
parking company acquisitions and lease acquisitions in fiscal 1998. The
Acquisition resulted in a pro forma adjustment in 1996 of $0.1 million related
to increased monthly leasehold amortization.
General and administrative expenses in fiscal 1998 increased to $11.9 million
from $9.0 million in fiscal pro forma 1997, an increase of $2.9 million. This
increase was primarily a result of an increase in payroll expense associated
with the additional general and administrative expenses of acquired operations,
as well as, opening of additional leased and owned locations and the costs
associated with acquiring additional personnel in the corporate office.
Amortization of goodwill in fiscal 1998 increased to $1.2 million from $1.1
million in fiscal pro forma 1997, an increase of $0.1 million. The amortization
of goodwill increase resulted primarily from parking company acquisitions in
1998. The Acquisition resulted in a pro forma adjustment of $0.4 million related
to additional amortization of goodwill.
Interest expense increased in fiscal 1998 to $22.9 million from $20.6 million in
fiscal pro forma 1997. The increased interest expense was a result of borrowing
to fund additional asset purchases and acquisitions during the year. Additional
debt financing was obtained for the Acquisition resulting in a pro forma
adjustment to interest expense of $4.9 million.
Interest income increased in fiscal 1998 to $1.3 million from $1.0 million in
fiscal pro forma 1997. The increase in interest income was the result of
additional short-term investments made during fiscal 1998.
Loss from extraordinary item in fiscal pro forma 1997 was $1.5 million compared
to zero in 1998. The decrease is due to the extraordinary loss recognized in
connection with the defeasance of industrial revenue bonds in fiscal pro forma
1997.
138
<PAGE> 146
Fiscal pro forma year ended June 30, 1997 compared to year ended June 30, 1996
Parking service revenues and management fee revenues in fiscal pro forma 1997
increased to $178.6 million from $172.4 million in fiscal 1996, an increase of
$6.2 million. Of the $6.2 million increase, $3.5 million resulted from parking
company acquisitions and individual lot acquisitions in fiscal pro forma 1997.
The remaining increase was attributable to a combination of the net addition of
36 leased and managed locations and parking rate increases on existing lots
nationwide.
Cost of parking services in fiscal pro forma 1997 increased to $139.6 million
from $138.6 million in fiscal 1996, an increase of $1.0 million. Contract labor
expense increased $0.7 million, principally as a result of labor costs related
to the computer systems and contract labor related to the Edison Partnership.
Payroll expense accounted for $0.9 million being attributable to a combination
of acquisitions, new locations and increases on existing payroll. The remaining
decrease of $0.6 million is primarily attributable to a decrease in rent due to
a loss of a significant lease in the second quarter of fiscal 1996. Cost of
parking services as a percentage of parking revenues decreased to 78.2% in
fiscal pro forma 1997 from 80.4% in fiscal 1996. This decrease of 2.2% was
attributable predominantly to the spreading of a number of fixed costs,
primarily rent and property costs, over a larger revenue base.
Depreciation and amortization in fiscal pro forma 1997 increased to $6.7 million
from $6.3 million in fiscal 1996, an increase of $0.4 million. This increase
resulted primarily from increased capital expenditures including van purchases
for off-airport locations and a corporate re-imaging program. In addition, the
October 1996 Acquisition resulted in a pro forma adjustment in 1997 of $0.1
million related to increased monthly leasehold amortization and monthly
depreciation.
General and administrative expenses in fiscal pro forma 1997 decreased to $9.0
million from $9.3 million in fiscal 1996, a decrease of $0.3 million. This
decrease was primarily a result of the discontinuance of management fees paid to
the predecessor shareholders.
Amortization of goodwill in fiscal pro forma 1997 increased to $1.1 million from
a zero balance in fiscal 1996. The amortization of goodwill in 1997 is a direct
result of the Acquisition.
Interest expense increased in fiscal pro forma 1997 to $20.6 million from $5.9
million in fiscal 1996. The increased interest expense was a result of
borrowings to fund the Acquisition and additional asset purchases and
acquisitions during the year. Additional debt financing was obtained for the
Acquisition resulting in a pro forma adjustment to interest expense of $4.9
million.
Interest income increased in fiscal pro forma 1997 to $1.0 million from $0.7
million in fiscal 1996. The increase was a result of additional short-term
investments made during fiscal pro forma 1997.
Gain on sales of property, equipment and leases in fiscal pro forma 1997
decreased to $0.1 million from $1.1 million in fiscal 1996. The decrease of $1.0
million was primarily a result of a decrease in the sales of lots in fiscal pro
forma 1997.
Loss from extraordinary item in fiscal pro forma 1997 was $1.5 million compared
to zero in 1996. The increase is due to the extraordinary loss recognized in
connection with the defeasance of industrial revenue bonds in fiscal pro forma
1997.
139
<PAGE> 147
ACQUISITIONS
On June 1, 1997, Allright acquired a 50 percent controlling interest in the
Edison Partnership. The Edison Partnership's assets consist of management
contracts contributed by Park Fast. The value of Park Fast's interest is
reflected as minority interest in the balance sheet of Allright.
On December 1, 1997, Allright purchased National, based in Detroit, which
operates 210 facilities located primarily in the Mid-West United States. The
purchase price of approximately $3.7 million was paid in cash and financed
through working capital and a draw of $2.2 million on Allright's Permitted
Acquisition Loan (as defined below).
During the period from October 31, 1996 through June 30, 1997, Allright acquired
four properties and four companies for an aggregate purchase price of $8.4
million. During fiscal year 1998, Allright acquired 19 properties and seven
companies for aggregate purchase prices of $35 million and $5.4 million,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Allright's primary sources of working capital are cash flow from operations.
Allright had negative working capital of $9.1 million and $10.4 million as of
June 30, 1998 and 1997, respectively which reflects the incongruent timing of
Allright's cash inflows and outflows. The principal use of cash flows is to
finance the expansion of Allright's operations.
In October 1996, Allright obtained a revolving line of credit with a maximum
borrowing capacity of $75 million, maturing October 31, 1999 (the "Permitted
Acquisition Loan"). As of June 30, 1998, Allright had $43.7 million available
under the Permitted Acquisition Loan, which bears interest at LIBOR plus 3.75
percent. On March 5, 1998, Allright secured a line of credit and letter of
credit with Bank One Texas, National Association (the "Bank One Loan"), for a
maximum of $5.1 million. As of June 30, 1998, letters of credit outstanding
under the Bank One Loan were $1.7 million, leaving $3.4 million available.
The Acquisition. In October 1996, Allright entered into the CSFB Credit
Agreement for the purpose of financing the purchase of the Predecessor Company.
Allright secured $30 million under Tranche A, Sub-portion One, with an annual
interest rate of one-month LIBOR plus 3.00% up to October 30, 1998, and LIBOR
plus 3.25% thereafter, and an additional $125 million under Tranche A,
Sub-portion Two, with an annual interest rate of LIBOR plus 3% up to October 31,
1998, and LIBOR plus 3.25% thereafter. Allright also secured an additional $30
million under Tranche 2 with an annual interest rate of 12.25% up to October 30,
1998 and 12.50% thereafter. All Tranches are set to mature on October 30, 1999.
Upon consummation of the Merger, management believes that the existing debt will
be refinanced by Central Parking. In the event the Merger is not consummated,
management intends to either refinance the existing debt obligations with CSFB
or obtain new financing when they expire on October 30, 1999. Management
believes it will obtain this financing at similar or better terms. The Company
used the proceeds from these Tranches to finance the purchase of the Predecessor
Company, to pay off a majority of its existing notes and to defease all of its
Industrial Development Revenue Bonds ("IRBs") in the amount of $17,892,093, of
which Allright recorded an extraordinary loss of $1,534,000. While the IRBs have
been defeased, at June 30, 1997 and 1998, $15,800,000 and $15,515,000,
respectively, of the IRBs remain outstanding in a defeasance trust.
140
<PAGE> 148
Issuance of Common Stock. On October 31, 1996, Apollo and AEW each obtained
32,925 shares of the Company for a combined $65.8 million. Since that date, AEW
and Apollo have each obtained an additional 5,263 shares for a total combined
$15.8 million. From February 28, 1997 through June 30, 1998, an executive of
Allright has purchased a total of 900 shares of Allright, for a combined $0.9
million. In addition 1,650 shares were issued to management for a combined $1.65
million, and 400 shares were issued to a financial advisory firm that assisted
Allright during the Acquisition.
Leases. Allright leases parking properties pursuant to noncancellable operating
leases that expire at various dates through 2073. In addition to regular rental,
certain leases require payment of a percentage of gross receipts. The terms of
certain lease agreements also provide for payment by the lessee of taxes,
insurance and maintenance on the facilities. Certain long-term lease agreements
also have various terms of renewal, escalation clauses and provisions under
which Allright could share in any gains upon the sale of property during the
lease term. Allright also uses rental income from subleases to offset current
lease payments.
IMPACT OF INFLATION AND CHANGING PRICES
The primary sources of revenues to Allright are parking revenues from owned and
leased locations and management contract revenue (net of expense reimbursements)
on managed parking facilities. Allright believes that inflation has had a
limited impact on its overall operations for fiscal years ended June 30, 1998
and 1997.
YEAR 2000
Allright has considered the impact of year 2000 issues on its computer systems
and applications and has developed a remediation plan. The general ledger system
is year 2000 compliant. Compliance activities are in process with respect to
field office systems and facilities' systems. Equipment upgrades and revisions
are expected to remedy field issues by the year 2000. Allright believes the
impact of the year 2000 will not have a significant impact on its operations or
liquidity.
ACCOUNTING PRONOUNCEMENTS
In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was issued. SFAS
No. 130 establishes standards for reporting and display of comprehensive income
and its components in a full set of general-purpose financial statements.
Comprehensive income is the total of net income and all other nonowner changes
in equity. Allright is required to adopt SFAS No. 130 in the first quarter of
fiscal 1999. Reclassification of comparative financial statements provided for
earlier periods will be required. Allright believes that the display of
comprehensive income will only differ from the currently reported net income by
the foreign currency translation currently reported in the consolidated
statement of stockholders' equity.
RECENT DEVELOPMENTS
Allied Parking. On October 1, 1998, Allright purchased from Allied four leases
relating to parking facilities in Manhattan, with maturities ranging from 2006
to 2029 for $14.2 million in cash. Allied agreed to lease to Allright two more
lots for 19 years each in exchange for a prepaid lease payment of $4.9 million.
Allright also purchased the right to use the "Allied Parking" name for $835,000
in cash.
141
<PAGE> 149
Merger with Central Parking. On September 21, 1998, the Merger Agreement was
signed pursuant to which Allright will merge with Central Parking Sub. The
Merger, which is expected to be accounted for as a pooling of interests
transaction, is based on an equity purchase price of $564 million, which is
subject to adjustment for, and reduction related to, among other things,
transaction costs, acquisitions and Allright indebtedness. For purposes of
computing the Exchange Ratio, the Central Parking Common Stock will have a
deemed price of $46.00 per share. The Merger remains subject to certain closing
conditions, including the expiration of the waiting period under the HSR Act.
The Merger is also subject to approval by the shareholders of both Central
Parking and Allright at the Special Meetings. The Merger is anticipated to close
in early 1999.
System Conversion. Allright is in the process of upgrading local and wide area
information networks, computer hardware, software, and connection devices to
comply with Year 2000 issues. The vendors of such computer equipment have
warranted that their systems will appropriately process information beyond Year
2000. Allright expects that the conversion of all system critical functions will
be completed no later than the end of the first calendar quarter of 1999.
Management expects this conversion timetable to provide adequate opportunity to
fully test and address any unforeseen Year 2000 issues. Management believes that
the system is operating sufficiently to produce the necessary management
reporting needed to operate Allright on a timely basis and that all reporting
capabilities will be ready as necessary.
142
<PAGE> 150
PRINCIPAL SHAREHOLDERS OF ALLRIGHT
The table below sets forth certain information regarding the beneficial
ownership of Allright Common Stock, as of the date hereof, and as adjusted to
reflect the Merger based on an assumed Exchange Ratio of 88.658 (see "The
Merger -- General") of (i) each person known to Allright to beneficially own
more than 5% of the Allright Common Stock, (ii) each director of Allright, (iii)
Allright Corporation's chief executive officer and four other most highly
compensated executive officers, and (iv) all directors of Allright and executive
officers of Allright Corporation as a group.
<TABLE>
<CAPTION>
ESTIMATED
ALLRIGHT COMMON CENTRAL PARKING
STOCK BENEFICIALLY COMMON STOCK
OWNED PRIOR TO OWNED AFTER
MERGER(1) MERGER
------------------ -------------------
NUMBER PERCENT NUMBER PERCENT
------- -------- --------- -------
<S> <C> <C> <C> <C>
AEW Partners, L.P.(2)........................ 38,188 48.1% 3,385,671 9.1
Apollo Real Estate Investment Fund II,
L.P.(3).................................... 38,188 48.1 3,385,671 9.1
Marc L. Davidson(2).......................... 0 * 0 *
Thomas J. Nolan, Jr.(2)...................... 0 * 0 *
Michael McGillis(2).......................... 0 * 0 *
William S. Benjamin(3)....................... 0 * 0 *
Lee S. Neibart(3)............................ 0 * 0 *
Stuart Koenig(3)............................. 0 * 0 *
Gregory P. Shay(4)........................... 3,835.75 4.7 340,069 *
Timothy L. Grady(5).......................... 370 * 32,803 *
Peter D. Dane(6)............................. 210 * 18,618 *
Monty Stone(7)............................... 210 * 18,618 *
Terry Chen(8)................................ 220 * 19,504 *
All directors and executive officers as a
group
(11 persons)............................... 4,635.75 5.6% N/A N/A
</TABLE>
- ---------------
* Indicates less than 1%
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares as of the date of this Joint Proxy
Statement/Prospectus that such person or group has the right to acquire
within 60 days after such date, or with respect to which such person
otherwise has or shares voting or investment power. For purposes of
computing beneficial ownership and the percentages of outstanding shares
held by each person or group of persons on a given date, shares which such
person or group has the right to acquire within 60 days after such date are
shares for which such person has beneficial ownership and are deemed to be
outstanding for purposes of computing the percentage for such person, but
are not deemed to be outstanding for the purpose of computing the percentage
of any other person.
(2) Address: c/o AEW Capital Management, L.P., 225 Franklin Street, Boston, MA
02110. Shares of Allright Common Stock owned by AEW may be deemed
beneficially owned by its general partner, AEW/L.P., and by the general
partner of AEW/L.P., AEW, Inc. The indicated number of shares of Allright
Common Stock for Messrs. Davidson, Nolan and McGillis does not include
shares held by AEW. Messrs. Davidson, Nolan and McGillis, directors of
Allright, are employed by AEW or its affiliates, and disclaim beneficial
ownership of all shares of Allright Common Stock not directly held by them.
143
<PAGE> 151
Mr. Davidson is expected to be AEW's nominee to the Central Parking Board
after consummation of the Merger.
(3) Address: c/o Apollo Real Estate Management II, L.P., 1301 Avenue of the
Americas, New York, NY 10019. Shares of Allright Common Stock owned by
Apollo may be deemed beneficially owned by its general partner, Apollo Real
Estate Advisors II, L.P. ("AREA II") and by AREA II's general partner,
Apollo Real Estate Capital Advisors II, Inc. The indicated number of shares
of Allright Common Stock for Messrs. Benjamin, Neibart and Koenig does not
include shares held by Apollo. Messrs. Benjamin, Neibart and Koenig,
directors of Allright, are principals of AREA II, the general partner of
Apollo, and disclaim beneficial ownership of all shares not directly held by
them. Mr. Benjamin is expected to be Apollo's nominee to the Central Parking
Board after consummation of the Merger.
(4) Address: c/o Allright Corporation, 1313 Main Street, Houston, TX 77002.
Includes options to purchase 1,220 shares which have vested and are
immediately exercisable as of the date hereof, and options to purchase 1,697
shares which are expected to be vested and exercisable upon consummation of
the Merger. Mr. Shay's employment agreement provides that he is entitled to
options to purchase an additional 6.25 shares of Allright each month in lieu
of salary otherwise due, which options will be immediately vested and
exercisable.
(5) Address: c/o Allright Corporation, 1313 Main Street, Houston, TX 77002.
Includes options to purchase 185 shares of Allright common stock which are
currently vested and exercisable and options to purchase 185 shares of
Allright common stock which are expected to be vested and exercisable upon
consummation of the Merger.
(6) Address: c/o Allright Corporation, 59 Temple Place, Suite 402, Boston MA,
02111. Includes options to purchase 105 shares of Allright common stock
exercisable within 60 days from the date hereof.
(7) Address: c/o Allright Corporation, 1313 Main Street, Houston, TX 77002.
Includes options to purchase 105 shares of Allright common stock exercisable
within 60 days from the date hereof.
(8) Address: c/o Allright Corporation, 1313 Main Street, Houston, TX 77002.
Includes options to purchase 110 shares of Allright common stock exercisable
within 60 days from the date hereof.
144
<PAGE> 152
MANAGEMENT OF ALLRIGHT CORPORATION
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION WITH ALLRIGHT CORPORATION
- ---- --- ----------------------------------
<S> <C> <C>
Gregory P. Shay..................... 38 President, Chief Executive Officer
Timothy L. Grady.................... 42 Executive Vice President, Chief
Operating Officer
Terry Chen.......................... 47 Chief Financial Officer
Peter D. Dane....................... 50 Executive Vice President,
Division Manager, Northeast & Canada
Richard Dane........................ 44 Division Manager, West
Monty Stone......................... 62 Division Manager, Southwest
Daniel Baldwin...................... 48 Division Manager, Southeast
Daniel McKee........................ 44 Regional Manager
</TABLE>
Gregory P. Shay, was named President and CEO of Allright Corporation on March 1,
1997. Mr. Shay joined Allright Corporation from the real estate advisory firm of
AEW Capital Management Corporation, where he was instrumental in AEW's
acquisition of Allright in addition to other acquisitions totaling over $1.5
billion. Prior to joining AEW, Mr. Shay worked for Colony Capital Real Estate
Advisors as Vice President -- Acquisitions; London & Leeds Development
Corporation as Regional Vice President, Local Partner; and JMB Realty
Corporation as Vice President, Acquisitions. Mr. Shay holds a BS in Mechanical
Engineering and a BA in Economics from Brown University. Mr. Shay currently
serves on Allright's Board of Directors.
Timothy L. Grady, Executive Vice President, oversees Allright Corporation's
nationwide administrative operations. These operations include the departments
of finance/accounting, human resources, marketing and information systems.
Before joining Allright in September 1997, Mr. Grady served as Senior Vice
President and Chief Financial Officer for Oshman's Sporting Goods, Inc. Prior to
Oshman's, he spent six years at Solo Serve Corporation in several capacities
including Senior Vice President and Chief Operating Officer and Vice President
of Finance. Mr. Grady holds an MBA from the University of Texas and a BS in
Accounting from Texas Lutheran College. He is also a CPA.
Terry Chen, joined Allright Corporation in 1991 as Chief Financial Officer. He
is responsible for all activities related to financial analysis, financial
reporting, financial administration, internal/external reporting and treasury.
Before coming to Allright, he served as CFO at the Children's Hospital at
Stanford (Stanford University) and prior to that he worked with the accounting
firm of Ernst & Young in Los Angeles, CA. Mr. Chen received a BA at Whittier
College in Los Angeles and an MBA from the University of California, Los
Angeles. He is also a CPA.
Peter Dane, Executive Vice President and Division Manager, joined Allright
Corporation in 1972, after graduating with honors from Harvard College. During
his tenure, Mr. Dane has worked as President of Allright's Philadelphia
subsidiary, President of the Philadelphia Airport, and as Regional Manager of
New England, Canadian, Mid-Atlantic and upstate New York operations. In 1985 he
was promoted to Division Manager of the Northwest
145
<PAGE> 153
United States and of all Canadian operations. Currently, Mr. Dane's division
oversees the states of Illinois, Maryland, Massachusetts, New Jersey, New York,
Ohio and Pennsylvania and the provinces of Ontario and Quebec. His
responsibilities also include acquisition management.
Richard Dane, Division Manager, joined Allright Corporation in 1975 upon
graduation from the University of Rhode Island. He was named Division Manager of
West Coast Operations in 1989. He oversees the operations of numerous cities in
California, Minnesota, Missouri, Nebraska, Washington, and Wisconsin.
Monty Stone, Division Manager, joined Allright in 1969 as Vice President of
Houston operations, after having sold his parking business to Allright
Corporation. He started his own parking business in 1964 and built his company
to include over 50 locations in Houston and San Antonio. Since merging with
Allright Corporation, he has lived in Houston serving as Division Manager of
operations in the Southwestern United States.
Daniel Baldwin, Division Manager, began his career with Allright Corporation in
1972. He was named Vice President, Southeast Division in 1993. Mr. Baldwin is
responsible for the states of Alabama, Florida, Georgia, Michigan, Pennsylvania,
Tennessee and Virginia, which includes over 400 operations in approximately 30
cities.
Daniel McKee, Regional Manager, has been with Allright Corporation for 19 years.
He oversees Allright Corporation's operations in Arizona, Missouri, Kansas,
Colorado, New Mexico, and portions of Texas and Nevada. Mr. McKee sits on the
Downtown Denver, Inc. Board of Directors, is a member of the DDI Management
Council, and has also received mayoral appointments to serve on various advisory
boards and tasks forces.
146
<PAGE> 154
MANAGEMENT OF THE COMBINED COMPANY
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the expected
directors and executive officers of the combined company as of the date of this
Joint Proxy Statement/ Prospectus. Although certain executive officers of
Allright are expected to become executive officers of the combined company, such
decisions have not been finalized.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH CENTRAL PARKING
- ---- --- -----------------------------
<S> <C> <C>
Monroe J. Carell, Jr................ 67 Chairman of the Board, Chief
Executive Officer
James H. Bond....................... 56 President, Chief Operating Officer,
Director
Stephen A. Tisdell.................. 46 Chief Financial Officer
Emanuel J. Eads..................... 46 Executive Vice President
Jeff L. Wolfe....................... 38 Senior Vice President
Alan J. Kahn........................ 37 Senior Vice President -- European
Operations
Greg Susick......................... 38 Senior Vice President
William R. Porter................... 43 Senior Vice President
Benjamin F. Parrish, Jr............. 42 Senior Vice President and General
Counsel
Ben Wolfley......................... 38 Vice President and Controller
John W. Eakin(1)(2)................. 43 Director
Edward G. Nelson(1)................. 66 Director
William C. O'Neil, Jr.(2)........... 63 Director
P.E. Sadler(1)...................... 61 Director
Cecil Conlee(2)..................... 61 Director
Lowell Harwood...................... 68 Director
Lewis Katz.......................... 56 Director
William S. Benjamin................. 34 Director
Marc L. Davidson.................... 39 Director
</TABLE>
- ---------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
All directors hold office until the next annual meeting of shareholders or until
their successors are duly elected and qualified. Executive officers serve at the
discretion of the Board of Directors.
Monroe J. Carell, Jr. has served as Chief Executive Officer and Chairman of the
Board of Directors of Central Parking for over 18 years. Mr. Carell has also
served as a trustee of Vanderbilt University in Nashville, Tennessee, since 1991
and is a member of the Board of Trust of the Urban Land Institute. Mr. Carell is
also a member of the Board of Directors of Prison Realty Trust, a publicly held
real estate investment trust, and Vanderbilt University Medical Center.
James H. Bond has been employed by Central Parking since 1971 in various
positions including general manager and regional manager. He has served as
President, Chief Operating Officer, and a member of the Board of Directors of
Central Parking since October 1990.
Stephen A. Tisdell has served as Chief Financial Officer of Central Parking
since February 1993. From May 1992 to February 1993 he was President and owner
of Tisdell Consulting, an
147
<PAGE> 155
independent financial consulting company. Mr. Tisdell served as Executive Vice
President, Treasurer, and Secretary of Maison Blanche, Inc., a retail clothing
company from June 1991 until May 1992. From February 1987 until June 1991, he
served as Group Vice President -- Finance and Chief Accounting Officer of
Service Merchandise Corporation, a nationwide retail goods company.
Emanuel J. Eads has served as Executive Vice President since August 1998 and
previously as a Senior Vice President of Central Parking since 1985. Mr. Eads
has served in various other positions with Central Parking, including general
manager and regional manager, since 1974.
Jeff L. Wolfe has served as a Senior Vice President of Central Parking since May
1994 and has served in various other positions with Central Parking, including
general manager and regional manager, since 1988.
Alan J. Kahn has served as Senior Vice President -- European Operations since
April 1996 and has served in various other positions with Central Parking,
including general manager and regional manager, since 1988.
Greg Susick has served as Senior Vice President since 1996 and has served in
various other positions with Central Parking, including general manager and
regional manager, since 1989.
William R. Porter has served as Senior Vice President -- Acquisitions since
November 1996. From 1991 to 1996, Mr. Porter served as Executive Vice
President -- Marketing for Ace Parking, a parking management company.
Benjamin F. Parrish, Jr. has served as Senior Vice President and General Counsel
since August 1998. From 1993 to 1998, Mr. Parrish served as Senior Vice
President and General Counsel of Smith & Nephew, Inc., a medical products
company.
Ben Wolfley has served as Vice President -- Controller since February , 1998.
From 1993 to 1998, Mr. Wolfley served as Chief Financial Officer, Vice
President -- Finance and Controller of Kyzen Corporation, a specialty chemical
manufacturer. Mr. Wolfley served as Chief Financial Officer -- Controller of
Cannon Industries, Inc., an industrial development and venture capital firm,
from 1990 to 1993.
John W. Eakin has served as a director of Central Parking since August 1993. Mr.
Eakin has been President of Eakin-Smith, Inc., a real estate development and
management company, since September 1987. In April 1996, Mr. Eakin merged his
company with Highwoods Properties, Inc., an office and industrial real estate
investment trust. Mr. Eakin serves as a director of Highwoods Properties, Inc.
and has served on the advisory board of First American Bank since 1994. Mr.
Eakins is also a member of the Board of Directors of Prison Realty Trust.
Edward G. Nelson has served as a director of Central Parking since August 1993.
Mr. Nelson formed Nelson Capital Corp., a merchant banking firm, in 1985, and
has served as the President and Chairman of the Board of such firm since its
organization. Mr. Nelson serves as a director of each of Advocat Inc., a
long-term care facility owner and operator; ClinTrials Research Inc., a clinical
research organization; and Berlitz International, Inc., a language services
company. Mr. Nelson also serves as a trustee of Vanderbilt University.
William C. O'Neil, Jr. has served as a director of Central Parking since August
1993. Mr. O'Neil serves as a director of each of Advocat Inc., a long-term care
facility owner and operator; ATRIX Laboratories, Inc., a drug delivery company;
ClinTrials Research Inc., a clinical research organization Sigma Aldrich
Corporation, a manufacturer of research chemicals; and American HealthCorp.,
Inc., a specialty healthcare service company.
148
<PAGE> 156
Mr. O'Neil served as Chairman of the Board, President and Chief Executive
Officer of ClinTrials Research Inc. from September 1989 to January 1998.
P.E. Sadler has served as a director of Central Parking since 1996. Mr. Sadler
is the Chairman of the Board of ActaMed Corporation, a healthcare technology
company that he founded in 1992. In 1979, Mr. Sadler founded MicroBilt
Corporation and served as its Chairman and Chief Executive Officer. After
MicroBilt was acquired by First Financial Management Corporation in 1989, Mr.
Sadler remained as Chairman and Chief Executive Officer until 1991.
Cecil Conlee has served as a director of Central Parking since 1996. Mr. Conlee
has served as Chairman of the Board and Chief Executive Officer of CGR
Investors, a real estate investment and portfolio management services company,
since 1989. Mr. Conlee serves on the Board of Directors of Oxford Industries,
Inc., a clothing manufacturer, and Rodamco, N.V., a real estate investment
company. Mr. Conlee also serves as a trustee of Cornerstone Properties, Inc.,
International Council of Shopping Centers and Vanderbilt University. Mr. Conlee
is a member and past trustee of the Urban Land Institute, a director of Central
Atlanta Progress, and The Southern Center for International Studies.
Lowell Harwood has served as a director of Central Parking since June 1997. Mr.
Harwood served as Chairman of the Board and Chief Executive Officer of Square
from 1968 until its acquisition by Central Parking in January 1997. Mr. Harwood
is past President of the Metropolitan Parking Association of New York and a
former Treasurer of the National Parking Association. Mr. Harwood also serves as
a Trustee of Kean University and a member of the Foundation Board of Trustees of
Christ Hospital.
Lewis Katz has been a director of Central Parking since May 1998. Mr. Katz
served as the Chief Executive Officer of Kinney from November 1990 until Central
Parking acquired Kinney in February 1998. Mr. Katz serves as a director of
Orleans Homebuilders, Inc. (formerly FPA Corporation), a residential real estate
development company.
William S. Benjamin is expected to become a director of Central Parking after
consummation of the Merger and is a principal of Apollo Real Estate Advisors,
L.P. which together with its affiliates, serves as general partner of the Apollo
Real Estate Investment Funds, private real estate oriented investment entities.
Mr. Benjamin's responsibilities include the acquisition and management of real
estate-related investments throughout the United States and Western Europe.
Prior to joining Apollo in 1995, he was Vice President in the Real Estate
Investment Bank of Bankers Trust. Mr. Benjamin serves as a director of several
private operating companies in the U.S. and the United Kingdom.
Marc L. Davidson is expected to become a director of Central Parking after
consummation of the Merger and is a Portfolio Manager in AEW's Private Equity
Investment Group, with responsibility for approximately $1 billion in client
investments. As such, Mr. Davidson assists in evaluating and negotiating new
investment opportunities and works with asset managers and real estate operators
in executing each asset's business plan. Mr. Davidson joined AEW in 1995,
bringing 15 years of experience in real estate consulting, property management
and development. Prior to joining AEW, Mr. Davidson worked for five years at
Coopers & Lybrand as a Senior Manager in the Real Estate and Reorganization
Groups, where his areas of expertise included financial and feasibility
analysis, systems and internal control development, deal structuring, investment
analysis and evaluation. For the previous 10 years, he served as a Financial
Officer at Winthrop Management, The Linpro Company and Charter Development. A
Certified Public Accountant, Mr. Davidson is a graduate of Bentley College
(B.S.).
149
<PAGE> 157
DESCRIPTION OF CENTRAL PARKING CAPITAL STOCK
Central Parking's authorized capital stock currently consists of 50 million
shares of Common Stock, par value $.01 per share, and 1 million shares of serial
Preferred Stock, par value $.01 per share (the "Preferred Stock"). If the
Charter Amendment Proposal is approved by the Central Parking shareholders, the
authorized capital stock will be increased to 100 million shares of Central
Parking Common Stock. As of October 16, 1998, there were (i) 29,575,892 shares
of Central Parking Common Stock issued and outstanding, including 270,786 shares
subject to further vesting pursuant to restricted stock agreements, (ii) 883,403
shares of Central Parking Common Stock reserved for issuance upon exercise of
outstanding options, and (iii) no shares of Preferred Stock outstanding.
CENTRAL PARKING COMMON STOCK
Each holder of Central Parking Common Stock is entitled to one vote per share on
all matters to be voted on by the shareholders. The Charter does not provide for
cumulative voting and, accordingly, the holders of a majority of the outstanding
shares have the power to elect all directors and to control the resolution of
all issues put to a vote of the shareholders. There are no preemptive or other
subscription rights, conversion rights, or redemption or sinking fund provisions
with respect to shares of the Central Parking Common Stock. All shares of the
Central Parking Common Stock outstanding upon consummation of the Merger will be
validly issued, fully paid, and nonassessable. The shares of Central Parking
Common Stock have the following rights, subject, in each case, to the rights of
the holders of any outstanding Preferred Stock: (i) to receive dividends, if
any, as may be declared and paid from time to time by the Central Parking Board,
in its discretion, from funds legally available therefore; and (ii) upon
liquidation, dissolution, or winding up of Central Parking, to receive pro rata
all assets remaining available for distribution.
PREFERRED STOCK
The Central Parking Board may authorize, without further action by Central
Parking's shareholders, the issuance of up to 1 million shares of Preferred
Stock in one or more series, and may fix by resolution, to the extent permitted
by the TBCA, the terms and rights of each such series, including the voting
powers, full or limited, if any, of the shares of such series and the
designations, preferences, and relative, participating, optional, or other
special rights, and qualifications, limitations, or restrictions thereof. The
issuance of Preferred Stock by action of the Central Parking Board could
adversely affect the voting power, dividend rights and other rights of holders
of the Common Stock. Issuance of a series of Preferred Stock could also,
depending on the terms of such series, either impede or facilitate the
completion of a merger, tender offer, or other takeover attempt. Although the
Central Parking Board is required to make a determination as to the best
interests of the shareholders of Central Parking when issuing Preferred Stock,
the Central Parking Board could act in a manner that would discourage an
acquisition attempt or other transaction that some, or a majority, of the
shareholders might believe to be in the best interests of Central Parking or in
which shareholders might receive a premium for their stock over the then
prevailing market price.
CONVERTIBLE TRUST ISSUED PREFERRED SECURITIES
In March 1998, Central Parking created the Trust, which completed a private
placement of 4.4 million shares at $25.00 per share of 5.25% convertible Trust
Issued Preferred Securities pursuant to an exemption from registration under the
Securities Act. The Trust Issued
150
<PAGE> 158
Preferred Securities represent preferred undivided beneficial interests in the
assets of the Trust. Central Parking owns all of the common securities of the
Trust. The Trust exists for the sole purpose of issuing the Trust Issued
Preferred Securities and investing the proceeds thereof in an equivalent amount
of 5.25% Convertible Subordinated Debentures ("Convertible Debentures") of
Central Parking due 2028. The net proceeds to Central Parking from the Trust
Issued Preferred Securities private placement were $106.0 million. Each Trust
Issued Preferred Security is entitled to receive cumulative cash distributions
at an annual rate of 5.25% (or $1.312 per share) and is convertible at the
option of the holder thereof into shares of Central Parking Common Stock at a
conversion rate of 0.4545 shares of Central Parking Common Stock for each Trust
Issued Preferred Security (equivalent to $55.00 per share of Central Parking
Common Stock), subject to adjustment in certain circumstances. The Trust Issued
Preferred Securities do not have a stated maturity date but are subject to
mandatory redemption upon the repayment of the Convertible Debentures at their
stated maturity (April 1, 2028) or upon acceleration or earlier repayment of the
Convertible Debentures.
Central Parking's consolidated balance sheets reflect the Trust Issued Preferred
Securities of the Trust as company-obligated mandatorily redeemable convertible
securities of subsidiary whose sole assets are the convertible subordinated
debentures of Central Parking.
151
<PAGE> 159
COMPARISON OF RIGHTS OF HOLDERS OF CENTRAL
PARKING COMMON STOCK AND ALLRIGHT COMMON STOCK
GENERAL
Central Parking is incorporated under the laws of the State of Tennessee, and
the rights of Central Parking shareholders are governed by Tennessee law,
including the TBCA, the Central Parking Charter, and Central Parking Bylaws.
Allright is incorporated under the laws of the State of Delaware, and the rights
of Allright shareholders are governed by Delaware law, including the DGCL, the
Certificate of Incorporation of Allright (the "Allright Certificate") and the
Allright Bylaws. At the Closing, Allright shareholders will become shareholders
in Central Parking, and their rights as Central Parking shareholders will be
governed by Tennessee law, and will also be governed by the Central Parking
Charter and the Central Parking Bylaws, which differ from the Allright
Certificate and the Allright Bylaws. Certain of these differences are summarized
below.
The following summary is not intended to be an exhaustive examination or a
detailed description of the differences between the rights of Central Parking
and Allright shareholders and is qualified in its entirety by reference to
Tennessee law, Delaware law, the Central Parking Charter, the Central Parking
Bylaws, the Allright Certificate and the Allright Bylaws. Allright shareholders
should carefully review the information contained in the Central Parking
documents, all of which are on file with the Commission. Copies of the Central
Parking Charter and Central Parking Bylaws are available without charge, upon
request, from Central Parking. Copies of the Allright Certificate and the
Allright Bylaws are available without charge, upon request, from Allright.
DIRECTORS
Size of the Board of Directors. The Central Parking Charter provides that the
board of directors shall consist of at least three and no more than 15
directors, the exact number to be fixed by resolution adopted by a majority of
the directors then in office. The size of the Central Parking board of directors
may be increased beyond fifteen to reflect the rights of the holders of
preferred stock, if any. The Central Parking Board currently consists of 9
members and will be expanded to 11 pursuant to certain Allright shareholders'
right to designate two members of the board under the Merger Agreement. The
Allright Certificate provides that the size of the board of directors shall be
as set in the Allright Bylaws. The Allright Bylaws provide that the number of
directors constituting the full board of directors shall be at least one and no
more than 15, the exact number to be fixed by resolution of the board of
directors. The Allright Board currently consists of 7 members.
Meetings of the Board of Directors. The Central Parking Bylaws require the
board of directors hold a meeting to elect the officers of Central Parking
immediately following the adjournment of an annual meeting of shareholders.
Special meetings of the Central Parking Board may be called by the chairman, the
president or any two directors. The Allright Bylaws provide that regular
meetings of the board of directors may be held without notice or special
meetings of the Allright Board may be called by the chairman, the president, or
any director.
Removal of Directors. The Central Parking Charter and Central Parking Bylaws
provide that one or more or the entire board of directors may be removed at any
time for cause by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock entitled to vote generally in the election
of directors (considered for this purpose as one class). The
152
<PAGE> 160
Central Parking Bylaws define cause with respect to the removal of directors as
(i) any fraudulent or dishonest act or activity by the director or (ii) behavior
materially detrimental to the business of Central Parking. Pursuant to Delaware
law, any director or the entire board of directors of Allright may be removed,
with or without cause, by the affirmative vote of a majority of the shares
entitled to be voted at an election of directors.
Filling Vacancies on the Board of Directors. Pursuant to the Central Parking
Bylaws, newly created directorships resulting from an increase in the number of
directors and vacancies occurring in any directorship for any reason, including
removal of a director, may be filled by the vote of a majority of the directors
remaining in office, even if less than a quorum exists, or by the majority vote
of the holders of outstanding shares of stock entitled to vote. The Allright
Bylaws provide that vacancies and newly created directorships on the Board of
Directors may be filled by a majority of the remaining directors in office.
AMENDMENT OF CONSTITUENT DOCUMENTS
Charter and Certificate of Incorporation. The Central Parking Charter provides
that it may be amended consistent with Tennessee law. Tennessee law provides
that the board of directors may adopt certain specified amendments to a charter
without shareholder approval, otherwise the right to amend a charter is reserved
to the shareholders.
The Allright Certificate provides that it may be amended or repealed consistent
with Delaware law. Delaware law generally provides that the right to amend a
certificate of incorporation is reserved to the shareholders.
Bylaws. The Central Parking Charter and Central Parking Bylaws provide that the
Central Parking Bylaws may be amended, added to or repealed either by (i) a
majority vote of the shares represented at any duly constituted shareholders
meeting or (ii) by a majority vote of the Central Parking Board. The Allright
Bylaws specifically provide for amendment or repeal or adoption of new bylaws by
the vote of a majority of the outstanding shares entitled to be voted or by a
majority of the Allright Board.
SHAREHOLDERS
Shareholders Action by Written Consent. The TBCA and DGCL provide that, unless
a corporation's certificate of incorporation or charter provides otherwise, any
action that is required to be or may be taken at any annual or special meeting
of the shareholders may be taken by a written consent in lieu of a meeting. The
Allright Bylaws expressly permit Allright shareholders to act without a meeting
pursuant to a written consent. The Central Parking Charter does not preclude
shareholders from acting by a written consent in lieu of a meeting, provided
that certain preferred stock holders may exercise any special voting rights
given to them pursuant to the Central Parking Charter.
Notice of Shareholders Business. Pursuant to the Central Parking Bylaws, only
such business shall come before an annual meeting of shareholders as shall have
been properly brought before the meeting. A shareholder properly brings business
before a meeting by providing the secretary of Central Parking with a written
notice not less than 60 nor more than 90 days prior to the meeting date, unless
Central Parking shall not have publicly announced the meeting at least 70 days
prior to the meeting, in which case the shareholder must provide the written
notice not later than the tenth day after the shareholders were notified of the
meeting. The Allright Bylaws do not specify the procedure by which a shareholder
may bring business before an annual meeting.
153
<PAGE> 161
Special Meetings of Shareholders. The Central Parking Bylaws provide that a
special meeting of the shareholders may be called only by the president or a
majority of the board of directors. The Allright Bylaws provide that special
meetings of the shareholders may be called by the chairman, the president, any
vice president, the secretary, any assistant secretary or by any such officer at
the written request of a majority of the Allright Board, or the holders of a
majority of issued and outstanding stock entitled to vote at such meeting.
Proxies. The Central Parking Bylaws provide that no proxy shall be valid after
the expiration of eleven months from the date of its execution, unless the proxy
expressly provides otherwise, while the Allright Bylaws do not specify any such
restrictions with respect to proxies.
INDEMNIFICATION AND ELIMINATION OF DIRECTORS' MONETARY LIABILITY FOR BREACH OF
DUTY OF CARE
The constituent documents of Central Parking and Allright contain similar
provisions limiting the personal liability of directors and providing for the
indemnification and payment of expenses of directors and officers to the full
extent of the law. See "Description of Central Parking Capital Stock."
ANTI-TAKEOVER MEASURES
Vote Required for Certain Business Combinations. Neither the Central Parking
Charter nor the Allright Certificate contains any special voting or other
provisions relating to business combinations. However, Tennessee law has certain
legislation dealing with this subject. See "Description of Central Parking
Capital Stock."
Prevention of Self-Dealing Transactions. Allright may participate in a
transaction with its directors or officers if the material facts are disclosed
or known to the Allright Board and a majority of the disinterested directors
approve the transaction or the transaction is approved in good faith by a vote
of the shareholders of Allright, or the transaction is fair at the time it is
authorized, ratified or approved by the Allright Board, a committee of the
Board, or the shareholders.
The Central Parking Charter contains no similar provisions.
154
<PAGE> 162
LEGAL MATTERS
The validity of the shares of Central Parking Common Stock offered hereby will
be passed upon for Central Parking by Harwell Howard Hyne Gabbert & Manner,
P.C., Nashville, Tennessee. Skadden, Arps, Slate, Meagher & Flom LLP, counsel to
Allright, and KPMG Peat Marwick LLP, tax advisor to Central Parking, have
delivered opinions concerning certain federal tax consequences of the Merger.
EXPERTS
The consolidated financial statements of Central Parking Corporation and
subsidiaries as of September 30, 1997 and 1996, and for each of the years in the
three-year period ended September 30, 1997, have been included herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, included herein, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of Allright Holdings, Inc. and
Subsidiaries as of June 30, 1998 and 1997, and for the year ended June 30, 1998,
and the period from October 31, 1996 to June 30, 1997, and of the Predecessor
Company for the period from July 1, 1996 to October 30, 1996, included herein,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
The consolidated statements of operations, cash flows and stockholder's equity
of the Predecessor Company for the year ended June 30, 1996, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
and included herein. Such consolidated financial statements are included herein
in reliance upon such report giving upon the authority of such firm as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Central Parking files annual, quarterly and special reports, proxy statements
and other information with the Commission. You may read and copy any reports,
statements or other information filed by Central Parking at the Commission's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further information
on the public reference rooms. Central Parking's Commission filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the Commission at "http://www.sec.gov."
Central Parking filed a Registration Statement on Form S-4 to register with the
Commission the Central Parking Common Stock to be issued to holders of Allright
Common Stock in the Merger. This Joint Proxy Statement/Prospectus is a part of
that Registration Statement and constitutes a prospectus of Central Parking in
addition to being a joint proxy statement of Central Parking and Allright for
their respective Special Meetings. As allowed by Commission rules, this Joint
Proxy Statement/Prospectus does not contain all the information you can find in
the Registration Statement or the exhibits to the Registration Statement.
The Commission allows Central Parking to "incorporate by reference" information
into this Joint Proxy Statement/Prospectus, which means important information
may be disclosed to you by referring you to another document filed separately
with the Commission. The
155
<PAGE> 163
information incorporated by reference is deemed to be part of this Joint Proxy
Statement/Prospectus, except for any information superseded by information in
(or incorporated by reference in) this Joint Proxy Statement/Prospectus. This
Joint Proxy Statement/Prospectus incorporates by reference the documents set
forth below that have been previously filed with the Commission. These documents
contain important information about Central Parking and its finances.
CENTRAL PARKING COMMISSION FILINGS (File No. 001-13950)
(1) Central Parking's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997;
(2) Central Parking's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1997, March 31, 1998 and June 30, 1998;
(3) Central Parking's Current Report on Form 8-K dated December 31, 1996, as
amended by the Current Reports on Form 8-K/A, dated January 16, 1997 and
March 17, 1997, relating to the acquisition of Civic;
(4) Central Parking's Current Report on Form 8-K dated February 17, 1998, as
amended by the Current Report on Form 8-K/A, dated March 15, 1998, relating
to the acquisition of Kinney;
(5) Central Parking's Current Report on Form 8-K dated February 20, 1998
relating to the offering of Trust Issued Preferred Securities;
(6) Central Parking's Current Report on Form 8-K dated September 21, 1998
relating to the proposed Merger; and
(7) The description of Central Parking's Common Stock contained in Central
Parking's Registration Statement on Form 8-A filed on September 15, 1995.
Central Parking is also incorporating by reference additional documents that it
may file with the Commission between the date of this Joint Proxy
Statement/Prospectus and the date of the Central Parking and Allright Special
Meetings.
Central Parking has supplied all information contained or incorporated by
reference in this Joint Proxy Statement/Prospectus relating to Central Parking,
and Allright has supplied all such information relating to Allright.
If you are a Central Parking Shareholder or Allright Shareholder, you can obtain
any of the documents incorporated by reference through either Central Parking or
the Commission. Documents incorporated by reference are available from Central
Parking without charge, excluding all exhibits unless we have specifically
incorporated by reference an exhibit in this Joint Proxy Statement/Prospectus.
You may obtain documents incorporated by reference in this Joint Proxy
Statement/Prospectus by requesting them in writing or by telephone from the
appropriate party at the following address:
Central Parking Corporation
2401 21st Avenue South
Suite 200
Nashville, Tennessee 37212
Attention: Investor Relations
If you would like to request documents from Central Parking, please do so by
December , 1998 to receive them before the Special Meetings.
156
<PAGE> 164
You should rely only on the information contained or incorporated by reference
in this Joint Proxy Statement/Prospectus to vote on the approval and adoption of
the Merger Agreement. Neither Central Parking nor Allright has authorized anyone
to provide you with information that is different from what is contained in this
Joint Proxy Statement/Prospectus. This Joint Proxy Statement/Prospectus is dated
December , 1998. You should not assume that the information contained in the
Joint Proxy Statement/Prospectus is accurate as of any date other than such
date, and neither the mailing of this Joint Proxy Statement/Prospectus to
shareholders nor the issuance of Central Parking Common Stock in the Merger
shall create any implication to the contrary.
157
<PAGE> 165
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Central Parking Independent Auditors' Report................ F-2
Central Parking Consolidated Balance Sheets as of September
30, 1997 and 1998......................................... F-3
Central Parking Consolidated Statements of Earnings for the
three years ended September 30, 1997...................... F-4
Central Parking Consolidated Statements of Shareholders'
Equity as of September 30, 1997........................... F-5
Central Parking Consolidated Statements of Cash Flows for
the three years ended September 30, 1997.................. F-6
Central Parking Notes to Consolidated Financial
Statements................................................ F-7
Central Parking Condensed Consolidated Balance Sheets as of
June 30, 1997 and 1998(unaudited)......................... F-28
Central Parking Condensed Consolidated Statements of
Earnings for the three and nine months ended June 30, 1997
and 1998 (unaudited)...................................... F-29
Central Parking Condensed Consolidated Statements of Cash
Flows for the Nine Months ended June 30, 1997 and 1998
(unaudited)............................................... F-30
Central Parking Notes to Condensed Consolidated Financial
Statements (unaudited).................................... F-31
Allright Reports of Independent Public Accountants.......... F-38
Allright Consolidated Balance Sheets as of June 30, 1997 and
1998...................................................... F-40
Allright Consolidated Statements of Operations for the year
ended June 30, 1996 (Predecessor), the period from July 1,
1996 to October 30, 1996 (Predecessor), the period from
October 31, 1996 to June 30, 1997 and the year ended June
30, 1998 (Successor)...................................... F-41
Allright Consolidated Statements of Stockholders' Equity as
of June 30, 1998.......................................... F-42
Allright Consolidated Statements of Cash Flows for the year
ended June 30, 1996 (Predecessor), the period from July 1,
1996 to October 30, 1996 (Predecessor), the period from
October 31, 1996 to June 30, 1997 and the year ended June
30, 1998 (Successor)...................................... F-43
Allright Notes to Consolidated Financial Statements......... F-44
</TABLE>
F-1
<PAGE> 166
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS
CENTRAL PARKING CORPORATION AND SUBSIDIARIES:
We have audited the accompanying consolidated balance sheets of Central Parking
Corporation and Subsidiaries as of September 30, 1996 and 1997, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the years in the three-year period ended September 30, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Central Parking
Corporation and Subsidiaries as of September 30, 1996 and 1997, and the results
of their operations and their cash flows for each of the years in the three-year
period ended September 30, 1997 in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Nashville, Tennessee
November 21, 1997
F-2
<PAGE> 167
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------
1996 1997
--------- ---------
(AMOUNTS IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 28,605 $ 9,979
Management accounts receivable............................ 8,982 11,004
Accounts and current portion of notes receivable -- other
(including amounts due from related parties of $459 in
1996 and $544 in 1997) (Notes 3 and 7)................. 3,016 6,158
Prepaid expenses.......................................... 4,549 9,394
Deferred income taxes (Note 11)........................... 270 911
Refundable income taxes................................... -- 2,154
-------- --------
Total current assets.............................. 45,422 39,600
Investments, at amortized cost (fair value
$4,631 in 1996 and $4,962 in 1997) (Note 4)............... 4,483 4,754
Notes receivable, less current portion (including amounts
due from related parties of $7,120 in 1996 and $5,264 in
1997) (Notes 3 and 7)..................................... 8,248 16,537
Property, equipment, and leasehold
improvements, net (Note 5)................................ 38,188 79,057
Contract rights, net (Note 6)............................... 5,815 5,021
Goodwill, net (Notes 2 and 6)............................... -- 31,863
Investment in partnerships and joint ventures (Note 7)...... 2,939 50,195
Other assets................................................ 2,117 6,987
-------- --------
$107,212 $234,014
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (Note 8)................ $ -- $ 206
Accounts payable.......................................... 11,275 25,097
Accrued payroll and related costs......................... 5,059 8,256
Accrued expenses.......................................... 900 4,020
Management accounts payable............................... 7,788 10,381
Income taxes payable (Note 11)............................ 693 871
-------- --------
Total current liabilities......................... 25,715 48,831
Long-term debt (Notes 8 and 17)............................. -- 73,252
Other liabilities........................................... -- 5,161
Deferred compensation (Note 12)............................. 3,095 3,048
Deferred income taxes (Note 11)............................. 1,609 6,871
-------- --------
Total liabilities................................. 30,419 137,163
Shareholders' equity (Notes 9, 12 and 17):
Common stock, $0.01 par value; 50,000,000 shares authorized,
26,215,632 and 26,303,592 shares issued and outstanding in
1996 and 1997, respectively............................... 262 263
Additional paid-in capital................................ 31,660 32,843
Foreign currency translation adjustment................... 59 193
Retained earnings......................................... 45,449 64,122
Deferred compensation on restricted stock................. (637) (570)
-------- --------
Total shareholders' equity........................ 76,793 96,851
-------- --------
Commitments and contingencies (Notes 2, 7, 8, 10, 12, 14 &
17).......................................................
$107,212 $234,014
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 168
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------
1995 1996 1997
-------- -------- --------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Revenues:
Parking......................................... $ 94,383 $109,272 $180,886
Management contract............................. 31,772 34,044 42,090
-------- -------- --------
Total revenues.......................... 126,155 143,316 222,976
Costs and expenses:
Cost of parking................................. 87,192 99,196 159,904
Cost of management contracts.................... 9,650 9,769 11,793
General and administrative...................... 15,711 17,419 23,427
-------- -------- --------
Total costs and expenses................ 112,553 126,384 195,124
-------- -------- --------
Operating earnings...................... 13,602 16,932 27,852
Other income (expenses):
Interest income................................. 1,462 2,303 1,842
Interest expense................................ -- -- (4,582)
Net gains on sales of property and equipment.... 81 1,192 3,137
Equity in partnership and joint venture earnings
(Note 7)..................................... 362 641 4,163
-------- -------- --------
Earnings before income taxes.................... 15,507 21,068 32,412
Income tax expense (Note 11):
Current......................................... 5,977 6,647 11,842
Deferred........................................ (414) 585 365
-------- -------- --------
Total income taxes...................... 5,563 7,232 12,207
-------- -------- --------
Net earnings............................ $ 9,944 $ 13,836 $ 20,205
======== ======== ========
Weighted average shares
(Notes 9 and 12)........................ 23,058 26,237 26,387
-------- -------- --------
Net earnings per share
(Notes 9 and 12)........................ $ 0.43 $ 0.53 $ 0.77
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 169
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
DEFERRED
COMPENSATION
ADDITIONAL FOREIGN ON
NUMBER OF COMMON PAID-IN CURRENCY RESTRICTED
SHARES STOCK CAPITAL TRANSLATION RETAINED STOCK
(NOTE 9) (NOTE 9) (NOTE 9) ADJUSTMENT EARNINGS (NOTE 12) TOTAL
--------- -------- ---------- ----------- -------- ------------ -------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30,
1994................... 23,058 $231 $ 8,069 $ 46 $23,515 $ -- $31,861
Net earnings........... -- -- -- -- 9,944 -- 9,944
Preferred stock
dividends............ -- -- -- -- (450) -- (450)
Foreign currency
translation
adjustment........... -- -- -- 5 -- -- 5
------ ---- ------- ---- ------- ----- -------
Balance at September 30,
1995................... 23,058 231 8,069 51 33,009 -- 41,360
------ ---- ------- ---- ------- ----- -------
Net earnings........... -- -- -- -- 13,836 -- 13,836
Issuance of common
stock net of offering
costs................ 2,798 28 19,986 -- -- -- 20,014
Issuance under
restricted stock
plan................. 272 3 2,582 -- -- (705) 1,880
Common stock
dividends -- $.05 per
share................ -- -- -- -- (1,396) -- (1,396)
Exercise of stock
options and related
tax benefits......... 88 -- 1,023 -- -- -- 1,023
Amortization of
deferred
compensation......... -- -- -- -- -- 68 68
Foreign currency
translation
adjustment........... -- -- -- 8 -- -- 8
------ ---- ------- ---- ------- ----- -------
Balance at September 30,
1996................... 26,216 262 31,660 59 45,449 (637) 76,793
------ ---- ------- ---- ------- ----- -------
Net earnings........... -- -- -- -- 20,205 -- 20,205
Issuance under
restricted stock
plan................. -- -- 46 -- -- -- 46
Common stock dividends
$.06 per share....... -- -- -- -- (1,532) -- (1,532)
Exercise of stock
options and related
tax benefits......... 88 1 1,137 -- -- -- 1,138
Amortization of
deferred
compensation......... -- -- -- -- -- 67 67
Foreign currency
translation
adjustment........... -- -- -- 134 -- -- 134
------ ---- ------- ---- ------- ----- -------
Balance at September 30,
1997................... 26,304 $263 $32,843 $193 $64,122 $(570) $96,851
====== ==== ======= ==== ======= ===== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 170
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------
1995 1996 1997
-------- -------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings.............................................. $ 9,944 $ 13,836 $ 20,205
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation............................................ 2,120 2,500 4,049
Amortization of contract rights......................... 762 852 839
Amortization of deferred compensation cost.............. -- 68 67
Amortization of goodwill and non-compete agreements..... -- -- 920
Equity in partnership and joint venture earnings........ (362) (641) (4,163)
Distributions from partnerships and joint ventures...... 367 1,023 2,920
Net gains on sales of property and equipment............ (81) (1,192) (3,137)
Deferred income taxes................................... (414) 585 365
Changes in operating assets and liabilities, excluding
effects of acquisitions:
(Increase) decrease in management accounts receivable... (594) (2,211) (2,117)
(Increase) decrease in notes and accounts
receivable -- other................................... (1,757) 2,733 1,061
(Increase) decrease in prepaid expenses................. (79) (749) (3,266)
(Increase) decrease in refundable income taxes.......... -- -- (533)
(Increase) decrease in other assets..................... (901) 674 (1,511)
Increase (decrease) in accounts payable, accrued
expenses, other liabilities and deferred
compensation.......................................... 1,925 730 6,093
Increase (decrease) in management accounts payable...... 865 2,156 (68)
Increase (decrease) in income taxes payable............. 74 (872) 178
-------- -------- --------
Net cash provided by operating activities........... 11,869 19,492 21,902
-------- -------- --------
Cash flows from investing activities:
Proceeds from sales of property and equipment............. 95 1,467 12,529
Investments in notes receivable, net...................... (4,000) (3,883) (1,682)
Purchase of assets held for resale........................ -- -- (45,962)
Proceeds from sale of assets.............................. -- -- 45,962
Purchase of property, equipment, and leasehold
improvements............................................ (5,375) (16,684) (6,261)
Purchase of contract rights............................... (9) (300) (45)
Investments in partnerships, joint ventures and
unconsolidated subsidiaries............................. (2,545) (1,467) (46,319)
Acquisitions of companies, net of cash acquired........... -- -- (49,963)
Proceeds from maturities of investments................... -- 151 330
Purchase of investments................................... (1,125) (388) (601)
Proceeds from sale of partnership......................... 125 -- --
-------- -------- --------
Net cash used by investing activities............... (12,834) (21,104) (92,012)
-------- -------- --------
Cash flows from financing activities:
Dividends paid............................................ (848) (1,046) (1,488)
Net borrowings under revolving credit agreement........... -- -- 70,750
Principal repayments on notes payable..................... -- -- (19,096)
Proceeds from issuance of common stock and exercise of
stock options, net...................................... -- 21,037 1,184
-------- -------- --------
Net cash provided (used) by financing activities.... (848) 19,991 51,350
Foreign currency translation................................ 5 8 134
-------- -------- --------
Net increase (decrease) in cash and cash equivalents........ (1,808) 18,387 (18,626)
Cash and cash equivalents at beginning of period............ 12,026 10,218 28,605
-------- -------- --------
Cash and cash equivalents at end of period.................. $ 10,218 $ 28,605 $ 9,979
======== ======== ========
Non-cash transactions:
Exchange of properties, net of cash (Note 13)............... $ -- $ 2,644 $ --
Note receivable on property sale (Note 3)................... $ -- $ -- $ 10,225
Issuance of restricted stock (Note 12)...................... $ -- $ 1,880 $ --
Effects of acquisition:
Estimated fair value of assets acquired..................... $ 72,950
Purchase price in excess of the net assets acquired
(goodwill)................................................ 32,713
Estimated fair value of liabilities assumed................. (49,144)
--------
Cash paid................................................. 56,519
Less cash acquired........................................ (6,556)
--------
Net cash paid for acquisitions...................... $ 49,963
========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 171
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements follows:
(a) Organization
Central Parking Corporation is a United States company chartered in the State of
Tennessee. The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries: Central Parking System, Inc. and its
193 wholly-owned U.S. subsidiaries ("CPS"); Central Parking System of the United
Kingdom, Ltd. and its wholly-owned subsidiary ("CPS-UK"); and Central Parking
System Realty, Inc. and its five wholly-owned subsidiaries ("Realty"). All
significant intercompany transactions have been eliminated.
The Company provides parking consulting services and manages parking facilities
throughout the world, principally in the United States and United Kingdom. The
primary operations of the Company are conducted through CPS and CPS-UK. These
companies manage and operate owned or leased parking facilities, manage and
operate parking facilities owned or leased by third parties and provide
financial and other advisory services to clients.
The primary focus of Realty is to provide financing support to the affiliates.
Realty is engaged in the ownership and development of parking related real
estate, which is managed by one of the affiliated companies. Realty's real
estate activities are conducted through purchase, joint venture (either
corporate or partnership), or lending of capital. Realty also leases real estate
to affiliated parking companies.
(b) Revenues
Parking revenues include the parking revenues from leased and owned locations.
Management contract revenues represent revenues (both fixed fees and additional
payments based upon parking revenues) from facilities managed for other parties,
and miscellaneous management fees for accounting, insurance and other ancillary
services such as consulting and transportation management services. Parking and
management contract revenues are recognized when earned.
Total managed, leased and owned parking revenues, representing gross revenues
processed by the Company, including the revenues of facilities managed by the
Company for other parties, was $412,525,000, $457,176,000, and $583,131,000 for
the years ended September 30, 1995, 1996, and 1997, respectively.
Management accounts payable reflected on the accompanying consolidated balance
sheets is reflected net of cash of $4,892,000 and $5,348,000 at September 30,
1996 and 1997, respectively. Such cash balances belong to the owners of the
various managed facilities, but they are held by the Company and are used to pay
expenses of the managed facilities and ultimately to settle the balance due to
the owners of the managed facilities.
F-7
<PAGE> 172
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(c) Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers cash and
cash equivalents to include cash on hand, in banks, and short-term, highly
liquid investments with original maturities of three months or less.
(d) Investments
The Company accounts for investments in certain securities under Statement of
Financial Accounting Standards ("SFAS") No. 115, Accounting for Certain
Investments in Debt and Equity Securities, which requires investments in equity
securities that have a readily determinable fair value and investments in debt
securities to be classified into one of three categories, as follows: (i)
held-to-maturity debt securities, (ii) trading securities, and (iii) securities
available-for-sale. Classification of a debt security as held-to-maturity is
based on the Company's positive intent and ability to hold such security to
maturity. Such securities are stated at amortized cost adjusted for amortization
of premiums and accretion of discounts, unless there is a decline in value which
is considered to be other than temporary, in which case the cost basis of such
security is written down to fair value and the amount of the writedown is
reflected in earnings. Securities that are bought and held principally for the
purpose of selling them in the near term are classified as trading account
securities, which are valued at fair value with the unrealized gains and losses
included in earnings. Securities classified as available-for-sale are reported
at fair value with the unrealized gains and losses excluded from earnings and
reported, net of tax, in shareholders' equity. At September 30, 1996 and 1997,
all of the Company's investment securities were classified as held-to-maturity.
(e) Property, Equipment, and Leasehold Improvements
Property, equipment, and leasehold improvements are recorded at cost.
Depreciation is provided principally on a straight-line basis over a period of
five to ten years for furniture, fixtures, and equipment, over the remaining
lives of the corresponding leases for leasehold improvements, and over thirty
years for buildings. Accelerated depreciation is used for income tax purposes.
(f) Investment in Partnerships and Joint Ventures
Investment in general, limited partnerships and joint ventures are accounted for
using the equity method of accounting. The Company has a number of joint
ventures, owned directly or indirectly by the Company, to operate and develop
parking garages through either corporate joint ventures, general partnerships,
limited liability companies, or limited partnerships. The financial results of
the Company's joint ventures are accounted for under the equity method and are
included in equity in partnership and joint venture earnings in the accompanying
consolidated statements of earnings.
(g) Contract Rights
Contract rights consist of capitalized payments made to third-party parking
service companies pursuant to agreements which provide the Company the
opportunity to manage or lease facilities owned, leased or previously managed by
such companies. Contract rights are
F-8
<PAGE> 173
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
allocated among respective locations and are amortized on a straight-line basis
over the terms of related agreements which range from five to ten years.
(h) Goodwill
Goodwill, which represents the excess of purchase price over fair value of net
assets acquired, is amortized on a straight-line basis over the expected periods
to be benefited, generally 25 years. The Company assesses the recoverability of
this intangible asset by determining whether the amortization of the goodwill
balance over its remaining life can be recovered through undiscounted future
operating cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected discounted future operating
cash flows using a discount rate reflecting the Company's average cost of funds.
The assessment of the recoverability of goodwill will be impacted if estimated
future operating cash flows are not achieved.
(i) Lease Transactions and Related Balances
The Company accounts for operating lease obligations on a straight-line basis.
Contingent or percentage payments are recognized when operations indicate such
amounts will be payable. Lease obligations paid in advance are included in
prepaid expenses. The difference between actual lease payments and straight-line
lease expenses over the lease term is included in accrued expense or other
liabilities, as appropriate.
(j) Impairment of Long-Lived Assets
The Company adopted the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", on
October 1, 1996. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell. Adoption of this Statement did not have a material impact on the Company's
financial position, results of operations, or liquidity.
(k) Income Taxes
The Company files a consolidated federal income tax return. The Company uses the
asset and liability method to account for income taxes. Under this method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
F-9
<PAGE> 174
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Jobs tax credits are accounted for by the flow-through method, which recognizes
the credits as reductions of income tax expense in the year utilized.
The Company does not provide for federal income taxes on the accumulated
earnings considered permanently reinvested in foreign subsidiaries.
(l) Preopening Expenses and Computer Software Development Costs
The direct and incremental costs of hiring and training personnel associated
with the opening of new parking facilities and the internal development costs
associated with computer software are expensed as incurred.
(m) Per Share and Share Data
Per share data has been computed on the basis of the weighted average number of
shares outstanding, including common stock equivalents, which consist of stock
options. In determining the number of dilutive common stock equivalents, the
Company includes average common shares attributable to dilutive stock options
using the treasury stock method. Fully diluted earnings per share is not
presented since it approximates earnings per common share. All share and
earnings per share data included herein have been adjusted for a
recapitalization of shares in October 1995, the three-for-two stock split
completed in March 1996 and the three-for-two stock split as approved by the
Company's Board of Directors in November 1997 (see Note 9).
(n) Foreign Currency Translation
The financial position and results of operations of the Company's foreign
subsidiaries and equity method joint ventures are measured using local currency
as the functional currency. Translation adjustments arising from the differences
in exchange rates from period to period are included in the currency translation
adjustment in shareholders' equity.
(o) Fair Value of Financial Instruments
The Company discloses the fair values of most on-and-off balance sheet financial
instruments for which it is practicable to estimate the value. Fair value
disclosures exclude certain financial instruments such as trade receivables and
payables when carrying values approximate the fair value. Fair value disclosures
are not required for employee benefit obligations, lease contracts, and all
non-financial instruments such as land, buildings and equipment. The fair values
of the financial instruments are estimates based upon current market conditions
and quoted market prices for the same or similar instruments as of September 30,
1997. Book value approximates fair value for substantially all of the Company's
assets and liabilities which fall under the fair value disclosure requirements.
(p) Use of Estimates
Management of the Company has made certain estimates and assumptions relating to
the reporting of assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from these estimates.
F-10
<PAGE> 175
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(2) ACQUISITIONS
(a) Civic Parking, LLC
On December 31, 1996 the Company purchased for cash Civic Parking, LLC ("Civic
Parking"), a limited liability company, which owns four parking garages in St.
Louis: Kiener East, Kiener West, Stadium East and Stadium West. The four garages
had previously been operated by the Company under management agreements. The
$91.0 million purchase price was financed through working capital and a draw of
$67.2 million on the Company's Revolving Credit Facility (see Note 8). The
transaction was accounted for using the purchase method. The estimated fair
value of the garages at the date of the acquisition approximated the purchase
price and, accordingly, management has allocated the purchase price to the land
and buildings acquired.
On April 16, 1997, the Company sold 50% of the membership units of Civic Parking
to an affiliate of Equity Capital Holdings, LLC for $46.0 million in cash. In
the initial allocation of the purchase price, the Company assigned $45.8 million
to the membership units that were sold; consisting of an estimated sale price of
$46.0 million and estimated net cash inflows for the holding period of $638
thousand offset by interest on incremental debt during the holding period of
$801 thousand. The difference between the sales price of $46.0 million and the
amount initially assigned to the membership units that were sold of $45.8
million, was recorded as an adjustment to the purchase price of the units
retained by the Company. Accordingly, no gain or loss was recognized. The
membership units retained by the Company have been accounted for in the
accompanying consolidated financial statements under the equity method and are
included in the Company's consolidated financial statements from December 31,
1996.
The Company will continue to operate these garages pursuant to a lease and
operating agreement with Civic Parking, LLC.
(b) Square Industries, Inc.
On January 18, 1997, the Company completed a cash tender to acquire all of the
outstanding shares of Square Industries, Inc. ("Square") for $54.8 million,
including transaction fees and other related expenses. In addition, the Company
assumed $23.2 million of existing Square debt. The purchase price was financed
through a draw on the Company's Revolving Credit Facility (see Note 8). As of
September 30, 1997, the Company has refinanced $18.9 million of the debt assumed
from Square through a draw on the Revolving Credit Facility.
