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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended September 30, 1999.
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from __________________________
to__________________________
Commission file number 001-13950
CENTRAL PARKING CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
Tennessee 62-1052916
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2401 21st Avenue South,
Suite 200, Nashville, Tennessee 37212
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (615) 297-4255
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Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Title of Each Class Name of each Exchange on which registered
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Common Stock $0.01 par Value New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based on the closing price of the Common Stock on the New York Stock
Exchange on December 24, 1999 was $221,225,461. For purposes of this response,
the registrant has assumed that its directors, executive officers, and
beneficial owners of 5% or more of its Common Stock are the affiliates of the
registrant.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date.
Class Outstanding at December 24, 1999
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Common Stock, $0.01 par value 36,837,177
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on February 15, 2000 are incorporated by reference into
Part III of this Form 10-K. Portions of the Registrant's Annual Report to
Shareholders for the fiscal year ended September 30, 1999 are incorporated by
reference into Parts I and II of this Form 10-K.
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PART I
ITEM 1. BUSINESS
GENERAL
Central Parking Corporation ("Central Parking" or the "Company") is a
leading provider of parking services operating, as of September 30, 1999, 4,810
parking facilities containing approximately 1,635,000 spaces in 42 states, the
District of Columbia, Puerto Rico, Canada, the United Kingdom, the Republic of
Ireland, Spain, Germany, Poland, Mexico, and Chile.
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, 1999,
Central Parking operated 2,096 parking facilities under management contracts and
2,455 parking facilities under leases, and 259 facilities owned either
independently or through joint ventures.
INDUSTRY
The International Parking Institute, a non-profit parking industry
organization, has estimated that there are 35,000 parking facilities in the
United States operated by commercial and governmental entities. 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
advantage 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.
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, much of the growth of
certain parking service companies, including Central Parking, has been as 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 or leverage the original
rental value to a third-party lender. Parking management companies can increase
profits by using managerial skills and experience, operating systems, and
operating controls unique to the parking industry.
Privatization of government operations and facilities could provide new
opportunities for the parking industry. The International Parking Institute has
estimated that more than 50% of the revenues generated by the United States
parking industry is generated by facilities operated by municipalities and other
governmental entities. Cities and municipal authorities may consider retaining
private firms to operate facilities and parking-related services in an effort to
reduce operating budgets and increase efficiency. Privatization in the United
Kingdom already has 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 been awarded contracts for parking meter collection and
enforcement in Charlotte, Richmond, and Fort Myers.
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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 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, entering
into 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 area of responsibility, has been a key contributor to Central
Parking's growth.
Pursue Strategic Acquisitions. Central Parking intends to continue to
pursue acquisition opportunities. Central Parking believes that many of its
smaller 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 (i) become
a stronger, more efficient provider in selected markets, (ii) generate
significant economies of scale and cost savings, and (iii) 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 and development.
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 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, Poland, Canada, Mexico, Spain, Chile, and the Republic
of Ireland. 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, the Company 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 components
of their compensation, managers are continuously motivated to contain the costs
of their operations. Strict cash control also is 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.
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 lasting 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.
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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. General and administrative expenses, excluding
goodwill amortization, as a percentage of total revenues were 10.9%, 10.6%, and
10.5% in fiscal 1997, 1998, and 1999, respectively.
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, the Company 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, legal services, 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 into six levels, Central Parking
has a total of 779 managers and hires approximately 90 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 training program is a significant factor in Central Parking's success.
New managers 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 this stage of the program, management trainees are
promoted to facility manager in charge of a particular parking facility. As
facility managers, they report up through the 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 designed to be an
attractive opportunity for prospective new hires. In addition, management
believes 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
allowed Central Parking to balance localized autonomy with accountability and
centralized support and control.
Automate Facilities. Management believes that the Company'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.
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 services, on-street parking services, car pooling coordination,
shuttle van services, and
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transportation management. 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 the Company for future changes in the parking industry.
Focus on Retention of Patrons. In order for the Company to succeed, its
parking patrons must have a positive experience at Company facilities.
Accordingly, the Company 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. The Company 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 location's potential demand based on traffic patterns and counts, area
demographics, and potential competitors. Pro forma financial statements are then
developed and a Company representative will meet with the property owner to
discuss the terms and structure of the agreement.
The Company seeks to distinguish itself from its competitors by combining a
reputation for professional integrity and quality management with operating
strategies designed to increase the revenues of parking operations for its
clients. The Company's clients include some of the nation's largest owners and
developers of mixed-use projects, major office building complexes, sports
stadiums, hotels, and toll roads. Parking facilities operated by the Company
include, among others, certain terminals operated by BAA Heathrow International
Airport (London), the Prudential Center (Boston), Cinergy Field (Cincinnati),
Turner Field (Atlanta), Coors Field (Denver), and various parking facilities
owned by the Hyatt and Westin hotel chains, the Rouse Company, Faison
Associates, May Department Stores, Equity Office Properties, TrizechHahn, Jones
Lang LaSalle, Simon Property Group, and Crescent Real Estate. None of these
clients account for more than 5% of the Company's total revenues.
MERGER WITH ALLRIGHT
On March 19, 1999, the Company completed a merger with Allright
Holdings, Inc. ("Allright"), one of the largest parking services companies in
the United States with revenues of approximately $217.2 million for the fiscal
year ended June 30, 1998. 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. Allright's facilities are located 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. As of September 30, 1998,
Allright, directly or indirectly, owned 195 facilities, leased 1,473 facilities,
and operated 647 facilities through management contracts.
Under the merger, approximately 7.0 million shares of Company common stock,
and approximately 0.5 million options and warrants to purchase such Company
common stock were exchanged for all of the outstanding shares of common stock
and options and warrants to purchase common stock of Allright. Each outstanding
share of Allright common stock and each outstanding option or warrant to
purchase such common stock was exchanged for 87.637 shares of Central Parking
common stock.
The transaction constituted a tax-free reorganization and has been
accounted for as a pooling-of-interests under Accounting Principles Board
("APB") Opinion No. 16, "Business Combinations." Accordingly, prior period
financial statements presented have been restated to include the combined
results of operations, financial position and cash flows of Allright as if it
had been part of Central Parking from the date of Allright's inception, October
31, 1996. See note 2 to the Company's consolidated financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Company's Annual Report to Shareholders for the fiscal year
ended September 30, 1999 for additional information regarding the merger with
Allright.
In connection with the Allright merger, the Antitrust Division of the
United States Department of Justice (the "Antitrust Division") filed a complaint
in U.S. District Court for the District of Columbia seeking to enjoin the merger
on antitrust grounds. Central Parking and Allright entered into a settlement
agreement with the Antitrust Division on March 16, 1999, under which Central and
Allright agreed to divest a total of 74 parking facilities in 18
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cities, representing approximately 18,000 parking spaces. Under the settlement
agreement, the terms of the divestitures are subject to approval by the
Antitrust Division, and the Company is required to divest the facilities within
five days after the court enters a final judgment relating to the settlement
agreement. As of December 23, 1999, the court had not yet entered a final
judgement relating to the settlement agreement. Substantially all of the
facilities had been divested or were under contract to be divested as of such
date. The settlement agreement also provides that Central and Allright may not
operate any of the divested facilities for a period of two years following the
divestiture.
ACQUISITIONS
The Company's acquisition strategy focuses primarily on acquisitions that
will enable Central Parking to become a more efficient and cost-effective
provider in selected markets. Central Parking believes it can recognize
economies of scale by making acquisitions in markets where the Company 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 generally can improve acquired operations by
applying its operating strategies and professional management techniques. The
Company's acquisitions over the last two years, all of which were accounted for
under the purchase method of accounting, are as follows: Diplomat Parking
Corporation ("Diplomat") in October 1997; National Garages, Inc. ("National") in
December 1997; Kinney System Holding Corp. ("Kinney") in February 1998; Central
Parking System of Louisiana, Inc. ("CPS - Louisiana") in March 1998; Turner
Parking System, Inc. ("Turner") in April 1998; Sterling Parking, Inc.
("Sterling") in July 1998; Allied Parking ("Allied") in October 1998, November
1998 and April 1999; and Sacramento Parking Group in July 1999. For additional
information regarding recent acquisitions, please see the Management Discussion
and Analysis section of the annual report incorporated herein by reference on
page 33.
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 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, TrizecHahn, Jones Lang LaSalle, 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. Management believes outsourcing by
parking facility owners will continue to be a source for additional facilities,
and management believes the Company's global presecse, experience and reputation
with large real estate asset managers give it a competitive advantage in this
area.
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INTERNATIONAL EXPANSION
Central Parking's international operations began in the early 1990's with
the formation of an international division. The Company 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 224 facilities in the United Kingdom including two
terminals at Heathrow International Airport and parking meter enforcement and
ticketing services for six 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 87 facilities in Mexico. Central Parking also operates 81 facilities in
Canada, three facilities in Spain, one in Poland (opened November 1999) and
three in Chile. The Company also operates on-street parking services in the
United Kingdom, Germany and the Republic of Ireland. In 1996, Central Parking
acquired a 50% equity interest in a joint venture, which presently operates
twelve facilities in Germany. In order to manage its international expansion,
the Company has allocated responsibilities for international operations to an
executive vice president.
OPERATING ARRANGEMENTS
Central Parking operates parking facilities under three general types of
arrangements: management contracts, leases, and fee ownership. As of September
30, 1999, Central Parking operated 2,096 parking facilities through management
contracts, leased 2,455 parking facilities, and owned 259 parking facilities,
either independently or in joint venture 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>
SEPTEMBER 30,
1997 1998 1999
------------------------------------------------
<S> <C> <C> <C>
Managed 1,241 1,937 2,096
Leased 2,024 2,565 2,455
Owned 237 261 259
------------- ------------- -----------
Total 3,502 4,763 4,810
============= ============= ===========
</TABLE>
The general terms and benefits of these types of arrangements are discussed
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. The Company'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. In general, management contracts are for terms of one to three years and
are renewable for successive one-year terms, but are cancelable by the property
owner on short notice. Although management contracts typically are for
relatively short terms, the Company's renewal rates for each of the past five
fiscal years were in excess of 90%. With respect to insurance, the Company'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 the Company's size and claims experience, management
believes it can purchase such insurance at lower rates than the Company's
clients can generally obtain on their own. Accordingly, Central Parking
historically has generated profits on the insurance provided under its
management contracts. See "--Insurance."
Leases. The Company's rent under leases is generally 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,
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depreciation, maintenance, insurance, and general operating expenses. Under its
leases, the Company 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
the Company, and the Company 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 the Company complete responsibility
for all aspects of the property, including all structural, mechanical, or
electrical maintenance or repairs.
Joint Ventures. The Company 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 the Company'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. The Company has interests in joint ventures
that own or operate parking facilities located throughout the United States as
well as Mexico, Germany, Spain, and Chile.
MBE Partnerships. Central Parking is a party to a number of minority
business enterprise partnerships. These are generally partnerships formed by
Central Parking and a minority businessperson to manage a facility. Central
Parking generally 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. The Company
faces direct competition for additional facilities to manage, lease, or own and
the facilities currently operated by the Company face competition for employees
and customers. The Company competes with a variety of other companies to add new
operations. Although there are relatively few large, national parking companies
that compete with the Company, developers, hotel companies, and national
financial services companies have the potential to compete with parking
companies. Municipalities and other governmental entities also operate parking
facilities which compete with Central Parking. The Company also faces
competition from regional and local parking companies and from owner-operators
of facilities who are potential clients for the Company's management services.
Construction of new parking facilities near the Company's existing leased or
managed facilities could adversely affect the Company's business.
Management believes that it competes for clients based on rates charged for
services; ability to generate revenues and control expenses for clients; ability
to anticipate and respond to industry changes; range and quality of services;
and ability to expand operations. The Company believes it has a reputation as a
leader in the industry and as a provider of high quality services. The Company
also is one of the largest companies in the parking industry and is not limited
to a single geographic region. The Company has the financial strength to make
capital investments as an owner or joint venture partner that smaller or more
leveraged companies cannot make. The Company's size also has allowed it to
centralize administrative functions that give the decentralized managerial
operations cost-efficient support. Moreover, the Company has obtained broad
experience in managing and operating a wide variety of facilities over the past
30 years. Additionally, the Company 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.
INSURANCE
The Company purchases comprehensive liability insurance covering certain
claims that occur at parking facilities it owns, leases or manages. The primary
amount of such coverage is $1 million per occurrence and $1 million in the
aggregate per facility. In addition, the Company purchases umbrella/excess
liability coverage. The Company also purchases group health insurance with
respect to all full-time Company employees, whether such persons are employed at
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owned, leased, or managed facilities. The Company's various insurance policies
have deductibles that must be met before the insurance companies are required to
reimburse the Company for costs and liabilities relating to covered claims.
Because of the size of the operations covered, the Company 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, the Company charges its customers for
insurance at rates it believes approximate market rates based upon its review of
the applicable market. In each case, the Company's clients have the option of
purchasing their own policies, provided the Company is named as an additional
insured; however, because the Company's fees for insurance are generally
competitive with market rates, many of the Company's clients have chosen
historically to purchase such insurance through the Company. A reduction in the
number of clients that purchase insurance through the Company, however, could
have a material adverse effect on the operating earnings of the Company. In
addition, a material increase in insurance costs due to increased claims
experienced by the Company 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 the Company.
REGULATION
The Company's business is subject to various federal, state and local laws
and regulations, and both municipal and state authorities sometimes directly
regulate parking facilities. The facilities in New York City are, for example,
subject to certain governmental restrictions concerning numbers of cars,
pricing, and certain prohibited practices. The Company is also affected by laws
and regulations (such as zoning ordinances) that are common to any business that
owns real estate and by regulations (such as labor and tax laws) that affect
companies with a large number of employees. In addition, several state and local
laws have been passed in recent years that encourage car-pooling and the use of
mass transit, including, for example, a Los Angeles, California law prohibiting
employers from reimbursing employee-parking expenses. Laws and regulations that
reduce the number of cars and vehicles being driven could adversely impact the
Company's business.
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws typically impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In connection with the ownership
or operation of parking facilities, the Company may be potentially liable for
any such costs. Although Central Parking is currently not aware of any material
environmental claims pending or threatened against it, there can be no assurance
that a material environmental claim will not be asserted against the Company.
The cost of defending against claims of liability, or of remediating a
contaminated property, could have a material adverse effect on the Company's
financial condition or results of operations.
The Company also is subject to various federal and state antitrust and
consumer laws and regulations including the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, which requires filings in connection with certain
mergers and acquisitions. In connection with the Allright merger, Central and
Allright entered into a settlement agreement with the Antitrust Division of the
U.S. Department of Justice which required, among other things, the divestiture
of certain parking facilities. See "Merger With Allright."
Various other governmental regulations affect the Company'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 the Company
owns and operates are in substantial compliance with these requirements.
EMPLOYEES
As of September 30, 1999, the Company employed approximately 17,000
individuals, including 9,100 full-time and 7,900 part-time employees.
Approximately 3,479 U.S. employees are represented by labor unions. Various
union locals, including Teamsters Local No. 272, represent parking attendants
and cashiers at the New York City
10
<PAGE> 11
facilities. Other cities in which some of the Company's employees are
represented by labor unions are Washington, D.C., Miami, Philadelphia, San
Francisco, Des Moines, Jersey City, Newark, Atlantic City, Pittsburgh, White
Plains, San Juan, Puerto Rico, and Chicago. The Company frequently is engaged in
collective bargaining negotiations with various union locals but has not
experienced any labor strikes. Management believes that the Company's employee
relations are good.
SERVICE MARKS AND TRADEMARKS
The Company has registered the names CPC, Central Parking System and
Central Parking Corporation, and its logo with the United States Patent Office
and has the right to use them throughout the United States except in the Chicago
and Atlantic City areas where two other companies have the exclusive right to
use the name "Central Parking." The Company also owns registered trademarks for
Square Industries, Kinney System, and Allright Parking and operates various
parking locations under those names. The Company uses the name "Chicago Parking
System" in Chicago and "CPS Parking" in Seattle and Milwaukee. The Company has
registered the name "Control Plus" and its symbol in London and intends to use
and register that name and symbol in association with its on street parking
activities in Richmond, Virginia . The Company has registered, or intends to
register, its name and logo in various international locations where it does
business.
FOREIGN AND DOMESTIC OPERATIONS
Information about the Company's foreign and domestic operations is
incorporated by reference to Note 17 to the Company's 1999 Consolidated
Financial Statements.
ITEM 2. PARKING FACILITY PROPERTIES
The Company's facilities are currently organized into 6 segments which are
subdivided into 17 regions, 16 in North America of which 15 are in the United
States and Canada and 1 is in Mexico, and one which is comprised 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 the Company's operations
in a particular city. The following table summarizes certain information
regarding the Company's facilities as of September 30, 1999.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF TOTAL OF
DIVISION CITIES LOCATIONS MANAGED LEASED OWNED SPACES TOTAL SPACES
------------------------ ------------------------------ ---------- ---------- -------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Division 1
Northwest Oakland, Reno, Sacramento,
Salt Lake City, San 206 104 100 2 50,006 3.1
Francisco, Seattle
South Texas, Louisiana Austin, Baton Rouge,
Beaumont, Corpus Christi, El
Paso, Houston, Lake Charles,
New Orleans, San Antonio 419 126 258 35 125,058 7.6
Western Las Vegas, Los Angeles,
Orange County, Phoenix, San 218 94 120 4 86,095 5.3
---- ---- --- --- --------- -----
Diego
Total Division 1 843 324 478 41 261,159 16.0
Division 2
New England Boston, Harford, Holyoke,
Manchester, Pittsfield, 195 88 99 8 85,056 5.2
Providence
New York, New Jersey New York City, Jersey,
Newark, Stanford 470 219 239 12 188,330 11.5
Pennsylvania Atlantic City, Chicago,
Philadelphia, Pittsburg 219 60 136 23 77,963 4.8
---- --- --- -- -------- -----
Total Division 2 884 367 474 43 351,349 21.5
Division 3
Florida, PR, Savannah Jacksonville, Savannah,
Miami, Orlando, San Juan,
Tampa, West Palm Beach 307 156 146 5 110,798 6.8
</TABLE>
11
<PAGE> 12
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Baltimore, Newport News,
Norfolk, Richmond, 306 156 142 8 89,860 5.5
Washington, DC
Southeast Atlanta, Winston-Salem,
Charleston, SC, Charlotte,
Columbia, Jackson, Mobile 220 87 119 14 98,174 6.0
--- ----- --- -- -------- -----
Total Division 3 833 399 407 27 298,832 18.3
Division 4
Mid-South Birmingham, AL, Chattanooga,
Hebron Airport, Knoxville,
Lexington, Louisville, 395 133 228 34 88,876 5.4
Nashville
Ohio, West Virginia, Charleston, WV, Cincinnati,
Indiana, Roanoke Columbus, Dayton,
Indianapolis, Lynchburg,
Roanoke, Toledo 254 86 138 30 86,216 5.3
Upper Mid-west Milwaukee Airport, Ann
Arbor, Birmingham, MI, Des
Moines, Detroit, Lincoln,
Milwaukee, Minneapolis, 198 105 84 9 82,861 5.1
Omaha, Pontiac
Upstate New York, Binghamton, Buffalo,
Cleveland Cleveland, Montpelier,
Poughkeepsie, Rochester,
Scranton, Syracuse, 191 79 98 14 66,237 4.0
---- ---- ---- ---- -------- -----
Wilkes-Barre
Total Division 4 1,038 403 548 87 324,190 19.8
Division 5
Northern Texas, Dallas, Ft. Worth, Little
Arkansas, Memphis Rock, Memphis, Peoria,
Shreveport, Springfield 445 200 222 23 107,060 6.5
Rockies, MO, OK, NM Albuquerque, Denver, Kansas
City, Oklahoma City, St. 362 162 164 36 118,786 7.3
--- --- --- -- ------- ---
Louis, Tulsa
Total Division 5 807 362 386 59 225,846 13.8
Division 6
Canada Toronto, Ottawa, Montreal 81 35 44 2 49,239 3.0
International Germany, Ireland, London,
Poland, Spain 237 158 79 -- 79,575 4.9
Mexico Mexico City, Cuernavaca, 87 48 39 -- 44,796 2.7
----- ------- ------- ------ -------- -------
Monterey
Total Division 6 405 241 162 2 173,610 10.6
---- ------ ------ ----- ------- ------
Total 4,810 2,096 2,455 259 1,634,986 100.0%
===== ===== ===== === ========= =====
</TABLE>
The Company's facilities include both surface lots and structured parking
facilities (garages). Approximately 17% of the Company's owned parking
properties are in structured parking facilities, with the remainder in surface
lots. Management believes the Company's owned facilities generally are in good
condition and adequate for its present needs.
(1) Includes Central Parking Corporate headquarters in owned facilities.
ITEM 3. LEGAL PROCEEDINGS
The ownership of property and provision of services to the public entails
an inherent risk of liability. Although the Company is engaged in routine
litigation incidental to its business, there is no legal proceeding to which the
Company is a party, which, in the opinion of management, will have a material
adverse effect upon the Company's financial condition, results of operations, or
liquidity. The Company carries liability insurance against certain types of
claims 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 the Company's
financial condition, liquidity, or results of operations.
12
<PAGE> 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matter was submitted to a vote of the Company's security-holders during the
fourth quarter of the fiscal year ended September 30, 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) The Registrant'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 Company Common Stock as reported by the NYSE.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
FISCAL 1998
First Quarter* ................................................. $ 46.81 $ 31.42
Second Quarter ................................................. 49.38 38.44
Third Quarter .................................................. 48.44 40.31
Fourth Quarter ................................................. 53.38 40.00
Twelve months* ................................................. 53.38 31.42
FISCAL 1999
First Quarter .................................................. $ 50.13 $ 25.44
Second Quarter ................................................. 37.25 29.00
Third Quarter .................................................. 36.25 27.00
Fourth Quarter ................................................. 35.81 27.25
Twelve months .................................................. 50.13 27.00
</TABLE>
* Adjusted to reflect three-for-two stock split in December 1997
(b) There were, as of September 30, 1999, approximately 10,325 holders of
the Registrant's Common Stock, as evidenced by security position listings.