Square operated parking facilities primarily in the northeast. The Square
acquisition was accounted for using the purchase method and, accordingly, the
results of operations of Square have been included in the Company's consolidated
financial statements from January 18, 1997. The purchase price has been
allocated to Square's assets and liabilities based on their estimated fair
values at the date of acquisition. The excess of the purchase price over the
fair value of the net assets acquired of $29.3 million is being amortized on a
straight-line basis over 25 years.
F-11
<PAGE> 176
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(c) Car Park Corporation
On May 29, 1997, the Company acquired certain assets and leases of Car Park
Corporation ("Car Park") for $3.5 million; consisting of parking facilities in
the San Francisco metropolitan area. The purchase price was financed through a
draw of approximately $1.7 million on the Company's Revolving Credit Facility,
and $1.8 million payable to the sellers in equal monthly installments over a
four year term, subject to early payoff at seller's request (at a discounted
rate). The acquisition was accounted for as a purchase and, accordingly, the
results of operations of Car Park have been included in the Company's
consolidated financial statements from the date of acquisition.
The following unaudited pro forma condensed results of operations give effect to
the acquisitions of Square, Civic Parking and Car Park as if such transactions
had occurred at the beginning of each period presented (in thousands except for
earnings per share):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
SEPTEMBER 30,
--------------------
1996 1997
-------- --------
<S> <C> <C>
Total revenues................................. $212,145 $246,825
Earnings before income taxes................... 24,292 33,463
Net earnings................................... 15,477 20,317
Earnings per share............................. $ 0.59 $ 0.77
Weighted average common shares & common share
equivalents.................................. 26,237 26,387
</TABLE>
The foregoing unaudited proforma amounts are based upon certain assumptions and
estimates, including, but not limited to, the recognition of estimated cost
savings related to general and administrative expenses to be eliminated
prospectively in connection with the Square acquisition, interest expense on
debt incurred to finance the acquisitions and amortization of goodwill over 25
years. The unaudited proforma amounts do not necessarily represent results which
would have occurred if the acquisitions had taken place on the basis assumed
above, nor are they indicative of the results of future combined operations.
(3) NOTES AND ACCOUNTS RECEIVABLE
Included in notes receivable are the Series B Bonds purchased in April 1994
relating to the Commerce Street Joint Venture (see Note 7(b)) in the amounts of
$1,553,000 and $760,000 at September 30, 1996 and 1997, respectively. The Bonds
require monthly interest and principal payments at the index rate (prime) plus
250 basis points (11% at September 30, 1997) through 2011. The minimum interest
rate is 9.5% and the maximum interest rate is 12%. The Bonds are secured by a
mortgage on the project which is subordinate to the industrial development bonds
described in Note 7(b). The remainder of the Series B Bonds are owned by the
other joint venture partner.
Included in notes receivable at September 30, 1996 and 1997, are loans totaling
$2.5 million and $2.4 million, respectively, from a joint venture in Denver,
Colorado (see Note 7(c)). The interest rates range from 9.5% to 10% and
repayments are based on an amortization schedule for one portion and sales tax
and property tax revenues for the second portion.
F-12
<PAGE> 177
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Also included in notes receivable at September 30, 1996 and 1997 are loans
totaling $2.9 million and $2.2 million, respectively, to a foreign affiliate, of
which the Company holds a 50% equity interest. These loans bear interest between
10% and 15% and require principal payments over various terms through 2001.
In October 1995, the Company loaned $500,000, in the form of a term note, to a
joint venture of which the Company holds a 10% equity interest. This note
requires monthly principal and interest payments at 10% through the year 2000
and is secured by leasehold interests of the joint venture. The outstanding
balance at September 30, 1996 and 1997, respectively, was $426,000 and $337,000.
The Company sold a parking garage in July 1997. As part of the sale, the Company
received $3 million in cash and a note for $10.2 million secured by a mortgage.
The note is a balloon note, with principal due in full on or before July 7,
2000. The note requires quarterly interest payments at 8.25%. The Company
recognized a gain of $3.1 million on this sale, which is included in net gains
on sales of property and equipment in the accompanying consolidated statements
of earnings.
The remainder of notes receivable consist of miscellaneous amounts ranging from
$142,000 to $488,000 at September 30, 1996, and $78,000 to $434,000 at September
30, 1997 and earn interest at rates ranging from 9.75% to 10.5%.
(4) INVESTMENTS
Investment securities consist of debt obligations of states and political
subdivisions and are classified by the Company as held-to-maturity securities
pursuant to SFAS No. 115.
The amortized cost, gross unrealized gains, gross unrealized losses, and
approximate fair values for such securities are presented as follows (in
thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------
1996 1997
------ ------
<S> <C> <C>
Amortized cost............................................. $4,483 $4,754
Unrealized gains........................................... 174 213
Unrealized losses.......................................... 26 5
------ ------
Fair value................................................. $4,631 $4,962
====== ======
</TABLE>
The amortized cost and approximate fair value of debt securities at September
30, 1997 by average estimated maturity are shown below (in thousands):
<TABLE>
<CAPTION>
SECURITIES HELD-TO-MATURITY
---------------------------------
AMORTIZED COST FAIR VALUE
-------------- ----------------
<S> <C> <C>
Due in one year or less..................... $ 690 $ 653
Due after one year through five years....... 1,444 1,581
Due after five years through ten years...... 1,890 1,958
Due after ten years......................... 730 770
------ ------
Total securities.................. $4,754 $4,962
====== ======
</TABLE>
There were no sales of investment securities during the years ended September
30, 1995, 1996 or 1997.
F-13
<PAGE> 178
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) PROPERTY, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS
A summary of property, equipment, and leasehold improvements and related
accumulated depreciation and amortization is as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------
1996 1997
------------- -------
<S> <C> <C>
Leasehold improvements............................... $ 2,076 $10,537
Buildings............................................ 14,026 13,573
Garage and other operating equipment................. 5,397 10,805
Furniture and fixtures............................... 2,473 3,519
Aircraft............................................. 3,956 3,955
------- -------
27,928 42,389
------- -------
Less accumulated depreciation and amortization....... 8,278 15,722
------- -------
19,650 26,667
Land................................................. 18,538 52,390
------- -------
Property, equipment and leasehold improvements,
net................................................ $38,188 $79,057
======= =======
</TABLE>
(6) INTANGIBLE ASSETS
(a) Contract Rights
The Company and its subsidiaries manage certain parking facilities which are
owned, leased or managed by an unrelated parking services company. Pursuant to
these arrangements, the Company made an initial payment and guarantees
additional annual payments through the term of the respective agreement. Such
additional payments are included in the future minimum payments discussed (Note
10). Such additional payments may increase in the event parking revenues exceed
certain thresholds over the term of the agreement. In the event of a location
termination, the guaranteed additional annual payments referred to above are to
be reduced on a predetermined basis.
Contract rights and accumulated amortization are as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------
1996 1997
------ ------
<S> <C> <C>
Contract rights............................................ $8,981 $9,026
Less accumulated amortization.............................. 3,166 4,005
------ ------
Contract rights, net....................................... $5,815 $5,021
====== ======
</TABLE>
(b) Goodwill
Goodwill at September 30, 1997 resulted from:
<TABLE>
<S> <C>
Purchase price of Square and Car Park....................... $58,295
Less fair value of net assets acquired...................... 25,582
Excess of purchase price over net assets acquired
(goodwill)................................................ 32,713
Less accumulated amortization............................... 850
-------
Goodwill, net............................................... $31,863
=======
</TABLE>
F-14
<PAGE> 179
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(c) Other
Included in other assets are unamortized balances related to non-competition
agreements of $413,000 at September 30, 1997.
(7) INVESTMENTS IN PARTNERSHIPS AND JOINT VENTURES
The following tables reflect the financial position and results of operations
for the partnerships and joint ventures as of September 30, 1996 and 1997, and
for the three years ended September 30, 1997 (in thousands). Except for the
Company's investment in Civic Parking LLC, summary financial information of the
partnerships and joint ventures has not been presented since such information is
not material to the Company's Consolidated Financial Statements.
<TABLE>
<CAPTION>
INVESTMENT AND
ACCUMULATED
LOSSES IN INVESTMENT IN
PARTNERSHIPS LIMITED EQUITY IN PARTNERSHIPS &
AND JOINT VENTURES PARTNERSHIPS JOINT VENTURE EARNINGS
------------------- --------------- --------------------------
1996 1997 1996 1997 1995 1996 1997
-------- -------- ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Civic Parking, LLC....... $ -- $45,421 $ -- $ -- $ -- $ -- $2,877
Commerce Street Joint
Venture................ (1,017) (868) -- -- 305 400 504
LoDo Parking Garage,
LLC.................... 1,308 1,270 -- -- 96 77 126
Larimer Square Parking
Associates............. 951 1,014 -- -- 12 22 59
Arizona Stadium Parking
Garage, LLC............ -- 1,500 -- -- -- -- --
Other Partnerships....... 463 618 1,234 1,240 (51) 142 597
------- ------- ------ ------ ---- ---- ------
$ 1,705 $48,955 $1,234 $1,240 $362 $641 $4,163
======= ======= ====== ====== ==== ==== ======
</TABLE>
<TABLE>
<CAPTION>
JOINT VENTURE OTHER
NON-RECOURSE DEBT ASSETS
----------------- -----------
1996 1997 1996 1997
------- ------- ---- ----
<S> <C> <C> <C> <C>
Civic Parking LLC................................ $ -- $ -- $ -- $ --
Commerce Street Joint Venture.................... 7,848 7,606 -- --
LoDo Parking Garage, LLC......................... -- -- -- --
Larimer Square Parking Associates................ 3,647 3,554 -- --
Arizona Stadium Parking Garage, LLC.............. -- 1,800 -- --
Other Partnerships............................... -- 4,524 221 536
------- ------- ---- ----
$11,495 $17,484 $221 $536
======= ======= ==== ====
</TABLE>
(a) Civic Parking, LLC
As explained in Note 2(a), the Company acquired its 50% joint venture ownership
in Civic Parking, in the current year. The results of operations include 50% of
Civic Parking's net earnings from January 1, 1997 to September 30, 1997. The
four parking garages are located in
F-15
<PAGE> 180
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
St. Louis, Missouri and contain retail spaces. Unaudited summary information for
Civic Parking is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
------------------
<S> <C>
Financial position:
Land, property and equipment, net................... $90,925
Cash................................................ 1,669
Other assets........................................ 175
Liabilities......................................... (768)
-------
Net assets.................................. $92,001
=======
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1997
TO
SEPTEMBER 30, 1997
------------------
<S> <C>
Results of operations:
Revenue............................................. $7,668
Cost of operations.................................. 2,458
------
Net earnings................................ $5,210
======
Cash flow distributed to partners..................... $3,680
======
</TABLE>
(b) Commerce Street Joint Venture
Realty has a 50% interest in a joint venture that owns a parking complex in
Nashville, Tennessee. The complex consists of the original parking garage and
retail space (the "Original Facility") and an addition to the parking garage
(the "Addition") constructed several years after the completion of the Original
Facility.
The joint venture financed the Original Facility with industrial development
bonds in the original principal amount of $8,600,000 (the "Series A Bonds")
issued by The Industrial Development Board of the Metropolitan Government of
Nashville and Davidson County (the "Metro IDB"). The Metro IDB holds title to
the Original Facility, which it leases to the joint venture under a lease
expiring in 2016. The lease of the Original Facility obligates the venture to
make lease payments corresponding to principal and interest payable on Series A
Bonds and provides the venture with an option to purchase the Original Facility
at any time by paying the amount due under the Series A Bonds and making a
nominal purchase payment to the Metro IDB. The joint venture refinanced the
Series A Bonds in 1994 to achieve more favorable interest rates terms. The
outstanding principal amount of Series A Bonds is reflected in the above table
at September 30, 1996 and 1997. In addition, the Company held $1,553,000 and
$760,000 of Series B Bonds relating to Commerce Street Joint Venture at
September 30, 1996 and 1997, respectively (see Note 3).
(c) Larimer Square Parking Associates
In October 1994, the Company acquired a 50% interest in a joint venture to
construct a parking complex in Denver, Colorado. The complex, which was
completed in February 1996, was constructed and financed by the joint venture
partners. The Company invested $991,000 in the joint venture and loaned the
joint venture $1,100,000 in the form of a construction
F-16
<PAGE> 181
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
note, bearing interest at 9.5%, which was converted to a term note in August
1996, following completion of the project. An additional $1,430,000 was loaned
by the Company which will be repaid through sales tax and property tax revenues
by the Denver Urban Renewal Authority at an interest rate of 10%. The Company
manages the parking facility for the venture.
(d) LoDo Parking Garage, LLC
The Company acquired in March 1995 a 50% interest in a joint venture parking
complex in Denver, Colorado. The complex is a seven-story parking facility. The
Company invested $1,375,000 in the joint venture and manages this parking
facility for the joint venture.
(e) Arizona Stadium Parking Garage, LLC
During the year ended September 30, 1997, construction began on the Arizona
Stadium parking garage. The Company invested $1.5 million in this joint venture.
(f) Central Parking System Deutschland, GmbH
The Company acquired in April 1996 a 50% interest in a joint venture that
manages and leases various parking structures in Germany. The Company invested
$210,000 in this joint venture.
(g) Realty Parking Properties II
Included in investment in limited partnerships is Realty Parking Properties II,
a limited partnership organized to acquire real estate properties. The Company
has a 3% limited partnership interest in this partnership of which its total
investment is $990,000. The Company earns a dividend based on cash flows of
acquired properties. The annualized percentage cash return averaged
approximately 4.5% during 1996 and 5.0% during 1997. Such investment is
accounted for using the cost method.
(8) LONG TERM DEBT
Long term debt includes the Revolving Credit Facility, which is unsecured,
expires January 31, 2000, provides that the Lenders may extend the term until
January 31, 2001, upon the request of the Company. Advances under the Revolving
Credit Facility bear interest at one of two rates, at the Company's option,
either (i) the bank base rate or (ii) the LIBOR plus a margin ranging from .25%
to 1.25%, depending on the occurrence of certain dates or events and achievement
of certain financial ratios. In accordance with the loan agreement, the Company
permanently reduced the Revolving Credit Facility from $150 million to $120
million as of April 16, 1997. The Revolving Credit Facility contains certain
covenants which require the Company and its subsidiaries to maintain certain
financial ratios and restrict further indebtedness. As of September 30, 1997 the
Company had $70.8 million outstanding, and $48.0 million available for
borrowing, under the Revolving Credit Facility. The average interest rate for
the period during which the Company had debt outstanding, beginning December 31,
1996, was 7.1% and the interest rate at the end of the year was 6.7%. Commitment
fees for the unused portion of the Revolving Credit Facility approximate 0.25%
of the unused balance. The commitment fees are included in interest expense in
the
F-17
<PAGE> 182
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
accompanying consolidated statements of earnings. The Company anticipates that
the borrowings under the Revolving Credit Facility will be refinanced from the
proceeds of the Acquisition Credit Facility described in Note 17(c), or a
subsequent debt or equity offering.
In April 1996, the Company established a committed unsecured line of credit
totaling $20,000,000. Such line provides liquidity, if necessary, for the
Company and subsidiaries at LIBOR rates plus 1.125%. The agreement contains
covenants for certain financial tests, including minimum interest coverage, net
worth and maximum borrowings. The Company did not use such line during 1996.
This line of credit was terminated in conjunction with the Revolving Credit
Facility.
Prior to April 1996, the Company had various revolving credit agreements which
were terminated. The Company did not use such lines in 1994, 1995, or 1996.
In addition to the Revolving Credit Facility, the Company also has several notes
payable outstanding, totaling $2.7 million, which are secured by related real
estate and equipment and bear interest at rates ranging from 6.46% to 11.0%.
These balances mature from dates in 1998 to 2006. The Company has $4.7 million
of outstanding letters of credit. Of these letters of credit, $1.3 million
reduces availability under the Revolving Credit Facility.
(9) SHAREHOLDERS' EQUITY
(a) Recapitalization
On October 16, 1994, 5,532 shares of Class B Preferred stock of the Company were
converted into 176,441 shares of nonvoting common stock. On March 16, 1995, the
remaining 417 shares of Class B Preferred stock were converted into 13,282
shares of nonvoting common stock. No Class B Preferred stock was outstanding at
September 30, 1996 or 1995.
As of September 29, 1995, the Board of Directors and shareholders of the Company
approved a plan of recapitalization which was effective immediately prior to the
effectiveness of the Company's initial public offering of common stock on
October 10, 1995 (see Note 9(b)). Under the plan of recapitalization, the
Company authorized the issue of 1,000,000 shares of Preferred stock and
30,000,000 shares of common stock. At the February 28,1997 Annual Meeting,
shareholders approved an increase in the authorized common stock to 50,000,000
shares. The Class A Preferred, nonvoting common and voting common shares issued
and outstanding as of the effective date of the plan of recapitalization, were
canceled and exchanged for common stock (split adjusted) as follows:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
CANCELED SHARES
CLASS SHARES ISSUED
- ----- --------- ----------
<S> <C> <C>
A-1 Preferred.................................... 3,100 65,200
A-2 Preferred.................................... 5,200 125,775
A-3 Preferred.................................... 5,000 121,764
A-4 Preferred.................................... 2,650 62,316
Nonvoting Common................................. 1,040,223 11,449,463
Voting Common.................................... 850,500 11,233,482
--------- ----------
1,906,673 23,058,000
========= ==========
</TABLE>
F-18
<PAGE> 183
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
For purposes of calculating the exchange ratio for recapitalization, the Company
utilized $10.00 (adjusted for the stock splits) as the price per share of the
Company's common stock. Weighted average common shares and net earnings per
common share for all years presented have been adjusted to reflect the
recapitalization and subsequent stock splits.
The Company declared dividends of $398,000 and $450,000 in 1994 and 1995,
respectively, on the Preferred stock that was outstanding prior to the
recapitalization.
(b) Initial Public Offering
On October 10, 1995, the Company completed an initial public offering of common
stock in which 2,796,750 shares were sold by the Company for net proceeds of
$20.0 million.
(c) Stock Splits
On November 21, 1997 the Company's Board of Directors approved a three-for-two
stock split to be effected on December 12, 1997. On March 19, 1996 the Company
effected a three-for-two stock split. All share and per share amounts have been
adjusted to reflect both stock splits.
(10) OPERATING LEASE COMMITMENTS
The Company and its subsidiaries conduct a portion of their operations on leased
premises under operating leases expiring at various dates through 2045. Lease
agreements provide for minimum payments and contingent payments based upon a
percentage of revenue or a combination of both. Certain locations additionally
require the Company and its subsidiaries to pay real estate taxes and other
occupancy expenses.
Future minimum rental commitments under operating leases are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
- ------------------------
<S> <C>
1998............................................... $ 66,054
1999............................................... 57,427
2000............................................... 45,188
2001............................................... 40,548
2002............................................... 34,720
Thereafter......................................... 171,854
--------
Total future operating lease
commitments........................... $415,791
========
</TABLE>
Included in the future minimum rental commitments under operating leases are
aggregate payments of $83,917,000 resulting from commitments incurred under the
agreement described in Note 6(a).
F-19
<PAGE> 184
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Rental expense for all operating leases is as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Rentals:
Minimum.................................... $30,022 $38,882 $66,177
Contingent................................. 21,009 19,330 23,952
------- ------- -------
Total rentals...................... $51,031 $58,212 $90,129
======= ======= =======
</TABLE>
(11) INCOME TAXES
Income tax expense consists of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------
1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
Current:
Federal...................................... $4,951 $5,585 $ 9,940
Targeted jobs credit, net of federal tax
benefit................................. (216) -- (98)
------ ------ -------
Net federal current tax expense................ 4,735 5,585 9,842
State........................................ 655 639 1,312
Non-U.S...................................... 587 423 688
------ ------ -------
5,977 6,647 11,842
Deferred:
Federal...................................... (363) 585 378
State........................................ -- -- --
Non-U.S...................................... (51) -- (13)
------ ------ -------
(414) 585 365
------ ------ -------
Total income tax expense from
earnings.......................... $5,563 $7,232 $12,207
====== ====== =======
</TABLE>
Total income taxes are allocated as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------
1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
Income tax expense from earnings............... $5,563 $7,232 $12,207
Currently deductible amounts included in
goodwill for financial statement purposes.... -- -- (1,423)
Shareholders' equity, tax benefit derived from
non-statutory stock options exercised........ -- (310) (213)
------ ------ -------
Total income taxes................... $5,563 $6,922 $10,571
====== ====== =======
</TABLE>
Provision has not been made for U.S. or additional foreign taxes on
approximately $2,110,000, $2,863,000, and $2,878,000 at September 30, 1995,
1996, and 1997, respectively, of undistributed earnings of a foreign subsidiary,
as those earnings are intended to be permanently reinvested.
F-20
<PAGE> 185
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation between actual income taxes and amounts computed by applying
the federal statutory rate to earnings before income taxes is summarized as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------------------
1995 1996 1997
------------- ------------- --------------
$ % $ % $ %
------ ---- ------ ---- ------- ----
<S> <C> <C> <C> <C> <C> <C>
U.S. Federal statutory rate
on earnings before income
taxes..................... $5,272 34.0% $7,164 34.0% $11,344 35.0%
State and city income taxes,
net of federal income tax
benefit................... 432 2.8 422 2.0 853 2.6
Targeted jobs credits, net
of federal tax benefit.... (216) (1.4) -- -- (98) (0.3)
Tax-exempt interest
income.................... (145) (0.9) (312) (1.5) (88) (0.3)
Nondeductible goodwill
amortization.............. -- -- -- -- 282 0.9
Other....................... 220 1.4 (42) (0.2) (86) (0.2)
------ ---- ------ ---- ------- ----
Income tax expense.......... $5,563 35.9% $7,232 34.3% $12,207 37.7%
====== ==== ====== ==== ======= ====
</TABLE>
Sources of deferred tax assets and deferred tax liabilities are as follows (in
thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------
1996 1997
------- --------
<S> <C> <C>
Deferred tax assets:
Deferred compensation expense..................... $ 1,515 $ 1,620
Prepaid expenses.................................. -- 197
Contribution carry forwards....................... -- 3,080
Net operating losses.............................. -- 1,151
Deferred and capitalized expenses................. -- 380
Accrued expenses and reserves..................... 205 439
Other............................................. 131 172
------- --------
Total gross deferred tax assets........... 1,851 7,039
------- --------
Deferred tax liabilities:
Deferred tax gain on sales of properties.......... (2,583) (1,230)
Deferred installment gain on sale of property..... -- (2,062)
Timing differences in recognition of partnership
earnings....................................... (243) (482)
Property, plant and equipment, due to differences
in depreciation................................ (322) (8,324)
Other............................................. (42) (11)
------- --------
Total gross deferred tax liabilities...... (3,190) (12,109)
------- --------
Valuation allowance on net operating losses......... -- (890)
------- --------
Net deferred tax liabilities........................ $(1,339) $ (5,960)
======= ========
</TABLE>
F-21
<PAGE> 186
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net operating losses and contribution carry forwards expire between 2002 and
2012. Management believes that it is more likely than not that the results of
operations will generate sufficient taxable income to realize current deferred
tax assets after giving consideration to the valuation allowance. The valuation
allowance has been provided for loss and contribution carry forwards for which
recoverability is not deemed to be more likely than not.
(12) EMPLOYEE BENEFIT PROGRAMS
(a) Stock Plans
All share amounts and prices have been adjusted to reflect the effects of the
stock splits discussed in Note 9(c).
In August 1995, the Board of Directors and shareholders approved a stock plan
for key personnel, which included a stock option plan and a restricted stock
plan. Under this plan incentive stock options, as well as nonqualified options
and other stock-based awards, may be granted to officers, employees and
directors. A total of 1,417,500 common shares have been reserved for issuance
under these two plans combined. Options representing 425,375 shares, net of
cancellations, had been granted under this plan at September 30, 1997. Options
are granted with an exercise price equal to the fair market value at the date of
grant and generally expire ten years after the date of grant. At September 30,
1997, 273,816 shares had been issued through the restricted stock plan. Expense
related to the vesting of restricted stock is recognized by the Company over the
vesting period. Shares in the amount of 267,750 granted under the restricted
stock plan were issued pursuant to the deferred compensation agreement
modification discussed in Note 12(d).
In August 1995, the Board of Directors and shareholders also approved a stock
plan for directors. This plan provides for the grant, upon each director's
initial election, of options to purchase 11,250 shares to each non-employee
director. In addition, each non-employee director who has served for a minimum
of six months on the last day of each fiscal year will receive additional
options to purchase 4,500 shares on that date. A total of 225,000 shares have
been reserved for issuance under the plan. Options to purchase 112,500 shares
had been granted at fair market value on the date of grant under this plan at
September 30, 1997.
The following table summarizes the transactions pursuant to the Company's stock
option plans for the last two fiscal years:
<TABLE>
<CAPTION>
NUMBER OPTION PRICE
OF SHARES PER SHARE
--------- ------------
<S> <C> <C>
Outstanding at September 30, 1995.......... -- $ -- to $ --
Granted.................................. 449,250 $ 8.00 to $21.67
Exercised................................ 89,175 $ 8.00
Canceled................................. 40,650 $ 8.00
------- ----------------
Outstanding at September 30, 1996.......... 319,425 $ 8.00 to $21.67
------- ----------------
Granted.................................. 281,975 $21.25 to $30.50
Exercised................................ 45,525 $ 8.00
Canceled................................. 18,000 $21.25
------- ----------------
Outstanding at September 30, 1997.......... 537,875 $ 8.00 to $30.50
------- ----------------
</TABLE>
F-22
<PAGE> 187
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company accounts for these plans under Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, and accordingly, no
compensation cost has been recognized. If compensation cost for these plans had
been determined consistent with SFAS No. 123, "Accounting for
Stock-Based-Compensation", the Company's net earnings and earnings per share
would have been reduced to the following pro forma amounts:
<TABLE>
<S> <C> <C>
Net Earnings.................. As reported for fiscal year ended
September 30, 1997 $20,205
Pro formas as adjusted under SFAS
123 $19,238
As reported for fiscal year ended
September 30, 1996 $13,836
Pro forma as adjusted under SFAS
123 $12,840
Earnings per Common Share..... As reported for fiscal year ended
September 30, 1997 $ .77
Pro forma as adjusted under SFAS
123 $ .72
As reported for fiscal year ended
September 30, 1996 $ .53
Pro forma, as adjusted under SFAS
123 $ .49
</TABLE>
The estimated weighted average fair value of the options granted were $3.60 for
1996 option grants and $11.90 for 1997 option grants using the Black-Scholes
option pricing model with the following assumptions: dividend yield based on
historic dividend rates at the date of grant, volatility of 35%, risk free
interest based on the treasury bill rate of 10 year instruments at the date of
grant, and an expected life of ten years for all grants.
The Company also has an Employee Stock Purchase Plan which began April 1, 1996,
under which 450,000 shares of common stock have been reserved for issuance. The
Plan allows participants to contribute up to 10% of their normal pay (as defined
in the Plan) to a custodial account for purchase of the Company's common stock.
Participants may enroll or make changes to their enrollment annually, and they
may withdraw from the Plan at any time by giving the Company written notice.
Employees purchase stock annually following the end of the Plan year at a price
per share equal to the lesser of 85% of the closing market price of the common
stock on the first or the last trading day of the Plan year. At September 30,
1997, 40,349 shares had been issued under this plan.
(b) Profit Sharing Plan
The Company has a profit-sharing plan for domestic employees to which employer
contributions are at the discretion of the Board of Directors. Voluntary
after-tax contributions not in excess of 10% of compensation may be made by
non-highly compensated employees.
Eligible employees, 20 years or older, may become a participant in the Plan
after one year of continuous service, if the employee was employed prior to
reaching age 65. An employee's
F-23
<PAGE> 188
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
interest in the Plan vests after two years at the rate of 20% each year, so that
the employee is fully vested at the end of seven continuous years of service.
Employer expense associated with this plan was $886,000, $971,000, and
$1,136,000 in years 1995, 1996 and 1997, respectively.
(c) Incentive Compensation Agreements
The Company has incentive compensation agreements with certain key employees.
Participating employees receive an annual bonus based on profitability of the
operations for which they are responsible. Incentive compensation expense is
accrued during the year based upon management's estimate of amounts earned under
the related agreements. Incentive compensation under all such agreements was
approximately $4,560,000, $4,371,000, and $5,160,000 in years 1995, 1996 and
1997, respectively. In 1996, the cap on this bonus compensation for certain key
executives was decreased.
(d) Deferred Compensation Agreements
The Company has a deferred compensation agreement with the President and Chief
Operating Officer of the Company in which the officer is entitled to receive
upon retirement, payments in an aggregate amount equal to 5% of the increase in
the Company's cumulative after tax profits since September 30, 1983. Upon the
closing of the Company's initial public offering, the Company and the officer
modified the existing agreement by issuing to the officer 267,750 shares of
restricted common stock under the Company's restricted stock plan. Further, the
officer may be entitled to receive additional shares of restricted common stock
until his normal retirement or, if earlier, the date of termination of his
employment, in an amount determined by a formula based upon the Company's
performance over such period. If the officer voluntarily terminates his
employment with the Company before his normal retirement, or if the Company
terminates his employment for cause, all shares of stock received and to be
received under the restricted stock plan are to be forfeited. The market value
of the restricted stock at the date of issuance was $670,000 greater than the
Company's deferred compensation liability. Accordingly, the Company recorded
deferred compensation expense in its shareholders' equity, which is being
amortized ratably over the remaining expected term of the officer's employment.
If it is determined that additional shares are to be issued under the agreement,
the Company will recognize compensation expense, spread ratably over the
remaining expected term of the officer's employment, equivalent to the market
value of such shares, subject to future market fluctuations prior to the
issuance of such shares.
The Company has a deferred compensation agreement that entitles the Chairman and
Chief Executive Officer to annual payments of $500,000 for a period of ten years
following his termination, for any reason other than death, in exchange for a
covenant not to compete. Thereafter, the officer is entitled to annual payments
of $300,000 until his death and, in the event his wife survives him, she is
entitled to annual payments of $300,000 until her death. The Company recognizes
annual compensation expense pursuant to this agreement equivalent to the
increase in the actuarially determined future obligation under the agreement.
F-24
<PAGE> 189
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Compensation expense associated with these agreements was approximately
$782,000, $412,000, and $88,000 in fiscal years 1995, 1996 and 1997,
respectively.
(e) Deferred Unit Plan
On December 19, 1996, the Board of Directors approved the adoption of the
Company's Deferred Stock Unit Plan (the "Deferred Stock Unit Plan" or the
"Plan"). Under the plan, certain key employees will have the opportunity to
defer the receipt of certain portions of their cash compensation, instead
receiving shares of Common Stock following certain periods of deferral.
Approximately nine key employees will be eligible to participate in the plan.
The plan is administered by a committee, appointed by the board of directors of
the Company consisting of at least two non-employee "outside" directors of the
Company.
The Company reserved 375,000 shares of Common Stock for issuance under the 1996
Deferred Stock Unit Plan. Participants may defer up to 50% of their salary. As
of September 30, 1997 no compensation has been deferred under this plan.
(f) Severance Agreement
The Company entered into a severance agreement with the President and Chief
Operating Officer providing for a severance payment to him in cash or stock, at
the Company's election, in an amount currently equal to three weeks of his total
compensation for each year of employment with the Company, upon the termination
of his employment with the Company for any reason other than fraud or
malfeasance.
(13) RELATED PARTIES
In October 1995, the Company exchanged two Nashville, Tennessee properties for
two Tulsa, Oklahoma, properties owned by the majority shareholders through a
Tennessee limited liability company ("the LLC") of which the Company's chairman
is chief manager and owner of fifty percent of the membership interests. The two
Nashville properties are surface lots located in downtown Nashville with an
appraised value of $2,840,000. The Tulsa properties are two surface parking lots
that the LLC purchased from an unrelated third party immediately prior to the
exchange for approximately $2.6 million. In the transaction, the Company
exchanged the Nashville properties at their appraised value and received the two
Tulsa properties and approximately $200,000 in cash from the LLC. The Company
leased the Nashville properties from the LLC for $290,000 per year for a 10 year
term and pays percentage rent. Total rent expense, including percentage rent,
was $290,000 and $354,000 in 1996 and 1997, respectively. In addition, the
Company will receive 25% of the gain in the event of a sale of these properties
during the term of the lease. During 1997, the Company approved an increase in
the percentage rent clause which was approved by a majority of the Company's
disinterested directors. Management believes that such transactions have been on
terms no less favorable to the Company than those that could have been obtained
from unaffiliated persons.
F-25
<PAGE> 190
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(14) CONTINGENCIES
The Company is subject to various legal proceedings and claims which arise in
the ordinary course of its business. In the opinion of management, the ultimate
liability with respect to those proceedings and claims will not materially
affect the financial position, operations, or liquidity of the Company. The
Company maintains liability insurance coverage for individual claims in excess
of $50,000, subject to annual aggregate limits.
Certain contractual obligations are collateralized by irrevocable letters of
credit. At September 30, 1997, total letters of credit amounted to $3,630,000.
(15) SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments made for interest and income taxes were as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------
1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
Interest............................................... $ -- $ -- $ 4,368
Income taxes........................................... 5,877 7,209 10,899
</TABLE>
(16) BUSINESS SEGMENTS
The Company's business activities consist of domestic and foreign operations. A
summary of information about the Company's operations by segments is as follows
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Total revenues:
Domestic................................ $110,007 $130,141 $204,868
Foreign................................. 16,148 13,175 18,108
-------- -------- --------
Consolidated............................ $126,155 $143,316 $222,976
======== ======== ========
Operating earnings:
Domestic................................ $ 12,111 $ 15,873 $ 25,967
Foreign................................. 1,491 1,059 1,885
-------- -------- --------
Consolidated............................ $ 13,602 $ 16,932 $ 27,852
======== ======== ========
Earnings before income taxes:
Domestic................................ $ 13,953 $ 19,748 $ 30,065
Foreign................................. 1,554 1,320 2,347
-------- -------- --------
Consolidated............................ $ 15,507 $ 21,068 $ 32,412
======== ======== ========
</TABLE>
F-26
<PAGE> 191
CENTRAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
-------------------
1996 1997
-------- --------
<S> <C> <C>
Identifiable assets:
Domestic......................................... $102,132 $227,471
Foreign.......................................... 5,080 6,543
-------- --------
Consolidated....................................... $107,212 $234,014
======== ========
</TABLE>
(17) SUBSEQUENT EVENTS
(a) Diplomat Acquisition
On October 1, 1997 the Company purchased Diplomat Parking Corporation for $21.7
million which has parking facilities primarily located in Washington D.C. and
Baltimore, MD. The purchase was financed through the Company's Revolving Credit
Facility (see Note 8). The transaction will be accounted using the purchase
method.
(b) Kinney Acquisition
On November 7, 1997 the Company announced it had signed a definitive purchase
agreement to acquire Kinney System Holding Corporation for approximately $188
million, consisting of cash and $37.0 million of the Company's common stock,
plus assumption of approximately $18.6 million of debt. The purchase price is
subject to adjustment for certain events. Management intends to initially
finance the purchase price through the new Acquisition Credit Facility, which
will replace the present Revolving Credit Facility (see Note 17(c)). The
transaction will be accounted using the purchase method.
(c) Acquisition Credit Facility Commitment
On October 20, 1997 Company obtained a commitment for an aggregate $300 million
facility consisting of a five year $200 million Revolving Credit Facility which
will include a sublimit of $25 million for standby letters of credit and a $100
million five year term loan with scheduled repayment of $25 million per year,
beginning in year two, at an interest rate during the first six months at LIBOR
plus 125 basis points. At the end of an initial six month period, the interest
rate on the facility and the commitment fee will revert to a grid pricing based
upon the Company achieving a number of certain financial ratios. The facility
commitment contains certain covenants which require the Company to maintain
certain financial ratios, restrict further indebtedness and limit the amount of
dividends paid. The Acquisition Credit Facility will replace the Revolving
Credit Facility (see Note 8) upon closing of the Kinney System acquisition.
F-27
<PAGE> 192
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED
JUNE 30, SEPTEMBER 30, JUNE 30,
1998 1997 1997
--------- ------------- ---------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 20,582 $ 9,979 $ 476
Management accounts receivable....................... 17,061 11,004 9,753
Accounts and current portion of notes
receivable -- other................................ 8,924 6,158 7,630
Prepaid expenses..................................... 13,014 9,394 7,257
Deferred income taxes................................ 1,279 911 416
Refundable income taxes.............................. -- 2,154 --
-------- -------- --------
Total current assets.......................... 60,860 39,600 25,532
Investments, at amortized cost......................... 4,978 4,754 4,676
Notes receivable, less current portion................. 31,039 16,537 8,511
Property, equipment, and leasehold improvements, net... 127,839 79,057 90,586
Contract and lease rights, net......................... 11,165 5,021 5,234
Goodwill, net.......................................... 239,879 31,863 31,493
Investment in partnerships and joint ventures.......... 31,641 50,195 48,910
Other assets........................................... 19,512 6,987 6,917
-------- -------- --------
$526,913 $234,014 $221,859
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital lease
obligations........................................ $ 1,191 $ 206 $ 218
Accounts payable..................................... 39,049 25,097 17,017
Accrued payroll and related costs.................... 13,177 8,256 7,260
Accrued expenses..................................... 10,325 4,020 2,324
Management accounts payable.......................... 16,422 10,381 8,703
Income taxes payable................................. 450 871 154
-------- -------- --------
Total current liabilities..................... 80,614 48,831 35,676
Long-term debt and capital lease obligations........... 64,359 73,252 82,178
Other liabilities...................................... 15,802 5,161 5,022
Deferred compensation.................................. 3,740 3,048 3,102
Deferred income taxes.................................. 5,605 6,871 5,440
-------- -------- --------
Total liabilities............................. 170,120 137,163 131,418
Company-obligated mandatorily redeemable convertible
securities of subsidiary whose sole assets are
convertible subordinated debentures of the Company... 110,000 -- --
Shareholders' equity:
Common stock, $.01 par value; 50,000,000 shares
authorized, 29,503,487, 26,303,592 and 26,295,700
issued and outstanding, respectively............... 296 263 263
Additional paid-in capital........................... 164,163 32,843 32,559
Foreign currency translation adjustment.............. 315 193 305
Retained earnings.................................... 82,538 64,122 57,901
Deferred compensation on restricted stock............ (519) (570) (587)
-------- -------- --------
Total shareholders' equity.................... 246,793 96,851 90,441
-------- -------- --------
$526,913 $234,014 $221,859
======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-28
<PAGE> 193
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
------------------ --------------------
1998 1997 1998 1997
------- ------- -------- --------
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Parking......................... $96,454 $49,194 $231,988 $126,981
Management contract............. 15,734 10,836 42,611 30,397
------- ------- -------- --------
Total revenues.......... 112,188 60,030 274,599 157,378
Costs and expenses:
Cost of parking................. 81,817 43,123 199,639 111,605
Cost of management contracts.... 4,217 3,471 11,328 9,163
General and administrative...... 9,733 5,398 24,319 16,098
Goodwill and non-compete
amortization................. 2,566 332 4,620 568
------- ------- -------- --------
Total costs and
expenses............. 98,333 52,324 239,906 137,434
------- ------- -------- --------
Operating earnings...... 13,855 7,706 34,693 19,944
Other income (expenses):
Interest income................. 785 341 1,894 1,206
Interest expense................ (1,487) (1,617) (6,243) (2,937)
Dividends on company-obligated
mandatorily redeemable
convertible securities of a
subsidiary trust............. (1,478) -- (1,684) --
Net gains on sales of property
and equipment................ (17) 3 -- 8
Equity in partnership and joint
venture earnings............. 1,265 1,809 3,678 3,014
------- ------- -------- --------
Other income (expenses),
net.................. (932) 536 (2,355) 1,291
------- ------- -------- --------
Earnings before income
taxes................ 12,923 8,242 32,338 21,235
Income taxes............ 4,975 2,967 12,420 7,645
------- ------- -------- --------
Net earnings............ $ 7,948 $ 5,275 $ 19,918 $ 13,590
======= ======= ======== ========
Basic weighted average common
shares outstanding.............. 29,228 25,987 27,373 25,988
======= ======= ======== ========
Basic earnings per common share... $ 0.27 $ 0.20 $ 0.73 $ 0.52
======= ======= ======== ========
Diluted weighted average common
shares and dilutive potential
common shares................... 29,694 26,301 27,838 26,303
======= ======= ======== ========
Diluted earnings per common
share........................... $ 0.27 $ 0.20 $ 0.72 $ 0.52
======= ======= ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-29
<PAGE> 194
CENTRAL PARKING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
--------------------
1998 1997
--------- --------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings.............................................. $ 19,918 $ 13,590
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation............................................ 4,373 2,935
Amortization of contract rights......................... 712 626
Amortization of deferred compensation cost.............. 51 50
Amortization of goodwill and non-compete agreements..... 4,620 568
Equity in partnership and joint venture (earnings)...... (3,678) (3,014)
Distributions from partnerships and joint ventures...... 2,315 --
Net gains on sales of property and equipment............ -- (8)
Deferred income taxes................................... 620 1,159
Changes in operating assets and liabilities, excluding
effects of acquisitions:
(Increase) decrease in management accounts
receivable........................................... (2,206) (840)
(Increase) decrease in notes and accounts
receivable -- other.................................. 3,545 (2,255)
(Increase) decrease in prepaid expenses............... (2,098) (884)
(Increase) decrease in refundable income taxes........ 2,154 --
(Increase) decrease in other assets................... (423) (1,092)
Increase (decrease) in accounts payable, accrued
expenses other liabilities and deferred
compensation......................................... (1,315) (3,298)
Increase (decrease) in management accounts payable.... 5,023 (1,746)
Increase (decrease) in income taxes payable........... 3,884 (658)
--------- --------
Net cash provided by operating activities........... 37,495 5,133
--------- --------
Cash flows from investing activities:
Proceeds from sales of property and equipment............... 121 9,609
Investments in notes receivable............................. (350) (1,682)
Purchase of assets held for resale.......................... -- (45,962)
Proceeds from sale of assets................................ -- 45,962
Purchase of property, equipment, and leasehold
improvements.............................................. (21,409) (6,205)
Purchase of contract rights................................. -- (45)
Investment in and partnerships and joint ventures........... (2) (43,412)
Acquisitions of companies net of cash acquired.............. (210,444) (50,601)
Purchase of investments..................................... (224) (193)
--------- --------
Net cash used by investing activities............... (232,308) (92,529)
--------- --------
Cash flows from financing activities:
Dividends paid.............................................. (1,429) (1,094)
Net borrowings (repayments) under revolving credit
agreement................................................. (17,250) 78,260
Proceeds from issuance of company-obligated mandatorily
redeemable securities..................................... 106,000 --
Proceeds from issuance of notes payable..................... 100,000 --
Principal repayments on notes payable....................... (103,456) (19,045)
Distribution from partnerships and joint ventures........... 30,286 --
Proceeds from issuance of common stock and exercise of stock
options, net.............................................. 91,143 900
--------- --------
Net cash provided by financing activities........... 205,294 59,021
--------- --------
Foreign currency translation................................ 122 246
--------- --------
Net increase (decrease) in cash and cash
equivalents......................................... 10,603 (28,129)
Cash and cash equivalents at beginning of period............ 9,979 28,605
--------- --------
Cash and cash equivalents at end of period.................. $ 20,582 $ 476
========= ========
Non-cash transactions:
Issuance of stock in acquisitions......................... $ 40,185 $ --
========= ========
Effects of acquisitions:
Fair value of assets acquired............................. $ 93,481 $ 71,388
Purchase price in excess of the net assets acquired....... 212,440 32,015
Liabilities assumed in acquisitions....................... (47,079) (46,137)
Stock issued in acquisitions.............................. (40,185) --
--------- --------
Cash paid................................................. 218,657 57,266
Less cash acquired........................................ (8,213) (6,665)
--------- --------
Net cash paid for acquisition....................... $ 210,444 $ 50,601
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-30
<PAGE> 195
CENTRAL PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and with
the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. All significant
intercompany transactions have been eliminated in consolidation. Operating
results for the three and nine months ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the fiscal year ending
September 30, 1998. For further information, refer to the consolidated financial
statements and footnotes thereto for the year ended September 30, 1997 (included
in the Company's Annual Report on Form 10-K). Certain items have been restated
to conform to current year presentation.
STOCK SPLIT
On November 21, 1997, the Board of Directors approved a three-for-two stock
split payable to shareholders of record as of December 5, 1997. The stock split
was distributed on December 12, 1997, resulting in the net issuance of 8,771,363
new shares. All shares and per share amounts in this report have been adjusted
to reflect the stock split.
EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings
Per Share". Statement 128 replaced the previously reported primary and fully
diluted earnings per share with basic and diluted earnings per share. Basic
earnings per share excludes dilution and is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. Earnings per share
for all periods presented have been calculated and presented in accordance with
SFAS No. 128.
F-31
<PAGE> 196
CENTRAL PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) -- (CONTINUED)
The following tables set forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
------------------------------- -------------------------------
INCOME COMMON PER- INCOME COMMON
AVAILABLE SHARES SHARE AVAILABLE SHARES PER-SHARE
($000'S) (000'S) AMOUNT ($000'S) (000'S) AMOUNT
--------- ------- --------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share..... $19,918 27,373 $ 0.73 $13,590 25,988 $0.52
Effect of dilutive stock and
options:
Stock option plan.......... 247 (0.01) 110
Restricted stock plan...... 151 145
Deferred stock unit plan... 12 --
Employee stock purchase
plan.................... 55 60
Diluted earnings per share... $19,918 27,838 $ 0.72 $13,590 26,303 $0.52
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
------------------------------- -------------------------------
INCOME COMMON INCOME COMMON
AVAILABLE SHARES PER-SHARE AVAILABLE SHARES PER-SHARE
($000'S) (000'S) AMOUNT ($000'S) (000'S) AMOUNT
--------- ------- --------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share... $7,948 29,228 $0.27 $5,275 25,987 $0.20
Effect of dilutive stock
and options:
Stock option plan........ 256 99
Restricted stock plan.... 152 143
Deferred stock unit
plan.................. 12 --
Employee stock purchase
plan.................. 46 72
Diluted earnings per
share.................... $7,948 29,694 $0.27 $5,275 26,301 $0.20
</TABLE>
Weighted average common shares used for the computation of basic earnings per
share excludes certain common shares issued pursuant to the Company's restricted
stock plan because under the related deferred compensation agreement the officer
forfeits such shares if he voluntarily terminates his employment with the
Company. The effect of the conversion of the company-obligated mandatorily
redeemable securities of the subsidiary trust has not been included in the
diluted earnings per share calculation since such securities are anti-dilutive.
At June 30, 1998, such securities were convertible into 2,000,000 shares of
common stock.
ACQUISITIONS
Turner Parking
On April 1, 1998, the Company purchased substantially all of the assets of
Turner Parking Systems, Inc, ("Turner") a privately-held parking company
headquartered in Dallas, Texas, for $3.8 million, including $3.0 million in cash
and $800 thousand (16,842 shares) in common stock of the Company. The Company
financed the cash portion of the Turner
F-32
<PAGE> 197
CENTRAL PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
purchase with borrowings under the New Credit Facility described below. The
transaction was accounted for using the purchase method and, accordingly, the
results of operations of Turner have been included in the Company's consolidated
financial statements from the date of acquisition. The purchase price has been
allocated to Turner's assets and liabilities based on their estimated fair
values at the date of acquisition. The excess of the purchase price over fair
value of the net assets acquired of $3.7 million is being amortized on a
straight-line basis over 10 years. Turner operates 34 parking facilities in
Texas, Florida, California, Georgia and Washington D.C.
Central Parking System of Louisiana, Inc.
The Company has historically owned 50% of Central Parking System of Louisiana,
Inc. ("CPS of LA") and on March 30, 1998 purchased the remaining 50% from
Property Service Corporation for $2.4 million in common stock (52,631 shares).
CPS of LA manages and operates leased parking facilities, manages and operates
parking facilities owned or leased by other parties, and provides financial and
other advisory services. The Company's facilities are located in Louisiana. The
transaction was accounted for using the purchase method and, accordingly, the
purchase price has been allocated to CPS of LA's assets and liabilities based on
their estimated fair market values at the date of acquisition. Since the date of
acquisition, the results of operations have been included in the Company's
consolidated financial statements. Prior to the acquisition, results of
operations have been accounted for on the Company's books under the equity
method as an investment. The excess of the purchase price over fair value of the
net assets acquired of $2.3 million is being amortized on a straight-line basis
over 5 years.
Kinney System Holding, Corp.
On February 12, 1998, the Company purchased Kinney System Holding Corp.
("Kinney"), a privately-held parking company headquartered in New York City, for
$208.8 million, including $171.8 million in cash and other consideration, and
$37.0 million (882,422 shares) in common stock of the Company. Kinney operated
403 parking facilities at the date of acquisition, including facilities in New
York, Boston, Philadelphia, and Washington D.C. In connection with this
transaction, the Company assumed $8.1 million in capitalized leases, refinanced
$24.2 million in existing Kinney debt and assumed $4.6 million of Kinney debt.
The purchase price is subject to adjustment based on the outcome of an
independent evaluation of Kinney's February 12, 1998 balance sheet. The Company
financed the Kinney acquisition with borrowings under the New Credit Facility
described below. The transaction was accounted for using the purchase method
and, accordingly, the results of operations of Kinney have been included in the
Company's consolidated financial statements from the date of acquisition. The
preliminary purchase price has been allocated to Kinney's assets and liabilities
based on their estimated fair market values at the date of acquisition. The
excess of the preliminary purchase price over fair value of the net assets
acquired of $186.3 million is being amortized on a straight-line basis over 30
years. Purchase price adjustments for Kinney have not been finalized.
F-33
<PAGE> 198
CENTRAL PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Diplomat Parking Corporation
On October 1, 1997, the Company purchased Diplomat Parking Corporation
("Diplomat") for $21.7 million, which was financed through a $12.3 million draw
on a revolving credit facility and an $8.2 million note to the sellers, that was
subsequently paid, at an interest rate of 5%. The note payment was financed
through a draw on the revolving credit facility. Diplomat operates 164 parking
facilities, located primarily in Washington, D.C. and Baltimore, Maryland. The
transaction was accounted for using the purchase method and, accordingly, the
results of operations of Diplomat have been included in the Company's
consolidated financial statements from the date of acquisition. The purchase
price has been allocated to Diplomat's assets and liabilities based on their
estimated fair values at the date of acquisition. The excess of the purchase
price over fair value of the net assets acquired of $20.1 million is being
amortized on a straight-line basis over 25 years.
Civic Parking, L.L.C.
On December 31, 1996, the Company purchased for cash, Civic Parking L.L.C.
("Civic Parking"), a limited liability company, which owns four parking garages
in St. Louis: Kiener East, Kiener West, Stadium East and Stadium West. The four
garages, which had previously been operated by the Company under management
agreements, have a total of 7,464 parking spaces. The purchase price was
approximately $91.0 million, which was financed through working capital and a
draw of $67.2 million on the Company's revolving credit facility. The
transaction was accounted for under the purchase method. The estimated fair
value of the garages at the date of the acquisition was equal to the purchase
price and, accordingly, management has allocated the purchase price to the land
and buildings acquired.
On April 16, 1997, the Company sold 50% of the membership units of Civic Parking
to an affiliate of Equity Capital Holdings, L.L.C. for $46.0 million in cash. In
the allocation of the purchase price, the Company assigned $45.8 million to the
membership units that were sold; consisting of an estimated sale price of $46.0
million and estimated net cash inflows for the holding period of $638 thousand
offset by interest on incremental debt during the holding period of $801
thousand. The membership units retained by the Company have been accounted for
in the accompanying financial statements under the equity method.
On March 17, 1998, Civic Parking obtained financing with a financial institution
for $60 million. The Company received net proceeds of $30.3 million from this
transaction which reduced the Company's investment in partnerships and joint
ventures. The proceeds from the refinancing were used to pay down the New Credit
Facility mentioned below. The Company will continue to operate these garages
pursuant to a lease and operating agreement with Civic Parking.
F-34
<PAGE> 199
CENTRAL PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
PRO FORMA INFORMATION
The following unaudited consolidated pro forma condensed results of operations,
give effect to the acquisition of Kinney, CPS of LA, and Turner as if such
transactions had occurred at October 1, 1997, as follows (in thousands except
for earnings per share):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30, 1998
-----------------
<S> <C>
Total revenues.......................................... $325,412
Earnings before income tax.............................. 30,347
Net earnings............................................ 17,995
Basic earnings per common share......................... $ 0.65
Diluted earnings per common share....................... $ 0.64
</TABLE>
The foregoing unaudited proforma amounts are based upon certain assumptions and
estimates, including, but not limited to, the recognition of estimated cost
savings related to general and administrative expenses to be eliminated
prospectively in connection with the Kinney acquisition, interest expense on
debt incurred to finance the acquisition and amortization of goodwill over 30
years for Kinney, 5 years for Louisiana, and 10 years for Turner. The unaudited
proforma amounts do not necessarily represent the results, which would have
occurred if the acquisition had taken place on the basis assumed above, nor are
they indicative of the results of future combined operations.
LONG TERM DEBT
On February 11, 1998, the Company established a new credit facility (the "New
Credit Facility") providing for an aggregate availability of up to $300 million,
consisting of a five-year $200 million revolving credit facility, including a
sub-limit of $25 million for standby letters of credit, and a $100 million term
loan. The New Credit Facility bears interest until June 30, 1998 at a rate of
LIBOR plus 1.25%. On June 30, 1998 the interest rate on the New Credit Facility
and the commitment fee on the unused portion reverted to a grid pricing based
upon the achievement of various financial ratios. The New Credit Facility
contains certain covenants including those that require the Company to maintain
certain financial ratios, restrict further indebtedness, and limit the amount of
dividends payable. On March 18, 1998, the Company completed offerings of equity
and convertible trust issued preferred securities, from which the Company
obtained $195.3 million in net proceeds. The Company repaid and terminated the
$100 million term loan with proceeds from these offerings. The remaining $95.3
million in proceeds was applied to reduce the outstanding balance under the $200
million revolving credit facility. The amount outstanding under the Company's
New Credit Facility as of June 30, 1998 is $53.5 million, at an interest rate of
7.0%. The Company used borrowings under the New Credit Facility to replace the
Company's prior revolving credit facility and to finance the Kinney and Turner
acquisitions.
The prior credit facility, which was unsecured, was scheduled to expire January
31, 2000. Credit available under the prior facility amounted to $120 million.
The amount outstanding under the Company's prior credit facility was $70.8
million, which is reflected as long term debt on the accompanying condensed
consolidated balance sheet as of September 30, 1997.
F-35
<PAGE> 200
CENTRAL PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Such debt had a 7.1% weighted average interest rate for the period from December
31, 1996 to September 30, 1997, during which the Company had debt outstanding.
At June 30, 1997, the Company had $78.3 million outstanding under its credit
facilities at an interest rate of 7.1%. The weighted average balance outstanding
was $227.4 million during the nine months ended June 30, 1997 with a weighted
average interest rate of 7.2%.
CONVERTIBLE TRUST ISSUED PREFERRED SECURITIES AND EQUITY OFFERINGS
On March 18, 1998, the Company completed an offering of 2,137,500 shares of
common stock. The Company received net proceeds from the offering of $89.3
million. Concurrent with the common stock offering, the Company created Central
Parking Finance Trust ("Trust") which completed a private placement of 4,400,000
shares at $25.00 per share of 5.25% convertible trust issued preferred
securities ("Preferred Securities") pursuant to an exemption from registration
under the Securities Act of 1933, as amended. The Preferred Securities represent
preferred undivided beneficial interests in the assets of Central Parking
Finance Trust, a statutory business trust formed under the laws of the State of
Delaware. The Company owns all of the common securities of the Trust. The Trust
exists for the sole purpose of issuing the Preferred Securities and investing
the proceeds thereof in an equivalent amount of 5.25% Convertible Subordinated
Debentures ("Convertible Debentures") of the Company due 2028. The net proceeds
to the Company from the Preferred Securities private placement were $106.0
million. Each Preferred Security is entitled to receive cumulative cash
distributions at an annual rate of 5.25% (or $1.312 per share) and will be
convertible at the option of the holder thereof into shares of Company common
stock at a conversion rate of 0.4545 shares of Company common stock for each
Preferred Security (equivalent to $55.00 per share of Company common stock),
subject to adjustment in certain circumstances. The Preferred Securities do not
have a stated maturity date but are subject to mandatory redemption upon the
repayment of the Convertible Debentures at their stated maturity (April 1, 2028)
or upon acceleration or earlier repayment of the Convertible Debentures. The
proceeds of the equity and preferred security offerings were used to repay
indebtedness.
The Company's consolidated balance sheets reflect the Preferred Securities of
the Trust as company-obligated mandatorily redeemable convertible securities of
subsidiary whose sole assets are convertible subordinated debentures of the
Company.
YEAR 2000
The Company has considered the impact of year 2000 issues on its computer
systems and applications and has developed a remediation plan. These plans are
part of the Company's ongoing business strategies to incorporate advanced
technologies in its information systems. The expenditures for system upgrades
will be accounted for as capital expenditures, and will not have a significant
impact on the Company's operations or liquidity.
SUBSEQUENT EVENTS
On July 1, 1998, the Company purchased substantially all of the assets of
Sterling Parking, Inc, ("Sterling") a privately-held parking company
headquartered in Dallas, Texas, for $4.48
F-36
<PAGE> 201
CENTRAL PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
million, including $2.24 million in cash and $2.24 million (54,358 shares) in
common stock of the Company. The Company financed the cash portion of the
Sterling purchase with borrowings under the New Credit Facility described above.
Sterling operates 31 parking facilities in Georgia, Florida, Virginia,
California, and Kentucky.
F-37
<PAGE> 202
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Allright Holdings, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Allright
Holdings, Inc. (a Delaware corporation) and Subsidiaries (Allright or the
Company) as of June 30, 1998 and 1997, and the related consolidated statements
of operations, stockholders' equity and cash flows of the Company for the year
ended June 30, 1998, and the period from October 31, 1996, through June 30,
1997, and of the Predecessor Company (as defined in Note 1) for the period from
July 1, 1996, through October 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Allright as of June
30, 1998 and 1997, and the consolidated results of operations, changes in
stockholders' equity and cash flows of the Company for the year ended June 30,
1998, and the period from October 31, 1996, through June 30, 1997, and of the
Predecessor Company for the period from July 1, 1996, through October 30, 1996,
in conformity with generally accepted accounting principles.
As explained in Note 1 to the consolidated financial statements, the Predecessor
Company was acquired by Allright Acquisition, Inc., in a purchase transaction
effective as of October 31, 1996. The acquisition was accounted for as a
purchase and, accordingly, the purchase price was allocated to the assets and
liabilities of the Predecessor Company based on their estimated fair values at
October 31, 1996. Accordingly, the financial statements of the Company are not
comparable to those of the Predecessor Company.
ARTHUR ANDERSEN LLP
Houston, Texas
October 9, 1998
F-38
<PAGE> 203
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Allright Corporation
We have audited the accompanying consolidated statements of income,
stockholder's equity, and cash flows of Allright Corporation for the year ended
June 30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of Allright Corporation's
operations and cash flows for the year then ended in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Houston, Texas
August 17, 1996
F-39
<PAGE> 204
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS -- JUNE 30, 1998 AND 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 7,329 $ 19,655
Receivables............................................... 6,093 6,034
Prepaid expenses.......................................... 5,015 4,528
-------- --------
Total current assets............................... 18,437 30,217
PROPERTY AND EQUIPMENT, at cost:
Land...................................................... 194,170 209,017
Garages and buildings..................................... 22,050 36,068
Equipment and leasehold improvements...................... 14,472 28,687
-------- --------
Total property and equipment....................... 230,692 273,772
Less-Accumulated depreciation and amortization............ 3,589 9,442
-------- --------
Net property and equipment......................... 227,103 264,330
LEASEHOLDS AND MANAGEMENT FEE CONTRACTS, at cost, less
accumulated amortization.................................. 46,866 44,699
OTHER ASSETS:
Investments in parking affiliates......................... 2,698 3,032
Other real estate investments............................. 2,390 2,380
Deferred debt issuance costs, net......................... 6,022 3,441
Long-term portion of notes receivable..................... 21,646 21,414
Other..................................................... 5,952 6,463
-------- --------
Total other assets................................. 38,708 36,730
GOODWILL, net............................................... 32,685 32,293
-------- --------
Total assets....................................... $363,799 $408,269
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued liabilities and payables-
Rents..................................................... $ 10,726 $ 15,621
Property taxes............................................ 1,889 3,252
Insurance................................................. 2,471 1,907
Payroll and related and profit sharing.................... 4,470 6,557
Interest.................................................. 1,514 1,680
Other..................................................... 7,762 9,254
-------- --------
Total accrued liabilities and payables............. 28,832 38,271
Current maturities of long-term obligations............... 99 656
-------- --------
Total current liabilities.......................... 28,931 38,927
LONG-TERM OBLIGATIONS, less current maturities.............. 200,473 222,615
DEFERRED FEDERAL INCOME TAXES............................... 30,047 30,168
DEFERRED COMPENSATION LIABILITY............................. 7,771 7,562
MINORITY INTEREST........................................... 21,163 23,103
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 500,000 shares authorized,
73,921 shares and 79,325 shares issued and outstanding
in 1997 and 1998, respectively.......................... 1 1
Capital in excess of par value............................ 78,949 89,734
Retained deficit.......................................... (3,400) (3,332)
Equity adjustment for foreign currency translation........ (136) (509)
-------- --------
Total stockholders' equity......................... 75,414 85,894
-------- --------
Total liabilities and stockholders' equity......... $363,799 $408,269
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-40
<PAGE> 205
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
AND PREDECESSOR COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY ALLRIGHT HOLDINGS, INC.
-------------------------------- ---------------------------------
FOR THE PERIOD FOR THE PERIOD
FROM FROM
FOR THE YEAR JULY 1, 1996, OCTOBER 31, 1996, FOR THE YEAR
ENDED THROUGH THROUGH ENDED
JUNE 30, 1996 OCTOBER 30, 1996 JUNE 30, 1997 JUNE 30, 1998
------------- ---------------- ----------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Parking services
revenues............ $167,709 $58,595 $114,881 $206,448
Management fee
revenues............ 4,645 1,484 3,677 10,936
------- ------ ------- -------
Total revenues........ 172,354 60,079 118,558 217,384
Costs and Expenses:
Cost of parking
services............ 138,604 45,268 94,374 169,811
Depreciation and
amortization........ 6,257 2,019 4,593 9,633
General and
administrative
expenses............ 9,271 2,840 6,207 11,919
Issuance of stock to
management.......... -- 5,500 -- --
Amortization of
goodwill............ -- -- 735 1,177
------- ------ ------- -------
Total costs and
expenses............ 154,132 55,627 105,909 192,540
------- ------ ------- -------
Income from parking
Operations.............. 18,222 4,452 12,649 24,844
------- ------ ------- -------
Other income (expense):
Interest expense...... (5,915) (1,786) (13,915) (22,859)
Interest and
investment income... 729 240 733 1,308
Minority interest..... -- -- (163) (289)
Gain (loss) on sales
of property,
equipment and
leases.............. 1,101 110 (19) (710)
------- ------ ------- -------
Total other income
(expense)........... (4,085) (1,436) (13,364) (22,550)
------- ------ ------- -------
Income (loss) before
income taxes and
extraordinary item.... 14,137 3,016 (715) 2,294
------- ------ ------- -------
Income taxes:
Current............... (5,980) (2,960) (834) (2,105)
Deferred.............. 25 1,774 (317) (121)
------- ------ ------- -------
Total income taxes.... (5,955) (1,186) (1,151) (2,226)
------- ------ ------- -------
Income (loss) before
extraordinary item.... 8,182 1,830 (1,866) 68
Extraordinary item, loss
on defeasance of
industrial revenue
bonds................. -- -- (1,534) --
------- ------ ------- -------
Net income (loss)....... $ 8,182 $1,830 $(3,400) $ 68
======= ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-41
<PAGE> 206
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
AND PREDECESSOR COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
EQUITY
ADJUSTMENT
COMMON STOCK CAPITAL IN RETAINED FOR FOREIGN
--------------- EXCESS OF EARNINGS CURRENCY
SHARES AMOUNT PAR VALUE (DEFICIT) TRANSLATION
------ ------ ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Predecessor company:
Balance, June 30, 1995............ 1,000 $-- $ 58,240 $ 33,652 $(424)
Net income...................... -- -- -- 8,182 --
Current federal tax provision
contributed to capital....... -- -- 4,366 -- --
Translation adjustment.......... -- -- -- -- 9
------ --- -------- -------- -----
Balance, June 30, 1996............ 1,000 -- 62,606 41,834 (415)
Capital contribution............ -- -- 36,245 -- --
Net income...................... -- -- -- 1,830 --
Current federal tax provision
contributed to capital....... -- -- 2,658 -- --
Issuance of stock to
management................... -- -- 5,500 -- --
Translation adjustment.......... -- -- -- -- 46
------ --- -------- -------- -----
Balance, October 30, 1996......... 1,000 $-- $107,009 $ 43,664 $(369)
====== === ======== ======== =====
Allright Holdings, Inc.:
Balance, October 31, 1996......... 67,900 $ 1 $ 72,928 $ -- $ --
Issuance of common stock........ 6,021 -- 6,021 -- --
Net loss........................ -- -- -- (3,400) --
Translation adjustment.......... -- -- -- -- (136)
------ --- -------- -------- -----
Balance, June 30, 1997............ 73,921 1 78,949 (3,400) (136)
Issuance of common stock........ 5,404 -- 10,785 -- --
Net income...................... -- -- -- 68 --
Translation adjustment.......... -- -- -- -- (373)
------ --- -------- -------- -----
Balance, June 30, 1998............ 79,325 $ 1 $ 89,734 $ (3,332) $(509)
====== === ======== ======== =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-42
<PAGE> 207
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
AND PREDECESSOR COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY ALLRIGHT HOLDINGS, INC
------------------------------ --------------------------------
FOR THE PERIOD FOR THE PERIOD
FROM FROM
JULY 1, 1996, OCTOBER 31,
FOR THE YEAR THROUGH 1996, FOR THE YEAR
ENDED OCTOBER 30, THROUGH ENDED
JUNE 30, 1996 1996 JUNE 30, 1997 JUNE 30, 1998
------------- -------------- ---------------- -------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................... $ 8,182 $ 1,830 $ (3,400) $ 68
Adjustments to reconcile net income (loss) to
net cash provided by operating activities --
Extraordinary item............................ -- -- 1,534 --
Depreciation and amortization................. 6,257 2,019 4,593 9,633
Goodwill amortization......................... -- -- 735 1,177
Debt issuance cost amortization............... -- -- 1,720 2,581
Deferred tax provision (benefit).............. 214 (1,774) (366) 121
Current federal tax provision contributed to
capital..................................... 4,366 2,658 -- --
Undistributed earnings from investments in
parking affiliates, real estate and other
investments................................. (39) (59) (48) (150)
(Gain) loss on sales of property and
equipment................................... (1,101) (110) 19 710
Minority interest in consolidated entity...... -- -- 163 1,940
Change in operating assets and liabilities --
(Increase) decrease in receivables............ 50 (2,215) (3,200) 293
(Increase) decrease in prepaid expenses....... (1,154) (649) (938) 721
Increase in accrued liabilities and
payables.................................... 2,320 1,080 7,109 7,828
Other......................................... 52 (107) 67 780
------- ------- --------- --------
Net cash provided by operating activities....... 19,147 2,673 7,988 25,702
------- ------- --------- --------
Cash flows from investing activities:
Proceeds from sales of property and equipment... $ 2,274 $ 184 $ 2,641 $ 6,379
Proceeds received from investments in parking
affiliates and real estate.................... 58 49 43 58
Advances to investments in parking affiliates
and real estate............................... (10) (664) (5) (12)
Purchase of land................................ (4,233) -- (4,104) (21,194)
Purchase of garages and equipment............... (5,235) (1,436) (4,269) (25,435)
Purchase of leaseholds and management fee
contracts..................................... (351) (33) (3,805) (1,569)
Acquisitions of companies, net of cash
acquired...................................... -- -- (221,754) (2,842)
(Increase) decrease in long-term notes
receivable.................................... -- -- (16,987) 232
Other........................................... (1,478) 565 (320) (359)
------- ------- --------- --------
Net cash used in investing activities........... (8,975) (1,335) (248,560) (44,742)
------- ------- --------- --------
Cash flows from financing activities:
Net bank note borrowings (payments)............. 5,298 (11,149) -- --
Payments of long-term obligations............... (11,896) (32,805) (2,679) (4,856)
Proceeds from issuance of long-term
obligations................................... 528 -- 168,211 25,437
Proceeds from issuance of common stock.......... -- -- 6,021 10,785
Capital contribution............................ -- 41,745 67,428 --
------- ------- --------- --------
Net cash (used in) provided by financing
activities.................................... (6,070) (2,209) 238,981 31,366
------- ------- --------- --------
Net increase (decrease) in cash and cash
equivalents..................................... 4,102 (871) (1,591) 12,326
Cash and cash equivalents, beginning of period.... 3,652 7,754 8,920 7,329
------- ------- --------- --------
Cash and cash equivalents, end of period.......... $ 7,754 $ 6,883 $ 7,329 $ 19,655
======= ======= ========= ========
Noncash transactions:
Purchase of property and equipment in exchange
for liabilities............................... -- -- -- $ 1,314
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-43
<PAGE> 208
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACQUISITIONS
Effective October 31, 1996, Allright Acquisition Company, Inc., a newly formed
Delaware corporation and wholly owned subsidiary of Allright Holdings, Inc.
(Allright or the Company), a newly formed Delaware corporation, acquired all of
the common stock (the Acquisition) of Allright Corporation and its wholly owned
subsidiaries (the Predecessor Company), a Delaware corporation, from Nedinco
Delaware Incorporated (Nedinco), a Delaware corporation, for approximately
$226,334,000, including acquisition-related expenses of approximately
$3,267,000. The Acquisition was financed with proceeds from a capital
contribution of $65,850,000 from Holdings and a credit facility with CS First
Boston Mortgage Capital Corp. (CSFB). The Acquisition was accounted for as a
purchase, and the total purchase price was allocated to assets acquired and
liabilities assumed based on their relative fair market values at the date of
purchase and resulted in goodwill of approximately $33,596,000.
The $36,245,000 capital contribution recorded in the accompanying Predecessor
Company's statement of stockholder's equity reflects the amount necessary to
retire certain debt obligations of the Predecessor Company, prior to the
Acquisition, as required by the agreement for the Acquisition. This amount was
deducted from the sales proceeds remitted to Nedinco.
During the period from July 1, 1996, to October 30, 1996, Nedinco committed to
grant management equity in the Predecessor Company equal to $5,500,000. The
Predecessor Company recorded a noncash compensation expense reflecting the fair
value of this commitment. The issuance of this equity is being effected through
the use of Allright stock instruments. In order to effect the grant, $1,650,000
was issued on the date of the acquisition, with the remaining $3,850,000 to be
issued as directed by and subject to limitations established by the Company's
Board of Directors. The value of the equity commitment was included as
additional acquisition cost on Allright's financial statements.
The following unaudited pro forma condensed results of operations give effect to
the acquisition of the Predecessor Company as if such transaction had occurred
at the beginning of each period presented (in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
JUNE 30
-------------------
1996 1997
-------- --------
(UNAUDITED)
<S> <C> <C>
Total revenues..................................... $172,354 $178,637
Loss before extraordinary item..................... (2,168) (919)
Net loss........................................... (2,168) (2,453)
</TABLE>
The foregoing unaudited pro forma amounts are based upon certain assumptions and
estimates, including, but not limited to, (a) interest expense on debt incurred
to finance the acquisition, (b) depreciation expense related to the net increase
in the values of garages, buildings and leaseholds, (c) amortization of goodwill
over 30 years associated with the acquisition and (d) the related tax effects of
(a), (b) and (c). Additionally, the nonrecurring charge to the Predecessor
Company for the $5,500,000 compensation charge related to the
F-44
<PAGE> 209
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
equity commitment made by Nedinco was excluded from the 1997 unaudited pro forma
condensed results of operations. The unaudited pro forma results are not
necessarily indicative of the financial results that might have occurred had the
transaction taken place at the beginning of each period presented or of future
results of operations.
During the period July 1, 1996, through October 30, 1996, there were no
significant acquisitions made by Allright other than the purchase of the
Predecessor Company described above. During the period October 31, 1996, through
June 30, 1997, the Company acquired four properties and four companies for a
purchase price of $3,041,000 and $5,369,000, respectively. The purchase price of
these acquisitions approximated fair market value of the properties. One of
these acquisitions provides for potential contingent consideration of a maximum
amount of $1,600,000 to be paid if certain operating thresholds are met over the
next eight years. During fiscal year 1998, the Company acquired 19 properties
and seven companies for an aggregate purchase consideration of $35,023,000 and
$5,401,000, respectively. These acquisitions resulted in goodwill of $2,213,000.
Five of these acquisitions provide for potential contingent consideration of a
maximum amount of $1,648,000 to be paid if certain operating thresholds are met
over the next five years.
On June 1, 1997, the Company acquired a 50 percent controlling interest in
Edison Parking Management L.P (Edison). Edison's assets consist of management
contracts contributed by Park Fast Parking Management, L.P. (Park Fast), a third
party. These management contracts were recorded at their fair market value and
are being amortized straight-line over their expected lives, which average 12
years. The value of Park Fast's interest is reflected as minority interest in
the accompanying balance sheet.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
Operations and Basis of Presentation
Allright operates, maintains and manages automobile parking facilities and
invests in real estate utilized in parking operations.
The financial statements include the results of operations and cash flows of the
Predecessor Company for the year ended June 30, 1996, the period from July 1,
1996, through October 30, 1996, and the results of operations and cash flows of
Allright from October 31, 1996, through June 30, 1997, and for the year ended
June 30, 1998.
Principles of Consolidation
The accompanying financial statements include the accounts of Allright, its
subsidiaries and controlled partnerships. Investments in affiliates and other
real estate investments that are not majority owned or controlled are accounted
for using the equity method. All significant intercompany accounts have been
eliminated.
Cash and Cash Equivalents
Allright considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
F-45
<PAGE> 210
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property and Equipment
Property and equipment are stated at cost, as adjusted to fair value on the
effective date of the Acquisition, October 31, 1996. Allright used the direct
capitalization method to determine the fair value of properties that generate
parking income. Generally, a market capitalization rate was applied to the
annual stabilized historical income from the property to determine its fair
value. For properties which are operated as parking lots, a substantial portion
of the purchase price was allocated to land since the value of improvements was
nominal. For properties improved with a garage, the fair value was allocated
between the land and the garage based upon the estimated replacement cost of the
structure. Garages and equipment are depreciated using the straight-line method.
In July 1997, based on the results of operating experience and the Company's
maintenance programs, the Company extended the useful lives of certain garages
and buildings effective July 1, 1997. Such change in estimate resulted in an
approximate $589,000 reduction in depreciation expense for the year ended June
30, 1998. The balances and estimated useful lives for property and equipment are
as follow (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1997 JUNE 30, 1998 USEFUL LIVES
------------- ------------- --------------
<S> <C> <C> <C>
Land........................... $194,170 $209,017 Nondepreciable
Garages and buildings.......... 22,050 36,068 35-40 years
Equipment and leasehold
improvements................. 14,472 28,687 1-15 years
-------- --------
230,692 273,772
Less- Accumulated depreciation
and amortization............. (3,589) (9,442)
-------- --------
$227,103 $264,330
======== ========
</TABLE>
Leaseholds and Management Contracts
Long-term leases (leaseholds) and management contracts allow Allright to operate
parking facilities without acquiring a fee interest in the property. The
leaseholds and management contracts were valued using the discounted cash flow
method. Leaseholds and management contracts are amortized principally over the
remaining contractual term or an estimated term considering anticipated
terminations and renewal periods.
Carrying Amount of Long-Lived Assets
Allright has allocated the purchase price of the Predecessor Company to
long-lived assets based upon their fair values as of the purchase date. Such
values were determined based upon management's current intent to continue
operating such properties as parking facilities. In future periods, management
could change its intended use for certain properties, including deciding to sell
certain properties, or other events could occur that may indicate the carrying
amount of an asset may not be recoverable from continued operation of such
property as a parking facility. An impairment loss would be recognized in the
period such events occur, and such loss would be measured by the difference
between the carrying costs of the asset and the current fair value based on its
intended use. During the year ended June 30, 1998,
F-46
<PAGE> 211
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Allright recorded an impairment loss of approximately $1,075,000 for properties
of which management changed the intended use from hold and operate to sell.
These properties were sold in fiscal year 1998. Management will continue to
monitor circumstances which may indicate that an impairment loss has occurred
and will record any such loss in the proper period.
Income Taxes
The Predecessor Company and Allright have both accounted for income taxes in
accordance with Statement of Financial Accounting Standards (SFAS) No. 109
whereby deferred income taxes are provided at the balance sheet date for
temporary differences between the tax bases of assets and liabilities and their
respective carrying amounts for financial statement purposes. These deferred
taxes are measured by applying current tax law and rates. The Predecessor
Company filed a consolidated U.S. federal income tax return with its parent,
Nedinco, for the year ended June 30, 1996, and the period ended October 30,
1996. For the period commencing October 31, 1996, and for subsequent periods,
Allright has filed and will continue filing a consolidated U.S. federal income
tax return. For state tax purposes, Allright and its subsidiaries will file
either on a stand-alone or combined basis depending on individual state
requirement. While a current federal income tax provision has been reflected in
the Predecessor Company's consolidated statement of operations for the period
from July 1, 1995, through October 30, 1996, pursuant to the terms of SFAS No.
109, federal taxes payable by the Predecessor Company were not required to be
remitted to Nedinco unless a consolidated tax liability existed. Accordingly,
the amount of such income taxes for the period from July 1, 1995, through
October 30, 1996, has been reflected as a capital contribution by Nedinco to the
Predecessor Company.
Foreign Currency Translation
The financial statements of Allright's Canadian subsidiaries have been
translated into U.S. dollar equivalents in accordance with SFAS No. 52. All
balance sheet accounts have been translated using exchange rates at the end of
the period, and income statement items have been translated using the average
exchange rate for the period. The translation adjustment is included in
stockholder's equity.
Extraordinary Loss
On October 31, 1996, Allright recorded an extraordinary loss of $1,534,000 for
costs incurred with respect to the defeasance of debt obligations. The tax
benefit resulting from the extraordinary loss increased the Company's net
operating loss carryforward (NOL); however, the deferred tax attributable to
this NOL has been fully reduced by a valuation allowance. See Note 9 for further
discussion.
Goodwill
Goodwill represents the excess of cost over fair value of net assets acquired
and is amortized on a straight-line basis over 30 years. Amortization expense
for the period from October 31, 1996, through June 30, 1997, and the year ended
June 30, 1998, totaled approximately
F-47
<PAGE> 212
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$735,000 and $1,177,000, respectively. The Company assesses the recoverability
of this intangible asset by determining whether the amortization of the goodwill
balance over its remaining life can be recovered through undiscounted future
operating cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected discounted future operating
cash flows using a discount rate reflecting the Company's average cost of funds.
The assessment of the recoverability of goodwill will be impacted if estimated
future operating cash flows are not achieved.
Debt Issuance Costs
The Company has deferred certain expenses totaling approximately $7,742,000
incurred in connection with the issuance of the CSFB debt. These debt issuance
costs are being amortized over three years, the term of the debt. The
amortization of such deferred costs for the period from October 31, 1996,
through June 30, 1997, and the year ended June 30, 1998, totaled approximately
$1,720,000 and $2,581,000, respectively and is reflected in interest expense in
the accompanying consolidated statement of operations.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash and cash equivalents,
long-term obligations and notes receivable. The Company believes that the
carrying amounts of these instruments approximate their fair value as of June
30, 1997 and 1998.
Newly Issued Accounting Standards
In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation," was
issued. SFAS No. 123 requires either recognition of compensation expense in the
financial statements for those companies that adopt the fair value-based
accounting method or expanded disclosure of pro forma net income information for
those companies that retain the accounting method set forth in Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees." The Company follows the accounting method set forth in APB Opinion
No. 25 and provides the expanded disclosure requirements required by SFAS No.
123.
In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was issued. SFAS
No. 130 establishes standards for reporting and display of comprehensive income
and its components in a full set of general purpose financial statements.
Comprehensive income is the total of net income and all other nonowner changes
in equity. The Company is required to adopt SFAS No. 130 in the first quarter of
fiscal 1999. Reclassification of comparative financial statements provided for
earlier periods will be required. The Company believes that the display of
comprehensive income will only differ from the currently reported net income by
the foreign currency translation currently reported in the consolidated
statement 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 reported
F-48
<PAGE> 213
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
3. OTHER ACCRUED LIABILITIES AND PAYABLES
The components of "Other accrued liabilities and payables" at June 30, 1997 and
1998, were as follows (in thousands):
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Accounts payable....................................... $1,541 $2,196
Sales tax payable...................................... 2,349 3,066
Rent deposits.......................................... 740 687
Accrued expenses -- general............................ 963 905
Deferred income........................................ 812 1,173
Other.................................................. 1,357 1,227
------ ------
$7,762 $9,254
====== ======
</TABLE>
4. LONG-TERM OBLIGATIONS
Long-term obligations at June 30, 1997 and 1998, consisted of the following (in
thousands):
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
CSFB -- Senior Debt Tranche A Subportion One................ $ 29,712 $ 29,712
CSFB -- Senior Debt Tranche A Subportion Two................ 125,242 125,242
CSFB -- Senior Debt Tranche B............................... 30,000 30,000
CSFB -- Permitted Acquisition Loan.......................... 12,503 31,260
Installment mortgage notes.................................. 503 2,636
Secured notes............................................... -- 1,406
Unsecured notes............................................. 1,385 1,843
Touro Capital Lease Obligation.............................. 1,226 1,172
-------- --------
Total............................................. 200,571 223,271
Less- Current maturities of long-term obligations........... (99) (656)
-------- --------
Long-term obligations....................................... $200,472 $222,615
======== ========
</TABLE>
In October 1996, Allright entered into a credit agreement with CSFB for the
purpose of financing the purchase of the Predecessor Company. Additionally, in
October 1996, Allright defeased all of its Industrial Development Revenue Bonds
(IRBs) in the amount of $17,892,093 and recorded an extraordinary loss of
$1,534,000. At June 30, 1997 and 1998, $15,800,000 and $15,515,000,
respectively, of the IRBs remain outstanding in a trust secured by U.S. Treasury
bills which were used to defease these instruments.
The principal balances of CSFB Tranche A Subportion One and Subportion Two notes
mature on October 30, 1999. Subportion One interest is payable monthly and
accrues at the London Interbank Offered Rate (LIBOR) plus 3 percent until
October 31, 1998, and LIBOR plus 3.25 percent thereafter. Subportion Two
interest is payable monthly and accrues
F-49
<PAGE> 214
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
at 8.85 percent until October 31, 1997, LIBOR plus 3 percent until October 30,
1998, and LIBOR plus 3.25 percent thereafter.
The principal balance of CSFB Tranche B note matures on October 30, 1999.
Interest is payable monthly and accrues at 12.25 percent until October 30, 1998,
and 12.50 percent thereafter.
The Company obtained a revolving line of credit (Permitted Acquisition Loan)
with a maximum borrowing capacity of $75,000,000, maturing October 30, 1999. At
June 30, 1997 and 1998, borrowing capacity available under the Permitted
Acquisition Loan was approximately $62,497,000 and $43,740,000, respectively.
The Permitted Acquisition Loan provides for interest per annum equal to LIBOR
plus 3.75 percent on outstanding borrowings.
On March 5, 1998, the Company obtained a revolving line of credit and letter of
credit agreement (Bank One Loan) with a maximum borrowing capacity of
$5,100,000, maturing October 1, 1999. At June 30, 1998, borrowing capacity
available under the Bank One Loan was $3,813,000. The Bank One Loan provides for
interest per annum equal, at the Company option, to either the Prime Rate of
interest or LIBOR plus 2.75 percent on outstanding borrowings.
The CSFB term loans and Permitted Acquisition Loan are secured by substantially
all of Allright's assets. The Bank One Loan is collateralized by a piece of the
Company's property.
The aggregate maturities on long-term obligations during the five years
subsequent to June 30, 1998, are as follows:
<TABLE>
<S> <C>
For the fiscal year ending June 30-
1999............................................ $ 656
2000............................................ 219,089
2001............................................ 775
2002............................................ 310
2003............................................ 326
Thereafter...................................... 2,115
--------
$223,271
========
</TABLE>
Management intends to either refinance the existing debt obligations with CSFB
or obtain new financing when they expire on October 30, 1999. Management
believes it will obtain this financing at similar or better terms.
Cash paid for the year ended June 30, 1996, from July 1, 1996 through October
30, 1996, from October 31, 1996 through June 30, 1997, and for the year ended
June 30, 1998, for interest was approximately $ 5,648,000, $1,778,000,
$10,469,000 and $20,487,000, respectively.
F-50
<PAGE> 215
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. LEASES
Total rental expense under operating leases for parking properties and rental
income from subleases are reflected in cost of parking services and consist of
the following (in thousands):
<TABLE>
<CAPTION>
ALLRIGHT HOLDINGS, INC
PREDECESSOR COMPANY --------------------------------
-------------------------------- FOR THE PERIOD
FOR THE PERIOD FROM
FROM OCTOBER 31,
FOR THE YEAR JULY 1, 1996, 1996, FOR THE YEAR
ENDED THROUGH THROUGH ENDED
JUNE 30, 1996 OCTOBER 30, 1996 JUNE 30, 1997 JUNE 30, 1998
------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C>
Fixed rentals........ $ 63,022 $20,547 $41,992 $73,659
Variable rentals..... 18,917 6,528 12,179 20,897
-------- ------- ------- -------
Total
rentals.. 81,939 27,075 54,171 94,556
Less- Sublease
income............. (2,775) (1,520) (2,287) (3,532)
-------- ------- ------- -------
Net rental expense... $ 79,164 $25,555 $51,884 $91,024
======== ======= ======= =======
</TABLE>
Aggregate minimum rental commitments for parking properties under noncancelable
fixed rental leases, reduced by estimated rentals to be received from existing
subleases at June 30, 1998, consisted of the following (in thousands):
<TABLE>
<CAPTION>
OPERATING LEASES
------------------------------
MINIMUM NET
CAPITAL FIXED SUBLEASE MINIMUM
LEASE RENTALS INCOME RENTALS
------- -------- -------- --------
<S> <C> <C> <C> <C>
For fiscal years-
1999............................. $ 753 $ 58,870 $ 874 $ 57,996
2000............................. 753 44,731 728 44,003
2001............................. 867 30,840 528 30,312
2002............................. 295 18,228 333 17,895
2003............................. 266 12,121 209 11,912
Thereafter....................... 1,209 57,981 2,358 55,623
------ -------- ------ --------
Total minimum lease
payments.............. 4,143 $222,771 $5,030 $217,741
======== ====== ========
Less- Amount representing
interest......................... 1,565
------
Present value of net minimum lease
payments......................... $2,578
======
</TABLE>
Payments under management fee contracts and variable rentals under leases
requiring payment of a percentage of gross receipts are not included in the
preceding table. The terms of certain lease agreements also provide for payment
by the lessee of taxes, insurance and maintenance on the facilities. Certain
long-term lease agreements also have various terms of renewal, escalation
clauses and provisions under which Allright could share in any gains upon the
sale of property during the lease term.
F-51
<PAGE> 216
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. EMPLOYEE BENEFIT PROGRAMS
Profit-Sharing Plan
A trusteed noncontributory profit-sharing plan covers substantially all
employees of the Predecessor Company and Allright at June 30, 1997 and 1998.
Contributions under the plan are based upon 5 percent of consolidated pretax
income from parking operations, as adjusted as specified in the plan, and
approximated $902,000 for the year ended June 30, 1996, $405,000 for the period
from July 1, 1996, through October 30, 1996, $680,000 for the period from
October 31, 1996, through June 30, 1997, and $1,398,000 for the year ended June
30, 1998.
Deferred Compensation
Agreements with certain present and former key executives provide for aggregate
annual payments ranging from $20,000 to $144,000 per year for periods ranging
from 10 years to life, beginning when the executive retires or upon death or
disability. Under certain conditions, the amount of deferred benefits can be
reduced. Life insurance contracts with a face value of approximately $9,288,000
have been purchased to fund, as necessary, the benefits under these agreements.
The cash surrender value of the life insurance contracts is approximately
$900,000 and $1,135,000 at June 30, 1997 and 1998, respectively, and is included
in other noncurrent assets. The plan is a nonqualified plan and is not subject
to ERISA funding requirements.
Net pension costs for the period from October 31, 1996, through June 30, 1997,
and the year ended June 30, 1998, included the following components (in
thousands):
<TABLE>
<CAPTION>
1997 1998
----- ----
<S> <C> <C>
Service cost, benefits earned during the year............ $ 74 $ 39
Interest cost on projected benefit obligation............ 337 506
Actual gain on plan assets............................... -- --
Net amortization and deferral............................ (95) (51)
----- ----
Net pension costs.............................. $ 316 $494
===== ====
</TABLE>
The funded status of the plans at June 30, 1998, was as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Actuarial present value of benefit obligations --
Vested benefit obligation................................. $7,562
Nonvested benefit obligation.............................. --
------
Accumulated benefit obligation.................... 7,562
Effect of projected future compensation levels.............. --
------
Projected benefit obligation...................... 7,562
Plan assets at fair value................................... --
------
Projected benefit obligation in excess of plan assets....... 7,562
Unrecognized cumulative net (loss) gain..................... --
Prior service cost unrecognized in pension cost............. --
Unrecognized net implementation asset (obligation).......... --
------
Accrued pension cost.............................. $7,562
======
</TABLE>
F-52
<PAGE> 217
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The weighted average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligations was 7 percent, for the period from October 31, 1996, through June
30, 1997 and the year ended June 30, 1998.
Stock Plans
As discussed in Note 1, Nedinco committed to grant the management of the
Predecessor Company an effective interest equal to $5,500,000. The Predecessor
Company recorded a noncash compensation expense reflecting the fair value of
this commitment. In order to effect the grant, the Company issued $1,650,000 on
October 31, 1996. The remaining $3,850,000 was to be issued as directed by and
subject to limitations established by the Company's board of directors.
Effective January 1, 1998, the Company's Allright 1998 Employee Stock Option
Plan (the 1998 Incentive Plan) authorized 3,850 shares of common stock to be
available for awards. The 1998 Incentive Plan is intended, in part, as a vehicle
by which the Company's board of directors could fulfill the commitment made by
Nedinco to management of the Predecessor Company. Effective May 20, 1998, 1,605
incentive stock options (ISOs) were issued to management of the Company to
purchase 1,605 shares of the Company's common stock at the price of $1,700 per
share. Under the terms of the award, at the time of exercise, a special cash
bonus shall be paid equal to the number of shares of common stock for which the
ISO has been exercised times $1,700 per share. This combination of ISOs and
special cash bonus was designed to effect a portion of the remaining stock
commitment made to management by Nedinco. One-third of the ISOs vested on May
20, 1998. The remaining ISOs vest as follows: one-third on January 1, 1999, and
one-third on January 1, 2000. The ISOs expire January 1, 2008.
In February 1997, stock options to purchase 2,917 common stock shares were
granted to an executive of the Company at an option price per share above market
on the date of grant. Vesting commenced on March 1, 1997, with such options
vesting at the rate of 61 shares per month.
In July 1997, stock options to purchase 740 common stock shares were granted to
an executive of the Company at an option price per share above market on the
date of grant. The options vest 25 percent on July 25, 1998, 1999, 2000 and
2001.
Based on the terms in the respective agreements, the vesting of all options
outstanding at June 30, 1998, shall accelerate at various rates upon a change in
control.
F-53
<PAGE> 218
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock option transactions under the plans were as follows:
<TABLE>
<CAPTION>
NUMBER
OF OPTION PRICE
SHARES PER SHARE
------ ----------------
<S> <C> <C>
Outstanding at June 30, 1996.......................... -- --
Granted............................................. -- --
Exercised........................................... -- --
Canceled............................................ -- --
----- ----------------
Outstanding at October 30, 1996....................... -- --
----- ----------------
Granted............................................. 2,917 $ 1,100
Exercised........................................... -- --
Canceled............................................ -- --
Outstanding at June 30, 1997.......................... 2,917 $ 1,100
Granted............................................. 2,345 $1,300 to $2,900
Exercised........................................... -- --
Canceled............................................ -- --
----- ----------------
Outstanding at June 30, 1998.......................... 5,262 $1,100 to $2,900
===== ================
</TABLE>
The Fair Value of the 2,917 and 740 stock options was estimated as of the date
of the grant using the minimum value method as described in SFAS No. 123. The
following weighted average assumptions were used for the 2,917 and 740 options
granted: Risk Free Interest Rate of 6.48% and 6.04%, respectively, and an
expected life of 4 years and 4 years, respectively. The resulting Fair Values of
the 2,917 and 740 options grants were $151 and $0, respectively.
The Company accounted for the 2917 and 740 options under APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and, accordingly, no compensation
cost was recognized. If compensation cost for these options had been determined
consistent with SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company's net income (loss) would have been reduced (increased) to the following
pro forma amounts (in thousands):
<TABLE>
<S> <C>
Net income (loss) --
As reported for period ended June 30, 1997................ $(3,400)
Pro forma as adjusted under SFAS No. 123.................. (3,450)
Net income (loss) --
As reported for fiscal year ended June 30, 1998........... 68
Pro forma as adjusted under SFAS No. 123.................. (59)
</TABLE>
The 1605 options issued in 1998 under the 1998 Incentive Plan were not included
in the above pro forma calculations as the Predecessor Company recorded a
non-cash compensation charge for the $5,500,000 equity commitment made by
Nedinco to management of the Predecessor Company.
F-54
<PAGE> 219
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. STOCK WARRANTS
In October 1996, Allright engaged the financial advisory firm CBA Mortgage
Partners, L.P. (CBA), to assist the Company in the acquisition of the
Predecessor Company. In return for services rendered, the Company issued CBA
1,177 warrants to purchase common stock of the Company at an exercise price of
$.01 per share. The fair market value of the warrants on the date of grant,
estimated at $1,177,000, was recorded as additional purchase consideration.
8. COMMITMENTS AND CONTINGENCIES
Indemnification of Liabilities by Nedinco and
Hang Lung Development Company Ltd.
Nedinco and Hang Lung Development Company Ltd., a Hong Kong corporation, have
agreed to indemnify Allright for certain costs and liabilities incurred in
connection with or arising out of the operations of the Predecessor Company
prior to October 31, 1996. As a result of the indemnification, expenses related
to items covered by the indemnification are being paid directly by Nedinco.
Letters of Credit
At June 30, 1998, the Company had letters of credit outstanding totalling
$1,638,000.
Litigation
The Company is involved in various legal actions arising in the normal course of
business. Management is of the opinion, after taking into consideration
evaluations by counsel for Company, that the outcome of all known and potential
claims and litigation will not have a material adverse effect on the Company's
business or consolidated financial position or result of operations.
F-55
<PAGE> 220
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. INCOME TAXES
Income tax expense (benefit) for the periods presented below consisted of the
following (in thousands):
<TABLE>
<CAPTION>
PREDECESSOR COMPANY ALLRIGHT
------------------------- ----------------------
YEAR OCTOBER 31, YEAR
ENDED JULY 1, 1996, 1996, TO ENDED
JUNE 30, TO OCTOBER 30, JUNE 30, JUNE 30,
1996 1996 1997 1998
-------- -------------- ----------- --------
<S> <C> <C> <C> <C>
Current--
Federal...................... $4,701 $ 2,706 $ -- $ 477
State........................ 1,104 149 628 1,567
Non-U.S...................... 175 105 206 61
------ ------- ------ ------
Total current........ 5,980 2,960 834 2,105
------ ------- ------ ------
Deferred--
Federal...................... (28) (1,766) 240 207
State........................ (6) (3) 95 (83)
Non-U.S...................... 9 (5) (18) (3)
------ ------- ------ ------
Total deferred....... (25) (1,774) 317 121
------ ------- ------ ------
Total income tax
expense........... $5,955 $ 1,186 $1,151 $2,226
====== ======= ====== ======
</TABLE>
The effective rate, as computed on income (loss) before extraordinary items and
income taxes, differs from the statutory U.S. income tax rate for the periods
presented below due to the following (in thousands):
<TABLE>
<CAPTION>
PREDECESSOR COMPANY ALLRIGHT
----------------------------------- -------------------------------------
YEAR ENDED JULY 1, 1996, TO OCTOBER 31, 1996, YEAR ENDED
JUNE 30, 1996 OCTOBER 30, 1996 TO JUNE 30, 1997 JUNE 30, 1998
---------------- ---------------- ------------------ ----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. federal
statutory rate on
income (loss)
before
extraordinary items
and income taxes... $4,807 34.0% $1,026 34.0% $ (290) 34.0% $ 778 34.0%
State and city income
taxes, net of
federal income tax
benefit............ 724 5.1 168 5.4 5 (0.1) 159 6.9
Nondeductible
goodwill
amortization....... -- -- -- -- 235 (27.6) 427 18.7
Nondeductible
expenses........... 114 1.0 13 -- 94 (10.9) 70 3.1
Valuation allowance.. -- -- -- -- 1,107 (130.1) 792 34.6
Other................ 310 2.0 (21) (0.1) -- -- -- --
------ ----- ------ ----- ------ ------ ------ -----
Income tax expense... $5,955 42.1% $1,186 39.3% $1,151 (134.7)% $2,226 97.3%
====== ===== ====== ===== ====== ====== ====== =====
</TABLE>
F-56
<PAGE> 221
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Sources of deferred tax assets and liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30
-------------------
1997 1998
-------- --------
<S> <C> <C>
Deferred tax assets-
Deferred compensation expense.................... $ 4,361 $ 4,276
State taxes...................................... 1,447 971
Straight-line rent increases..................... 874 775
Net operating losses............................. 16,955 17,143
Other............................................ 144 879
-------- --------
Total gross deferred tax assets.......... 23,781 24,044
-------- --------
Deferred tax liabilities-
Book/tax difference in land values............... (32,694) (33,220)
Property, plant and equipment, due to differences
in depreciation............................... (3,914) (3,434)
Other.............................................. (435) (416)
-------- --------
Total gross deferred tax liabilities..... (37,043) (37,070)
Less- Valuation allowance.......................... (16,785) (17,142)
-------- --------
Net deferred tax liabilities............. $(30,047) $(30,168)
======== ========
</TABLE>
Net operating losses will expire if not utilized beginning in 2004. The
utilization of these net operating losses will be significantly limited by
various provisions of the Tax Code. Valuation allowance has been provided for
net operating losses for which recoverability is not deemed to be more likely
than not.
The amount of cash paid for federal alternative minimum, state and foreign
income taxes during the year ended June 30, 1996, the period from July 1, 1996,
to October 30, 1996, the period from October 31, 1996, to June 30, 1997, and the
year ended June 30, 1998, was approximately $2,153,000, $684,000 and $1,332,000
and $2,072,000, respectively.
10. NOTES RECEIVABLE
Included in notes receivable at June 30, 1997 and 1998, is a mortgage note of
$2,485,000 from a partnership which is secured by a parking garage and rental
assignments. The note bears interest at a rate of 7.7 percent which is payable
monthly. The loan matures in August 2010.
In June 1997, the Company loaned its partner in Edison $16,500,000 in connection
with the Company's acquisition of its interest in Edison. The note is secured by
a partnership interest in Edison, bears interest at a rate of 10 percent and is
payable in full in July 2004.
The remainder of notes receivable consist of notes ranging from $153,000 to
$1,071,000 at June 30, 1997, and notes ranging from $17,000 to $1,071,000 at
June 30, 1998. The notes bear interest at rates ranging from 8 percent to 12
percent at June 30, 1998.
F-57
<PAGE> 222
ALLRIGHT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. SUBSEQUENT EVENTS
Prepaid Insurance
On July 1, 1998, the Company renewed its primary insurance coverages with its
existing carrier under a three year rate guaranteed program. The Company
financed the purchase of these insurance coverages by paying $550,000 in cash
and financing the remaining $10,500,000 over 30 months at an annual percentage
rate of 6.20 percent. Monthly payments of $376,000, which include interest and
principal, begin August 1, 1998.
Allied Parking Acquisition
On October 1, 1998, the Company purchased four leases from Allied Parking of New
York (Allied Parking) relating to parking facilities in Manhattan with
maturities ranging from 2006 to 2029 for $14,230,000 cash. In addition, Allied
Parking agreed to lease the Company two more lots for 19 years each in exchange
for a prepaid lease payment of $4,900,000. The Company also purchased the right
to use the "Allied Parking" name for $835,000 in cash.
Merger With Central
On September 21, 1998, a merger agreement was signed in which the Company will
merge with a wholly owned subsidiary of Central Parking Corporation. The merger,
which is expected to be accounted for as a pooling of interests transaction is
based on an equity purchase price of $564 million, which is subject to
adjustment for and reduction related to, among other things, transaction costs,
acquisitions and Allright indebtedness. For purposes of computing the exchange
ratio, the Central Parking Corporation common stock will have a deemed price of
$46.00 per share. The merger remains subject to certain closing conditions,
including the expiration of the waiting period under the Hart-Scott-Rodino Act.
The transaction is also subject to approval by the shareholders of both Central
Parking Corporation and the Company at separate meetings to be scheduled. The
transaction is anticipated to close in early 1999.
System Conversion
Allright is in the process of upgrading local and wide area information
networks, computer hardware, software, and connection devices to comply with
Year 2000 issues. The vendors of such computer equipment have warranted that
their systems will appropriately process information beyond Year 2000. Allright
expects that the conversion of all system critical functions will be completed
no later than the end of the first calendar quarter of 1999. Management expects
this conversion timetable to provide adequate opportunity to fully test and
address any unforeseen Year 2000 issues. Management believes that the system is
operating sufficiently to produce the necessary management reporting needed to
operate the Company on a timely basis and that all reporting capabilities will
be ready as necessary.
F-58
<PAGE> 223
ANNEX A
AGREEMENT AND PLAN OF MERGER
AMONG
CENTRAL PARKING CORPORATION,
CENTRAL MERGER SUB, INC.
AND
ALLRIGHT HOLDINGS, INC.
DATED AS OF SEPTEMBER 21, 1998
A-1
<PAGE> 224
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 21, 1998 (this "Agreement"),
among Central Parking Corporation ("Central"), a Tennessee corporation, Central
Merger Sub, Inc. ("Central Sub"), a Delaware corporation and wholly owned
subsidiary of Central, Allright Holdings, Inc. ("Holdings"), a Delaware
corporation and the sole shareholder of Allright Corporation ("Allright"), a
Delaware corporation, Apollo Real Estate Investment Fund II, L.P. ("Apollo"), a
Delaware limited partnership and AEW Partners, L.P. ("AEW"), a Delaware limited
partnership.
RECITALS
WHEREAS, the respective Boards of Directors of Central, Central Sub and Holdings
have each approved the Merger (as defined below) of Central Sub and Holdings
pursuant to the terms of this Agreement;
WHEREAS, the majority stockholders of Central, Monroe J. Carrell, Jr. and The
Carell Children's Trust (collectively, the "Central Stockholders"), have each
entered into a transaction support agreement with Holdings, Apollo and AEW,
dated as of the date hereof (collectively, the "Transaction Support
Agreements"), with respect to the Merger wherein the Central Stockholders have
committed to vote the shares of Central capital stock beneficially owned by the
Central Stockholders in connection with the Merger and the other transactions
contemplated by this Agreement, and Apollo and AEW, as the majority stockholders
of Holdings, have committed to vote the shares of Holdings capital stock
beneficially owned by them in favor of the Merger and the other transactions
contemplated by this Agreement, and certain other stockholders and
warrantholders of Holdings have each entered into a transaction support
agreement with respect to the Merger wherein such stockholders and
warrantholders have committed to vote the shares of Holdings capital stock
beneficially owned by them in favor of the Merger and the other transactions
contemplated by this Agreement;
WHEREAS, Central, certain stockholders of Central, Apollo and AEW have entered
into a Registration Rights Agreement, dated as of the date hereof (the
"Registration Rights Agreement"), pursuant to which Central has agreed to
provide certain registration rights for the benefit of such stockholders of
Central, Apollo and AEW;
WHEREAS, Central, Central Sub and Holdings desire to make certain
representations, warranties, covenants and agreements in connection with such
merger as set forth in this Agreement; and
WHEREAS, for United States Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement
is intended to be and is adopted as a plan of reorganization within the meaning
of Section 368 of the Code;
A-2
<PAGE> 225
Now, therefore, in consideration of the premises and of the mutual covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
in accordance with the terms of this Agreement and applicable law, Central Sub
shall be merged (the "Merger") with and into Holdings and its separate legal
existence shall cease to exist, and Holdings will be the surviving corporation
(some times referred to herein as the "Surviving Corporation") and shall
continue its corporate existence as "Allright Holdings, Inc." under the laws of
the State of Delaware. The Merger shall have the effects provided for in Section
251 of the Delaware General Corporation Law (the "DGCL").
Section 1.2 Effective Time. The merger (the "Merger") shall become effective at
the time of the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware (or at such later time specified as the effective time
in the Certificate of Merger), which Certificate of Merger shall be so filed at
the time of the Closing (as defined in Section 1.3). The date and time when the
Merger becomes effective are herein referred to as the "Effective Time".
Section 1.3 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to the
provisions of Article VII herein, the closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at a location to be
agreed to by Central and Holdings, on the second business day following the
satisfaction or waiver of the conditions set forth in Article VI, or at such
other time and date as the parties may mutually agree. The date and time of such
Closing are herein referred to as the "Closing Date". At the Closing, each of
the parties hereto shall take, or cause to be taken, all such actions and
deliver, or cause to be delivered, all such documents, instruments, certificates
and other items as may be required under this Agreement or otherwise, in order
to perform or fulfill all covenants, conditions and agreements on its part to be
performed at or prior to the Effective Time.
Section 1.4 Certificate of Incorporation. The Certificate of Incorporation of
Holdings, as in effect at the Effective Time, shall continue in effect as the
Certificate of Incorporation of the Surviving Corporation, until thereafter
amended as provided therein.
Section 1.5 By-Laws. The By-Laws of Holdings, as in effect at the Effective
Time, shall be the By-Laws of the Surviving Corporation, until thereafter
amended as provided therein.
Section 1.6 Directors and Officers. The officers and directors of Central Sub
at the Effective Time shall be the officers and directors of the Surviving
Corporation, each to hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or removal.
A-3
<PAGE> 226
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof:
(a) each share of common stock of Central Sub, $0.01 par value per
share, issued and outstanding immediately prior to the Effective Time shall
be cancelled and cease to exist and shall be converted into one share of
common stock of the Surviving Corporation, $0.01 par value per share. Such
newly issued shares shall thereafter constitute all of the issued and
outstanding shares of the Surviving Corporation;
(b) each share of common stock of Holdings, $0.01 par value per share
(the "Holdings Common Stock"), issued and outstanding immediately prior to
the Effective Time, other than shares to be cancelled in accordance with
Section 2.1(c), shall be cancelled and cease to exist and shall be
converted into and represent the number of common shares of Central, $0.01
par value per share (the "Central Common Stock"), equal to the Exchange
Ratio (as defined in Section 2.6);
(c) all share capital held in the treasury of Holdings or held by any of
Holdings' subsidiaries shall be cancelled and cease to exist and no payment
shall be made in respect thereof; and
(d) at the Effective Time, all rights in respect of outstanding shares
of Holdings Common Stock shall cease to exist, other than the right to
receive Central Common Stock as described above.
Section 2.2 Closing of Holdings Transfer Books. At the Effective Time, the
stock transfer books of Holdings shall be closed and no transfer of Holdings
Common Stock shall thereafter be made.
Section 2.3 No Fractional Shares. No fractional shares of Central Common Stock
shall be issued pursuant hereto. In lieu of any such fractional share of Central
Common Stock, Central shall pay to each former shareholder of Holdings who
otherwise would be entitled to receive a fractional share of Central Common
Stock an amount in cash determined by multiplying (i) $46.00 by (ii) the
fractional interest in a share of Central Common Stock to which such holder
would otherwise be entitled.
Section 2.4 Certain Adjustments. If after the date hereof and on or prior to
the Closing Date the outstanding shares of Central Common Stock shall be changed
into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, or any similar event shall occur, the amount of shares
to which a holder of Holdings Common Stock shall be entitled to receive shall be
adjusted accordingly to provide to such holder the same economic effect as
contemplated by this Agreement prior to such reclassification, recapitalization,
split-up, combination, exchange or dividend or similar event.
Section 2.5 Stock Options; Warrants. (a) At the Effective Time, each option
granted by Holdings to purchase shares of Holdings Common Stock (each, a
"Holdings Option") which is outstanding and unexercised immediately prior
thereto shall cease to represent a right to acquire shares of Holdings Common
Stock and shall be converted automatically into an option to purchase shares of
Central Common Stock (each, a "Central Option") in an
A-4
<PAGE> 227
amount and at an exercise price determined as provided below (and otherwise
subject to the terms of the Allright 1998 Employee Stock Option Plan (the
"Holdings Option Plan"), if applicable to such Holdings Options), and the
agreements evidencing grants thereunder, including, but not limited to, the
accelerated vesting of such options which shall occur in connection with and by
virtue of the consummation of the Merger as and to the extent required by the
Holdings Option Plan and such agreements:
(i) the number of shares of Central Common Stock to be subject to the
new Central Option shall be equal to the product of the number of shares of
Holdings Common Stock subject to the original Holdings Option and the
Exchange Ratio, provided that any fractional shares of Central Common Stock
resulting from such multiplication shall be rounded down to the nearest
share; and
(ii) the exercise price per share of Central Common Stock under the new
Central Option shall be equal to the exercise price per share of Holdings
Common Stock under the original Holdings Option divided by the Exchange
Ratio, provided that the resulting exercise price shall be rounded up to
the nearest cent.
(b) In the case of any Holdings Options which are intended to be "incentive
stock options" (as defined in Section 422 of the Code)("ISOs"), the exercise
price of, the number of shares purchasable pursuant to, and the terms and
conditions of exercise of, the Central Options issued in exchange therefor shall
be determined in order to comply with Section 424(a) of the Code.
(c) The duration and other terms of Central Options shall be the same as the
Holdings Options except that all references to Holdings shall be deemed to be
references to Central.
(d) As of the Effective Time, the Holdings Options Plan shall be assumed by
Central and, following the Effective Time, Central shall take all steps
necessary to provide that shares of Central Common Stock issuable upon the
exercise of all outstanding Central Options shall be covered by an effective
registration statement on Form S-8 (or other appropriate form) as soon as
practicable after the Effective Time.
(e) At the Effective Time, each warrant granted by Holdings to purchase shares
of Holdings Common Stock (each, a "Holdings Warrant") which is outstanding and
unexercised immediately prior thereto shall cease to represent a right to
acquire shares of Holdings Common Stock and shall be converted automatically
into a warrant to purchase shares of Central Common Stock (each, a "Central
Warrant") in an amount equal to the product of the number of shares of Holdings
Common Stock subject to the original Holdings Warrant and the Exchange Ratio,
provided that any fractional shares of Central Common Stock resulting from such
multiplication shall be rounded down to the nearest share. The exercise price
per share of Central Common Stock under the new Central Warrant shall be equal
to the exercise price per share of Holdings Common Stock under the original
Holdings Warrant divided by the Exchange Ratio, provided that the resulting
exercise price shall be rounded up to the nearest cent.
Section 2.6 Calculation of Exchange Ratio. (a) The "Exchange Ratio" shall be
(i) the Equity Purchase Price (as defined in Section 2.6(b)), divided by (ii)
$46.00, divided by (iii) the number of shares of Holdings Common Stock
outstanding as of the Effective Time (excluding any shares of Holdings Common
Stock issued or issuable to the seller in exchange for assets in any acquisition
permitted under Sections 5.1(d) and 5.1(e)), plus the number
A-5
<PAGE> 228
of shares of Holdings Common Stock issuable pursuant to outstanding Holdings
Options and Holdings Warrants immediately prior to the Effective Time.
(b) The "Equity Purchase Price" shall be calculated as follows and shall be set
forth in a closing statement (the "Closing Statement"), an example of which is
set forth on Schedule 2.6(b), that will be prepared by Holdings based on its
good faith estimates of the amounts indicated and provided to Central for its
review and approval (which shall not be unreasonably withheld), not less than
five business days prior to the Closing Date: (i) $564,390,050, plus (ii) the
Acquisition Expenses (as defined in Section 2.6(c)), plus (iii) the excess, if
any, of $5,000,000 over the Covered Transaction Expenses (as defined in Section
2.6(d)), plus (iv) the Working Capital Adjustment (as defined in Section
2.6(e)), plus (v) the aggregate exercise price of all outstanding and
unexercised Holdings Warrants or Holdings Options which are not ISOs as of the
Closing Date, less (vi) the principal amount of any long-term indebtedness for
borrowed money and capitalized lease obligations of Allright and its
consolidated subsidiaries as of the Closing Date and assumed by Central or
Central Sub pursuant to the Merger, but not including the current portion of
either long-term indebtedness or capitalized lease obligations, less (vii) the
excess, if any, of the Covered Transaction Expenses over $5,000,000, less (viii)
any adjustment required pursuant to paragraph (f) below, plus (ix) any Divesture
Gain (as defined herein), less (x) any Divesture Loss (as defined herein), less
(xi) any proceeds arising from the sale, lease, transfer or disposition of any
property or assets set forth on Schedule 5.1(j), after deduction of all expenses
incurred relating to any such transaction, less (xii) any Excess Severance (as
defined in Section 3.12(a)). Holdings shall use its best efforts to deliver to
Central as soon as possible (but no later than fifteen business days prior to
the Closing Date), Allright's and Holdings' audited financial statements for the
fiscal year ended June 30, 1998, Allright's Actual EBITDA (as defined below),
the Acquired Facility EBITDA (as defined below) and the Non-Acquired EBITDA (as
defined below).
(c) The "Acquisition Expenses" shall be the aggregate amount of cash
consideration and transaction expenses paid by Holdings, Allright or any
Subsidiary (as defined below) through the Closing in respect of any and all
acquisitions of parking facilities after April 30, 1998 and any and all capital
expenditures incurred in connection with such acquisitions and leases entered
into after April 30, 1998, all as set forth on Schedule 2.6(c) (as such Schedule
may be supplemented or revised prior to the Closing Date).
(d) "Covered Transaction Expenses" include, without duplication, any and all
out-of-pocket expenses of Holdings, Allright, the Subsidiaries, Apollo and AEW,
incurred in connection with the Merger or the other transactions contemplated by
this Agreement, to the extent that such expenses have been paid or are accrued
on the Closing Statement. AEW and Apollo shall list all such expenses on the
Closing Statement.
(e) The "Working Capital Adjustment" shall be calculated as follows: (i) the
amount of working capital surplus or deficit (such deficit, if any, to be
expressed as a negative number) of Allright and its consolidated subsidiaries as
set forth on its most recent available balance sheet (which shall not be dated
more than 50 calendar days prior to the Closing Date), reduced by the amount of
any portion of any acquisitions not financed from additional debt or equity
proceeds subsequent to such balance sheet date and which shall be determined in
accordance with Schedule 2.6(e) and otherwise in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis with
Allright's historical financial statements, plus (ii) $6,000,000. Any items
reflected as Covered Transaction
A-6
<PAGE> 229
Expenses or as an adjustment pursuant to any other clause of paragraph (b) above
used to calculate the Equity Purchase Price shall be excluded in calculating the
working capital deficit or surplus for the purposes of determining the Working
Capital Adjustment. The Working Capital Adjustment may only be a negative number
or zero.
(f) Notwithstanding anything to the contrary above, the Equity Purchase Price
shall be adjusted as follows:
(i) if Allright's EBITDA (as defined below) calculated from Allright's
audited financial statements for the fiscal year ended June 30, 1998
("Allright's Actual EBITDA"), minus the EBITDA attributable to those
parking facilities acquired by Holdings, Allright or any Subsidiary after
April 30, 1998, to the extent the EBITDA attributable to such parking
facilities was included in Allright's Actual EBITDA (the "Acquired Facility
EBITDA", and the difference between Allright's Actual EBITDA and the
Acquired Facility EBITDA, the "Non-Acquired EBITDA"), is equal to or
greater than $34.0 million, the Equity Purchase Price shall be computed as
set forth above and no further adjustment shall be made under this
paragraph (f); and
(ii) if the Non-Acquired EBITDA is less than $34.0 million (the
difference between the $34.0 million and the Non-Acquired EBITDA, the
"EBITDA Shortfall"), then the Equity Purchase Price shall be reduced by the
EBITDA Shortfall, multiplied by 16.
"EBITDA" shall mean, for any particular entity, the earnings before interest,
taxes, depreciation and amortization attributable to that entity. For purposes
of computing Allright's Actual EBITDA above, the EBITDA shall be derived in
accordance with GAAP consistently applied from Allright's audited financial
statements for the fiscal year ended June 30, 1998 and shall not include the
following expenses: the Covered Transaction Expenses and expenses incurred in
connection with the Merger, payments made in respect of retention, employment
and management continuity agreement bonuses listed on Schedules 5.9(a), 5.9(b)
and 5.9(c) and any other charges related to Holdings Options or Holdings
Warrants used to compute the Exchange Ratio pursuant to Section 2.6(a)(iii),
charges for asset impairments and expenses associated with other liabilities
mutually agreed to by Holdings and Central. In addition, Allright's Actual
EBITDA shall not include any gains or losses attributable to the sale of any
assets, and any minority interest expense deducted to calculate EBITDA shall be
reinstated when computing Allright's Actual EBITDA. The calculation used to
derive Allright's Actual EBITDA shall be included as part of the Closing
Statement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Holdings and Allright represent and warrant to Central and Central Sub as
follows:
Section 3.1 Organization. Holdings is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
Section 3.2 Authority; Enforceability. Holdings has the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated on its part hereby. The execution and delivery by
Holdings of this Agreement and the consummation by Holdings of the transactions
contemplated hereby have been duly authorized by all
A-7
<PAGE> 230
necessary corporate action on the part of Holdings. No other corporate
proceedings on the part of Holdings are necessary to authorize the execution and
delivery of this Agreement and the consummation by Holdings of the transactions
contemplated hereby or the performance of its obligations hereunder. This
Agreement has been duly executed and delivered by Holdings and is a valid and
binding agreement of Holdings, enforceable against Holdings in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws relating to or affecting creditors' rights
generally and by general equity principles. AEW and Apollo, as the majority
stockholders of Holdings, have taken, or will prior to the Closing take, all
action required to be taken on their respective parts in order for Holdings to
have duly authorized, executed and delivered this Agreement and to consummate
the transactions contemplated hereby.
Section 3.3 Subsidiaries. Holdings does not have any subsidiaries other than
Allright. Except as provided in Schedule 3.3, Allright does not have any equity
interest, directly or indirectly, in any other entity (such subsidiaries in
Schedule 3.3, the "Subsidiaries").
Section 3.4 Non-Contravention. Except as set forth on Schedule 3.4, the
execution and delivery by Holdings, AEW and Apollo of this Agreement and by AEW
and Apollo of the Registration Rights Agreement, the Noncompetition Agreement
and the Transaction Support Agreements do not, and the consummation by each of
the transactions contemplated hereby and thereby and the performance by each of
the obligations which it is obligated to perform hereunder and thereunder will
not, (a) violate any provision of the Certificate of Incorporation or By-Laws of
Holdings, Allright or any Subsidiary, (b) except as a result of failing to
obtain any third party consents, violate, or result in the violation of, any
provision of, or result in the termination of or the acceleration of, or entitle
any party to accelerate any obligation or indebtedness under, or result in the
imposition of any lien upon or the creation of a security interest in any of the
Holdings Common Stock or upon the assets of Holdings, Allright or any
Subsidiary, pursuant to, any mortgage, lien, lease, franchise, license, permit,
agreement or other instrument to which Holdings, Allright or any Subsidiary is a
party, or by which Holdings, Allright or any Subsidiary is bound, and that is
likely to, in any such event, in the aggregate, have a material adverse effect
on the financial condition of Holdings, Allright and the Subsidiaries taken as a
whole (a "Holdings Material Adverse Effect"), or (c) subject to the approvals
required as set forth in Section 3.5, violate or conflict with any other
restriction of any kind or character to which Holdings, Allright or any
Subsidiary or to which AEW or Apollo is subject which would prevent or
significantly restrict or delay the consummation of the transactions
contemplated hereby.
Section 3.5 Consents. Except for filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and as set forth in
Schedule 3.5, no consent, authorization, order or approval of, or filing or
registration with, any governmental commission, board or other regulatory body
(collectively, "Consents") which has not been obtained or made is required (a)
for or in connection with the execution and delivery of this Agreement by
Holdings and the consummation by Holdings of the transactions contemplated
hereby and the performance by Holdings of its obligations hereunder, other than
those Consents, the failure of which to obtain, in the aggregate, would not have
a Holdings Material Adverse Effect, or (b) for the ongoing operations of
Allright and the Subsidiaries as currently conducted, other than those Consents,
the failure of which to obtain, in the aggregate, would not have a Holdings
Material Adverse Effect.
A-8
<PAGE> 231
Section 3.6 Capital Stock. (a) The entire authorized capital stock of Holdings
consists of 500,000 shares of common stock, $0.01 par value, 79,564 of which are
issued and outstanding as of the date hereof and all such shares are validly
issued, fully paid and nonassessable, and 500,000 shares of preferred stock,
with a par value of $0.01 per share, none of which are issued and outstanding.
Except as set forth on Schedule 3.6(a), there are no outstanding obligations,
warrants, options or other rights to subscribe for or purchase, or other plans,
contracts or commitments providing for the issuance of, or the granting of
rights to acquire, shares of stock of any class of Holdings capital stock or any
securities or other instruments convertible into or exchangeable for shares of
stock of any class of Holdings capital stock.
(b) The entire authorized capital stock of Allright consists of 1,000 shares of
common stock, $0.01 par value, all of which are issued and outstanding as of the
date hereof, and all such shares are validly issued, fully paid and
nonassessable. Other than as set forth on Schedule 3.6(b), Holdings owns all
such issued and outstanding shares free and clear of any options, liens, claims,
charges or other encumbrances. There are no outstanding obligations, warrants,
options or other rights to subscribe for or purchase, or other plans, contracts
or commitments providing for the issuance of, or the granting of rights to
acquire, shares of stock of any class of Allright capital stock or any
securities or other instruments convertible into or exchangeable for shares of
stock of any class of Allright capital stock.
(c) All of the issued and outstanding shares of capital stock or securities of
the Subsidiaries (the "Subsidiaries Shares") are validly issued, fully paid and
nonassessable. Allright owns, directly or indirectly, the percentage of such
Subsidiary Shares set forth on Schedule 3.6(c), in each case free and clear of
any options, liens, claims, charges or other encumbrances, except as set forth
on Schedule 3.6(c). There are no outstanding obligations, warrants, options or
other rights to subscribe for or purchase, or other plans, contracts or
commitments providing for the issuance of, or the granting of rights to acquire,
shares of stock of any class of any Subsidiary capital stock or any securities
or other instruments convertible into or exchangeable for shares of stock of any
class of any Subsidiary capital stock.
Section 3.7 Organization and Qualification of Allright and the
Subsidiaries. Except as set forth on Schedule 3.7, each of Allright and the
Subsidiaries is duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization and each has
full corporate or partnership, as the case may be, power and authority to own
all of its properties and assets and to carry on its business as it is now being
conducted, except where such failure would not, in the aggregate, have a
Holdings Material Adverse Effect. Each of Allright and the Subsidiaries is
qualified and in good standing in every jurisdiction where the failure to so
qualify or be in good standing would have, in the aggregate, a Holdings Material
Adverse Effect.
Section 3.8 Financial Statements. Schedule 3.8 contains a true and correct copy
of (a) the audited consolidated balance sheet of Allright as of June 30, 1997,
(b) the audited related statement of income and cash flows for the three-years
then ended, (c) the unaudited consolidated balance sheet of Allright as of June
30, 1998, (d) the unaudited and consolidated statements of income and retained
earnings and unaudited statements of cash flows of Allright for the fiscal year
ended June 30, 1998, (e) the unaudited balance sheet of Holdings (parent company
only) as of June 30, 1998 and (f) the unaudited statements of income and
retained earnings of Holdings (parent company only) for the fiscal year ended
June 30, 1998 (collectively, the "Financial Statements"). The Financial
Statements (including the notes thereto) present fairly in all material respects
the financial position and results of operations
A-9
<PAGE> 232
of Allright and the Subsidiaries as of the date and for the periods specified
therein set forth, and have been prepared in accordance with GAAP consistently
applied, except for any ordinary year-end adjustments and footnote disclosures
with respect to any interim financial statement. The sole remedy for any breach
of this Section 3.8 shall be an adjustment to the Equity Purchase Price as set
forth in Section 2.6(f), except if such breach arises from a fraudulent act or
fraudulent omission committed by AEW, Apollo, Holdings or Allright in connection
with the preparation of such Financial Statements.
Section 3.9 Undisclosed Liabilities. Except as set forth on Schedule 3.9,
Holdings, Allright and the Subsidiaries have no liabilities or obligations,
secured or unsecured (whether absolute, accrued, contingent or otherwise and
whether due or to become due), which are not fully reflected in the Financial
Statements, except (a) those incurred in the ordinary course of business since
June 30, 1998, (b) those that may have arisen as a result of the execution and
delivery of this Agreement by Holdings or (c) those that would not have, in the
aggregate, a Holdings Material Adverse Effect.
Section 3.10 Absence of Certain Changes or Events. Except as contemplated by
this Agreement, since the date of the Financial Statements, Holdings, Allright
and the Subsidiaries have conducted their respective businesses in the ordinary
course.
Section 3.11 Legal Proceedings. Except as set forth in Schedule 3.11, there are
no governmental proceedings seeking over $50,000 or private litigation
proceedings against Holdings, Allright or any Subsidiary pending or, to the
knowledge of Holdings, threatened which, if determined adversely to Holdings,
Allright or any Subsidiary, is likely to have, in the aggregate, a Holdings
Material Adverse Effect, nor are there any judgments, decrees or orders against
or enjoining Holdings, Allright or any Subsidiary in respect of, or the effect
of which is to prohibit, restrict, or affect, any business practice or the
acquisition of any property or the conduct of business in any area which will
have, in the aggregate, a Holdings Material Adverse Effect.
Section 3.12 Employee Benefits. (a) Schedule 3.12(a) sets forth a true and
complete list as of the date hereof of each material bonus, retention bonus,
deferred compensation, incentive compensation, severance, stock purchase, stock
option, severance or termination pay, hospitalization or other medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement sponsored, maintained or
contributed to or required to be contributed to by Holdings, Allright or the
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with Holdings, Allright or the Subsidiaries would be
deemed a "single employer" within the meaning of section 4001(a)(15) of ERISA,
for the benefit of any employee or former employee of Allright or an ERISA
Affiliate, whether written or unwritten (the "Plans"). For purposes of the
adjustment to the Equity Purchase Price set forth in Section 2.6(b), "Excess
Severance" shall mean the amount by which the aggregate severance obligations of
Holdings, Allright or the Subsidiaries set forth on Schedule 3.12(a) as updated
or supplemented on the Closing Date (excluding any reasonable and customary
severance obligations contained in provisions of any employment or severance
agreement entered into in connection with any acquisition of a parking facility
or parking-related entity after the date hereof) shall exceed $6.3 million.
(b) Holdings, Allright and the Subsidiaries have previously made available to
Central or its representatives copies of (i) each of the Plans or summaries
thereof, including all amendments thereto to date; (ii) the two most recent
actuarial statements, if any, prepared for each
A-10
<PAGE> 233
Plan; (iii) the two most recent annual reports (Series 5500 and all schedules
thereto), if any, required under ERISA in connection with each Plan or related
trust; (iv) the most recent determination letter received from the IRS, if any,
for each Plan and related trust which is intended to satisfy the requirements of
Section 401(a) of the Code; (v) the most recent summary plan description
together with the most recent summary of material modifications, if any,
required under ERISA with respect to each Plan; and (vi) all material
communications to any employee or employees relating to each Plan.
(c) Except as set forth on Schedule 3.12(c) hereto, no Plan provides benefits,
including without limitation death or medical benefits (whether or not insured)
with respect to current or former employees of Holdings, Allright, any
Subsidiary or any ERISA Affiliate beyond their retirement or other termination
of service (other than (i) coverage mandated by applicable law, (ii) death
benefits or retirement benefits under any "employee pension plan," as defined in
section 3(2) of ERISA, or (iii) benefits the full cost of which is borne by the
current or former employee (or his beneficiary)).
(d) Each of the Plans is in material compliance with the terms thereof and with
the requirements of any and all laws, orders, decrees, rules and regulations
applicable to such plan, including, but not limited to, ERISA and the Code.
Except as set forth on Schedule 3.12 (d), no Plan is subject to Title IV of
ERISA. There are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the Plans or any
trusts related thereto.
(e) Except as set forth on Schedule 3.12(e), no Plan is a "multiemployer pension
plan" (as defined in section 3(37) of ERISA). With respect to any Plan that is a
"multiemployer pension plan" (as defined in section 3(37) of ERISA) covering
employees of Holdings, Allright, the Subsidiaries or any ERISA Affiliate, (i)
none of Holdings, Allright, any Subsidiary or any ERISA Affiliate has, since
January 1, 1992, made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in sections 4203 and 4205 of
ERISA, (ii) no event has occurred that presents a material risk of a partial
withdrawal, (iii) none of Holdings, Allright, any Subsidiary or any ERISA
Affiliate has any contingent liability under section 4204 of ERISA and no
circumstances exist that present a material risk that any such plan will go into
reorganization, and (iv) the aggregate withdrawal liability of Holdings,
Allright, the Subsidiaries and the ERISA Affiliates, computed as if a complete
withdrawal by Holdings, Allright, the Subsidiaries and the ERISA Affiliates had
occurred under each such Plan on the date hereof, would not exceed $25,000.
(f) Each Plan intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a determination letter from the Internal Revenue Service
stating that it is so qualified, and, to the knowledge of Holdings, Allright and
the Subsidiaries, no event has occurred since the date of such determination
that would adversely affect such determination.
(g) The consummation of the Merger will not cause Holdings, Allright or any
Subsidiary to be responsible for any long-term gain incentive bonus to be paid
to any regional or division manager in connection with the sale of owned
property.
Section 3.13 Properties, Contracts and Other Data. (a) Allright and its
Subsidiaries own and have good, marketable and insurable title to the real
property owned of record or beneficially by Allright or such Subsidiary, as the
case may be (the "Owned Properties"), free and clear of all mortgages, liens
(except for ad valorem real estate taxes not yet delinquent or the validity of
which are being contested in good faith, imperfections and liens that do not
materially detract from the value of or interfere with the present use of such
property),
A-11
<PAGE> 234
claims, pledges, security interests and other monetary encumbrances, and free of
all restrictions, easements, reservations, covenants and other non-monetary
encumbrances, except for the matters set forth in the title policies related to
the Owned Properties referenced on Schedule 3.13(a)(1) and as set forth on
Schedule 3.13(b)(1). Except as set forth on Schedule 3.13(a)(2), as of the date
hereof, neither Allright nor any Subsidiary has received any written notice of
condemnation or suspension of its right to use with respect to any of the Owned
Properties, none of the Owned Properties is subject to condemnation proceedings
and there is not now pending or threatened, any governmental or regulatory
action or action by a private party adverse to the uses contemplated for the
Owned Properties by Allright and its Subsidiaries.
(b) Except as set forth on Schedule 3.13(b)(1), as of the date hereof there are
no (i) mortgages, indentures, loan agreements or other borrowing agreements to
which Holdings, Allright or any Subsidiary is a party as obligor, or to which it
or any of their respective owned assets or properties is subject, which relate
to indebtedness of Holdings, Allright or any Subsidiary for borrowed money or to
mortgaging, pledging or otherwise placing a lien on any of their respective
assets; or (ii) guarantees or indemnification agreements given or entered into
by Holdings, Allright or any Subsidiary with respect to indebtedness for
borrowed money or in support of obligations the principal obligor in respect of
which is not Holdings, Allright or any Subsidiary. Except as set forth on
Schedule 3.13(b)(2), neither Allright's chief executive officer, chief financial
officer, chief operating officer, general counsel nor divisional managers have
knowledge (based on reasonable information) that any party to any contract
involving the payment by or to Holdings, Allright or any Subsidiary of more than
$100,000 per annum that such party intends or has threatened to cancel,
terminate or amend such contract.
Section 3.14 Certain Tax Matters. (a) Except as set forth in Schedule 3.14:
(i) giving effect to all extensions obtained, each of Holdings, Allright
and the Subsidiaries has timely filed (or there has been timely filed on
its behalf) all Tax Returns (as defined below) required to be filed by it,
and all such Tax Returns are complete in all material respects, has paid
(or there has been paid on its behalf) all Taxes shown thereon to be due,
other than such Taxes as are being contested in good faith, and has
established reserves in accordance with generally accepted accounting
principles for the payment of all Taxes for periods subsequent to the
periods covered by such Tax Returns;
(ii) no material deficiency, assessment or other formal claim for any
material Taxes has been asserted by a Tax authority against Holdings,
Allright or any of the Subsidiaries that has not been fully paid, accrued
or finally settled;
(iii) none of Holdings, Allright or any of the Subsidiaries has been
notified that any Tax Returns are currently the subject of any audit or
other administrative proceeding or court proceeding ("Audit") by any Tax
authority;
(iv) no extension, waiver or comparable consent regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns has been given by or on behalf of Holdings, Allright or any of the
Subsidiaries and is currently in effect; and
(v) the income Tax Returns of Holdings, Allright and the Subsidiaries
for the taxable periods ending on or before June 30, 1992 have been
examined by the appropriate Tax authority (or the applicable statute of
limitations for the assessment of Taxes for
A-12
<PAGE> 235
such periods has expired) and a list of Audits commenced and not yet
completed with respect to Holdings, Allright and the Subsidiaries is set
forth on Schedule 3.14.
(b) For purposes of this Agreement, (i) "Taxes" (including, with correlative
meaning, the term "Tax") shall mean all taxes, charges, fees, levies, penalties
or other assessments imposed by any federal, state, local or foreign govern
mental authority, including, but not limited to, income, gross receipts,
commercial rent and occupancy, excise, property, sales, transfer, franchise,
payroll, withholding, social security or other taxes, including any interest,
penalties or additions attributable thereto and (ii) "Tax Return" shall mean any
return, report, information return or other document (including any related or
supporting information) with respect to Taxes.
(c) To the knowledge of Holdings, the Indemnification Agreement, dated as of
October 31, 1996, by and among Nedinco Delaware Incorporated, Hang Lung
Development Company Ltd., Allright Holdings LLC and Allright, and the Letter of
Credit, made by HSBC Trade Services on October 29, 1996 related thereto, are
each valid and binding agreements, enforceable against each party thereto in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency or other similar laws relating to or affecting
creditors' rights generally and by general equity principles.
Section 3.15 Compliance with Laws. Except as set forth in Schedule 3.15, to
their knowledge, each of Holdings, Allright and the Subsidiaries;
(a) is in substantial compliance with all laws, regulations, reporting
and licensing requirements, and orders applicable to its business or
employees conducting its business;
(b) has received no notification or communication from any agency or
department of any federal, state, local or foreign government or any
regulatory authority or the staff thereof (i) asserting that Holdings,
Allright or any Subsidiary is not in compliance with any of the statutes,
regulations or ordinances which such governmental authority or regulatory
authority enforces, or (ii) threatening to revoke any license, franchise,
permit, or governmental authorization; and
(c) is not a party to any written order, decree, agreement or memorandum
of understanding with, or a commitment letter or similar submission to, or
a recipient of any extraordinary supervisory letter from, any federal,
state or local governmental agency or authority which restricts in any
material respect the conduct of business of Holdings, Allright and the
Subsidiaries; nor has Holdings, Allright or any Subsidiary been advised by
any such regulatory authority that such authority is contemplating issuing
or requesting any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or
similar submission.
Section 3.16 Environmental Laws. Except as set forth on Schedule 3.16, and to
Holdings' knowledge:
(a) the facilities and properties owned, leased or operated by Allright
or any Subsidiary (the "Properties") and all operations at the Properties
are in material compliance with all applicable federal, state, local and
foreign laws and regulations relating to protection of the environment
("Environmental Laws");
(b) neither of Allright nor any Subsidiary has received any notice of
violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental
Laws with regard to any of the properties or
A-13
<PAGE> 236
the business operated by Allright or any Subsidiary (the "Business"), nor
does Holdings have knowledge of facts that could lead to such notice;
(c) no judicial proceeding or governmental or administrative action is
pending or threatened, under any Environmental Law to which Allright or any
Subsidiary is or is likely to be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders under any
Environmental Law with respect to the Properties or the Business;
(d) no Phase II Environmental Site Assessments have been prepared with
respect to real property owned of record or beneficially by Holdings,
Allright or any Subsidiary as the date hereof; and
(e) access to all Phase I Environmental Site Assessments, and any other
environmental reports or studies, prepared as of the date hereof, with
respect to real property owned of record or beneficially by Holdings,
Allright or any Subsidiary, has been provided to representatives of
Central. Those properties for which no Phase I Environmental Assessments
have been prepared are set forth on Schedule 3.16.