(c) Since April 1997, Central Parking has distributed a quarterly cash
dividend of $0.015 per share of Central Parking common stock. The Company 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 Company 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, the Company'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. The
Company's existing 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; however, the Company
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 the Company, issued preferred securities (the "Trust Issued
Preferred Securities") which prohibit the payment of dividends on the Central
Parking common stock if the quarterly distributions on the Trust Issued
Preferred Securities are not made for any reason.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The information set forth under the caption "Five Year Selected
Consolidated Financial Data " in the Company's Annual Report to Shareholders for
the fiscal year ended September 30, 1999 is incorporated herein by reference.
13
<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
Annual Report to Shareholders for the fiscal year ended September 30, 1999 is
incorporated herein by reference.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Interest Rates
The Company's primary exposure to market risk consists of changes in
interest rates on borrowings. At September 30, 1999, the Company's short-term
debt of $25 million and long-term debt excluding capital leases and notes
payable was $324 million. Of this amount, $25 million is subject to a fixed rate
swap and $324 million is variable rate debt which is subject to a pricing grid
of which $200 million is payable in quarterly installments of $12.5 million
beginning in June 2000 through March 2004 and $124 million in revolving credit
loans due in March 2004. The Company anticipates paying the scheduled quarterly
payments out of operating cash flow and, if necessary, will renew the revolving
credit facility. Generally, fixed long-term debt is used to finance single
purpose purchases over a fixed period of time.
The Company's variable rate debt is priced at LIBOR plus 112.5 basis
points. For each 100 basis point increase or decrease in the LIBOR the Company
would incur increased or decreased interest expense of approximately $3.2
million per year.
As described in Note 8 of the financial statements, the Company has $25
million in interest rate swap agreements.
Foreign Currency Exposure
The Company as described in Note 17 to the financial statements derives
approximately $34.2 million or 4.6% of total revenues from foreign sources. Of
the $34.2 million, 62.5% is derived from the United Kingdom and 34.1% is derived
from Canada. The Company does not employ any foreign currency hedge programs
because management does not believe the risk to be material.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth under the captions "Independent Auditors'
Report", "Consolidated Balance Sheets", "Consolidated Statements of Earnings",
"Consolidated Statements of Shareholders' Equity", "Consolidated Statements of
Cash Flows", and "Notes to Consolidated Financial Statements" in the Company's
Annual Report to Shareholders for the fiscal year ended September 30, 1999 is
incorporated herein by reference.
The Company's unaudited operating results for each fiscal quarter within
the two most recent fiscal years, as set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Company's Annual Report to Shareholders for the fiscal year ended September 30,
1999, is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
14
<PAGE> 15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Information concerning this Item is incorporated by reference to the
Company's definitive proxy materials for the Company's 2000 Annual Meeting of
Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning this Item is incorporated by reference to the
Company's definitive proxy materials for the Company's 2000 Annual Meeting of
Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information concerning this Item is incorporated by reference to the
Company's definitive proxy materials for the Company's 2000 Annual Meeting of
Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning this Item is incorporated by reference to the
Company's definitive proxy materials for the Company's 2000 Annual Meeting of
Shareholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
The following financial statements and related notes of the Company
contained in the Annual report to Shareholders for the fiscal year ended
September 30, 1999 are incorporated herein by reference and are included in
Exhibit 13.
Independent Auditors' Report
Consolidated Balance Sheets - September 30, 1998 and 1999
Consolidated Statements and Earnings - Fiscal Years Ended September 30,
1997, 1998, and 1999
Consolidated Statement of Shareholders's Equity and Comprehensive
Income - Fiscal Years Ended September 30, 1997, 1998, and 1999
Consolidated Statements and Cash Flows - Fiscal Years Ended September
30, 1997, 1998, and 1999
Notes to Consolidated Financial Statements
(a) (2) Financial Statement Schedules
None
Financial statement schedules have been omitted because they are not
applicable or because the required information is otherwise furnished.
(a) (3) Exhibits
15
<PAGE> 16
The exhibits are listed in the Index to Exhibits which appears immediately
following the signature page.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the fiscal
year ended September 30, 1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CENTRAL PARKING CORPORATION
Date: December 29, 1999 By: /s/ Stephen A. Tisdell
-------------------------------
Stephen A. Tisdell
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------- -----
<S> <C>
/s/ Monroe J. Carell, Jr. Chairman of the Board, Chief Executive Officer and
- --------------------------------- Director
Monroe J. Carell, Jr.
/s/ James H. Bond President & Chief Operating Officer
- --------------------------------- Director
James H. Bond
/s/ Stephen A. Tisdell Chief Financial Officer (Principal
- --------------------------------- Accounting Officer)
Stephen A. Tisdell
/s/ William S. Benjamin Director
- ---------------------------------
William S. Benjamin
/s/ Marc L. Davidson Director
- ---------------------------------
Marc L. Davidson
/s/ Edward G. Nelson Director
- ---------------------------------
Edward G. Nelson
/s/ William C. O'Neil, Jr. Director
- ---------------------------------
William C. O'Neil, Jr.
/s/ Cecil Conlee Director
- ---------------------------------
Cecil Conlee
/s/ Lowell Harwood Director
- ---------------------------------
Lowell Harwood
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
/s/ Lewis Katz Director
- ---------------------------------
Lewis Katz
/s/ Julia Carell Stadler Director
- ---------------------------------
Julia Carell Stadler
</TABLE>
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
- ------ --------
2 Plan of Recapitalization, effective October 9, 1997
(Incorporated by reference to Exhibit 2 to the
Company's Registration Statement No. 33-95640 on Form
S-1).
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. (Incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement No. 333-66081 on
Form S-4 filed on October 21, 1998).
2.2 Amendment dated as of January 5, 1999, to the
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.
(Incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement No. 333-66081 on
Form S-4 filed on October 21, 1998, as amended).
2.3 Acquisition Agreement and Plan of Merger dated as of
November 7, 1997, by and between the Registrant and
Kinney System Holding Corp and a subsidiary of the
Registrant (Incorporated by reference to the
Company's Current Report on Form 8-K filed on
February 17, 1998).
3.1 (a) Amended and Restated Charter of the Registrant
(Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement No. 333-23869 on
Form S-3).
(b) Articles of Amendment to the Charter of Central
Parking Corporation increasing the authorized number
of shares of common stock, par value $0.01 per share,
to one hundred million (Incorporated by reference to
Exhibit 2 to the Company's 10-Q for the quarter ended
March 31, 1999).
3.2 Amended and Restated Bylaws of the Registrant
(Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement No. 333-23869 on
Form S-3).
4.1 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
17
<PAGE> 18
Julie 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 (Incorporated by
reference to Exhibit 4.4 to the Company's
Registration Statement No. 333-66081 filed on October
21, 1998).
4.4 Amendment dated January 5, 1999 to the 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 Julie 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. (Incorporated
by reference to Exhibit 4.4.1 to the Company's
Registration Statement No. 333-66081 filed on October
21, 1998, as amended).
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 4.5 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 March 18,
1998 by the Registrant. (Incorporated by reference
to Exhibit 4.9 to 333-52497 on Form S-3).
10.1 Executive Compensation Plans and Arrangements
(a) 1997 Incentive and Nonqualified Stock Option
Plan for Key personnel (Incorporated by
reference to Exhibit 10.1 to the Company's
Registration Statement No. 33-95640 on Form
S-1).
(b) Form of Option Agreement under Key Personnel
Plan (Incorporated by reference to Exhibit
10.2 to the Company's Registration Statement
No. 33-95640 on Form S-1).
(c) 1997 Restricted Stock Plan (Incorporated by
reference to Exhibit 10.5.1 to the Company's
Registration Statement No. 33-95640 on Form
S-1.)
(d) Form of Restricted Stock Agreement
(Incorporated by reference to Exhibit 10.5.2
to the Company's Registration Statement No.
33-95640 on Form S-1.)
(e) Form of Employment Agreements with Executive
Officers (Incorporated by reference to
Exhibit 10.7 to the Company's Registration
Statement No. 33-
18
<PAGE> 19
95640 on Form S-1.)
(f) Monroe J. Carell, Jr. Employment Agreement
(Incorporated by reference to Exhibit 10.8
to the Company's Registration Statement No.
33-95640 on Form S-1.)
(g) Monroe J. Carell, Jr. Revised Deferred
Compensation Agreement, as amended
(Incorporated by reference to Exhibit 10.9
to the Company's Registration Statement No.
33-95640 on Form S-1.)
(h) James H. Bond Employment Agreement
(Incorporated by reference to Exhibit 10.10
to the Company's Registration Statement No.
33-95640 on Form S-1.)
(i) Performance Unit Agreement between Central
Parking Corporation and James H. Bond
(Incorporated by reference to Exhibit
10.11.1 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
(j) Modification of Performance Unit Agreement
of James H. Bond (Incorporated by reference
to Exhibit 10.1 (j) to the Company's Annual
Report on Form 10-K filed on December 27,
1997).
(k) James H. Bond Severance Agreement
(Incorporated by reference to Exhibit 10.17
to the Company's Registration Statement No.
33-95640 on Form S-1.)
(l) Deferred Stock Unit Plan (Incorporated by
reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the period
ended September 30, 1998).
(m) EPS Compensation Program for Senior
Executives.*
10.2 1997 Nonqualified Stock Option Plan for Directors
(Incorporated by reference to Exhibit 10.3 to the
Company's Registration Statement No. 33-95640 on Form
S-1.)
10.3 Form of Option Agreement under Directors plan
(Incorporated by reference to Exhibit 10.4 to the
Company's Registration Statement No. 33-95640 on Form
S-1.)
10.4 Central Parking System, Inc. Profit Sharing Plan, as
amended (Incorporated by reference to Exhibit 10.6 to
the Company's Registration Statement No. 33-95640 on
Form S-1.)
10.5 Form of Indemnification Agreement for Directors
(Incorporated by reference to Exhibit 10.12 to the
Company's Registration Statement No. 33-95640 on Form
S-1.)
10.6 Indemnification Agreement for Monroe J. Carell, Jr.
(Incorporated by reference to Exhibit 10.13 to the
Company's Registration Statement No. 33-95640 on Form
S-1.)
10.7 Form of Management Contract (Incorporated by
reference to Exhibit 10.14 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.8 Form of Lease (Incorporated by reference to Exhibit
10.15 to the Company's Registration Statement No.
33-95640 on Form S-1.)
10.9 1998 Employee Stock Purchase Plan (Incorporated by
reference to Exhibit 10.16 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.10 Exchange Agreement between the Company and Monroe J.
Carell, Jr. (Incorporated by
19
<PAGE> 20
reference to Exhibit 10.18 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.11 $400 Million Credit Agreement dated as of March 19,
1999 by and among various banks with Bank of America,
N.A., as Agent, and Central Parking Corporation and
certain affiliates.*
10.12 Letter Amendment dated as of June 25, 1999 to Credit
Agreement dated as of March 19, 1999, by and among
various banks with Bank of America, N.A., as Agent,
and Central Parking Corporation and certain
affiliates.*
10.13 Letter Amendment dated as of October 27, 1999 to
Credit Agreement dated as of March 19, 1999, by and
among various banks with Bank of America, N.A., as
Agent, and Central Parking Corporation and certain
affiliates.*
10.14 Form of Amendment dated as of December 28, 1999 to
$400 million Credit Agreement dated as of March 19,
1999, by and among various banks with Bank of
America, N.A., as Agent, and Central Parking
Corporation and certain affiliates.*
10.19 Consultancy Agreement dated as of January 21, 1997
between Central Parking System, Inc. and Lowell
Harwood (Incorporated by reference to Exhibit (c)(4)
to the Company's Tender Offer Statement on Schedule
14D-1 filed December 13, 1996).
10.20 Consulting Agreement dated as of February 12, 1998,
by and between Central Parking Corporation and Lewis
Katz.*
10.21 Limited Partnership Agreement dated as of August 11,
1999, by and between CPS of the Northeast, Inc. and
Arizin Ventures, L.L.C.*
10.22 Registration Rights Agreement dated as of February
12, 1998, by and among Central Parking Corporation,
Lewis Katz and Saul Schwartz.*
10.23 Shareholders' Agreement and Agreement Not to Compete
by and among Central Parking Corporation, Monroe J.
Carell, Jr., Lewis Katz and Saul Schwartz dated as of
February 12, 1998.*
10.24 Lease Agreement dated as of October 6, 1995, by and
between The Carell Family LLC and Central Parking
System of Tennessee, Inc. (Alloway Parking Lot)*
10.25 First Amendment to Lease Agreement dated as of July
29, 1997, by and between The Carell Family LLC and
Central Parking System of Tennessee, Inc. (Alloway
Parking Lot)*
10.26 Lease Agreement dated as of October 6, 1995 by and
between The Carell Family LLC and Central Parking
System of Tennessee, Inc. (Second and Church Parking
Lot)*
10.27 First Amendment to Lease Agreement dated as of
October 6, 1995, by and between The Carell Family LLC
and Central Parking System of Tennessee, Inc. (Second
and Church Parking Lot)*
10.28 Prospectus and offering document for 2,625,000 shares
of Common Stock dated February 17, 1998.
(Incorporated by reference to the Company's
Registration Statement No. 233-23869 on Form S-3).
10.29 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. (Incorporated by reference to Exhibit 2.1 to
the Company's Registration Statement No. 333-66081
filed on October 23, 1998).
10.30 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.
(Incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement No. 333-66081 filed
on October 23, 1998).
10.31 Form of Transaction Support Agreement by certain
shareholders of Allright Holdings, Inc. to the
Registrant and Central Merger Sub, Inc. dated
September 21, 1998. (Incorporated by reference to
Exhibit 2.1 to the Company's Registration Statement
No. 333-66081 filed on October 23, 1998).
20
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT PAGE NO
- ------ -------- -------
<S> <C> <S>
13 Portions of the Annual Report to Shareholders*
21 Subsidiaries of the Registrant*
23 Consent of KPMG LLP*
27 Financial Data Schedule*
</TABLE>
- ---------------
* Filed herewith.
21
<PAGE> 1
EXHIBIT 10.1 (m)
EPS COMPENSATION PROGRAM FOR SENIOR EXECUTIVES
BACKGROUND
Central Parking Corporation (the "Company") historically has had a compensation
philosophy that is extremely entrepreneurial, with low fixed compensation and
high bonus potential. This program, which pre-dated the Company's initial public
offering, was better suited to a private company or partnership than to a public
company. In addition, salary caps imposed on several executives under this
program were viewed as increasingly problematic. As a result, the Company
engaged a compensation consultant to assist in designing a new compensation
program for senior executives. The compensation program is limited to senior
executives with the potential to materially affect the success of the entire
company.
One of the primary goals of this new program is to align senior executives'
compensation more closely with the interests of the Company's shareholders. The
Company has determined that the best way to achieve this goal is to base the
bonus calculations on growth in earnings per share, which is generally viewed as
the primary driver of increases in the Company's stock price.
As part of this new program, the Company will adjust base salaries upward to
bring them in line with similar public companies. The goal is to place the
salary level of each senior executive in the 75th percentile of similar
companies. The cash compensation levels for each executive for the 1998/99
fiscal year are designed to approximate the cash compensation paid to each
executive during the 1997/98 fiscal year.
The final component of the new program is stock options. Options will be valued
using the Black Shoals method, which values options at 50% of the stock price at
the time the options are granted. A pre-determined amount of stock options will
be awarded to senior executives each year. In addition, if earnings per share
exceed budgeted levels, participants in the program will receive a combination
of cash and options as additional compensation. The total of base salary, target
bonus and value of the stock options granted to each executive represents the
total target compensation of each participant.
The Company also seeks to align the interests of senior management with the
interests of the Company's shareholders through stock ownership by the Company's
executives. The new program seeks to define appropriate levels of ownership for
senior executives.
<PAGE> 2
TERMS OF THE PLAN
- A bonus pool is established each year based on a formula.
- The formula for the 1998/99 fiscal year is as follows:
- Bonus Pool = 14.2% of [change in EPS X Average Shares
Outstanding]
- The following adjustments will be made in the event of a
merger or acquisition:
- Shares outstanding will be adjusted to reflect any
additional issuance of shares.
- The base year EPS, for use in computing growth, would
be increased to include projected earnings from the
acquired entity, estimated without regard to any
projected increases due to efficiencies, synergies,
etc.
- The goal of this structure is to reward management for
increases "they caused" rather than for increases that
"shareholders bought."
- In the event EPS exceeds the budgeted amount, the additional
compensation to each participant will be composed of cash
and/or additional options.
- Total cash compensation is limited to:
- 120% of base salary and target bonus levels.
- Any additional compensation that is due in the event EPS
exceeds the budgeted amount would be paid in the form of
options and the maximum options would be the cash cap plus 1.2
X the value of the original options, which equals the maximum
compensation for any participant.
- The vesting schedule for maximum compensation options is one
year.
- A sample computation of the bonus is attached as Exhibit A,
which also indicates the growth rates required to maintain the
1998/99 bonus level in future years.
2
<PAGE> 3
- Senior executives are expected to maintain stock ownership
levels as follows:
<TABLE>
<CAPTION>
Multiple of Salary
------------------
<S> <C>
CEO 4.0 X
COO 3.0 X
Other Participants 2.0 X
Independent Directors 3.0 X
</TABLE>
- Participants are required to achieve these levels within four
years of their adoption or the date the executive joins the
company, whichever is later.
- Participants also are required to own stock equal to 25% of
50% of their base salary at the end of the first year.
- All full value shares, including stock units, count towards
this guideline.
- For the purpose of these guidelines, shares are valued as
follows:
- The stock price would be averaged over the last 30
days at the end of the four-year period.
- Under the Company's Deferred Stock Unit Plan, participants can
choose to purchase units on December 15th of each year or
units can be purchased during the following twelve-month
period as follows:
- First 25% on December 15
- Second 25% on March 25
- Third 25% on June 15
- Fourth 25% on September 15
- During the period of this four-quarter cycle, funds not
invested in stock units would be held by the Company and the
interest charge at the Company's prevailing rate would be
paid.
3
<PAGE> 4
Sample Calculation
1998/99
Target Pool: $1,685,000
EPS Growth .40
Approximate Number of Shares 30,000,000
Percentage = $1,685,000
----------------- = 13.9% of EPS Change
.40 x 30,000,000
Growth Rates to Maintain 98/99 Bonus Level:
Year Growth Rate
---- -----------
1999 28.6%
2000 22.0%
2001 18.2%
2002 15.4%
2003 13.3%
<PAGE> 1
Exhibit 10.11
CREDIT AGREEMENT
Dated as of March 19, 1999
among
CENTRAL PARKING CORPORATION
CENTRAL PARKING SYSTEM, INC.
CENTRAL PARKING SYSTEM REALTY, INC.
CENTRAL PARKING SYSTEM OF MASSACHUSETTS, INC.
CPC FINANCE OF TENNESSEE, INC.
KINNEY SYSTEM OF SUDBURY ST., INC.
ALLRIGHT HOLDINGS, INC.
as Borrowers,
and
CERTAIN SUBSIDIARIES OF THE BORROWERS, as Guarantors,
and
THE LENDERS IDENTIFIED HEREIN
and
NATIONSBANK, N.A., as Agent
and
NATIONSBANC MONTGOMERY SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager
and
SUNTRUST BANK, NASHVILLE, N.A., as Documentation Agent
and
FLEET BANK, N.A., as Syndication Agent
and
THE BANK OF NOVA SCOTIA
NBD BANK, N.A.
BARCLAYS BANK PLC
CHASE BANK OF TEXAS, N.A.