Holdings' sole representations with respect to environmental matters are set
forth in this Section 3.16. To the extent representations in other sections of
this Agreement could also apply to environmental matters including, but not
limited to, matters related to, arising under or concerning Environmental Laws,
such representations shall be construed to exclude all environmental matters and
to apply to matters other than environmental matters.
Section 3.17 Affiliate Transactions. Except as set forth in Schedule 3.17 and
for the payment by Holdings of transaction expenses of Apollo and AEW as
contemplated by Section 5.9, there is no transaction and no transaction is now
proposed, to which Holdings, Allright or any Subsidiary is or is to be a party
in which any current stockholder, director or officer or other affiliate of
Holdings, Allright or any Subsidiary has a direct or indirect interest.
Section 3.18 Labor and Employment Matters. (a) Except as set forth in Schedule
3.18, there is no collective bargaining agreement, other labor agreement or
employment contract to which Holdings, Allright or any Subsidiary is a party or
by which it is bound and, in the case of employment contracts, involving
employees at the city manager level or higher.
(b) Except as set forth in Schedule 3.18; (i) no labor union or organization has
been certified or recognized as a representative of any employees of Holdings,
Allright or any Subsidiary, (ii) to the knowledge of Holdings, there are no
current or threatened organizational activities or demands for recognition by a
labor organization seeking to represent employees of Holdings, Allright or any
Subsidiary, labor strikes, material arbitrations or material labor grievances or
difficulties and (iii) to the knowledge of Holdings no such activities have
occurred during the past 12 months.
Section 3.19 Insurance. All properties and operations of Holdings, Allright and
the Subsidiaries are insured for its respective benefit, in such amounts and
against such risks customarily insured against by persons operating similar
properties or conducting similar operations under valid and enforceable policies
issued by insurers of recognized responsibility. Holdings does not have
knowledge of any pending or threatened termination or cancellation, coverage
limitation or reduction, or material premium increase with respect to any
policy.
Section 3.20 Certain Contracts. Except as set forth on Schedule 3.20, there is
no contract to which Holdings, Allright or any Subsidiary is a party which
contains any (i) non-competition
A-14
<PAGE> 237
or non-solicitation provision, (ii) any earn-out or lock-out provision, or (iii)
any rights to share proceeds, rights to repurchase, contingent payment or
similar provision, other than those customary revenue sharing arrangements
relating to ongoing business operations contained in ordinary course of business
lease and management agreement participation provisions.
Section 3.21 Accounting Matters. Holdings believes, after discussions with
Arthur Andersen, that Holdings qualifies as a "combining company" in accordance
with the criteria set forth in paragraph 46 of Accounting Principles Board
Opinion No. 16 ("APB 16") and has not violated the criteria set forth in
paragraph Nos. 47c, 47d and 48c of APB 16 during the period extending from two
years preceding the initiation date of the Merger and the Closing Date.
Section 3.22 No Implied Representation. Notwithstanding anything contained in
this Article or any other provision of this Agreement, it is the explicit intent
of each party hereto that none of Holdings, Allright, any Subsidiary, Apollo,
AEW or any of their respective affiliates, directors or officers is making any
representation or warranty whatsoever, express or implied, other than those
representations and warranties of Holdings in this Agreement, and in the case of
AEW and Apollo, with respect to the last sentence of Section 3.2. It is
understood that any estimates, projections or other predictions contained or
referred to in any Exhibit or Schedule hereto or which otherwise have been or
are provided to Central or its representatives or affiliates are not and shall
not be deemed to be representations or warranties of Holdings, Allright, any
Subsidiary, Apollo or AEW or any of their respective affiliates. Central and
Central Sub acknowledge that there are uncertainties inherent in attempting to
make such estimates, projections and other predictions, that they are familiar
with such uncertainties, that they are taking full responsibility for making
their own evaluation of the adequacy and accuracy of all estimates, projections
and other predictions so furnished to them, and that they shall have no claim
against anyone with respect thereto.
Section 3.23 Intellectual Property. Schedule 3.23 sets forth a true and
complete list of all licenses and other rights to use without payment of all
patents, copyrights, trade secrets, trade names, servicemarks and trademarks
used in its businesses held by Holdings, Allright or any Subsidiary; and none of
Holdings, Allright or any Subsidiary has received any notice of conflict with
respect thereto that asserts the right of others.
Section 3.24 Certain Information. Holdings has delivered to Central or its
representatives, prior to the date hereof, true and complete copies (other than
with respect to names of entities or landlords or locations, which information
has been deleted from such copies) of any and all assignment provisions
contained in any leases for parking facilities with direct lot operating profits
of over $50,000 for the 1998 fiscal year (the "$50,000 Leases").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CENTRAL AND CENTRAL SUB
Central and Central Sub represent and warrant to Holdings as follows:
Section 4.1 Organization. Central and Central Sub are duly organized, validly
existing and in good standing under the laws of the jurisdiction of their
respective incorporation and have all requisite power and authority to own,
lease and operate their properties and to carry on their respective business as
now being conducted.
A-15
<PAGE> 238
Section 4.2 Authority; Enforceability. (a) Central and Central Sub have the
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated on their respective parts hereby, and
Central has the corporate power and authority to execute and deliver the
Registration Rights Agreement and to consummate the transactions contemplated
thereby. The execution and delivery by Central and Central Sub of this Agreement
and by Central of the Registration Rights Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on their respective parts, subject, in the case of
the issuance of Central Common Stock pursuant to the Merger, to the approval by
Central's shareholders (the "Central Shareholder Approval") of such issuance
required by the shareholder approval policy of the New York Stock Exchange (the
"NYSE"). No other corporate proceedings on the part of Central or Central Sub
other than the Central Shareholder Approval are necessary to authorize the
execution and delivery of this Agreement or the Registration Rights Agreement
and the consummation by each of the transactions contemplated hereby and by
Central of the transactions contemplated thereby or the performance of their
obligations hereunder or by Central thereunder. This Agreement has been duly
executed and delivered by Central and Central Sub and is a valid and binding
agreement of Central and Central Sub, as the case may be, enforceable against
each in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency or other similar laws relating to or affecting
creditors' rights generally and by general equity principles. The Registration
Rights Agreement has been duly executed and delivered by Central and is a valid
and binding agreement of Central, enforceable against Central in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws relating to or affecting creditors' rights
generally and by general equity principles.
(b) The Transaction Support Agreements have each been duly executed and
delivered by the Central Stockholders and are valid and binding agreements of
the Central Stockholders, enforceable against each of the Central Stockholders
in accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency or other similar laws relating to or affecting creditors'
rights generally and by general equity principles. Compliance by the Central
Stockholders with the Transaction Support Agreements will ensure that the
Central Shareholder Approval is obtained without the need for approval by any
other stock holder of Central.
Section 4.3 Subsidiaries. Central does not have any subsidiaries other than
those set forth in Schedule 4.3 (such subsidiaries in Schedule 4.3, "Central
Subsidiaries").
Section 4.4 Non-Contravention. Except as set forth in Schedule 4.4, the
execution and delivery by Central and Central Sub of this Agreement, by Central
of the Registration Rights Agreement and by the Central Stockholders of the
Transaction Support Agreements do not, and the consummation by each of the
transactions contemplated hereby and thereby, as the case may be, and the
performance by each of the obligations which they are obligated to perform
hereunder and thereunder, as the case may be, will not (a) violate any provision
of the Certificate of Incorporation or By-Laws of Central or any Central
Subsidiary, (b) except as a result of failing to obtain any third party
consents, violate, or result in the violation of, any provision of, or result in
the termination of or the acceleration of, or entitle any party to accelerate
any obligation or indebtedness under, or result in the imposition of any lien
upon or the creation of a security interest in any of the Central Common Stock
or upon the assets of Central or any Central Subsidiary, pursuant to, any
mortgage, lien, lease, franchise, license, permit, agreement or other instrument
to which Central or any Central Subsidiary is a party,
A-16
<PAGE> 239
or by which Central or any Central Subsidiary is bound, and that is likely to,
in any such event, in the aggregate, have a material adverse effect on the
financial condition of Central and the Central Subsidiaries taken as a whole (a
"Central Material Adverse Effect"), or (c) subject to the approvals required as
set forth in Section 4.5, violate or conflict with any other restriction of any
kind or character to which Central, any Central Subsidiary or the Central
Stockholders are subject which would prevent or significantly restrict or delay
the consummation of the transactions contemplated hereby.
Section 4.5 Consents. Except for filings under the HSR Act, and as set forth in
Schedule 4.5, no Consent which has not been obtained or made is required (a) for
or in connection with the execution and delivery of this Agreement by Central
and Central Sub and the consummation by Central and Central Sub of the
transactions contemplated hereby and the performance by Central and Central Sub
of their obligations hereunder, other than those Consents, the failure of which
to obtain, in the aggregate, would not have a Central Material Adverse Effect,
or (b) for the ongoing operations of Central and the Central Subsidiaries as
currently conducted, other than those Consents, the failure of which to obtain,
in the aggregate, would not have a Central Material Adverse Effect.
Section 4.6 Capital Stock. (a) The entire authorized capital stock of Central
consists of 50,000,000 shares of Central Common Stock, 29,564,067 of which are
issued and outstanding as of September 17, 1998, and all such shares are validly
issued, fully paid and nonassessable, and 1,000,000 shares of preferred stock,
$0.01 par value per share, none of which are issued and outstanding.
Shareholders of Holdings will own, upon their issuance pursuant to Article II,
validly issued, fully paid and nonassessable shares of Central Common Stock, and
all such shares will be free and clear of any options, liens, claims, charges or
other encumbrances, subject to rights outlined in the Registration Rights
Agreement. Except as set forth on Schedule 4.6(a), there are no outstanding
obligations, warrants, options or other rights to subscribe for or pur chase, or
other plans, contracts or commitments providing for the issuance of, or the
granting of rights to acquire, shares of stock of any class of Central capital
stock or any securities or other instruments convertible into or exchangeable
for shares of stock of any class of Central capital stock.
(b) All of the issued and outstanding shares of capital stock or securities of
the Central Subsidiaries (the "Central Subsidiaries Shares") are validly issued,
fully paid and nonassessable. Central owns, directly or indirectly, the percent
age of such Central Subsidiaries Shares set forth on Schedule 4.3, in each case
free and clear of any options, liens, claims, charges or other encumbrances.
Except as set forth on Schedule 4.6(b), there are no outstanding obligations,
warrants, options or other rights to subscribe for or purchase, or other plans,
contracts or commitments providing for the issuance of, or the granting of
rights to acquire, shares of stock of any class of any Central Subsidiary
capital stock or any securities or other instruments convertible into or
exchangeable for shares of stock of any class of any Central Subsidiary capital
stock.
Section 4.7 Organization and Qualification of the Central Subsidiaries. Except
as set forth on Schedule 4.7, each of the Central Subsidiaries is duly
incorporated or formed, validly existing and in good standing under the laws of
the jurisdiction of its organization and each has full corporate or partnership,
as the case may be, power and authority to own all of its properties and assets
and to carry on its business as it is now being conducted, except where such
failure would not, in the aggregate, have a Central Material Adverse Effect.
Each of Central and the Central Subsidiaries is qualified and in good standing
in every jurisdiction
A-17
<PAGE> 240
where the failure to so qualify or be in good standing would have, in the
aggregate, a Central Material Adverse Effect.
Section 4.8 SEC Reports. Since October 10, 1995, Central has filed with the
Securities and Exchange Commission (the "SEC") all reports, schedules, forms,
statements and other documents (including exhibits and all other information
incorporated therein) required to be filed with the SEC (the "Central SEC
Documents"). As of their respective dates, the Central SEC Documents complied in
all material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Central SEC Documents, and
none of the Central SEC Documents when filed (as amended and restated and as
supplemented by subsequently filed Central SEC Documents) contained any untrue
statement of fact or omitted to state a fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, other than those, in the aggregate,
which would not have a Central Material Adverse Effect. The financial statements
of Central included in the Central SEC Documents complied as to form, as of
their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of Central and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal recurring
year-end audit adjustments), except when such failure, in the aggregate, would
not have a Central Material Adverse Effect. True, correct and complete copies of
Central's most recent Form 10-K, Form 10-Q and Proxy Statement are set forth on
Schedule 4.8.
Section 4.9 Undisclosed Liabilities. Except as set forth on Schedule 4.9,
Central and the Central Subsidiaries have no liabilities or obligations, secured
or unsecured (whether absolute, accrued, contingent or otherwise and whether due
or to become due), which are not fully reflected in the financial statements
contained in the Central SEC Documents, except (a) those incurred in the
ordinary course of business since June 30, 1998, (b) those that may have arisen
as a result of the execution and delivery of this Agreement by Central and
Central Sub, or (c) those that would not have, in the aggregate, a Central
Material Adverse Effect.
Section 4.10 Absence of Certain Changes or Events. Except as contemplated by
this Agreement, since June 30, 1998, Central and the Central Subsidiaries have
conducted their respective businesses in the ordinary course.
Section 4.11 Legal Proceedings. Except as set forth in Schedule 4.11, there are
no governmental proceedings seeking over $50,000 or private litigation
proceedings against Central or any Central Subsidiary pending or, to the
knowledge of Central or any Central Subsidiary, threatened which, if determined
adversely to Central or any Central Subsidiary, is likely to have, in the
aggregate, a Central Material Adverse Effect, nor are there any judgments,
decrees or orders against or enjoining Central or any Central Subsidiary in
respect of, or the effect of which is to prohibit, restrict, or affect, any
business practice or the
A-18
<PAGE> 241
acquisition of any property or the conduct of business in any area which will
have, in the aggregate, a Central Material Adverse Effect.
Section 4.12 Employee Benefits. (a) Schedule 4.12(a) sets forth a true and
complete list as of the date hereof of each material bonus, retention bonus,
deferred compensation, incentive compensation, severance, stock purchase, stock
option, severance or termination pay, hospitalization or other medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement sponsored, maintained or
contributed to or required to be contributed to by Central or the Central
Subsidiaries or by any trade or business, whether or not incorporated (a
"Central ERISA Affiliate"), that together with Central or the Central
Subsidiaries would be deemed a "single employer" within the meaning of section
4001(a)(15) of ERISA, for the benefit of any employee or former employee of
Central or a Central ERISA Affiliate, whether written or unwritten (the "Central
Plans").
(b) Central and the Central Subsidiaries have previously delivered to Allright
or its representatives copies of (i) each of the Central Plans or summaries
thereof, including all amendments thereto to date; (ii) the two most recent
actuarial statements, if any, prepared for each Central Plan; (iii) the two most
recent annual reports (Series 5500 and all schedules thereto), if any, required
under ERISA in connection with each Central Plan or related trust; (iv) the most
recent determination letter received from the IRS, if any, for each Central Plan
and related trust which is intended to satisfy the requirements of Section
401(a) of the Code; (v) the most recent summary plan description together with
the most recent summary of material modifications, if any, required under ERISA
with respect to each Central Plan; and (vi) all material communications to any
employee or employees relating to each Central Plan.
(c) Except as set forth on Schedule 4.12(c) hereto, no Central Plan provides
benefits, including without limitation death or medical benefits (whether or not
insured) with respect to current or former employees of Central, any Central
Subsidiary or any Central ERISA Affiliate beyond their retirement or other
termination of service (other than (i) coverage mandated by applicable law, (ii)
death benefits or retirement benefits under any "employee pension plan," as
defined in section 3(2) of ERISA, or (iii) benefits the full cost of which is
borne by the current or former employee (or his beneficiary)).
(d) Each of the Central Plans is in material compliance with the terms thereof
and with the requirements of any and all laws, orders, decrees, rules and
regulations applicable to such plan, including, but not limited to, ERISA and
the Code. Except as provided in Schedule 4.12(d), no Central Plan is subject to
Title IV of ERISA. There are no pending, threatened or anticipated claims (other
than routine claims for benefits) by, on behalf of or against any of the Central
Plans or any trusts related thereto.
(e) Except as set forth on Schedule 4.12(e) hereto, no Central Plan is a
"multiemployer pension plan" (as defined in section 3(37) of ERISA). With
respect to any Central Plan that is a "multiemployer pension plan" (as defined
in section 3(37) of ERISA) covering employees of Central, the Central
Subsidiaries or any Central ERISA Affiliate, (i) neither Central, any Central
Subsidiary nor any Central ERISA Affiliate has, since January 1, 1992 made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in sections 4203 and 4205 of ERISA, (ii) no event has
occurred that presents a material risk of a partial withdrawal, (iii) neither
Central, any Central Subsidiary nor any Central ERISA Affiliate has any
contingent liability under section 4204 of ERISA
A-19
<PAGE> 242
and no circumstances exist that present a material risk that any such plan will
go into reorganization, and (iv) the aggregate withdrawal liability of Central,
the Central Subsidiaries and the Central ERISA Affiliates, computed as if a
complete withdrawal by Central, the Central Subsidiaries and the Central ERISA
Affiliates had occurred under each such Central Plan on the date hereof, would
not exceed $25,000.
(f) Except as set forth on Schedule 4.12(f), each Central Plan intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
determination letter from the Internal Revenue Service stating that it is so
qualified, and, to the knowledge of Central and the Central Subsidiaries, no
event has occurred since the date of such determination that would adversely
affect such determination.
(g) No liability under Title IV or Section 302 of ERISA has been incurred by
Central, the Central Subsidiaries or any Central ERISA Affiliate that has not
been satisfied in full, and no condition exists that presents a risk to Central,
the Central Subsidiaries or any Central ERISA Affiliate of incurring any such
liability, other than liability for premiums due the Pension Benefit Guaranty
Corporation ("PBGC") (which premiums have been paid when due). Insofar as the
representation made in this Section 4.12(h) applies to sections 4064, 4069 or
4204 of Title IV of ERISA, it is made with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to which Central,
the Central Subsidiaries or any Central ERISA Affiliate made, or was required to
make, contributions during the five (5)-year period ending on the last day of
the most recent plan year which ended prior to the Closing Date.
(h) Except as set forth on Schedule 4.12(h), the PBGC has not instituted
proceedings to terminate any Central Plan which is subject to Title IV of ERISA
(each, a "Central Title IV Plan") and no condition exists that presents a risk
that such proceedings will be instituted.
(i) With respect to each Central Title IV Plan, the present value of accrued
benefits under such plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan's actuary
with respect to such plan did not exceed, as of its latest valuation date, the
then current value of the assets of such plan allocable to such accrued
benefits.
(j) No Central Title IV Plan or any trust established thereunder has incurred
any "accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the last day of the most
recent fiscal year of each Central Title IV Plan ended prior to the Closing
Date. All contributions required to be made with respect to any Central Plan on
or prior to the Closing Date have been timely made or are reflected on Central's
most current audited balance sheet.
Section 4.13 Properties, Contracts and Other Data. (a) Central and the Central
Subsidiaries own and have good, marketable and insurable title to the real
property owned of record or beneficially by Central or such Central Subsidiary,
as the case may be (the "Central Owned Properties"), free and clear of all
mortgages, liens (except for ad valorem real estate taxes not yet delinquent or
the validity of which are being contested in good faith, imperfections and liens
that do not materially detract from the value of or interfere with the present
use of such property), claims, pledges, security interests and other monetary
encumbrances, and free of all restrictions, easements, reservations, covenants
and other non-monetary encumbrances, except for the matters set forth in the
title policies related to the Central Owned Properties on Schedule 4.13(a)(1)
and as set forth on Schedule 4.13(b)(1). Except as set forth on Schedule
4.13(a)(2), as of the date hereof, neither Central nor any Central Subsidiary
has
A-20
<PAGE> 243
received any written notice of condemnation or suspension of its right to use
with respect to any of the Central Owned Properties, none of the Central Owned
Properties is subject to condemnation proceedings and there is not now pending
or threatened, any governmental or regulatory action or action by a private
party adverse to the uses contemplated for the Central Owned Properties by
Central and the Central Subsidiaries.
(b) Except as set forth on Schedule 4.13(b)(1), as of the date hereof there are
no (i) mortgages, indentures, loan agreements or other borrowing agreements to
which Central or any Central Subsidiary is a party as obligor, or to which it or
any of their respective owned assets or properties is subject, which relate to
indebtedness of Central or any Central Subsidiary for borrowed money or to
mortgaging, pledging or otherwise placing a lien on any of their respective
assets; (ii) guarantees or indemnification agreements given or entered into by
Central or any Central Subsidiary with respect to indebtedness for borrowed
money or in support of obligations the principal obligor in respect of which is
not Central or any Central Subsidiary; or (iii) obligations of Holdings,
Allright or any Subsidiary outstanding as of the Closing Date and assumed by
Central or any Central Subsidiary pursuant to the Merger that require
refinancing or which Central or any Central Subsidiary will be unable to
refinance. Except as set forth on Schedule 4.13(b)(2), neither Central's chief
executive officer, chief operating officer, chief financial officer, general
counsel nor senior vice presidents have knowledge (based on reasonable
information) that any party to any contract involving the payment by or to
Central or any Central Subsidiary of more than $100,000 per annum that such
party intends or has threatened to cancel, terminate or amend such contract.
Section 4.14 Certain Tax Matters. (a) Except as set forth in Schedule 4.14:
(i) giving effect to all extensions obtained, each of Central and the
Central Subsidiaries has timely filed (or there has been timely filed on
its behalf) all Tax Returns required to be filed by it, and all such Tax
Returns are complete in all material respects, has paid (or there has been
paid on its behalf) all Taxes shown thereon to be due, other than such
Taxes as are being contested in good faith and has established reserves in
accordance with generally accepted accounting principles for the payment of
all Taxes for periods subsequent to the periods covered by such Tax
Returns;
(ii) no material deficiency, assessment or other formal claim for any
material Taxes has been asserted by a Tax authority against Central or any
of the Central Subsidiaries that has not been fully paid, accrued or
finally settled;
(iii) neither Central nor any of the Central Subsidiaries has been
notified that any Tax Returns are currently the subject of any Audit by any
Tax authority;
(iv) no extension, waiver or comparable consent regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns has been given by or on behalf of Central or any of the Central
Subsidiaries and is currently in effect; and
(v) the income Tax Returns of Central and the Central Subsidiaries for
the taxable periods ending on or before June 30, 1992 have been examined by
the appropriate Tax authority (or the applicable statute of limitations for
the assessment of Taxes for such periods has expired) and a list of all
Audits commenced and not yet completed with respect to Central and the
Central Subsidiaries is set forth on Schedule 4.14.
A-21
<PAGE> 244
Section 4.15 Compliance with Laws. Except as set forth in Schedule 4.15, to
their knowledge, each of Central and the Central Subsidiaries;
(a) is in substantial compliance with all laws, regulations, reporting
and licensing requirements, and orders applicable to its business or
employees conducting its business;
(b) has received no notification or communication from any agency or
department of any federal, state, local or foreign government or any
regulatory authority or the staff thereof (i) asserting that Central or any
Central Subsidiary is not in compliance with any of the statutes,
regulations or ordinances which such governmental authority or regulatory
authority enforces, or (ii) threatening to revoke any license, franchise,
permit, or governmental authorization; and
(c) is not a party to any written order, decree, agreement or memorandum
of understanding with, or a commitment letter or similar submission to, or
a recipient of any extraordinary supervisory letter from, any federal,
state or local governmental agency or authority which restricts in any
material respect the conduct of business of Central and the Central
Subsidiaries; nor has Central or any Central Subsidiary been advised by any
such regulatory authority that such authority is contemplating issuing or
requesting any such order, decree, agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter or similar submission.
Section 4.16 Environmental Laws. Except as set forth in Schedule 4.16 and to
Central's knowledge:
(a) the facilities and properties owned, leased or operated by Central
or any Central Subsidiary (the "Central Properties") and all operations at
the Central Properties are in material compliance with all applicable
Environmental Laws;
(b) neither of Central nor any Central Subsidiary has received any
notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the properties or the business
operated by Central or any Central Subsidiary (the "Central Business"), nor
does Central have knowledge of facts that could lead to any such notice;
(c) no judicial proceeding or governmental or administrative action is
pending or threatened, under any Environmental Law to which Central or any
Central Subsidiary is or is likely to be named as a party with respect to
the Central Properties or the Central Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other
orders under any Environmental Law with respect to the Central Properties
or the Central Business;
(d) no Phase II Environmental Site Assessments have been prepared with
respect to real property owned of record or beneficially by Central or any
Central Subsidiary as of the date hereof; and
(e) access to all Phase I and Phase II Environmental Site Assessments,
and any other environmental reports or studies, prepared as of the date
hereof with respect to real property owned of record or beneficially by
Central or any Central subsidiary has been provided to representatives of
Holdings.
Central's and Central Sub's sole representations with respect to environmental
matters are set forth in this Section 4.16. To the extent representations in
other sections of this Agreement
A-22
<PAGE> 245
could also apply to environmental matters including, but not limited to, matters
related to, arising under or concerning Environmental Laws, such representations
shall be construed to exclude all environmental matters and to apply to matters
other than environmental matters.
Section 4.17 Affiliate Transactions. Except as set forth in Schedule 4.17,
there is no transaction and no transaction is now proposed, to which Central or
any Central Subsidiary is or is to be a party in which any current shareholder,
director or officer or other affiliate of Central or any Central Subsidiary has
a direct or indirect interest.
Section 4.18 Labor and Employment Matters. (a) Except as set forth in Schedule
4.18, there is no collective bargaining agreement, other labor agreement or
employment contract to which Central or any Central Subsidiary is a party or by
which it is bound and, in the case of employment contracts, involving employees
at the city manager level or higher.
(b) Except as set forth in Schedule 4.18; (i) no labor union or organization has
been certified or recognized as a representative of any employees of Central or
any Central Subsidiary, (ii) to the knowledge of Central, there are no current
or threatened organizational activities or demands for recognition by a labor
organization seeking to represent employees of Central or any Central
Subsidiary, labor strikes, material arbitrations or material labor grievances or
difficulties and (iii) to the knowledge of Central no such activities have
occurred during the past 12 months.
Section 4.19 Insurance. All properties and operations of Central and the
Central Subsidiaries are insured for its respective benefit, in such amounts and
against such risks customarily insured against by persons operating similar
properties or conducting similar operations under valid and enforceable policies
issued by insurers of recognized responsibility. Central does not have knowledge
of any pending or threatened termination or cancellation, coverage limitation or
reduction, or material premium increase with respect to any policy.
Section 4.20 Certain Contracts. Except as set forth on Schedule 4.20, there is
no contract to which Central or any Central Subsidiary is a party which contains
any (i) non-competition or non-solicitation provision, (ii) any earn-out or
lock-out provision, or (iii) any rights to share proceeds, rights to repurchase,
contingent payment or similar provision other than those customary revenue
sharing arrangements relating to ongoing business operations contained in
ordinary course of business lease and management agreement participation
provisions.
Section 4.21 Accounting Matters. Central believes, after discussions with KPMG
Peat Marwick LLP, that Central qualifies as a "combining company" in accordance
with the criteria set forth in paragraph 46 of Accounting Principles Board
Opinion No. 16 ("APB 16") and has not violated the criteria set forth in
paragraph Nos. 47c, 47d and 48c of APB 16 during the period extending from two
years preceding the initiation date of the Merger and the Closing Date.
Section 4.22 No Implied Representation. Notwithstanding anything contained in
this Article or any other provision of this Agreement, it is the explicit intent
of each party hereto that none of the Central Stockholders, Central nor any
Central Subsidiary, or any of their respective affiliates, directors or officers
is making any representation or warranty whatsoever, express or implied, other
than those representations and warranties of the Central Stockholders, Central
and Central Sub in this Agreement, the Registration Rights Agreement or the
Transaction Support Agreements. It is understood that any estimates, projections
or other predictions contained or referred to in any Exhibit or Schedule hereto
or which otherwise have been provided to Holdings or its representatives or
affiliates are not and shall not be
A-23
<PAGE> 246
deemed to be representations or warranties of Central, any Central Stockholder
or any Central Subsidiary or any of their respective affiliates. Holdings
acknowledges that there are uncertainties inherent in attempting to make such
estimates, projections and other predictions, that it is familiar with such
uncertainties, that it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all estimates, projections and other
predictions so furnished to it, and that it shall have no claim against anyone
with respect thereto.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business by Allright. During the period from the date
hereof to the Closing Date, without the prior written consent of Central or
except as contemplated by this Agreement, Holdings agrees to cause:
(a) the business of Allright and the Subsidiaries to be operated in the
ordinary course of business consistent with past practice;
(b) no change to be made in the corporate charter or by-laws or other
constituent documents of Holdings, Allright or any Subsidiaries;
(c) except as set forth in Schedule 5.1(c) or otherwise in the ordinary
course of business consistent with past practices, (i) no material increase
in the compensation payable or to become payable by Holdings, Allright or
any Subsidiary to any officer, employee, consultant or agent to be made
(provided, that any increase in compensation payable to any officers of
Allright shall be set forth on Schedule 5.1(c), notwithstanding that such
increases were made in the ordinary course of business), and (ii) no bonus
or retirement or similar benefit or arrangement to be made or agreed to by
Holdings, Allright or any Subsidiary;
(d) except as set forth in Schedule 5.1(d), (i) no capital expenditure
or commitment to make a capital expenditure which involves the payment of
consideration having a value in excess of $1,200,000 in the aggregate per
quarter (without duplication with clause (ii) of this paragraph or Section
5.1(e)) (excluding payments made for key money or fixed or capital assets
in connection with the entering into or renewal of any parking facility
lease), and (ii) no lease to be entered into or renewed which involves the
payment of consideration having a value in excess of $500,000 annual rent
per year (without duplication with clause (i) of this paragraph or Section
5.1(e)). For purposes of this paragraph, "annual rent per year" as to a
given lease shall equal (a) the average annual rent computed in accordance
with GAAP on a straight line basis with respect to any leased facility plus
(b)(x) the amount of payments made for key money, fixed or capital assets
in connection with the entering into or renewal of such lease, divided by
(y) the amount of base years with respect to such lease. In the event that
Central refuses to consent to any proposed lease pursuant to this Section
5.1(d), Central and any Central Subsidiary shall refrain from entering into
any transaction concerning the subject matter of such proposed lease;
(e) except as set forth in Schedule 5.1(e), no action to be taken to by
it, Allright or any Subsidiary to acquire any business (whether by merger,
consolidation, purchase of assets or otherwise) or acquire any equity
interest in any person not an affiliate (whether through a purchase of
stock, establishment of a joint venture or otherwise)
A-24
<PAGE> 247
which involves the payment of consideration having a value in excess of
$100,000 individually or $1,000,000 in the aggregate (without duplication
with Section 5.1(d)) with all other such acquisitions. In the event that
Central refuses to consent to any proposed transaction pursuant to this
Section 5.1(e), Central and any Central Subsidiary shall refrain from
entering into a transaction concerning the subject matter of such proposed
transaction;
(f) except for borrowings under credit facilities or lines of credit
existing on the date hereof or incurred to finance expenditures or
acquisitions permitted pursuant to Section 5.1(d) or 5.1(e), it, Allright
or any Subsidiaries not to incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise
become responsible for the obligations of any person, or make any loans,
advances or capital contributions to, any person other than its wholly
owned subsidiaries, except in the ordinary course of business consistent
with past practice;
(g) to the extent reasonably practicable, (i) the business organization
of Allright and the Subsidiaries to remain intact and to keep available to
Central the opportunity to retain the services of the present employees of
Allright and the Subsidiaries and (ii) the goodwill of the customers of
Allright and the Subsidiaries and others having business relations with
Allright and the Subsidiaries to be preserved;
(h) no action to be taken or failed to be taken that would, or would be
reasonably likely to, result in any of Holdings' representations and
warranties set forth in this Agreement not being true in all material
respects;
(i) Allright and the Subsidiaries to use their reasonable best efforts
to comply with all material legal requirements applicable to them and to
the conduct of their respective businesses;
(j) except as set forth in Schedule 5.1(j) and after consultation with
Arthur Andersen, Holdings, Allright and the Subsidiaries not to sell, lease
transfer or dispose of any of their properties not in the ordinary course
of business and provided such sale does not, in the reasonable opinion of
Arthur Andersen, jeopardize the Merger from being qualified as a
pooling-of-interests transaction for accounting purposes;
(k) except as set forth on Schedule 5.1(k), (i) Holdings not to declare
any dividend or make any distribution with respect to its capital stock,
and (ii) Allright and the Subsidiaries not to declare any dividend or make
any distribution with respect to their capital stock or partnership
interests, as the case may be, which is not made to minority interest
holders or partners pursuant to existing agreements, or which is not in the
ordinary course of business; and
(l) in the event Central does not provide a written refusal for Allright
or any Subsidiary to enter into any proposed above transaction within five
business days after receiving notification of such proposal (with data
reasonably requested by Central to evaluate such proposal) from Allright,
Holdings or any Subsidiary, Central shall be deemed to have consented to
such proposed transaction, and Allright, Holdings or such Subsidiary may
enter into any such proposed transaction as if Central had provided its
written consent.
A-25
<PAGE> 248
Section 5.2 Conduct of Business by Central. During the period from the date
hereof to the Closing Date, without the prior written consent of Holdings or
except as contemplated by this Agreement, Central agrees to cause:
(a) the business of Central and the Central Subsidiaries to be operated
in the ordinary course of business consistent with past practice;
(b) no change to be made in the corporate charter or by-laws or other
constituent documents of Central or any Central Subsidiaries;
(c) except as set forth in Schedule 5.2(c), no expenditure which
involves the payment of consideration having a value in excess of
$20,000,000 individually or $75,000,000 in the aggregate (without
duplication with Section 5.2(d)) in respect of the purchase or other
acquisition of real estate or fixed or capital assets to be made, except
for any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations or pursuant to
or as required by existing contractual obligations and except as to the
renewal of presently existing leases which are scheduled to expire
according to their respective terms;
(d) except as set forth in Schedule 5.2(d), no action to be taken to by
it or any Central Subsidiaries to acquire any business (whether by merger,
consolidation, purchase of assets or otherwise) or acquire any equity
interest in any person not an affiliate (whether through a purchase of
stock, establishment of a joint venture or otherwise) which, involves the
payment of consideration having a value in excess of $20,000,000
individually or $75,000,000 in the aggregate (without duplication with
Section 5.2(c)) with all other such acquisitions. In the event that
Holdings refuses to consent to any proposed transaction pursuant to this
Section 5.1(d), Holdings, Allright and any Subsidiary shall refrain from
entering into a transaction concerning the subject matter of such proposed
transaction;
(e) except for borrowings under credit facilities or lines of credit
existing on the date hereof or incurred to finance an expenditures or
acquisitions permitted pursuant to Section 5.2(d) or 5.2(e), or pursuant to
the transactions contemplated by this Agreement, it, or any Central
Subsidiary not to incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise become
responsible for the obligations of any person, or make any loans, advances
or capital contributions to, any person other than its wholly owned
subsidiaries, except in the ordinary course of business consistent with
past practice;
(f) no action to be taken or failed to be taken that would, or would be
reasonably likely to, result in any of Central's and Central Sub's
representations and warranties set forth in this Agreement not being true
in all material respects;
(g) Central and the Central Subsidiaries to use their reasonable best
efforts to comply with all material legal requirements applicable to them
and to the conduct of their respective businesses;
(h) except as set forth in Schedule 5.2(h) and after consultation with
KPMG Peat Marwick LLP, Central and the Central Subsidiaries not to sell,
lease transfer or dispose of any of their properties to the extent such
sale may, in the reasonable opinion of KPMG Peat Marwick LLP, jeopardize
the Merger from being qualified as a pooling-of-interests transaction for
accounting purposes;
A-26
<PAGE> 249
(i) other than regular quarterly dividends distributed in the normal
course of business, Central not to (i) declare, set aside or pay any
dividends on (whether in cash, stock or other securities), make any other
distributions in respect of, or enter into any agreement with respect to
the voting of, any of its capital stock or the capital stock, partnership
interests, membership interests or other equity, as the case may be, of the
Central Subsidiaries, or (ii) split, combine, issue, authorize for
issuance, exchange or reclassify any of its capital stock or issue or
authorize the issuance of any other securities, except for issuances of
Central Common Stock to a seller or sellers for acquisitions permitted
under Section 5.2(d), upon the exercise of any stock options for Central
Common Stock that are, in each case, outstanding as of the date hereof in
accordance with their present terms or the issuance of Central Common Stock
or Central Options under any Plans in the ordinary course of business; and
(j) in the event Holdings does not provide a written refusal for Central
or any Central Subsidiary to enter into any transaction above within five
business days after receiving notification of such proposal (with data
reasonably requested by Holdings to evaluate such proposal) from Central or
any Central Subsidiary, Holdings shall be deemed to have consented to such
proposed transaction (other than transactions pursuant to paragraph (i),
for which affirmative consent is necessary) and Central or such Central
Subsidiary may enter into any such proposed transaction as if Holdings had
provided written consent.
Section 5.3 Preparation of the Form S-4 and the Proxy Statement; Stockholders
Meetings. (a) As soon as practicable following the date of this Agreement,
Central shall prepare and file with the SEC a proxy statement/prospectus
relating to the meeting of Central's shareholders to be held in connection with
obtaining the Central Shareholder Approval (as the same may be amended or
supplemented from time to time, the "Proxy Statement") and Central shall prepare
and file with the SEC a registration statement on Form S-4 in connection with
the issuance of Central Common Stock pursuant to the Merger (as the same may be
amended or supplemented from time to time, the "Form S-4"), in which the Proxy
Statement will be included as a prospectus. Central shall use its reasonable
best efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Central will use its reasonable best
efforts to cause the Proxy Statement to be mailed to the holders of Central
Common Stock as promptly as practicable after the Form S-4 is declared effective
under the Securities Act. Central shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of the Central Common Stock in the Merger, and Holdings shall furnish all
information concerning Holdings and the holders of Holdings Common Stock as may
be reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the Form S-4 or the Proxy Statement will be made by
Central without providing Holdings and counsel to Holdings with the opportunity
to review and comment thereon. Central will advise Holdings, promptly after it
receives notice thereof, of the time when the Form S-4 has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Central Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement or the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any information relating
to Central or Holdings, or
A-27
<PAGE> 250
any of their respective affiliates, officers or directors, should be discovered
by Central or Holdings which should be set forth in an amendment or supplement
to any of the Form S-4 or the Proxy Statement, so that any of such documents
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of Central.
(b) Central shall, as promptly as reasonably practicable after the date hereof
give notice of, convene and hold a meeting of its stockholders (the "Central
Stockholders Meeting") in accordance with the Tennessee Business Corporation Act
(the "Tennessee Act") and the requirements of the NYSE for the purpose of
obtaining Central's stockholder approval in accordance with the Tennessee Act
and the rules and regulations of the NYSE and shall, through its Board of
Directors, recommend to its shareholders that they provide the Central
Shareholder Approval.
(c) As an integral part of their obligations under the Registration Rights
Agreement, Central will use its reasonable best efforts to comply with the
provisions of Rule 144(c) under the Securities Act in order that affiliates of
Holdings may resell the Central Common Stock they receive pursuant to the Merger
pursuant to Rule 145(d) under the Securities Act, and agrees that the Form S-4
will include such information as may be requested by Holdings to permit resales
of such Central Common Stock by persons who may be deemed to be underwriters of
Central Common Stock pursuant to Rule 145 under the Securities Act.
(d) Holdings shall, as promptly as practicable after the mailing of the Proxy
Statement by Central, either (i) give notice of, convene and hold a meeting of
its stockholders in accordance with the Delaware General Corporation Law (the
"Delaware Act") or (ii) obtain an action by written consent, executed by the
requisite percentage of Holdings stockholders and in accordance with the
Delaware Act, for the purpose of obtaining Holdings' stockholders approval in
connection with the Merger in accordance with the Delaware Act.
Section 5.4 Investigation; Non-Solicitation. Each of Central and Holdings shall
afford to one another's officers, employees, accountants, counsel and other
authorized representatives reasonable access during normal business hours
throughout the period prior to the Effective Time or the date of termination of
this Agreement, to its and its respective subsidiaries' properties, contracts,
commitments, books and records and any report, schedule or other document filed
or received by it during such period pursuant to the requirements of federal or
state securities laws and shall use its reasonable best efforts to cause its
respective representatives to furnish promptly to one another such additional
financial and operating data and other information as to its and its
subsidiaries' respective businesses and properties as the other or its duly
authorized representatives may from time to time reasonably request in writing;
provided, however, that nothing herein shall require either Central or Holdings
or any of their respective subsidiaries to disclose any information to the other
if such disclosure would cause competitive harm to such disclosing party (in
such party's reasonable judgment) or its affiliates if the transactions
contemplated by this Agreement are not consummated, or would be in violation of
applicable laws or regulations of any governmental entity; provided further,
that notwithstanding the above, Holdings shall allow Central and its
representatives reasonable access to information concerning, and Holdings agrees
to meet with Central and its representatives in connection with, (i) any $50,000
Leases, which according to their
A-28
<PAGE> 251
respective terms are scheduled to expire within six months from any time prior
to the Closing Date, (ii) any $50,000 Lease for which Allright or any Subsidiary
has knowledge (based on reasonable information) that the respective landlord has
asserted or has threatened to assert a breach of any consent or assignment
provision contained in such lease as a result of the Merger, and (iii) the
retention of key management personnel. A representative appointed by Holdings
shall be present at any meeting between Holdings, Allright, the Subsidiaries or
any of their respective employees, directors and officers, on the one hand, and
Central, any of the Central Subsidiaries or any of their respective employees,
directors and officers, on the other hand. Unless otherwise required by law and
until the Effective Time, the parties will hold any such information which is
nonpublic in confidence in accordance with the provisions of the Confidentiality
Agreements between Central and Holdings, dated as of January 30, 1998 and May
19, 1998 (the "Confidentiality Agreements"). AEW and Apollo agree to reasonably
cooperate, at Central's request and expense, in connection with the retrieval of
records or other documentation which AEW and Apollo have in their possession
regarding Allright's ability to utilize any net operating loss carry-forwards.
Section 5.5 Approvals and Consents; Cooperation; Notification. (a) The parties
hereto shall use their respective best efforts, and cooperate with each other,
to obtain as promptly as practicable all governmental and third party
authorizations, approvals, consents or waivers required in order to consummate
the transactions contemplated by this Agreement, including, without limitation,
the Merger.
(b) The parties shall take all actions necessary to file as soon as practicable
all notifications, filings and other documents required to obtain all
governmental authorizations, approvals, consents or waivers, including, without
limitation, under the HSR Act, and to respond as promptly as practicable to any
inquiries received from the Federal Trade Commission, the Antitrust Division of
the Department of Justice and any other governmental entity for additional
information or documentation and to respond as promptly as practicable to all
inquiries and requests received from any State Attorney General or other
governmental entity in connection therewith.
(c) If any divesture of property or operations at a particular parking facility
is necessary in order to terminate the waiting period required by the HSR Act in
connection with the Merger, Central and Holdings shall retain a mutually
agreeable real estate appraisal firm (the "Appraiser") for the purpose of
appraising those facilities or operations which must be divested in order to
obtain termination of the HSR waiting period. In connection therewith, the
Equity Purchase Price set forth in Section 2.6(b) shall be adjusted for any
Divesture Gain or Divesture Loss. "Divesture Gain" shall be computed as follows:
thirty-five percent multiplied by the difference between (a) the appraised value
of such property or operations, as determined by the Appraiser, and (b) (i) 16,
multiplied by (ii) the EBITDA for such property or operations at such facility
for such property's or facility's prior fiscal year. If such number shall be a
negative number, such amount shall be deemed a "Divesture Loss" for purposes of
Section 2.6(b).
Section 5.6 Central Board of Directors. Promptly after the Effective Time, the
Board of Directors of Central (the "Central Board") shall be expanded to ten
members. At such time, Apollo and AEW shall each be entitled, in its sole
discretion, to designate one individual to the Central Board, who shall serve in
accordance with and for the time period specified by the Certificate of
Incorporation and By-laws of Central. If at any time Apollo or AEW, with their
respective affiliates, individually own, directly or indirectly, less than (i)
$50,000,000
A-29
<PAGE> 252
worth of outstanding Central Common Stock, Central shall, at the next election
of the Central Board, have the right to decrease the number of appointees to the
Central Board that may be made by the shareholder failing to meet such threshold
from one to none. For purposes of the foregoing, the value of the Central Common
Stock held by Apollo and AEW, together with their respective affiliates, shall
be determined by multiplying the number of shares of Central Common Stock then
beneficially owned by such holders by the average of the closing sale prices per
share of Central Common Stock on the NYSE for the prior 20 trading days. This
Section 5.6 is intended to be for the benefit of Apollo and AEW.
Section 5.7 Public Announcements. Other than disclosures required by federal
securities laws, the parties will consult with each other before issuing any
press release or otherwise making any public statement with respect to this
Agreement and the transactions contemplated hereby and shall not make any such
announcement if the other party hereto shall reasonably object.
Section 5.8 Tax Treatment of Merger. It is the intent of the parties to this
Agreement that the Merger be treated for federal income tax purposes as a
tax-free reorganization pursuant to Section 368(a) of the Code and this
Agreement shall constitute a "Plan of Reorganization" for purposes of the Code,
and the parties agree (i) not to take any actions which would prevent the Merger
from qualifying as such a reorganization, (ii) to report the transactions under
this Agreement consistent with such treatment and (iii) to take no positions
that are contrary thereto unless otherwise required by law.
Section 5.9 Expenses; Severance. All out-of-pocket transaction costs and
expenses incurred by Central or any Central Subsidiary in connection with this
Agreement and the transactions contemplated hereby, whether or not the Merger is
consummated, shall be paid by Central, and all Covered Transaction Expenses
incurred by Allright, any Subsidiary, Holdings, AEW and Apollo in connection
with this Agreement and the transactions contemplated hereby, if the Merger is
consummated, shall be paid by Holdings, and if the Merger is not consummated,
Allright, the Subsidiaries, Holdings, AEW and Apollo shall be responsible for
their own expenses incurred in connection with this Agreement and the
transactions contemplated hereby. Notwithstanding the foregoing, if the Merger
is not consummated solely by reason of a material breach of this Agreement by
Holdings, Holdings shall pay any and all out-of-pocket transaction costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby of Central and Central Sub up to a maximum of $5,000,000 and
if the Merger is not consummated solely by reason of a material breach of this
Agreement by Central, Central shall pay any and all out-of-pocket transaction
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby of Allright, any Subsidiary, Holdings, AEW and
Apollo up to a maximum of $5 million. AEW and Apollo shall be solely responsible
for any payments required to be made to Cheslock, Bakker & Associates, Inc.
("Cheslock Bakker"), other than with respect to the exchange of Holdings
Warrants held by Cheslock Bakker for Central Warrants as provided in Section
2.5(e). Notwithstanding anything to the contrary herein, if the Merger is not
consummated as a result of the fact that either Section 6.2(g) or Section 6.3(f)
shall not have been satisfied, the party whose accountant was unable to deliver
its pooling letter as required therein shall pay to the other party an amount of
$2.5 million for expenses incurred in connection with the execution of this
Agreement; provided, neither party shall be liable for such expenses if it had
not breached a representation, warranty or covenant herein. Nothing in this
Section 5.9 is intended to limit the rights of the parties hereto under Section
7.2. If the Merger is consummated, Central shall be solely responsible
A-30
<PAGE> 253
for any obligation and payment to be made under any severance agreement,
retention agreement, stay-on bonus, non-compete agreement, compensation plan or
severance or retention provision of any employment, non-compete or retention
agreement set forth on Schedules 3.12(a), 3.20, 5.9(a), 5.9(b) or 5.10 which is
incurred as a result of the entering into of this Agreement, including but not
limited to payments required to be made immediately after the Effective Time
pursuant to the retention bonus agreements set forth on Schedule 5.9(a).
Holdings shall use its reasonable best efforts after the date hereof so that the
persons listed on Schedule 5.9(a) will enter into the retention bonus agreements
substantially in the form set forth on such Schedule 5.9(a) and that immediately
after the Effective Time, the persons listed on Schedules 5.9(b) and 5.9(c) will
enter into employment agreements and management continuity agreements with
Allright substantially in the form set forth on Schedules 5.9(b) and 5.9(c),
respectively, and Central shall cause Allright to enter into such employment
agreements and management continuity agreements at such time. Any material
modifications to the form retention agreement, employment agreement and
management continuity agreement set forth on Schedules 5.9(a), 5.9(b) and
5.9(c), respectively, shall be subject to the prior approval of Central and
Holdings.
Section 5.10 Employment Matters. (a) Central hereby agrees to honor the Plans
in accordance with their terms as in effect on the date hereof, to the same
extent that Holdings, Allright and the Subsidiaries would be required to perform
them in the event that the Merger were not consummated. This Section 5.10(a) is
intended to be for the benefit of the beneficiaries of the Plans.
(b) Central shall honor, comply with and perform all of the respective terms and
all obligations of Holdings, Allright or the Subsidiaries under any severance
agreement, retention agreement, employment agreement or any severance or
retention provision of any employment agreement set forth on Schedule 5.10. This
Section 5.10(b) is intended to be for the benefit of the employees party to such
agreements. Central agrees to provide severance to those employees of Allright
or any Subsidiary which will be terminated after the Closing Date and which do
not have severance agreements or severance provisions in any employment
agreements in effect with Holdings, Allright or any Subsidiary as of the Closing
Date on terms not less favorable than it would provide to any of its or the
Central Subsidiaries' similarly situated employees.
(c) Central agrees that individuals who are employed by Holdings, Allright or
the Subsidiaries immediately prior to the Closing Date shall remain employees of
the Surviving Corporation immediately following the Closing Date (each such
employee, an "Affected Employee"); provided, however, that nothing in this
Section 5.10(c) shall limit or otherwise restrict the ability of the Surviving
Corporation to terminate, lay-off or reduce the work hours with respect to the
employment of any Affected Employees following their initial continued
employment following the Effective Time.
(d) Central shall, or shall cause the Central Subsidiaries or the Surviving
Corporation to, give Affected Employees full credit, for purposes of
eligibility, vesting, benefit accrual and determination of the level of benefits
under any employee benefit plans or arrangements maintained by Central or the
Central Subsidiaries or the Surviving Corporation, for such Affected Employees'
service with Holdings, Allright or the Subsidiaries to the same extent
recognized by the Holdings, Allright and the Subsidiaries immediately prior to
the Closing Date, provided however that the Affected Employees' eligibility to
participate in, and benefits
A-31
<PAGE> 254
under, such plans and arrangements shall otherwise be determined under the terms
of such plans.
(e) Central shall, or shall cause the Central Subsidiaries or the Surviving
Corporation to, (i) waive all limitations as to preexisting conditions
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Affected Employees under any welfare benefit
plans that such employees may be eligible to participate in after the Closing
Date, other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the Closing
Date under any welfare plan maintained for the Affected Employees immediately
prior to the Closing Date and (ii) provide each Affected Employee with credit
for any co-payments and deductibles paid prior to the Closing Date in satisfying
any applicable deductible or out-of-pocket requirements under any welfare plans
that such employees are eligible to participate in after the Closing Date.
(f) For a period of two years immediately following the Closing Date, the
coverage and benefits provided to Affected Employees pursuant to employee
benefit plans or arrangements maintained by Central or the Central Subsidiaries
or the Surviving Corporation shall be, in the aggregate, not less favorable than
those provided to similarly situated employees of Central and the Central
Subsidiaries and the Surviving Corporation.
Section 5.11 Indemnification, Exculpation and Insurance. (a) Central and
Central Sub agree that all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
now existing in favor of the current or former directors, officers, employees or
agents of Holdings, Allright and the Subsidiaries as provided in their
respective certificates of incorporation or by-laws (or comparable
organizational documents) and any indemnification agreements or arrangements of
Holdings, Allright or any Subsidiary the existence of which does not cause a
breach of this Agreement shall be assumed by Central, shall survive the Merger
and shall continue in full force and effect, without amendment, for six years
after the Effective Time; provided, however, that all rights to indemnification
in respect of any claim asserted or made within such period shall continue until
the final disposition of such claim. Central shall cooperate in the defense of
any such matter. In addition, from and after the Effective Time, directors or
officers of Holdings, Allright or any Subsidiary who become directors or
officers of Central or any Central Subsidiary will be entitled to the same
indemnity rights and protections as are afforded to other directors and officers
of Central or such Central Subsidiary.
(b) In the event that either of the Surviving Corporation or Central or any of
its successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision will be made so that the successors and assigns of Central or the
Surviving Corporation, as applicable, will assume the obligations thereof set
forth in this Section 5.11.
(c) The provisions of this Section 5.11 (i) are intended to be for the benefit
of, and will be enforceable by, each indemnified party, his or her heirs and his
or her representatives and (ii) are in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such person may
have by contract or otherwise.
(d) For six years after the Effective Time, Central or the Surviving Corporation
shall maintain in effect Holdings' and Allright's current directors' and
officers' liability insurance covering acts or omissions occurring prior to the
Effective Time with respect to those persons
A-32
<PAGE> 255
who are currently covered by such directors' and officers' liability insurance
policy on terms with respect to such coverage and amount no less favorable in
the aggregate currently covered by such insurance than those of such policy in
effect on the date hereof; provided that Central may substitute therefor
policies of Central or the Central Subsidiaries containing terms with respect to
coverage and amount no less favorable to such directors or officers or, in the
alternative, Central may purchase a "tail" on Holdings' existing insurance
policy for a term of not less than six years.
(e) Central shall cause the Surviving Corporation or any successor thereto to
comply with its obligations under this Section 5.11.
(f) This Section 5.11 is intended to be for the benefit of such directors and
officers.
Section 5.12 NYSE Exchange Listings. Central shall use best efforts to cause
the Central Common Stock issuable under pursuant to the Merger to be approved
for listing on the NYSE, subject to official notice of issuance, as promptly as
practicable after the date hereof, and in any event prior to the Closing Date.
Section 5.13 Affiliates. (a) Holdings and Central will use their reasonable
best efforts to cause all persons who, at the time of the Central Stockholders
Meeting, may be deemed to be affiliates of Holdings as that term is used under
Rule 145 under the Securities Act and who will become the beneficial owners of
Central Common Stock pursuant to the Merger, or affiliates of Holdings or
Central for purposes of qualifying the Merger for pooling of interests
accounting treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations, to execute "affiliate letters" in
customary form prior to the Effective Time.
(b) Central shall use its reasonable best efforts to publish on the earliest
possible date after the end of the first month after the Effective Time in which
there are at least 30 days of post-Merger combined operations (which month may
be the month in which the Effective Time occurs), combined sales and net income
figures as contemplated by and in accordance with the terms of SEC Accounting
Series Release No. 135.
(c) This Section 5.13 is intended to be for the benefit of affiliates of
Holdings.
Section 5.14 Pooling of Interests. Each of Holdings and Central shall use
reasonable best efforts to cause the transactions contemplated by this Agreement
and the Registration Rights Agreement, including the Merger, to be accounted for
as a pooling of interests under Opinion 16 of the Accounting Principles Board
and applicable SEC rules and regulations, and such accounting treatment to be
accepted by Central's accountants and by the SEC, and each of Holdings and
Central agrees that it shall take no action that would cause such accounting
treatment not to be obtained. Central shall, if necessary, take any action
required on its part to permit the Central Stockholders to comply with their
obligations under the Transaction Support Agreements in connection with
obtaining pooling-of-interests accounting treatment for the Merger. Any breach
by the Central Stockholders under the Transaction Support Agreements with
respect to such obligations shall be deemed a breach of this Section 5.14 by
Central.
Section 5.15 Conveyance Taxes. Holdings and Central shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees or any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
A-33
<PAGE> 256
required or permitted to be filed on or before the Effective Time. Holdings
shall pay any such taxes or fees imposed by any governmental entity, which
become payable in connection with the transactions contemplated by this
Agreement, on behalf of the respective shareholders of Holdings and Central.
Section 5.16 Registration Rights Agreement. Central shall not amend the
Registration Rights Agreement, or agree to give the Central Stockholders
additional registration rights at any time that AEW or Apollo shall have
registration rights under the Registration Rights Agreement, without the prior
written consent of AEW and Apollo.
Section 5.17 Restructuring Agreement. Central agrees to cause the parties to
the Restructuring Agreement, dated as of the date hereof, by and among Edison
Parking Management, L.P., Allright, AParkco, Inc., Allright Parking Management,
Inc., AParkco Finance, Inc., Allright New York Parking, Inc., Edison Parking
Corp., Park Fast Parking Management L.P. and Edison Leasing Management Company,
LLC, which it shall directly or indirectly control at or following the Effective
Time, to consummate the transactions contemplated therein.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction or, where permissible, waiver at or prior to the Effective Time, of
each of the following conditions:
(a) the Central Shareholder Approval shall have been obtained;
(b) none of Holdings, Allright, Central or Central Sub shall be subject
to any order, decree, ruling or other action of a court of competent
jurisdiction which restrains, delays or otherwise prohibits the
transactions contemplated by this Agreement;
(c) the Form S-4 shall have become effective (reflecting
pooling-of-interests accounting treatment) under the Securities Act prior
to the mailing of the Proxy Statement by Central and no stop order or
proceedings seeking a stop order shall have been entered or be pending by
the SEC;
(d) the shares of Central Common Stock issuable to the Holdings'
stockholders pursuant to the Merger shall have been approved for listing on
the NYSE, subject to official notice of issuance; and
(e) any waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
Section 6.2 Conditions to the Obligations of Central to Effect the Merger. The
obligations of Central and Central Sub to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) The representations and warranties of Holdings set forth in this
Agreement (without taking into account any qualifications as to materiality
contained in such representations and warranties) shall be true and correct
when made and as of the Closing Date (except to the extent that any such
representation and warranty had by its terms been made as of a specific
date, in which case such representation and warranty shall be true and
correct as of such date), and Holdings, Allright and the Subsidiaries
A-34
<PAGE> 257
shall have performed the obligations to be performed by each under this
Agreement prior to the Closing Date, except where the failure to be so true
and correct, and all failures to perform and comply with such obligations
(without taking into account any qualifications as to materiality contained
in such representations, warranties, covenants and agreements), does not
and will not have, in the aggregate, a Holdings Material Adverse Effect.
Any information delivered by Holdings to Central prior to the Effective
Time for attachment to the schedules to bring down the representations and
warranties contained herein on the Closing Date which supplements or
updates any schedule previously delivered shall be used for determining if
any representation or warranty set forth in this Agreement is true and
correct on the Closing Date and for determining if Central had knowledge of
a particular fact as of the Closing Date, in each case, for purposes of
Central's ability to seek indemnification under Article VIII, provided that
the supplemented or updated schedule shall not be used for determining if
any representation or warranty set forth in this Agreement shall have been
true on the date hereof, and provided further that the updating or
supplementing of any schedule shall not limit Central's rights under
Section 6.2(a) and Section 6.2(b) herein. The updating of any schedule
shall not be deemed an admission by Holdings that it has breached any
representation or warranty contained herein.
(b) There shall not have occurred any Holdings Material Adverse Effect
since the date of this Agreement.
(c) Central shall have received a certificate to the effect that the
conditions set forth in Section 6.2 (a) and 6.2(b) have been satisfied
signed on behalf of Holdings by an officer of Holdings.
(d) Central shall have received an opinion from KPMG Peat Marwick LLP,
tax counsel to Central, in form and substance reasonably satisfactory to
Central, dated as of the Closing Date, substantially to the effect that, on
the basis of facts, representations, and assumptions set forth in such
opinion that are consistent with the state of facts existing at the
Effective Time, the Merger will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code and
that accordingly:
(i) no gain or loss will be recognized by Central, Holdings or
Central Sub as a result of the Merger;
(ii) no gain or loss will be recognized by the stockholders of
Holdings on the exchange of their Holdings Common Stock for Central
Common Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in Central Common
Stock); and
(iii) the tax basis of the Central Common Stock received by
shareholders who exchange their Holdings Common Stock for Central Common
Stock in the Merger will be the same as the tax basis of Holdings Common
Stock surrendered in exchange therefor (reduced by any amount allocable
to a fractional share interest for which cash is received).
In rendering such opinion, Central's counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Central, Central Sub, Holdings and others, including
certificates substantially in the form of Exhibits A and B.
A-35
<PAGE> 258
(e) Central shall have received an opinion from Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to Holdings, in form and substance reasonably
satisfactory to Central and its counsel.
(f) Holdings shall have delivered to Central Allright's audited
financial statements prepared in accordance with GAAP for the fiscal year
ended June 30, 1998.
(g) Holdings shall have provided to Central a letter from Arthur
Andersen, stating their belief that Holdings qualifies as a "combining
company" in accordance with the criteria set forth in paragraph 46 of
Accounting Principles Board Opinion No. 16 ("APB 16") and has not violated
the criteria set forth in paragraph Nos. 47c, 47d and 48c of APB 16 during
the period extending from two years preceding the initiation date of the
Merger and the Closing Date, and KPMG Peat Marwick LLP shall have delivered
a letter to Central, stating their belief that there are no conditions
which exist which would preclude Central from accounting for the Merger as
a pooling-of-interests pursuant to APB 16, provided, that if KPMG Peat
Marwick LLP does not provide such letter to Central, KPMG Peat Marwick LLP
must deliver a letter to Central (and Central shall immediately deliver
such letter to Holdings) stating its belief as to what condition exists
which would preclude Central from accounting for the Merger as a
pooling-of-interests pursuant to APB 16, and in such letter also state what
facts, if any, have changed since the later of the date hereof and the date
on which the Proxy Statement was mailed to Central's shareholders pursuant
to Section 5.3 to cause KPMG Peat Marwick LLP to change its belief with
respect to such issues and why, in its reasonable opinion, Central cannot
take actions to cure such pooling issues.
(h) AEW and Apollo shall have executed and delivered to Central the
Noncompetition Agreement, substantially in the form of Exhibit C.
Section 6.3 Conditions to the Obligations of Holdings to Effect the Merger. The
obligations of Holdings to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the following conditions:
(a) The representations and warranties of Central and Central Sub set
forth in this Agreement (without taking into account any qualifications as
to materiality contained in such representations and warranties) shall be
true and correct when made and as of the Closing Date (except to the extent
that any such representation and warranty had by its terms been made as of
a specific date, in which case such representation and warranty shall be
true and correct as of such date), and Central, Central Sub and the Central
Subsidiaries shall have performed the obligations to be performed by each
under this Agreement prior to the Closing Date, except where the failure to
be so true and correct, and all failures to perform and comply with such
obligations (without taking into account any qualifications as to
materiality contained in such representations, warranties, covenants and
agreements), does not and will not have, in the aggregate, a Central
Material Adverse Effect. Any information delivered by Central to Holdings
prior to the Effective Time for attachment to the schedules to bring down
the representations and warranties contained herein on the Closing Date
which supplements or updates any schedule previously delivered shall be
used for determining if any representation or warranty set forth in this
Agreement is true and correct on the Closing Date and for determining if
Holdings had knowledge of a particular fact as of the Closing Date, in each
case, for purposes of Holdings ability to seek indemnification under
Article VIII, provided that the supplemented or updated schedule shall not
be used for determining
A-36
<PAGE> 259
if any representation or warranty set forth in this Agreement shall have
been true on the date hereof, and provided further that the updating or
supplementing of any schedule shall not limit Holding's rights under
Section 6.3(a) and Section 6.3(b) herein. The updating of any schedule
shall not be deemed an admission by Central that its has breached any
representation or warranty contained herein.
(b) There shall not have occurred any Central Material Adverse Effect
since the date of this Agreement.
(c) Holdings shall have received a certificate to the effect that the
conditions set forth in the foregoing clauses (a) and (b) have been
satisfied signed on behalf of Central and Central Sub by an officer of
Central and Central Sub, respectively.
(d) Holdings shall have received an opinion from Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to Holdings, in form and substance reasonably
satisfactory to Holdings, dated as of the Closing Date, substantially to
the effect that, on the basis of facts, representations, and assumptions
set forth in such opinion that are consistent with the state of facts
existing at the Effective Time, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and that accordingly:
(i) no gain or loss will be recognized by Central, Holdings or
Central Sub as a result of the Merger;
(ii) no gain or loss will be recognized by the stockholders of
Holdings on the exchange of their Holdings Common Stock for Central
Common Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in Central Common
Stock); and
(iii) the tax basis of the Central Common Stock received by
shareholders who exchange their Holdings Common Stock for Central Common
Stock in the Merger will be the same as the tax basis of Holdings Common
Stock surrendered in exchange therefor (reduced by any amount allocable
to a fractional share interest for which cash is received).
In rendering such opinion, Skadden, Arps, Slate, Meagher & Flom LLP may
require and rely upon representations and covenants including those
contained in certificates of officers of Central, Central Sub, Holdings and
others, including certificates substantially in the form of Exhibits A and
B.
(e) Allright shall have received an opinion from Harwell, Howard, Hyne,
Gabbert & Manner, P.C., counsel to Central, in form and substance
reasonably satisfactory to Holdings and its counsel.
(f) Central shall have provided to Holdings a letter from KPMG Peat
Marwick LLP, stating their belief that no condition exists which would
preclude Central from accounting for the Merger as a pooling-of-interests
pursuant to APB 16, and Arthur Andersen shall have delivered a letter to
Holdings, stating their belief that Holdings qualifies as a "combining
company" in accordance with the criteria set forth in paragraph 46 of APB
16 and has not violated the criteria set forth in paragraph Nos. 47c, 47d
and 48c of APB 16 during the period extending from two years preceding the
initiation date of the Merger and the Closing Date, provided, that if
Arthur Andersen does not provide such letter to Holdings, Arthur Andersen
must deliver a letter to
A-37
<PAGE> 260
Holdings (and Holdings shall immediately deliver such letter to Central)
stating its belief as to why Holdings does not qualify as a "combining
company" in accordance with the criteria set forth in paragraph 46 of APB
16 or its belief as to how Holdings has violated the criteria set forth in
paragraph Nos. 47c, 47d and 48c of APB 16 during the period extending from
two years preceding the initiation date of the Merger and the Closing Date,
as the case may be, and in such letter also state what facts, if any, have
changed since the later of the date hereof and the date on which the Proxy
Statement was mailed to Central's shareholders pursuant to Section 5.3 to
cause Arthur Andersen to change its belief with respect to such issues and
why, in its reasonable opinion, Holdings cannot take actions to cure such
pooling issues.
ARTICLE VII
TERMINATION; NON-CONSUMMATION
Section 7.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual agreement of all of the parties hereto;
(b) by Holdings or Central upon notice given to the other in the event
that the other shall, contrary to the terms of this Agreement, fail or
refuse to consummate the transactions contemplated hereby or to take any
other action referred to herein necessary to consummate the transactions
contemplated hereby, after affording such defaulting party a thirty-day
period after notice in which to cure;
(c) by Holdings or Central upon notice given to the other if the Closing
shall not have taken place on or before 120 days after the date hereof (or
such later date as Holdings and Central shall have agreed); provided that
the failure of the Closing to occur on or before such date is not the
result of the breach of the covenants, agreements, representations or
warranties hereunder of the party seeking such termination, and provided
further that if the Closing has not taken place due solely to the fact that
the waiting period under the HSR Act shall not have expired or been
terminated, the 120 days referred to above may be extended at the option of
either Holdings or Central for an additional 60 days, and, provided further
that to the extent the SEC has not declared the Form S-4 effective on or
before 120 days after the date hereof solely as a result of the fact that
Holdings had not delivered to Central audited financial statements for the
fiscal year ended June 30, 1998 prior to September 30, 1998, the 120 days
shall be extended by the number of days after September 30, 1998 that such
financial statements were delivered; or
(d) by Holdings or Central upon written notice to the other party if any
court or governmental authority of competent jurisdiction shall have issued
a final permanent order, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement.
Section 7.2 Effect of Termination, Non-Competition. (a) In the event of the
termination of this Agreement as provided in Section 7.1, this Agreement shall
forthwith become wholly void and of no further force and effect and, other than
in the event of a termination pursuant to Section 7.1(b), there shall be no
liability on the part of any of the parties hereto (except as set forth in this
Section and Sections 5.9 and 9.4), or their respective officers or directors. In
the event of the termination of this Agreement pursuant to Section 7.1(b), the
A-38
<PAGE> 261
terminating party shall be indemnified by the other party for any or all
damages, costs and expenses sustained or incurred as a result of such
termination. The obligations of the parties to this Agreement under Sections
5.4, 5.9, 9.4 and this Section shall survive any such termination. The terms of
the Confidentiality Agreements between Central and Holdings, dated January 30,
1998 and May 19, 1998, shall survive according to the terms contained therein,
notwithstanding the termination of this Agreement, provided that the terms of
the Confidentiality Agreement may be enforced on behalf of Holdings and Allright
by AEW and Apollo.
(b) Central shall not use any of the information obtained with respect to
Holdings, Allright or any Subsidiary or any landlord of a property leased or
managed by Holdings, Allright or any Subsidiary to compete, directly or
indirectly, with Holdings, Allright or any Subsidiary, whether with respect to
customers, suppliers, employees or with regard to pricing, distribution or
otherwise at any time after the date hereof until the Closing. In addition, for
a period of time as set forth below in paragraph (c) below, Central agrees to
refrain from, directly and indirectly, making any offer or proposal, or seeking
or soliciting the opportunity, or responding to any solicitation, or entering
into any agreement to, operate, acquire, lease or manage any parking facility
which Allright or any Subsidiary operated, owned, leased or managed, or is
subject to a binding agreement (provided, in the case of a parking facility
subject to a binding agreement, only if such binding agreement was disclosed to
Central) to do any of the foregoing, as of the date hereof or the date of
termination of this Agreement, or encouraging any owner, lessor, partner or
customer (or any of their respective affiliates) with respect to such parking
facility to terminate (whether or not pursuant to an existing right of
termination) or otherwise adversely modify its business relationship with
Allright or any Subsidiary in any matter whatsoever. In addition, for the time
period set forth below, Central will refrain from directly or indirectly
employing, attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with Allright or any Subsidiary who
was employed by Allright or any Subsidiary either on the date hereof or on the
date of termination of this Agreement.
(c) For purposes of paragraph (b), in the event the Merger is not consummated as
a result of the conditions set forth in Sections 6.2(a) (with respect to the
bring-down of representations and warranties) or 6.2(b), not being satisfied, or
upon a material breach of this Agreement by Central, the restrictions on
Central's ability to compete shall be for a period of three years, and if the
Merger is not consummated for any other reason, such restrictions shall be in
effect for a period of eighteen months.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 8.1 Survival of Representations, Warranties and Agreements. The
representations, warranties and covenants of each of Holdings, Central and
Central Sub made in this Agreement shall survive the Closing until the first
anniversary of the Closing (the "Indemnity Period"), except for representations
and warranties made in Section 3.8 (other than with respect to breaches of
Section 3.8 arising from a fraudulent act or fraudulent omission committed by
AEW, Apollo Holdings or Allright in connection with the preparation of the
Financial Statements) and Section 3.16 (other than with respect to those
properties not contained in the Law Report (as defined below)), which shall not
survive the Closing. The aforementioned representations, warranties and
covenants shall not, except as provided in
A-39
<PAGE> 262
Section 7.2 hereof, survive any termination of this Agreement. The parties
intend to shorten the statute of limitations and agree that no claims or causes
of action may be brought against each of AEW, Apollo, Holdings, Central and
Central Sub or any of its directors, officers, employees, affiliates,
controlling persons, agents or representatives based upon, directly or
indirectly, any of the representations, warranties or agreements contained in
this Agreement after the Indemnity Period or, except as provided in Section 7.2
hereof, any termination of this Agreement. This Section 8.1 shall not limit any
covenant or agreement of the parties which contemplates performance after the
Closing, including, without limitation, the covenants and agreements set forth
in Sections 5.6, 5.10, 5.11, 5.13 and 5.15 hereof.
Section 8.2 Agreement to Indemnify by AEW and Apollo. (a) Subject to the terms
and conditions set forth herein, from and after the Closing, AEW and Apollo
shall indemnify and hold harmless Central, the Surviving Corporation and their
respective directors, officers, employees, affiliates, controlling persons,
agents and representatives and their successors and assigns (collectively, the
"Central Indemnitees") from and against all liability, demands, claims, actions
or causes of action, assessments, losses, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses, but
excluding any such claims, losses or damages related to breaches of
representations and warranties contained in Section 3.8 (other than with respect
to breaches of Section 3.8 arising from a fraudulent act or fraudulent omission
committed by AEW, Apollo, Holdings or Allright in connection with the
preparation of the Financial Statements) and Section 3.16 hereof (other than
with respect to properties not contained in the Law Report)) (collectively,
"Central Damages") asserted against or incurred by any Central Indemnitee as a
result of or arising out of a breach of any representation, warranty or covenant
contained in this Agreement (excluding representations and warranties contained
in Section 3.8 (other than with respect to breaches of Section 3.8 arising from
a fraudulent act or fraudulent omission committed by AEW, Apollo, Holdings or
Allright in connection with the preparation of the Financial Statements) and
Section 3.16 hereof (other than with respect to properties not contained in the
Law Report), and excluding any breaches of representations and warranties with
respect to matters for which Central or its representatives had knowledge (based
on reasonable information) prior to the date hereof), without consideration of
materiality standards contained in the representations and warranties, when made
or at and as of the Closing as though such representation or warranty was made
at and as of the Closing. Notwithstanding the foregoing, AEW and Apollo shall
not be liable for any breaches of representations and warranties resulting in
Central Damages if Central or its representatives had knowledge of such breaches
(based on reasonable information) at the Closing Date.
(b) The obligations of AEW and Apollo to indemnify the Central Indemnitees
pursuant to Section 8.2(a) hereof with respect to a breach of a representation,
warranty or covenant contained in this Agreement, excluding representations and
warranties contained in Section 3.8 (other than with respect to breaches of
Section 3.8 arising from a fraudulent act or fraudulent omission committed by
AEW, Apollo, Holdings or Allright in connection with the preparation of the
Financial Statements) and Section 3.16 hereof (other than with respect to
properties not contained in the Law Report), are subject to the following
limitations:
(i) No indemnification shall be made by AEW or Apollo unless the
aggregate amount of Central Damages exceeds $4,000,000, and then only for
the amount by which the Central Damages exceed $4,000,000. Each of Apollo
and AEW shall be liable for 50% of all Central Damages in excess of
$4,000,000, in the aggregate, and not
A-40
<PAGE> 263
exceeding $34,000,000, in the aggregate; provided, however, that AEW or
Apollo shall not be liable for the obligations of the other under this
Section 8.2(b)(i).
(ii) AEW and Apollo shall be obligated to indemnify the Central
Indemnitees only for those claims giving rise to Central Damages as to
which the Central Indemnitees have given each of AEW and Apollo written
notice thereof prior to the end of the Indemnity Period. Any written notice
delivered by a Central Indemnitee to AEW and Apollo with respect to Central
Damages shall set forth with as much specificity as is reasonably
practicable the basis of the claim for such Central Damages and, to the
extent reasonably practicable, a reasonable estimate of the amount thereof.
(iii) The sole remedy for any Excess Severance shall be an adjustment to
the Equity Purchase Price as set forth in Section 2.6(b), and the Central
Indemnitees shall not be entitled to indemnification hereunder for any
Central Damages arising from any such increase in aggregate severance
exposure.
Section 8.3 Agreement to Indemnify by Central. (a) Subject to the terms and
conditions set forth herein, from and after the Closing, Central shall indemnify
and hold harmless the stockholders of Holdings as of the Closing (and, in the
case where such stockholders are not natural persons, their respective
directors, officers, employees, affiliates, controlling persons, agents and
representatives) and their permitted successors and assigns (collectively, the
"Holdings Indemnitees") from and against all liability, demands, claims, actions
or causes of action, assessments, losses, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, "Holdings Damages") asserted against or incurred by any Holdings
Indemnitee as a result of or arising out of a breach of any representation,
warranty or covenant contained in this Agreement (excluding any breaches of
representations and warranties with respect to matters for which Holdings or its
representatives had knowledge (based on reasonable information) prior to the
date hereof), without consideration of materiality standards contained in the
representations and warranties, when made or at and as of the Closing as though
such representation or warranty was made at and as of the Closing.
Notwithstanding the foregoing, Central shall not be liable for any breaches of
representations and warranties resulting in Holdings Damages if Holdings had
knowledge of such breaches (based on reasonable information) at the Closing
Date.
(b) The obligations of Central to indemnify the Holdings Indemnitees pursuant to
Section 8.3(a) hereof with respect to a breach of a representation or warranty
contained in this Agreement are subject to the following limitations:
(i) No indemnification shall be made by Central unless the aggregate
amount of Holdings Damages exceeds $4,000,000, and then only for the amount
by which the Holdings Damages exceed $4,000,000 and do not exceed
$34,000,000, in the aggregate.
(ii) Central shall be obligated to indemnify the Holdings Indemnitees
only for those claims giving rise to Holdings Damages as to which the
Holdings Indemnitees have given Central written notice thereof prior to the
end of the Indemnity Period. Any written notice delivered by a Holdings
Indemnitee to Central with respect to Holdings Damages shall set forth with
as much specificity as is reasonably practicable the basis of the claim for
such Holdings Damages and, to the extent reasonably practicable, a
reasonable estimate of the amount thereof.
Section 8.4 Indemnification -- Environmental Matters. (a) Subject to the terms
and conditions set forth herein, from and after the Closing, AEW and Apollo
shall indemnify and
A-41
<PAGE> 264
hold harmless the Central Indemnitees from and against all liability, demands,
claims, actions or causes of action, assessments, losses, damages, costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, but excluding the Central Damages) (collectively, the "Environmental
Damages" and, together with the Central Damages, the "Damages") asserted against
or incurred by any Central Indemnitee solely with respect to those matters
contained in the report of Law Engineering & Environmental Services, Inc., dated
July 19, 1996 (the "Law Report") previously furnished to Central and set forth
on Schedule 8.4. The obligations of AEW and Apollo under this Section 8.4(a)
shall terminate upon the thirty month anniversary of the Closing (the
"Environmental Indemnity Period").
(b) The obligations of AEW and Apollo to indemnify the Central Indemnitees
pursuant to clause (i) of Section 8.4(a) are subject to the following
limitations:
(i) With respect to each individual property, each of Apollo and AEW
shall be liable up to a maximum of 25% of all Environmental Damages (the
remaining 50% shall be the sole liability and responsibility of Central)
described in the Law Report under the column entitled "nominal cost" for
that property, and in no event shall either be liable for over $5,000,000,
in the aggregate, for all properties. In no event shall AEW or Apollo be
liable for the obligations of the other or Central under this Section
8.4(b)(i).
(ii) AEW and Apollo shall be obligated to indemnify the Central
Indemnitees only for those claims giving rise to Environmental Damages as
to which the Central Indemnitees have given each of AEW and Apollo written
notice thereof prior to the end of the Environmental Indemnity Period. Any
written notice delivered by a Central Indemnitee to AEW and Apollo with
respect to Environmental Damages shall set forth with as much specificity
as is reason ably practicable the basis of the claim for such Environmental
Damages and, to the extent reasonably practicable, a reasonable estimate of
the amount thereof.
(iii) No indemnification shall be made by AEW or Apollo for
environmental clean up costs incurred with respect to a particular property
to the extent such clean up costs are not (i) required to be incurred by
the Central Indemnitees by a federal, state or local governmental or
regulatory agency or (ii) incurred by the Central Indemnities in connection
with the sale or refinancing of such property to the extent required by the
buyer or the lender thereto, as the case may be.
Section 8.5 Procedures. The obligations of the indemnifying parties under this
Article VIII to indemnify the indemnified parties with respect to Damages or
Holdings Damages, as the case may be, resulting from the assertion of liability
by third parties (a "Claim"), will be subject to the following terms and
conditions:
(a) An indemnitee against whom any Claim is asserted will give the
indemnifying party or parties, as the case may be, written notice of any
such Claim promptly after learning of such Claim, and each indemnifying
party may at its option undertake the defense thereof by representatives of
its own choosing. Failure to give prompt notice of a Claim hereunder shall
not affect the obligations of the indemnifying party or parties, as the
case may be, under this Article VIII except to the extent an indemnifying
party is materially prejudiced by such failure to give prompt notice. If an
indemnifying party within 30 days after notice of any such Claim, or such
shorter period as is reasonably required, fails to assume the defense of
such Claim, the indemnitee against whom such Claim has been made will (upon
further notice to the indemnifying party) have the right
A-42
<PAGE> 265
to undertake the defense, compromise or settlement of such Claim on behalf
of and for the account and risk, and at the expense, of the indemnifying
party or parties, as the case may be, subject to the right of each
indemnifying party to assume the defense of such Claim at any time prior to
settlement, compromise or final determination thereof. In connection with
the handling and disposition of any Claim, the parties agree to use their
reasonable best efforts to cooperate and consult with each other to the
extent practicable in order to mitigate any Holdings Damages, Environmental
Damages or Central Damages which may arise from any such Claim.
(b) Anything in this Section 8.5 to the contrary notwithstanding, no
indemnitee shall enter into any settlement or compromise of any action,
suit or proceeding or consent to the entry of any judgment (i) which does
not include as an unconditional term thereof the delivery by the claimant
or plaintiff to the indemnifying party or parties, as the case may be, of a
written release from all liability in respect of such action, suit or
proceeding and (ii) without the prior written consent of the indemnifying
party or parties, as the case may be, which consent shall not be
unreasonably withheld or delayed.
(c) All obligations for indemnification incurred by each of the
indemnifying party or parties, as the case may be, under this Article VIII
may be satisfied, in the sole discretion of the indemnifying party or
parties, as the case may be, by the payment of Central Common Stock in lieu
of cash, provided, however, that Central shall satisfy any such obligation
only through a payment of Central Common Stock to the extent required in
order to qualify the Merger as a pooling of interests transaction under APB
16. For purposes of this subsection, the value of a share of Central Common
Stock delivered in lieu of cash under this clause shall be deemed to equal
the closing sale price per share of Central Common Stock on the NYSE on the
Closing Date.
(d) The amount of Damages and Holdings Damages for which indemnification
is provided under this Article VIII herein shall be net of (i) any amounts
recovered by the appropriate indemnitee under insurance policies with
respect to such Damages or Holdings Damages, (ii) any balance sheet
reserves with respect to such Damages or Holdings Damages to the extent
accounted for on the balance sheet delivered in connection with the Working
Capital Adjustment, and (iii) any amounts recovered by the appropriate
indemnitee pursuant to third party indemnification agreements; provided
that in the case of (i) and (iii) above, the indemnitee must first seek
recovery from such insurance carrier or third party, as the case may be,
prior to seeking indemnification from an indemnifying party hereunder;
provided, further, that the indemnitee shall not adversely modify, reduce
coverage or terminate any existing insurance policy or third party
indemnification agreement prior to the expiration of the Indemnity Period
or, with respect to environmental insurance policies and third party
indemnification agreements relating to matters set forth in Section 8.4, if
any, the Environmental Indemnity Period.
Section 8.6 Sharing of Purchase Claim Costs. Subject to the terms and
conditions set forth herein, AEW, Apollo and Central agree, with respect to the
partnership listed on Schedule 3.20 numbered "5" (the "Partnership"), that if
the other partners of the Partnership shall assert the right (the "Purchase
Claim") to purchase the entire interest of the Allright subsidiary which is a
partner (the "Allright Partner") in the Partnership, then Central, AEW and
Apollo shall jointly make determinations regarding the defense or other
disposition of the Purchase Claim, including the terms of any disposition of the
Allright Partner pursuant to the Purchase Claim, and shall share in any Purchase
Claim Costs (as
A-43
<PAGE> 266
defined below) as follows: (i) each of AEW and Apollo shall be liable for 25% of
the first $4,000,000 in Purchase Claim Costs up to a maximum obligation by each
of $1,000,000 and 0% of any Purchase Claim Costs beyond $4,000,000; and (ii)
Central shall be liable for 50% of the first $4,000,000 in Purchase Claim Costs
and 100% of any Purchase Claim Costs beyond $4,000,000. For purposes of this
Section 8.6, "Purchase Claim Costs" shall include the difference, if any,
between (i) $2,288,960, and (ii) the purchase price paid by such remaining
partner for the entire interest of the Allright Partner, determined in
accordance with the provisions of the Partnership Agreement of the Partnership
(the "Partnership Agreement") plus any documented out-of-pocket costs of
Central, AEW and Apollo in responding to the Purchase Claim. Purchase Claim
Costs shall not constitute Central Damages for any purposes under this
Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Schedules. All references to Schedules are to the Disclosure
Schedule exchanged among the parties to this Agreement. Disclosures included in
any Schedule shall, to the extent clear from the context, be considered to be
made for purposes of all Schedules, to the extent that such Schedules are
intended to contain the same subject matter and be used in the same context.
Inclusion of any matter in any Schedule does not imply that such matter would,
under the provisions of this Agreement, have to be included in such Schedule.
Section 9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or transmitted by
telex or telegram or mailed by registered or certified mail (returned receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to Holdings, to:
Apollo Real Estate Investment Fund II, L.P.
1301 Avenue of the Americas
New York, New York 10019
Attn: William S. Benjamin
AEW Partners, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Attn: Marc Davidson
with copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attn: Randall H. Doud
and to:
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
Attn: Laura Hodges Taylor
A-44
<PAGE> 267
If to Central or Central Sub, to:
Central Parking Corporation
2401 21st Avenue South
Nashville, Tennessee 37212
Attn: Monroe J. Carell, Jr.
with copy to:
Harwell Howard Hyne Gabbert & Manner, P.C.
1800 First American Center
315 Deaderick Street
Nashville, Tennessee 37238
Attn: Mark Manner
Section 9.3 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.4 Brokers and Financial Advisors. Central represents and warrants
that, except for The Blackstone Group, L.P. (for whose fees and expenses Central
is solely responsible and against whose fees and expenses Central hereby
indemnifies Holdings), no person is entitled to any brokerage or finder's fee,
financial advisory fee or other payment from Central or any of its affiliates
based on agreements, arrangements or undertakings made by Central in connection
with the transactions contemplated hereby. Holdings represents and warrants
that, except for Bear, Stearns & Co. (for whose fees and expenses Central is
responsible for to the extent set forth in Section 5.9 and Central hereby
indemnifies Holdings with respect to such fees to such extent and, if Central is
not responsible for such fees and expenses under Section 5.9, Holdings hereby
indemnifies Central with respect to such fees and expenses), no person is
entitled to any brokerage or finder's fee, financial advisory fee or other
payment from Holdings or any of its affiliates based on agreements, arrangements
or undertakings made by Holdings or any of its affiliates in connection with the
transactions contemplated hereby.
Section 9.5 Amendment. This Agreement and the Schedules hereto may be amended
by the parties hereto, but may not be amended except by an instrument or
instruments in writing signed and delivered on behalf of each of the parties
hereto.
Section 9.6 Extension; Waiver. At any time prior to the Closing Date, any party
hereto which is entitled to the benefits hereof may (a) extend the time for the
performance of any of the obligations or other acts of any of the other parties
hereto, (b) waive any inaccuracy in the representations and warranties of any of
the other parties hereto contained herein or in any Schedule hereto or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements of any of the other parties hereto or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed and delivered on
behalf of such party.
Section 9.7 Entire Agreement. This Agreement (including the Schedules,
documents and instruments referred to herein) and the Confidentiality Agreements
constitute the entire agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and thereof.
Section 9.8 Assignment. This Agreement shall not be assigned by operation of
law or otherwise, and any attempted assignment shall be void.
A-45
<PAGE> 268
Section 9.9 Governing Law; Jurisdiction. This Agreement shall be governed in
all respects, including validity, interpretation and effect, by the laws of the
State of Delaware. Any dispute arising in connection with this Agreement and any
claim arising hereunder may be brought in the courts of the State of Delaware,
or in any federal court within the State of Delaware, and by execution of this
Agreement, each of the parties accepts the jurisdiction of such courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. The foregoing consents shall not constitute general
consents to the service of process in the State of Delaware for any purpose
except as provided above and shall not be deemed to confer rights to any person
other than the respective parties to this Agreement. Nothing herein shall affect
the right of either party hereto to commence legal proceedings or otherwise
proceed against the other party in any other jurisdiction.
Section 9.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute a single agreement.
Section 9.11 Joint and Several Liability. Any obligation of AEW and Apollo
arising hereunder shall be considered several, but not joint, obligations of
such parties.
A-46
<PAGE> 269
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
authorized officers of the parties hereto on the date first above written.
CENTRAL PARKING CORPORATION
By: /s/ MONROE J. CARELL, JR.
-----------------------------------
Name: Monroe J. Carell, Jr.
Title: Chief Executive Officer
CENTRAL MERGER SUB, INC.
By: /s/ MONROE J. CARELL, JR.
-----------------------------------
Name: Monroe J. Carell, Jr.
Title: Chief Executive Officer
ALLRIGHT HOLDINGS, INC.
By: /s/ WILLIAM S. BENJAMIN
-----------------------------------
Name: William S. Benjamin
Title: President
APOLLO REAL ESTATE INVESTMENT FUND II,
L.P. (with respect to Article VIII,
Article IX and Sections 2.6(d), 3.2
and 3.4 only)
By: Apollo Real Estate Advisors II,
L.P., its managing general partner
By: Apollo Real Estate Capital
Advisors II, Inc., its general
partner
By: /s/ WILLIAM S. BENJAMIN
-----------------------------------
Name: William S. Benjamin
Title: Vice President
AEW PARTNERS, L.P.
(with respect to Article VIII, Article
IX and Sections 2.6(d), 3.2 and 3.4 only)
By: AEW/L.P., its general partner
By: AEW, Inc., its general partner
By: /s/ MARC L. DAVIDSON
-----------------------------------
Name: Marc L. Davidson
Title: Vice President
A-47
<PAGE> 270
ANNEX B
September 21, 1998
Board of Directors
Central Parking Corporation
2401 21st Avenue South, Suite 200
Nashville, TN 37212
Gentlemen:
We understand that Central Parking Corporation ("Central"), Central Merger Sub,
Inc. ("Central Sub") and Allright Holdings, Inc. ("Allright") plan to enter into
an Agreement and Plan of Merger (the "Agreement") dated as of September 21,
1998, which provides for, among other things, the merger of Central Sub with and
into Allright (the "Merger"), with Allright becoming a wholly owned subsidiary
of Central. Each issued and outstanding share of common stock, $0.01 par value
per share, of Allright ("Allright Common Stock"), other than those shares held
in treasury or by subsidiaries of Allright, will be converted into the right to
receive that number of shares of the common stock, $0.01 par value per share, of
Central ("Central Common Stock") as calculated as set forth in the Agreement
(the "Exchange Ratio"). It is also our understanding that Central, Allright and
the other parties listed therein plan to enter into a Registration Rights
Agreement (the "Registration Rights Agreement"), that Central and the other
parties listed therein plan to enter into a Non-Competition Agreement (the
"Non-Competition Agreement") and that Allright and the other parties listed
therein plan to enter into Transaction Support Agreements (the "Transaction
Support Agreements"), each dated as of September 21, 1998. The Registration
Rights Agreement grants the current majority shareholders of Allright, Monroe J.
Carell Jr. and the Carell Trusts, certain demand registration, shelf
registration and piggyback rights. The Non-Competition Agreement places certain
limitations on future parking investments by the current shareholders of
Allright. The Transaction Support Agreements provide that Monroe J. Carell, Jr.,
Central's chairman and majority shareholder, and the Carell Trusts, will vote
their respective shares in favor of the Merger. The transactions set forth above
are more fully described in each of the Agreement, the Registration Rights
Agreement, the Non-Competition Agreement and the Transaction Support Agreements.
You have asked us whether, in our opinion, the Exchange Ratio is fair to the
holders of Central Common Stock, other than Allright and its affiliates, from a
financial point of view.
In arriving at the opinion set forth below we have reviewed, among other things,
certain publicly available information concerning the business, financial
condition and operations of Central and Allright which we believe to be relevant
to our inquiry, certain publicly available information relating to financial
markets and industry and economic conditions, certain internal financial
analyses and forecasts relating to Central and Allright prepared by, and
furnished to us by, the respective managements of Central and Allright, the
historical and current financial position and the historical and projected cash
flows and results of operations of Central and Allright and forecasts of certain
operating efficiencies and financial synergies expected to be achieved as a
result of the Merger, which forecasts were prepared by the management of
Central; held discussions with members of management of Central and Allright
concerning their respective businesses, operating environments, historical and
projected financial performance, prospects and strategic objectives; reviewed
the historical market prices and trading activity for Central Common Stock;
reviewed financial and stock
B-1
<PAGE> 271
market information for certain companies we deemed relevant, the securities of
which are publicly traded, and reviewed the financial terms of certain recent
business combinations in the parking industry; considered the pro forma
financial effect of the Merger on Central and Allright; participated in
discussions among representatives of Central and Allright and their respective
financial and legal advisors; reviewed the Agreement dated September 21, 1998,
the Registration Rights Agreement dated September 21, 1998, the Non-Competition
Agreement dated September 21, 1998 and the Transaction Support Agreements dated
September 21, 1998, and performed such other studies and analyses, and took into
account such other matters, as we deemed appropriate.
In arriving at our opinion, we have relied without independent verification upon
the accuracy and completeness of all of the financial and other information
reviewed by us that was publicly available, that was supplied or otherwise made
available to us by Central and Allright or that was otherwise reviewed by us. We
have further relied upon the assurances of the managements of Central and
Allright that they are not aware of any facts that would make such information
inaccurate, incomplete or misleading. Without limiting the generality of the
foregoing, we have assumed that the financial forecasts prepared by Central and
Allright and provided to us, including without limitation, forecasts of
operating efficiencies and synergies that would result from the combination of
Central and Allright, have been reasonably determined on a basis reflecting the
best currently available judgments and estimates of Central and Allright. We
express no view as to such financial forecasts or the assumptions on which they
are based. In addition, we have not conducted a physical inspection of the
properties and facilities of Central and Allright, nor have we made an
independent evaluation or appraisal of the assets and liabilities of Central and
Allright. We note that for financial forecasts for Allright beyond December 31,
1998, we, in conjunction with Central management, assisted in the preparation of
projections for, Allright's 1999, 2000, and 2001 financial results.
We have assumed that the Merger contemplated by the Agreement will be accounted
for as a pooling-of-interests under generally accepted accounting principles and
will qualify as a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended. Our opinion is necessarily
based upon economic, market, monetary and other conditions as they exist and can
be evaluated, and the information made available to us, as of the date hereof.
We have assumed that in the course of obtaining the necessary regulatory or
other consents or approvals (contractual or otherwise) for the Merger, no
restrictions, including any divestiture requirements or amendments or
modifications, will be imposed that will have a material adverse effect on the
contemplated benefits of the Merger. Furthermore, we express no opinion as to
the prices at which Central Common Stock will trade at any time.
This opinion does not address the merits of the underlying decision by Central
to engage in the Merger and does not constitute a recommendation to any
shareholder as to how such holder should vote with respect to the Merger or any
matter related thereto.
We have acted as financial advisor to Central with respect to the proposed
Merger and will receive a fee from Central for our services, a portion of which
is contingent upon the consummation of the Merger. Central has agreed to
indemnify us for certain liabilities arising out of our engagement. In addition,
we have performed other investment banking and financial advisory services for
Central (and companies which they have acquired) in the past for which we have
received customary compensation.
B-2
<PAGE> 272
This opinion is for the use and benefit of the Board of Directors of Central.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Exchange Ratio is fair to the holders of Central Common Stock other
than Allright and its affiliates from a financial point of view.
Very truly yours,
THE BLACKSTONE GROUP L.P.
B-3
<PAGE> 273
ANNEX C
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE RELATING TO THE RIGHTS
OF DISSENTING STOCKHOLDERS
262. APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to sec. 228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of
stock of a constituent corporation in a merger or consolidation to be effected
pursuant to sec. 251 (other than a merger effected pursuant to subsection (g) of
Section 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or
C-1
<PAGE> 274
depository receipts at the effective date of the merger or consolidation
will be either listed on a national securities exchange or designated as
a national market system security on an interdealer quotation system by
the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation,
a written demand for appraisal of his shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228 or
sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall
C-2
<PAGE> 275
include in such notice a copy of this section; provided that, if the notice
is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all
such holders of any class or series of stock of a constituent corporation
that are entitled to appraisal rights. Such notice may, and, if given on or
after the effective date of the merger or consolidation, shall, also notify
such stockholders of the effective and the historical and projected cash
flows and results of operations of Central and Allright and forecasts of
certain rights may, within twenty days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the effective
date of the merger or consolidation notifying each of the holders of any
class or series of stock of such constituent corporation that are entitled
to appraisal rights of the effective date of the merger or consolidation or
(ii) the surviving or resulting corporation shall send such a second notice
to all such holders on or within 10 days after such effective date;
provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be
sent to each stockholder who is entitled to appraisal rights and who has
demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice
that such notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of determining the
stockholder entitled to receive either notice, each constituent corporation
may fix, in advance, a record date that shall be not more than 10 days
prior to the date the notice is given; provided that, if the notice is
given on or after the effective date of the merger or consolidation, the
record date shall be such effective date. If no record date is fixed and
the notice is given prior to the effective date, the record date shall be
the close of business on the day next preceding the day on which the notice
is given.
(e) Within 120 days after the effective date of the merger or consolidation, the
surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
C-3
<PAGE> 276
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agree ments as to the value of their shares have not been reached by
the surviving or result ing corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to appraisal
rights. The Court may require the stockholders who have demanded an appraisal
for their shares and who hold stock represented by certificates to submit their
certificates of stock to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court shall
appraise the shares, determining their fair value exclusive of any element of
value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares, together
with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon application
of a stockholder, the
C-4
<PAGE> 277
Court may order all or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including, without limitation,
reasonable attorney's fees and the fees and expenses of experts, to be charged
pro rata against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no stock
holder who has demanded his appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of his demand for an
appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to the
merger or consolidation shall have the status of authorized and unissued shares
of the surviving or resulting corporation.
C-5
<PAGE> 278
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) The TBCA provides that a corporation may indemnify any of its directors
against liability incurred in connection with a proceeding if (i) the director
acted in good faith, (ii) in the case of conduct in his or her official capacity
with the corporation, the director reasonably believed such conduct was in the
corporation's best interest, (iii) in all other cases, the director reasonably
believed that his or her conduct was not opposed to the best interest of the
corporation, and (iv) in connection with any criminal proceeding, the director
had no reasonable cause to believe that his or her conduct was unlawful. In
actions brought by or in the right of the corporation, however, the TBCA
provides that no indemnification may be made if the director was adjudged to be
liable to the corporation. In cases where the director is wholly successful, on
the merits or otherwise, in the defense of any proceeding instigated because of
his or her status as a director of a corporation, the TBCA mandates that the
corporation indemnify the director against reasonable expenses incurred in the
proceeding. The TBCA also provides that in connection with any proceeding
charging improper benefit to a director, no indemnification may be made if such
director is adjudged liable on the basis that personal benefit was improperly
received. Notwithstanding the foregoing, the TBCA provides that a court of
competent jurisdiction, upon application, may order that a director be
indemnified for reasonable expense if, in consideration of all relevant
circumstances, the court determines that such individual is fairly and
reasonably entitled to indemnification, whether or not the standard of conduct
set forth above was met.
(b) Article Eleven of the Amended and Restated Charter of the Registrant sets
forth the extent to which officers or directors of the Registrant may be insured
or indemnified against any liabilities which they may incur. The general effect
of such provision is that any person made a party to any action, suit or
proceeding by reason of the fact that he or she is or was a director or officer
of the Registrant will be indemnified by the Registrant against expenses
(including attorney's fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding, to the fullest extent permitted under the laws of the State
of Tennessee. In addition, such provision provides that, in the Registrant's
sole discretion, the Registrant may indemnify employees or agents against such
expenses, judgments, fines, and amounts paid in settlement.
(c) Central Parking maintains a policy of directors' and officers' insurance
that would in certain instances provide the funds necessary for the Registrant
to meet its obligations under its Amended and Restated Charter.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
See the Exhibit index immediately following the signature page.
(b) Financial Statement Schedules
The schedules for which provision is made in the applicable accounting
regulations of the Commission are not required under the related instructions or
are inapplicable and, therefore, have been omitted.
II-1
<PAGE> 279
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
1. The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use
of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
2. The undersigned registrant undertakes that every prospectus: (i) that
is filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Securities Act
and is used in connection with an offering of securities subject to Rule
415, will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, that the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted against the Registrant by such
director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
4. For purposes of determining any liability under the Securities Act,
that each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
5. For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
6. The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11,
II-2
<PAGE> 280
or 13 of this form within one business day of receipt of such request, and
to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the
date of responding to the request.
7. The undersigned registrant undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 281
SIGNATURES
Pursuant to the requirements of the Securities Act, Central Parking has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Nashville, State of
Tennessee, on October 21, 1998.
CENTRAL PARKING CORPORATION
By: /s/ MONROE J. CARELL, JR.
-----------------------------------
Monroe J. Carell, Jr.
Chairman
POWER OF ATTORNEY
Each person whose signature to the Registration Statement appears below hereby
appoints Monroe J. Carell, Jr. and Stephen A. Tisdell, and each of them, one of
whom may act without the joinder of the other, as his attorney-in-fact to
execute in the name and on behalf of any such persons, individually and in the
capacity stated below, and to file all amendments and post-effective amendments
to this Registration Statement, which amendment or amendments may make such
changes and additions in this Registration Statement as such attorney-in-fact
may deem necessary or appropriate and to execute and file any registration
statement relating to the same offering as this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act.
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MONROE J. CARELL, JR. Chief Executive October 21,
- --------------------------------------------------- Officer (Principal 1998
Monroe J. Carell, Jr. Executive Officer),
Chairman of the
Board
/s/ JAMES H. BOND President and Chief October 21,
- --------------------------------------------------- Operating Officer, 1998
James H. Bond Director
/s/ STEPHEN A. TISDELL Chief Financial October 21,
- --------------------------------------------------- Officer (Principal 1998
Stephen A. Tisdell Financial and
Accounting Officer)
/s/ JOHN W. EAKIN Director October 21,
- --------------------------------------------------- 1998
John W. Eakin
/s/ EDWARD G. NELSON Director October 21,
- --------------------------------------------------- 1998
Edward G. Nelson
/s/ WILLIAM C. O'NEIL, JR. Director October 21,
- --------------------------------------------------- 1998
William C. O'Neil, Jr.
</TABLE>
II-4
<PAGE> 282
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Director October ,
- --------------------------------------------------- 1998
P.E. Sadler
/s/ CECIL CONLEE Director October 21,
- --------------------------------------------------- 1998
Cecil Conlee
Director October ,
- --------------------------------------------------- 1998
Lowell Harwood
/s/ LEWIS KATZ Director October 21,
- --------------------------------------------------- 1998
Lewis Katz
</TABLE>
II-5
<PAGE> 283
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger dated September 21, 1998, by
and among the Registrant, Central Merger Sub, Inc., Allright
Holdings, Inc., Apollo Real Estate Investment Fund II, L.P.
and AEW Partners, L.P.
4.1 -- Amended and Restated Charter of the Registrant, as amended
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement No. 333-23869 on Form S-3).
4.2 -- Amended and Restated Bylaws of the Registrant (incorporated
by reference to Exhibit 3.2 to the Company's Registration
Statement No. 33-95640 on Form S-1).
4.3 -- Form of Common Stock Certificate (incorporated by reference
to Exhibit 4.1 to the Company's Registration Statement No.
33-95640 on Form S-1).
4.4 -- Registration Rights Agreement dated as of September 21, 1998
by and between the Registrant, Apollo Real Estate Investment
Fund II, L.P., AEW Partners, L.P., and Monroe J. Carell,
Jr., The Monroe Carell, Jr. Foundation, Monroe Carell, Jr.
1995 Grantor Retained Annuity Trust, Monroe Carell, Jr. 1994
Grantor Retained Annuity Trust, The Carell Children's Trust,
The 1996 Carell Grandchildren's Trust, The Carell Family
Grandchildren 1990 Trust, The Kathryn Carell Brown
Foundation, The Edith Carell Johnson Foundation, The Julia
Carell Stadler Foundation, 1997 Carell Elizabeth Brown
Trust, 1997 Ann Scott Johnson Trust, 1997 Julia Claire
Stadler Trust, 1997 William Carell Johnson Trust, 1997 David
Nicholas Brown Trust and 1997 George Monroe Stadler Trust.
4.5 -- Indenture dated March 18, 1998 between the registrant and
Chase Bank of Texas, National Association, as Trustee
regarding up to $113,402,050 of 5 1/4% Convertible
Subordinated Debentures due 2028. (incorporated by reference
to Exhibit 4.5 to the Registrant's Registration Statement
No. 333-52497 on Form S-3).
4.6 -- Amended and Restated Declaration of Trust of Central Parking
Finance Trust dated as of March 18, 1998. (incorporated by
reference to Exhibit 4.6 to the Registrant's Registration
Statement No. 333-52497 on Form S-3).
4.7 -- Preferred Securities Guarantee Agreement dated as of March
18, 1998 by and between the Registrant and Chase Bank of
Texas, National Association as Trustee. (incorporated by
reference to Exhibit 4.7 to the Registrant's Registration
Statement No. 333-52497 on Form S-3).
4.8 -- Common Securities Guarantee Agreement dated as of March 18,
1998 by the Registrant (incorporated by reference to Exhibit
4.9 to the Registrant's Registration Statement No. 333-52497
on Form S-3).
*5 -- Opinion of Harwell Howard Hyne Gabbert & Manner, P.C. as to
the legality of the securities being registered hereby.
*8.1 -- Opinion of KPMG Peat Marwick LLP as to certain tax matters.
*8.2 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
certain tax matters.
</TABLE>
<PAGE> 284
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
10.1 -- Transaction Support Agreement by Monroe J. Carell, Jr., the
Registrant, Kathryn Carell Brown, Julia Carell Stadler and
Edith Carell Johnson to Allright Holdings, Inc., Apollo Real
Estate Investment Fund II, L.P. and AEW Partners, L.P. dated
September 21, 1998.
10.2 -- Form of Transaction Support Agreement by certain
shareholders of the Registrant to Allright Holdings, Inc.,
Apollo Real Estate Investment Fund II, L.P. and AEW
Partners, L.P. dated September 21, 1998.
10.3 -- Form of Transaction Support Agreement by certain
stockholders of Allright Holdings, Inc. to the Registrant
and Central Merger Sub, Inc. dated September 21, 1998.
10.4 -- Best efforts commitment letter dated September 9, 1998 from
NationsBank Montgomery Securities LLC for a credit facility
of up to $400 million.
23.1 -- Consent of KPMG Peat Marwick LLP.
23.2 -- Consent of Arthur Andersen LLP.
23.3 -- Consent of Ernst & Young LLP.
23.4 -- Consent of Harwell Howard Hyne Gabbert & Manner, P.C.
(included in Exhibit 5).
23.5 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 8.2).
23.6 -- Consent of KPMG Peat Marwick LLP (included in Exhibit 8.1).
24 -- Power of Attorney (included on page II-4).
*99.1 -- Consent of William S. Benjamin.
*99.2 -- Consent of Marc L. Davidson.
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
Exhibit 2.1
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
among
CENTRAL PARKING CORPORATION,
CENTRAL MERGER SUB, INC.
and
ALLRIGHT HOLDINGS, INC.
Dated as of September 21, 1998
- -------------------------------------------------------------------------------
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 21, 1998
(this "Agreement"), among Central Parking Corporation ("Central"), a Tennessee
corporation, Central Merger Sub, Inc. ("Central Sub"), a Delaware corporation
and wholly owned subsidiary of Central, Allright Holdings, Inc. ("Holdings"), a
Delaware corporation and the sole shareholder of Allright Corporation
("Allright"), a Delaware corporation, Apollo Real Estate Investment Fund II,
L.P. ("Apollo"), a Delaware limited partnership and AEW Partners, L.P. ("AEW"),
a Delaware limited partnership.
RECITALS
WHEREAS, the respective Boards of Directors of Central,
Central Sub and Holdings have each approved the Merger (as defined below) of
Central Sub and Holdings pursuant to the terms of this Agreement;
WHEREAS, the majority stockholders of Central, Monroe J.
Carrell, Jr. and The Carell Children's Trust (collectively, the "Central
Stockholders"), have each entered into a transaction support agreement with
Holdings, Apollo and AEW, dated as of the date hereof (collectively, the
"Transaction Support Agreements"), with respect to the Merger wherein the
Central Stockholders have committed to vote the shares of Central capital stock
beneficially owned by the Central Stockholders in connection with the Merger and
the other transactions contemplated by this Agreement, and Apollo and AEW, as
the majority stockholders of Holdings, have committed to vote the shares of
Holdings capital stock beneficially owned by them in favor of the Merger and the
other transactions contemplated by this Agreement, and certain other
stockholders and warrantholders of Holdings have each entered into a transaction
support agreement with respect to the Merger wherein such stockholders and
warrantholders have committed to vote the shares of Holdings capital stock
beneficially owned by them in favor of the Merger and the other transactions
contemplated by this Agreement;
WHEREAS, Central, certain stockholders of Central, Apollo and
AEW have entered into a Registration Rights Agreement, dated as of the date
hereof (the "Registration Rights Agreement"), pursuant to which Central has
agreed to provide certain registration rights for the benefit of such
stockholders of Central, Apollo and AEW;
<PAGE> 3
WHEREAS, Central, Central Sub and Holdings desire to make
certain representations, warranties, covenants and agreements in connection with
such merger as set forth in this Agreement; and
WHEREAS, for United States Federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization under the provisions
of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"),
and this Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368 of the Code;
Now, therefore, in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time (as defined in
Section 1.2) and in accordance with the terms of this Agreement and applicable
law, Central Sub shall be merged (the "Merger") with and into Holdings and its
separate legal existence shall cease to exist, and Holdings will be the
surviving corporation (some times referred to herein as the "Surviving
Corporation") and shall continue its corporate existence as "Allright Holdings,
Inc." under the laws of the State of Delaware. The Merger shall have the effects
provided for in Section 251 of the Delaware General Corporation Law (the
"DGCL").
Section 1.2 Effective Time. The merger (the "Merger") shall
become effective at the time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (or at such later time specified as
the effective time in the Certificate of Merger), which Certificate of Merger
shall be so filed at the time of the Closing (as defined in Section 1.3). The
date and time when the Merger becomes effective are herein referred to as the
"Effective Time".
Section 1.3 Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to the provisions of Article VII herein, the closing (the "Closing") of
the transactions contemplated by this Agreement shall take place at a location
to be agreed to by Central and Holdings, on the second business day following
the
2
<PAGE> 4
satisfaction or waiver of the conditions set forth in Article VI, or at such
other time and date as the parties may mutually agree. The date and time of such
Closing are herein referred to as the "Closing Date". At the Closing, each of
the parties hereto shall take, or cause to be taken, all such actions and
deliver, or cause to be delivered, all such documents, instruments, certificates
and other items as may be required under this Agreement or otherwise, in order
to perform or fulfill all covenants, conditions and agreements on its part to be
performed at or prior to the Effective Time.
Section 1.4 Certificate of Incorporation. The Certificate of
Incorporation of Holdings, as in effect at the Effective Time, shall continue
in effect as the Certificate of Incorporation of the Surviving Corporation,
until thereafter amended as provided therein.
Section 1.5 By-Laws. The By-Laws of Holdings, as in effect at
the Effective Time, shall be the By-Laws of the Surviving Corporation, until
thereafter amended as provided therein.
Section 1.6 Directors and Officers. The officers and directors
of Central Sub at the Effective Time shall be the officers and directors of the
Surviving Corporation, each to hold office until their respective successors are
duly elected and qualified, or their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of the holders
thereof:
(a) each share of common stock of Central Sub, $0.01
par value per share, issued and outstanding immediately prior to the Effective
Time shall be cancelled and cease to exist and shall be converted into one share
of common stock of the Surviving Corporation, $0.01 par value per share. Such
newly issued shares shall thereafter constitute all of the issued and
outstanding shares of the Surviving Corporation;
3
<PAGE> 5
(b) each share of common stock of Holdings, $0.01 par
value per share (the "Holdings Common Stock"), issued and outstanding
immediately prior to the Effective Time, other than shares to be cancelled in
accordance with Section 2.1(c), shall be cancelled and cease to exist and shall
be converted into and represent the number of common shares of Central, $0.01
par value per share (the "Central Common Stock"), equal to the Exchange Ratio
(as defined in Section 2.6);
(c) all share capital held in the treasury of Holdings
or held by any of Holdings' subsidiaries shall be cancelled and cease to exist
and no payment shall be made in respect thereof; and
(d) at the Effective Time, all rights in respect of
outstanding shares of Holdings Common Stock shall cease to exist, other than the
right to receive Central Common Stock as described above.
Section 2.2 Closing of Holdings Transfer Books. At the
Effective Time, the stock transfer books of Holdings shall be closed and no
transfer of Holdings Common Stock shall thereafter be made.
Section 2.3 No Fractional Shares. No fractional shares of
Central Common Stock shall be issued pursuant hereto. In lieu of any such
fractional share of Central Common Stock, Central shall pay to each former
shareholder of Holdings who otherwise would be entitled to receive a fractional
share of Central Common Stock an amount in cash determined by multiplying (i)
$46.00 by (ii) the fractional interest in a share of Central Common Stock to
which such holder would otherwise be entitled.
Section 2.4 Certain Adjustments. If after the date hereof and
on or prior to the Closing Date the outstanding shares of Central Common Stock
shall be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination or exchange of
shares, or any dividend payable in stock or other securities shall be declared
thereon with a record date within such period, or any similar event shall occur,
the amount of shares to which a holder of Holdings Common Stock shall be
entitled to receive shall be adjusted accordingly to provide to such holder the
same economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or dividend
or similar event.
4
<PAGE> 6
Section 2.5 Stock Options; Warrants.
(a) At the Effective Time, each option granted by
Holdings to purchase shares of Holdings Common Stock (each, a "Holdings Option")
which is outstanding and unexercised immediately prior thereto shall cease to
represent a right to acquire shares of Holdings Common Stock and shall be
converted automatically into an option to purchase shares of Central Common
Stock (each, a "Central Option") in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms of the Allright
1998 Employee Stock Option Plan (the "Holdings Option Plan"), if applicable to
such Holdings Options), and the agreements evidencing grants thereunder,
including, but not limited to, the accelerated vesting of such options which
shall occur in connection with and by virtue of the consummation of the Merger
as and to the extent required by the Holdings Option Plan and such agreements:
(i) the number of shares of Central Common
Stock to be subject to the new Central Option shall be equal to the
product of the number of shares of Holdings Common Stock subject to the
original Holdings Option and the Exchange Ratio, provided that any
fractional shares of Central Common Stock resulting from such
multiplication shall be rounded down to the nearest share; and
(ii) the exercise price per share of Central
Common Stock under the new Central Option shall be equal to the
exercise price per share of Holdings Common Stock under the original
Holdings Option divided by the Exchange Ratio, provided that the
resulting exercise price shall be rounded up to the nearest cent.
(b) In the case of any Holdings Options which are
intended to be "incentive stock options" (as defined in Section 422 of the
Code)("ISOs"), the exercise price of, the number of shares purchasable pursuant
to, and the terms and conditions of exercise of, the Central Options issued in
exchange therefor shall be determined in order to comply with Section 424(a) of
the Code.
(c) The duration and other terms of Central Options
shall be the same as the Holdings Options except that all references to Holdings
shall be deemed to be references to Central.
5
<PAGE> 7
(d) As of the Effective Time, the Holdings Options
Plan shall be assumed by Central and, following the Effective Time, Central
shall take all steps necessary to provide that shares of Central Common Stock
issuable upon the exercise of all outstanding Central Options shall be covered
by an effective registration statement on Form S-8 (or other appropriate form)
as soon as practicable after the Effective Time.
(e) At the Effective Time, each warrant granted by
Holdings to purchase shares of Holdings Common Stock (each, a "Holdings
Warrant") which is outstanding and unexercised immediately prior thereto shall
cease to represent a right to acquire shares of Holdings Common Stock and shall
be converted automatically into a warrant to purchase shares of Central Common
Stock (each, a "Central Warrant") in an amount equal to the product of the
number of shares of Holdings Common Stock subject to the original Holdings
Warrant and the Exchange Ratio, provided that any fractional shares of Central
Common Stock resulting from such multiplication shall be rounded down to the
nearest share. The exercise price per share of Central Common Stock under the
new Central Warrant shall be equal to the exercise price per share of Holdings
Common Stock under the original Holdings Warrant divided by the Exchange Ratio,
provided that the resulting exercise price shall be rounded up to the nearest
cent.
Section 2.6 Calculation of Exchange Ratio.
(a) The "Exchange Ratio" shall be (i) the Equity
Purchase Price (as defined in Section 2.6(b)), divided by (ii) $46.00, divided
by (iii) the number of shares of Holdings Common Stock outstanding as of the
Effective Time (excluding any shares of Holdings Common Stock issued or issuable
to the seller in exchange for assets in any acquisition permitted under Sections
5.1(d) and 5.1(e)), plus the number of shares of Holdings Common Stock issuable
pursuant to outstanding Holdings Options and Holdings Warrants immediately prior
to the Effective Time.
(b) The "Equity Purchase Price" shall be calculated
as follows and shall be set forth in a closing statement (the "Closing
Statement"), an example of which is set forth on Schedule 2.6(b), that will be
prepared by Holdings based on its good faith estimates of the amounts indicated
and provided to Central for its review and approval (which shall not be
unreasonably withheld), not less than five business days prior to the Closing
Date: (i) $564,390,050, plus (ii) the Acquisition Expenses (as defined in
Section 2.6(c)), plus (iii) the excess, if any, of
6
<PAGE> 8
$5,000,000 over the Covered Transaction Expenses (as defined in Section 2.6(d)),
plus (iv) the Working Capital Adjustment (as defined in Section 2.6(e)), plus
(v) the aggregate exercise price of all outstanding and unexercised Holdings
Warrants or Holdings Options which are not ISOs as of the Closing Date, less
(vi) the principal amount of any long-term indebtedness for borrowed money and
capitalized lease obligations of Allright and its consolidated subsidiaries as
of the Closing Date and assumed by Central or Central Sub pursuant to the
Merger, but not including the current portion of either long-term indebtedness
or capitalized lease obligations, less (vii) the excess, if any, of the Covered
Transaction Expenses over $5,000,000, less (viii) any adjustment required
pursuant to paragraph (f) below, plus (ix) any Divesture Gain (as defined
herein), less (x) any Divesture Loss (as defined herein), less (xi) any proceeds
arising from the sale, lease, transfer or disposition of any property or assets
set forth on Schedule 5.1(j), after deduction of all expenses incurred relating
to any such transaction, less (xii) any Excess Severance (as defined in Section
3.12(a)). Holdings shall use its best efforts to deliver to Central as soon as
possible (but no later than fifteen business days prior to the Closing Date),
Allright's and Holdings' audited financial statements for the fiscal year ended
June 30, 1998, Allright's Actual EBITDA (as defined below), the Acquired
Facility EBITDA (as defined below) and the Non-Acquired EBITDA (as defined
below).
(c) The "Acquisition Expenses" shall be the aggregate
amount of cash consideration and transaction expenses paid by Holdings, Allright
or any Subsidiary (as defined below) through the Closing in respect of any and
all acquisitions of parking facilities after April 30, 1998 and any and all
capital expenditures incurred in connection with such acquisitions and leases
entered into after April 30, 1998, all as set forth on Schedule 2.6(c) (as such
Schedule may be supplemented or revised prior to the Closing Date).
(d) "Covered Transaction Expenses" include, without
duplication, any and all out-of-pocket expenses of Holdings, Allright, the
Subsidiaries, Apollo and AEW, incurred in connection with the Merger or the
other transactions contemplated by this Agreement, to the extent that such
expenses have been paid or are accrued on the Closing Statement. AEW and Apollo
shall list all such expenses on the Closing Statement.
(e) The "Working Capital Adjustment" shall be
calculated as follows: (i) the amount of working capital surplus or deficit
(such deficit, if any, to be expressed as a negative number) of Allright and its
consolidated subsidiaries as set forth on its most recent available balance
sheet (which shall not be dated more
7
<PAGE> 9
than 50 calendar days prior to the Closing Date), reduced by the amount of any
portion of any acquisitions not financed from additional debt or equity proceeds
subsequent to such balance sheet date and which shall be determined in
accordance with Schedule 2.6(e) and otherwise in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis with
Allright's historical financial statements, plus (ii) $6,000,000. Any items
reflected as Covered Transaction Expenses or as an adjustment pursuant to any
other clause of paragraph (b) above used to calculate the Equity Purchase Price
shall be excluded in calculating the working capital deficit or surplus for the
purposes of determining the Working Capital Adjustment. The Working Capital
Adjustment may only be a negative number or zero.
(f) Notwithstanding anything to the contrary above,
the Equity Purchase Price shall be adjusted as follows:
(i) if Allright's EBITDA (as defined below)
calculated from Allright's audited financial statements for the fiscal
year ended June 30, 1998 ("Allright's Actual EBITDA"), minus the EBITDA
attributable to those parking facilities acquired by Holdings, Allright
or any Subsidiary after April 30, 1998, to the extent the EBITDA
attributable to such parking facilities was included in Allright's
Actual EBITDA (the "Acquired Facility EBITDA", and the difference
between Allright's Actual EBITDA and the Acquired Facility EBITDA, the
"Non-Acquired EBITDA"), is equal to or greater than $34.0 million, the
Equity Purchase Price shall be computed as set forth above and no
further adjustment shall be made under this paragraph (f); and
(ii) if the Non-Acquired EBITDA is less than $34.0
million (the difference between the $34.0 million and the Non-Acquired
EBITDA, the "EBITDA Shortfall"), then the Equity Purchase Price shall
be reduced by the EBITDA Shortfall, multiplied by 16.
"EBITDA" shall mean, for any particular entity, the earnings
before interest, taxes, depreciation and amortization attributable to that
entity. For purposes of computing Allright's Actual EBITDA above, the EBITDA
shall be derived in accordance with GAAP consistently applied from Allright's
audited financial statements for the fiscal year ended June 30, 1998 and shall
not include the following expenses: the Covered Transaction Expenses and
expenses incurred in connection with the Merger, payments made in respect of
retention, employment and management continuity agreement bonuses listed on
Schedules 5.9(a), 5.9(b) and
8
<PAGE> 10
5.9(c) and any other charges related to Holdings Options or Holdings Warrants
used to compute the Exchange Ratio pursuant to Section 2.6(a)(iii), charges for
asset impairments and expenses associated with other liabilities mutually agreed
to by Holdings and Central. In addition, Allright's Actual EBITDA shall not
include any gains or losses attributable to the sale of any assets, and any
minority interest expense deducted to calculate EBITDA shall be reinstated when
computing Allright's Actual EBITDA. The calculation used to derive Allright's
Actual EBITDA shall be included as part of the Closing Statement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Holdings and Allright represent and warrant to Central and
Central Sub as follows:
Section 3.1 Organization. Holdings is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Section 3.2 Authority; Enforceability. Holdings has the
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated on its part hereby. The execution and
delivery by Holdings of this Agreement and the consummation by Holdings of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Holdings. No other corporate proceedings on the
part of Holdings are necessary to authorize the execution and delivery of this
Agreement and the consummation by Holdings of the transactions contemplated
hereby or the performance of its obligations hereunder. This Agreement has been
duly executed and delivered by Holdings and is a valid and binding agreement of
Holdings, enforceable against Holdings in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency or other similar
laws relating to or affecting creditors' rights generally and by general equity
principles. AEW and Apollo, as the majority stockholders of Holdings, have
taken, or will prior to the Closing take, all action required to be taken on
their respective parts in order for Holdings to have duly authorized, executed
and delivered this Agreement and to consummate the transactions contemplated
hereby.
9
<PAGE> 11
Section 3.3 Subsidiaries. Holdings does not have any
subsidiaries other than Allright. Except as provided in Schedule 3.3, Allright
does not have any equity interest, directly or indirectly, in any other entity
(such subsidiaries in Schedule 3.3, the "Subsidiaries").
Section 3.4 Non-Contravention. Except as set forth on Schedule
3.4, the execution and delivery by Holdings, AEW and Apollo of this Agreement
and by AEW and Apollo of the Registration Rights Agreement, the Noncompetition
Agreement and the Transaction Support Agreements do not, and the consummation
by each of the transactions contemplated hereby and thereby and the performance
by each of the obligations which it is obligated to perform hereunder and
thereunder will not, (a) violate any provision of the Certificate of
Incorporation or By-Laws of Holdings, Allright or any Subsidiary, (b) except as
a result of failing to obtain any third party consents, violate, or result in
the violation of, any provision of, or result in the termination of or the
acceleration of, or entitle any party to accelerate any obligation or
indebtedness under, or result in the imposition of any lien upon or the creation
of a security interest in any of the Holdings Common Stock or upon the assets of
Holdings, Allright or any Subsidiary, pursuant to, any mortgage, lien, lease,
franchise, license, permit, agreement or other instrument to which Holdings,
Allright or any Subsidiary is a party, or by which Holdings, Allright or any
Subsidiary is bound, and that is likely to, in any such event, in the aggregate,
have a material adverse effect on the financial condition of Holdings, Allright
and the Subsidiaries taken as a whole (a "Holdings Material Adverse Effect"), or
(c) subject to the approvals required as set forth in Section 3.5, violate or
conflict with any other restriction of any kind or character to which Holdings,
Allright or any Subsidiary or to which AEW or Apollo is subject which would
prevent or significantly restrict or delay the consummation of the transactions
contemplated hereby.
Section 3.5 Consents. Except for filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and as set forth in Schedule 3.5, no consent, authorization, order or
approval of, or filing or registration with, any governmental commission, board
or other regulatory body (collectively, "Consents") which has not been obtained
or made is required (a) for or in connection with the execution and delivery of
this Agreement by Holdings and the consummation by Holdings of the transactions
contemplated hereby and the performance by Holdings of its obligations
hereunder, other than those Consents, the failure of which to obtain, in the
aggregate, would not have a Holdings Material Adverse Effect, or (b) for the
ongoing operations of Allright and the Subsidiaries as
10
<PAGE> 12
currently conducted, other than those Consents, the failure of which to obtain,
in the aggregate, would not have a Holdings Material Adverse Effect.
Section 3.6 Capital Stock.
(a) The entire authorized capital stock of Holdings
consists of 500,000 shares of common stock, $0.01 par value, 79,564 of which are
issued and outstanding as of the date hereof and all such shares are validly
issued, fully paid and nonassessable, and 500,000 shares of preferred stock,
with a par value of $0.01 per share, none of which are issued and outstanding.
Except as set forth on Schedule 3.6(a), there are no outstanding obligations,
warrants, options or other rights to subscribe for or purchase, or other plans,
contracts or commitments providing for the issuance of, or the granting of
rights to acquire, shares of stock of any class of Holdings capital stock or any
securities or other instruments convertible into or exchangeable for shares of
stock of any class of Holdings capital stock.
(b) The entire authorized capital stock of Allright
consists of 1,000 shares of common stock, $0.01 par value, all of which are
issued and outstanding as of the date hereof, and all such shares are validly
issued, fully paid and nonassessable. Other than as set forth on Schedule
3.6(b), Holdings owns all such issued and outstanding shares free and clear of
any options, liens, claims, charges or other encumbrances. There are no
outstanding obligations, warrants, options or other rights to subscribe for or
purchase, or other plans, contracts or commitments providing for the issuance
of, or the granting of rights to acquire, shares of stock of any class of
Allright capital stock or any securities or other instruments convertible into
or exchangeable for shares of stock of any class of Allright capital stock.
(c) All of the issued and outstanding shares of
capital stock or securities of the Subsidiaries (the "Subsidiaries Shares") are
validly issued, fully paid and nonassessable. Allright owns, directly or
indirectly, the percentage of such Subsidiary Shares set forth on Schedule
3.6(c), in each case free and clear of any options, liens, claims, charges or
other encumbrances, except as set forth on Schedule 3.6(c). There are no
outstanding obligations, warrants, options or other rights to subscribe for or
purchase, or other plans, contracts or commitments providing for the issuance
of, or the granting of rights to acquire, shares of stock of any class of any
Subsidiary capital stock or any securities or other instruments convertible into
or exchangeable for shares of stock of any class of any Subsidiary capital
stock.
11
<PAGE> 13
Section 3.7 Organization and Qualification of Allright and the
Subsidiaries. Except as set forth on Schedule 3.7, each of Allright and the
Subsidiaries is duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization and each has
full corporate or partnership, as the case may be, power and authority to own
all of its properties and assets and to carry on its business as it is now being
conducted, except where such failure would not, in the aggregate, have a
Holdings Material Adverse Effect. Each of Allright and the Subsidiaries is
qualified and in good standing in every jurisdiction where the failure to so
qualify or be in good standing would have, in the aggregate, a Holdings Material
Adverse Effect.
Section 3.8 Financial Statements. Schedule 3.8 contains a true
and correct copy of (a) the audited consolidated balance sheet of Allright as of
June 30, 1997, (b) the audited related statement of income and cash flows for
the three-years then ended, (c) the unaudited consolidated balance sheet of
Allright as of June 30, 1998, (d) the unaudited and consolidated statements of
income and retained earnings and unaudited statements of cash flows of Allright
for the fiscal year ended June 30, 1998, (e) the unaudited balance sheet of
Holdings (parent company only) as of June 30, 1998 and (f) the unaudited
statements of income and retained earnings of Holdings (parent company only)
for the fiscal year ended June 30, 1998 (collectively, the "Financial
Statements"). The Financial Statements (including the notes thereto) present
fairly in all material respects the financial position and results of operations
of Allright and the Subsidiaries as of the date and for the periods specified
therein set forth, and have been prepared in accordance with GAAP consistently
applied, except for any ordinary year-end adjustments and footnote disclosures
with respect to any interim financial statement. The sole remedy for any breach
of this Section 3.8 shall be an adjustment to the Equity Purchase Price as set
forth in Section 2.6(f), except if such breach arises from a fraudulent act or
fraudulent omission committed by AEW, Apollo, Holdings or Allright in connection
with the preparation of such Financial Statements.
Section 3.9 Undisclosed Liabilities. Except as set forth on
Schedule 3.9, Holdings, Allright and the Subsidiaries have no liabilities or
obligations, secured or unsecured (whether absolute, accrued, contingent or
otherwise and whether due or to become due), which are not fully reflected in
the Financial Statements, except (a) those incurred in the ordinary course of
business since June 30, 1998, (b) those that may have arisen as a result of the
execution and delivery of this Agreement by
12
<PAGE> 14
Holdings or (c) those that would not have, in the aggregate, a Holdings Material
Adverse Effect.
Section 3.10 Absence of Certain Changes or Events. Except as
contemplated by this Agreement, since the date of the Financial Statements,
Holdings, Allright and the Subsidiaries have conducted their respective
businesses in the ordinary course.
Section 3.11 Legal Proceedings. Except as set forth in
Schedule 3. 11, there are no governmental proceedings seeking over $50,000 or
private litigation proceedings against Holdings, Allright or any Subsidiary
pending or, to the knowledge of Holdings, threatened which, if determined
adversely to Holdings, Allright or any Subsidiary, is likely to have, in the
aggregate, a Holdings Material Adverse Effect, nor are there any judgments,
decrees or orders against or enjoining Holdings, Allright or any Subsidiary in
respect of, or the effect of which is to prohibit, restrict, or affect, any
business practice or the acquisition of any property or the conduct of business
in any area which will have, in the aggregate, a Holdings Material Adverse
Effect.
Section 3.12 Employee Benefits.
(a) Schedule 3.12(a) sets forth a true and complete
list as of the date hereof of each material bonus, retention bonus, deferred
compensation, incentive compensation, severance, stock purchase, stock option,
severance or termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement sponsored, maintained or
contributed to or required to be contributed to by Holdings, Allright or the
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with Holdings, Allright or the Subsidiaries would be
deemed a "single employer" within the meaning of section 4001(a)(15) of ERISA,
for the benefit of any employee or former employee of Allright or an ERISA
Affiliate, whether written or unwritten (the "Plans"). For purposes of the
adjustment to the Equity Purchase Price set forth in Section 2.6(b), "Excess
Severance" shall mean the amount by which the aggregate severance obligations
of Holdings, Allright or the Subsidiaries set forth on Schedule 3.12(a) as
updated or supplemented on the Closing Date (excluding any reasonable and
customary severance obligations contained in provisions of any employment or
severance agreement entered into in connection with any acquisition of a parking
facility or parking-related entity after the date hereof) shall exceed $6.3
million.
13
<PAGE> 15
(b) Holdings, Allright and the Subsidiaries have
previously made available to Central or its representatives copies of (i) each
of the Plans or summaries thereof, including all amendments thereto to date;
(ii) the two most recent actuarial statements, if any, prepared for each Plan;
(iii) the two most recent annual reports (Series 5500 and all schedules
thereto), if any, required under ERISA in connection with each Plan or related
trust; (iv) the most recent determination letter received from the IRS, if any,
for each Plan and related trust which is intended to satisfy the requirements of
Section 401(a) of the Code; (v) the most recent summary plan description
together with the most recent summary of material modifications, if any,
required under ERISA with respect to each Plan; and (vi) all material
communications to any employee or employees relating to each Plan.
(c) Except as set forth on Schedule 3.12(c) hereto,
no Plan provides benefits, including without limitation death or medical
benefits (whether or not insured) with respect to current or former employees of
Holdings, Allright, any Subsidiary or any ERISA Affiliate beyond their
retirement or other termination of service (other than (i) coverage mandated by
applicable law, (ii) death benefits or retirement benefits under any "employee
pension plan," as defined in section 3(2) of ERISA, or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary)).
(d) Each of the Plans is in material compliance with
the terms thereof and with the requirements of any and all laws, orders,
decrees, rules and regulations applicable to such plan, including, but not
limited to, ERISA and the Code. Except as set forth on Schedule 3.12 (d), no
Plan is subject to Title IV of ERISA. There are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Plans or any trusts related thereto.
(e) Except as set forth on Schedule 3.12(e), no Plan
is a "multiemployer pension plan" (as defined in section 3(37) of ERISA). With
respect to any Plan that is a "multiemployer pension plan" (as defined in
section 3(37) of ERISA) covering employees of Holdings, Allright, the
Subsidiaries or any ERISA Affiliate, (i) none of Holdings, Allright, any
Subsidiary or any ERISA Affiliate has, since January 1, 1992, made or suffered a
"complete withdrawal" or a "partial withdrawal," as such terms are respectively
defined in sections 4203 and 4205 of ERISA, (ii) no event has occurred that
presents a material risk of a partial withdrawal, (iii) none of Holdings,
Allright, any Subsidiary or any ERISA Affiliate
14
<PAGE> 16
has any contingent liability under section 4204 of ERISA and no circumstances
exist that present a material risk that any such plan will go into
reorganization, and (iv) the aggregate withdrawal liability of Holdings,
Allright, the Subsidiaries and the ERISA Affiliates, computed as if a complete
withdrawal by Holdings, Allright, the Subsidiaries and the ERISA Affiliates had
occurred under each such Plan on the date hereof, would not exceed $25,000.
(f) Each Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a determination letter from
the Internal Revenue Service stating that it is so qualified, and, to the
knowledge of Holdings, Allright and the Subsidiaries, no event has occurred
since the date of such determination that would adversely affect such
determination.
(g) The consummation of the Merger will not cause
Holdings, Allright or any Subsidiary to be responsible for any long-term gain
incentive bonus to be paid to any regional or division manager in connection
with the sale of owned property.
Section 3.13 Properties, Contracts and Other Data.
(a) Allright and its Subsidiaries own and have good,
marketable and insurable title to the real property owned of record or
beneficially by Allright or such Subsidiary, as the case may be (the "Owned
Properties"), free and clear of all mortgages, liens (except for ad valorem real
estate taxes not yet delinquent or the validity of which are being contested in
good faith, imperfections and liens that do not materially detract from the
value of or interfere with the present use of such property), claims, pledges,
security interests and other monetary encumbrances, and free of all
restrictions, easements, reservations, covenants and other non-monetary
encumbrances, except for the matters set forth in the title policies related to
the Owned Properties referenced on Schedule 3.13(a)(1) and as set forth on
Schedule 3.13(b)(1). Except as set forth on Schedule 3.13(a)(2), as of the date
hereof, neither Allright nor any Subsidiary has received any written notice of
condemnation or suspension of its right to use with respect to any of the Owned
Properties, none of the Owned Properties is subject to condemnation proceedings
and there is not now pending or threatened, any governmental or regulatory
action or action by a private party adverse to the uses contemplated for the
Owned Properties by Allright and its Subsidiaries.
15
<PAGE> 17
(b) Except as set forth on Schedule 3.13(b)(1), as
of the date hereof there are no (i) mortgages, indentures, loan agreements or
other borrowing agreements to which Holdings, Allright or any Subsidiary is a
party as obligor, or to which it or any of their respective owned assets or
properties is subject, which relate to indebtedness of Holdings, Allright or any
Subsidiary for borrowed money or to mortgaging, pledging or otherwise placing a
lien on any of their respective assets; or (ii) guarantees or indemnification
agreements given or entered into by Holdings, Allright or any Subsidiary with
respect to indebtedness for borrowed money or in support of obligations the
principal obligor in respect of which is not Holdings, Allright or any
Subsidiary. Except as set forth on Schedule 3.13(b)(2), neither Allright's chief
executive officer, chief financial officer, chief operating officer, general
counsel nor divisional managers have knowledge (based on reasonable information)
that any party to any contract involving the payment by or to Holdings, Allright
or any Subsidiary of more than $100,000 per annum that such party intends or has
threatened to cancel, terminate or amend such contract.