FIRST UNION NATIONAL BANK,
As Co-Agents
<PAGE> 2
TABLE OF CONTENTS
SECTION 1 DEFINITIONS .............................................. 1
1.1 Definitions .............................................. 1
1.2 Computation of Time Periods .............................. 23
1.3 Accounting Terms ......................................... 23
SECTION 2 CREDIT FACILITIES ........................................ 23
2.1 Revolving Loans .......................................... 23
2.2 Term Loans ............................................... 25
2.3 Letter of Credit Subfacility ............................. 26
2.4 Swingline Loans .......................................... 31
2.5 Joint and Several Liability of the Borrowers ............. 33
2.6 Appointment of Parent as Agent for Borrowers ............. 35
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES ........... 35
3.1 Default Rate ............................................. 35
3.2 Extension and Conversion ................................. 35
3.3 Prepayments .............................................. 36
3.4 Voluntary Reductions in Revolving Commitments ............ 37
3.5 Fees ..................................................... 37
3.6 Capital Adequacy ......................................... 38
3.7 Inability To Determine Interest Rate ..................... 39
3.8 Illegality ............................................... 39
3.9 Requirements of Law ...................................... 39
3.10 Taxes .................................................... 40
3.11 Indemnity ................................................ 43
3.12 Pro Rata Treatment ....................................... 43
3.13 Sharing of Payments ...................................... 43
3.14 Payments, Computations, Etc. ............................. 44
3.15 Evidence of Debt ......................................... 46
SECTION 4 GUARANTY ................................................. 47
4.1 The Guarantee ............................................ 47
4.2 Obligations Unconditional ................................ 47
4.3 Reinstatement ............................................ 48
4.4 Certain Additional Waivers ............................... 49
4.5 Remedies ................................................. 49
4.6 Rights of Contribution ................................... 49
4.7 Continuing Guarantee ..................................... 50
SECTION 5 CONDITIONS ............................................... 50
5.1 Conditions to Closing .................................... 50
5.2 Conditions to All Extensions of Credit ................... 53
SECTION 6 REPRESENTATIONS AND WARRANTIES ........................... 53
6.1 Financial Condition ...................................... 54
6.2 No Changes or Restricted Payments ........................ 54
6.3 Organization; Existence; Compliance with Law ............. 54
6.4 Power; Authorization; Enforceable Obligations ............ 54
i
<PAGE> 3
6.5 No Legal Bar ..................................................... 55
6.6 No Material Litigation ........................................... 55
6.7 No Default ....................................................... 55
6.8 Ownership of Property; Liens ..................................... 55
6.9 Intellectual Property ............................................ 55
6.10 No Burdensome Restrictions ....................................... 56
6.11 Taxes ............................................................ 56
6.12 ERISA ............................................................ 56
6.13 Governmental Regulations, Etc. ................................... 57
6.14 Purpose of Extensions of Credit .................................. 58
6.15 Environmental Matters ............................................ 58
6.16 Labor Matters .................................................... 59
6.17 Year 2000 Compliance ............................................. 60
SECTION 7 AFFIRMATIVE COVENANTS ............................................. 60
7.1 Financial Statements ............................................. 60
7.2 Certificates; Other Information .................................. 61
7.3 Notices .......................................................... 62
7.4 Payment of Obligations ........................................... 63
7.5 Conduct of Business and Maintenance of Existence ................. 63
7.6 Maintenance of Property; Insurance ............................... 64
7.7 Inspection of Property; Books and Records; Discussions ........... 64
7.8 Environmental Laws ............................................... 64
7.9 Financial Covenants .............................................. 65
7.10 Use of Proceeds .................................................. 65
7.11 Additional Credit Parties ........................................ 66
7.12 Subsidiaries ..................................................... 66
7.13 Interest Rate Protection Agreement ............................... 66
7.15 Year 2000 Compliance ............................................. 66
SECTION 8 NEGATIVE COVENANTS ................................................ 66
8.1 Indebtedness ..................................................... 67
8.2 Liens ............................................................ 67
8.3 Nature of Business ............................................... 68
8.4 Consolidation, Merger, Sale or Purchase Assets ................... 68
8.5 Advances, Investments and Loans .................................. 69
8.6 Restricted Payments .............................................. 69
8.7 Transactions with Affiliates; Modification of Documentation ...... 69
8.8 Fiscal Year ...................................................... 69
8.9 Limitation on Restrictions ....................................... 69
8.10 Sale Leasebacks .................................................. 70
8.11 No Further Negative Pledges ...................................... 70
8.12 Subsidiaries, Partnerships, Joint Ventures and Acquisitions ...... 70
8.13 Infringement of Property Rights .................................. 70
SECTION 9 EVENTS OF DEFAULT ................................................. 70
9.1 Events of Default ................................................ 70
9.2 Acceleration; Remedies ........................................... 72
SECTION 10 AGENCY PROVISIONS ................................................ 73
10.1 Appointment ...................................................... 73
ii
<PAGE> 4
10.2 Delegation of Duties ............................................. 74
10.3 Exculpatory Provisions ........................................... 74
10.4 Reliance on Communications ....................................... 74
10.5 Notice of Default ................................................ 75
10.6 Non-Reliance on Agent and Other Lenders .......................... 75
10.7 Indemnification .................................................. 75
10.8 Agent in its Individual Capacity ................................. 76
10.9 Successor Agent .................................................. 76
10.10 Documentation Agent, Syndication Agent and Co-Agents ............. 76
SECTION 11 MISCELLANEOUS .................................................... 77
11.1 Notices .......................................................... 77
11.2 Right of Set-Off ................................................. 78
11.3 Benefit of Agreement ............................................. 78
11.4 No Waiver; Remedies Cumulative ................................... 80
11.5 Payment of Expenses, etc. ........................................ 81
11.6 Amendments, Waivers and Consents ................................. 81
11.7 Counterparts ..................................................... 82
11.8 Headings ......................................................... 82
11.9 Survival ......................................................... 83
11.10 Governing Law; Submission to Jurisdiction; Venue ................. 83
11.11 Severability ..................................................... 84
11.12 Entirety ......................................................... 84
11.13 Binding Effect; Termination ...................................... 84
11.14 Confidentiality .................................................. 84
11.15 Source of Funds .................................................. 85
11.16 Conflict ......................................................... 85
iii
<PAGE> 5
SCHEDULES
- -----------------
Schedule 1.1(a) Existing Letters of Credit
Schedule 1.1(b) EBITDA Special Adjustments
Schedule 1.2 Preferred Stock
Schedule 2.1(a) Schedule of Lenders and Commitments
Schedule 6.4 Required Consents, Authorizations, Notices and Filings
Schedule 6.6 Litigation
Schedule 6.12 ERISA Matters
Schedule 7.12 Subsidiaries
Schedule 8.1 Indebtedness
Schedule 8.2 Liens
Schedule 8.5 Investments
Schedule 11.1 Notices
EXHIBITS
- -----------------
Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 2.2(d) Form of Term Note
Exhibit 2.4(b)(i) Form of Swing Line Loan Request
Exhibit 2.4(d) Form of Swingline Note
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 5.1 Form of Officer's Certificate
Exhibit 7.2(b) Form of Officer's Compliance Certificate
Exhibit 7.11 Form of Joinder Agreement
Exhibit 11.3(b) Form of Assignment and Acceptance
iv
<PAGE> 6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of March 19, 1999 (the "Credit Agreement"),
is by and among CENTRAL PARKING CORPORATION, a Tennessee corporation ("CPC" or
the "Parent"), CENTRAL PARKING SYSTEM, INC., a Tennessee corporation (CPS"),
CENTRAL PARKING SYSTEM REALTY, INC., a Tennessee corporation ("CPSR"), CENTRAL
PARKING SYSTEM OF MASSACHUSETTS, INC., a Tennessee corporation ("CPSM"), CPC
FINANCE OF TENNESSEE, INC., a Tennessee corporation ("CPCF"), KINNEY SYSTEM OF
SUDBURY ST., INC., A Massachusetts corporation ("KSSS") and ALLRIGHT HOLDINGS,
INC., a Delaware corporation ("Allright"), (CPC, CPS, CPSR, CPSM, CPCF, KSSS
and Allright are hereinafter referred to individually as a Borrower and
collectively as the "Borrowers"), certain subsidiaries and affiliates of the
Borrowers as may from time to time become guarantors hereunder in accordance
with the provisions hereof (the "Guarantors"), the lenders named herein and
such other lenders as may become a party hereto (the "Lenders"), and
NATIONSBANK, N.A., as Agent for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Borrowers have requested that the Lenders provide a
$400,000,000 credit facility for the purposes hereinafter set forth;
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrowers on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
-----------
1.1 DEFINITIONS.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Acquisition", by any Person, means the acquisition by such Person of
the capital stock or all or substantially all of the Property of another
Person, whether or not involving a merger or consolidation with such
Person.
"Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the equity interest in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by
<PAGE> 7
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agent" shall have the meaning assigned to such term in the heading
hereof, together with any successors or assigns.
"Aggregate Revolving Committed Amount" means the aggregate amount of
Revolving Commitments in effect from time to time, being initially TWO HUNDRED
MILLION DOLLARS ($200,000,000) (such aggregate maximum amount may be reduced
from time to time as provided in Section 3.4).
"Allright" means Allright Holdings, Inc., a Delaware corporation.
"Allright Merger" means the merger of Allright under and pursuant to the
Allright Merger Documents.
"Allright Merger Documents" means the Agreement and Plan of Merger, dated
as of September 21, 1998, as amended as of January 5, 1999, by and among
Allright, the Parent, Central Merger Sub, Inc., a Delaware corporation, Apollo
Real Estate Investment Fund II, L.P., a Delaware limited partnership and AEW
Partners, L.P., a Delaware limited partnership.
"Applicable Percentage" means for the Loans, Letter of Credit Fee and the
Unused Fee, the appropriate applicable percentages corresponding to the Leverage
Ratio in effect as of the most recent determination date as shown below:
<TABLE>
<CAPTION>
Applicable Applicable Applicable
Percentage For Percentage Percentage
Pricing Leverage Eurodollar For Letter of For Unused
Level Ratio Loans Credit Fees Fees
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I (less than) 2.5 to 1.0 .75% .50% .20%
II (less than) 3.0 to 1.0 .875% .625% .25%
but (greater than or
equal to) 2.5 to 1.0
III (less than) 3.5 to 1.0 1.125% .875% .30%
but (greater than or
equal to) 3.0 to 1.0
IV (greater than or equal 1.50% 1.25% .375%
to) 3.5 to 1.0
</TABLE>
The Applicable Percentages shall be determined and adjusted quarterly on the
date (each a "Calculation Date") five Business Days after the date by which the
Borrowers are required to provide the officer's certificate in accordance with
the provisions of Section 7.1(b); provided, however, that (i) the initial
Applicable Percentages shall be based on Pricing Level III until the first
Calculation Date to occur after June 30, 1999, and, thereafter, the Applicable
Percentages shall be determined by the Leverage Ratio as of the fiscal quarter
end immediately preceding the applicable Calculation Date, and (ii) if
2
<PAGE> 8
the Borrowers fail to provide the officer's certificate to the Agent as required
by Section 7.1(b) on or before the most recent Calculation Date, the Applicable
Percentages from such Calculation Date shall be based on Pricing Level IV until
such time as an appropriate officer's certificate is provided, whereupon the
Pricing Level shall be determined by the Leverage Ratio as of the fiscal
quarter end immediately preceding the applicable Calculation Date. Except as set
forth above, each Applicable Percentage shall be effective from one Calculation
Date until the next Calculation Date. Any adjustment in the Applicable
Percentages shall be applicable to all existing Loans and Letters of Credit as
well as any new Loans made or Letters of Credit issued.
"Asset Disposition" means the disposition of any or all of the Property
(including without limitation the capital stock of a Subsidiary) of any Credit
Party whether by sale, lease, transfer or otherwise; provided that the term
"Asset Disposition" shall not include (i) any like-kind exchanges under Section
1031 of the Code, (ii) dispositions of Property with a fair market value of less
than $500,000 and (iii) donations of Property in an aggregate amount not to
exceed $5,000,000 for which a Credit Party receives a corresponding tax benefit.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence of any
of the following with respect to such Person: (i) a court or governmental agency
having jurisdiction in the premises shall enter a decree or order for relief in
respect of such Person in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or ordering
the winding up or liquidation of its affairs; or (ii) there shall be commenced
against such Person an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or any case,
proceeding or other action for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or for the winding up or liquidation
of its affairs and such involuntary case or other case, proceeding or other
action shall remain undismissed for a period of sixty (60) days; or (iii) such
Person shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consent to the
entry of an order for relief in an involuntary case under any such law, or
consent to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or make any general assignment for
the benefit of creditors; or (iv) such Person shall be unable to, or shall admit
in writing its inability to, pay its debts generally as they become due.
"Base Rate" means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of 1/100 of 1%) equal to the greater of
(i) the Federal Funds Rate in effect on such day plus 1/2 of 1% or (ii) the
Prime Rate in effect on such day. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable after due inquiry to ascertain the Federal
3
<PAGE> 9
Funds Rate for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Base Rate
shall be determined without regard to clause (i) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such change in
the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate determined by
reference to the Base Rate.
"Borrowers" has the meaning set forth in the preamble of this Credit
Agreement.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in Charlotte, North Carolina are authorized or required
by law to close, except that, when used in connection with a Eurodollar Loan,
such day shall also be a day on which dealings between banks are carried on in
U.S. dollar deposits in London, England and Charlotte, North Carolina.
"Capital Expenditures" means all expenditures which in accordance with GAAP
would be classified as capital expenditures, including, without limitation,
Capital Leases.
"Capital Lease" means, as applied to any Person, any lease of any Property
(whether real, personal or mixed) by that Person as lessee which, in accordance
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.
"Capital Lease Obligation" means the capital lease obligations relating to
a Capital Lease determined in accordance with GAAP.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition, (b) U.S. dollar denominated
time deposits and certificates of deposit of (i) any Lender, or (ii) any
commercial bank of recognized standing (y) having capital and surplus in excess
of $100,000,000 and (z) whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such Lender being an "Approved Lender"), in each case
with maturities of not more than 270 days from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved Lender
(or by the parent company thereof) and maturing within six months of the date of
acquisition, (d) repurchase agreements entered into by a Person with a bank or
trust company (including any of the Lenders) or recognized securities dealer
having capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which such
Person shall have a perfected first priority security interest (subject to no
other Liens) and having, on the date of purchase thereof, a fair market value of
at least 100% of the amount of the repurchase obligations, (e) obligations of
any State of the United States or any political subdivision thereof, the
interest with respect to which is exempt from federal income taxation under
4
<PAGE> 10
Section 103 of the Code, having a long term rating of at least AA- or Aa-3 by
S&P or Moody's, respectively, and maturing within three years from the date of
acquisition thereof, (f) Investments in municipal auction preferred stock (i)
rated AAA (or the equivalent thereof) or better by S&P or Aaa (or the equivalent
thereof) or better by Moody's and (ii) with dividends that reset at least once
every 365 days and (g) Investments, classified in accordance with GAAP as
current assets, in money market investment programs registered under the
Investment Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $100,000,000 and the
portfolios of which are limited to Investments of the character described in the
foregoing subdivisions (a), (b), (c), (e) and (f).
"Change of Control" means that, except for the Monroe J. Carell, Jr. Group,
any Person or two or more Persons acting in concert shall have acquired
beneficial ownership, directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of, control
over, Voting Stock of the Parent (or other securities convertible into such
Voting Stock) representing 30% or more of the combined voting power of all
Voting Stock of the Parent.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations issued
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed also to refer to any successor sections.
"Commitment" means the Revolving Commitment, the Swingline Commitment and
the LOC Commitment.
"Commitment Period" means the period from and including the Closing Date to
but not including the earlier of (i) the Termination Date, or (ii) the date on
which the Revolving Commitments terminate in accordance with the provisions of
this Credit Agreement.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any material agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Consolidated Parties" means a collective reference to the Parent and its
Subsidiaries, and "Consolidated Party" means any one of them.
"CPC" means Central Parking Corporation, a Tennessee corporation.
"CPS" means Central Parking System, Inc., a Tennessee corporation.
"CPSR" means Central Parking System Realty, Inc., a Tennessee corporation.
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<PAGE> 11
"CPCF" means CPC Finance of Tennessee, Inc., a Tennessee corporation.
"CPSM" means Central Parking System of Massachusetts, Inc., a Tennessee
corporation.
"Credit Documents" means a collective reference to this Credit Agreement,
the Notes, the LOC Documents and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or thereto.
"Credit Party" means any of the Borrowers and the Guarantors.
"Credit Party Obligations" means, as to each Guarantor, without
duplication, (i) all obligations of any of the Borrowers to the Lenders and the
Agent, whenever arising, under this Credit Agreement, the Notes or the other
Credit Documents (including, but not limited to, any interest accruing after
the occurrence of a Bankruptcy Event with respect to any Credit Party,
regardless of whether such interest is an allowed claim under the Bankruptcy
Code), and (ii) all liabilities and obligations, whenever arising, owing from
any of the Borrowers to any Lender, or any Affiliate of a Lender, arising under
any Hedging Agreement relating to the Loans or Obligations hereunder. It is
specifically understood and agreed that the Credit Party Obligations of each
Guarantor include any and all Obligations that such Guarantor may have as a
Borrower hereunder or under any of the other Credit Documents.
"Default" means any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, at such time,
(i) has failed to make an Extension of Credit required pursuant to the terms of
this Credit Agreement, (ii) has failed to pay to the Agent or any Lender an
amount owed by such Lender pursuant to the terms of the Credit Agreement or any
other of the Credit Documents, or (iii) has been deemed insolvent or has become
subject to a bankruptcy or insolvency proceeding or to a receiver, trustee or
similar proceeding.
"Dollars" and "$" means dollars in lawful currency of the United States of
America.
"Domestic Subsidiary" means any Subsidiary which is incorporated or
organized under the laws of any state of the United States or of the District
of Columbia.
"EBITDA" means for any period with respect to the Parent and its
Subsidiaries on a consolidated basis the sum of Net Income plus Interest
Expense plus all provisions for any Federal, state, local and other domestic
and foreign income taxes paid during the applicable period plus depreciation,
amortization and other non-cash charges plus non-recurring charges and costs of
up to $30,000,000 for the first twelve month period following the Closing Date
arising in connection with the Allright Merger as set forth on Schedule 1.1(b),
in each case determined in accordance with GAAP applied on a
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<PAGE> 12
consistent basis. Except as expressly provided otherwise, the applicable period
shall be for the four consecutive quarters ending as of the date of
determination.
"EBITDAR" means, for any period, with respect to the Parent and its
Subsidiaries on a consolidated basis, the sum of EBITDA for such period plus an
amount which in the determination of Net Income for such period has been
deducted for Rent Expense for such period, all as determined in accordance with
GAAP.
"Environmental Laws" means any and all lawful and applicable Federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or other governmental restrictions relating to the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"Equity Transaction" means any issuance by the Parent to any Person of
shares of its capital stock or other equity interest; provided that any Equity
Transaction shall not include any such issuance to an employee, officer or
director or former employee, officer or director pursuant to a stock incentive
plan, stock option plan, deferred unit plan, key employee stock option plan,
employee stock purchase plan or other equity-based compensation plan or
arrangement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common control with the
Parent within the meaning of Section 4001(a)(14) of ERISA, or is a member of a
group which includes the Parent and which is treated as a single employer under
Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the occurrence of a
Reportable Event or the substantial cessation of operations (within the meaning
of Section 4062(e) of ERISA); (ii) the withdrawal by the Parent, any Subsidiary
of the Parent or any ERISA Affiliate from a Multiple Employer Plan during a
plan year in which it was a substantial employer (as such term is defined in
Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(iii) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (iv) the
institution of proceedings to terminate or the actual termination of a Plan by
the PBGC under Section 4042 of ERISA; (v) any event or condition which could
reasonably be expected to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan;
(vi) the complete or partial withdrawal of the Parent, any Subsidiary of the
Parent or any ERISA Affiliate from a Multiemployer
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<PAGE> 13
Plan; (vii) the conditions for imposition of a lien under Section 302(f) of
ERISA exist with respect to any Plan; or (vii) the adoption of an amendment to
any Plan requiring the provision of security to such Plan pursuant to Section
307 of ERISA.
"Eurodollar Loan" means any Loan bearing interest at a rate determined by
reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar Loan
comprising part of the same borrowing (including conversions, extensions and
renewals), a per annum interest rate determined pursuant to the following
formula:
Interbank Offered Rate
Eurodollar Rate = ---------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate of Eurodollar Loans is determined), whether or not a Lender
has any Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities
and as such shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from time to
time to a Lender. The Eurodollar Rate shall be adjusted automatically on and as
of the effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" means such term as defined in Section 9.1.
"Existing Credit Agreement" means that certain Credit Agreement, dated as
of February 12, 1998, among Central Parking Corporation, Central Parking
System, Inc. Central Parking System Realty, Inc., Square Industries, Inc. and
Kinney System Holding Corp., certain guarantors party thereto, the Lenders
identified therein and NationsBank, N.A., as Agent (as amended).
"Existing Letters of Credit" means those Letters of Credit outstanding on
the Closing Date and identified on Schedule 1.1.
"Extension of Credit" means, as to any Lender, the making of, or
participation in, a Loan by such Lender or the issuance or extension of, or
participation in, a Letter of Credit.
"Fees" means all fees payable pursuant to Section 3.5.
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"Federal Funds Rate" means, for any day, the rate of interest per annum
(rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (i) if such day is
not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day and (ii) if no such rate is
so published on such next preceding Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to the Agent on such day on such
transactions as determined by the Agent.
"Fixed Charge Coverage Ratio" means, as of the end of each fiscal quarter
of the Parent for the Parent and its Subsidiaries on a consolidated basis for
the four consecutive quarters ending on such date, the ratio of (a) EBITDAR for
the applicable period minus Capital Expenditures for the applicable period minus
Federal, state, local and other domestic and foreign income taxes paid during
the applicable period to (b) the sum of Interest Expense for the applicable
period plus Scheduled Funded Debt Payments for the applicable period plus Rent
Expense for the applicable period plus dividends paid on capital stock or equity
securities of the Parent or the PS Subsidiary (but with respect to the Preferred
Stock, without duplication to the extent a comparable amount is taken by the
Parent as interest expense on the related subordinated debt) for the applicable
period.
"Funded Debt" means, with respect to any Person, without duplication, (i)
all Indebtedness of such Person for borrowed money, (ii) all purchase money
Indebtedness of such Person, including without limitation the principal portion
of all obligations of such Person under Capital Leases, (iii) all Guaranty
Obligations of such Person with respect to Funded Debt of another Person, (iv)
the maximum available amount of all standby letters of credit or acceptances
issued or created for the account of such Person, (v) all Funded Debt of another
Person secured by a Lien on any Property of such Person, whether or not such
Funded Debt has been assumed, provided that for purposes hereof the amount of
such Funded Debt shall be limited to the greater of (A) the amount of such
Funded Debt as to which there is recourse to such Person and (B) the fair market
value of the property which is subject to the Lien, (vi) the principal balance
outstanding under any Synthetic Lease, and (vii) the principal amount of the
subordinated notes issued by the Parent to the PS Subsidiary in connection with
the Preferred Stock. The Funded Debt of any Person shall include the Funded Debt
of any partnership or joint venture in which such Person is a general partner or
joint venture, but only to the extent to which there is recourse to such Person
for the payment of such Funded Debt.
"GAAP" means generally accepted accounting principles in the United States
applied on a consistent basis and subject to the terms of Section 1.3 hereof.
"Governmental Authority" means any Federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory body.
"Guarantor" means such term as defined in the first paragraph hereof.
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<PAGE> 15
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any Property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease or
purchase Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection agreement or
foreign currency exchange agreement between one or more of the Borrowers and
any Lender, or any Affiliate of a Lender.
"Indebtedness" of any Person means (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, or upon which interest payments are
customarily made, (iii) all obligations of such Person under conditional sale or
other title retention agreements relating to Property purchased by such Person
(other than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (iv) all obligations
of such Person issued or assumed as the deferred purchase price of Property or
services purchased by such Person (other than trade debt incurred in the
ordinary course of business and due within six months of the incurrence thereof)
which would appear as liabilities on a balance sheet of such Person, (v) all
obligations of such Person under take-or-pay or similar arrangements or under
commodities agreements, (vi) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the proceeds of production
from, Property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (vii) all Guaranty Obligations of such
Person, (viii) the principal portion of all obligations of such Person under
Capital Leases, (ix) all obligations of such Person in respect of interest rate
protection agreements, foreign currency exchange agreements, commodity purchase
or option agreements or other interest or exchange rate or commodity price
hedging agreements (including, but not limited to, the Hedging Agreements), (x)
the maximum amount of all standby letters of credit issued or bankers'
acceptances facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (xi) all
preferred stock issued by such Person and required by the terms thereof to be
redeemed, or for which mandatory sinking fund payments are due, by a fixed date,
(xii) the principal balance outstanding under any Synthetic Lease and (xiii) the
principal amount of the
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<PAGE> 16
Subordinated Indebtedness. The Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer, but only to the extent to which there is
recourse to such Person for payment of such Indebtedness.