Section 3.14 Certain Tax Matters.
(a) Except as set forth in Schedule 3.14:
(i) giving effect to all extensions obtained,
each of Holdings, Allright and the Subsidiaries has timely filed (or
there has been timely filed on its behalf) all Tax Returns (as defined
below) required to be filed by it, and all such Tax Returns are
complete in all material respects, has paid (or there has been paid on
its behalf) all Taxes shown thereon to be due, other than such Taxes
as are being contested in good faith, and has established reserves in
accordance with generally accepted accounting principles for the
payment of all Taxes for periods subsequent to the periods covered by
such Tax Returns;
(ii) no material deficiency, assessment or
other formal claim for any material Taxes has been asserted by a Tax
authority against Holdings, Allright or any of the Subsidiaries that
has not been fully paid, accrued or finally settled;
(iii) none of Holdings, Allright or any of the
Subsidiaries has been notified that any Tax Returns are currently the
16
<PAGE> 18
subject of any audit or other administrative proceeding or court
proceeding ("Audit") by any Tax authority;
(iv) no extension, waiver or comparable
consent regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns has been given by or on behalf of
Holdings, Allright or any of the Subsidiaries and is currently in
effect; and
(v) the income Tax Returns of Holdings,
Allright and the Subsidiaries for the taxable periods ending on or
before June 30, 1992 have been examined by the appropriate Tax
authority (or the applicable statute of limitations for the assessment
of Taxes for such periods has expired) and a list of Audits commenced
and not yet completed with respect to Holdings, Allright and the
Subsidiaries is set forth on Schedule 3.14.
(b) For purposes of this Agreement, (i) "Taxes"
(including, with correlative meaning, the term "Tax") shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any federal,
state, local or foreign govern mental authority, including, but not limited to,
income, gross receipts, commercial rent and occupancy, excise, property, sales,
transfer, franchise, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto and (ii)
"Tax Return" shall mean any return, report, information return or other document
(including any related or supporting information) with respect to Taxes.
(c) To the knowledge of Holdings, the Indemnification
Agreement, dated as of October 31, 1996, by and among Nedinco Delaware
Incorporated, Hang Lung Development Company Ltd., Allright Holdings LLC and
Allright, and the Letter of Credit, made by HSBC Trade Services on October 29,
1996 related thereto, are each valid and binding agreements, enforceable against
each party thereto in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
relating to or affecting creditors' rights generally and by general equity
principles.
Section 3.15 Compliance with Laws. Except as set forth in
Schedule 3.15, to their knowledge, each of Holdings, Allright and the
Subsidiaries;
17
<PAGE> 19
(a) is in substantial compliance with all laws,
regulations, reporting and licensing requirements, and orders applicable to its
business or employees conducting its business;
(b) has received no notification or communication
from any agency or department of any federal, state, local or foreign government
or any regulatory authority or the staff thereof (i) asserting that Holdings,
Allright or any Subsidiary is not in compliance with any of the statutes,
regulations or ordinances which such governmental authority or regulatory
authority enforces, or (ii) threatening to revoke any license, franchise,
permit, or governmental authorization; and
(c) is not a party to any written order, decree,
agreement or memorandum of understanding with, or a commitment letter or similar
submission to, or a recipient of any extraordinary supervisory letter from, any
federal, state or local governmental agency or authority which restricts in any
material respect the conduct of business of Holdings, Allright and the
Subsidiaries; nor has Holdings, Allright or any Subsidiary been advised by any
such regulatory authority that such authority is contemplating issuing or
requesting any such order, decree, agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter or similar submission.
Section 3.16 Environmental Laws. Except as set forth on
Schedule 3.16, and to Holdings' knowledge:
(a) the facilities and properties owned, leased or
operated by Allright or any Subsidiary (the "Properties") and all operations at
the Properties are in material compliance with all applicable federal, state,
local and foreign laws and regulations relating to protection of the environment
("Environmental Laws");
(b) neither of Allright nor any Subsidiary has
received any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the properties or the business operated
by Allright or any Subsidiary (the "Business"), nor does Holdings have knowledge
of facts that could lead to such notice;
(c) no judicial proceeding or governmental or
administrative action is pending or threatened, under any Environmental Law to
which Allright or
18
<PAGE> 20
any Subsidiary is or is likely to be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders under any Environmental
Law with respect to the Properties or the Business;
(d) no Phase II Environmental Site Assessments have
been prepared with respect to real property owned of record or beneficially by
Holdings, Allright or any Subsidiary as the date hereof; and
(e) access to all Phase I Environmental Site
Assessments, and any other environmental reports or studies, prepared as of the
date hereof, with respect to real property owned of record or beneficially by
Holdings, Allright or any Subsidiary, has been provided to representatives of
Central. Those properties for which no Phase I Environmental Assessments have
been prepared are set forth on Schedule 3.16.
Holdings' sole representations with respect to environmental matters are set
forth in this Section 3.16. To the extent representations in other sections of
this Agreement could also apply to environmental matters including, but not
limited to, matters related to, arising under or concerning Environmental Laws,
such representations shall be construed to exclude all environmental matters and
to apply to matters other than environmental matters.
Section 3.17 Affiliate Transactions. Except as set forth in
Schedule 3.17 and for the payment by Holdings of transaction expenses of Apollo
and AEW as contemplated by Section 5.9, there is no transaction and no
transaction is now proposed, to which Holdings, Allright or any Subsidiary is or
is to be a party in which any current stockholder, director or officer or other
affiliate of Holdings, Allright or any Subsidiary has a direct or indirect
interest.
Section 3.18 Labor and Employment Matters.
(a) Except as set forth in Schedule 3.18, there is no
collective bargaining agreement, other labor agreement or employment contract
to which Holdings, Allright or any Subsidiary is a party or by which it is bound
and, in the case of employment contracts, involving employees at the city
manager level or higher.
19
<PAGE> 21
(b) Except as set forth in Schedule 3.18; (i) no
labor union or organization has been certified or recognized as a representative
of any employees of Holdings, Allright or any Subsidiary, (ii) to the knowledge
of Holdings, there are no current or threatened organizational activities or
demands for recognition by a labor organization seeking to represent employees
of Holdings, Allright or any Subsidiary, labor strikes, material arbitrations or
material labor grievances or difficulties and (iii) to the knowledge of Holdings
no such activities have occurred during the past 12 months.
Section 3.19 Insurance. All properties and operations of
Holdings, Allright and the Subsidiaries are insured for its respective benefit,
in such amounts and against such risks customarily insured against by persons
operating similar properties or conducting similar operations under valid and
enforceable policies issued by insurers of recognized responsibility. Holdings
does not have knowledge of any pending or threatened termination or
cancellation, coverage limitation or reduction, or material premium increase
with respect to any policy.
Section 3.20 Certain Contracts. Except as set forth on
Schedule 3.20, there is no contract to which Holdings, Allright or any
Subsidiary is a party which contains any (i) non-competition or non-solicitation
provision, (ii) any earn-out or lock-out provision, or (iii) any rights to share
proceeds, rights to repurchase, contingent payment or similar provision, other
than those customary revenue sharing arrangements relating to ongoing business
operations contained in ordinary course of business lease and management
agreement participation provisions.
Section 3.21 Accounting Matters. Holdings believes, after
discussions with Arthur Andersen, that Holdings qualifies as a "combining
company" in accordance with the criteria set forth in paragraph 46 of Accounting
Principles Board Opinion No. 16 ("APB 16") and has not violated the criteria set
forth in paragraph Nos. 47c, 47d and 48c of APB 16 during the period extending
from two years preceding the initiation date of the Merger and the Closing Date.
Section 3.22 No Implied Representation. Notwithstanding
anything contained in this Article or any other provision of this Agreement, it
is the explicit intent of each party hereto that none of Holdings, Allright, any
Subsidiary, Apollo, AEW or any of their respective affiliates, directors or
officers is making any representation or warranty whatsoever, express or
implied, other than those representations and warranties of Holdings in this
Agreement, and in the case of AEW and Apollo, with respect to the last sentence
of Section 3.2. It is understood
20
<PAGE> 22
that any estimates, projections or other predictions contained or referred to in
any Exhibit or Schedule hereto or which otherwise have been or are provided to
Central or its representatives or affiliates are not and shall not be deemed to
be representations or warranties of Holdings, Allright, any Subsidiary, Apollo
or AEW or any of their respective affiliates. Central and Central Sub
acknowledge that there are uncertainties inherent in attempting to make such
estimates, projections and other predictions, that they are familiar with such
uncertainties, that they are taking full responsibility for making their own
evaluation of the adequacy and accuracy of all estimates, projections and other
predictions so furnished to them, and that they shall have no claim against
anyone with respect thereto.
Section 3.23 Intellectual Property. Schedule 3.23 sets forth a
true and complete list of all licenses and other rights to use without payment
of all patents, copyrights, trade secrets, trade names, servicemarks and
trademarks used in its businesses held by Holdings, Allright or any Subsidiary;
and none of Holdings, Allright or any Subsidiary has received any notice of
conflict with respect thereto that asserts the right of others.
Section 3.24 Certain Information. Holdings has delivered to
Central or its representatives, prior to the date hereof, true and complete
copies (other than with respect to names of entities or landlords or locations,
which information has been deleted from such copies) of any and all assignment
provisions contained in any leases for parking facilities with direct lot
operating profits of over $50,000 for the 1998 fiscal year (the "$50,000
Leases").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
CENTRAL AND CENTRAL SUB
Central and Central Sub represent and warrant to Holdings as
follows:
Section 4.1 Organization. Central and Central Sub are duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their respective incorporation and have all requisite power and
authority to own, lease and operate their properties and to carry on their
respective business as now being conducted.
21
<PAGE> 23
Section 4.2 Authority; Enforceability.
(a) Central and Central Sub have the corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated on their respective parts hereby, and Central has the
corporate power and authority to execute and deliver the Registration Rights
Agreement and to consummate the transactions contemplated thereby. The execution
and delivery by Central and Central Sub of this Agreement and by Central of the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on their respective parts, subject, in the case of the
issuance of Central Common Stock pursuant to the Merger, to the approval by
Central's shareholders (the "Central Shareholder Approval") of such issuance
required by the shareholder approval policy of the New York Stock Exchange (the
"NYSE"). No other corporate proceedings on the part of Central or Central Sub
other than the Central Shareholder Approval are necessary to authorize the
execution and delivery of this Agreement or the Registration Rights Agreement
and the consummation by each of the transactions contemplated hereby and by
Central of the transactions contemplated thereby or the performance of their
obligations hereunder or by Central thereunder. This Agreement has been duly
executed and delivered by Central and Central Sub and is a valid and binding
agreement of Central and Central Sub, as the case may be, enforceable against
each in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency or other similar laws relating to or affecting
creditors' rights generally and by general equity principles. The Registration
Rights Agreement has been duly executed and delivered by Central and is a valid
and binding agreement of Central, enforceable against Central in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws relating to or affecting creditors' rights
generally and by general equity principles.
(b) The Transaction Support Agreements have each been
duly executed and delivered by the Central Stockholders and are valid and
binding agreements of the Central Stockholders, enforceable against each of the
Central Stockholders in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
relating to or affecting creditors' rights generally and by general equity
principles. Compliance by the Central Stockholders with the Transaction Support
Agreements will ensure that the Central Shareholder Approval is obtained without
the need for approval by any other stock holder of Central.
22
<PAGE> 24
Section 4.3 Subsidiaries. Central does not have any
subsidiaries other than those set forth in Schedule 4.3 (such subsidiaries in
Schedule 4.3, "Central Subsidiaries").
Section 4.4 Non-Contravention. Except as set forth in Schedule
4.4, the execution and delivery by Central and Central Sub of this Agreement, by
Central of the Registration Rights Agreement and by the Central Stockholders of
the Transaction Support Agreements do not, and the consummation by each of the
transactions contemplated hereby and thereby, as the case may be, and the
performance by each of the obligations which they are obligated to perform
hereunder and thereunder, as the case may be, will not (a) violate any provision
of the Certificate of Incorporation or By-Laws of Central or any Central
Subsidiary, (b) except as a result of failing to obtain any third party
consents, violate, or result in the violation of, any provision of, or result in
the termination of or the acceleration of, or entitle any party to accelerate
any obligation or indebtedness under, or result in the imposition of any lien
upon or the creation of a security interest in any of the Central Common Stock
or upon the assets of Central or any Central Subsidiary, pursuant to, any
mortgage, lien, lease, franchise, license, permit, agreement or other instrument
to which Central or any Central Subsidiary is a party, or by which Central or
any Central Subsidiary is bound, and that is likely to, in any such event, in
the aggregate, have a material adverse effect on the financial condition of
Central and the Central Subsidiaries taken as a whole (a "Central Material
Adverse Effect"), or (c) subject to the approvals required as set forth in
Section 4.5, violate or conflict with any other restriction of any kind or
character to which Central, any Central Subsidiary or the Central Stockholders
are subject which would prevent or significantly restrict or delay the
consummation of the transactions contemplated hereby.
Section 4.5 Consents. Except for filings under the HSR Act,
and as set forth in Schedule 4.5, no Consent which has not been obtained or made
is required (a) for or in connection with the execution and delivery of this
Agreement by Central and Central Sub and the consummation by Central and Central
Sub of the transactions contemplated hereby and the performance by Central and
Central Sub of their obligations hereunder, other than those Consents, the
failure of which to obtain, in the aggregate, would not have a Central Material
Adverse Effect, or (b) for the ongoing operations of Central and the Central
Subsidiaries as currently conducted, other than those Consents, the failure of
which to obtain, in the aggregate, would not have a Central Material Adverse
Effect.
23
<PAGE> 25
Section 4.6 Capital Stock.
(a) The entire authorized capital stock of Central
consists of 50,000,000 shares of Central Common Stock, 29,564,067 of which are
issued and outstanding as of September 17, 1998, and all such shares are validly
issued, fully paid and nonassessable, and 1,000,000 shares of preferred stock,
$0.01 par value per share, none of which are issued and outstanding.
Shareholders of Holdings will own, upon their issuance pursuant to Article II,
validly issued, fully paid and nonassessable shares of Central Common Stock, and
all such shares will be free and clear of any options, liens, claims, charges or
other encumbrances, subject to rights outlined in the Registration Rights
Agreement. Except as set forth on Schedule 4.6(a), there are no outstanding
obligations, warrants, options or other rights to subscribe for or pur chase, or
other plans, contracts or commitments providing for the issuance of, or the
granting of rights to acquire, shares of stock of any class of Central capital
stock or any securities or other instruments convertible into or exchangeable
for shares of stock of any class of Central capital stock.
(b) All of the issued and outstanding shares of
capital stock or securities of the Central Subsidiaries (the "Central
Subsidiaries Shares") are validly issued, fully paid and nonassessable. Central
owns, directly or indirectly, the percent age of such Central Subsidiaries
Shares set forth on Schedule 4.3, in each case free and clear of any options,
liens, claims, charges or other encumbrances. Except as set forth on Schedule
4.6(b), there are no outstanding obligations, warrants, options or other rights
to subscribe for or purchase, or other plans, contracts or commitments providing
for the issuance of, or the granting of rights to acquire, shares of stock of
any class of any Central Subsidiary capital stock or any securities or other
instruments convertible into or exchangeable for shares of stock of any class of
any Central Subsidiary capital stock.
Section 4.7 Organization and Qualification of the Central
Subsidiaries. Except as set forth on Schedule 4.7, each of the Central
Subsidiaries is duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization and each has
full corporate or partnership, as the case may be, power and authority to own
all of its properties and assets and to carry on its business as it is now being
conducted, except where such failure would not, in the aggregate, have a Central
Material Adverse Effect. Each of Central and the Central Subsidiaries is
qualified and in good standing in every jurisdiction where the failure to so
qualify or be in good standing would have, in the aggregate, a Central Material
Adverse Effect.
24
<PAGE> 26
Section 4.8 SEC Reports. Since October 10, 1995, Central has
filed with the Securities and Exchange Commission (the "SEC") all reports,
schedules, forms, statements and other documents (including exhibits and all
other information incorporated therein) required to be filed with the SEC (the
"Central SEC Documents"). As of their respective dates, the Central SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Central SEC Documents, and none of the Central SEC Documents when filed (as
amended and restated and as supplemented by subsequently filed Central SEC
Documents) contained any untrue statement of fact or omitted to state a fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, other than those, in the aggregate, which would not have a Central
Material Adverse Effect. The financial statements of Central included in the
Central SEC Documents complied as to form, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of Central
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal recurring year-end audit
adjustments), except when such failure, in the aggregate, would not have a
Central Material Adverse Effect. True, correct and complete copies of Central's
most recent Form 10-K, Form 10-Q and Proxy Statement are set forth on Schedule
4.8.
Section 4.9 Undisclosed Liabilities. Except as set forth on
Schedule 4.9, Central and the Central Subsidiaries have no liabilities or
obligations, secured or unsecured (whether absolute, accrued, contingent or
otherwise and whether due or to become due), which are not fully reflected in
the financial statements contained in the Central SEC Documents, except (a)
those incurred in the ordinary course of business since June 30, 1998, (b) those
that may have arisen as a result of the execution and delivery of this Agreement
by Central and Central Sub, or (c) those that would not have, in the aggregate,
a Central Material Adverse Effect.
25
<PAGE> 27
Section 4.10 Absence of Certain Changes or Events. Except as
contemplated by this Agreement, since June 30, 1998, Central and the Central
Subsidiaries have conducted their respective businesses in the ordinary course.
Section 4.11 Legal Proceedings. Except as set forth in
Schedule 4. 11, there are no governmental proceedings seeking over $50,000 or
private litigation proceedings against Central or any Central Subsidiary pending
or, to the knowledge of Central or any Central Subsidiary, threatened which, if
determined adversely to Central or any Central Subsidiary, is likely to have, in
the aggregate, a Central Material Adverse Effect, nor are there any judgments,
decrees or orders against or enjoining Central or any Central Subsidiary in
respect of, or the effect of which is to prohibit, restrict, or affect, any
business practice or the acquisition of any property or the conduct of business
in any area which will have, in the aggregate, a Central Material Adverse
Effect.
Section 4.12 Employee Benefits.
(a) Schedule 4.12(a) sets forth a true and complete
list as of the date hereof of each material bonus, retention bonus, deferred
compensation, incentive compensation, severance, stock purchase, stock option,
severance or termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement sponsored, maintained or
contributed to or required to be contributed to by Central or the Central
Subsidiaries or by any trade or business, whether or not incorporated (a
"Central ERISA Affiliate"), that together with Central or the Central
Subsidiaries would be deemed a "single employer" within the meaning of section
4001(a)(15) of ERISA, for the benefit of any employee or former employee of
Central or a Central ERISA Affiliate, whether written or unwritten (the "Central
Plans").
(b) Central and the Central Subsidiaries have
previously delivered to Allright or its representatives copies of (i) each of
the Central Plans or summaries thereof, including all amendments thereto to
date; (ii) the two most recent actuarial statements, if any, prepared for each
Central Plan; (iii) the two most recent annual reports (Series 5500 and all
schedules thereto), if any, required under ERISA in connection with each Central
Plan or related trust; (iv) the most recent determination letter received from
the IRS, if any, for each Central Plan and related trust which is intended to
satisfy the requirements of Section 401(a) of the Code; (v) the most recent
summary plan description together with the most recent summary of
26
<PAGE> 28
material modifications, if any, required under ERISA with respect to each
Central Plan; and (vi) all material communications to any employee or employees
relating to each Central Plan.
(c) Except as set forth on Schedule 4.12(c) hereto,
no Central Plan provides benefits, including without limitation death or medical
benefits (whether or not insured) with respect to current or former employees of
Central, any Central Subsidiary or any Central ERISA Affiliate beyond their
retirement or other termination of service (other than (i) coverage mandated by
applicable law, (ii) death benefits or retirement benefits under any "employee
pension plan," as defined in section 3(2) of ERISA, or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary)).
(d) Each of the Central Plans is in material
compliance with the terms thereof and with the requirements of any and all laws,
orders, decrees, rules and regulations applicable to such plan, including, but
not limited to, ERISA and the Code. Except as provided in Schedule 4.12(d), no
Central Plan is subject to Title IV of ERISA. There are no pending, threatened
or anticipated claims (other than routine claims for benefits) by, on behalf of
or against any of the Central Plans or any trusts related thereto.
(e) Except as set forth on Schedule 4.12(e) hereto,
no Central Plan is a "multiemployer pension plan" (as defined in section 3(37)
of ERISA). With respect to any Central Plan that is a "multiemployer pension
plan" (as defined in section 3(37) of ERISA) covering employees of Central, the
Central Subsidiaries or any Central ERISA Affiliate, (i) neither Central, any
Central Subsidiary nor any Central ERISA Affiliate has, since January 1, 1992
made or suffered a "complete withdrawal" or a "partial withdrawal," as such
terms are respectively defined in sections 4203 and 4205 of ERISA, (ii) no event
has occurred that presents a material risk of a partial withdrawal, (iii)
neither Central, any Central Subsidiary nor any Central ERISA Affiliate has any
contingent liability under section 4204 of ERISA and no circumstances exist that
present a material risk that any such plan will go into reorganization, and (iv)
the aggregate withdrawal liability of Central, the Central Subsidiaries and the
Central ERISA Affiliates, computed as if a complete withdrawal by Central, the
Central Subsidiaries and the Central ERISA Affiliates had occurred under each
such Central Plan on the date hereof, would not exceed $25,000.
27
<PAGE> 29
(f) Except as set forth on Schedule 4.12(f), each
Central Plan intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a determination letter from the Internal Revenue Service
stating that it is so qualified, and, to the knowledge of Central and the
Central Subsidiaries, no event has occurred since the date of such determination
that would adversely affect such determination.
(g) No liability under Title IV or Section 302 of
ERISA has been incurred by Central, the Central Subsidiaries or any Central
ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a risk to Central, the Central Subsidiaries or any Central ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation ("PBGC") (which premiums have been paid
when due). Insofar as the representation made in this Section 4.12(h) applies to
sections 4064, 4069 or 4204 of Title IV of ERISA, it is made with respect to any
employee benefit plan, program, agreement or arrangement subject to Title IV of
ERISA to which Central, the Central Subsidiaries or any Central ERISA Affiliate
made, or was required to make, contributions during the five (5)-year period
ending on the last day of the most recent plan year which ended prior to the
Closing Date.
(h) Except as set forth on Schedule 4.12(h), the PBGC
has not instituted proceedings to terminate any Central Plan which is subject to
Title IV of ERISA (each, a "Central Title IV Plan") and no condition exists that
presents a risk that such proceedings will be instituted.
(i) With respect to each Central Title IV Plan, the
present value of accrued benefits under such plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan did not exceed, as of
its latest valuation date, the then current value of the assets of such plan
allocable to such accrued benefits.
(j) No Central Title IV Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each Central Title IV Plan ended
prior to the Closing Date. All contributions required to be made with respect to
any Central Plan on or prior to the Closing Date have been timely made or are
reflected on Central's most current audited balance sheet.
28
<PAGE> 30
Section 4.13 Properties, Contracts and Other Data.
(a) Central and the Central Subsidiaries own and have
good, marketable and insurable title to the real property owned of record or
beneficially by Central or such Central Subsidiary, as the case may be (the
"Central Owned Properties"), free and clear of all mortgages, liens (except for
ad valorem real estate taxes not yet delinquent or the validity of which are
being contested in good faith, imperfections and liens that do not materially
detract from the value of or interfere with the present use of such property),
claims, pledges, security interests and other monetary encumbrances, and free of
all restrictions, easements, reservations, covenants and other non-monetary
encumbrances, except for the matters set forth in the title policies related to
the Central Owned Properties on Schedule 4.13(a)(1) and as set forth on Schedule
4.13(b)(1). Except as set forth on Schedule 4.13(a)(2), as of the date hereof,
neither Central nor any Central Subsidiary has received any written notice of
condemnation or suspension of its right to use with respect to any of the
Central Owned Properties, none of the Central Owned Properties is subject to
condemnation proceedings and there is not now pending or threatened, any
governmental or regulatory action or action by a private party adverse to the
uses contemplated for the Central Owned Properties by Central and the Central
Subsidiaries.
(b) Except as set forth on Schedule 4.13(b)(1), as of
the date hereof there are no (i) mortgages, indentures, loan agreements or other
borrowing agreements to which Central or any Central Subsidiary is a party as
obligor, or to which it or any of their respective owned assets or properties is
subject, which relate to indebtedness of Central or any Central Subsidiary for
borrowed money or to mortgaging, pledging or otherwise placing a lien on any of
their respective assets; (ii) guarantees or indemnification agreements given or
entered into by Central or any Central Subsidiary with respect to indebtedness
for borrowed money or in support of obligations the principal obligor in respect
of which is not Central or any Central Subsidiary; or (iii) obligations of
Holdings, Allright or any Subsidiary outstanding as of the Closing Date and
assumed by Central or any Central Subsidiary pursuant to the Merger that require
refinancing or which Central or any Central Subsidiary will be unable to
refinance. Except as set forth on Schedule 4.13(b)(2), neither Central's chief
executive officer, chief operating officer, chief financial officer, general
counsel nor senior vice presidents have knowledge (based on reasonable
information) that any party to any contract involving the payment by or to
Central or any Central Subsidiary of more than $100,000 per annum that such
party intends or has threatened to cancel, terminate or amend such contract.
29
<PAGE> 31
Section 4.14 Certain Tax Matters.
(a) Except as set forth in Schedule 4.14:
(i) giving effect to all extensions obtained,
each of Central and the Central Subsidiaries has timely filed (or
there has been timely filed on its behalf) all Tax Returns required to
be filed by it, and all such Tax Returns are complete in all material
respects, has paid (or there has been paid on its behalf) all Taxes
shown thereon to be due, other than such Taxes as are being contested
in good faith and has established reserves in accordance with
generally accepted ac counting principles for the payment of all Taxes
for periods subsequent to the periods covered by such Tax Returns;
(ii) no material deficiency, assessment or other
formal claim for any material Taxes has been asserted by a Tax author
ity against Central or any of the Central Subsidiaries that has not
been fully paid, accrued or finally settled;
(iii) neither Central nor any of the Central
Subsidiaries has been notified that any Tax Returns are currently the
subject of any Audit by any Tax authority;
(iv) no extension, waiver or comparable consent
regarding the application of the statute of limitations with respect to
any Taxes or Tax Returns has been given by or on behalf of Central or
any of the Central Subsidiaries and is currently in effect; and
(v) the income Tax Returns of Central and the
Central Subsidiaries for the taxable periods ending on or before June
30, 1992 have been examined by the appropriate Tax authority (or the
applicable statute of limitations for the assessment of Taxes for such
periods has expired) and a list of all Audits commenced and not yet
completed with respect to Central and the Central Subsidiaries is set
forth on Schedule 4.14.
Section 4.15 Compliance with Laws. Except as set forth in
Schedule 4.15, to their knowledge, each of Central and the Central Subsidiaries;
30
<PAGE> 32
(a) is in substantial compliance with all laws,
regulations, reporting and licensing requirements, and orders applicable to its
business or employees conducting its business;
(b) has received no notification or communication
from any agency or department of any federal, state, local or foreign government
or any regulatory authority or the staff thereof (i) asserting that Central or
any Central Subsidiary is not in compliance with any of the statutes,
regulations or ordinances which such governmental authority or regulatory
authority enforces, or (ii) threatening to revoke any license, franchise,
permit, or governmental authorization; and
(c) is not a party to any written order, decree,
agreement or memorandum of understanding with, or a commitment letter or similar
submission to, or a recipient of any extraordinary supervisory letter from, any
federal, state or local governmental agency or authority which restricts in any
material respect the conduct of business of Central and the Central
Subsidiaries; nor has Central or any Central Subsidiary been advised by any such
regulatory authority that such authority is contemplating issuing or requesting
any such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission.
Section 4.16 Environmental Laws. Except as set forth in
Schedule 4.16 and to Central's knowledge:
(a) the facilities and properties owned, leased or
operated by Central or any Central Subsidiary (the "Central Properties") and all
operations at the Central Properties are in material compliance with all
applicable Environmental Laws;
(b) neither of Central nor any Central Subsidiary has
received any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the properties or the business operated
by Central or any Central Subsidiary (the "Central Business"), nor does Central
have knowledge of facts that could lead to any such notice;
31
<PAGE> 33
(c) no judicial proceeding or governmental or
administrative action is pending or threatened, under any Environmental Law to
which Central or any Central Subsidiary is or is likely to be named as a party
with respect to the Central Properties or the Central Business, nor are there
any consent decrees or other decrees, consent orders, administrative orders or
other orders under any Environmental Law with respect to the Central Properties
or the Central Business;
(d) no Phase II Environmental Site Assessments have
been prepared with respect to real property owned of record or beneficially by
Central or any Central Subsidiary as of the date hereof; and
(e) access to all Phase I and Phase II Environmental
Site Assessments, and any other environmental reports or studies, prepared as of
the date hereof with respect to real property owned of record or beneficially by
Central or any Central subsidiary has been provided to representatives of
Holdings.
Central's and Central Sub's sole representations with respect to environmental
matters are set forth in this Section 4.16. To the extent representations in
other sections of this Agreement could also apply to environmental matters
including, but not limited to, matters related to, arising under or concerning
Environmental Laws, such representations shall be construed to exclude all
environmental matters and to apply to matters other than environmental matters.
Section 4.17 Affiliate Transactions. Except as set forth in
Schedule 4.17, there is no transaction and no transaction is now proposed, to
which Central or any Central Subsidiary is or is to be a party in which any
current shareholder, director or officer or other affiliate of Central or any
Central Subsidiary has a direct or indirect interest.
Section 4.18 Labor and Employment Matters.
(a) Except as set forth in Schedule 4.18, there is no
collective bargaining agreement, other labor agreement or employment contract
to which Central or any Central Subsidiary is a party or by which it is bound
and, in the case of employment contracts, involving employees at the city
manager level or higher.
(b) Except as set forth in Schedule 4.18; (i) no
labor union or organization has been certified or recognized as a representative
of any employees
32
<PAGE> 34
of Central or any Central Subsidiary, (ii) to the knowledge of Central, there
are no current or threatened organizational activities or demands for
recognition by a labor organization seeking to represent employees of Central or
any Central Subsidiary, labor strikes, material arbitrations or material labor
grievances or difficulties and (iii) to the knowledge of Central no such
activities have occurred during the past 12 months.
Section 4.19 Insurance. All properties and operations of
Central and the Central Subsidiaries are insured for its respective benefit, in
such amounts and against such risks customarily insured against by persons
operating similar properties or conducting similar operations under valid and
enforceable policies issued by insurers of recognized responsibility. Central
does not have knowledge of any pending or threatened termination or
cancellation, coverage limitation or reduction, or material premium increase
with respect to any policy.
Section 4.20 Certain Contracts. Except as set forth on
Schedule 4.20, there is no contract to which Central or any Central Subsidiary
is a party which contains any (i) non-competition or non-solicitation provision,
(ii) any earn-out or lock-out provision, or (iii) any rights to share proceeds,
rights to repurchase, contingent payment or similar provision other than those
customary revenue sharing arrangements relating to ongoing business operations
contained in ordinary course of business lease and management agreement
participation provisions.
Section 4.21 Accounting Matters. Central believes, after
discussions with KPMG Peat Marwick LLP, that Central qualifies as a "combining
company" in accordance with the criteria set forth in paragraph 46 of Accounting
Principles Board Opinion No. 16 ("APB 16") and has not violated the criteria set
forth in paragraph Nos. 47c, 47d and 48c of APB 16 during the period extending
from two years preceding the initiation date of the Merger and the Closing Date.
Section 4.22 No Implied Representation. Notwithstanding
anything contained in this Article or any other provision of this Agreement, it
is the explicit intent of each party hereto that none of the Central
Stockholders, Central nor any Central Subsidiary, or any of their respective
affiliates, directors or officers is making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of the Central Stockholders, Central and Central Sub in this Agreement, the
Registration Rights Agreement or the Transaction Support Agreements. It is
understood that any estimates, projections or other predictions contained or
referred to in any Exhibit or Schedule hereto or which
33
<PAGE> 35
otherwise have been provided to Holdings or its representatives or affiliates
are not and shall not be deemed to be representations or warranties of Central,
any Central Stockholder or any Central Subsidiary or any of their respective
affiliates. Holdings acknowledges that there are uncertainties inherent in
attempting to make such estimates, projections and other predictions, that it is
familiar with such uncertainties, that it is taking full responsibility for
making its own evaluation of the adequacy and accuracy of all estimates,
projections and other predictions so furnished to it, and that it shall have no
claim against anyone with respect thereto.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business by Allright. During the period
from the date hereof to the Closing Date, without the prior written consent of
Central or except as contemplated by this Agreement, Holdings agrees to cause:
(a) the business of Allright and the Subsidiaries to
be operated in the ordinary course of business consistent with past practice;
(b) no change to be made in the corporate charter or
by-laws or other constituent documents of Holdings, Allright or any
Subsidiaries;
(c) except as set forth in Schedule 5.1(c) or
otherwise in the ordinary course of business consistent with past practices, (i)
no material increase in the compensation payable or to become payable by
Holdings, Allright or any Subsidiary to any officer, employee, consultant or
agent to be made (provided, that any increase in compensation payable to any
officers of Allright shall be set forth on Schedule 5.1(c), notwithstanding that
such increases were made in the ordinary course of business), and (ii) no bonus
or retirement or similar benefit or arrangement to be made or agreed to by
Holdings, Allright or any Subsidiary;
(d) except as set forth in Schedule 5.1(d), (i) no
capital expenditure or commitment to make a capital expenditure which involves
the payment of consideration having a value in excess of $1,200,000 in the
aggregate per quarter (without duplication with clause (ii) of this paragraph or
Section 5.1(e)) (excluding payments made for key money or fixed or capital
assets in connection with the entering into or renewal of any parking facility
lease), and (ii) no lease to be
34
<PAGE> 36
entered into or renewed which involves the payment of consideration having a
value in excess of $500,000 annual rent per year (without duplication with
clause (i) of this paragraph or Section 5.1(e)). For purposes of this paragraph,
"annual rent per year" as to a given lease shall equal (a) the average annual
rent computed in accordance with GAAP on a straight line basis with respect to
any leased facility plus (b)(x) the amount of payments made for key money, fixed
or capital assets in connection with the entering into or renewal of such lease,
divided by (y) the amount of base years with respect to such lease. In the event
that Central refuses to consent to any proposed lease pursuant to this Section
5.1(d), Central and any Central Subsidiary shall refrain from entering into any
transaction concerning the subject matter of such proposed lease;
(e) except as set forth in Schedule 5.1(e), no action
to be taken to by it, Allright or any Subsidiary to acquire any business
(whether by merger, consolidation, purchase of assets or otherwise) or acquire
any equity interest in any person not an affiliate (whether through a purchase
of stock, establishment of a joint venture or otherwise) which involves the
payment of consideration having a value in excess of $100,000 individually or
$1,000,000 in the aggregate (without duplication with Section 5.1(d)) with all
other such acquisitions. In the event that Central refuses to consent to any
proposed transaction pursuant to this Section 5.1(e), Central and any Central
Subsidiary shall refrain from entering into a transaction concerning the subject
matter of such proposed transaction;
(f) except for borrowings under credit facilities or
lines of credit existing on the date hereof or incurred to finance expenditures
or acquisitions permitted pursuant to Section 5.1(d) or 5.1(e), it, Allright or
any Subsidiaries not to incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise become responsible
for the obligations of any person, or make any loans, advances or capital
contributions to, any person other than its wholly owned subsidiaries, except in
the ordinary course of business consistent with past practice;
(g) to the extent reasonably practicable, (i) the
business organization of Allright and the Subsidiaries to remain intact and to
keep available to Central the opportunity to retain the services of the present
employees of Allright and the Subsidiaries and (ii) the goodwill of the
customers of Allright and the Subsidiaries and others having business relations
with Allright and the Subsidiaries to be preserved;
35
<PAGE> 37
(h) no action to be taken or failed to be taken that
would, or would be reasonably likely to, result in any of Holdings'
representations and warranties set forth in this Agreement not being true in
all material respects;
(i) Allright and the Subsidiaries to use their
reasonable best efforts to comply with all material legal requirements
applicable to them and to the conduct of their respective businesses;
(j) except as set forth in Schedule 5.1(j) and after
consultation with Arthur Andersen, Holdings, Allright and the Subsidiaries not
to sell, lease transfer or dispose of any of their properties not in the
ordinary course of business and provided such sale does not, in the reasonable
opinion of Arthur Andersen, jeopardize the Merger from being qualified as a
pooling-of-interests transaction for accounting purposes;
(k) except as set forth on Schedule 5.1(k), (i)
Holdings not to declare any dividend or make any distribution with respect to
its capital stock, and (ii) Allright and the Subsidiaries not to declare any
dividend or make any distribution with respect to their capital stock or
partnership interests, as the case may be, which is not made to minority
interest holders or partners pursuant to existing agreements, or which is not in
the ordinary course of business; and
(l) in the event Central does not provide a written
refusal for Allright or any Subsidiary to enter into any proposed above
transaction within five business days after receiving notification of such
proposal (with data reasonably requested by Central to evaluate such proposal)
from Allright, Holdings or any Subsidiary, Central shall be deemed to have
consented to such proposed transaction, and Allright, Holdings or such
Subsidiary may enter into any such proposed transaction as if Central had
provided its written consent.
Section 5.2 Conduct of Business by Central. During the period
from the date hereof to the Closing Date, without the prior written consent of
Holdings or except as contemplated by this Agreement, Central agrees to cause:
(a) the business of Central and the Central
Subsidiaries to be operated in the ordinary course of business consistent with
past practice;
(b) no change to be made in the corporate charter or
by-laws or other constituent documents of Central or any Central Subsidiaries;
36
<PAGE> 38
(c) except as set forth in Schedule 5.2(c), no
expenditure which involves the payment of consideration having a value in excess
of $20,000,000 individually or $75,000,000 in the aggregate (without duplication
with Section 5.2(d)) in respect of the purchase or other acquisition of real
estate or fixed or capital assets to be made, except for any such asset acquired
in connection with normal replacement and maintenance programs properly charged
to current operations or pursuant to or as required by existing contractual
obligations and except as to the renewal of presently existing leases which are
scheduled to expire according to their respective terms;
(d) except as set forth in Schedule 5.2(d), no action
to be taken to by it or any Central Subsidiaries to acquire any business
(whether by merger, consolidation, purchase of assets or otherwise) or acquire
any equity interest in any person not an affiliate (whether through a purchase
of stock, establishment of a joint venture or otherwise) which, involves the
payment of consideration having a value in excess of $20,000,000 individually or
$75,000,000 in the aggregate (without duplication with Section 5.2(c)) with all
other such acquisitions. In the event that Holdings refuses to consent to any
proposed transaction pursuant to this Section 5.1(d), Holdings, Allright and any
Subsidiary shall refrain from entering into a transaction concerning the subject
matter of such proposed transaction;
(e) except for borrowings under credit facilities or
lines of credit existing on the date hereof or incurred to finance an
expenditures or acquisitions permitted pursuant to Section 5.2(d) or 5.2(e), or
pursuant to the transactions contemplated by this Agreement, it, or any Central
Subsidiary not to incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise become responsible for
the obligations of any person, or make any loans, advances or capital
contributions to, any person other than its wholly owned subsidiaries, except in
the ordinary course of business consistent with past practice;
(f) no action to be taken or failed to be taken that
would, or would be reasonably likely to, result in any of Central's and Central
Sub's representations and warranties set forth in this Agreement not being true
in all material respects;
37
<PAGE> 39
(g) Central and the Central Subsidiaries to use their
reasonable best efforts to comply with all material legal requirements
applicable to them and to the conduct of their respective businesses;
(h) except as set forth in Schedule 5.2(h) and after
consultation with KPMG Peat Marwick LLP, Central and the Central Subsidiaries
not to sell, lease transfer or dispose of any of their properties to the extent
such sale may, in the reasonable opinion of KPMG Peat Marwick LLP, jeopardize
the Merger from being qualified as a pooling-of-interests transaction for
accounting purposes;
(i) other than regular quarterly dividends distributed
in the normal course of business, Central not to (i) declare, set aside or pay
any dividends on (whether in cash, stock or other securities), make any other
distributions in respect of, or enter into any agreement with respect to the
voting of, any of its capital stock or the capital stock, partnership interests,
membership interests or other equity, as the case may be, of the Central
Subsidiaries, or (ii) split, combine, issue, authorize for issuance, exchange or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities, except for issuances of Central Common Stock to a seller or
sellers for acquisitions permitted under Section 5.2(d), upon the exercise of
any stock options for Central Common Stock that are, in each case, outstanding
as of the date hereof in accordance with their present terms or the issuance of
Central Common Stock or Central Options under any Plans in the ordinary course
of business; and
(j) in the event Holdings does not provide a written
refusal for Central or any Central Subsidiary to enter into any transaction
above within five business days after receiving notification of such proposal
(with data reasonably requested by Holdings to evaluate such proposal) from
Central or any Central Subsidiary, Holdings shall be deemed to have consented to
such proposed transaction (other than transactions pursuant to paragraph (i),
for which affirmative consent is necessary) and Central or such Central
Subsidiary may enter into any such proposed transaction as if Holdings had
provided written consent.
Section 5.3 Preparation of the Form S-4 and the Proxy
Statement; Stockholders Meetings.
(a) As soon as practicable following the date of this
Agreement, Central shall prepare and file with the SEC a proxy
statement/prospectus relating to the meeting of Central's shareholders to be
held in connection with
38
<PAGE> 40
obtaining the Central Shareholder Approval (as the same may be amended or
supplemented from time to time, the "Proxy Statement") and Central shall prepare
and file with the SEC a registration statement on Form S-4 in connection with
the issuance of Central Common Stock pursuant to the Merger (as the same may be
amended or supplemented from time to time, the "Form S-4"), in which the Proxy
Statement will be included as a prospectus. Central shall use its reasonable
best efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Central will use its reasonable best
efforts to cause the Proxy Statement to be mailed to the holders of Central
Common Stock as promptly as practicable after the Form S-4 is declared effective
under the Securities Act. Central shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of the Central Common Stock in the Merger, and Holdings shall furnish all
information concerning Holdings and the holders of Holdings Common Stock as may
be reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the Form S-4 or the Proxy Statement will be made by
Central without providing Holdings and counsel to Holdings with the opportunity
to review and comment thereon. Central will advise Holdings, promptly after it
receives notice thereof, of the time when the Form S-4 has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Central Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement or the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any information relating
to Central or Holdings, or any of their respective affiliates, officers or
directors, should be discovered by Central or Holdings which should be set forth
in an amendment or supplement to any of the Form S-4 or the Proxy Statement, so
that any of such documents would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties hereto
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of Central.
(b) Central shall, as promptly as reasonably
practicable after the date hereof give notice of, convene and hold a meeting of
its stockholders (the
39
<PAGE> 41
"Central Stockholders Meeting") in accordance with the Tennessee Business
Corporation Act (the "Tennessee Act") and the requirements of the NYSE for the
purpose of obtaining Central's stockholder approval in accordance with the
Tennessee Act and the rules and regulations of the NYSE and shall, through its
Board of Directors, recommend to its shareholders that they provide the Central
Shareholder Approval.
(c) As an integral part of their obligations under
the Registration Rights Agreement, Central will use its reasonable best efforts
to comply with the provisions of Rule 144(c) under the Securities Act in order
that affiliates of Holdings may resell the Central Common Stock they receive
pursuant to the Merger pursuant to Rule 145(d) under the Securities Act, and
agrees that the Form S-4 will include such information as may be requested by
Holdings to permit resales of such Central Common Stock by persons who may be
deemed to be underwriters of Central Common Stock pursuant to Rule 145 under the
Securities Act.
(d) Holdings shall, as promptly as practicable after
the mailing of the Proxy Statement by Central, either (i) give notice of,
convene and hold a meeting of its stockholders in accordance with the Delaware
General Corporation Law (the "Delaware Act") or (ii) obtain an action by written
consent, executed by the requisite percentage of Holdings stockholders and in
accordance with the Delaware Act, for the purpose of obtaining Holdings'
stockholders approval in connection with the Merger in accordance with the
Delaware Act.
Section 5.4 Investigation; Non-Solicitation. Each of Central
and Holdings shall afford to one another's officers, employees, accountants,
counsel and other authorized representatives reasonable access during normal
business hours throughout the period prior to the Effective Time or the date of
termination of this Agreement, to its and its respective subsidiaries'
properties, contracts, commitments, books and records and any report, schedule
or other document filed or received by it during such period pursuant to the
requirements of federal or state securities laws and shall use its reasonable
best efforts to cause its respective representatives to furnish promptly to one
another such additional financial and operating data and other information as to
its and its subsidiaries' respective businesses and properties as the other or
its duly authorized representatives may from time to time reasonably request in
writing; provided, however, that nothing herein shall require either Central or
Holdings or any of their respective subsidiaries to disclose any information to
the other if such disclosure would cause competitive harm to such disclosing
party (in such party's reasonable judgment) or its affiliates if the
transactions contemplated by
40
<PAGE> 42
this Agreement are not consummated, or would be in violation of applicable laws
or regulations of any governmental entity; provided further, that
notwithstanding the above, Holdings shall allow Central and its representatives
reasonable access to information concerning, and Holdings agrees to meet with
Central and its representatives in connection with, (i) any $50,000 Leases,
which according to their respective terms are scheduled to expire within six
months from any time prior to the Closing Date, (ii) any $50,000 Lease for which
Allright or any Subsidiary has knowledge (based on reasonable information) that
the respective landlord has asserted or has threatened to assert a breach of any
consent or assignment provision contained in such lease as a result of the
Merger, and (iii) the retention of key management personnel. A representative
appointed by Holdings shall be present at any meeting between Holdings,
Allright, the Subsidiaries or any of their respective employees, directors and
officers, on the one hand, and Central, any of the Central Subsidiaries or any
of their respective employees, directors and officers, on the other hand. Unless
otherwise required by law and until the Effective Time, the parties will hold
any such information which is nonpublic in confidence in accordance with the
provisions of the Confidentiality Agreements between Central and Holdings, dated
as of January 30, 1998 and May 19, 1998 (the "Confidentiality Agreements"). AEW
and Apollo agree to reasonably cooperate, at Central's request and expense, in
connection with the retrieval of records or other documentation which AEW and
Apollo have in their possession regarding Allright's ability to utilize any net
operating loss carry-forwards.
Section 5.5 Approvals and Consents; Cooperation; Notification.
(a) The parties hereto shall use their respective
best efforts, and cooperate with each other, to obtain as promptly as
practicable all governmental and third party authorizations, approvals, consents
or waivers required in order to consummate the transactions contemplated by this
Agreement, including, without limitation, the Merger.
(b) The parties shall take all actions necessary to
file as soon as practicable all notifications, filings and other documents
required to obtain all governmental authorizations, approvals, consents or
waivers, including, without limitation, under the HSR Act, and to respond as
promptly as practicable to any inquiries received from the Federal Trade
Commission, the Antitrust Division of the Department of Justice and any other
governmental entity for additional information or documentation and to respond
as promptly as practicable to all inquiries and
41
<PAGE> 43
requests received from any State Attorney General or other governmental entity
in connection therewith.
(c) If any divesture of property or operations at a
particular parking facility is necessary in order to terminate the waiting
period required by the HSR Act in connection with the Merger, Central and
Holdings shall retain a mutually agreeable real estate appraisal firm (the
"Appraiser") for the purpose of appraising those facilities or operations which
must be divested in order to obtain termination of the HSR waiting period. In
connection therewith, the Equity Purchase Price set forth in Section 2.6(b)
shall be adjusted for any Divesture Gain or Divesture Loss. "Divesture Gain"
shall be computed as follows: thirty-five percent multiplied by the difference
between (a) the appraised value of such property or operations, as determined
by the Appraiser, and (b) (i) 16, multiplied by (ii) the EBITDA for such
property or operations at such facility for such property's or facility's prior
fiscal year. If such number shall be a negative number, such amount shall be
deemed a "Divesture Loss" for purposes of Section 2.6(b).
Section 5.6 Central Board of Directors. Promptly after the
Effective Time, the Board of Directors of Central (the "Central Board") shall be
expanded to ten members. At such time, Apollo and AEW shall each be entitled, in
its sole discretion, to designate one individual to the Central Board, who shall
serve in accordance with and for the time period specified by the Certificate of
Incorporation and By-laws of Central. If at any time Apollo or AEW, with their
respective affiliates, individually own, directly or indirectly, less than (i)
$50,000,000 worth of outstanding Central Common Stock, Central shall, at the
next election of the Central Board, have the right to decrease the number of
appointees to the Central Board that may be made by the shareholder failing to
meet such threshold from one to none. For purposes of the foregoing, the value
of the Central Common Stock held by Apollo and AEW, together with their
respective affiliates, shall be determined by multiplying the number of shares
of Central Common Stock then beneficially owned by such holders by the average
of the closing sale prices per share of Central Common Stock on the NYSE for the
prior 20 trading days. This Section 5.6 is intended to be for the benefit of
Apollo and AEW.
Section 5.7 Public Announcements. Other than disclosures
required by federal securities laws, the parties will consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement and the transactions contemplated hereby and shall
not make any such announcement if the other party hereto shall reasonably
object.
42
<PAGE> 44
Section 5.8 Tax Treatment of Merger. It is the intent of the
parties to this Agreement that the Merger be treated for federal income tax
purposes as a tax-free reorganization pursuant to Section 368(a) of the Code and
this Agreement shall constitute a "Plan of Reorganization" for purposes of the
Code, and the parties agree (i) not to take any actions which would prevent the
Merger from qualifying as such a reorganization, (ii) to report the transactions
under this Agreement consistent with such treatment and (iii) to take no
positions that are contrary thereto unless otherwise required by law.
Section 5.9 Expenses; Severance. All out-of-pocket transaction
costs and expenses incurred by Central or any Central Subsidiary in connection
with this Agreement and the transactions contemplated hereby, whether or not the
Merger is consummated, shall be paid by Central, and all Covered Transaction
Expenses incurred by Allright, any Subsidiary, Holdings, AEW and Apollo in
connection with this Agreement and the transactions contemplated hereby, if the
Merger is consummated, shall be paid by Holdings, and if the Merger is not
consummated, Allright, the Subsidiaries, Holdings, AEW and Apollo shall be
responsible for their own expenses incurred in connection with this Agreement
and the transactions contemplated hereby. Notwithstanding the foregoing, if the
Merger is not consummated solely by reason of a material breach of this
Agreement by Holdings, Holdings shall pay any and all out-of-pocket transaction
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby of Central and Central Sub up to a maximum of
$5,000,000 and if the Merger is not consummated solely by reason of a material
breach of this Agreement by Central, Central shall pay any and all out-of-pocket
transaction costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby of Allright, any Subsidiary, Holdings, AEW
and Apollo up to a maximum of $5 million. AEW and Apollo shall be solely
responsible for any payments required to be made to Cheslock, Bakker &
Associates, Inc. ("Cheslock Bakker"), other than with respect to the exchange of
Holdings Warrants held by Cheslock Bakker for Central Warrants as provided in
Section 2.5(e). Notwithstanding anything to the contrary herein, if the Merger
is not consummated as a result of the fact that either Section 6.2(g) or Section
6.3(f) shall not have been satisfied, the party whose accountant was unable to
deliver its pooling letter as required therein shall pay to the other party an
amount of $2.5 million for expenses incurred in connection with the execution of
this Agreement; provided, neither party shall be liable for such expenses if it
had not breached a representation, warranty or covenant herein. Nothing in this
Section 5.9 is intended to limit the rights of the parties hereto under Section
7.2. If
43
<PAGE> 45
the Merger is consummated, Central shall be solely responsible for any
obligation and payment to be made under any severance agreement, retention
agreement, stay-on bonus, non-compete agreement, compensation plan or severance
or retention provision of any employment, non-compete or retention agreement set
forth on Schedules 3.12(a), 3.20, 5.9(a), 5.9(b) or 5.10 which is incurred as a
result of the entering into of this Agreement, including but not limited to
payments required to be made immediately after the Effective Time pursuant to
the retention bonus agreements set forth on Schedule 5.9(a). Holdings shall use
its reasonable best efforts after the date hereof so that the persons listed on
Schedule 5.9(a) will enter into the retention bonus agreements substantially in
the form set forth on such Schedule 5.9(a) and that immediately after the
Effective Time, the persons listed on Schedules 5.9(b) and 5.9(c) will enter
into employment agreements and management continuity agreements with Allright
substantially in the form set forth on Schedules 5.9(b) and 5.9(c),
respectively, and Central shall cause Allright to enter into such employment
agreements and management continuity agreements at such time. Any material
modifications to the form retention agreement, employment agreement and
management continuity agreement set forth on Schedules 5.9(a), 5.9(b) and
5.9(c), respectively, shall be subject to the prior approval of Central and
Holdings.
Section 5.10 Employment Matters.
(a) Central hereby agrees to honor the Plans in
accordance with their terms as in effect on the date hereof, to the same extent
that Holdings, Allright and the Subsidiaries would be required to perform them
in the event that the Merger were not consummated. This Section 5.10(a) is
intended to be for the benefit of the beneficiaries of the Plans.
(b) Central shall honor, comply with and perform all
of the respective terms and all obligations of Holdings, Allright or the
Subsidiaries under any severance agreement, retention agreement, employment
agreement or any severance or retention provision of any employment agreement
set forth on Schedule 5.10. This Section 5.10(b) is intended to be for the
benefit of the employees party to such agreements. Central agrees to provide
severance to those employees of Allright or any Subsidiary which will be
terminated after the Closing Date and which do not have severance agreements or
severance provisions in any employment agreements in effect with Holdings,
Allright or any Subsidiary as of the Closing Date on terms not less favorable
than it would provide to any of its or the Central Subsidiaries' similarly
situated employees.
44
<PAGE> 46
(c) Central agrees that individuals who are employed
by Holdings, Allright or the Subsidiaries immediately prior to the Closing Date
shall remain employees of the Surviving Corporation immediately following the
Closing Date (each such employee, an "Affected Employee"); provided, however,
that nothing in this Section 5.10(c) shall limit or otherwise restrict the
ability of the Surviving Corporation to terminate, lay-off or reduce the work
hours with respect to the employment of any Affected Employees following their
initial continued employment following the Effective Time.
(d) Central shall, or shall cause the Central
Subsidiaries or the Surviving Corporation to, give Affected Employees full
credit, for purposes of eligibility, vesting, benefit accrual and determination
of the level of benefits under any employee benefit plans or arrangements
maintained by Central or the Central Subsidiaries or the Surviving Corporation,
for such Affected Employees' service with Holdings, Allright or the Subsidiaries
to the same extent recognized by the Holdings, Allright and the Subsidiaries
immediately prior to the Closing Date, provided however that the Affected
Employees' eligibility to participate in, and benefits under, such plans and
arrangements shall otherwise be determined under the terms of such plans.
(e) Central shall, or shall cause the Central
Subsidiaries or the Surviving Corporation to, (i) waive all limitations as to
preexisting conditions exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Affected Employees
under any welfare benefit plans that such employees may be eligible to
participate in after the Closing Date, other than limitations or waiting
periods that are already in effect with respect to such employees and that have
not been satisfied as of the Closing Date under any welfare plan maintained for
the Affected Employees immediately prior to the Closing Date and (ii) provide
each Affected Employee with credit for any co-payments and deductibles paid
prior to the Closing Date in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such employees are
eligible to participate in after the Closing Date.
(f) For a period of two years immediately following
the Closing Date, the coverage and benefits provided to Affected Employees
pursuant to employee benefit plans or arrangements maintained by Central or the
Central Subsidiaries or the Surviving Corporation shall be, in the aggregate,
not less favorable than those provided to similarly situated employees of
Central and the Central Subsidiaries and the Surviving Corporation.
45
<PAGE> 47
Section 5.11 Indemnification, Exculpation and Insurance.
(a) Central and Central Sub agree that all rights to
indemnification and exculpation from liabilities for acts or omissions
occurring at or prior to the Effective Time now existing in favor of the current
or former directors, officers, employees or agents of Holdings, Allright and the
Subsidiaries as provided in their respective certificates of incorporation or
by-laws (or comparable organizational documents) and any indemnification
agreements or arrangements of Holdings, Allright or any Subsidiary the existence
of which does not cause a breach of this Agreement shall be assumed by Central,
shall survive the Merger and shall continue in full force and effect, without
amendment, for six years after the Effective Time; provided, however, that all
rights to indemnification in respect of any claim asserted or made within such
period shall continue until the final disposition of such claim. Central shall
cooperate in the defense of any such matter. In addition, from and after the
Effective Time, directors or officers of Holdings, Allright or any Subsidiary
who become directors or officers of Central or any Central Subsidiary will be
entitled to the same indemnity rights and protections as are afforded to other
directors and officers of Central or such Central Subsidiary.
(b) In the event that either of the Surviving
Corporation or Central or any of its successors or assigns (i) consolidates with
or merges into any other person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision will be made so that the
successors and assigns of Central or the Surviving Corporation, as applicable,
will assume the obligations thereof set forth in this Section 5.11.
(c) The provisions of this Section 5.11 (i) are
intended to be for the benefit of, and will be enforceable by, each indemnified
party, his or her heirs and his or her representatives and (ii) are in addition
to, and not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise.
(d) For six years after the Effective Time, Central
or the Surviving Corporation shall maintain in effect Holdings' and Allright's
current directors' and officers' liability insurance covering acts or omissions
occurring prior to the Effective Time with respect to those persons who are
currently covered by such directors' and officers' liability insurance policy on
terms with respect to such
46
<PAGE> 48
coverage and amount no less favorable in the aggregate currently covered by such
insurance than those of such policy in effect on the date hereof; provided that
Central may substitute therefor policies of Central or the Central Subsidiaries
containing terms with respect to coverage and amount no less favorable to such
directors or officers or, in the alternative, Central may purchase a "tail" on
Holdings' existing insurance policy for a term of not less than six years.
(e) Central shall cause the Surviving Corporation or
any successor thereto to comply with its obligations under this Section 5.11.
(f) This Section 5.11 is intended to be for the
benefit of such directors and officers.
Section 5.12 NYSE Exchange Listings. Central shall use best
efforts to cause the Central Common Stock issuable under pursuant to the Merger
to be approved for listing on the NYSE, subject to official notice of issuance,
as promptly as practicable after the date hereof, and in any event prior to the
Closing Date.
Section 5.13 Affiliates.
(a) Holdings and Central will use their reasonable
best efforts to cause all persons who, at the time of the Central Stockholders
Meeting, may be deemed to be affiliates of Holdings as that term is used under
Rule 145 under the Securities Act and who will become the beneficial owners of
Central Common Stock pursuant to the Merger, or affiliates of Holdings or
Central for purposes of qualifying the Merger for pooling of interests
accounting treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations, to execute "affiliate letters" in
customary form prior to the Effective Time.
(b) Central shall use its reasonable best efforts to
publish on the earliest possible date after the end of the first month after the
Effective Time in which there are at least 30 days of post-Merger combined
operations (which month may be the month in which the Effective Time occurs),
combined sales and net income figures as contemplated by and in accordance with
the terms of SEC Accounting Series Release No. 135.
(c) This Section 5.13 is intended to be for the
benefit of affiliates of Holdings.
47
<PAGE> 49
Section 5.14 Pooling of Interests. Each of Holdings and
Central shall use reasonable best efforts to cause the transactions contemplated
by this Agreement and the Registration Rights Agreement, including the Merger,
to be accounted for as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations, and such accounting
treatment to be accepted by Central's accountants and by the SEC, and each of
Holdings and Central agrees that it shall take no action that would cause such
accounting treatment not to be obtained. Central shall, if necessary, take any
action required on its part to permit the Central Stockholders to comply with
their obligations under the Transaction Support Agreements in connection with
obtaining pooling-of-interests accounting treatment for the Merger. Any breach
by the Central Stockholders under the Transaction Support Agreements with
respect to such obligations shall be deemed a breach of this Section 5.14 by
Central.
Section 5.15 Conveyance Taxes. Holdings and Central shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees or any similar taxes
which become payable in connection with the transactions contemplated by this
Agreement that are required or permitted to be filed on or before the Effective
Time. Holdings shall pay any such taxes or fees imposed by any governmental
entity, which become payable in connection with the transactions contemplated by
this Agreement, on behalf of the respective shareholders of Holdings and
Central.
Section 5.16 Registration Rights Agreement. Central shall not
amend the Registration Rights Agreement, or agree to give the Central
Stockholders additional registration rights at any time that AEW or Apollo shall
have registration rights under the Registration Rights Agreement, without the
prior written consent of AEW and Apollo.
Section 5.17 Restructuring Agreement. Central agrees to cause
the parties to the Restructuring Agreement, dated as of the date hereof, by and
among Edison Parking Management, L.P., Allright, AParkco, Inc., Allright Parking
Management, Inc., AParkco Finance, Inc., Allright New York Parking, Inc.,
Edison Parking Corp., Park Fast Parking Management L.P. and Edison Leasing
Management Company, LLC, which it shall directly or indirectly control at or
following the Effective Time, to consummate the transactions contemplated
therein.
48
<PAGE> 50
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligations to Effect
the Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or, where permissible, waiver at or prior to the
Effective Time, of each of the following conditions:
(a) the Central Shareholder Approval shall have been
obtained;
(b) none of Holdings, Allright, Central or Central
Sub shall be subject to any order, decree, ruling or other action of a court of
competent jurisdiction which restrains, delays or otherwise prohibits the
transactions contemplated by this Agreement;
(c) the Form S-4 shall have become effective
(reflecting pooling-of-interests accounting treatment) under the Securities Act
prior to the mailing of the Proxy Statement by Central and no stop order or
proceedings seeking a stop order shall have been entered or be pending by the
SEC;
(d) the shares of Central Common Stock issuable to
the Holdings' stockholders pursuant to the Merger shall have been approved for
listing on the NYSE, subject to official notice of issuance; and
(e) any waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
Section 6.2 Conditions to the Obligations of Central to Effect
the Merger. The obligations of Central and Central Sub to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) The representations and warranties of Holdings
set forth in this Agreement (without taking into account any qualifications as
to materiality contained in such representations and warranties) shall be true
and correct when made and as of the Closing Date (except to the extent that any
such representation and warranty had by its terms been made as of a specific
date, in which case such
49
<PAGE> 51
representation and warranty shall be true and correct as of such date), and
Holdings, Allright and the Subsidiaries shall have performed the obligations to
be performed by each under this Agreement prior to the Closing Date, except
where the failure to be so true and correct, and all failures to perform and
comply with such obligations (without taking into account any qualifications as
to materiality contained in such representations, warranties, covenants and
agreements), does not and will not have, in the aggregate, a Holdings Material
Adverse Effect. Any information delivered by Holdings to Central prior to the
Effective Time for attachment to the schedules to bring down the representations
and warranties contained herein on the Closing Date which supplements or updates
any schedule previously delivered shall be used for determining if any
representation or warranty set forth in this Agreement is true and correct on
the Closing Date and for determining if Central had knowledge of a particular
fact as of the Closing Date, in each case, for purposes of Central's ability to
seek indemnification under Article VIII, provided that the supplemented or
updated schedule shall not be used for determining if any representation or
warranty set forth in this Agreement shall have been true on the date hereof,
and provided further that the updating or supplementing of any schedule shall
not limit Central's rights under Section 6.2(a) and Section 6.2(b) herein. The
updating of any schedule shall not be deemed an admission by Holdings that it
has breached any representation or warranty contained herein.
(b) There shall not have occurred any Holdings
Material Adverse Effect since the date of this Agreement.
(c) Central shall have received a certificate to the
effect that the conditions set forth in Section 6.2 (a) and 6.2(b) have been
satisfied signed on behalf of Holdings by an officer of Holdings.
(d) Central shall have received an opinion from KPMG
Peat Marwick LLP, tax counsel to Central, in form and substance reasonably
satisfactory to Central, dated as of the Closing Date, substantially to the
effect that, on the basis of facts, representations, and assumptions set forth
in such opinion that are consistent with the state of facts existing at the
Effective Time, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
accordingly:
(i) no gain or loss will be recognized by
Central, Holdings or Central Sub as a result of the Merger;
50
<PAGE> 52
(ii) no gain or loss will be recognized by the
stockholders of Holdings on the exchange of their Holdings Common Stock
for Central Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in Central Common
Stock); and
(iii) the tax basis of the Central Common Stock
received by shareholders who exchange their Holdings Common Stock for
Central Common Stock in the Merger will be the same as the tax basis of
Holdings Common Stock surrendered in exchange therefor (reduced by any
amount allocable to a fractional share interest for which cash is
received).
In rendering such opinion, Central's counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Central, Central Sub, Holdings and others, including certificates
substantially in the form of Exhibits A and B.
(e) Central shall have received an opinion from
Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Holdings, in form and
substance reasonably satisfactory to Central and its counsel.
(f) Holdings shall have delivered to Central
Allright's audited financial statements prepared in accordance with GAAP for the
fiscal year ended June 30, 1998.
(g) Holdings shall have provided to Central a letter
from Arthur Andersen, stating their belief that Holdings qualifies as a
"combining company" in accordance with the criteria set forth in paragraph 46
of Accounting Principles Board Opinion No. 16 ("APB 16") and has not violated
the criteria set forth in paragraph Nos. 47c, 47d and 48c of APB 16 during the
period extending from two years preceding the initiation date of the Merger and
the Closing Date, and KPMG Peat Marwick LLP shall have delivered a letter to
Central, stating their belief that there are no conditions which exist which
would preclude Central from accounting for the Merger as a pooling-of-interests
pursuant to APB 16, provided, that if KPMG Peat Marwick LLP does not provide
such letter to Central, KPMG Peat Marwick LLP must deliver a letter to Central
(and Central shall immediately deliver such letter to Holdings) stating its
belief as to what condition exists which would preclude Central from accounting
for the Merger as a pooling-of-interests
51
<PAGE> 53
pursuant to APB 16, and in such letter also state what facts, if any, have
changed since the later of the date hereof and the date on which the Proxy
Statement was mailed to Central's shareholders pursuant to Section 5.3 to cause
KPMG Peat Marwick LLP to change its belief with respect to such issues and why,
in its reasonable opinion, Central cannot take actions to cure such pooling
issues.
(h) AEW and Apollo shall have executed and delivered
to Central the Noncompetition Agreement, substantially in the form of Exhibit C.
Section 6.3 Conditions to the Obligations of Holdings to
Effect the Merger. The obligations of Holdings to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of Central and
Central Sub set forth in this Agreement (without taking into account any
qualifications as to materiality contained in such representations and
warranties) shall be true and correct when made and as of the Closing Date
(except to the extent that any such representation and warranty had by its terms
been made as of a specific date, in which case such representation and warranty
shall be true and correct as of such date), and Central, Central Sub and the
Central Subsidiaries shall have performed the obligations to be performed by
each under this Agreement prior to the Closing Date, except where the failure to
be so true and correct, and all failures to perform and comply with such
obligations (without taking into account any qualifications as to materiality
contained in such representations, warranties, covenants and agreements), does
not and will not have, in the aggregate, a Central Material Adverse Effect. Any
information delivered by Central to Holdings prior to the Effective Time for
attachment to the schedules to bring down the representations and warranties
contained herein on the Closing Date which supplements or updates any schedule
previously delivered shall be used for determining if any representation or
warranty set forth in this Agreement is true and correct on the Closing Date and
for determining if Holdings had knowledge of a particular fact as of the Closing
Date, in each case, for purposes of Holdings ability to seek indemnification
under Article VIII, provided that the supplemented or updated schedule shall not
be used for determining if any representation or warranty set forth in this
Agreement shall have been true on the date hereof, and provided further that the
updating or supplementing of any schedule shall not limit Holding's rights under
Section 6.3(a) and Section 6.3(b) herein. The updating of any schedule shall not
be deemed an admission by Central that its has breached any representation or
warranty contained herein.
52
<PAGE> 54
(b) There shall not have occurred any Central
Material Adverse Effect since the date of this Agreement.
(c) Holdings shall have received a certificate to the
effect that the conditions set forth in the foregoing clauses (a) and (b) have
been satisfied signed on behalf of Central and Central Sub by an officer of
Central and Central Sub, respectively.
(d) Holdings shall have received an opinion from
Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Holdings, in form and
substance reasonably satisfactory to Holdings, dated as of the Closing Date,
substantially to the effect that, on the basis of facts, representations, and
assumptions set forth in such opinion that are consistent with the state of
facts existing at the Effective Time, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code and that accordingly:
(i) no gain or loss will be recognized by
Central, Holdings or Central Sub as a result of the Merger;
(ii) no gain or loss will be recognized by the
stockholders of Holdings on the exchange of their Holdings Common Stock
for Central Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in Central Common
Stock); and
(iii) the tax basis of the Central Common Stock
received by shareholders who exchange their Holdings Common Stock for
Central Common Stock in the Merger will be the same as the tax basis of
Holdings Common Stock surrendered in exchange therefor (reduced by any
amount allocable to a fractional share interest for which cash is
received).
In rendering such opinion, Skadden, Arps, Slate, Meagher & Flom LLP may
require and rely upon representations and covenants including those contained in
certificates of officers of Central, Central Sub, Holdings and others, including
certificates substantially in the form of Exhibits A and B.
53
<PAGE> 55
(e) Allright shall have received an opinion from
Harwell, Howard, Hyne, Gabbert & Manner, P.C., counsel to Central, in form and
substance reasonably satisfactory to Holdings and its counsel.
(f) Central shall have provided to Holdings a letter
from KPMG Peat Marwick LLP, stating their belief that no condition exists which
would preclude Central from accounting for the Merger as a pooling-of-interests
pursuant to APB 16, and Arthur Andersen shall have delivered a letter to
Holdings, stating their belief that Holdings qualifies as a "combining company"
in accordance with the criteria set forth in paragraph 46 of APB 16 and has not
violated the criteria set forth in paragraph Nos. 47c, 47d and 48c of APB 16
during the period extending from two years preceding the initiation date of the
Merger and the Closing Date, provided, that if Arthur Andersen does not provide
such letter to Holdings, Arthur Andersen must deliver a letter to Holdings (and
Holdings shall immediately deliver such letter to Central) stating its belief as
to why Holdings does not qualify as a "combining company" in accordance with the
criteria set forth in paragraph 46 of APB 16 or its belief as to how Holdings
has violated the criteria set forth in paragraph Nos. 47c, 47d and 48c of APB 16
during the period extending from two years preceding the initiation date of the
Merger and the Closing Date, as the case may be, and in such letter also state
what facts, if any, have changed since the later of the date hereof and the date
on which the Proxy Statement was mailed to Central's shareholders pursuant to
Section 5.3 to cause Arthur Andersen to change its belief with respect to such
issues and why, in its reasonable opinion, Holdings cannot take actions to cure
such pooling issues.
ARTICLE VII
TERMINATION; NON-CONSUMMATION
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual agreement of all of the parties hereto;
(b) by Holdings or Central upon notice given to the
other in the event that the other shall, contrary to the terms of this
Agreement, fail or refuse to consummate the transactions contemplated hereby or
to take any other action
54
<PAGE> 56
referred to herein necessary to consummate the transactions contemplated hereby,
after affording such defaulting party a thirty-day period after notice in which
to cure;
(c) by Holdings or Central upon notice given to the
other if the Closing shall not have taken place on or before 120 days after the
date hereof (or such later date as Holdings and Central shall have agreed);
provided that the failure of the Closing to occur on or before such date is not
the result of the breach of the covenants, agreements, representations or
warranties hereunder of the party seeking such termination, and provided further
that if the Closing has not taken place due solely to the fact that the waiting
period under the HSR Act shall not have expired or been terminated, the 120 days
referred to above may be extended at the option of either Holdings or Central
for an additional 60 days, and, provided further that to the extent the SEC has
not declared the Form S-4 effective on or before 120 days after the date hereof
solely as a result of the fact that Holdings had not delivered to Central
audited financial statements for the fiscal year ended June 30, 1998 prior to
September 30, 1998, the 120 days shall be extended by the number of days after
September 30, 1998 that such financial statements were delivered; or
(d) by Holdings or Central upon written notice to the
other party if any court or governmental authority of competent jurisdiction
shall have issued a final permanent order, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement.
Section 7.2 Effect of Termination, Non-Competition.
(a) In the event of the termination of this Agreement
as provided in Section 7.1, this Agreement shall forthwith become wholly void
and of no further force and effect and, other than in the event of a termination
pursuant to Section 7.1(b), there shall be no liability on the part of any of
the parties hereto (except as set forth in this Section and Sections 5.9 and
9.4), or their respective officers or directors. In the event of the termination
of this Agreement pursuant to Section 7.1(b), the terminating party shall be
indemnified by the other party for any or all damages, costs and expenses
sustained or incurred as a result of such termination. The obligations of the
parties to this Agreement under Sections 5.4, 5.9, 9.4 and this Section shall
survive any such termination. The terms of the Confidentiality Agreements
between Central and Holdings, dated January 30, 1998 and May 19, 1998, shall
survive according to the terms contained therein, notwithstanding the
termination of this Agreement, provided that the terms of the
55
<PAGE> 57
Confidentiality Agreement may be enforced on behalf of Holdings and Allright by
AEW and Apollo.
(b) Central shall not use any of the information
obtained with respect to Holdings, Allright or any Subsidiary or any landlord of
a property leased or managed by Holdings, Allright or any Subsidiary to compete,
directly or indirectly, with Holdings, Allright or any Subsidiary, whether with
respect to customers, suppliers, employees or with regard to pricing,
distribution or otherwise at any time after the date hereof until the Closing.
In addition, for a period of time as set forth below in paragraph (c) below,
Central agrees to refrain from, directly and indirectly, making any offer or
proposal, or seeking or soliciting the opportunity, or responding to any
solicitation, or entering into any agreement to, operate, acquire, lease or
manage any parking facility which Allright or any Subsidiary operated, owned,
leased or managed, or is subject to a binding agreement (provided, in the case
of a parking facility subject to a binding agreement, only if such binding
agreement was disclosed to Central) to do any of the foregoing, as of the date
hereof or the date of termination of this Agreement, or encouraging any owner,
lessor, partner or customer (or any of their respective affiliates) with respect
to such parking facility to terminate (whether or not pursuant to an existing
right of termination) or otherwise adversely modify its business relationship
with Allright or any Subsidiary in any matter whatsoever. In addition, for the
time period set forth below, Central will refrain from directly or indirectly
employing, attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with Allright or any Subsidiary who
was employed by Allright or any Subsidiary either on the date hereof or on the
date of termination of this Agreement.
(c) For purposes of paragraph (b), in the event the
Merger is not consummated as a result of the conditions set forth in Sections
6.2 (a) (with respect to the bring-down of representations and warranties) or
6.2(b), not being satisfied, or upon a material breach of this Agreement by
Central, the restrictions on Central's ability to compete shall be for a period
of three years, and if the Merger is not consummated for any other reason, such
restrictions shall be in effect for a period of eighteen months.
56
<PAGE> 58
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 8.1 Survival of Representations, Warranties and
Agreements. The representations, warranties and covenants of each of Holdings,
Central and Central Sub made in this Agreement shall survive the Closing until
the first anniversary of the Closing (the "Indemnity Period"), except for
representations and warranties made in Section 3.8 (other than with respect to
breaches of Section 3.8 arising from a fraudulent act or fraudulent omission
committed by AEW, Apollo Holdings or Allright in connection with the preparation
of the Financial Statements) and Section 3.16 (other than with respect to those
properties not contained in the Law Report (as defined below)), which shall not
survive the Closing. The aforementioned representations, warranties and
covenants shall not, except as provided in Section 7.2 hereof, survive any
termination of this Agreement. The parties intend to shorten the statute of
limitations and agree that no claims or causes of action may be brought against
each of AEW, Apollo, Holdings, Central and Central Sub or any of its directors,
officers, employees, affiliates, controlling persons, agents or representatives
based upon, directly or indirectly, any of the representations, warranties or
agreements contained in this Agreement after the Indemnity Period or, except as
provided in Section 7.2 hereof, any termination of this Agreement. This Section
8.1 shall not limit any covenant or agreement of the parties which contemplates
performance after the Closing, including, without limitation, the covenants and
agreements set forth in Sections 5.6, 5.10, 5.11, 5.13 and 5.15 hereof.
Section 8.2 Agreement to Indemnify by AEW and Apollo.
(a) Subject to the terms and conditions set forth
herein, from and after the Closing, AEW and Apollo shall indemnify and hold
harmless Central, the Surviving Corporation and their respective directors,
officers, employees, affiliates, controlling persons, agents and representatives
and their successors and assigns (collectively, the "Central Indemnitees") from
and against all liability, demands, claims, actions or causes of action,
assessments, losses, damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses, but excluding any such claims, losses
or damages related to breaches of representations and warranties contained in
Section 3.8 (other than with respect to breaches of Section 3.8 arising from a
fraudulent act or fraudulent omission committed by AEW, Apollo, Holdings or
Allright in connection with the preparation of the Financial Statements) and
Section 3.16 hereof (other than with respect to properties not
57
<PAGE> 59
contained in the Law Report)) (collectively, "Central Damages") asserted against
or incurred by any Central Indemnitee as a result of or arising out of a breach
of any representation, warranty or covenant contained in this Agreement
(excluding representations and warranties contained in Section 3.8 (other than
with respect to breaches of Section 3.8 arising from a fraudulent act or
fraudulent omission committed by AEW, Apollo, Holdings or Allright in connection
with the preparation of the Financial Statements) and Section 3.16 hereof (other
than with respect to properties not contained in the Law Report), and excluding
any breaches of representations and warranties with respect to matters for which
Central or its representatives had knowledge (based on reasonable information)
prior to the date hereof), without consideration of materiality standards
contained in the representations and warranties, when made or at and as of the
Closing as though such representation or warranty was made at and as of the
Closing. Notwithstanding the foregoing, AEW and Apollo shall not be liable for
any breaches of representations and warranties resulting in Central Damages if
Central or its representatives had knowledge of such breaches (based on
reasonable information) at the Closing Date.
(b) The obligations of AEW and Apollo to indemnify
the Central Indemnitees pursuant to Section 8.2(a) hereof with respect to a
breach of a representation, warranty or covenant contained in this Agreement,
excluding representations and warranties contained in Section 3.8 (other than
with respect to breaches of Section 3.8 arising from a fraudulent act or
fraudulent omission committed by AEW, Apollo, Holdings or Allright in
connection with the preparation of the Financial Statements) and Section 3.16
hereof (other than with respect to properties not contained in the Law Report),
are subject to the following limitations:
(i) No indemnification shall be made by AEW
or Apollo unless the aggregate amount of Central Damages exceeds
$4,000,000, and then only for the amount by which the Central Damages
exceed $4,000,000. Each of Apollo and AEW shall be liable for 50% of
all Central Damages in excess of $4,000,000, in the aggregate, and not
exceeding $34,000,000, in the aggregate; provided, however, that AEW or
Apollo shall not be liable for the obligations of the other under this
Section 8.2(b)(i).
(ii) AEW and Apollo shall be obligated to
indemnify the Central Indemnitees only for those claims giving rise to
Central Damages as to which the Central Indemnitees have given each of
AEW and Apollo written notice thereof prior to the end of the
58
<PAGE> 60
Indemnity Period. Any written notice delivered by a Central Indemnitee
to AEW and Apollo with respect to Central Damages shall set forth with
as much specificity as is reasonably practicable the basis of the
claim for such Central Damages and, to the extent reasonably
practicable, a reasonable estimate of the amount thereof.
(iii) The sole remedy for any Excess Severance
shall be an adjustment to the Equity Purchase Price as set forth in
Section 2.6(b), and the Central Indemnitees shall not be entitled to
indemnification hereunder for any Central Damages arising from any such
increase in aggregate severance exposure.
Section 8.3 Agreement to Indemnify by Central.
(a) Subject to the terms and conditions set forth
herein, from and after the Closing, Central shall indemnify and hold harmless
the stockholders of Holdings as of the Closing (and, in the case where such
stockholders are not natural persons, their respective directors, officers,
employees, affiliates, controlling persons, agents and representatives) and
their permitted successors and assigns (collectively, the "Holdings
Indemnitees") from and against all liability, demands, claims, actions or causes
of action, assessments, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) (collectively, "Holdings
Damages") asserted against or incurred by any Holdings Indemnitee as a result of
or arising out of a breach of any representation, warranty or covenant contained
in this Agreement (excluding any breaches of representations and warranties with
respect to matters for which Holdings or its representatives had knowledge
(based on reasonable information) prior to the date hereof), without
consideration of materiality standards contained in the representations and
warranties, when made or at and as of the Closing as though such representation
or warranty was made at and as of the Closing. Notwithstanding the foregoing,
Central shall not be liable for any breaches of representations and warranties
resulting in Holdings Damages if Holdings had knowledge of such breaches (based
on reasonable information) at the Closing Date.
(b) The obligations of Central to indemnify the
Holdings Indemnitees pursuant to Section 8.3(a) hereof with respect to a breach
of a representation or warranty contained in this Agreement are subject to the
following limitations:
59
<PAGE> 61
(i) No indemnification shall be made by Central
unless the aggregate amount of Holdings Damages exceeds $4,000,000, and
then only for the amount by which the Holdings Damages exceed
$4,000,000 and do not exceed $34,000,000, in the aggregate.
(ii) Central shall be obligated to indemnify the
Holdings Indemnitees only for those claims giving rise to Holdings
Damages as to which the Holdings Indemnitees have given Central written
notice thereof prior to the end of the Indemnity Period. Any written
notice delivered by a Holdings Indemnitee to Central with respect to
Holdings Damages shall set forth with as much specificity as is
reasonably practicable the basis of the claim for such Holdings Damages
and, to the extent reasonably practicable, a reasonable estimate of the
amount thereof.
Section 8.4 Indemnification - Environmental Matters.
(a) Subject to the terms and conditions set forth
herein, from and after the Closing, AEW and Apollo shall indemnify and hold
harmless the Central Indemnitees from and against all liability, demands,
claims, actions or causes of action, assessments, losses, damages, costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, but excluding the Central Damages) (collectively, the "Environmental
Damages" and, together with the Central Damages, the "Damages") asserted against
or incurred by any Central Indemnitee solely with respect to those matters
contained in the report of Law Engineering & Environmental Services, Inc., dated
July 19, 1996 (the "Law Report") previously furnished to Central and set forth
on Schedule 8.4. The obligations of AEW and Apollo under this Section 8.4(a)
shall terminate upon the thirty month anniversary of the Closing (the
"Environmental Indemnity Period").
(b) The obligations of AEW and Apollo to indemnify
the Central Indemnitees pursuant to clause (i) of Section 8.4(a) are subject to
the following limitations:
(i) With respect to each individual property,
each of Apollo and AEW shall be liable up to a maximum of 25% of all
Environmental Damages (the remaining 50% shall be the sole liability
and responsibility of Central) described in the Law Report
60
<PAGE> 62
under the column entitled "nominal cost" for that property, and in no
event shall either be liable for over $5,000,000, in the aggregate,
for all properties. In no event shall AEW or Apollo be liable for the
obligations of the other or Central under this Section 8.4(b)(i).
(ii) AEW and Apollo shall be obligated to
indemnify the Central Indemnitees only for those claims giving rise to
Environmental Damages as to which the Central Indemnitees have given
each of AEW and Apollo written notice thereof prior to the end of the
Environmental Indemnity Period. Any written notice delivered by a
Central Indemnitee to AEW and Apollo with respect to Environmental
Damages shall set forth with as much specificity as is reason ably
practicable the basis of the claim for such Environmental Damages and,
to the extent reasonably practicable, a reasonable estimate of the
amount thereof.
(iii) No indemnification shall be made by AEW
or Apollo for environmental clean up costs incurred with respect to a
particular property to the extent such clean up costs are not (i)
required to be incurred by the Central Indemnitees by a federal, state
or local governmental or regulatory agency or (ii) incurred by the
Central Indemnities in connection with the sale or refinancing of such
property to the extent required by the buyer or the lender thereto, as
the case may be.
Section 8.5 Procedures. The obligations of the indemnifying
parties under this Article VIII to indemnify the indemnified parties with
respect to Damages or Holdings Damages, as the case may be, resulting from the
assertion of liability by third parties (a "Claim"), will be subject to the
following terms and conditions:
(a) An indemnitee against whom any Claim is asserted
will give the indemnifying party or parties, as the case may be, written notice
of any such Claim promptly after learning of such Claim, and each indemnifying
party may at its option undertake the defense thereof by representatives of its
own choosing. Failure to give prompt notice of a Claim hereunder shall not
affect the obligations of the indemnifying party or parties, as the case may be,
under this Article VIII except to the extent an indemnifying party is materially
prejudiced by such failure to give prompt notice. If an indemnifying party
within 30 days after notice of any such Claim, or such shorter period as is
reasonably required, fails to assume the defense of
61
<PAGE> 63
such Claim, the indemnitee against whom such Claim has been made will (upon
further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such Claim on behalf of and for the account
and risk, and at the expense, of the indemnifying party or parties, as the case
may be, subject to the right of each indemnifying party to assume the defense of
such Claim at any time prior to settlement, compromise or final determination
thereof. In connection with the handling and disposition of any Claim, the
parties agree to use their reasonable best efforts to cooperate and consult with
each other to the extent practicable in order to mitigate any Holdings Damages,
Environmental Damages or Central Damages which may arise from any such Claim.
(b) Anything in this Section 8.5 to the contrary
notwithstanding, no indemnitee shall enter into any settlement or compromise of
any action, suit or proceeding or consent to the entry of any judgment (i) which
does not include as an unconditional term thereof the delivery by the claimant
or plaintiff to the indemnifying party or parties, as the case may be, of a
written release from all liability in respect of such action, suit or proceeding
and (ii) without the prior written consent of the indemnifying party or parties,
as the case may be, which consent shall not be unreasonably withheld or
delayed.
(c) All obligations for indemnification incurred by
each of the indemnifying party or parties, as the case may be, under this
Article VIII may be satisfied, in the sole discretion of the indemnifying party
or parties, as the case may be, by the payment of Central Common Stock in lieu
of cash, provided, however, that Central shall satisfy any such obligation only
through a payment of Central Common Stock to the extent required in order to
qualify the Merger as a pooling of interests transaction under APB 16. For
purposes of this subsection, the value of a share of Central Common Stock
delivered in lieu of cash under this clause shall be deemed to equal the closing
sale price per share of Central Common Stock on the NYSE on the Closing Date.
(d) The amount of Damages and Holdings Damages for
which indemnification is provided under this Article VIII herein shall be net of
(i) any amounts recovered by the appropriate indemnitee under insurance policies
with respect to such Damages or Holdings Damages, (ii) any balance sheet
reserves with respect to such Damages or Holdings Damages to the extent
accounted for on the balance sheet delivered in connection with the Working
Capital Adjustment, and (iii) any amounts recovered by the appropriate
indemnitee pursuant to third party indemnification agreements; provided that in
the case of (i) and (iii) above, the
62
<PAGE> 64
indemnitee must first seek recovery from such insurance carrier or third party,
as the case may be, prior to seeking indemnification from an indemnifying party
hereunder; provided, further, that the indemnitee shall not adversely modify,
reduce coverage or terminate any existing insurance policy or third party
indemnification agreement prior to the expiration of the Indemnity Period or,
with respect to environmental insurance policies and third party indemnification
agreements relating to matters set forth in Section 8.4, if any, the
Environmental Indemnity Period.
Section 8.6 Sharing of Purchase Claim Costs. Subject to the
terms and conditions set forth herein, AEW, Apollo and Central agree, with
respect to the partnership listed on Schedule 3.20 numbered "5" (the
"Partnership"), that if the other partners of the Partnership shall assert the
right (the "Purchase Claim") to purchase the entire interest of the Allright
subsidiary which is a partner (the "Allright Partner") in the Partnership, then
Central, AEW and Apollo shall jointly make determinations regarding the defense
or other disposition of the Purchase Claim, including the terms of any
disposition of the Allright Partner pursuant to the Purchase Claim, and shall
share in any Purchase Claim Costs (as defined below) as follows: (i) each of AEW
and Apollo shall be liable for 25% of the first $4,000,000 in Purchase Claim
Costs up to a maximum obligation by each of $1,000,000 and 0% of any Purchase
Claim Costs beyond $4,000,000; and (ii) Central shall be liable for 50% of the
first $4,000,000 in Purchase Claim Costs and 100% of any Purchase Claim Costs
beyond $4,000,000. For purposes of this Section 8.6, "Purchase Claim Costs"
shall include the difference, if any, between (i) $2,288,960, and (ii) the
purchase price paid by such remaining partner for the entire interest of the
Allright Partner, determined in accordance with the provisions of the
Partnership Agreement of the Partnership (the "Partnership Agreement") plus any
documented out-of-pocket costs of Central, AEW and Apollo in responding to the
Purchase Claim. Purchase Claim Costs shall not constitute Central Damages for
any purposes under this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Schedules. All references to Schedules are to the
Disclosure Schedule exchanged among the parties to this Agreement. Disclosures
included in any Schedule shall, to the extent clear from the context, be
considered to be made for purposes of all Schedules, to the extent that such
Schedules are intended
63
<PAGE> 65
to contain the same subject matter and be used in the same context. Inclusion of
any matter in any Schedule does not imply that such matter would, under the
provisions of this Agreement, have to be included in such Schedule.
Section 9.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or transmitted by telex or telegram or mailed by registered or certified mail
(returned receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to Holdings, to:
Apollo Real Estate Investment Fund II, L.P.
1301 Avenue of the Americas
New York, New York 10019
Attn: William S. Benjamin
AEW Partners, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Attn: Marc Davidson
with copy to: Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attn: Randall H. Doud
and to: Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
Attn: Laura Hodges Taylor
If to Central or Central Sub, to:
Central Parking Corporation
2401 21st Avenue South
Nashville, Tennessee 37212
Attn: Monroe J. Carell, Jr.
64
<PAGE> 66
with copy to: Harwell Howard Hyne Gabbert & Manner, P.C.
1800 First American Center
315 Deaderick Street
Nashville, Tennessee 37238
Attn: Mark Manner
Section 9.3 Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 9.4 Brokers and Financial Advisors. Central represents
and warrants that, except for The Blackstone Group, L.P. (for whose fees and
expenses Central is solely responsible and against whose fees and expenses
Central hereby indemnifies Holdings), no person is entitled to any brokerage or
finder's fee, financial advisory fee or other payment from Central or any of its
affiliates based on agreements, arrangements or undertakings made by Central in
connection with the transactions contemplated hereby. Holdings represents and
warrants that, except for Bear, Stearns & Co. (for whose fees and expenses
Central is responsible for to the extent set forth in Section 5.9 and Central
hereby indemnifies Holdings with respect to such fees to such extent and, if
Central is not responsible for such fees and expenses under Section 5.9,
Holdings hereby indemnifies Central with respect to such fees and expenses), no
person is entitled to any brokerage or finder's fee, financial advisory fee or
other payment from Holdings or any of its affiliates based on agreements,
arrangements or undertakings made by Holdings or any of its affiliates in
connection with the transactions contemplated hereby.
Section 9.5 Amendment. This Agreement and the Schedules hereto
may be amended by the parties hereto, but may not be amended except by an
instrument or instruments in writing signed and delivered on behalf of each
of the parties hereto.
Section 9.6 Extension; Waiver. At any time prior to the
Closing Date, any party hereto which is entitled to the benefits hereof may (a)
extend the time for the performance of any of the obligations or other acts of
any of the other parties hereto, (b) waive any inaccuracy in the representations
and warranties of any of the other parties hereto contained herein or in any
Schedule hereto or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements of any of the other parties hereto or
conditions contained herein. Any agreement on the
65
<PAGE> 67
part of a party hereto to any such extension or waiver shall be valid if set
forth in an instrument in writing signed and delivered on behalf of such party.
Section 9.7 Entire Agreement. This Agreement (including the
Schedules, documents and instruments referred to herein) and the Confidentiality
Agreements constitute the entire agreement and supersede all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof and thereof.
Section 9.8 Assignment. This Agreement shall not be assigned
by operation of law or otherwise, and any attempted assignment shall be void.
Section 9.9 Governing Law; Jurisdiction. This Agreement shall
be governed in all respects, including validity, interpretation and effect, by
the laws of the State of Delaware. Any dispute arising in connection with this
Agreement and any claim arising hereunder may be brought in the courts of the
State of Delaware, or in any federal court within the State of Delaware, and by
execution of this Agreement, each of the parties accepts the jurisdiction of
such courts, and irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Agreement. The foregoing consents shall not constitute
general consents to the service of process in the State of Delaware for any
purpose except as provided above and shall not be deemed to confer rights to any
person other than the respective parties to this Agreement. Nothing herein shall
affect the right of either party hereto to commence legal proceedings or
otherwise proceed against the other party in any other jurisdiction.
Section 9.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but which
together shall constitute a single agreement.
Section 9.11 Joint and Several Liability. Any obligation of
AEW and Apollo arising hereunder shall be considered several, but not joint,
obligations of such parties.
66
<PAGE> 68
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the authorized officers of the parties hereto on the date first
above written.
CENTRAL PARKING CORPORATION
By:
---------------------------------------------
Name:
Title:
CENTRAL MERGER SUB, INC.
By:
---------------------------------------------
Name:
Title:
ALLRIGHT HOLDINGS, INC.
By:
---------------------------------------------
Name:
Title:
APOLLO REAL ESTATE INVESTMENT FUND II,
L.P. (with respect to Article VIII, Article IX
and Sections 2.6(d), 3.2 and 3.4 only)
By: Apollo Real Estate Advisors II, L.P., its
managing general partner
By: Apollo Real Estate Capital Advisors II, Inc.,
its general partner
By:
---------------------------------------------
Name:
Title:
67
<PAGE> 69
AEW PARTNERS, L.P.
(with respect to Article VIII, Article IX and
Sections 2.6(d), 3.2 and 3.4 only)
By: AEW/L.P., its general partner
By: AEW, Inc., its general partner
By:
--------------------------------------------
Name:
Title:
68
<PAGE> 1
Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 21, 1998,
among (i) Central Parking Corporation, a Tennessee corporation (the "Company"),
(ii) Apollo Real Estate Investment Fund II, L.P., a Delaware limited partnership
(together with its Affiliates, "Apollo"), (iii) AEW Partners, L.P., a Delaware
limited partnership (together with its Affiliates, "AEW"), and (iv) Monroe J.
Carell, Jr., The Monroe Carell, Jr. Foundation, Monroe Carell, Jr. 1995 Grantor
Retained Annuity Trust, Monroe Carell, Jr. 1994 Grantor Retained Annuity Trust,
The Carell Children's Trust, The 1996 Carell Grandchildren's Trust, The Carell
Family Grandchildren 1990 Trust, The Kathryn Carell Brown Foundation, The Edith
Carell Johnson Foundation, The Julia Carell Stadler Foundation, 1997 Carell
Elizabeth Brown Trust, 1997 Ann Scott Johnson Trust, 1997 Julia Claire Stadler
Trust, 1997 William Carell Johnson Trust, 1997 David Nicholas Brown Trust and
1997 George Monroe Stadler Trust (together with their respective Affiliates
other than the Company, the "Carell Holders"). Apollo, AEW and all other
holders at the effective time of the Merger (as hereinafter defined) of the
shares of Common Stock, par value of $.01 per share (the "Holdings Common
Stock"), of Allright Holdings, Inc., a Delaware corporation ("Holdings"), or of
options and warrants to purchase shares of Holdings Common Stock, are sometimes
referred to collectively as the "Allright Holders" and the Allright Holders and
the Carell Holders are sometimes referred to collectively as the "Holders."
W I T N E S S E T H
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as
of the date hereof (the "Merger Agreement"), by and among the Company, Central
Merger Sub, Inc., a Delaware corporation ("Central Sub"), Holdings, AEW and
Apollo, shareholders of Holdings will receive from the Company shares of the
Company's Common Stock (as hereinafter defined) pursuant to the merger of
Holdings with and into Central Sub, with Holdings being the surviving
corporation (the "Merger"); and
WHEREAS, the parties hereto desire to set forth the rights of
the Holders and the obligations of the Company with respect to the registration
of the Registrable Securities (as hereinafter defined) pursuant to the
Securities Act (as hereinafter defined); and
<PAGE> 2
WHEREAS, the execution and delivery of this Agreement by the
parties hereto is a condition to the willingness of each of Holdings, Apollo and
AEW to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the covenants and
agreements of the Company, Central Sub and Holdings contained in the Merger
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Merger Agreement.
For purposes of this Agreement the following terms shall have the following
meanings:
"Affiliate" has the meaning assigned to such term under Rule
405 of the Securities Act.
"Business Day" means any day other than (i) a Saturday or
Sunday, or (ii) a day on which banking institutions in the City of New York are
authorized or required by law or executive order to remain closed.
"Charitable Organization" means any corporation, community
chest, fund or foundation organized and operated exclusively for religious,
charitable, scientific, testing for public safety, literary or educational
purposes, or to foster national or international amateur sports competition or
for the prevention of cruelty to children or animals, no part of the net
earnings of which inures to the benefit of any private shareholder or individual
(including, without limitation, any family members of Monroe J. Carell, Jr. and
beneficiaries of the various trusts which are Carell Holders), no substantial
part of the activities of which is carrying on propaganda, or otherwise
attempting, to influence legislation, and which does not participate in, or
intervene in (including the publishing or distributing of statements), any
political campaign on behalf of (or in opposition to) any candidate for public
office.
"Common Stock" means the shares of common stock, par value
$0.01 per share, of the Company.
"Convertible Securities" means any securities of the Company
or any Affiliates thereof which are convertible into, or exchangeable for,
shares of common stock or common stock equivalents (excluding options and
warrants which are issued
2
<PAGE> 3
to employees, officers and directors in the ordinary course of business
consistent with past practice), the terms of which satisfy the following
conditions: (a) the per share price for converting such convertible securities
into, or exchanging such convertible securities for, shares of Common Stock must
be at least 18% higher than the market price per share of Common Stock on the
day before the issuance of such convertible securities, (b) such convertible
securities must not be convertible into shares of Common Stock at any time
before the three year anniversary of the issuance of such convertible
securities, except with respect to earlier conversions related to extraordinary
transactions in accordance with market practices, (c) such convertible
securities must not, by their terms, place any restrictions on the ability of
the Company to satisfy its obligations under this Agreement, or in any manner
adversely impact the ability of any of the Holders to exercise the rights
granted to them hereunder, and (d) the terms and provisions of such Convertible
Securities must be consistent with customary market practices.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations thereunder.
"Extra Underwriting End Date" means (i) in the event that the
Extra Underwriting is consummated, the date set forth in the underwriting
agreement for the Extra Underwriting as the first day after the closing of the
Extra Underwriting that the Company, Apollo, AEW and the Carell Holders will be
allowed to effect open market sales of shares of Common Stock without the
consent of the Underwriters' Representative, (ii) in the event that the Extra
Underwriting Notice is not given prior to the date one year following the Shelf
Registration Date, such date or (iii) in the event that the Extra Underwriting
Notice is given but the Extra Underwriting is abandoned with the concurrence of
Apollo, AEW and the Carell Holders, the date of such abandonment.
"Initial Liquidity Date" means the earliest date on which each
of Apollo, AEW and the Carell Holders shall have received gross proceeds from
the sale of Registrable Securities following the date hereof at least equal to
their respecting Initial Underwriting Amounts.
"Initial Underwriting Amount" means (i) in the case of either
Apollo or AEW, $125 million (or such lesser amount, to the extent that (A) other
Allright Holders participate in an Underwritten Offering which closes before the
Initial Liquidity Date, or (B) AEW and Apollo elect to distribute shares of
Common Stock to Cheslock, Bakker & Associates, Inc. ("CBA") before the Initial
Liquidity Date
3
<PAGE> 4
(where such reduction shall be based on the aggregate market value of the
Registrable Securities distributed to CBA by Apollo and AEW on the day prior to
such transfer)), (ii) in the case of the Carell Holders, $100 million, and (iii)
in the case of any other Holders, the product of (x) the amount of Registrable
Securities received by such Holder at the Closing multiplied by (y) a fraction,
the numerator of which is the amount of Registrable Securities the Underwriters'
Representative of the Initial Underwriting believes, at the time the Initial
Underwriting Notice is delivered to the Company, must be sold to yield gross
proceeds of $125 million to Apollo (or, in the event that the Initial
Underwriting Notice is not delivered to the Company by the end of the Initial
Underwriting Notice Period, the amount of Registrable Securities that would be
need to be sold, based on the Market Value per share of Common Stock on the day
before the last day of the Initial Underwriting Notice Period, to yield gross
proceeds of $125 million), and the denominator of which is the amount of
Registrable Securities received by Apollo at the Closing.
"Kinney Registration Rights" means the registration rights
provided for in the registration rights agreement, dated February 12, 1998, by
and among the Company, Lewis Katz and Saul Schwartz (the "Kinney Holders"), as
in effect as of the date hereof, a complete and accurate copy of which has been
provided by the Company to Apollo and AEW.
"Market Value" means the average, rounded to the nearest cent
($0.01), of the closing price per share of Common Stock on the New York Stock
Exchange for the twenty (20) consecutive trading days ending on the trading day
immediately preceding the date in question.
"Maximum Number" when used in connection with an underwritten
offering, shall mean the number of shares of Common Stock that the Underwriters'
Representative has informed the Company may be included as part of such offering
without materially and adversely affecting the success or pricing of such
offering.
"Offering" means any Underwritten Offering, or any offering of
unregistered securities to a purchaser or purchasers for reoffering to select
investors in a transaction which is exempt from federal securities laws.
"Person" shall mean any natural person, firm, individual,
corporation, partnership, limited liability company, joint venture, business
trust, association, trust, company or other organization or entity, whether
incorporated or unincorporated.
4
<PAGE> 5
"Preferred Stock" means any shares of capital stock of the
Company or any Affiliate thereof which have preferential rights to dividends or
to amounts distributable upon liquidation of the Company.
"Prospectus" means the prospectus included in the Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Public" means all stockholders of the Company, as of a given
date, excluding the Carell Holders, executive officers of the Company, members
of the Board of Directors of the Company, and all other stockholders of the
Company who then beneficially own at least 5% of the outstanding shares of
Common Stock.
"Publication Date" means the date on which the Company
initially publishes financial results reflecting the first thirty days of
combined operations of the Company and Holdings after the consummation of the
Merger.
"Registrable Securities" means, collectively, (i) the shares
of Common Stock issued to the Allright Holders in connection with the Merger or
pursuant to options or warrants held by the Allright Holders (the "Allright
Shares"), (ii) any stock or other securities into which or for which the
Allright Shares may hereafter be changed, converted or exchanged, (iii) any
other securities issued or distributed in respect of the Allright Shares by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, reorganization, merger, consolidation or otherwise, and (iv)
that number of shares of Common Stock that, when ultimately disposed of by the
Carell Holders in one or more transactions after the date of this Agreement,
will yield gross proceeds to the Carell Holders of $250 million (excluding
transfers by the Carell Holders to any purchasers up to that amount of shares of
Common Stock received by the Carell Holders pursuant to the contribution of
assets to the Company, as required by the Transaction Support Agreement, dated
as of the date hereof, by and among Monroe J. Carell, Jr., the Company, Apollo
and AEW (the "Exempted Transfers")).
"Registration Expenses" means any and all expenses incident to
performance of or compliance by the Company with its registration obligations
under Section 3, including, without limitation, (i) all SEC and securities
exchange
5
<PAGE> 6
registration and filing fees, (ii) all fees and expenses of complying with
securities or blue sky laws (including fees and disbursements of counsel for any
underwriters in connection with blue sky qualifications of the Registrable
Securities), (iii) all printing, messenger and delivery expenses, (iv) all fees
and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange pursuant to Section 7(h), (v) the fees and
disbursements of counsel for the Company and of its independent public
accountants, (vi) any fees and disbursements of underwriters customarily paid by
the issuers or sellers of securities, and the reasonable fees and expenses of
any special experts retained in connection with the requested registration, and
(vii) the expenses incurred in connection with making "roadshow" presentations
and holding meetings with potential investors to facilitate the distribution and
sale of Registrable Securities.
"Registration Statement" means any registration statement of
the Company which covers Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statements including post-effective amendments, and all exhibits
and all material incorporated by reference in such Registration Statement.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations thereunder.
"SEC" means the Securities and Exchange Commission.
"Shelf Registration Date" means (i) in the event that the
Initial Underwriting is consummated, the date set forth in the underwriting
agreement for the Initial Underwriting as the first day after the closing of the
Initial Underwriting that the Company, Apollo, AEW and the Carell Holders will
be allowed to effect open market sales of shares of Common Stock without the
consent of the Underwriters' Representative, (ii) in the event that the Initial
Underwriting Notice is not given prior to the date nine months following the
Publication Date, such date or (iii) in the event that the Initial Underwriting
Notice is given but the Initial Underwriting is abandoned with the concurrence
of Apollo, AEW and the Carell Holders, the date of such abandonment.
"TIPS Registration Statement" means the shelf registration
statement filed on Form S-3 on June 1, 1998 (registration statements no.
333-52497 and 333-52497-01) as such registration statements may be amended or
supplemented from time to time.
6
<PAGE> 7
"Total Market Capitalization" means the aggregate market value
of all outstanding equity securities, Preferred Stock and Convertible Securities
of the Company, and the book value of all outstanding loan obligations and debt
instruments of the Company (excluding any Convertible Securities).
"Underwriting Amount" means that amount of shares of Common
Stock, which, when sold in an Underwritten Offering, would yield gross proceeds
of a given amount of money, as reasonably estimated by the owner of such shares
of Common Stock and the Underwriters' Representative of such Underwritten
Offering at the time such owner informs the Company of its desire to initiate,
or participate in, an Underwritten Offering.
"Underwriters' Representative" when used in connection with an
Underwritten Offering, shall mean the managing underwriter of such offering, or,
in the case of a co-managed underwriting, the managing underwriter designated as
the Underwriters' Representative by the co-managers.
"Underwritten Offering" shall mean a registration in which
securities of the Company are sold to one or more underwriters for reoffering to
the public.
2. Securities Subject to This Agreement. The securities entitled
to the benefits of this Agreement are the Registrable Securities. For the
purposes of this Agreement, Registrable Securities will cease to be Registrable
Securities when (i) a Registration Statement covering such Registrable
Securities has been declared effective under the Securities Act and they have
been disposed of pursuant to such effective Registration Statement, (ii) such
Registrable Securities are distributed to the public pursuant to Rule 144 and/or
Rule 145 (or any similar provision then in force) under the Securities Act,
(iii) such Registrable Securities shall have been otherwise transferred, new
certificates for such Registrable Securities not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
disposition of such Registrable Securities shall not require registration or
qualification of such Registrable Securities under the Securities Act or any
state securities or blue sky law then in force, or (iv) such Registrable
Securities shall have ceased to be outstanding.
7
<PAGE> 8
3. Registration Under the Securities Act.
(a) Initial Underwriting. (i) At any time after the
Publication Date and before the date nine months following the Publication Date
(the "Initial Underwriting Notice Period"), the Carell Holders, or Allright
Holders owning at least 80% of the Registrable Securities then owned by all the
Allright Holders, shall have the right to demand, by written notice (the
"Initial Underwriting Notice"), the Company to use its reasonable best efforts
to register under the Securities Act up to the Initial Underwriting Amount for
such Holder or Holders of Registrable Securities for resale by such Holder or
Holders in an Underwritten Offering (the "Initial Underwriting"). In the event
that one or more Holders deliver the Initial Underwriting Notice, the Company
shall then promptly mail written notice thereof (a "Company Notice") to all
other Holders, and then each such Holder may then elect to participate in the
Initial Underwriting by delivering to the Company, within fifteen days after
such Company Notice is given, a written notice specifying the number of
Registrable Securities such Holders wish to have registered for resale in the
Initial Underwriting up to but not exceeding such Holder's Initial Underwriting
Amount. All rights to demand the Initial Underwriting shall expire immediately
after an Initial Underwriting Notice is properly delivered to the Company, but
shall be subject to the reinstatement provisions contained in Section 3(g).
(ii) The Registrable Securities to be sold in the Initial
Underwriting (including pursuant to any underwriters' overallotment option)
shall be allocated among the various Holders participating in the Initial
Underwriting up to but not exceeding their respective Initial Underwriting
Amounts in the following order of priority: (A) subject to pro rata reduction to
the extent that any allocations are made pursuant to clause (C), each of Apollo
and AEW shall be entitled to receive (1) 50% of the first $100 million in gross
proceeds (or, if only one of them is participating, 100% of such gross
proceeds), (2) 0% of the next $50 million in gross proceeds, (3) 33 1/3% of the
next $150 million in gross proceeds (or, if only one of them is participating,
66 2/3% of such gross proceeds), and (4) 50% of the next $50 million in gross
proceeds (or, if only one of them is participating, 100% of such gross
proceeds); (B) the Carell Holders shall be entitled to receive (1) 0% of the
first $100 million in gross proceeds, (2) 100% of the next $50 million in gross
proceeds, (3) 33 1/3% of the next $150 million in gross proceeds, and (4) 0% of
the next $50 million in gross proceeds; and (C) any Allright Holders other than
Apollo or AEW shall be entitled to receive a percentage of the gross proceeds
allocated to Apollo and AEW hereunder equal to the percentage represented by the
number of Registrable Securities then held by such Allright Holder divided by
the number of Registrable
8
<PAGE> 9
Securities then held by all Allright Holders participating in the Initial
Underwriting. In the event that there shall be gross proceeds in excess of $350
million and the Company shall determine not to allocate such excess to shares of
Common Stock to be sold by the Company, the Holders shall be allocated
additional Registrable Securities to be sold in proportion to their holding of
all remaining Registrable Securities.
(b) Shelf Registration. (i) The Company shall use its
reasonable best efforts to promptly process, file and cause to become effective
a Registration Statement on Form S-3 (the "Shelf") for an offering to be made on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act (or
any similar rule that may be adopted by the SEC) and permitting sales in
ordinary course brokerage or dealer transactions not involving an Underwritten
Offering, the initial filing to be made not later than 30 days before the Shelf
Registration Date in the event that the Initial Underwriting is consummated or
30 days after the Shelf Registration Date in the event that the Initial
Underwriting Notice is not given or the Initial Underwriting is abandoned. Each
Allright Holder which owns, on the date of the initial filing of the Shelf (the
"Initial Filing Date"), Registrable Securities (each such Holder, an "Eligible
Holder") shall have the right to resell such Registrable Securities under the
Shelf until the date that such Eligible Holder sells all of such Registrable
Securities, whether or not under the Shelf (such Eligible Holder's "Termination
Date"). The Carell Holders shall have the right to resell that amount of
Registrable Securities under the Shelf which has an aggregate Market Value, on
the Initial Filing Date, of (a) $150 million, plus (b) the Initial Underwriting
Amount of the Carell Holders, less (c) the gross proceeds received by the Carell
Holders in all sales of Registrable Securities before the Initial Filing Date
(excluding gross proceeds received in the Exempted Transfers). The Carell
Holders shall lose their right to sell under the Shelf once they have sold, in
one or more transactions occurring after the Initial Filing Date, whether in the
Initial Underwriting, the Extra Underwriting, under the Shelf or otherwise, at
least that amount of shares of Common Stock equal to the amount of Registrable
Securities of the Carell Holders registered under the Shelf pursuant to this
Section 3(b)(i) (the Carell Holders' "Termination Date"). The Company agrees to
use its reasonable best efforts to keep the Shelf continuously effective and
usable for resale of Registrable Securities until all Eligible Holders lose
their rights to resell Registrable Securities under the Shelf.
(ii) The Company agrees to include within the Method of
Distribution for the Shelf the possible distribution by the Allright Holders to
their respective investors of the Registrable Securities held by them; provided,
that
9
<PAGE> 10
nothing herein shall restrict an Allright Holder from distributing Registrable
Securities to its investors under the Shelf before it receives gross proceeds of
at least its Initial Underwriting Amount, or sells an amount of Registrable
Securities equal to at least its Initial Underwriting Amount. No Allright Holder
may, however, transfer to its investors any registration rights granted
hereunder when distributing Registrable Securities to such investors, unless the
Company has failed to cause the Shelf to become effective within 45 days after
the Shelf Registration Date.
(iii) Each Allright Holder agrees that, in the event that it
shall have received gross proceeds of at least its Initial Underwriting Amount,
or sold that amount of Registrable Securities equal to at least its Initial
Underwriting Amount, with respect to one or more sales of Registrable Securities
(whether in the Initial Underwriting, the Extra Underwriting (as defined in
Section 3(c)), resales under the Shelf or otherwise), it shall be restricted
from reselling Registrable Securities under the Shelf until the Carell Holders
shall have received gross proceeds of at least $100 million in one or more sales
of Registrable Securities (whether in the Initial Underwriting, the Extra
Underwriting, resales under the Shelf or otherwise) after the date of this
Agreement. The Carell Holders agree that, in the event that they shall have
received gross proceeds of at least $100 million with respect to one or more
sales of Registrable Securities (whether in the Initial Underwriting, the Extra
Underwriting, resales under the Shelf or otherwise), they shall be restricted
from reselling Registrable Securities under the Shelf until each of Apollo and
AEW shall have received gross proceeds of at least its Initial Underwriting
Amount in one or more sales of Registrable Securities (whether in the Initial
Underwriting, the Extra Underwriting, resales under the Shelf or otherwise)
after the Closing. Each of Apollo, AEW and the Carell Holders agrees to promptly
notify the Company and each other in writing at such time that it has received
sufficient gross proceeds for it to become restricted from resales pursuant to
this Section 3(b)(iii). Notwithstanding the foregoing, nothing herein shall
restrict the ability of any Holder to distribute Registrable Securities to its
investors.
(iv) In the event that one or more Holders exercises a Demand
Right (as defined in Section 3(c)), then each Eligible Holder (including the
Holder or Holders exercising such Demand Right and regardless of whether or not
such Eligible Holder elects to participate in the Extra Underwriting related to
such Company Notice) may not sell any Registrable Securities under the Shelf at
any time after 30 days after receiving such Company Notice and before the Extra
Underwriting End Date; provided, that nothing herein shall limit the ability of
an Allright Holder to distribute Registrable Securities to its investors.
10
<PAGE> 11
(v) The Company shall have the right, at any time after the
Allright Holders, collectively, own less than 7% of all the Registrable
Securities received by the Allright Holders in the Merger, to terminate the
Shelf and promptly process and file, and use its reasonable best efforts to
cause to become effective, a Registration Statement on Form S-3 (the "Second
Shelf") for an offering to be made on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act (or any similar rule that may be adopted by
the SEC) and permitting sales in ordinary course brokerage or dealer
transactions not involving an Underwritten Offering. The Company must register
for resale under the Second Shelf all Registrable Securities that were
registered for resale under the Shelf at the time the Shelf is terminated, but
may also register for sale under the Second Shelf all shares of Common Stock,
and any other securities of the Company, that the Company desires to register
for resale at such time. The Company shall cause the Second Shelf to remain
effective at least up to the date until which the Company would, under the terms
of this Agreement, be required to maintain the effectiveness of the Shelf, if
otherwise not terminated pursuant to this Section 3(b)(v). The Holders shall not
have any restrictions on their ability to resell Registrable Securities under
the Second Shelf which are greater than the restrictions on their ability to
resell Registrable Securities under the Shelf.
(c) Extra Underwriting. (i) In the event that, as of the date
of the giving of the Extra Underwriting Notice referred to below, either Apollo
or AEW shall have failed to receive gross proceeds of at least its Initial
Underwriting Amount from selling Registrable Securities or the Carell Holders
shall have failed to receive gross proceeds of at least $100 million from
selling Registrable Securities, each of (A) AEW and/or Apollo, if AEW and/or
Apollo shall have failed to receive such gross proceeds, together with all other
Allright Holders who have failed to sell that amount of Registrable Securities
equal to at least their respective Initial Underwriting Amounts, by agreement of
Allright Holders owning at least 60% of the Registrable Securities then owned by
all the Allright Holders, (B) and the Carell Holders, if they have failed to
receive gross proceeds of at least their Initial Underwriting Amount, shall have
the right, at any time commencing on the Shelf Registration Date and ending on
the twelve month anniversary of the Shelf Registration Date (the "Extra
Underwriting Notice Period"), to demand (a "Demand Right"), by written notice
(an "Extra Underwriting Notice"), the Company to use its reasonable best efforts
to register under the Securities Act up to the Initial Underwriting Amount of
such Holder or Holders, less the amount of gross proceeds received by, or the
amount of Registrable Securities sold by, such Holder in the Initial
Underwriting, if any, and in any other sales of Registrable Securities after the
Shelf Registration Date, for resale
11
<PAGE> 12
by such Holder or Holders in an Underwritten Offering (the "Extra
Underwriting"). In the event that one or more of such Holders deliver the Extra
Underwriting Notice, the Company shall then promptly mail a Company Notice to
all other Holders who shall have failed to receive gross proceeds of at least
their respective Initial Under writing Amounts, or to sell that amount of
Registrable Securities equal to at least their respective Initial Underwriting
Amounts, and then each such other Holder may then elect to participate in the
Extra Underwriting by delivering to the Company, within fifteen days after such
Company Notice is given, a written notice specifying the number of Registrable
Securities such Holders wish to have registered for resale in the Initial
Underwriting up to but not exceeding such Holder's Initial Underwriting Amount,
less the amount of gross proceeds received by such Holder, or that amount of
Registrable Securities sold by such Holder, in the Initial Underwriting, if any,
and in any other sales of Registrable Securities after the date hereof. The
Company shall use its reasonable best efforts to promptly (but in no event later
than fifteen Business Days after receipt of the Extra Period Demand Notice)
supplement or amend the Shelf, including the Method of Distribution or similar
section therein, or, in the event that the Shelf shall not have been filed, to
promptly process, file and cause to become effective a Registration Statement on
Form S-3, in order to cover registration of the resale of all of the Registrable
Securities properly requested to be registered pursuant to this Section 3(c)(i)
by the Holders. All Demand Rights shall expire immediately after an Extra
Underwriting Notice is properly delivered to the Company, but shall be subject
to the reinstatement provisions contained in Section 3(g).
(ii) The Registrable Securities to be sold in the Extra
Underwriting (including pursuant to any underwriters' overallotment option)
shall be allocated among the various Holders participating in the Extra
Underwriting up to but not exceeding their respective Initial Underwriting
Amounts in the same order of priority set forth in Section 3(a)(ii), except that
for purposes of this Section 3(c)(ii) determinations of the gross proceeds
received by any Holder shall be deemed to include gross proceeds received from
the sale of any Registrable Securities following the date hereof and through and
including the Extra Underwriting, and determinations of the amount of
Registrable Securities sold by any Holder shall be deemed to include any sales
of Registrable Securities following the date hereof and through and including
the Extra Underwriting, but shall not be deemed to include the distribution of
Registrable Securities by a Holder to its investors.
(d) Incidental Registration. If at any time the Company
proposes to register any of its Common Stock under the Securities Act after the
date hereof
12
<PAGE> 13
(other than in connection with any acquisition or business combination
transaction and other than in connection with stock options and employee benefit
plans and compensation) either in connection with a primary offering for cash
for the account of the Company, a secondary offering or a combined primary and
secondary offering, the Company will, each time it intends to effect such a
registration, give a Company Notice to all Holders whose Termination Date shall
not have occurred at least 15 Business Days prior to the initial filing of a
registration statement with the SEC pertaining thereto, informing such Holders
of its intent to file such registration statement and of the Holders' right to
request the registration of the Registrable Securities held by the Holders. Upon
the written request of one or more of the Holders made within 10 business days
after any such Company Notice is given (which request shall specify the
Registrable Securities intended to be disposed of by each such Holder, and,
unless the applicable registration is intended to effect a primary offering of
Common Stock for cash for the account of the Company, the intended method of
distribution thereof), the Company will use its reasonable best efforts to
effect the registration under the Securities Act of all Registrable Securities,
which the Company has been so requested to register by one or more Holders to
the extent required to permit the disposition (in accordance with the intended
methods of distribution thereof or, in the case of a registration which is
intended to effect a primary offering for cash for the account of the Company,
in accordance with the Company's intended method of distribution) of the
Registrable Securities so requested to be registered, including, if necessary,
by filing with the SEC a post-effective amendment or a supplement to the
registration statement filed by the Company or the related prospectus or any
document incorporated therein by reference or by filing any other required
document or otherwise supplementing or amending the registration statement filed
by the Company, if required by the rules, regulations or instructions applicable
to the registration form used by the Company for such registration statement or
by the Securities Act, any state securities or blue sky laws, or any rules and
regulations thereunder; provided, however, that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay such registration of the securities, the Company shall give written notice
of such determination to each Holder of Registrable Securities and, thereupon,
(A) in the case of a determination not to register, the Company shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration, and (B) in the case of a determination to delay such
registration, the Company shall be permitted to delay registration of any
Registrable Securities requested to be
13
<PAGE> 14
included in such registration statement for the same period as the delay in
registering such other securities.
(e) Underwriter Limitations. (i) If, in connection with an
Underwritten Offering other than the Initial Underwriting or the Extra
Underwriting, the Underwriters' Representative of the offering registered
thereon shall inform the Company in writing that in its opinion there is a
Maximum Number of shares of Common Stock that may be successfully included
therein; then (a) in the event such Registration Statement relates to an
offering initiated by the Company of Common Stock being offered for the account
of the Company, the Company may include in such registration the number of
shares it proposes to offer and, if such number is less than the Maximum Number,
then the number of shares of Common Stock requested to be included in such
registration by any Person other than the Company may be reduced, pro rata in
proportion to the number of shares of Common Stock owned by such Persons
requesting to participate in such offering, to the extent necessary to reduce
the respective total number of shares of Common Stock requested to be included
in such offering to the Maximum Number, and (b) in the event such a Registration
Statement is initiated by any Person other than the Company or a Holder, such
Person shall have the right, in its sole discretion, to include in such
registration the number of shares of Common Stock it proposes to offer and, if
such number is less than the Maximum Number, then the number of shares of Common
Stock requested to be included by any other Person may be reduced pro rata in
proportion to the number of shares of Common Stock owned by such Persons, to the
extent necessary to reduce the respective total number of shares of Common Stock
requested to be included in such offering to the Maximum Number.
(ii) Notwithstanding Section 3(e)(i), in the event that the
Company decides to conduct an Underwritten Offering other than the Initial
Underwriting and the Extra Underwriting, and at such time any of Apollo, AEW or
the Carell Holders shall have failed to receive gross proceeds from the sale of
Registrable Securities since the date hereof at least equal to at least their
respective Initial Underwriting Amounts, and if the Underwriters' Representative
of such Underwritten Offering shall inform the Company in writing that in its
opinion there is a Maximum Number of shares of Common Stock that may be
successfully included therein beyond the number of shares to be sold by the
Company, then each of the above Holders who shall have so failed to receive such
gross proceeds, and all other Holders who shall have failed to sell that amount
of Registrable Securities equal to their respective Initial Underwriting
Amounts, may include in such registration that number of Registrable Securities
which, in the opinion of the Underwriters' Representative,
14
<PAGE> 15
when sold would yield gross proceeds sufficient to bring each such Holder's
gross proceeds from the sale of Registrable Securities after the date hereof to
such Holder's Initial Underwriting Amount, or would allow each such Holder to
sell an amount of Registrable Securities which would bring each such Holder's
amount of Registrable Securities sold to its Initial Underwriting Amount. To the
extent that the Maximum Number is insufficient to accomplish the foregoing, the
Registrable Securities to be sold in such Underwritten Offering (including
pursuant to any underwriters' overallotment option) shall be allocated among the
various Holders participating in such Underwritten Offering up to but not
exceeding their respective Initial Underwriting Amounts in the same order of
priority set forth in Section 3(a)(ii).
(iii) Notwithstanding the foregoing, any reduction of the
shares of Common Stock requested by a Person to be included in any Registration
Statement pursuant to this Section 3(e) shall be limited to the extent such
reduction would place the Company in breach of any presently existing
contractual obligations that it might have.
(f) Company Limitations. (i) The Company hereby agrees that,
until the earlier to occur of the Extra Underwriting End Date and the Initial
Liquidity Date, it will not (i) sell any shares of Common Stock other than (A)
pursuant to the Merger, (B) to the Carell Holders, to the extent the issuance of
such shares of Common Stock is required by Section 5.14 of the Merger Agreement,
(C) pursuant to mergers, acquisitions and purchases involving the Company and/or
its Affiliates whereby the Company issues shares of Common Stock which are not
registered under the Securities Act and which either (1) have an aggregate value
of no more than $10 million (where the value of a share of Common Stock issued
pursuant to a given transaction is determined based on the closing price per
share of Common Stock on the trading day immediately preceding the date on which
such transaction occurred), or (2) are not transferable by the holders thereof
for at least two years from the respective dates of issuance, or (D) upon
exercise of options or conversion of other securities outstanding as of the date
of this Agreement, or options or other securities issued to employees, officers
and directors after the date of this Agreement in the ordinary course of
business consistent with past practice, with or without registration under the
Securities Act, without first providing for the sale of Registrable Securities
as contemplated by Section 3(a)(ii), (ii) permit any Underwritten Offering, not
for the account of the Company, involving the sale of shares of Common Stock
other than the Initial Underwriting, the Extra Underwriting, the TIPS
Registration Statement and any Underwritten Offering required by the Kinney
Registration Rights, (iii) grant to any Holder, or any Person included within
the Carell Holders, registration rights not provided for in this Agreement as of
the date hereof, or waive any conditions herein with respect to any Holder, or
any Person included within
15
<PAGE> 16
the Carell Holders, without waiving such conditions with respect to all other
Holders, (iv) otherwise facilitate a sale by any Person with the Holders of
shares of Common Stock, (v) grant registration rights to any Person which would
permit such Person to participate in the Initial Underwriting, the Shelf or the
Extra Underwriting, or to have such Person's shares of Common Stock registered
for resale, prior to the Initial Liquidity Date, or (vi) grant to any Person
registration rights that contemplate Underwritten Offerings which preclude the
exercise of the customary "piggyback" rights granted to certain Holders in
Section 3(d).
(ii) Furthermore, during the period of time beginning on the
date hereof and ending on the Shelf Registration Date, or, in the event that the
Underwriters' Representative of the Initial Underwriting provides the Company
with its written consent to a plan by the Company to conduct an Offering of
Preferred Stock or Convertible Securities during the Lockout Period (as
hereinafter defined) related to the Initial Underwriting, ending on the closing
of the Initial Underwriting, the Company may not sell any shares of Preferred
Stock or Convertible Securities, and during the period of time beginning on the
day after the Shelf Registration Date and ending on the earlier to occur of the
Extra Underwriting End Date and the Initial Liquidity Date, the Company may not
sell shares of Preferred Stock and/or Convertible Securities if, after
consummation of such sale, the aggregate market value of the Preferred Stock
and/or Convertible Securities outstanding (as calculated on the day such
transaction is completed) is greater than the lesser of (a) 20% of the Company's
Total Market Capitalization (as calculated on the day such transaction is
completed), and (b) 50% of the market value of the outstanding shares of Common
Stock held by the Public on the day such transaction is completed. The Company
hereby agrees that in the event that it elects to conduct an Offering of
Preferred Stock or Convertible Securities, it will promptly mail a Company
Notice to all Holders who shall have then failed to receive gross proceeds of at
least their respective Initial Underwriting Amounts, or to sell that amount of
Registrable Securities equal to at least their respective Initial Underwriting
Amounts. Each such Holder may then elect to participate in such Offering by
delivering to the Company, within fifteen days after such Company Notice is
given, a written notice specifying the number of Registrable Securities such
Holder wishes to have sold in such Offering up to but not exceeding such
Holder's Initial Underwriting Amount, less the amount of gross proceeds received
by such Holder, or that amount of Registrable Securities sold by such Holder, in
the Initial Underwriting, if any, and in any other sales of Registrable
Securities after the date hereof. In the event that one or more Holders elects
to
16
<PAGE> 17
participate in an Offering, the Company hereby agrees that it will include the
offering of Registrable Securities by such Holder or Holders in any "roadshow"
marketing efforts conducted by the Company in connection with such Offering. In
the event that a Holder sells Registrable Securities in an Offering, regardless
of whether or not such Offering is covered by a registration statement filed by
the Company, such Holder shall be subject to the provisions of Section 6 of this
Agreement, to the extent that the Underwriters' Representative, or, in the event
an Offering is not conducted on a "firm commitment" underwritten basis, the
substantial equivalent of an Underwriters' Representative (the "Lead
Purchaser"), asks participating sellers to refrain from selling shares of Common
Stock during a Lockout Period (as hereinafter defined). No Holder, however,
shall be obligated to refrain from selling shares of Common Stock during a
Lockout Period relating to an Offering of Convertible Securities or Preferred
Stock if such Holder did not participate in such Offering.
(iii) In the event that Holders participate in an Offering of
Convertible Securities or Preferred Stock, then the Extra Underwriting Notice
Period shall be deemed not to continue to run during that period of time
beginning on the first date that a Holder or Holders notifies the Company of its
or their desire to participate in such Offering, and ending on the date that the
Underwriters' Representative or the Lead Purchaser of such Offering selects as
the first day that the participating sellers may sell shares of Common Stock
after the closing of such Offering, or, in the event that such Offering is not
consummated, on the date such Offering is abandoned (an "Offering End Date").
Such extension of the Extra Underwriting Notice Period shall only be deemed to
occur, however, in the event that an Offering End Date occurs before the Initial
Liquidity Date. For purposes of this Agreement, participation in an Offering of
Convertible Securities or Preferred Stock by one or more Holders shall not be
deemed to be an exercise of a Demand Right or a right to demand the Initial
Underwriting.
(g) Pricing Determinations. (i) The Carell Holders and (ii)
representatives of the Allright Holders electing to participate in the Initial
Underwriting and/or the Extra Underwriting, such representatives to be selected
by Allright Holders owning a majority of the Registrable Securities being
offered by the Allright Holders for resale in such Underwritten Offering, shall
mutually determine the offering price per share and underwriting discounts that
shall apply in the Initial Underwriting and the Extra Underwriting, subject to
the right of (i) any such Holder to withdraw its Registrable Securities from
such Underwritten Offering should it be dissatisfied with the proposed offering
price per share or underwriting discount, and
17
<PAGE> 18
(ii) any non-withdrawing Holders to include additional Registrable Securities in
such Underwritten Offering to replace shares withdrawn by another Holder. In the
event that the Company refuses to execute the underwriting agreement related to
the Initial Underwriting or the Extra Underwriting, and subsequently the Initial
Underwriting or the Extra Underwriting, as the case may be, is abandoned, then
all rights to demand the Initial Underwriting or the Extra Underwriting, as the
case may be, shall be restored, and the Initial Underwriting Notice Period or
the Extra Underwriting Notice Period, as the case may be, shall be reinstated
for that amount of days equal to the difference between (x) the amount of days
comprising such period, less (y) the amount of days that lapsed in such period
before the Initial Underwriting Notice or the Extra Underwriting Notice, as the
case may be, was delivered to the Company.
(h) Kinney Registration Rights. The registration rights
granted hereunder shall be subordinate to the Kinney Registration Rights;
provided, that, in the event that the Kinney Holders exercise a "demand" Kinney
Registration Right during the Extra Underwriting Notice Period and before the
Extra Underwriting Notice is properly delivered to the Company, or during the
Initial Underwriting Notice Period and before the Company receives a demand for
the Initial Underwriting, then the Extra Underwriting Notice Period or the
Initial Underwriting Notice Period, as the case may be, shall be deemed not to
continue to run during that period of time beginning on the date a "demand"
Kinney Registration Right is exercised and ending on the date that the
Underwriters' Representative of the Underwritten Offering related to such
exercise selects as the first day that the Company and the Kinney Holders may
sell shares of Common Stock after the closing of such Underwritten Offering, or,
in the event that such Underwritten Offering is not consummated, on the
date such Underwritten Offering is abandoned (a "Kinney Offering End Date").
Such extension of the Extra Underwriting Notice Period or the Initial
Underwriting Notice Period shall only be deemed to occur, however, in the event
that a Kinney Offering End Date occurs before the Initial Liquidity Date.
(i) Sales of Registrable Securities. For purposes of this
Agreement, the following transfers of Registrable Securities shall not be
deemed to be "sales" of Registrable Securities: (i) the transfers of shares
among Persons comprising an individual Holder, (ii) pledges of shares permitted
under Section 11(d), (iii) transfers of shares by Apollo and AEW to CBA, (iv)
the Exempted Transfers, (v) donations of shares by the Holders which are made to
Charitable Organizations, and (vi) any distribution of shares by an Allright
Holder to its investors.
18
<PAGE> 19
4. Blackout Period. The Company shall be entitled to elect that a
Registration Statement not be usable, for a reasonable period of time, but not
in excess of 30 days, with respect to a Registration Statement relating to the
Initial Underwriting, or 90 days, with respect to a Registration Statement
related to any other sale of Registrable Securities (a "Blackout Period"), if
the Company determines in good faith that the registration and distribution of
Registrable Securities (or the use of the Registration Statement or related
Prospectus) would interfere with any pending material financing, acquisition,
corporate reorganization or any other material corporate development involving
the Company or any of its subsidiaries or would require premature disclosure
thereof and promptly gives the Holders of Registrable Securities written notice
of such determination, and if requested by Holders, the Company will promptly
deliver to it or them a general statement of the reasons for such postponement
or restriction on use and an approximation of the anticipated delay; provided,
however, that the aggregate number of days included in all Blackout Periods,
when taken together with any Lockout Periods and Suspension Periods, during any
consecutive 12 months after the Publication Date shall not exceed 180 days (or
such longer period of time, to the extent that the Underwriters' Representative
of the Initial Underwriting requests a Lockout Period for the Company and the
Holders of longer than 90 days after the Initial Underwriting).
5. Selection of Underwriters. Subject to the right of Central, the
Carell Holders and representatives of the Allright Holders electing to
participate in the Initial Underwriting and/or the Extra Underwriting, such
representatives to be selected by Allright Holders owning a majority of the
Registrable Securities being offered for resale by the Allright Holders in such
Underwritten Offering, to jointly determine otherwise, (i) Bear Stearns & Co.
Inc. shall be the lead-managing underwriter of the Initial Underwriting and the
Extra Underwriting, shall manage the "book" related to such Underwritten
Offerings, and shall be the Underwriters' Representative of such Underwritten
Offerings and (ii) NationsBanc Montgomery Securities LLC and J.C. Bradford & Co.
shall each be a co-managing underwriter with respect to such Underwritten
Offerings.
6. Holdback Agreement.
(a) If so requested by the Underwriters' Representative in
connection with an offering of shares of Common Stock covered by a registration
statement filed by the Company, the Holders participating in such Underwritten
Offering, and all other Holders who are Affiliates of Central at the time of
such Underwritten Offering, shall agree not to effect any sale or distribution
of the
19
<PAGE> 20
Registrable Securities other than pursuant to such Underwritten Offering,
including a sale pursuant to Rule 144, without the prior written consent of the
Underwriters' Representative (which if given to any such Holder shall be deemed
to be given to all such Holders), during the 7-day period prior to, and during
the 90-day period beginning on, the date such registration statement or
amendment to such registration statement is declared effective under the
Securities Act by the SEC or, with respect to the Initial Underwriting, for a
longer period of time if so requested by the Underwriters' Representative of the
Initial Underwriting (any such period, a "Lockout Period"); provided that the
Holders are timely notified of such effective date in writing by the Company or
the Underwriters' Representative. The Holders shall not be subject to Lockout
Periods for longer than 97 days (or such longer period of time, to the extent
that the Underwriters' Representative of the Initial Underwriting requests a
Lockout Period for the Company and the Holders of longer than 90 days after the
Initial Underwriting) during any 12-month period and shall not be subject to
Lockout Periods, when taken together with any Blackout Periods and Suspension
Periods, during any consecutive 12 months after the Publication Date in excess
of 180 days (or such longer period of time, to the extent that the Underwriters'
Representative of the Initial Underwriting requests a Lockout Period for the
Company and the Holders of longer than 90 days after the Initial Underwriting).
A Holder shall no longer be subject to such restrictions following such Holder's
Termination Date.
(b) If so requested by the Underwriters' Representative in
connection with an Underwritten Offering of any Registrable Securities, the
Company shall agree not to effect any sale or distribution of shares of Common
Stock without the prior written consent of the Underwriters' Representative
(other than in connection with any acquisition or business combination
transaction and other than in connection with stock options and employee benefit
plans and compensation) during the 7-day period prior to, and during the 90-day
period beginning on, the date the registration statement or amendment to a
registration statement relating to such Underwritten Offering is declared
effective under the Securities Act by the SEC or, with respect to the Initial
Underwriting, for a longer period of time if so requested by the Underwriters'
Representative of Initial Underwriting, and shall use its reasonable best
efforts to obtain and enforce similar agreements from any other Persons if
requested by the Underwriters' Representative.
(c) Notwithstanding anything else in this Section 6 to the
contrary, no Holder shall be precluded from distributing to its investors the
Registrable Securities as set forth in Section 3(b)(ii).