"Interbank Offered Rate" means, for the Interest Period for each Eurodollar
Loan comprising part of the same borrowing (including conversions, extensions
and renewals), a per annum interest rate (rounded upwards, if necessary, to the
nearest whole multiple of 1/100 of 1%) equal to the rate of interest, determined
by the Agent on the basis of the offered rates for deposits in dollars for a
period of time corresponding to such Interest Period (and commencing on the
first day of such Interest Period), appearing on Telerate Page 3750 (or, if, for
any reason, Telerate Page 3750 is not available, the Reuters Screen LIBO Page)
as of approximately 11:00 A.M. (London time) two (2) Business Days before the
first day of such Interest Period. As used herein, "Telerate Page 3750" means
the display designated as page 3750 by Dow Jones Telerate, Inc. (or such other
page as may replace such page on that service for the purpose of displaying the
British Bankers Association London interbank offered rates) and "Reuters Screen
LIBO Page" means the display designated as page "LIBO" on the Reuters Monitor
Money Rates Service (or such other page as may replace the LIBO page on that
service for the purpose of displaying London interbank offered rates of major
banks.)
"Interest Expense" means for any period with respect to the Parent and its
Subsidiaries on a consolidated basis all interest expense, including the
amortization of debt discount and premium and the interest component under
Capital Leases or Synthetic Leases, in each case determined in accordance with
GAAP applied on a consistent basis. Except as expressly provided otherwise, the
applicable period shall be for the four consecutive quarters ending as of the
date of determination.
"Interest Payment Date" means (i) as to any Base Rate Loan and each
Swingline Loan, the last day of each fiscal quarter of the Parent and the
Termination Date and (ii) as to any Eurodollar Loan (other than the Swingline
Loans), the last day of each Interest Period for such Loan and on the
Termination Date, and in addition where the applicable Interest Period is more
than 3 months, then also on the date 3 months from the beginning of the Interest
Period, and each 3 months thereafter. If an Interest Payment Date falls on a
date which is not a Business Day, such Interest Payment Date shall be deemed to
be the next succeeding Business Day, except that in the case of Eurodollar Loans
where the next succeeding Business Day falls in the next succeeding calendar
month, then on the next preceding Business Day.
"Interest Period" means (i) as to any Eurodollar Loan, a period of one,
two, three or six month's duration, as one or more of the Borrowers may elect,
commencing in each case, on the date of the borrowing (including conversions,
extensions and renewals) and (ii) as to any Swingline Loan, a period commencing
in each case on the date of the borrowing and ending on the date agreed to by
one or more of the Borrowers and the Swingline Lender in accordance with the
provisions of Section 2.4(b)(i); provided, however, (A) if any Interest Period
would end on a day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day (except that in the
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<PAGE> 17
case of Eurodollar Loans where the next succeeding Business Day falls in the
next succeeding calendar month, then on the next preceding Business Day), (B)
no Interest Period shall extend beyond the Termination Date, and (C) in the
case of Eurodollar Loans, where an Interest Period begins on a day for which
there is no numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last day of
such calendar month.
"Investment", in any Person, means any loan or advance to such Person, any
purchase or other acquisition of any capital stock, warrants, rights, options,
obligations or other securities of, or equity interest in, such Person, any
capital contribution to such Person or any other investment in such Person,
including, without limitation, any Guaranty Obligation incurred for the benefit
of such Person.
"Issuing Lender" means (i) NationsBank, N.A. with respect to all Letters of
Credit other than as provided in clause (ii) of this definition and (ii) Fleet
Bank, N.A. ("Fleet") with respect to the Existing Letters of Credit in a face
amount not to exceed $5,000,000 in the aggregate and such additional Letters of
Credit that the Borrowers elect to have issued by Fleet in a face amount not to
exceed $1,000,000 in the aggregate.
"Issuing Lender Fees" shall have the meaning assigned to term in Section
3.5(b)(ii).
"Joinder Agreement" means a joinder agreement substantially in the form of
Exhibit 7.11.
"KSSS" means Kinney System of Sudbury St., Inc., a Massachusetts
corporation.
"Lenders" means each of the Persons identified as a "Lender" on the
signature pages hereto, and their successors and assigns.
"Letter of Credit" means any letter of credit issued by the Issuing Lender
for the account of one or more of the Borrowers in accordance with the terms of
Section 2.3.
"Letter of Credit Fee" shall have the meaning given such term in Section
3.5(b).
"Leverage Ratio" means, as of the last day of any fiscal quarter of the
Parent, with respect to the Parent and is Subsidiaries on a consolidated basis,
the ratio of Funded Debt on such day to EBITDA for the period of four
consecutive fiscal quarters ending as of such day.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the Uniform Commercial
Code as adopted and in effect in the relevant jurisdiction or other similar
recording or notice statute, and any lease in the nature thereof).
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<PAGE> 18
"Loan" or "Loans" means the Revolving Loans, (or a portion of any Revolving
Loan bearing interest at the Base Rate or the Eurodollar Rate and referred to as
a Base Rate Loan or a Eurodollar Loan) and/or the Term Loans (or a portion of
any such Loan), and/or the Swingline Loans (or any Swingline Loan bearing
interest at the Base Rate or the Eurodollar Rate and referred to as a Base Rate
Loan or a Eurodollar Loan) individually or collectively, as appropriate.
"LOC Commitment" means the commitment of the Issuing Lender to issue, and
to honor payment obligations under, Letters of Credit hereunder and with
respect to each Lender, the commitment of each Lender to purchase participation
interests in the Letters of Credit up to such Lender's LOC Committed Amount as
specified in Schedule 2.1(a), as such amount may be reduced from time to time
in accordance with the provisions hereof.
"LOC Committed Amount" means, collectively, the aggregate amount of all of
the LOC Commitments of the Lenders to issue and participate in Letters of Credit
as referenced in Section 2.3(a) and, individually, the amount of each Lender's
LOC Commitment as specified in Schedule 2.1(a).
"LOC Documents" means, with respect to any Letter of Credit, such Letter
of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefor, and any agreements, instruments,
guarantees or other documents (whether general in application or applicable
only to such Letter of Credit) governing or providing for (i) the rights and
obligations of the parties concerned or at risk or (ii) any collateral security
for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum amount
which is, or at any time thereafter may become, available to be drawn under
Letters of Credit then outstanding, assuming compliance with all requirements
for drawings referred to in such Letters of Credit plus (ii) the aggregate
amount of all drawings under Letters of Credit honored by the Issuing Lender but
not theretofore reimbursed.
"Material Adverse Effect" means a material adverse effect on (i) the
condition (financial or otherwise), operations, business, assets, liabilities
or prospects of the Parent and its Subsidiaries taken as a whole, (ii) the
ability of the Parent and its Subsidiaries as a whole to perform any material
obligation under the Credit Documents to which it is a party or (iii) the
rights and remedies of the Lenders under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Monroe J. Carell, Jr. Group" means Monroe Carell, Jr.; Ann Scott Carell;
Julia Carell Stadler; Kathryn Carell Brown; Faith Carell Johnson; The Carell
Children's Trust; Monroe Carell, Jr. 1994 Grantor Retained Annuity Trust; Monroe
Carell, Jr. 1995 Grantor
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Retained Annuity Trust; 1996 Carell Grandchildren's Trust F/B/O Julia Clair
Stadler; 1996 Carell Grandchildren's Trust F/B/O George Monroe Stadler; 1996
Carell Grandchildren's Trust F/B/O Carell Elizabeth Brown; 1996 Carell
Grandchildren's Trust F/B/O David Nicholas Brown; The Monroe Carell, Jr.
Foundation; The Kathryn Carell Brown Foundation; The Edith Carell Johnson
Foundation; The Julia Carell Stadler Foundation; Carell Scholarship (at
Vanderbilt University) Lead Unitrust; 1990 Carell Grandchildren's Trust F/B/O
Julie Clair Stadler; 1990 Carell Grandchildren's Trust F/B/O George Monroe
Stadler; 1990 Carell Grandchildren's Trust F/B/O Carell Elizabeth Brown; 1990
Carell Grandchildren's Trust F/B/O David Nicholas Brown; 1990 Carell
Grandchildren's Trust F/B/O William Carell Johnson; 1990 Carell Grandchildren's
Trust F/B/O Ann Scott Johnson; 1997 Julia Clair Stadler Trust; 1997 George
Monroe Stadler Trust; 1997 Carell Elizabeth Brown Trust; 1997 David Nicholas
Brown Trust; 1997 William Carell Johnson Trust; 1997 Ann Scott Johnson Trust;
and any other trust or entity which may be created in the future for the benefit
of the children or other family members of Monroe J. Carell, Jr., or for
charitable purposes.
"Moody's" means Moody's Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Parent any Subsidiary of
the Parent or any ERISA Affiliate and at least one employer other than the
Parent, any Subsidiary of the Parent or any ERISA Affiliate are contributing
sponsors.
"NationsBank" means NationsBank, N.A. and its successors.
"Net Cash Proceeds" means gross cash proceeds (including any cash received
by way of deferred payment pursuant to a promissory note, receivable or
otherwise, but only as and when received) received in connection with any Asset
Disposition or Equity Transaction net of actual costs and taxes incurred by such
Person in connection with and attributable to such Asset Disposition or Equity
Transaction.
"Net Income" means for any period, the net income with respect to the
Parent and its Subsidiaries on a consolidated basis as determined in accordance
with GAAP applied on a consistent basis, but excluding for purposes of
determining the Leverage Ratio and the Fixed Charge Coverage Ratio, any
extraordinary gains or losses and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded gains and any tax
deductions or credits on account of any such excluded losses.
"Net Worth" means, as of any date, shareholders' equity or net worth of the
Parent and its Subsidiaries on a consolidated basis, as determined in accordance
with GAAP.
"Non-Excluded Taxes" means such term as is defined in Section 3.10.
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<PAGE> 20
"Note" or "Notes" means any Revolving Note or Term Note, individually or
collectively as the context may require.
"Notice of Borrowing" means a written notice of borrowing in substantially
the form of Exhibit 2.1(b)(i), as required by Section 2.1(b)(i).
"Notice of Extension/Conversion" means a request by one or more of the
Borrowers in substantially the form of Exhibit 3.2, to (a) continue an existing
Eurodollar Loan to a new Interest Period or (b) convert to a Eurodollar Loan to
a Base Rate Loan or a Base Rate Loan to a Eurodollar Loan.
"Obligations" means, collectively, the Revolving Loans, the Term Loans, the
Swingline Loans and the LOC Obligations.
"Operating Lease" means, as applied to any Person, any lease (including,
without limitation, leases which may be terminated by the lessee at any time) of
any Property (whether real property, personal property or mixed) which is not a
Capital Lease other than any such lease in which that Person is the lessor.
"Parent" means Central Parking Corporation, a Tennessee corporation.
"Participation Interest" means the purchase by a Lender of a participation
in Letters of Credit and LOC Obligations as provided in Section 2.3(c), in
Swingline Loans as provided in Section 2.4(b)(iii) and in Revolving Loans or
Term Loans as provided in Section 3.13.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Acquisition" means an Acquisition by the Parent or any
Subsidiary of the Parent for the fair market value of the capital stock or
Property acquired, provided that (i) the capital stock or Property acquired in
such Acquisition relates to a line of business similar to the business of the
Parent or any of its Subsidiaries engaged in on the Closing Date, (ii) in the
case of an Acquisition of the capital stock of another Person, (A) the board of
directors (or other comparable governing body) of such other Person shall have
duly approved such Acquisition and (B) such Person shall become a wholly-owned
direct or indirect Subsidiary of the Parent, (iii) the representations and
warranties made by the Credit Parties in any Credit Document shall be true and
correct in all material respects at and as if made as of the date of such
Acquisition (after giving effect thereto) except to the extent such
representations and warranties expressly relate to an earlier date and no
Default or Event of Default exists as of the date of such Acquisition (after
giving effect thereto), (iv) the Parent shall have delivered to the Agent a Pro
Forma Compliance Certificate demonstrating that, upon giving effect to the
Acquisition on a Pro Form Basis, the Credit Parties will be in compliance with
all of the covenants set forth in Section 7.9, and (v) the aggregate
consideration (including cash and non-cash consideration and any assumption of
liabilities (other than current working capital
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<PAGE> 21
liabilities not constituting Indebtedness)), for all such Acquisitions
occurring after the Closing Date shall not exceed $40,000,000.
"Permitted Investments" means Investments which are either (i) cash and
Cash Equivalents, (ii) accounts receivable created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms, (iii) Investments consisting of stock, obligations,
securities or other property received in settlement of accounts receivable
(created in the ordinary course of business) from defaulting obligors, (iv)
Investments existing as of the Closing Date and set forth in Schedule 8.5, (v)
loans to employees, directors or officers in connection with the award of
convertible bonds or stock under a stock incentive plan, stock option plan or
other equity-based compensation plan or arrangement in the aggregate not to
exceed $1,000,000 (calculated on the exercise price for any such shares) in the
aggregate at any time outstanding, (vi) other advances or loans to employees,
directors, officers, shareholders or agents not to exceed $1,000,000 in the
aggregate at any time outstanding, (viii) loans, advances and investments by one
Credit Party to or into another Credit Party, (ix) loans, advances and
investments by a Credit Party to or into a Subsidiary that is not a Credit
Party in an amount not to exceed the greater of $10,000,000 or ten percent
(10%) of Net Worth in the aggregate at any time outstanding, (x) Permitted
Acquisitions, (xi) "key money" advances or other prepaid rent paid in
connection with obtaining leasehold or other interests in real property in the
ordinary course of business and (xii) other loans, advances and investments of
a nature not contemplated in the foregoing subsections, including, without
limitation, loans in connection with purchase money financing, in an amount not
to exceed $25,000,000 in the aggregate at any time outstanding.
"Permitted Liens" means:
(i) Liens in favor of the Agent on behalf of the Lenders;
(ii) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies not yet due or Liens
for taxes being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other Liens imposed
by law or pursuant to customary reservations or retentions of title arising
in the ordinary course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are unfiled and no
other action has been taken to enforce the same or are being contested in
good faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof);
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<PAGE> 22
(iv) Liens (other than Liens created or imposed under ERISA) incurred
or deposits made by the Parent and its Subsidiaries in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(v) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that the judgments secured shall, within
30 days after the entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall have been discharged within 30 days after
the expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes;
(vii) Liens securing purchase money Indebtedness (including Capital
Leases) to the extent permitted under Section 8.1(c), provided that any
such Lien attaches only to the Property financed and such Lien attaches
thereto concurrently with or within 90 days after the acquisition thereof;
(viii) leases or subleases granted to others not interfering in any
material respect with the business of the Parent or any of its
Subsidiaries;
(ix) any interest of title of a lessor under, and Liens arising from
UCC financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) relating to, leases permitted by this
Credit Agreement;
(x) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(xi) inchoate Liens arising under ERISA to secure current service
pension liabilities as they are incurred under the provisions of any Plan;
and
(xii) Liens existing as of the Closing Date and set forth on Schedule
8.2; provided that (a) no such Lien shall at any time be extended to or
cover any Property other than the Property subject thereto on the Closing
Date and (b) the principal amount of the Indebtedness secured by such Liens
shall not be extended, renewed, refunded or refinanced.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated) or any Governmental Authority.
17
<PAGE> 23
"Plan" means any employee benefit plan (as defined in Section 3(3) of
ERISA) which is covered by ERISA and with respect to which the Parent, any
Subsidiary of the Parent or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" within the meaning of Section 3(5) of ERISA.
"Preferred Stock" means the convertible preferred stock issued by the PS
Subsidiary in the form and subject to the terms set forth in Schedule 1.2 (as
updated to include pricing terms).
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by NationsBank, N.A. as its prime rate in effect at its principal
office in Charlotte, North Carolina, with each change in the Prime Rate being
effective on the date such change is publicly announced as effective (it being
understood and agreed that the Prime Rate is a reference rate used by
NationsBank, N.A. in determining interest rates on certain loans and is not
intended to be the lowest rate of interest charged on any extension of credit
by NationsBank, N.A. to any debtor).
"Pro Forma Basis" means, with respect to a Permitted Acquisition, that
such transaction shall be deemed to have occurred, for purposes of calculating
compliance in respect of such transaction with each of the financial covenants
set forth in Section 7.9 as of the most recent fiscal quarter end preceding the
date of such transaction with respect to which the Agent has received the
Required Financial Information, as of the first day of the four fiscal-quarter
period ending as of such fiscal quarter end. In making such calculations (a)
any Indebtedness incurred in order to consummate such transaction (i) shall be
deemed to have been incurred on the first day of the applicable period four
fiscal-quarter period and (ii) if such Indebtedness has a floating or formula
rate, then the implied rate of interest for such Indebtedness for the
applicable period for purposes of this definition shall be determined by
utilizing the rate which is or would be in effect with respect to such
Indebtedness as at the relevant date of determination and (b) income statement
items (whether positive or negative) attributable to the Property acquired in
such Permitted Acquisition shall be included to the extent relating to the
relevant period.
"Pro Forma Compliance Certificate" means a certificate of an officer of
the Parent delivered to the Agent in connection with a Permitted Acquisition or
Asset Disposition and containing reasonably detailed calculations, upon giving
effect to the applicable transaction on a Pro Forma Basis, of the financial
covenants set forth in Section 7.9 as of the most recent fiscal quarter end
preceding the date of the applicable transaction with respect to which the
Agent shall have received the Required Financial Information.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"PS Subsidiary" means the trust formed by the Parent to issue the
Convertible Preferred Stock.
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<PAGE> 24
"Register" shall have the meaning given such term in Section 11.3(c).
"Regulation T, U, or X" means Regulation T, U or X, respectively, of the
Board of Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment (including the abandonment or discarding of barrels, containers
and other closed receptacles containing any Materials of Environmental Concern).
"Rent Expense" means, for any period, with respect to the Parent and its
Subsidiaries on a consolidated basis, all rent payable under an Operating Lease
(whether a lease of real property, personal property or mixed), as determined
in accordance with GAAP.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the notice requirement has been
waived by regulation.
"Required Financial Information" means, with respect to the delivery of a
Pro Forma Compliance Certificate, (i) the most recently received financial
statements of the Parent required to be delivered pursuant to Section 7.1(a) or
(b), and (ii) the officer's certificate required by Section 7.1(c) to be
delivered with the financial statements described in clause (i) above.
"Required Lenders" means, at any time, Lenders (other than any Defaulting
Lender) holding in the aggregate at least 51% of (i) the Revolving Commitments
and Term Loans, and (ii) if the Commitments have been terminated, the
outstanding Loans and Participation Interests (including the Participation
Interests of the Issuing Lender in any Letters of Credit).
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property is subject.
"Responsible Officer" means the Chief Financial Officer, the Controller,
any Vice President or other duly authorized officer.
"Restricted Payment" means (i) any dividend or other distribution, direct
or indirect, on account of any shares of any class of stock now or hereafter
outstanding, except (A) a dividend payable solely in shares of that class to
the holders of that class and (B) dividends and other distributions payable to
the Parent or a wholly-owned Subsidiary of the Parent, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock now or hereafter
outstanding, and (iii) any payment made to retire, or to obtain the surrender
of,
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<PAGE> 25
any outstanding warrants, options or other rights to acquire shares of any
class of stock now or hereafter outstanding.
"Revolving Commitment" means, with respect to each Lender, the commitment
of such Lender to make Revolving Loans in an aggregate principal amount at any
time outstanding of up to such Lender's Revolving Commitment Percentage of the
Aggregate Revolving Committed Amount as specified in Schedule 2.1(a), as such
amount may be reduced from time to time in accordance with the provisions
hereof.
"Revolving Commitment Percentage" means, for each Lender, a fraction
(expressed as a decimal) the numerator of which is the Revolving Commitment of
such Lender at such time and the denominator of which is the Aggregate
Revolving Committed Amount at such time. The initial Revolving Commitment
Percentages are set out on Schedule 2.1(a).
"Revolving Loans" shall have the meaning assigned to such term in Section
2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory notes of the
Borrowers in favor of each of the Lenders evidencing the Revolving Loans in
substantially the form attached as Exhibit 2.1(e), individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time.
"Revolving Obligations" means, collectively, Revolving Loans, Swingline
Loans and LOC Obligations.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc., or any successor or assignee of the business of such division in the
business of rating securities.
"Scheduled Funded Debt Payments" means, as of the date of determination,
for the Parent and its Subsidiaries on a consolidated basis the sum of all
scheduled payments of principal on Funded Debt for the applicable period ending
on the date of determination (including the principal component of payments due
on Capital Leases during the applicable period ending on the date of
determination).
"Senior Funded Indebtedness" means Funded Debt of the Consolidated Parties
which is not Subordinated Indebtedness determined on a consolidated basis in
accordance with GAAP applied on a consistent basis.
"Senior Leverage Ratio" means, as of the last day of any fiscal quarter of
the Parent, with respect to the Parent and its Subsidiaries on a consolidated
basis, the ratio of (a) Senior Funded Debt of the Consolidated Parties on a
consolidated basis on the last day of such period to (b) Consolidated EBITDA
for such period.
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
20
<PAGE> 26
"Solvent" or "Solvency" means, with respect to any Person as of a
particular date, that on such date (i) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (ii) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature in their ordinary course, (iii) such Person is not engaged in a business
or a transaction, and is not about to engage in a business or a transaction, for
which such Person's Property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged or is to engage, (iv) the fair value of the Property of
such Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (v) the present fair
saleable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount which, in light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Subordinated Indebtedness" means Indebtedness in the amount of
$110,000,000 (net of any treasury shares outstanding) evidenced by the
subordinated notes dated March 18, 1998, issued by the Parent to the PS
Subsidiary in connection with the Preferred Stock or by virtue of the issuance
of the Preferred Stock.
"Subsidiary" means, as to any Person, (a) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through Subsidiaries, and
(b) any partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries has more than 50% of the
voting interests at any time.
"Swingline Commitment" means the commitment of the Swingline Lender to make
Swingline Loans in an aggregate principal amount at any time outstanding of up
to the Swingline Committed Amount.
"Swingline Committed Amount" shall have the meaning assigned to such term
in Section 2.4(a).
"Swingline Lender" means NationsBank, N.A.
"Swingline Loan" shall have the meaning assigned to such term in Section
2.4(a).