20
<PAGE> 21
7. Registration Procedures. If and whenever the Company is
required to use its reasonable best efforts to effect or cause the registration
of any Registrable Securities under the Securities Act as provided in this
Agreement and the Merger Agreement, the Company will as expeditiously as
possible and without limiting any time period set forth elsewhere in this
Agreement:
(a) Subject to the requirements to file the Registration
Statement on Form S-4 pursuant to the Merger Agreement, prepare and file with
the SEC a Registration Statement with respect to such Registrable Securities on
a form for which the Company then qualifies or which counsel for the Company
shall deem appropriate, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended methods of distribution
thereof, and use its reasonable best efforts to cause such Registration
Statement to become effective as promptly as practicable after filing and to
keep such Registration Statements effective as provided in Section 3; provided
that, a reasonable time before filing a Registration Statement or Prospectus or
any amendments or supplements thereto (other than reports required to be filed
by it under the Exchange Act and the rules and regulations adopted by the SEC
thereunder), the Company will furnish to the Holders of Registrable Securities
covered by such Registration Statement and their counsel for review and comment
copies of all documents proposed to be filed;
(b) prepare and file with the SEC amendments and
post-effective amendments to each such Registration Statement and such
amendments and supplements to the Prospectus used in connection therewith as
may be necessary to maintain the effectiveness of such registration or as may be
required by the rules, regulations or instructions applicable to the
registration form utilized by the Company or by the Securities Act for shelf
registration or otherwise necessary to keep such Registration Statement
effective for the applicable period and cause the Prospectus as so supplemented
to be filed pursuant to Rule 424 under the Securities Act, and to otherwise
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement until such time as all
of such securities have been disposed of in accordance with the intended methods
of disposition set forth in such Registration Statement and Prospectus;
(c) furnish to each Holder of such Registrable Securities such
number of copies of such Registration Statement and of each amendment and
post-effective amendment thereto (in each case including all exhibits), the
Prospectus and Prospectus supplement, as applicable, and such other documents as
such Holder may
21
<PAGE> 22
reasonably request in order to facilitate the disposition of the Registrable
Securities by such Holder (the Company hereby consenting to the use (subject to
the limitations set forth in the last paragraph of this Section 7) of the
Prospectus or any amendment or supplement thereto in connection with such
disposition);
(d) use its reasonable best efforts to register or qualify
such Registrable Securities covered by such Registration Statement under such
other securities or blue sky laws of such jurisdictions as each Holder shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
Holder, except that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this Section 7(d), it would not be obligated
to be so qualified, to subject itself to taxation in any such jurisdiction, or
to consent to general service of process in any such jurisdiction;
(e) notify each Holder of any such Registrable Securities
covered by such Registration Statement at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in Section 7(b), of the Company's becoming aware
that the Prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and at the request
of any such Holder prepare and furnish to such Holder a reasonable number of
copies of an amendment or supplement to the Registration Statement or related
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(f) notify each Holder of Registrable Securities covered by
such Registration Statement at any time
(1) when the Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect
to the Registration Statement or any post-effective amendment,
when the same has become effective,
22
<PAGE> 23
(2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus
or for additional information, and of any comments, oral or
written, by the SEC with respect thereto,
(3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose,
(4) if at any time the representations and warranties
of the Company contemplated by paragraph (i)(1) below cease to
be true and correct, and
(5) of the receipt by the Company of any notification
with respect to the suspension of qualification or exemption
from qualification of the Registrable Securities for offering
or sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose;
(g) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than eighteen
months) after the effective date of the Registration Statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the Securities
Act and the rules and regulations promulgated thereunder;
(h) cause all such Registrable Securities to be listed on any
securities exchange on which the Common Stock is then listed, if such
Registrable Securities are not already so listed and if such listing is then
permitted under the rules of such exchange, and to provide a transfer agent,
CUSIP number and registrar for such Registrable Securities covered by such
Registration Statement no later than the effective date of such Registration
Statement;
(i) enter into agreements (including underwriting agreements)
and take all other appropriate actions in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection, whether or
not an underwriting agreement is entered into and whether or not the
registration is an Underwritten Offering:
23
<PAGE> 24
(1) make such representations and warranties to the
Holders of such Registrable Securities, limited, as to such
Holders, to the extent such representations and warranties are
based solely on representations and warranties made by such
Holders, and the underwriters, if any, and agree to such
indemnification and contribution agreements, in form,
substance and scope as are customarily made by issuers to
underwriters in comparable underwritten offerings;
(2) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the
underwriters, if any, the Holders of the Registrable
Securities being sold) addressed to each such Holder and the
underwriters, if any, covering the matters customarily covered
in opinions requested in comparable underwritten offerings and
such other matters as may be reasonably requested by such
Holders and such underwriters;
(3) obtain "cold comfort" letters and updates thereof
from the Company's independent certified public accountants
addressed to the selling Holders of Registrable Securities and
the underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "cold
comfort" letters by underwriters in connection with comparable
underwritten offerings;
(4) if requested, provide the indemnification in
accordance with the provisions and procedures of Section 9
hereof to all parties to be indemnified pursuant to said
Section; and
(5) deliver such documents and certificates as may be
reasonably requested by Apollo, AEW or the Carell Holders and
the underwriters, if any, to evidence compliance with clause
(f) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the
Company;
provided, that the matters set forth in this Section 7(i) shall be effected at
each closing under any underwriting or similar agreement as and to the extent
required thereunder and that nothing in this Section 7(i) shall be interpreted
in any manner
24
<PAGE> 25
which would increase the liability of the Company to the Holders beyond those
provided for in Section 9;
(j) cooperate with the Holders of Registrable Securities
covered by such Registration Statement and the underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing the securities to be sold under
such Registration Statement, and enable such securities to be in such
denominations and registered in such names as the underwriter or underwriters,
if any, or such Holders may reasonably request;
(k) if requested by the underwriter or underwriters or a
Holder of Registrable Securities being sold in connection with an Underwritten
Offering, immediately incorporate in a Prospectus supplement or post-effective
amendment such information as the underwriters and the Holders of the
Registrable Securities being sold, agree should be included therein relating to
the plan of distribution with respect to such Registrable Securities, including,
without limitation, information with respect to the principal amount of
Registrable Securities being sold to such underwriters, the purchase price
being paid therefor by such underwriters and with respect to any other terms of
the underwritten offering of the Registrable Securities to be sold in such
offering and make all required filings of such Prospectus supplement or
post-effective amendment promptly upon being notified of the matters of be
incorporated in such Prospectus supplement or post-effective amendment;
(l) in the event of the Initial Underwriting and the Extra
Underwriting, participate in any "roadshow" marketing efforts reasonably
requested by the underwriters; and
(m) make available for inspection by any Holder of Registrable
Securities included in such Registration Statement any underwriter participating
in any disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records and other
information, pertinent corporate documents and properties of any of the Company
and its subsidiaries and affiliates (collectively, the "Records"), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility.
The Company may require each Holder of Registrable Securities
as to which any registration is being effected to furnish the Company with such
25
<PAGE> 26
information regarding such Holder and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon
receipt of any notice (the "Suspension Notice") from the Company of the
happening of any event of the kind described in Section 7(e), such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
Prospectus or Registration Statement covering such Registrable Securities until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 7(e), and, if so directed by the Company, such Holder
will use its reasonable best efforts to deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. The Company will use its reasonable best
efforts to ensure that no Suspension Period exceeds 30 days. The Company shall
not be permitted to give more than one Suspension Notice during any period of 12
consecutive months or to cause the aggregate number of days included in all
Suspension Periods, when taken together with any Blackout Periods and Lockout
Periods, during any consecutive 12 months after the Publication Date to exceed
180 days (or such longer period of time, to the extent that the Underwriters'
Representative of the Initial Underwriting requests a Lockout Period for the
Company and the Holders of longer than 90 days after the Initial Underwriting).
8. Registration Expenses. With respect to the Initial Underwriting and
the Extra Underwriting but not any other Underwritten Offering in which they may
participate, the Holders participating as sellers shall, on a pro-rata basis
based on the amount of Registrable Securities sold by each seller in such
Underwritten Offering, pay all Registration Expenses incurred in connection with
the Registrable Securities sold by such holders; provided, that if, within two
years following the closing of either such Underwritten Offering, the Company
provides reimbursement of any such expenses to any Holder, it will provide pro
rata reimbursement to all Holders. Each such Holder will also be responsible for
the payment of its own underwriting discounts, commissions and transfer taxes,
if any, relating to the sale or disposition of such Registrable Securities and
any of its own expenses, including the fees and expenses of any counsel retained
by it.
9. Indemnification; Contribution.
26
<PAGE> 27
(a) Indemnification by the Company. The Company agrees to
indemnify each Holder of Registrable Securities, its officers and directors and
each Person who controls such Holder (within the meaning of the Securities Act)
and any agent or investment adviser thereof against all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees and expenses of
investigation) incurred by such party pursuant to any actual or threatened
action, suit, proceeding or investigation arising out of or based upon (i) any
untrue or alleged untrue statement of material fact contained in a Registration
Statement, any Prospectus or preliminary Prospectus, or any amendment or
supplement to any of the foregoing or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of a Prospectus or a preliminary Prospectus,
in light of the circumstances then existing) not misleading, except in each case
insofar as the same arise out of or are based upon, any such untrue statement or
omission made in reliance on and in conformity with (i) information with
respect to such indemnified party furnished in writing to the Company by such
indemnified party or its counsel expressly for use therein, or (ii) with respect
to Apollo and AEW, the representations and warranties made by Holdings in the
Merger Agreement and the schedules attached thereto, but only to the extent that
such representations and warranties were incorrect as of the Closing and the
alleged inaccuracies or omissions relate to periods preceding the Closing;
provided, that the release of the Company's indemnification obligations pursuant
to clause (ii) will be limited (x) to the extent that the Company becomes aware
that a representation or warranty made by Holdings in the Merger Agreement and
the schedules thereto is incorrect or incomplete before the effectiveness of the
Registration Statement, the Prospectus or preliminary Prospectus, or any
amendment or supplement to any of the foregoing, containing such untrue
statement or omission or (y) to the extent that the Company became aware of such
incorrectness or incompleteness after the effectiveness of such document and
failed to promptly amend or supplement such document as may be necessary to
satisfy the requirements of the Securities Act. In connection with an
Underwritten Offering, the Company will indemnify the underwriters thereof,
their officers and directors and each Person who controls such underwriters
(within the meaning of the Securities Act) to the same extent as provided above
with respect to the indemnification of the Holders of Registrable Securities.
Notwithstanding the foregoing provisions of this Section 9(a), in the case of an
offering that is not an Underwritten Offering, the Company will not be liable to
any Holder of Registrable Securities under the indemnity agreement in this
Section 9(a) for any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense that arises out of such Holder's
failure to send or give a copy of the final Prospectus to the Person asserting
an untrue
27
<PAGE> 28
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of the Registrable Securities to
such Person if such statement or omission was corrected in such final Prospectus
and the Company has previously furnished copies thereof in accordance with this
Agreement. Notwithstanding the foregoing, nothing in this Section 9(a) shall be
construed in any manner which would increase the indemnification liabilities of
Apollo and/or AEW to the Company contained in Article VIII of the Merger
Agreement.
(b) Indemnification by Holders of Registrable Securities. In
connection with a Registration Statement, each Holder will furnish to the
Company in writing such information, including with respect to the name, address
and the amount of Registrable Securities held by such Holder, as the Company
reasonably requests for use in such Registration Statement or the related
Prospectus and agrees to indemnify and hold harmless (in the same manner and to
the same extent as set forth in Section 9(a)) the Company, all other prospective
Holders, with respect to a Holder, or any underwriter, as the case may be, and
any of their respective affiliates, directors, officers and controlling Persons,
(within the meaning of the Securities Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of a material fact or any omission or alleged omission of a material fact
required to be stated in such Registration Statement or Prospectus or any
amendment or supplement to either of them or necessary to make the statements
therein (in the case of a Prospectus, in the light of the circumstances then
existing) not misleading, but only to the extent that any such untrue statement
or omission is made in reliance on and in conformity with information with
respect to such Holder furnished in writing to the Company by such Holder or its
counsel specifically for inclusion therein.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder agrees to give prompt written notice to
the indemnifying party after the receipt by such indemnified party of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such indemnified party
may claim indemnification or contribution pursuant to this Agreement (provided
that failure to give such notification shall not affect the obligations of the
indemnifying person pursuant to this Section 9 except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure). In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party
28
<PAGE> 29
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under these indemnification provisions for any legal expenses
of other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation, unless in the reasonable judgment of any
indemnified party a conflict of interest is likely to exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the
reasonable fees and expenses of such additional counsel or counsels. The
indemnifying party will not be subject to any liability for any settlement made
without its consent (which consent will not be unreasonably withheld).
(d) Contribution. If the indemnification from the indemnifying
party provided for in this Section 9 is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified party in connection with the actions
which resulted in such losses, claims, damages, liabilities and expenses, as
well as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 9(c), any legal and other fees
and expenses reasonably incurred by such indemnified party in connection with
any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 9(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable
29
<PAGE> 30
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 9(d), no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Holder of
Registrable Securities shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities of such
Holder were offered to the public (net of all underwriting discounts and
commissions) exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue statement or omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 9, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 9(a) or (b), as the case may be, without regard to the
relative fault of said indemnifying parties or indemnified party or any other
equitable consideration provided for in this Section 9(d).
(e) The provisions of this Section 9 shall be applicable in
respect of each registration pursuant to this Agreement, shall be in addition to
any liability which any party may have to any other party and shall survive any
termination of this Agreement.
10. Rule 144. For a period of two years following the Closing Date
or, if at the end of such two year period, a Holder is an affiliate of the
Company, until such time as no Holder is an affiliate of the Company, the
Company covenants that it will use reasonable best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act (or, if
the Company is not required to file such reports, it will, upon the request of
any Holder of Registrable Securities, use its reasonable best efforts to make
publicly available other information so long as necessary to permit sales under
Rule 144 under the Securities Act), and it will take such further action as any
Holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell shares of Common Stock
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted
30
<PAGE> 31
by the SEC. Upon the request of any Holder of Registrable Securities, the
Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
11. Miscellaneous.
(a) Remedies. Each Holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement.
(b) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Carell Holders and Allright Holders owning 70% of the Registrable Securities
then held by all of the Allright Holders.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by telex or telecopier, registered or
certified mail (return receipt requested), postage prepaid, or courier
guaranteeing next day delivery to the parties at the following addresses (or at
such other address for any party an shall be specified by like notice, provided
that notices of a change of address shall be effective only upon receipt
thereof). Notices delivered personally shall be effective upon receipt, notices
sent by mail shall be effective three days after mailing, notices sent by telex
shall be effective when answered back, notices sent by telecopier shall be
effective when receipt is acknowledged, and notices sent by courier guaranteeing
next day delivery shall be effective on the next business day after timely
delivery to the courier:
(i) if to the Holders at:
Apollo Real Estate Investment Fund II, L.P.
1301 Avenue of the Americas
New York, NY 10019
Attention: William S. Benjamin
Facsimile: (212) 261-4060
and
31
<PAGE> 32
AEW Partners, L.P.
225 Franklin Street
Boston, MA 02110-2803
Attention: Marc Davidson
Facsimile: (617) 261-9555
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Randall H. Doud
Facsimile: (212) 735-2000
and
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Attention: Laura Hodges Taylor
Facsimile: (617) 570-8150
(ii) if to the Company at:
Central Parking Corporation
2401 21st Avenue South, Suite 200
Nashville, TN 37212
Attention: Monroe J. Carell, Jr.
Facsimile: (615) 297-6240
with copies to:
Harwell Howard Hyne Gabbert & Manner, P.C.
1800 First American Center
315 Deaderick Street
Nashville, TN 37238
Attention: Mark Manner
Facsimile: (615) 251-1059
32
<PAGE> 33
(iii) if to the Carell Holders at:
Central Parking Corporation
2401 21st Avenue South, Suite 200
Nashville, TN 37212
Attention: Monroe J. Carell, Jr.
Facsimile: (615) 297-6240
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors of each of the parties and
transferees of Registrable Securities. No provision of this Agreement shall be
construed in any manner as to restrict the ability of any Holder to pledge all
or any portion of the Registrable Securities owned by such Holder, including the
registration rights related to such Registrable Securities granted hereunder, to
any lender; provided, that, in the event that one or more pledgees succeed to
all or a portion of the shares of Common Stock, and the registration rights
related to such shares, formerly owned by a Holder, such registration rights may
only be exercised if the then holders of a majority of such shares agree to
exercise such right. Accordingly, with respect to the exercise of any of the
registration rights granted hereunder, the original Holder of Registrable
Securities, and all pledgees of such Holder's Registrable Securities, shall be
deemed to be, collectively, one Holder. No holder of any such shares of Common
Stock, however, whether a Holder or a pledgee, shall be under any obligation to
sell, transfer or register any of the shares of Common Stock it then owns in the
event that a majority of such holders elects to exercise any registration right
granted hereunder.
(e) Kinney Shareholders Agreement. The Company hereby agrees
that it will use its reasonable best efforts to comply with all provisions of
the share holders agreement and agreement not to compete, dated as of February
12, 1998, by and among the Company, Monroe J. Carell, Jr. and the Kinney
Holders, which are related, in any manner, to the timing of the activation of
the Kinney Registration Rights, or in any manner amend or modify such
shareholders agreement in a manner adverse to the Holders with respect to the
registration rights granted hereunder.
(f) Construction. References herein to a specified number of
Registrable Securities are subject to equitable adjustment for shares of Common
Stock issued as a dividend or distribution on account of Registrable Securities
and for any combination or subdivision of outstanding Registrable Securities
into a less or greater number of securities (by reclassification, stock split or
otherwise). In the
33
<PAGE> 34
event shares of Common Stock included in the Registrable Securities are
exchanged for any other securities issued by the Company, such other securities
shall constitute Registrable Securities in accordance with clause (b) of the
definition of "Registrable Securities" in Section 1 and the provisions of this
Agreement shall be interpreted and construed in order to provide registration
rights with respect to such other securities constituting Registrable Securities
that are substantially identical to the registration rights granted hereunder
with respect to the exchanged shares of Common Stock.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed wholly within that State.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the Holders shall be enforceable to the fullest
extent permitted by law.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression and a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter hereof. There are no restrictions, promises, warranties or undertakings
with respect to the subject matter hereof, other than those set forth or
referred to herein and therein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
34
<PAGE> 35
(l) Termination. This Agreement, with respect to the Allright
Holders, shall terminate, and be of no further force and effect, in the event
that the Merger is not consummated for any reason.
(m) Pooling. Central, the Carell Holders, AEW and Apollo shall
use reasonable best efforts, with respect to the transactions contemplated by
this Agreement, to cause the Merger to be accounted for as a pooling of
interests under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations, and each party agrees that it shall take no action that
would cause such accounting not to be obtained.
35
<PAGE> 36
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
CENTRAL PARKING CORPORATION
By:
------------------------------------
Name: Monroe J. Carell, Jr.
Title: Chief Executive Officer and
Chairman of the Board
MONROE J. CARELL, JR.
------------------------------------
THE CARELL CHILDREN'S TRUST
By: Equitable Trust Company, Successor Trustee
U/A Monroe Carell, Jr. dated 10/30/87
By:
------------------------------------
Name: M. Kirk Scobey, Jr.
Title: Executive Vice President
MONROE CARELL, JR. 1994 GRANTOR
RETAINED ANNUITY TRUST
By:
------------------------------------
Name: Monroe Carell, Jr.
Title: Trustee U/A Monroe Carell, Jr. dated 9/22/94
36
<PAGE> 37
MONROE CARELL, JR. 1995 GRANTOR
RETAINED ANNUITY TRUST
By:
------------------------------------
Name: Monroe Carell, Jr.
Title: Trustee U/A Monroe Carell, Jr. dated 2/7/95
THE 1996 CARELL GRANDCHILDREN'S TRUST
F/B/O JULIA CLAIRE STADLER
By:
------------------------------------
Name: L. Glenn Worley
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Kathryn Carell Brown
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Julia Carell Stadler
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Edith Carell Johnson
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
THE 1996 CARELL GRANDCHILDREN'S TRUST
F/B/O CARELL ELIZABETH BROWN
By:
------------------------------------
Name: L. Glenn Worley
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
37
<PAGE> 38
By:
------------------------------------
Name: Kathryn Carell Brown
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Julia Carell Stadler
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Edith Carell Johnson
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
THE 1996 CARELL GRANDCHILDREN'S TRUST
F/B/O DAVID NICHOLAS BROWN
By:
------------------------------------
Name: L. Glenn Worley
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Kathryn Carell Brown
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Julia Carell Stadler
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Edith Carell Johnson
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
38
<PAGE> 39
THE 1996 CARELL GRANDCHILDREN'S TRUST F/B/O
WILLIAM CARELL JOHNSON
By:
------------------------------------
Name: L. Glenn Worley
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Kathryn Carell Brown
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Julia Carell Stadler
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Edith Carell Johnson
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
THE 1996 CARELL GRANDCHILDREN'S TRUST F/B/O
GEORGE MONROE STADLER
By:
------------------------------------
Name: L. Glenn Worley
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Kathryn Carell Brown
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
39
<PAGE> 40
By:
------------------------------------
Name: Julia Carell Stadler
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
By:
------------------------------------
Name: Edith Carell Johnson
Title: Co-Trustee U/A Monroe Carell, Jr. dated 2/20/96
THE CARELL FAMILY GRANDCHILDREN 1990 TRUST
F/B/O JULIA CLAIRE STADLER
By: Equitable Trust Company, Successor Trustee
U/A Monroe Carell, Jr. dated 12/26/90
By:
------------------------------------
Name: M. Kirk Scobey, Jr.
Title: Executive Vice President
THE CARELL FAMILY GRANDCHILDREN 1990 TRUST
F/B/O GEORGE MONROE STADLER
By: Equitable Trust Company, Successor Trustee
U/A Monroe Carell, Jr. dated 12/26/90
By:
------------------------------------
Name: M. Kirk Scobey, Jr.
Title: Executive Vice President
THE CARELL FAMILY GRANDCHILDREN 1990 TRUST
F/B/O CARELL ELIZABETH BROWN
By: Equitable Trust Company, Successor Trustee
U/A Monroe Carell, Jr. dated 12/26/90
40
<PAGE> 41
By:
------------------------------------
Name: M. Kirk Scobey, Jr.
Title: Executive Vice President
THE CARELL FAMILY GRANDCHILDREN 1990 TRUST
F/B/O DAVID NICHOLAS BROWN
By: Equitable Trust Company, Successor Trustee U/A
Monroe Carell, Jr. dated 12/26/90
By:
------------------------------------
Name: M. Kirk Scobey, Jr.
Title: Executive Vice President
THE CARELL FAMILY GRANDCHILDREN 1990 TRUST
F/B/O WILLIAM CARELL JOHNSON
By: Equitable Trust Company, Successor Trustee
U/A Monroe Carell, Jr. dated 12/26/90
By:
------------------------------------
Name: M. Kirk Scobey, Jr.
Title: Executive Vice President
THE CARELL FAMILY GRANDCHILDREN 1990 TRUST
F/B/O ANN SCOTT JOHNSON
By: Equitable Trust Company, Successor Trustee U/A
Monroe Carell, Jr. dated 12/26/90
By:
------------------------------------
Name: M. Kirk Scobey, Jr.
Title: Executive Vice President
41
<PAGE> 42
THE MONROE CARELL, JR. FOUNDATION
By:
------------------------------------
Name: Monroe J. Carell, Jr.
Title: President
THE KATHRYN CARELL BROWN FOUNDATION
By:
------------------------------------
Name: Kathryn Carell Brown
Title: Chairman, Board of Trustees
THE EDITH CARELL JOHNSON FOUNDATION
By:
------------------------------------
Name: Edith Carell Johnson
Title: Chairman, Board of Trustees
THE JULIA CARELL STADLER FOUNDATION
By:
------------------------------------
Name: Julia Carell Stadler
Title: Chairman, Board of Trustees
1997 CARELL ELIZABETH BROWN TRUST
By:
------------------------------------
Name: L. Glenn Worley
Title: Trustee U/A Kathryn Carell Brown and
David H. Brown dated 12/23/97
42
<PAGE> 43
1997 DAVID NICHOLAS BROWN TRUST
By:
------------------------------------
Name: L. Glenn Worley
Title: Trustee U/A Kathryn Carell Brown and
David H. Brown dated 12/23/97
1997 WILLIAM CARELL JOHNSON TRUST
By:
------------------------------------
Name: L. Glenn Worley
Title: Trustee U/A Edith Carell Johnson and
David B. Johnson dated 12/23/97
1997 ANN SCOTT JOHNSON TRUST
By:
------------------------------------
Name: L. Glenn Worley
Title: Trustee U/A Edith Carell Johnson and
David B. Johnson dated 12/23/97
1997 GEORGE MONROE STADLER TRUST
By:
------------------------------------
Name: L. Glenn Worley
Title: Trustee U/A Julia Carell Stadler and
George B. Stadler dated 12/23/97
1997 JULIA CLAIRE STADLER TRUST
By:
------------------------------------
Name: L. Glenn Worley
Title: Trustee U/A Julia Carell Stadler and
George B. Stadler dated 12/23/97
43
<PAGE> 44
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P., its general partner
By: Apollo Real Estate Capital Advisors II, Inc., its general
partner
By:
------------------------------------
Name: William S. Benjamin
Title: Vice President
AEW PARTNERS, L.P.
By: AEW/L.P., its general partner
By: AEW, Inc., its general partner
By:
------------------------------------
Name: Marc Davidson
Title: Vice President
44
<PAGE> 1
EXHIBIT 10.1
Monroe J. Carell, Jr.
c/o Central Parking Corporation
2401 21st Avenue South
Nashville, Tennessee 37212
Central Parking Corporation
2401 21st Avenue South
Nashville, TN 37212
September 21, 1998
Allright Holdings, Inc.
c/o Apollo Real Estate Investment Fund II, L.P.
1301 Avenue of the Americas
New York, NY 10019
Apollo Real Estate Investment Fund II, L.P.
1301 Avenue of the Americas
New York, NY 10019
AEW Partners, L.P.
225 Franklin Street
Boston, MA 02110
Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of
September 21, 1998 (the "Agreement"), by and among Central Parking Corporation
("Central"), a Tennessee corporation as to which the undersigned is a
stockholder (the "Stockholder"), Central Merger Sub, Inc. ("Central Sub"), a
Delaware corporation and a wholly-owned subsidiary of Central, and Allright
Holdings, Inc. ("Holdings"), a Delaware corporation.
1. The undersigned represents and warrants that he is the record and
beneficial holder of 10,814,523 shares of Central's common stock (the "Central
Common Stock"), representing approximately 36.58% of the shares of the Central
Common Stock outstanding, which includes 13,241 shares held through Central's
Deferred Unit Plan, 9,413 shares held through Central's Key Personnel Plan,
149,999 shares held through the Monroe Carell, Jr. Foundation, 130,022 shares
held through the Monroe Carell, Jr. 1995 Grantor Retained Annuity Trust and
1,720,877 shares held through The Monroe Carell 1994 Grantor Retained Annuity
Trust, and does not have beneficial ownership in any other shares of Central
Common Stock. The undersigned represents and warrants that he has
<PAGE> 2
sole power to direct the voting and disposition of such shares of Central Common
Stock set forth above.
2. In order to induce Holdings to enter into the Agreement, the
undersigned has executed and delivered this letter agreement to Holdings, Apollo
Real Estate Investment Fund II, L.P. and AEW Partners, L.P. Pursuant to this
letter agreement, the undersigned agrees that, at any meeting of the
stockholders of Central called with respect to the merger of Holdings with and
into Central Sub, with Holdings being the surviving corporation, pursuant to the
Agreement (the "Merger"), the issuance of shares of Central's common stock
pursuant thereto (the "Issuance"), and the Agreement, and at any adjournment
thereof, and with respect to any consent solicited with respect to the Merger,
the Issuance and the Agreement, the undersigned shall vote the Central Common
Stock in favor of approval of the merger, the Issuance, the Agreement and any
matter which could reasonably be expected to facilitate the Merger and such
other transactions, except in the event any of such agreements are amended in a
manner adverse to the rights of the undersigned. The undersigned may vote on all
other matters in his sole discretion. The undersigned, as the holder of voting
stock of Central, shall be present, in person or by proxy, at all meetings of
stockholders of Central called with respect to the Merger, the Issuance and the
Agreement, and at any adjournment thereof, so that all of the Central Common
Stock shall be counted for the purpose of determining the presence of a quorum
at such meetings. In the event Central or its board of directors does not
promptly call a shareholders meeting for the purpose of approving the Merger as
required in the Agreement, the undersigned hereby agrees that the undersigned
will take any and all actions as a shareholder required on the undersigned's
part to timely convene and hold a meeting of the stockholders of Central for the
purpose of voting on the Merger and the transactions contemplated in connection
therewith and to submit the Merger and the transactions contemplated in
connection therewith to a vote of the stockholders of Central at such
stockholder meeting. The undersigned hereby also agrees not to vote the Central
Common Stock beneficially owned by the undersigned in connection with any matter
submitted to a vote of the Central stockholders in a manner which would prevent
or delay the consummation of the transaction contemplated by the Agreement. This
letter agreement is intended to bind the undersigned only with respect to the
voting of the Central Common Stock as a stockholder of Central as provided
herein and shall not prohibit the undersigned from acting in accordance with the
undersigned's fiduciary duties as an officer or director of Central.
3. The undersigned agrees that, if required to achieve the intended
treatment of the Merger as a pooling-of-interests, the undersigned will
contribute or cause to have contributed, any and all parking-related assets
owned, directly or indirectly, to Central in exchange for Central Common Stock
prior to the consummation of the Merger.
4. Central hereby agrees, if necessary, to take any reasonable action
required on its part to permit the Central Stockholders to comply with their
obligations set forth
2
<PAGE> 3
above in connection with obtaining pooling-of-interests accounting treatment for
the Merger.
5. The undersigned hereby represents and warrants that the
representations and warranties of Central and Central Sub under Sections 4.2(b)
and 4.4 of the Agreement, as such sections relate to the undersigned, are true,
accurate and correct in all material respects as of the date hereof, and
covenants that if such representations and warranties cease to be true, accurate
and correct in all material respects at or prior to the Closing, the undersigned
will immediately notify Holdings in writing of the facts and circumstances which
led to such representation no longer being true, accurate and correct in all
material respects.
6. Any notices required to be sent to Holdings under this letter
agreement shall be sent to:
Allright Holdings, Inc.
c/o Apollo Real Estate Investment Fund II, L.P.
1301 Avenue of the Americas New York, NY 10019
Attn: William S. Benjamin
Facsimile: (212) 261-4060
with copies to:
AEW Partners, L.P.
225 Franklin Street
Boston, MA 02110
Attn: Marc Davidson
Facsimile: (617) 261-9555
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attn: Randall H. Doud
Facsimile: (212) 735-2000
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
Attn: Laura Hodges Taylor
Facsimile: (617) 570-8150
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to principles of
conflicts of laws thereof and shall be binding upon all beneficiaries, heirs at
law, distributees, successors, assigns
3
<PAGE> 4
and legal representatives of the undersigned. This letter agreement may be
executed in counterparts, each of which shall be deemed an original, but which
together constitute one and the same instrument.
4
<PAGE> 5
Very truly yours,
-------------------------------------
Monroe J. Carell, Jr.
CENTRAL PARKING CORPORATION
By:
----------------------------------
Name:
Title:
SIGNED AND AGREED AS TO PARAGRAPH 3
ONLY:
-------------------------------------
Kathryn Carell Brown
-------------------------------------
Julia Carell Stadler
-------------------------------------
Edith Carell Johnson
Accepted and agreed as of
the date first written above:
ALLRIGHT HOLDINGS, INC.
By:
-----------------------------
Name:
Title:
5
<PAGE> 6
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P., its general partner
By: Apollo Real Estate Capital Advisors II, Inc., its general partner
By:
------------------------------------
Name:
Title:
AEW PARTNERS, L.P.
By: AEW/L.P., its general partner
By: AEW, Inc., its general partner
By:
-------------------------------------
Name:
Title:
6
<PAGE> 1
EXHIBIT 10.2
---------------------
Central Parking Corporation
2401 21st Avenue South
Nashville, TN 37212
September 21, 1998
Allright Holdings, Inc.
c/o Apollo Real Estate Investment Fund II, L.P.
1301 Avenue of the Americas
New York, NY 10019
Apollo Real Estate Investment Fund II, L.P.
1301 Avenue of the Americas
New York, NY 10019
AEW Partners, L.P.
225 Franklin Street
Boston, MA 02110
Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of
September 21, 1998 (the "Agreement"), by and among Central Parking Corporation
("Central"), a Tennessee corporation as to which the undersigned is a
stockholder (the "Stockholder"), Central Merger Sub, Inc. ("Central Sub"), a
Delaware corporation and a wholly-owned subsidiary of Central, Apollo Real
Estate Investment Fund II, L.P., a Delaware limited partnership, AEW Partners,
L.P., a Delaware limited partnership and Allright Holdings, Inc.
("Holdings"), a Delaware corporation.
The undersigned represents and warrants that as of the date hereof the
undersigned is the record and beneficial holder of ___________ shares of
Central's common stock (the "Central Common Stock"), representing approximately
_____% of the shares of the Central Common Stock outstanding. The undersigned
represents and warrants that as of the date hereof the undersigned has sole
power to direct the voting and disposition of such shares of Central Common
Stock set forth above.
In order to induce Holdings to enter into the Agreement, the
undersigned has executed and delivered this letter agreement to Holdings, Apollo
Real Estate Investment Fund II, L.P. and AEW Partners, L.P. Pursuant to this
letter agreement, the undersigned
<PAGE> 2
agrees that, at any meeting of the stockholders of Central called with respect
to the merger of Holdings with and into Central Sub, with Holdings being the
surviving corporation, pursuant to the Agreement (the "Merger"), the issuance of
shares of Central's common stock pursuant thereto (the "Issuance"), and the
Agreement, and at any adjournment thereof, and with respect to any consent
solicited with respect to the Merger, the Issuance and the Agreement, the
undersigned shall vote the Central Common Stock that the undersigned is then
entitled to vote in favor of approval of the merger, the Issuance, the Agreement
and any matter which could reasonably be expected to facilitate the Merger and
such other transactions. The undersigned may vote on all other matters in its
sole discretion. The undersigned, as the holder of voting stock of Central,
shall be present, in person or by proxy, at all meetings of stockholders of
Central called with respect to the Merger, the Issuance and the Agreement, and
at any adjournment thereof, so that all of the Central Common Stock shall be
counted for the purpose of determining the presence of a quorum at such
meetings. The undersigned also agrees not to vote the Central Common Stock that
the undersigned is then entitled to vote in connection with any matter submitted
to a vote of the Central stockholders in a manner which would prevent or delay
the consummation of the transaction contemplated by the agreement.
The undersigned hereby represents and warrants that the representations
and warranties of Central and Central Sub under Sections 4.2(b) and 4.4 of the
Agreement, as such sections relate to the undersigned, are true, accurate and
correct in all material respects as of the date hereof, and covenants that if
such representations and warranties cease to be true, accurate and correct in
all material respects at or prior to the Closing, the undersigned will
immediately notify Holdings in writing of the facts and circumstances which led
to such representation no longer being true, accurate and correct in all
material respects.
Any notices required to be sent to Holdings under this letter agreement
shall be sent to:
Allright Holdings, Inc.
c/o Apollo Real Estate Investment Fund II, L.P.
1301 Avenue of the Americas New York, NY 10019
Attn: William S. Benjamin
Facsimile: (212) 261-4060
with copies to:
AEW Partners, L.P.
225 Franklin Street
Boston, MA 02110
Attn: Marc Davidson
Facsimile: (617) 261-9555
2
<PAGE> 3
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attn: Randall H. Doud
Facsimile: (212) 735-2000
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
Attn: Laura Hodges Taylor
Facsimile: (617) 570-8150
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to principles of
conflicts of laws thereof and shall be binding upon all beneficiaries, heirs at
law, distributees, successors, assigns and legal representatives of the
undersigned. This letter agreement may be executed in counterparts, each of
which shall be deemed an original, but which together constitute one and the
same instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
3
<PAGE> 4
Very truly yours,
----------------------------------
By:
-------------------------------
-----------------------
CENTRAL PARKING CORPORATION
By:
-------------------------------
Name:
Title:
Accepted and agreed as of
the date first written above:
ALLRIGHT HOLDINGS, INC.
By:
---------------------------------
Name: William S. Benjamin
Title: President
4
<PAGE> 5
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P., its general partner
By: Apollo Real Estate Capital Advisors II, Inc., its general partner
By:
-----------------------------------------
Name: William S. Benjamin
Title: Vice President
AEW PARTNERS, L.P.
By: AEW/L.P., its general partner
By: AEW, Inc., its general partner
By:
-----------------------------------------
Name: Marc Davidson
Title: Vice President
5
<PAGE> 1
EXHIBIT 10.3
------------------
c/o Allright Parking Corporation
1313 Main Street
Houston, TX 77002
Allright Holdings, Inc.
c/o Apollo Real Estate Investment Fund II, L.P.
1301 Avenue of the Americas
New York, NY 10019
September 21, 1998
Central Parking Corporation
2401 21st Avenue South
Nashville, TN 37212
Central Merger Sub, Inc.
c/o Central Parking Corporation
2401 21st Avenue South
Nashville, TN 37212
Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated
as of September 21, 1998 (the "Agreement"), by and among Central Parking
Corporation ("Central"), a Tennessee corporation, Central Merger Sub, Inc.
("Central Sub"), a Delaware corporation and a wholly-owned subsidiary of
Central, Apollo Real Estate Investment Fund II, L.P., a Delaware limited
partnership, AEW Partners, L.P., a Delaware limited partnership and Allright
Holdings, Inc. ("Holdings"), a Delaware corporation, as to which the undersigned
is a stockholder (the "Stockholder").
The undersigned represents and warrants that as of the date
hereof the undersigned is the record and beneficial holder of ______ shares of
Holdings' common stock (the "Holdings Common Stock"), representing approximately
____% of the shares of the Holdings Common Stock outstanding (on a fully-diluted
basis), and does not have beneficial ownership in any other shares of
<PAGE> 2
Holdings Common Stock. The undersigned represents and warrants that as of the
date hereof the undersigned has sole power to direct the voting and disposition
of such shares of Holdings Common Stock set forth above.
In order to induce Central and Central Sub to enter into the
Agreement, the undersigned has executed and delivered this letter agreement to
Central and Central Sub. Pursuant to this letter agreement, the undersigned
agrees that, at any meeting of the stockholders of Holdings called with respect
to the merger of Holdings with and into Central Sub, with Central Sub being the
surviving corporation, pursuant to the Agreement (the "Merger"), the issuance of
shares of Central's common stock pursuant thereto (the "Issuance"), and the
Agreement, and at any adjournment thereof, and with respect to any consent
solicited with respect to the Merger, the Issuance and the Agreement, the
undersigned shall vote the Holdings Common Stock that the undersigned is then
entitled to vote in favor of approval of the Merger, the Issuance, the Agreement
and any matter which could reasonably be expected to facilitate the Merger and
such other transactions, except in the event that any of such agreements are
amended in a manner adverse to the rights of the undersigned. The undersigned
may vote on all other matters in its sole discretion. The undersigned, as the
holder of voting stock of Holdings shall be present, in person or by proxy, at
all meetings of stockholders of Holdings called with respect to the Merger, the
Issuance and the Agreement, and at any adjournment thereof, so that all of the
Holdings Common Stock shall be counted for the purpose of determining the
presence of a quorum at such meetings. This letter agreement is intended to bind
the undersigned only with respect to the voting of the Holdings Common Stock as
a stockholder of Holdings, and shall not prohibit the undersigned from acting in
accordance with the undersigned's fiduciary duties as an officer or director of
Holdings.
The undersigned hereby agrees not to vote the Holdings Common
Stock that the undersigned is entitled to vote in connection with any matter
submitted to a vote of the Holdings stockholders in a manner which would prevent
or delay the consummation of the transactions contemplated by the Agreement.
The undersigned hereby represents and warrants that (a) this
letter agreement has been duly executed and delivered by the undersigned and is
a valid and binding agreement of the undersigned, enforceable against the
undersigned in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other similar laws relating to or affecting
creditors' rights generally and by general equity principles, and (b) the
execution and delivery by the
2
<PAGE> 3
undersigned of this letter agreement does not, and the consummation of the
transactions contemplated hereby, and the performance of the obligations which
the undersigned is obligated to perform hereunder will not violate or conflict
with any restriction of any kind or character to which the undersigned is
subject which would prevent or significantly restrict or delay the consummation
of the transactions contemplated hereby, and the undersigned hereby covenants
that if such representations and warranties cease to be true, accurate and
correct in all material respects at or prior to the Closing, the undersigned
will immediately notify Central and Central Sub in writing of the facts and
circumstances which led to such representation no longer being true, accurate
and correct in all material respects.
Any notices required to be sent to Central or Central Sub
under this letter agreement shall be sent to:
Central Parking Corporation
2401 21st Avenue South
Nashville, Tennessee 37212
Attn: Monroe J. Carell, Jr.
with copy to:
Harwell Howard Hyne Gabbert & Manner, P.C.
1800 First American Center
315 Deaderick Street
Nashville, Tennessee 37238
Attn: Mark Manner
This letter shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to principles of
conflicts of laws thereof and shall be binding upon all beneficiaries, heirs at
law, distributees, successors, assigns and legal representatives of the
undersigned. This letter agreement may be executed in counterparts, each of
which shall be deemed an original, but which together constitute one and the
same instrument.
3
<PAGE> 4
Very truly yours,
----------------------------------------
--------------------
ALLRIGHT HOLDINGS, INC.
By:
-----------------------------------
Name: William S. Benjamin
Title: President
Accepted and agreed as of
the date first written above:
CENTRAL PARKING CORPORATION
By:
-----------------------------------
Name: Monroe J. Carell, Jr.
Title: Chief Executive Officer and Chairman
of the Board
CENTRAL MERGER SUB, INC.
By:
----------------------------------
Name: Monroe J. Carell, Jr.
Title: Chief Executive Officer
4
<PAGE> 1
EXHIBIT 10.4
September 2, 1998
Stephen A. Tisdell
Chief Financial Officer
Central Parking Corporation
2401 21st Avenue South, Suite 200
Nashville, TN 37212
Re: $400 Million Senior Credit Facilities
Dear Steve:
NationsBanc Montgomery Securities LLC("NMS") is pleased to advise you of its
commitment, as Arranger and Syndication Agent, to use its best efforts to form a
syndicate of financial institutions (the "Lenders") reasonably acceptable to you
for up to $400 million in senior credit facilities (the "Facilities") to Central
Parking Corporation and its affiliates (the "Borrowers"), and NationsBank of
Tennessee, N.A. ("NationsBank") is pleased to act as Administrative Agent (in
such capacity, the "Agent") for the Facilities, providing a commitment of $75
million to the Facilities, upon and subject to the terms and conditions of this
letter and the Summary of Terms and Conditions attached hereto as Annex I (the
"Term Sheet"). All capitalized terms used and not otherwise defined herein shall
have the meanings set forth in the Term Sheet. The Facilities are being offered
in connection with the proposed pooling of interests by the Borrowers of
Allright Holdings, Inc. ("Allright").
The commitments of NationsBank and NMS hereunder are subject to the satisfaction
of each of the following conditions precedent in a manner acceptable to
NationsBank and NMS in their sole discretion:
(a) each of the terms and conditions set forth herein;
(b) each of the terms and conditions set forth in the Term Sheet;
(c) execution of a fee letter among the Borrowers, NationsBank and NMS
prior to or concurrently with the acceptance of this letter by the
Borrowers;
(d) the negotiation, execution and delivery of definitive documentation
with respect to the Facilities consistent with the Term Sheet and
otherwise satisfactory to NationsBank and NMS; and
(e) there not having occurred and being continuing since the date
hereof a material adverse change in the market for syndicated bank
credit facilities or a material disruption of, or a material adverse
change in, financial, banking or capital market conditions, in each
case as determined by NationsBank and NMS in their sole discretion.
<PAGE> 2
The commitments of NationsBank and NMS hereunder are based upon the financial
and other information regarding the Borrowers and their subsidiaries and
Allright and its subsidiaries previously provided to NationsBank and NMS and are
subject to the condition, among others, that there shall not have occurred after
the date of such information, in the opinion of NationsBank and NMS, any
material adverse change in the business, assets, liabilities (actual or
contingent), operations, condition (financial or otherwise) or prospects of the
Borrowers or Allright, in each case together with their respective subsidiaries
taken as a whole. If the continuing review by NationsBank and NMS of the
Borrowers discloses information relating to conditions or events not previously
disclosed to NationsBank and NMS or relating to new information or additional
developments concerning conditions or events previously disclosed to NationsBank
and NMS which NationsBank and NMS in their sole discretion believe may have a
material adverse effect on the condition (financial or otherwise), assets,
properties, business, operations or prospects of the Borrowers or Allright, in
each case together with their respective subsidiaries taken as a whole,
NationsBank and NMS may, in their sole discretion, suggest alternative financing
amounts or structures that ensure adequate protection for the Lenders or decline
to participate in the Facilities.
You agree to actively assist NationsBank and NMS in achieving a syndication of
the Facilities that is satisfactory to NationsBank, NMS and you. In the event
that such syndication can not be achieved in a manner satisfactory to
NationsBank and NMS under the structure outlined in the Term Sheet you agree to
cooperate with NationsBank and NMS in developing an alternative structure that
will permit a satisfactory syndication of the Facilities. It is specifically
understood and agreed that the terms for the Facilities contained in the Term
Sheet (including pricing) are based on current market conditions and may require
modification during syndication to reflect changes in market conditions.
Syndication of the Facilities will be accomplished by a variety of means,
including direct contact during the syndication between senior management and
advisors of the Borrowers and the proposed Lenders. To assist NationsBank and
NMS in the syndication efforts, you hereby agree to (a) provide and cause your
advisors to provide NationsBank and NMS and the other Lenders upon request with
all information reasonably deemed necessary by NationsBank and NMS to complete
syndication, (b) assist NationsBank and NMS upon their reasonable request in the
preparation of an Offering Memorandum to be used in connection with the
syndication of the Facilities and (c) otherwise assist NationsBank and NMS in
their syndication efforts, including by making available officers and advisors
of the Borrowers and their subsidiaries from time to time to attend and make
presentations regarding the business and prospects of the Borrowers and their
subsidiaries and Allright and its subsidiaries, as appropriate, at a meeting or
meetings of prospective Lenders. You further agree to refrain from engaging in
any additional financings for the Borrowers and their subsidiaries during such
syndication process unless otherwise agreed to by NationsBank and NMS.
It is understood and agreed that NationsBank and NMS, after consultation with
you, will manage and control all aspects of the syndication, including decisions
as to the selection of proposed Lenders and any titles offered to proposed
Lenders, when commitments will be accepted and the final allocations of the
commitments among the Lenders. It is understood that no Lender participating in
the Facilities will receive compensation from you outside the terms contained
herein and in the Term Sheet in order to obtain its commitment. It is also
understood and agreed that the amount and distribution of the fees among the
Lenders will be at the sole discretion of NationsBank and NMS and that any
syndication prior to execution of definitive documentation will reduce the
commitment of NationsBank. No additional agents will be appointed without the
prior approval of NationsBank and NMS.
<PAGE> 3
You hereby represent, warrant and covenant that (i) all information, other than
the Projections (as defined below), which has been or is hereafter made
available to NationsBank and NMS or the Lenders by you or any of your
representatives in connection with the transactions contemplated hereby
("Information") is and will be complete and correct in all material respects and
does not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained therein not
misleading and (ii) all financial projections concerning the Borrowers and
Allright that have been or are hereafter made available to NationsBank and NMS
or the Lenders by you or any of your representatives (the "Projections") have
been or will be prepared in good faith based upon reasonable assumptions. You
agree to furnish us with such Information and Projections as we may reasonably
request and to supplement the Information and the Projections from time to time
until the closing date for the Facilities so that the representation and
warranty in the preceding sentence is correct on such date. In arranging and
syndicating the Facilities, NationsBank and NMS will be using and relying on the
Information and the Projections without independent verification thereof.
By acceptance of this offer, the Borrowers agree to pay all reasonable
out-of-pocket fees and expenses (including reasonable attorneys' fees as
outlined in a separate letter from Moore & Van Allen, PLLC plus out of pocket
expenses and expenses of due diligence) incurred before or after the date hereof
by the Agent or NMS in connection with the Facilities and the syndication
thereof, regardless of whether or not the Facilities are closed.
In the event that NationsBank or NMS becomes involved in any capacity in any
action, proceeding or investigation in connection with any matter contemplated
by this letter (including specifically, without limitation, the acquisition of
Allright), the Borrowers will reimburse NationsBank and NMS for their legal and
other expenses (including the cost of any investigation and preparation) as they
are incurred by NationsBank or NMS. The Borrowers also agree to indemnify and
hold harmless NationsBank, NMS and their affiliates and their respective
directors, officers, employees and agents (the "Indemnified Parties") from and
against any and all losses, claims, damages and liabilities, joint or several,
related to or arising out of any matters contemplated by this letter (including
specifically, without limitation, the acquisition of Allright), unless and only
to the extent that it shall be finally judicially determined that such losses,
claims, damages or liabilities resulted primarily from the gross negligence or
willful misconduct of NationsBank or NMS.
The provisions of the immediately preceding two paragraphs shall remain in full
force and effect regardless of whether definitive financing documentation for
the Facilities shall be executed and delivered and notwithstanding the
termination of this letter or the commitments of NationsBank and NMS hereunder.
Neither this offer nor the undertaking and commitment contained herein may be
disclosed to or relied upon by any other person or entity other than your
accountants, attorneys and other advisors, without the prior written consent of
NationsBank and NMS, except that following your acceptance hereof you may make
public disclosure hereof as required by law and you may disclose the terms
hereof to Allright in connection with the proposed acquisition.
As described herein and in the Term Sheet, NMS will act as Arranger and
Syndication Agent for the Facilities. NationsBank reserves the right to
allocate, in whole or in part, to NMS certain fees payable to NationsBank in
such manner as NationsBank and NMS agree in their sole discretion. You
acknowledge and agree that NationsBank may share with any of its affiliates
(including specifically NMS) any information relating to the Facilities, the
Borrowers and their subsidiaries and affiliates.
<PAGE> 4
This letter shall be governed by the laws of the State of Tennessee without
regard to its principles of conflicts of laws. This letter may be modified or
amended only in writing. This letter is not assignable by the Borrowers without
the prior written consent of NationsBank and NMS. This letter supersedes and
replaces any and all proposals or commitment letters previously delivered by
NationsBank or NMS to the Borrowers relating to the Facilities.
<PAGE> 5
This offer will expire at 5:00 p.m. on September 26, 1998 unless the Borrowers
execute this letter and the related fee letter and returns each of them to the
Agent prior to that time (which may be by facsimile transmission), whereupon
this letter shall become a binding agreement. Thereafter, this undertaking and
commitment will expire at 5:00 p.m. on January 31, 1999 unless definitive
documentation for the Facilities is executed and delivered prior to that time.
Very truly yours,
NationsBank of Tennessee, N.A., NationsBanc Montgomery Securities LLC
Individually and as Agent
By: /s/ William H. Diehl /s/ Mary Lynn Moser
----------------------- ----------------------
William H. Diehl Mary Lynn Moser
Title: Senior Vice President Title: Managing Director
Accepted and Agreed to this 20th day of September, 1998:
Central Parking Corporation
By: /s/ Stephen A. Tisdell
----------------------
Stephen A. Tisdell
Title: Chief Financial Officer
<PAGE> 6
ANNEX I
-------
CENTRAL PARKING CORPORATION
SUMMARY OF TERMS & CONDITIONS
September 2, 1998
===============================================================================
BORROWERS: Central Parking Corporation ("Parent
Company") and related subsidiaries (Central Parking
System, Inc., Central Parking System Realty, Inc.,
Square Industries, Inc., Kinney System Holding
Corporation and Allright Holdings, Inc. ("Allright")
and other appropriate subsidiaries to be determined).
GUARANTORS: The Facilities shall be guaranteed by all
existing and hereafter acquired material domestic
subsidiaries of the Borrowers (the "Guarantors"). All
guarantees shall be guarantees of payment and not of
collection.
AGENT: NationsBank of Tennessee, N.A. ("NationsBank"
or the "Agent") will act as sole and exclusive
administrative agent. As such, NationsBank will
negotiate with the Borrowers, act as the primary
contact for the Borrowers and perform all other
duties associated with the role of exclusive
administrative agent. No other agents or co-agents
may be appointed without the prior written consent of
NationsBank and NMS.
LEAD ARRANGER &
SYNDICATION AGENT: NationsBanc Montgomery Securities LLC ("NMS").
LENDERS: A syndicate of financial institutions
(including NationsBank) arranged by NMS, which
institutions shall be acceptable to the Borrowers,
the Arranger and the Agent (collectively, the
"Lenders").
FACILITIES: An aggregate principal amount of up to $400
million will be available upon the conditions
hereinafter set forth:
Revolving Credit Facility: $200 million revolving
credit facility, which will include a $25 million
sublimit for the issuance of standby letters of
credit (each a "Letter of Credit"). Letters of Credit
will be issued by NationsBank (in such capacity, the
"Fronting Bank"), and each Lender will purchase an
irrevocable and unconditional participation in each
Letter of Credit.
Term Loan: $200 million term loan facility.
SWINGLINE: The Revolving Credit Facility will include a $15
million sublimit in an amount to be determined for
"Swingline" borrowings. The Swingline will be
provided by the Agent
<PAGE> 7
ANNEX I
-------
CENTRAL PARKING CORPORATION
SUMMARY OF TERMS & CONDITIONS
September 2, 1998
===============================================================================
as an accommodation to the Borrowers and the Lenders
to handle daily activity at a rate of interest to be
agreed upon by the Borrowers and the Agent. Any
borrowings under the Swingline will reduce
availability under the Revolving Credit Facility for
the purpose of subsequent borrowings. At anytime, the
Agent may require each Lender to fund its pro rata
share of the Swingline loans by making an advance
under the Revolving Credit Facility. Swingline
outstandings do not count as usage for the purposes
of calculating the Commitment Fee.
PURPOSE: The proceeds of the Facilities shall be used: (i) to
refinance existing indebtedness of the Borrowers and
Allright and for working capital, capital
expenditures, and other corporate purposes.
MATURITY: The Revolving Credit Facility shall terminate and
all amounts outstanding thereunder shall be due and
payable in full 5 years from Closing.
The Term Loan shall be subject to repayment according
to the Scheduled Amortization, with the final payment
of all amounts outstanding, plus accrued interest,
being due 5 years from Closing.
SCHEDULED AMORTIZATION: Term Loan: The loans made under the Term Loan will
be available in a single borrowing at Closing. The
Term Loan will be subject to quarterly amortization
of principal, based upon the annual amounts shown
below (the "Scheduled Amortization").
LOAN YEAR 2 $50 million
LOAN YEAR 3 $50 million
LOAN YEAR 4 $50 million
LOAN YEAR 5 $50 million
SECURITY: Negative pledge on all assets, including stock of
all subsidiaries of the Parent Company (with
appropriate carveouts to be determined).
<PAGE> 8
ANNEX I
-------
CENTRAL PARKING CORPORATION
SUMMARY OF TERMS & CONDITIONS
September 2, 1998
===============================================================================
MANDATORY PREPAYMENTS
AND COMMITMENT
REDUCTIONS: In addition to the amortization set forth above, the
Term Loan will be prepaid by an amount equal to 50%
of the net cash proceeds from the issuance of equity
by the Borrowers or any of their subsidiaries.
OPTIONAL PREPAYMENTS
AND COMMITMENT
REDUCTIONS: The Borrowers may prepay the Facilities in whole or
in part at any time without penalty, subject to
reimbursement of the Lenders' breakage and
redeployment costs in the case of prepayment of LIBOR
borrowings.
CONDITIONS
PRECEDENT TO CLOSING: The initial funding of the Facilities will be
subject to satisfaction of the conditions precedent
deemed appropriate by the Agent and the Lenders
including, but not limited to, the following:
(i) The completion of all due diligence with
respect to the Borrowers and their
subsidiaries and Allright and its subsidiaries
in scope and determination satisfactory to
NationsBank and NMS in their sole discretion.
(ii) The Agent's satisfactory review of the
acquisition agreements (the "Acquisition
Agreements") related to the purchase by the
Borrowers of Allright. The purchase of
Allright shall have been consummated in
accordance with the terms of the Acquisition
Documents and in compliance with applicable
law and regulatory approvals. The Acquisition
Documents shall not be altered, amended or
otherwise changed or supplemented or any
condition therein waived without the prior
written consent of the Agent.
(iii) The negotiation, execution and delivery of
definitive documentation with respect to the
Facilities satisfactory to NMS, the Agent and
the Lenders.
(iv) The Agent shall have received satisfactory
opinions of counsel to the Borrowers and the
other obligors (which shall cover, among other
things, authority, legality, validity, binding
effect and enforceability of the documents for
the Facilities) and such corporate
<PAGE> 9
ANNEX I
-------
CENTRAL PARKING CORPORATION
SUMMARY OF TERMS & CONDITIONS
September 2, 1998
===============================================================================
resolutions, certificates and other documents
as the Agent shall reasonably require.
(v) The Agent shall have received and, in each
case, approved the consolidated financial
statements of the Borrowers and their
subsidiaries for the fiscal years 1996 and
1997, including balance sheets, income and
cash flow statements audited by independent
public accountants of recognized national
standing and prepared in conformity with GAAP,
interim quarterly financial statements for the
trailing twelve months and first projected
year.
(vi) The Agent shall have received and, in each
case, approved the consolidated financial
statements of Allright as of June 30, 1998,
including balance sheets, income and cash flow
statements audited by independent public
accountants of recognized national standing
and prepared in conformity with GAAP, interim
quarterly financial statements for the
trailing twelve months and first projected
year.
(vii) There shall not have occurred a material
adverse change in the business, assets,
operations, condition (financial or otherwise)
or prospects of the Borrowers or Allright, in
each case together with their respective
subsidiaries taken as a whole or in the facts
and information regarding such entities as
represented to date.
(viii) The absence of any action, suit, investigation
or proceeding pending or threatened in any
court or before any arbitrator or governmental
authority that purports to affect the
Borrowers, Allright or their respective
subsidiaries or any transaction contemplated
hereby (including, without limitation, the
acquisition of Allright) or on the ability of
the Borrowers and their subsidiaries to
perform their obligations under the documents
to be executed in connection with the
Facilities.
(ix) The Borrowers and their subsidiaries (after
giving effect to the acquisition of Allright)
shall be in compliance with all existing
financial obligations.
(x) Receipt and review, with results satisfactory
to the Agent
<PAGE> 10
ANNEX I
-------
CENTRAL PARKING CORPORATION
SUMMARY OF TERMS & CONDITIONS
September 2, 1998
===============================================================================
and its counsel, of information regarding
litigation, tax, accounting, labor, insurance,
pension liabilities (actual or contingent),
real estate leases, material contracts, debt
agreements, property ownership, and contingent
liabilities of the Borrowers and their
subsidiaries and Allright and its
subsidiaries.
(xi) The absence of any disruption or adverse
change in the financial or capital markets
generally which the Agent or NMS, in their
sole discretion, deems material in connection
with the syndication of the Facilities.
REPRESENTATIONS &
WARRANTIES: Usual and customary for transactions of this type,
to include without limitation: (i) corporate status;
(ii) corporate power and authority/enforceability;
(iii) no violation of law or contracts or
organizational documents; (iv) no material
litigation; (v) correctness of specified financial
statements and no material adverse change; (vi) no
required governmental or third party approvals; (vii)
use of proceeds/compliance with margin regulations;
(viii) status under Investment Company Act; (ix)
ERISA; (x) environmental matters; and (xi) payment of
taxes.
COVENANTS: Usual and customary for transactions of this type,
to include without limitation: (i) delivery of
financial statements (annual audited consolidated
financial statements of the Borrowers and its
subsidiaries to be provided within 90 days after each
fiscal year with no default letter and compliance
certificate; quarterly unaudited statements and a
compliance certificate to be provided within 45 days
following each of the first three fiscal quarters);
(ii) notices of default, material litigation and
material governmental and environmental proceedings;
(iii) compliance with laws; (iv) payment of taxes;
(v) maintenance of insurance; (vi) limitations on
liens; (vii) limitations on investments; (viii)
limitations on dividends and other restricted
payments; (ix) limitations on capital expenditures;
(x) limitations on transactions with affiliates; (xi)
limitations on mergers, consolidations, sales of
assets and incurrence of debt; and (xii) ERISA.
Financial covenants to include (but not be limited
to):
- Maximum Total Funded Debt to EBITDA of 4.0x with
step downs to be determined.
<PAGE> 11
ANNEX I
-------
CENTRAL PARKING CORPORATION
SUMMARY OF TERMS & CONDITIONS
September 2, 1998
===============================================================================
- Maximum Senior Funded Debt to EBITDA of 3.5x with
step downs to be determined.
- Maintenance at all times of a Minimum Tangible Net
Worth to be determined, with step-ups equal to 50%
of net income and 100% of the proceeds of any
equity issuances.
- Minimum Fixed Charge Coverage ratio (EBITDAR less
Capital Expenditures less Cash Taxes)/(Cash
Interest + Scheduled Amortization + Rents) measured
on a rolling four quarter basis, to be determined.
- Permitted Acquisitions up to $20 million.
- Borrowers shall enter into interest rate protection
agreements, acceptable to NationsBank, for no less
that 25% of the total of the total Facilities
within 30 days from Closing.
EVENTS OF DEFAULT: Usual and customary in transactions of this nature,
to include, without limitation, (i) nonpayment of
principal, interest, fees or other amounts, (ii)
violation of covenants, (iii) inaccuracy of
representations and warranties, (iv) cross-default to
other material agreements and indebtedness, (v)
bankruptcy, (vi) material judgments, (vii) ERISA,
(viii) actual or asserted invalidity of any loan
documents or security interests and (ix) Change in
Control (to be defined) of the Parent Company.
ASSIGNMENTS/
PARTICIPATIONS: Each Lender will be permitted to make assignments to
other financial institutions approved by the
Borrowers and the Agent, which approval shall not be
unreasonably withheld. Lenders will be permitted to
sell participations with voting rights limited to
significant matters such as changes in amount, rate,
and maturity date and releases of collateral and
guarantors.
WAIVERS &
AMENDMENTS: Amendments and waivers of the provisions of the loan
agreement and other definitive credit documentation
will require the approval of Lenders holding loans
and commitments representing more than 51% or more of
the aggregate amount of loans and commitments under
the Facilities, except that the consent of all the
Lenders effected thereby shall be required with
respect to (i) increases in commitment amounts, (ii)
reductions of principal, interest, or fees, (iii)
extensions of scheduled maturities or times for
payment, and (iv) release of all or substantially all
of the collateral and release of all or
<PAGE> 12
ANNEX I
-------
CENTRAL PARKING CORPORATION
SUMMARY OF TERMS & CONDITIONS
September 2, 1998
===============================================================================
substantially all Guarantors.
CLOSING: The effective date of the loan documentation to be
no later than January 31, 1999.
INDEMNIFICATION: The Borrowers shall indemnify the Lenders from and
against all losses, liabilities, claims, damages or
expenses relating to the Loans, the Borrowers use of
loan proceeds or the commitments, including but not
limited to reasonable attorneys' fees and settlements
costs. This indemnification shall survive and
continue for the benefit of the Lenders at all times
after the Borrowers acceptance of the Lenders'
commitments for the Facilities, notwithstanding any
failure of the Facilities to close.
OTHER: This term sheet is intended as an outline only and
does not purport to summarize all the conditions,
covenants, representations, warranties and other
provisions which would be contained in definitive
legal documentation for the Facilities contemplated
hereby. The Borrowers shall waive their right to a
trial by jury.
<PAGE> 13
ADDENDUM I
FEES AND EXPENSES
===============================================================================
INTEREST RATES: The Facilities shall bear interest at a rate equal
to LIBOR plus the Applicable Margin for LIBOR Loans
or the Alternate Base Rate (defined as the higher of
(i) the NationsBank prime rate and (ii) the Federal
Funds rate plus .50%) for Base Rate Loans. The
Borrowers may select interest periods of 1, 2, 3 or 6
months for LIBOR loans, subject to availability.
A penalty rate shall apply on all loans in the event
of default at a rate per annum of 2% above the
applicable interest rate.
COMMITMENT FEE: Commencing on the Closing Date, a fee (in percentage
per annum specified in the accompanying Performance
Pricing Grid) will accrue on the daily average unused
portion of the Revolving Credit Facility, payable
quarterly in arrears and on the Facilities commitment
termination date.
PERFORMANCE PRICING: Initial pricing, from Closing through the earlier
of: (a) the first three months following Closing or
(b) the Parent Company obtaining a senior unsecured
debt rating from Moody's or Standard and Poors, will
be LIBOR plus 100 basis points with a Commitment Fee
of 25 basis points. After such time, the Applicable
Pricing and Commitment Fee shall be the applicable
rate per annum set forth in the table below based
upon the Borrowers' Funded Debt to EBITDA ratio
determined as of the last day of the immediately
preceding fiscal quarter.
<TABLE>
<CAPTION>
Total Funded Debt to Applicable Margin
EBITDA Ratio for LIBOR Loans Commitment Fee
- -------------------- ----------------- --------------
<S> <C> <C>
< 2.0 x 50 bps 15 bps
< 2.5 x > 2.0 x 62.5 bps 17.5 bps
-
< 3.0 x > 2.5 x 75 bps 20 bps
-
< 3.5 x > 3.0 x 100 bps 25 bps
< 4.0 x > 3.5 x 125 bps 30 bps
</TABLE>
RATINGS GRID: Upon receipt of a Senior Unsecured Debt Rating from
Standard & Poor's or Moody's, the Borrowers' pricing
shall be determined by the following grid:
<TABLE>
<CAPTION>
Senior Unsecured Applicable Margin Commitment
Debt Rating for LIBOR Loans Fee
- ----------- --------------- ---
<S> <C> <C>
A-/A3 25 bps 10 bps
BBB+/Baa1 37.5 bps 12.5 bps
BBB/Baa2 45 bps 15 bps
BBB-/Baa3 62.5 bps 20 bps
BB+/Bal 100 bps 25 bps
<BB+/Ba1 125 bps 30 bps
</TABLE>
In the event that the two ratings differ by one
tick, the pricing shall be at the lower tier. If the
two ratings differ by more than one tick, the
pricing shall be at the higher rating less one tick.
LETTER OF CREDIT FEES: Letter of credit fees are due quarterly in arrears
to be shared proportionately by the Lenders. Fees
will be equal to the Applicable Margin for LIBOR
Loans on a per annum less 25 basis points, but no
less than 50 basis points. Fees will be calculated on
the aggregate stated amount for each letter of credit
for the stated duration thereof.
COST AND YIELD
PROTECTION: The usual for transactions and facilities of this
type, including, without limitation, in respect of
prepayments, changes in capital adequacy and capital
requirements or their interpretation, illegality,
unavailability, and reserves without proration or
offset.
EXPENSES: The Borrowers agree to reimburse the Agent for all
reasonable out of pocket legal fees and expenses
incurred in the preparation and execution of the
Facilities. The Borrowers will reimburse the Agent
and each Lender for all reasonable out of pocket
legal fees and expenses incurred in connection with
the enforcement of the Facilities.
<PAGE> 1
Exhibit 23.1
Consent of Independent Auditors
The Board of Directors
Central Parking Corporation:
We consent to the use of our report included in the registration statement and
prospectus and to the reference to our firm under the heading "Experts" in
the prospectus.
KPMG Peat Marwick LLP
Nashville, Tennessee
October 22, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated October 9, 1998, in this registration statement on Form S-4 (No. 333- )
of our audits of the consolidated financial statements of Allright Holdings,
Inc. and Subsidiaries as of June 30, 1998 and 1997 and for the year ended June
30, 1998, and the period from October 31, 1996 to June 30, 1997, and of the
Predecessor Company for the period from July 1, 1996 to October 30, 1997, and
to all references to our firm included in this registration statement.
/s/ Arthur Andersen LLP
Houston, Texas
October 22, 1998
<PAGE> 1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts"
included in the Registration Statement (Form S-4 No._____) and related
Prospectus of Central Parking Corporation and to the use of our report dated
August 17, 1996, with respect to the consolidated financial statements for the
year ended June 30, 1996 of the Allright Corporation (Predecessor Company)
included in the Registration Statement on Form S-4.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Houston, Texas
October 21, 1998