"Swingline Loan Request" means a request by one or more of the Borrowers
for a Swingline Loan in substantially the form of Exhibit 2.4(b)(i).
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<PAGE> 27
"Swingline Rate" means the sum of (a) the Eurodollar Rate for an Interest
Period of one month as determined on the first Business Day of each month (and
adjusted on the first Business Day of each month) plus (b) the Applicable
Percentage for Eurodollar Loans plus (c) one-half of one percent (1/2%).
"Swingline Note" means the promissory note of the Borrowers in favor of
the Swingline Lender in the original principal amount of $25,000,000, as such
promissory note may be amended, modified, restated or replaced from time to
time.
"Synthetic Lease" means any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product
where such transaction is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease in accordance with GAAP.
"Term Loans" means the Term Loans made to the Borrowers pursuant to
Section 2.2(a).
"Term Loan Commitment" means, with respect to each Lender, the Commitment
of such Lender to make Term Loans on the Closing Date in the amount specified
for such Lender on Schedule 2.1(a).
"Term Loan Commitment Percentage" means, for each Lender, the percentage
identified as its Term Loan Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in connection with any assignment made in accordance
with the provisions of Section 11.3.
"Term Loan Committed Amount" means TWO HUNDRED MILLION DOLLARS
($200,000,000).
"Term Loan Note" or "Term Loan Notes" means the promissory notes of the
Borrowers in favor of each of the Lenders evidencing Term Loans provided
pursuant to Section 2.2(a), individually or collectively, as appropriate, as
such promissory notes may be amended, modified, supplemented, extended, renewed
or replaced from time to time as evidenced in the form of Exhibit 2.2(d).
"Termination Date" means March 19, 2004.
"Unused Fee" shall have the meaning given such term in Section 3.5(a).
"Voting Stock" means, with respect to any Person, capital stock issued by
such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
1.2 COMPUTATION OF TIME PERIODS.
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<PAGE> 28
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1
hereof (or, prior to the delivery of the first financial statements pursuant to
Section 7.1 hereof, consistent with the annual audited financial statements
referenced in Section 6.1); provided, however, if (a) the Parent shall object to
determining such compliance on such basis at the time of delivery of such
financial statements due to any change in GAAP or the rules promulgated with
respect thereto or (b) the Agent or the Required Lenders shall so object in
writing within 30 days after delivery of such financial statements, then such
calculations shall be made on a basis consistent with the most recent financial
statements delivered by the Parent to the Lenders as to which no such objection
shall have been made.
SECTION 2
CREDIT FACILITIES
2.1 REVOLVING LOANS.
(a) Revolving Commitment. During the Commitment Period, subject to
the terms and conditions hereof, each Lender severally agrees to make
revolving credit loans each a "Revolving Loan" and collectively (the
"Revolving Loans") to the Borrowers from time to time in the amount of such
Lender's Revolving Commitment Percentage of such Revolving Loans for the
purposes hereinafter set forth; provided that (i) with regard to the
Lenders collectively, the aggregate principal amount of Revolving
Obligations outstanding at any time shall not exceed the Aggregate
Revolving Committed Amount and (ii) with regard to each Lender
individually, such Lender's Revolving Commitment Percentage of the sum of
the Revolving Loans plus LOC Obligations plus Swingline Loans outstanding
at any time shall not exceed such Lender's Revolving Committed Amount.
Revolving Loans may consist of Base Rate Loans or Eurodollar Loans, or a
combination thereof, as the Borrowers may request, and may be repaid and
reborrowed in accordance with the provisions hereof.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. By no later than 12:00 Noon
(Charlotte, North Carolina time) on the Business Day prior to the date
of the requested borrowing in the case of Base Rate Loans, and on the
third Business Day prior to the date of the requested borrowing in the
case of Eurodollar Loans, one or more of the Borrowers shall submit a
written Notice of Borrowing in the form of Exhibit
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<PAGE> 29
2.1(b)(i) to the Agent setting forth (A) that a Revolving Loan is
requested, (B) the date of the requested borrowing (which shall be a
Business Day), (C) the aggregate principal amount to be borrowed and (D)
whether the borrowing shall be comprised of Base Rate Loans, Eurodollar
Loans or a combination thereof, and if Eurodollar Loans are requested, the
Interest Period(s) therefor. If any such Notice of Borrowing shall fail to
specify (I) an applicable Interest Period in the case of a Eurodollar Loan,
then such notice shall be deemed to be a request for an Interest Period of
one month, or (II) the type of Revolving Loan requested, then such notice
shall be deemed to be a request for a Base Rate Loan hereunder. The Agent
shall give notice to each Lender promptly upon receipt of each Notice of
Borrowing pursuant to this Section 2.1(b)(i), the contents thereof and each
such Lender's share of any borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Each Revolving Loan shall be in a minimum
aggregate principal amount of $5,000,000, in the case of Eurodollar Loans,
or $1,000,000 (or the remaining Revolving Committed Amount, if less), in
the case of Base Rate Loans, and integral multiples of $1,000,000 in excess
thereof.
(iii) Advances. Each Lender will make its Revolving Commitment
Percentage of each Revolving Loan borrowing available to the Agent as
specified in Section 3.14(a), or in such other manner as the Agent may
specify in writing, by 1:00 P.M. (Charlotte, North Carolina time) on the
date specified in the applicable Notice of Borrowing in Dollars and in
funds immediately available to the Agent. Such borrowing will then be made
available to one or more of the Borrowers by the Agent by crediting the
account of the applicable Borrower on the books of such office with the
aggregate of the amounts made available to the Agent by the Lenders and in
like funds as received by the Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be due
and payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as Revolving Loans shall be
comprised in whole or in part of Base Rate Loans, such Base Rate Loans
shall bear interest at a per annum rate equal to the Base Rate plus the
Applicable Percentage;
(ii) Eurodollar Loans. During such periods as Revolving Loans shall be
comprised in whole or in part of Eurodollar Loans, such Eurodollar Loans
shall bear interest at a per annum rate equal to the Eurodollar Rate plus
the Applicable Percentage.
Interest on Revolving Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
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<PAGE> 30
(e) Revolving Notes. The Revolving Loans shall be evidenced by a duly
executed Revolving Note in favor of each Lender substantially in the form of
Exhibit 2.1(e).
(f) Maximum Number of Eurodollar Loans. The Borrowers will be limited to a
maximum number of eight (8) Eurodollar Loans outstanding at any time. For
purposes hereof, Eurodollar Loans with separate or different Interest Periods
will be considered as separate Eurodollar Loans even if their Interest Periods
expire on the same date.
2.2 TERM LOANS.
(a) Term Loan. Subject to the terms and conditions set forth herein, each
Lender severally agrees, on the Closing Date, to make a Term Loan to the
Borrowers, in Dollars, in an aggregate amount equal to the Term Loan Committed
Amount and, with respect to each Lender, an amount equal to such Lender's Term
Loan Commitment Percentage of the Term Loan Committed Amount. Term Loans may
consist of Base Rate Loans or Eurodollar Loans, or a combination thereof, as the
Borrowers may request. Once repaid, Term Loans cannot be reborrowed.
(b) Funding of Term Loans. On the Closing Date, each applicable Lender will
make its Term Loan Commitment Percentage of the Term Loan Committed Amount
available to the Agent by deposit, in Dollars and in immediately available
funds, at the offices of the Agent at its principal office in Charlotte, North
Carolina or at such other address as the Agent may designate in writing. Upon
satisfaction of the conditions precedent set forth in Section 5.1, the aggregate
amount of the Term Loans will then be made available to the Borrowers by the
Agent by crediting an account of one or more of the Borrowers (as designated by
the Parent) at the office of the Agent, to the extent the amount of such Term
Loans are made available to the Agent.
No Lender shall be responsible for the failure or delay by any other Lender
in its obligation to make a Term Loan hereunder; provided, however, that the
failure of any Lender to fulfill its obligations hereunder shall not relieve any
other Lender of its obligations hereunder. If the Agent shall have received an
executed signature page to this Credit Agreement (whether an original or via
telecopy) from a Lender (and such Lender shall have authorized the release of
such signature page), the Agent may assume that, upon receipt of notice from the
Agent, such Lender has or will make the amount of its Term Loans available to
the Agent on the Closing Date, and the Agent in reliance upon such assumption,
may (in its sole discretion but without any obligation to do so) make available
to the Borrowers a corresponding amount.
(c) Amortization. The principal amount of the Term Loans shall be repaid in
quarterly payments on the dates set forth below:
<TABLE>
<CAPTION>
Principal Amortization Term Loan Principal
Payment Dates Amortization Payment
---------------------- --------------------
<C> <C>
June 30, 2000 $12,500,000
September 30, 2000 $12,500,000
</TABLE>
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<PAGE> 31
December 31, 2000 $12,500,000
March 31, 2001 $12,500,000
June 30, 2001 $12,500,000
September 30, 2001 $12,500,000
December 31, 2001 $12,500,000
March 31, 2002 $12,500,000
June 30, 2002 $12,500,000
September 30, 2002 $12,500,000
December 31, 2002 $12,500,000
March 31, 2003 $12,500,000
June 30, 2003 $12,500,000
September 30, 2003 $12,500,000
December 31, 2003 $12,500,000
March 19, 2004 $12,500,000
Total $200,000,000
(d) Term Notes. The Term Loan made by each Lender shall be evidenced by a
duly executed Term Note in favor of each Lender substantially in the form of
Exhibit 2.2(d). The outstanding balance of the Term Loans shall be due and
payable in full on March 19, 2004.
2.3 LETTER OF CREDIT SUBFACILITY.
(a) Issuance. During the Commitment Period, subject to the terms and
conditions hereof and of the LOC Documents, if any, and such other terms and
conditions which the Issuing Lender may reasonably require, the Issuing Lender
shall issue, and the Lenders shall participate in, such Letters of Credit as a
Borrower may request for its own account, in a form acceptable to the Issuing
Lender, for the purposes hereinafter set forth; provided that (i) the aggregate
amount of LOC Obligations shall not exceed TWENTY-FIVE MILLION DOLLARS
($25,000,000) at any time (the "LOC Committed Amount"), (ii) with regard to the
Lenders collectively, the aggregate principal amount of Revolving Obligations
outstanding at any time shall not exceed the Aggregate Revolving Committed
Amount and (iii) with regard to each Lender individually, such Lender's
Revolving Commitment Percentage of the sum of Revolving Loans plus LOC
Obligations plus Swingline Loans outstanding at any time shall not exceed such
Lender's Revolving Committed Amount. Letters of Credit issued hereunder shall
not have an original expiry date more than one year from the date of issuance or
extension, nor an expiry date, whether as originally issued or by extension,
extending beyond the Termination Date. Each Letter of Credit shall comply with
the related LOC Documents and shall be a standby letter of credit issued to
support the obligations (including pension or insurance obligations), contingent
or otherwise, of a Borrower. The issuance date of each Letter of Credit shall be
a Business Day.
(b) Notice and Reports. The request for the issuance of a Letter of Credit
shall be submitted by a Borrower to the Issuing Lender at least two (2) Business
Days prior to the requested date of issuance (or such shorter period as may be
agreed by the Issuing Lender. The Issuing Lender will provide to the Agent at
least monthly, and more frequently upon request, a detailed summary report on
its Letters of Credit and the activity thereon, in form and substance acceptable
to the Agent. In addition, the Issuing Lender will provide to the Agent for
dissemination to the Lenders at least quarterly, and more frequently upon
request, a detailed summary report on its Letters of Credit and the
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<PAGE> 32
activity thereon, including, among other things, the beneficiary, the face
amount, and the expiry date. The Issuing Lender will provide copies of the
Letters of Credit to the Agent and the Lenders promptly upon request.
(c) Participation. Each Lender, with respect to Existing Letters of
Credit, hereby purchases a participation interest in such Existing Letters of
Credit and, with respect to Letters of Credit issued on or after the Closing
Date, upon issuance of a Letter of Credit, shall be deemed to have purchased
without recourse a participation from the Issuing Lender in such Letter of
Credit and the obligations arising thereunder, in each case in an amount equal
to its Revolving Commitment Percentage of the obligations under such Letter of
Credit and shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the Issuing Lender
therefor and discharge when due, its pro rata share of the obligations arising
under such Letter of Credit. Without limiting the scope and nature of each
Lender's participation in any Letter of Credit, to the extent that the Issuing
Lender has not been reimbursed as required hereunder or under any such Letter of
Credit, each such Lender shall pay to the Issuing Lender its Revolving
Commitment Percentage of such unreimbursed drawing in same day funds on the day
of notification by the Issuing Lender of an unreimbursed drawing pursuant to the
provisions of subsection (d) hereof. The obligation of each Lender to so
reimburse the Issuing Lender shall be absolute and unconditional and shall not
be affected by the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of the Borrowers to reimburse the Issuing Lender under any
Letter of Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of Credit,
the Issuing Lender will promptly notify the Borrower that was the applicant for
such Letter of Credit. Unless such Borrower shall immediately notify the Issuing
Lender that it intends to otherwise reimburse the Issuing Lender for such
drawing, such Borrower shall be deemed to have requested that the Lenders make a
Revolving Loan at the adjusted Base Rate in the amount of the drawing as
provided in subsection (e) hereof on the related Letter of Credit, the proceeds
of which will be used to satisfy the related reimbursement obligations. Each
Borrower that is the applicant under a Letter of Credit promises to reimburse
the Issuing Lender on the day of drawing under any Letter of Credit (either with
the proceeds of a Revolving Loan obtained hereunder or otherwise) in same day
funds. If such Borrower shall fail to reimburse the Issuing Lender as provided
hereinabove, the unreimbursed amount of such drawing shall bear interest at a
per annum rate equal to the Base Rate plus two percent (2%). Such Borrower's
reimbursement obligations hereunder shall be absolute and unconditional under
all circumstances irrespective of any rights of setoff, counterclaim or defense
to payment such Borrower may claim or have against the Issuing Lender, the
Agent, the Lenders, the beneficiary of the Letter of Credit drawn upon or any
other Person, including without limitation any defense based on any failure of
such Borrower to receive consideration or the legality, validity, regularity or
unenforceability of the Letter of Credit. The Issuing Lender will promptly
notify the other Lenders of the
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amount of any unreimbursed drawing and each Lender shall promptly pay to the
Agent for the account of the Issuing Lender in Dollars and in immediately
available funds, the amount of such Lender's pro rata share of such unreimbursed
drawing. Such payment shall be made on the day such notice is received by such
Lender from the Issuing Lender if such notice is received at or before 2:00 P.M.
(Charlotte, North Carolina time) otherwise such payment shall be made at or
before 12:00 Noon (Charlotte, North Carolina time) on the Business Day next
succeeding the day such notice is received. If such Lender does not pay such
amount to the Issuing Lender in full upon such request, such Lender shall, on
demand, pay to the Agent for the account of the Issuing Lender interest on the
unpaid amount during the period from the date of such drawing until such Lender
pays such amount to the Issuing Lender in full at a rate per annum equal to, if
paid within two (2) Business Days of the date that such Lender is required to
make payments of such amount pursuant to the preceding sentence, the Federal
Funds Rate and thereafter at a rate equal to the Base Rate. Each Lender's
obligation to make such payment to the Issuing Lender, and the right of the
Issuing Lender to receive the same, shall be absolute and unconditional, shall
not be affected by any circumstance whatsoever and without regard to the
termination of this Credit Agreement or the Commitments hereunder, the existence
of a Default or Event of Default or the acceleration of the obligations of any
Borrower hereunder and shall be made without any offset, abatement, withholding
or reduction whatsoever. Simultaneously with the making of each such payment by
a Lender to the Issuing Lender, such Lender shall, automatically and without any
further action on the part of the Issuing Lender or such Lender, acquire a
participation in an amount equal to such payment (excluding the portion of such
payment constituting interest owing to the Issuing Lender) in the related
unreimbursed drawing portion of the LOC Obligation and in the interest thereon
and in the related LOC Documents, and shall have a claim against such Borrower
with respect thereto.
(e) Repayment with Revolving Loans. On any day on which any Borrower
shall have requested, or been deemed to have requested, a Revolving Loan
advance to reimburse a drawing under a Letter of Credit, the Agent shall give
notice to the Lenders that a Revolving Loan has been requested or deemed
requested by such Borrower to be made in connection with a drawing under a
Letter of Credit, in which case a Revolving Loan advance comprised of Base Rate
Loans (or Eurodollar Loans to the extent such Borrower has complied with the
procedures of Section 2.1(b)(i) with respect thereto) shall be immediately made
to such Borrower by all Lenders (notwithstanding any termination of the
Commitments pursuant to Section 9.2) pro rata based on the respective Revolving
Commitment Percentages of the Lenders (determined before giving effect to any
termination of the Commitments pursuant to Section 9.2) and the proceeds
thereof shall be paid directly to the Issuing Lender for application to the
respective LOC Obligations. Each such Lender hereby irrevocably agrees to make
its pro rata share of each such Revolving Loan immediately upon any such
request or deemed request in the amount, in the manner and on the date
specified in the preceding sentence notwithstanding (i) the amount of such
borrowing may not comply with the minimum amount for advances of Revolving
Loans otherwise required hereunder, (ii) whether any conditions specified in
Section 5.2 are then satisfied, (iii) whether a Default or an Event of Default
then exists, (iv) failure for any such
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request or deemed request for Revolving Loan to be made by the time otherwise
required hereunder, (v) whether the date of such borrowing is a date on which
Revolving Loans are otherwise permitted to be made hereunder or (vi) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to a Borrower), then each such Lender hereby
agrees that it shall forthwith purchase (as of the date such borrowing would
otherwise have occurred, but adjusted for any payments received from such
Borrower on or after such date and prior to such purchase) from the Issuing
Lender such participation in the outstanding LOC Obligations as shall be
necessary to cause each such Lender to share in such LOC Obligations ratably
(based upon the respective Revolving Commitment Percentages of the Lenders
(determined before giving effect to any termination of the Commitments
pursuant to Section 9.2)), provided that in the event such payment is not made
on the day of drawing, such Lender shall pay in addition to the Issuing Lender
interest on the amount of its unfunded Participation Interest at a rate equal
to, if paid within two (2) Business Days of the date of drawing, the Federal
Funds Rate, and thereafter at the Base Rate.
(f) Designation of Account Parties; Existing Letters of Credit.
Notwithstanding anything to the contrary set forth in this Credit Agreement,
including without limitation Section 2.3(a), a Letter of Credit issued
hereunder may contain a statement to the effect that such Letter of Credit is
issued for the account of a Subsidiary of the Parent that is not a Borrower,
provided that notwithstanding such statement, in such circumstances the Parent
shall be the actual account party for all purposes of this Credit Agreement for
such Letter of Credit and such statement shall not affect the Borrowers'
reimbursement obligations hereunder with respect to such Letter of Credit. In
addition, the Credit Parties hereby acknowledge and agree that the Existing
Letters of Credit are Letters of Credit hereunder and the Credit Parties hereby
assume and are jointly and severally obligated with respect to all LOC
Obligations related thereto.
(g) Renewal, Extension. The renewal or extension of any Letter of Credit
shall, for purposes hereof, be treated in all respects the same as the issuance
of a new Letter of Credit hereunder.
(h) Uniform Customs and Practices. The Issuing Lender may have the Letters
of Credit be subject to The Uniform Customs and Practice for Documentary
Credits (the "UCP"), and/or the International Standby Practices 1998 (the
"ISP"), each as published as of the date of issue by the International Chamber
of Commerce, in which case the UCP or the ISP, as the case may be, may be
incorporated therein and deemed in all respects to be a part thereof.
(i) Indemnification; Nature of Issuing Lender's Duties.
(i) In addition to its other obligations under this Section 2.3,
each Borrower that is an applicant with respect to a Letter of Credit hereby
agrees to protect, indemnify, pay and save the Issuing Lender harmless from and
against any
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and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees actually incurred) that the
Issuing Lender may incur or be subject to as a consequence, direct or
indirect, of (A) the issuance of any Letter of Credit upon the application
of such Borrower or (B) the failure of the Issuing Lender to honor a
drawing under a Letter of Credit issued upon the application of such
Borrower as a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto government or governmental
authority (all such acts or omissions, herein called "Government Acts").
(ii) As between the Borrower that is the applicant for a Letter of
Credit and the Issuing Lender for such Letter of Credit, such Borrower
shall assume all risks of the acts, omissions or misuse of any such Letter
of Credit by the beneficiary thereof. The Issuing Lender shall not be
responsible: (A) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with
the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (D) for
any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (E) for any consequences arising from causes beyond the
control of the Issuing Lender, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent the
vesting of the Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
the Issuing Lender, under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not put such
Issuing Lender under any resulting liability to such Borrower. It is the
intention of the parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Issuing Lender against any and all
risks involved in the issuance of the Letters of Credit, all of which risks
are hereby assumed by the Borrowers, including, without limitation, any
and all Government Acts. The Issuing Lender shall not, in any way, be
liable for any failure by the Issuing Lender or anyone else to pay any
drawing under any Letter of Credit as a result of any Government Acts or
any other cause beyond the control of the Issuing Lender.
(iv) Nothing in this Section 2.3(i) is intended to limit the
reimbursement obligations of the Borrowers contained in subsection (d)
above. The obligations of the Borrowers under this Section 2.3(i) shall
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survive the termination of this Credit Agreement. No act or omissions of
any current or prior beneficiary of a Letter of Credit shall in any way
affect or impair the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (i), the Borrowers shall have no obligation to indemnify the
Issuing Lender in respect of any liability incurred by the Issuing Lender
(A) arising solely out of the gross negligence or willful misconduct of the
Issuing Lender, as determined by a court of competent jurisdiction, or (B)
caused by the Issuing Lender's failure to pay under any Letter of Credit
after presentation to it of a request strictly complying with the terms and
conditions of such Letter of Credit, as determined by a court of competent
jurisdiction, unless such payment is prohibited by any law, regulation,
court order or decree.
(j) Responsibility of Issuing Lender. It is expressly understood and agreed
that the obligations of the Issuing Lender hereunder to the Lenders are only
those expressly set forth in this Credit Agreement and that the Issuing Lender
shall be entitled to assume that the conditions precedent set forth in Section
5.2 have been satisfied unless it shall have acquired actual knowledge that any
such condition precedent has not been satisfied; provided, however, that
nothing set forth in this Section 2.3 shall be deemed to prejudice the right of
any Lender to recover from the Issuing Lender any amounts made available by
such Lender to the Issuing Lender pursuant to this Section 2.3 in the event that
it is determined by a court of competent jurisdiction that the payment with
respect to a Letter of Credit constituted gross negligence or willful misconduct
on the part of the Issuing Lender.
(k) Conflict with LOC Documents. In the event of any conflict between this
Credit Agreement and any LOC Document (including any letter of credit
application), this Credit Agreement shall control.
2.4 SWINGLINE LOANS.
(a) Swingline Commitment. Subject to the terms and conditions hereof and
in reliance upon the representations and warranties herein set forth, the
Swingline Lender, in its individual capacity, agrees to make certain revolving
credit loans to the Borrowers (each a "Swingline Loan" and, collectively, the
"Swingline Loans") from time to time from the Closing Date until the
Termination Date for the purposes hereinafter set forth; provided, however,
(i) the aggregate principal amount of Swingline Loans outstanding at any time
shall not exceed TWENTY FIVE MILLION DOLLARS ($25,000,000) (the "Swingline
Committed Amount"), and (ii) the aggregate principal amount of Revolving
Obligations outstanding at any time shall not exceed the Aggregate Revolving
Committed Amount. Swingline Loans may be repaid and reborrowed in accordance
with the provisions hereof.
(b) Swingline Loan Advances.
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(i) Notices; Disbursement. By no later than 12:00 Noon (Charlotte,
North Carolina time) on the Business Day of the requested Swingline Loan
advance, one or more of the Borrowers shall submit a written Swingline Loan
Request in the form of Exhibit 2.4(b)(i) to the Agent setting forth
(A) that a Swingline Loan advance is requested, (B) the date of the
requested Swingline Loan advance (which shall be a Business Day) and
(C) the principal amount of the Swingline Loan advance requested. Each such
notice shall be irrevocable. Each Swingline Loan shall have such maturity
date as the Swingline Lender and the applicable Borrower shall agree upon
receipt by the Swingline Lender of any such Swingline Loan Request. The
Swingline Lender shall initiate the transfer of funds representing the
Swingline Loan advance to the applicable Borrower by 3:00 p.m. (Charlotte,
North Carolina time) on the Business Day of the requested borrowing.
(ii) Minimum Amount. Each Swingline Loan shall be in a minimum
principal amount of $100,000 and in integral multiples of $100,000 in
excess thereof (or the remaining amount of the Swingline Committed Amount,
if less).
(iii) Repayment of Swingline Loans. The principal amount of all
Swingline Loans shall be due and payable on the earlier of (A) the maturity
date agreed to by the Swingline Lender and the applicable Borrower with
respect to such Loan or (B) the Termination Date. The Swingline Lender may,
upon the occurrence of any Default or Event of Default, in its sole
discretion, by written notice to the Parent and the Lenders, demand
repayment of its Swingline Loans by way of a Revolving Loan advance, in
which case the Borrowers shall be deemed to have requested a Revolving Loan
advance comprised solely of Base Rate Loans in the amount of such Swingline
Loans; provided, however, that any such demand shall be deemed to have been
given one Business Day prior to the Termination Date and on the date of the
occurrence of any Event of Default described in Section 9.1 and upon
acceleration of the indebtedness hereunder and the exercise of remedies in
accordance with the provisions of Section 9.2. Upon notice from the Agent
each Lender hereby irrevocably agrees to make its pro rata share of each
such Revolving Loan in the amount, in the manner and on the date specified
in the preceding sentence notwithstanding (I) the amount of such borrowing
may not comply with the minimum amount for advances of Revolving Loans
otherwise required hereunder, (II) whether any conditions specified in
Section 5.2 are then satisfied, (III) whether a Default or Event of Default
then exists, (IV) failure of any such request or deemed request for
Revolving Loan to be made by the time otherwise required hereunder, (V)
whether the date of such borrowing is a date on which Revolving Loans are
otherwise permitted to be made hereunder of (VI) any termination of the
Commitments relating thereto immediately prior to or contemporaneously with
such borrowing. In the event that any Revolving Loan cannot for any reason
be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to any one of the Borrowers or any other
Credit Party), then each Lender hereby agrees that it shall forthwith
purchase (as of the date such borrowing would otherwise have occurred, but
adjusted for any payments received from the Borrowers on or after such date
and prior to such purchase) from
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the Swingline Lender such participants in the outstanding Swingline Loans
as shall be necessary to cause each such Lender to share in such Swingline
Loans ratably based upon its Revolving Commitment Percentage of the
Revolving Committed Amount (determined before giving effect to any
termination of the Commitments pursuant to Section 3.4), provided that (A)
all interest payable on the Swingline Loans shall be for the account of the
Swingline Lender until the date as of which the respective participation is
purchased and (B) at the time any purchase of participations pursuant to
this sentence is actually made, the purchasing Lender shall be required to
pay to the Swingline Lender, interest on the principal amount of
participation purchased for each day from and including the day upon which
such borrowing would otherwise have occurred to but excluding the date of
payment for such participation, at the rate equal to the Federal Funds
Rate.
(c) Interest on Swingline Loans.
(i) Subject to the provisions of Section 3.1, each Swingline Loan
shall bear interest at a per annum rate (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the
Swingline Rate applicable from time to time.
(ii) Interest on Swingline Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein).
(d) Swingline Note. The Swingline Loans shall be evidenced by a duly
executed promissory note of the Borrowers to the Swingline Lender in
substantially the form of Exhibit 2.4(d).
2.5 JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Borrowers is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided by the
Lender under this Credit Agreement, for the mutual benefit, directly, and
indirectly, of each of the Borrowers and in consideration of the undertakings
of each of the Borrowers to accept joint and several liability for the
obligations of each of them.
(b) Each of the Borrowers jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers with respect to the payment and
performance of all of the Obligations arising under this Credit Agreement and
the other Credit Documents, it being the intention of the parties hereto that
all the Obligations shall be joint and several obligations of each of the
Borrowers without preferences or distinction among them.
(c) If and to the extent that any of the Borrowers shall fail to make any
payment with respect to any of the obligations hereunder as and when due or to
perform
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any of such obligations in accordance with the terms thereof, then in each
such event, the other Borrowers will make such payment with respect to, or
perform, such obligation.
(d) The obligations of each Borrower under the provisions of this
Section 2.5 constitute full recourse obligations of such Borrower,
enforceable against it to the full extent of its properties and assets,
irrespective of the validity, regularity or enforceability of this Credit
Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided herein, each Borrower
hereby waives notice of acceptance of its joint and several liability,
notice of occurrence of any Default or Event of Default (except to the
extent notice is expressly required to be given pursuant to the terms of
this Credit Agreement), or of any demand for any payment under this Credit
Agreement, notice of any action at any time taken or omitted by the Lender
under or in respect of any of the Obligations hereunder, any requirement of
diligence and, generally, all demands, notices and other formalities of
every kind in connection with this Credit Agreement. Each Borrower hereby
assents to, and waives notice of, any extension or postponement of the time
for the payment of any of the Obligations hereunder, the acceptance of any
partial payment thereon, any waiver, consent or other action or
acquiescence by the Lender at any time or times in respect of any default
by any Borrower in the performance or satisfaction of any term, covenant,
condition or provision of this Credit Agreement, any and all other
indulgences whatsoever by the Lender in respect of any of the Obligations
hereunder, and the taking, addition, substitution or release, in whole or
in part, at any time or times, of any security for any of such Obligations
or the addition, substitution or release, in whole or in part, of any
Borrower. Without limiting the generality of the foregoing, each Borrower
assents to any other action or delay in acting or any failure to act on the
part of the Lender, including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to comply fully
with applicable laws or regulations thereunder which might, but for the
provisions of this Section 2.5, afford grounds for terminating, discharging
or relieving such Borrower, in whole or in part, from any of its
obligations under this Section 2.5, it being the intention of each Borrower
that, so long as any of the Obligations hereunder remain unsatisfied, the
obligations of such Borrower under this Section 2.5 shall not be discharged
except by performance and then only to the extent of such performance. The
obligations of each Borrower under this Section 2.5 shall not be diminished
or rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any
reconstruction or similar proceeding with respect to any Borrower or the
Lender. The joint and several liability of the Borrowers hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, membership,
constitution or place of formation of any Borrower or the Lender.
(f) The provisions of this Section 2.5 are made for the benefit of the
Agent and the Lenders and their respective successors and assigns, and may
be enforced by any such Person from time to time against any of the
Borrowers as often as occasion therefor may arise and without requirement
on the part of any Lender first to marshal any of its claims or to exercise
any of its rights against any of the other Borrowers or to exhaust
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any remedies available to it against any of the other Borrowers or to
resort to any other source or means of obtaining payment of any of the
Obligations or to elect any other remedy. Without limiting the generality
of the foregoing, each Borrower hereby specifically waives the benefits of
N.C. Gen. Stat. Sections 26-7 through 26-9, inclusive, to the extent
applicable. The provisions of this Section 2.5 shall remain in effect until
all the Obligations hereunder shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be
restored or returned by the Lender upon the insolvency, bankruptcy or
reorganization of any of the Borrowers, or otherwise, the provisions of
this Section 2.5 will forthwith be reinstated and in effect as though such
payment had not been made.
(g) Notwithstanding any provision to the contrary contained herein or
in any other of the Credit Documents or Hedging Agreements, the obligations
of each Borrower hereunder shall be limited to an aggregate amount equal to
the largest amount that would not render its obligations hereunder subject
to avoidance under Section 548 of the Bankruptcy Code or any comparable
provisions of any applicable state law.
2.6 APPOINTMENT OF PARENT AS AGENT FOR BORROWERS.
Each of the Borrowers hereby appoints the Parent to act as its agent for
all purposes under this Credit Agreement and the other Credit Documents
(including, without limitation, with respect to all matters related to the
borrowing and repayment of loans as described in Section 2 and Section 3
hereof). Each of the Borrowers acknowledges and agrees that (a) the Parent may
execute such documents on behalf of all the Borrowers as the Parent deems
appropriate in its sole discretion and each Borrower shall be bound by and
obligated by all of the terms of any such document executed by the Parent on its
behalf, (b) any notice or other communication delivered by the Agent or any
Lender hereunder to the Parent shall be deemed to have been delivered to each of
the Borrowers and (c) the Agent and each of the Lenders shall accept (and shall
be permitted to rely on) any document or agreement executed by the Parent on
behalf of the Borrowers (or any of them).
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 DEFAULT RATE.
Upon the occurrence, and during the continuance, of an Event of Default,
the principal of and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit Documents shall
bear interest, payable on demand, at a per annum rate 2% greater than the rate
which would otherwise be applicable (or if no rate is applicable, whether in
respect of interest, fees or other amounts, then 2% greater than the Base Rate).
3.2 EXTENSION AND CONVERSION.
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Subject to the terms of Section 5.2, the Borrowers shall have the option,
on any Business Day, to extend existing Loans into a subsequent permissible
Interest Period or to convert Loans into Loans of another interest rate type;
provided, however, that (i) except as provided in Section 3.8, Eurodollar Loans
may be converted into Base Rate Loans only on the last day of the Interest
Period applicable thereto, (ii) Eurodollar Loans may be extended, and Base Rate
Loans may be converted into Eurodollar Loans, only if no Default or Event of
Default is in existence on the date of extension or conversion and the
conditions set forth in subsections (a), (b) and (c) of Section 5.2 have been
satisfied, (iii) Loans extended as, or converted into, Eurodollar Loans shall be
subject to the terms of the definition of "Interest Period" set forth in Section
1.1 and shall be in such minimum amounts as provided in, Section 2.1(b)(ii), and
(iv) any request for extension or conversion of a Eurodollar Loan which shall
fail to specify an Interest Period shall be deemed to be a request for an
Interest Period of one month. Each such extension or conversion shall be
effected by the Borrowers by giving a Notice of Extension/Conversion, in the
form of Exhibit 3.2, to the Agent prior to 12:00 Noon (Charlotte, North Carolina
time) on the Business Day of, in the case of the conversion of a Eurodollar Loan
into a Base Rate Loan, and on the third Business Day prior to, in the case of
the extension of a Eurodollar Loan as, or conversion of a Base Rate Loan into, a
Eurodollar Loan, the date of the proposed extension or conversion, specifying
the date of the proposed extension or conversion, the Loans to be so extended or
converted, the types of Loans into which such Loans are to be converted and, if
appropriate, the applicable Interest Periods with respect thereto. Each request
for extension or conversion shall be irrevocable and shall constitute a
representation and warranty by the Borrowers of the matters specified in
subsections (a) through (c) of Section 5.2. In the event the Borrowers fail to
request extension or conversion of any Eurodollar Loan in accordance with this
Section, or any such conversion or extension is not permitted or required by
this Section, then such Eurodollar Loan shall be automatically converted into a
Base Rate Loan at the end of the Interest Period applicable thereto. The Agent
shall give each Lender notice as promptly as practicable of any such proposed
extension or conversion affecting any Loan.
3.3 PREPAYMENTS
(a) Voluntary Prepayments. Loans may be repaid in whole or in part
without premium or penalty; provided that (i) Eurodollar Loans may not be
prepaid other than at the end of the Interest Period applicable thereto and
only then on three (3) Business Days' prior written notice to the Agent,
(ii) any prepayment of Eurodollar Loans will be subject to Section 3.11,
(iii) Base Rate Loans may be prepaid by the Borrowers by giving notice to
the Agent prior to 12:00 Noon (Charlotte, North Carolina time) of the
requested prepayment, and (iv) each such partial prepayment shall be in a
minimum principal amount of $5,000,000, in the case of Eurodollar Loans,
and $1,000,000, in the case of Base Rate Loans, and in integral multiples
of $1,000,000 in excess thereof. Any such voluntary prepayments shall be
applied first to Base Rate Loans and then to Eurodollar Loans in direct
order of their Interest Period maturities. The Agent shall notify the
Lenders of any such prepayment.
(b) Mandatory Prepayments. If at any time,
(i) Revolving Committed Amount. If, at any time, the aggregate
principal amount of Revolving Obligations shall exceed the Aggregate
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Revolving Committed Amount as reduced from time to time, the Borrowers
shall immediately make a principal payment to the Lenders for
application to the Revolving Obligations in the manner and in an
amount necessary to be in compliance with Section 2.1. Any such
mandatory prepayment shall be applied first to Base Rate Loans and
then to Eurodollar Loans in the direct order of their Interest Period
maturities.
(ii) Equity Transaction. Upon receipt by the Parent of the
proceeds from any Equity Transaction at a time when Term Loans are
outstanding, the Parent shall prepay the Term Loans in an aggregate
amount equal to Fifty Percent (50%) of the Net Cash Proceeds of such
Equity Transaction (to be applied as set forth in Section 3.3(c)
below).
(iii) Asset Dispositions. Until such time at which the aggregate
amount of the Term Loans outstanding is less than $100,000,000, upon
receipt by the Parent of the proceeds from any Asset Disposition, the
Parent shall prepay the Term Loans in an aggregate amount equal to
100% of the Net Cash Proceeds of the related Asset Disposition (such
prepayment to be applied as set forth in Section 3.3(c) below).
(c) Application of Certain Prepayments. All amounts required to be
paid pursuant to Section 3.3(b)(ii) above shall be applied to the Term
Loans in the inverse order of principal payments due under Section 2.2(c).
All amounts required to be paid pursuant to Section 3.3(b)(iii) above shall
be applied as follows: (i) first, 50% of such prepayment to the remaining
principal payments due under Section 2.2(c) in the inverse order of
maturity and (ii) second, 50% of such prepayment to the remaining principal
payments due under Section 2.2(c) in the direct order of maturity. Within
the parameters of applications set forth above, prepayments shall be
applied first to Base Rate Loans and then Eurodollar Loans in direct order
of their Interest Period maturities.
3.4 VOLUNTARY REDUCTIONS IN REVOLVING COMMITMENTS
The Borrowers may from time to time permanently reduce the aggregate
amount of the Revolving Commitment in whole or in part without premium or
penalty except as provided in Section 3.11 upon three (3) Business Days' prior
written notice to the Agent (who shall promptly notify each Lender), provided
that (i) after giving effect to any voluntary reduction the aggregate amount of
Revolving Obligations shall not exceed the Aggregate Revolving Committed
Amount, as reduced, and (ii) partial reductions shall be minimum principal
amount of $5,000,000, and in integral multiples of $1,000,000 in excess thereof.
3.5 FEES.
(a) Unused Fee. In consideration of the Revolving Commitments
hereunder, the Borrowers agree to pay to the Agent, for the ratable benefit
of the Lenders, an unused fee (the "Unused Fee") equal to the Applicable
Percentage for Unused Fees then in effect (calculated on the basis of
actual number of days elapsed in a year of 360 days) on the average daily
unused portion of the Aggregate Revolving Committed Amount
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(excluding any amounts outstanding under the Swingline facility) for the
applicable period. The Unused Fee shall be payable quarterly in arrears on the
15th day following the last day of each calendar quarter for the immediately
preceding quarter (or portion thereof) beginning with the first such date to
occur after the Closing Date.
(b) Letter of Credit Fees.
(i) Standby Letter of Credit Issuance Fee. In consideration of the
issuance of standby Letters of Credit hereunder, the Borrowers promise to
pay to the Agent, for the account of each Lender a fee (the "Letter of
Credit Fee") on such Lender's Revolving Commitment Percentage of the
average daily maximum amount available to be drawn under each such standby
Letter of Credit computed at a per annum rate for each day from the date of
issuance to the date of expiration equal to the Applicable Percentage for
the Letter of Credit. The Letter of Credit Fee will be payable quarterly in
arrears on the last Business Day of each March, June, September and
December for the immediately preceding quarter (or a portion thereof).
(ii) Issuing Lender Fee. In addition to the Letter of Credit Fee
payable pursuant to clause (i) above, the Borrowers promise to pay to the
Issuing Lender for its own account without sharing by the other Lenders (A)
letter of credit fronting and negotiation fees of one-eighth percent (1/8%)
per annum on the average daily maximum amount available to be drawn under
outstanding Letters of Credit payable quarterly in arrears with the Letter
of Credit Fee, and (B) customary charges from time to time of the Issuing
Lender with respect to the issuance, amendment, transfer, administration,
cancellation and conversion of, and drawings under, such Letters of Credit
(collectively, the "Issuing Lender Fees").
3.6 CAPITAL ADEQUACY.
If any Lender has determined, after the date hereof, that the adoption or
the becoming effective of, or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof in the interpretation or administration of, any
applicable law, rule or regulation regarding capital adequacy, or compliance by
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital or assets as a consequence of its commitments or obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, effectiveness, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy), then, upon notice from
such Lender to the Parent, the Borrowers shall be obligated to pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties
hereto.
3.7 INABILITY TO DETERMINE INTEREST RATE.
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If prior to the first day of any Interest Period, the Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrowers) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, the Agent shall give telecopy or telephonic notice
thereof to the Parent and the Lenders as soon as practicable thereafter. If such
notice is given (a) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as Base Rate Loans and (b) any Loans that
were to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base Rate
Loans. Until such notice has been withdrawn by the Agent, no further Eurodollar
Loans shall be made or continued as such, nor shall the Borrowers have the right
to convert Base Rate Loans to Eurodollar Loans.
3.8 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Parent
and the Agent (which notice shall be withdrawn whenever such circumstances no
longer exist), (b) the commitment of such Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert a Base Rate Loan to
Eurodollar Loans shall forthwith be canceled and, until such time as it shall no
longer be unlawful for such Lender to make or maintain Eurodollar Loans, such
Lender shall then have a commitment only to make a Base Rate Loan when a
Eurodollar Loan is requested and (c) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrowers shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.11.
3.9 REQUIREMENTS OF LAW.
If, after the date hereof, the adoption of or any change in any Requirement
of Law or in the interpretation or application thereof applicable to any Lender,
or compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority, in each
case made subsequent to the Closing Date (or, if later, the date on which such
Lender becomes a Lender):
(a) shall subject such Lender to any tax of any kind whatsoever with
respect to any Letter of Credit, any Eurodollar Loans made by it or its
obligation to make Eurodollar Loans, or change the basis of taxation of
payments to such Lender in respect thereof (except for (i) Non-Excluded
Taxes covered by Section 3.10 (including Non-Excluded Taxes imposed solely
by reason of any failure of such Lender to comply with its obligations
under Section 3.10(b)) and (ii) changes in taxes measured by or imposed
upon the overall net income, or franchise tax (imposed in lieu of such net
income tax), of such Lender or its applicable lending office, branch, or
any affiliate thereof));
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(b) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(c) shall impose on such Lender any other condition (excluding any
tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Parent from such Lender,
through the Agent, in accordance herewith, the Borrowers shall be obligated to
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable,
provided that, in any such case, the Borrowers may elect to convert the
Eurodollar Loans made by such Lender hereunder to Base Rate Loans by giving the
Agent at least one Business Day's notice of such election in which case the
Borrowers shall promptly pay to such Lender, upon demand, without duplication,
such amounts, if any, as may be required pursuant to Section 3.11. If any
Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall provide prompt notice thereof to the Parent, through the
Agent, certifying (x) that one of the events described in this paragraph (a)
has occurred and describing in reasonable detail the nature of such event,
(y) as to the increased cost or reduced amount resulting from such event and
(z) as to the additional amount demanded by such Lender and a reasonably
detailed explanation of the calculation thereof. Such a certificate as to any
additional amounts payable pursuant to this subsection submitted by such
Lender, through the Agent, to the Parent shall be conclusive and binding on the
parties hereto in the absence of manifest error. This covenant shall survive
the termination of this Credit Agreement and the payment of the Loans and all
other amounts payable hereunder.
3.10 Taxes.
(a) Except as provided below in this subsection, all payments made by
the Borrowers under this Credit Agreement and any Notes shall be made free
and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any court, or
governmental body, agency or other official, excluding taxes measured by or
imposed upon the overall net income of any Lender or its applicable lending
office, or any branch or affiliate thereof, and all franchise taxes, branch
taxes, taxes on doing business or taxes on the overall capital or net worth
of any Lender or its applicable lending office, or any branch or affiliate
thereof, in each case imposed in lieu of net income taxes, imposed: (i) by
the jurisdiction under the laws of which such Lender, applicable lending
office, branch or affiliate is organized or is located, or in which its
principal executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by
reason of any connection between the jurisdiction imposing such tax and
such Lender,
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applicable lending office, branch or affiliate other than a connection
arising solely from such Lender having executed, delivered or performed its
obligations, or received payment under or enforced, this Credit Agreement
or any Notes. If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Agent or any Lender
hereunder or under any Notes, (A) the amounts so payable to the Agent or
such Lender shall be increased to the extent necessary to yield to the
Agent or such Lender (after payment of all Non-Excluded Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Credit Agreement and any Notes, provided, however, that
the Borrowers shall be entitled to deduct and withhold any Non-Excluded
Taxes and shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of America
or a state thereof if such Lender fails to comply with the requirements of
paragraph (b) of this subsection whenever any Non-Excluded Taxes are
payable by the Borrowers, and (B) as promptly as possible thereafter the
Borrowers shall send to the Agent for its own account or for the account of
such Lender, as the case may be, a certified copy of an original official
receipt received by one or more of the Borrowers showing payment thereof.
If the Borrowers fail to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the Borrowers shall
indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of
any such failure. The agreements in this subsection shall survive the
termination of this Credit Agreement and the payment of the Loans and all
other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(X)(i) on or before the date of any payment by the Borrowers
under this Credit Agreement or Notes to such Lender, deliver to the
Parent and the Agent (A) two (2) duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, certifying that it is entitled to
receive payments under this Credit Agreement and any Notes without
deduction or withholding of any United States federal income taxes and
(B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled to
an exemption from United States backup withholding tax;
(ii) deliver to the Parent and the Agent two (2) further
copies of any such form or certification on or before the date
that any such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a change in the
most recent form previously delivered by it to the Parent; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by
the Parent or the Agent; or
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(Y) in the case of any such Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (i) represent
to the Borrowers (for the benefit of the Borrowers and the Agent) that it
is not a bank within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, (ii) agree to furnish to the Parent on or before the date of
any payment by the Borrowers, with a copy to the Agent two (2) accurate and
complete original signed copies of Internal Revenue Service Form W-8, or
successor applicable form certifying to such Lender's legal entitlement at
the date of such certificate to an exemption from U.S. withholding tax
under the provisions of Section 881(c) of the Internal Revenue Code with
respect to payments to be made under this Credit Agreement and any Notes
(and to deliver to the Parent and the Agent two (2) further copies of such
form on or before the date it expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recently provided
form and, if necessary, obtain any extensions of time reasonably requested
by the Parent or the Agent for filing and completing such forms), and (iii)
agree, to the extent legally entitled to do so, upon reasonable request by
the Parent, to provide to the Parent (for the benefit of the Borrowers and
the Agent) such other forms as may be reasonably required in order to
establish the legal entitlement of such Lender to an exemption from
withholding with respect to payments under this Credit Agreement and any
Notes;
unless in any such case any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises the
Parent and the Agent. Each Person that shall become a Lender or a participant of
a Lender pursuant to subsection 11.3 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms, certifications and
statements required pursuant to this subsection, provided that in the case of a
participant of a Lender the obligations of such participant of a Lender pursuant
to this subsection (b) shall be determined as if the participant of a Lender
were a Lender except that such participant of a Lender shall furnish all such
required forms, certifications and statements to the Lender from which the
related participation shall have been purchased.
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3.11 INDEMNITY.
The Borrowers promise to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur (other
than through such Lender's gross negligence or willful misconduct) as a
consequence of (a) default by any of the Borrowers in making a borrowing of,
conversion into or continuation of Eurodollar Loans after notice has been given
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrowers in making any prepayment of a Eurodollar Loan
after notice thereof has been given in accordance with the provisions of this
Credit Agreement or (c) the making of a prepayment of Eurodollar Loans on a day
which is not the last day of Interest Period with respect thereto. With respect
to Eurodollar Loans, such indemnification may include an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
amount so prepaid, or not so borrowed, converted or continued, for the period
from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or, in the case of a
failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Eurodollar Loans provided for herein over (ii) the amount of
interest (as reasonably determined by such Lender) which would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. The covenants of
the Borrowers set forth in this Section 3.11 shall survive the termination of
this Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.12. PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) Loans. Each Extension of Credit in respect of the Term Loans,
Revolving Loans and LOC Obligations and payments of principal, interest and
fees (including Unused Fee and Letter of Credit Fee) on or in respect
thereof and each reduction in Commitments, relating thereto, and each
conversion or extension of such Loans and Obligations, shall be allocated
pro rata among the Lenders in accordance with the respective principal
amounts of their outstanding Revolving Loans and Participation Interests.
(b) Advances. Unless the Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount
that would constitute its ratable share of such borrowing available to the
Agent, the Agent may assume that such Lender is making such amount
available to the Agent, and the Agent may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. If such
amount is not made available to the Agent by such Lender within the time
period specified therefor hereunder, such Lender shall pay to the Agent, on
demand, such amount with interest thereon at a rate equal to the Federal
Funds Rate for the period until such Lender makes such amount immediately
available to the Agent. A certificate of the Agent submitted to any Lender
with respect to any amounts owing under this subsection shall be conclusive
in the absence of manifest error.
3.13 SHARING OF PAYMENTS.
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The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the
exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a
secured claim under Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured claim, received
by such Lender under any applicable bankruptcy, insolvency or other similar law
or otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a participation in such Loans, LOC Obligations
and other obligations in such amounts, and make such other adjustments from
time to time, as shall be equitable to the end that all Lenders share such
payment in accordance with their respective ratable shares as provided for in
this Credit Agreement. The Lenders further agree among themselves that if
payment to a Lender obtained by such Lender through the exercise of a right of
setoff, banker's lien, counterclaim or other event as aforesaid shall be
rescinded or must otherwise be restored, each Lender which shall have shared
the benefit of such payment shall, by repurchase of a participation theretofore
sold, return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each Lender whose payment shall have
been rescinded or otherwise restored. The Borrowers agree that any Lender so
purchasing such a participation may, to the fullest extent permitted by law,
exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such participation as fully as if such Lender
were a holder of such Loan, LOC Obligations or other obligation in the amount
of such participation. Except as otherwise expressly provided in this
Credit Agreement, if any Lender or the Agent shall fail to remit to the Agent
or any other Lender an amount payable by such Lender or the Agent to the Agent
or such other Lender pursuant to this Credit Agreement on the date when such
amount is due, such payments shall be made together with interest thereon for
each date from the date such amount is due until the date such amount is paid
to the Agent or such other Lender at a rate per annum equal to the Federal
Funds Rate. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section 3.13 applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Lenders under this Section 3.13 to share in the benefits of any
recovery on such secured claim.
3.14 PAYMENTS, COMPUTATIONS, ETC.
(a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Agent in dollars in immediately available funds,
without offset, deduction, counterclaim or withholding of any kind, at the
Agent's office specified in Section 11.1 not later than 2:00 p.m. (Charlotte,
North Carolina time) on the date when due. Payments received after such time
shall be deemed to have been received on the next succeeding Business Day. The
Agent may (but shall not be obligated to) debit the amount of any such payment
which is not made by such time to any ordinary deposit account of any of the
Borrowers maintained with the Agent (with notice to the Parent). The Borrowers
(or any of them) shall, at the time a payment is made under this Credit
Agreement, specify to the Agent the Loans, LOC Obligations, Fees, interest or
other amounts payable by the Borrowers hereunder to which such payment is to be
applied (and in the event that it fails so to specify, or if such application
would be inconsistent with the
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terms hereof, the Agent shall distribute such payment to the Lenders in such
manner as the Agent may determine to be appropriate in respect of obligations
owing by the Borrowers hereunder, subject to the terms of Section 3.12(a)). The
Agent will distribute such payments to such Lenders, if such payment is received
on or before 2:00 p.m. (Charlotte, North Carolina time) on a Business Day in
like funds as received prior to the end of such Business Day and otherwise the
Agent will distribute such payment to such Lenders on the next succeeding
Business Day. Whenever any payment hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for the period
of such extension), except that in the case of Eurodollar Loans, if the
extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Business
Day. Except as expressly provided otherwise herein, all computations of interest
and fees shall be made on the basis of actual number of days elapsed over a year
of 360 days, except with respect to computation of interest on Base Rate Loans
which (unless the Base Rate is determined by reference to the Federal Funds
Rate) shall be calculated based on a year of 365 or 366 days, as appropriate.
Interest shall accrue from and include the date of borrowing, but exclude the
date of payment.
(b) ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT. Notwithstanding any
other provisions of this Credit Agreement to the contrary, after the occurrence
and during the continuance of an Event of Default, all amounts collected or
received by the Agent or any Lender on account of the Obligations or any other
amounts outstanding under any of the Credit Documents shall be paid over or
delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs, fees and
expenses (including without limitation, reasonable attorneys' fees actually
incurred) of the Agent and each of the Lenders in connection with enforcing its
rights under the Credit Documents or otherwise with respect to the Obligations
owing to such Lender;
SECOND, to the payment of all fees, with the remainder, if any, to the
payment of all accrued interest on or in respect of the Obligations;
THIRD, to the payment of the outstanding principal amount of the
Obligations (including the payment or case collateralization of the outstanding
LOC Obligations);
FOURTH, to all other Obligations and other obligations which shall
have become due and payable under the Credit Documents or otherwise and not
repaid pursuant to clauses "FIRST" through "THIRD" above; and
FIFTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion
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that the then outstanding Obligations held by such Lender bears to the aggregate
then outstanding Obligations) of amounts available to be applied pursuant to
clauses "FIRST", "SECOND", "THIRD", and "FOURTH" above; and (iii) to the extent
that any amounts available for distribution pursuant to clause "THIRD" above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuing Lender for any drawings under such Letters
of Credit and (B) then, following the expiration or earlier cancellation of all
Letters of Credit, to all other obligations of the types described in clauses
"THIRD" and "FOURTH" above in the manner provided in this Section 3.14(b).
3.15 EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts evidencing each Loan
made by such Lender to the Borrowers from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Credit Agreement. Each Lender will make reasonable efforts to maintain the
accuracy of its account or accounts and to promptly update its account or
accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section 11.3(c)
hereof, and a subaccount for each Lender, in which Register and subaccounts
(taken together) shall be recorded (i) the amount, type and Interest Period of
each such Loan hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable to each Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder from or for the account of the
Borrowers and each Lender's share thereof. The Agent will make reasonable
efforts to maintain the accuracy of the subaccounts referred to in the preceding
sentence and to promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and subaccounts maintained
pursuant to subsection (b) of this Section 3.15 (and, if consistent with the
entries of the Agent, subsection (a)) shall be prima facie evidence of the
existence and amounts of the obligations of the Borrowers therein recorded;
provided, however, that the failure of any Lender or the Agent to maintain any
such account, such Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of the Borrowers to repay
the Loans made by such Lender in accordance with the terms hereof.
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SECTION 4
GUARANTY
4.1 THE GUARANTEE.
Each of the Guarantors hereby jointly and severally irrevocably guarantees
to each Lender, to each Affiliate of a Lender that enters into a Hedging
Agreement, and to the Agent as hereinafter provided the prompt payment of the
Credit Party Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, a mandatory cash collateralization or
otherwise) strictly in accordance with the terms thereof. The Guarantors hereby
further agree that if any of the Credit Party Obligations are not paid in full
when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as mandatory cash collateralization or otherwise), the Guarantors
will, jointly and severally, promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal
of any of the Credit Party Obligations, the same will be promptly paid in full
when due (whether at extended maturity, as a mandatory prepayment, by
acceleration or otherwise) in accordance with the terms of such extension or
renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents or Hedging Agreements, the obligations of each
Guarantor hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the Bankruptcy Code or any comparable provisions of any
applicable state law.
4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors under Section 4.1 hereof are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Credit Party Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 4.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that such Guarantor shall have no right of
subrogation, indemnity, reimbursement or contribution against any of the
Borrowers or any other Guarantor of the Credit Party Obligations for amounts
paid under this Guaranty until such time as the Lenders (and any Affiliates of
Lenders entering into Hedging Agreements) have been paid in full, all
Commitments under the Credit Agreement have been terminated and no Person or
Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received under
the Credit Documents or Hedging Agreements. Without limiting the generality of
the foregoing, it is agreed that, to the fullest extent permitted by law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
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(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of the
Credit Party Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any of the
Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements shall
be done or omitted;
(iii) The maturity of any of the Credit Party Obligations shall be
accelerated, or any of the Credit Party Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements shall
be waived or any other guarantee of any of the Credit Party Obligations or
any security therefor shall be released or exchanged in whole or in part or
otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any Lender or
Lenders as security for any of the Credit Party Obligations shall fail to
attach or be perfected; or
(v) any of the Credit Party Obligations shall be determined to be
void or voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents,
any Hedging Agreement or any other agreement or instrument referred to in the
Credit Documents or Hedging Agreements, or against any other Person under any
other guarantee of, or security for, any of the Credit Party Obligations.
4.3 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
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4.4 CERTAIN ADDITIONAL WAIVERS.
Without limiting the generality of the provisions of this Section 4, each
Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. Sections
26-7 through 26-9, inclusive, to the extent applicable. Each Guarantor further
agrees that such Guarantor shall have no right of recourse to security for the
Credit Party Obligations, except through the exercise of rights of subrogation
pursuant to Section 4.2 and through the exercise of rights of contribution
pursuant to Section 4.6.
4.5 REMEDIES.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Credit Party Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 hereof notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Credit Party
Obligations being deemed to have become automatically due and payable), the
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of said
Section 4.1.
4.6 RIGHTS OF CONTRIBUTION.
The Guarantors hereby agree, as among themselves, that if any Guarantor
shall become an Excess Funding Guarantor (as defined below), each other
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
succeeding provisions of this Section 4.6), pay to such Excess Funding Guarantor
an amount equal to such Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.6 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
hereof, (i) "Excess Funding Guarantor" shall mean, in respect of any obligations
arising under the other provisions of this Section 4 (hereafter, the "Guaranteed
Obligations"), a Guarantor that has paid an amount in excess of its Pro Rata
Share of the Guaranteed Obligations; (ii) "Excess Payment" shall mean, in
respect of any Guaranteed Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations; and
(iii) "Pro Rata Share", for the purposes of this Section 4.6, shall mean, for
any Guarantor, the ratio (expressed as a percentage) or (a) the amount by which
the aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Guarantor hereunder) to (b) the amount by which the
aggregate present fair saleable value of all assets and other properties of the
Borrowers and all of the Guarantors exceeds the amount of all of the debts and
liabilities
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(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of the Borrowers and the Guarantors hereunder) of
the Borrowers and all of the Guarantors, all as of the Closing Date (if any
Guarantor becomes a party hereto subsequent to the Closing Date, then for the
purposes of this Section 4.6 such subsequent Guarantor shall be deemed to have
been a Guarantor as of the Closing Date and the information pertaining to, and
only pertaining to, such Guarantor as of the date such Guarantor became a
Guarantor shall be deemed true as of the Closing Date).
4.7 CONTINUING GUARANTEE.
The guarantee in this Section 4 is a continuing guarantee, and shall apply
to all Credit Party Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 CONDITIONS TO CLOSING.
This Credit Agreement shall become effective, and the initial Extensions
of Credit may be made, upon the satisfaction of the following conditions
precedent:
(a) Execution of Credit Agreement and Credit Documents. Receipt of (i)
multiple counterparts of this Credit Agreement, and (ii) a Revolving Note
for each Lender, a Term Loan Note for each Lender and a Swingline Note for
the Swingline Lender, executed by a duly authorized officer of each party
thereto and in each case conforming to the requirements of this Credit
Agreement.
(b) Financial Information. Receipt of financial information regarding
the Parent and its Subsidiaries, as may be requested by, and in form and
substance satisfactory to the Agent, including without limitation, (i) the
consolidated financial statements of the Parent and its Subsidiaries for
the fiscal years 1997 and 1998, including balance sheets and income and
cash flow statements, audited by independent certified public accountants
of recognized national standing and containing an unqualified opinion of
such firm that such statements present fairly, in all material respects,
the consolidated financial position and results of operations of the Parent
and its Subsidiaries, and are prepared in conformity with GAAP, (ii) the
unaudited interim financial statements of the Parent and its Subsidiaries
for the trailing twelve month period ended December 31, 1998.
(c) Absence of Legal Proceedings. The absence of any action, suit,
investigation or proceeding pending in any court or before any arbitrator
or governmental instrumentality which could reasonably be expected to have
a Material Adverse Effect on the Parent or any of its Subsidiaries or, to
the best of knowledge of the Credit Parties, on Allright or any of its
Subsidiaries.
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(d) Legal Opinions. Receipt of multiple counterparts of opinions of
counsel for the Credit Parties relating to the Credit Documents and the
transactions contemplated herein, in form and substance satisfactory to the
Agent and the Required Lenders.
(e) Allright Merger. (i) The Allright Merger has been consummated and
was consummated in accordance with the terms of the Allright Merger
Documents and in compliance with applicable law and regulatory approvals
and (ii) the Allright Merger Documents were not altered, amended, or
otherwise changed or supplemented or any condition therein waived without
the prior written consent of the Agent.
(f) Financial Information of Allright. Receipt by Agent of financial
information regarding Allright in form and substance satisfactory to Agent,
including without limitation, (i) the consolidated financial statements of
Allright as of September 30, 1998, including balance sheets and income and
cash flow statements audited by independent certified accountants of
recognized national standing reasonably acceptable to Agent and containing
an unqualified opinion of such firm that such statements present fairly, in
all material respects, the consolidated financial position and results of
operations of Allright, and are prepared in conformity with GAAP and (ii)
the unaudited interim financial statements of Allright for the trailing
twelve month period ended December 31, 1998.
(g) Corporate Documents. Receipt of the following (or their
equivalent) for each of the Credit Parties;
(i) Articles of Incorporation. Copies of the articles of
incorporation or charter documents certified to be true and complete
as of a recent date by the appropriate governmental authority of the
state of its incorporation.
(ii) Resolutions. Copies of resolutions of the Board of Directors
approving and adopting the respective Credit Documents, the
transactions contemplated therein and authorizing execution and
delivery thereof, certified by a secretary or assistant secretary as
of the Closing Date to be true and correct and in force and effect as
of such date.
(iii) Bylaws. Copies of the bylaws certified by a secretary or
assistant secretary as of the Closing Date to be true and correct and
in force and effect as of such date.
(iv) Good Standing. Copies, where applicable, of certificates of
good standing, existence or its equivalent certified as of a recent
date by the appropriate governmental authorities of the state of
incorporation and each other state in which the failure to so qualify
and be in good standing would have a material adverse effect on the
business or operations in such state.
(h) Material Adverse Effect. There shall not have occurred a change
since September 30, 1998, that has had or could reasonably be expected to
have a Material Adverse Effect (including matters related to litigation,
tax, accounting, labor, insurance
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and pension liabilities) on the Parent or any of its Subsidiaries, or, to
the best of knowledge of the Credit Parties, on Allright or any of its
Subsidiaries, or any of the Lenders.
(i) Other Indebtedness. Receipt by the Agent of evidence that none of
the Credit Parties have any borrowed money Indebtedness other than (i) the
Indebtedness under the Credit Documents and (ii) other indebtedness
disclosed on Schedule 8.1 attached hereto.
(j) Officer's Certificate. The Agent shall have received a
certificate or certificates executed by the chief financial officer of the
Parent as of the Closing Date stating that (A) the Parent and each of the
Parent's Subsidiaries (after giving effect to the Acquisition) are in
compliance with all existing financial obligations in which the aggregate
outstanding amount of such Indebtedness is in excess of $5,000,000, (B) all
governmental, shareholder and third party consents and approvals, if any,
with respect to the Credit Documents and the transactions contemplated
thereby have been obtained, (C) no action, suit, investigation or
proceeding is pending or threatened in any court or before any arbitrator
or governmental instrumentality that purports to effect the Parent, any of
the Parent's Subsidiaries or any transaction contemplated by the Credit
Documents which, if adversely determined, might be reasonably expected to
have a Material Adverse Effect, and (D) immediately after giving effect to
this Credit Agreement, the other Credit Documents and all the transactions
contemplated herein or therein to occur on such date, (1) the Parent and
each of the Parent's Subsidiaries is Solvent, (2) no Default or Event of
Default exists, (3) all representations and warranties contained herein and
in the other Credit Documents are true and correct in all material
respects, and (4) the Parent is in compliance with each of the financial
covenants set forth in Section 7.9.
(k) Year 2000 Compliance. Receipt by the Agent and the Lenders of
evidence that (i) the Parent and its Subsidiaries are taking all necessary
and appropriate steps to ascertain the extent of, and to quantify and
successfully address, business and financial risks facing the Parent and
its Subsidiaries as a result of what is commonly referred to as the 'Year
2000 Problem' (i.e., the inability of certain computer applications to
recognize correctly and perform date-sensitive functions involving certain
dates prior to and after December 31, 1999), including risks resulting from
the failure of key vendors and customers of the Parent and its Subsidiaries
to successfully address the Year 2000 problem, and (ii) the Parent's and
its Subsidiaries' material computer applications and those of its key
vendors and customers will, on a timely basis, adequately address the Year
2000 problem in all material respects.
(l) Existing Credit Agreement. Receipt by the Agent of satisfactory
evidence of the repayment of all loans and obligations under the Existing
Credit Agreement and the termination of the commitments thereunder.
(m) Fees. Receipt of all fees, if any, owing pursuant to Section 3.5
or otherwise.
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(n) Due Diligence. Completion by Agent of all due diligence with
respect to the Parent and its Subsidiaries and Allright and its
Subsidiaries in scope and determination satisfactory to Agent in its sole
discretion.
(o) Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Credit Agreement
shall be reasonably satisfactory in form and substance to the Agent and the
Required Lenders.
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligation of each Lender to make any Extension of Credit hereunder
(including the initial Extension of Credit to be made hereunder) is subject to
the satisfaction of the following conditions precedent on the date of making
such Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Credit Parties herein or in any other Credit
Documents or which are contained in any certificate furnished at any
time under or in connection herewith shall be true and correct in all
material respects on and as of the date of such Extension of Credit as if
made on and as of such date (except for those which expressly relate to an
earlier date).
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date or after giving effect
to the Extension of Credit to be made on such date unless such Default or
Event of Default shall have been waived in accordance with this Credit
Agreement.
(c) No Material Adverse Effect. No circumstances, events or
conditions shall have occurred since September 30, 1998, which would have a
Material Adverse Effect.
Each request for Extension of Credit (including extensions and
conversions) and each acceptance by any of the Borrowers of an Extension of
Credit (including extensions and conversions) shall be deemed to constitute a
representation and warranty by each of the Borrowers as of the date of such
Extension of Credit that the applicable conditions in paragraphs (a), (b) and
(c) of this subsection have been satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make
Extensions of Credit herein provided for, each Credit Party hereby represents
and warrants to the Agent and to each Lender that:
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6.1 FINANCIAL CONDITION.
The financial statements delivered to the Agent pursuant to Section 5.1(b)
and Section 5.1(f) have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby, are complete and correct in all
material respects and present fairly the financial condition and results from
operations of the entities and for the periods specified, subject in the case of
interim company-prepared statements to normal year-end adjustments.
6.2 NO CHANGES OR RESTRICTED PAYMENTS.
Since the date of the audited financial statements referenced in Section
6.1, (a) there has been no circumstance, development or event relating to or
affecting the Parent or any of its Subsidiaries which has had or would be
reasonably expected to have a Material Adverse Effect and (b) except as
permitted herein, no Restricted Payments have been made or declared or are
contemplated by the Parent or any of its Subsidiaries.
6.3 ORGANIZATION; EXISTENCE; COMPLIANCE WITH LAW.
The Parent and each of its Subsidiaries (a) is a corporation duly
organized, validly existing in good standing under the laws of the jurisdiction
of its organization, (b) has the corporate or other necessary power and
authority, and the legal right to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not, in the aggregate, have a Material
Adverse Effect, and (d) is in compliance with all Requirements of Law, except to
the extent that the failure to comply therewith would not, in the aggregate, be
reasonably expected to have a Material Adverse Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each Credit Party has the corporate or other necessary power and authority,
and the legal right, to make, deliver and perform the Credit Documents to which
it is a party and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of the Credit Documents to which it is
a party. No consent or authorization of, filing with, notice to or other act by
or in respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery or
performance of any Credit Documents by any Credit Party (other than consents,
authorizations, notices and filings described in Schedule 6.4, all of which have
been obtained or made or have the status described in such Schedule 6.4) or with
the validity or enforceability of any Credit Document against such Credit Party
(except such filings as are necessary in connection with the perfection of the
Liens created by such Credit Documents). Each Credit Document to which it is a
party constitutes a legal, valid and binding obligation of each Credit Party
enforceable against such Credit Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
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6.5 NO LEGAL BAR.
The execution, delivery and performance of the Credit Documents, the
borrowings hereunder and the use of the Extensions of Credit will not violate
any Requirement of Law or any Contractual Obligation of any Credit Party or any
of its Subsidiaries (except those as to which waivers or consents have been
obtained, and will not result in, or require, the creation or imposition of any
Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or Contractual Obligation other than the Liens arising under
or contemplated in connection with the Credit Documents). None of the Credit
Parties nor any of their Subsidiaries are in default under or with respect to
any of their Contractual Obligations in any respect which would reasonably be
expected to have a Material Adverse Effect.
6.6 NO MATERIAL LITIGATION.
No claim, litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of any
Credit Party, threatened by or against, the Parent or any of its Subsidiaries or
against any of their respective properties or revenues which (a) relate to the
Credit Documents or any of the transactions contemplated hereby or thereby, or
(b) if adversely determined, would reasonably be expected to have a Material
Adverse Effect. Except as disclosed on Schedule 6.6, there are no actions, suits
or legal, equitable, arbitration or administrative proceedings, pending or, to
the knowledge of the Parent or any of its Subsidiaries, threatened by or against
the Parent or any of its Subsidiaries or against any of their respective
properties or revenues which individually or in the aggregate, is reasonably
expected to have a Material Adverse Effect.
6.7 NO DEFAULT.
No Default or Event of Default has occurred and is continuing.
6.8 OWNERSHIP OF PROPERTY; LIENS.
The Parent and each of its Subsidiaries has good record and marketable
title in fee simple to, or a valid leasehold interest in, all its material real
property, and good title to, or a valid leasehold interest in, all its other
material property, and none of such property is subject to any Lien, except for
Permitted Liens.
6.9 INTELLECTUAL PROPERTY.
The Parent and each of its Subsidiaries owns, or has the legal right to
use, all United States trademarks, tradenames, copyrights, technology, know-how
and processes, if any, necessary for each of them to conduct its business as
currently conducted (the "Intellectual Property") except for those the failure
to own or have such legal right to use would not be reasonably expected to have
a Material Adverse Effect. No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does any
Credit Party know of any such claim, and the use of such Intellectual Property
by the Parent or any of its Subsidiaries does not infringe on the rights of any
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Person, except for such claims and infringements that in the aggregate, would
not be reasonably expected to have a Material Adverse Effect.
6.10 No Burdensome Restrictions.
No Requirement of Law or Contractual Obligation of the Parent or any of its
Subsidiaries would be reasonably expected to have a Material Adverse Effect.
6.11 Taxes.
The Parent and each of its Subsidiaries (a) has filed or caused to be filed
all United States federal income tax returns and all other material tax returns
which, to the best knowledge of the Credit Parties, are required to be filed and
(b) has paid (i) all taxes shown to be due and payable on said returns, (ii) all
taxes shown to be due and payable on any assessments of which it has received
notice made against it or any of its property and (c) all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority
(other than any (x) taxes, fees or other charges with respect to which the
failure to pay, in the aggregate, would not have a Material Adverse Effect or
(y) taxes, fees or other charges the amount or validity of which are currently
being contested and with respect to which reserves in conformity with GAAP have
been provided on the books of such Person), and no tax Lien has been filed, and,
to the best knowledge of the Credit Parties, no claim is being asserted, with
respect to any such tax, fee or other charge.
6.12 ERISA
Except as described on Schedule 6.12 or which would not reasonably be
expected to have a Material Adverse Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred,
and, to the best knowledge of the Credit Parties, no event or condition has
occurred or exists as a result of which any ERISA Event could reasonably be
expected to occur, with respect to any Plan; (ii) no "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section
412 of the Code, whether or not waived, has occurred with respect to any
Plan; (iii) each Plan has been maintained, operated, and funded in
compliance with its own terms and in material compliance with the
provisions of ERISA, the Code, and any other applicable federal or state
laws; and (iv) no lien in favor of the PBGC or a Plan has arisen or is
reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under each
Single Employer Plan, as of the last annual valuation date prior to the
date on which this representation is made or deemed made (determined, in
each case, in accordance with Financial Accounting Standards Board
Statement 87, utilizing the actuarial assumptions used in such Plan's most
recent actuarial valuation report), did not exceed as of such valuation
date the fair market value of the assets of such Plan.
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(c) Neither the Parent, nor any of its Subsidiaries nor any
ERISA Affiliate has incurred, or, to the best knowledge of the Credit
Parties, could be reasonably expected to incur, any withdrawal liability
under ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither
the Parent, nor any of its Subsidiaries nor any ERISA Affiliate would
become subject to any withdrawal liability under ERISA if the Parent, any
of its Subsidiaries or any ERISA Affiliate were to withdraw completely from
all Multiemployer Plans and Multiple Employer Plans as of the valuation
date most closely preceding the date on which this representation is made
or deemed made. Neither the Parent, nor any of its Subsidiaries nor any
ERISA Affiliate has received any notification that any Multiemployer Plan
is in reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no Multiemployer
Plan is, to the best knowledge of the Credit Parties, reasonably expected
to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
has occurred with respect to a Plan which has subjected or may subject the
Parent, any of its Subsidiaries or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which the
Parent, any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(e) Neither the Parent, nor any of its Subsidiaries, nor any
ERISA Affiliates has any material liability with respect to "expected
post-retirement benefit obligations" within the meaning of the Financial
Accounting Standards Board Statement 106. Each Plan which is a welfare plan
(as defined in Section 3(1) of ERISA) to which Sections 601-609 of ERISA
and Section 4980B of the Code apply has been administered in compliance in
all material respects of such sections.
6.13 Governmental Regulations, Etc.
(a) No part of the proceeds of the Loans will be used, directly
or indirectly, for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation U, or for the purpose of purchasing or
carrying or trading in any securities. If requested by any Lender or the
Agent, the Borrowers will furnish to the Agent and each Lender a statement
to the foregoing effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U. No indebtedness being reduced or retired
out of the proceeds of the Loans was or will be incurred for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U
or any "margin security" within the meaning of Regulation T. None of the
transactions contemplated by this Credit Agreement (including, without
limitation, the direct or indirect use of the proceeds of the Loans) will
violate or result in a violation of the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, or regulations issued
pursuant thereto, or Regulation T, U or X.
(b) Neither the Parent, nor any of its Subsidiaries, is subject
to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment
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Company Act of 1940, each as amended. In addition, neither the Parent, nor
any of its Subsidiaries, is (i) an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as
amended, and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding
company", within the meaning of the Public Utility Holding Company Act of
1935, as amended.
(c) The Parent and each of its Subsidiaries have obtained all
material licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its respective Property and to the conduct of
its business.
(d) Neither the Parent, nor any of its Subsidiaries are in violation
of any applicable statute, regulation or ordinance of the United States of
America, or of any state, city, town, municipality, county or any other
jurisdiction, or of any agency thereof (including without limitation,
environmental laws and regulations), which violation could reasonably be
expected to have a Material Adverse Effect.
(e) The Parent and each of its Subsidiaries are current with all
material reports and documents, if any, required to be filed with any state
or federal securities commission or similar agency and is in full
compliance in all material respects with all applicable rules and
regulations of such commissions.
6.14 PURPOSE OF EXTENSIONS OF CREDIT.
The Loans will be used solely (a) to refinance existing Funded Debt, (b)
to finance the existing Funding Debt of Allright and to pay transactions costs
of up to $30,000,000 with respect to the Allright Merger, (c) to finance
working capital, and (d) for other general corporate purposes. The Letters of
Credit shall be used only for the purposes set forth in Section 2.3(a).
6.15 ENVIRONMENTAL MATTERS.
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) Each of the facilities and properties owned, leased or operated
by the Parent or any of its Subsidiaries (the "Properties") and all
operations at the Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the Properties or the businesses operated by the Parent or any
of its Subsidiaries (the "Businesses"), and there are no conditions
relating to the Businesses or Properties that could give rise to liability
under any applicable Environmental Laws.
(b) None of the Properties contains, or has previously contained, any
Materials of Environmental Concern at, on or under the Properties in
amounts or concentrations that constitute or constituted a violation of, or
could give rise to liability under, Environmental Laws.
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(c) Neither the Parent nor any of its Subsidiaries has received any
written or verbal notice of, or inquiry from any Governmental Authority
regarding, any 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 Businesses,
nor does the Parent or any of its Subsidiaries have knowledge or reason to
believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed
of at, on or under any of the Properties or any other location, in each
case by or on behalf of the Parent or any of its Subsidiaries in violation
of, or in a manner that would reasonably likely to give rise to liability
under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the best knowledge of the Credit Parties, threatened,
under any Environmental Law to which the Parent or any of its Subsidiaries
is or will be named as a party, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental
Law with respect to the Parent or any of its Subsidiaries, the Properties
or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations (including, without limitation, disposal) of the Parent
or any of its Subsidiaries in connection with the Properties or otherwise
in connection with the Businesses, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws.
6.16 LABOR MATTERS.
As of the Closing Date, there are no strikes, lockouts or slowdowns
against the Parent or any of its Subsidiaries pending or, to the knowledge of
the Parent, threatened. The hours worked by and payments made to employees of
the Parent and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters, except where any such violations, individually and
in the aggregate, would not be reasonably likely to result in a Material
Adverse Effect. All material payments due from the Parent or any of its
Subsidiaries, or for which any claim may be made against the Parent or any of
its Subsidiaries, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of
the Parent or such Subsidiary except where the failure to make such payments,
would not be reasonably likely to result in a Material Adverse Effect. The
consummation of the Credit Agreement or the Allright Merger will not give rise
to any right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which the Parent or any of its
Subsidiaries are bound that would be reasonably likely to result in a Material
Adverse Effect
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6.17 YEAR 2000 COMPLIANCE.
Each Credit Party has (i) initiated a review and assessment of all areas
within its and each of its Subsidiaries' business and operations (including
those affected by suppliers, vendors and customers) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by such Credit Party or any of its Subsidiaries (or suppliers,
vendors and customers) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), (ii) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with the timetable. Based on the foregoing, each Credit Party
believes that all computer applications (including those of its suppliers,
vendors and customers) that are material to its and any of its Subsidiaries'
business and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 compliant"), except to the extent that a failure
to do so could not reasonably be expected to have Material Adverse Effect.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party covenants and agrees that on the Closing Date, and so
long as this Credit Agreement is in effect and until the Commitments have been
terminated, no Obligations remain outstanding and all amounts owing hereunder or
in connection herewith have been paid in full, the Parent and each of its
Subsidiaries shall:
7.1 FINANCIAL STATEMENTS.
Furnish, or cause to be furnished, to each of the Lenders:
(a) Audited Financial Statements. As soon as available, but in any
event within 90 days after the end of each fiscal year, an audited
consolidated balance sheet of the Parent and its Subsidiaries as of the end
of the fiscal year and the related consolidated statements of income,
retained earnings, shareholders' equity and cash flows for the year,
audited by independent certified public accountants of nationally
recognized standing reasonably acceptable to the Required Lenders, setting
forth in each case in comparative form the figures for the previous year,
reported without a "going concern" or like qualification or exception, or
qualification indicating that the scope of the audit was inadequate to
permit such independent certified public accountants to certify such
financial statements without such qualification, together with a schedule
setting forth the unaudited consolidating balance sheet and the related
consolidating statements of income, retained earnings, shareholders equity
and cash flows for the Parent and its Subsidiaries in a format and with
detail sufficient to calculate the applicable financial covenants.
(b) Company-Prepared Financial Statements. As soon as available, but
in any event
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(i) within 45 days after the end of each fiscal quarter, a
company-prepared consolidated and (with respect to the fourth fiscal
quarter only) consolidating balance sheet of the Parent and its
Subsidiaries as of the end of such quarter and related
company-prepared consolidated and (with respect to the fourth fiscal
quarter only) consolidating statements of income, retained earnings,
shareholders' equity and cash flows for such period and for the fiscal
year to date in a format and with detail satisfactory to the Agent and
sufficient to calculate the applicable financial covenants; and
(ii) within 30 days after the end of each fiscal year, an annual
business plan and budget for the Parent and its Subsidiaries,
containing, among other things, pro forma financial statements for
such fiscal year,
in each case setting forth in comparative form the consolidated (and
consolidating, if applicable) figures for the corresponding period or
periods of the preceding fiscal year or the portion of the fiscal year
ending with such period, as applicable, in each case subject to normal
recurring year-end audit adjustments.
All such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein) and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change in the application of accounting principles as provided in
Section 1.3.
7.2 CERTIFICATES; OTHER INFORMATION.
Furnish, or cause to be furnished, to the Agent for distribution to the
Lenders:
(a) Accountant's Certificate and Reports. Concurrently with the
delivery of the financial statements referred to in subsection 7.1(a)
above, a certificate of the independent certified public accountants
reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate.
(b) Officer's Certificate. Concurrently with the delivery of the
financial statements referred to in Sections 7.1(a) and 7.1(b) above, a
certificate of a Responsible Officer stating that, to the best of such
Responsible Officer's knowledge and belief, (i) the financial statements
fairly present in all material respects the financial condition of the
parties covered by such financial statements, (ii) during such period the
Parent and its Subsidiaries have observed or performed in all material
respects the covenants and other agreements hereunder and under the other
Credit Documents relating to them, and satisfied in all material respects
the conditions, contained in this Credit Agreement to be observed,
performed or satisfied by them, (iii) such Responsible Officer has obtained
no knowledge of any Default or Event of Default except as specified in such
certificate and (iv) at the end of each fiscal quarter, such certificate
shall include the calculations
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required to indicate compliance with Section 7.9. A form of Officer's
Certificate is attached as Exhibit 7.2(b).
(c) Accountants' Reports. Promptly upon receipt, a copy of any final (as
distinguished from a preliminary or discussion draft) "management letter" or
other similar report submitted by independent accountants or financial
consultants to the Parent or any of its Subsidiaries in connection with any
annual, interim or special audit.
(d) Public Information. Within thirty days after the same are sent,
copies of all reports (other than those otherwise provided pursuant to
subsection 7.1) and other financial information which the Parent or any of its
Subsidiaries sends to its public stockholders, and within thirty days after the
same are filed, copies of all financial statements and non-confidential reports
which the Parent or any of its Subsidiaries may make to, or file with, the
Securities and Exchange Commission or any successor or analogous Governmental
Authority.
(e) Other Information. Promptly, such additional financial and other
information as the Agent, at the request of any Lender, may from time to time
reasonably request.
7.3 NOTICES.
Give notice to the Agent (which shall promptly transmit such notice to each
Lender) of:
(a) Defaults. Immediately (and in any event within two (2) Business Days)
after any Credit Party knows or has reason to know thereof, the occurrence of
any Default or Event of Default.
(b) Contractual Obligations. Promptly, the initiation of any default or
event of default under any Contractual Obligation of the Parent or any of its
Subsidiaries which would reasonably be expected to have a Material Adverse
Effect.
(c) Legal Proceedings. Promptly, any litigation, or any investigation or
proceeding (including without limitation, any environmental proceeding) known
to the Parent or any of its Subsidiaries, or any material development in
respect thereof, affecting the Parent or any of its Subsidiaries which, if
adversely determined, would reasonably be expected to have a Material Adverse
Effect.
(d) ERISA. Promptly, after any Responsible Officer of any Credit Party
knows or has reason to know of (i) any event or condition, including, but not
limited to, any Reportable Event, that constitutes, or might reasonably lead
to, an ERISA Event; (ii) with respect to any Multiemployer Plan, the receipt of
notice as prescribed in ERISA or otherwise of any withdrawal liability assessed
against any of their ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both within the meaning
of Title IV of ERISA); (iii) the failure to make full payment on or before the
due date (including extensions) thereof of all amounts which the Parent or any
of its Subsidiaries or any ERISA Affiliate are required to contribute to each
Plan
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pursuant to its terms and as required to meet the minimum funding standard
set forth in ERISA and the Code with respect; or (iv) any change in the
funding status of any Plan that reasonably could be expected to have a
Material Adverse Effect; together with a description of any such event or
condition or a copy of any such notice and a statement by the chief
financial officer of the Credit Parties briefly setting forth the details
regarding such event, condition, or notice, and the action, if any, which
has been or is being taken or is proposed to be taken by the Credit Parties
with respect thereto. Promptly upon request, the Parent or any of its
Subsidiaries shall furnish the Agent and the Lenders with such additional
information concerning any Plan as may be reasonably requested, including,
but not limited to, copies of each annual report/return (Form 5500 series),
as well as all schedules and attachments thereto required to be filed with
the Department of Labor and/or the Internal Revenue Service pursuant to
ERISA and the Code, respectively, for each "plan year" (within the meaning
of Section 3(39) of ERISA).
(e) Other. Promptly, any other development or event which a Responsible
Officer determines could reasonably be expected to have a Material Adverse
Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Credit Parties propose to take with respect
thereto.
7.4 PAYMENT OF OBLIGATIONS.
Pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, in accordance with prudent business
practice (subject, where applicable, to specified grace periods) all material
obligations of the Parent or any of its Subsidiaries of whatever nature
(including without limitation all taxes, assessments and governmental charges
or levies) and any additional costs that are imposed as a result of any failure
to so pay, discharge or otherwise satisfy such obligations, except when the
amount or validity of such obligations and costs is currently being contested
in good faith by appropriate proceedings and reserves, if applicable, in
conformity with GAAP with respect thereto have been provided on the books of
the Parent or any of its Subsidiaries, as the case may be or except where the
failure to so pay, discharge or contest could not be reasonably expected to
have a Material Adverse Effect.
7.5 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
Continue to engage in business of the same general type as now conducted
by it on the date hereof and preserve, renew and keep in full force and effect
its corporate existence and take all reasonable action to maintain all material
rights, privileges, licenses and franchises necessary or desirable in the
normal conduct of its business; comply with all Contractual Obligations and
Requirements of Law applicable to it except to the extent that failure to
comply therewith would not, in the aggregate, have a Material Adverse Effect.
7.6 MAINTENANCE OF PROPERTY; INSURANCE.
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Keep all material property useful and necessary in its business in
reasonably good working order and condition (ordinary wear and tear excepted);
maintain with financially sound and reputable insurance companies casualty,
liability and other such insurance (which may include plans of self-insurance)
with such coverage and deductibles, and in such amounts as may be consistent
with prudent business practice and in any event consistent with normal industry
practice (except to any greater extent as may be required by the terms of any of
the other Credit Documents); and furnish to the Agent, upon written request,
full information as to the insurance carried.
7.7 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Keep proper books of records and accounts in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its businesses and activities; and
permit, during regular business hours and upon reasonable notice by the Agent,
the Agent (and, during the continuance of any Event of Default, any Lender) to
visit and inspect any of its properties and examine and make abstracts
(including photocopies) from any of its books and records (other than materials
protected by the attorney-client privilege and materials which the Credit
Parties may not disclose without violation of a confidentiality obligation
binding upon them) at any reasonable time, and to discuss the business,
operations, properties an financial and other condition of the Parent and any
of is Subsidiaries with officers and employees of the Parent and any of its
Subsidiaries and with their independent certified public accountants. The cost
of the inspection referred to in the preceding sentence shall be for the account
of the Lenders, unless an Event of Default has occurred and is continuing, in
which case the cost of such inspection shall be for the account of the Credit
Parties.
7.8 ENVIRONMENTAL LAWS.
(a) Comply in all material respects with, and take reasonable actions
to ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain and
comply in all material respects with and maintain, and take reasonable
actions to ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable
Environmental Laws except to the extent that failure to do so would not
reasonably be expected to have a Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities regarding
Environmental Laws except to the extent that the same are being contested
in good faith by appropriate proceedings and the failure to do or the
pendency of such proceedings would not reasonable be expected to have a
Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Agent and the Lenders, and
their respective employees, agents, officers and directors, from and
against any and all
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claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of, noncompliance with
or liability under, any Environmental Law applicable to the operations of the
Parent or any of its Subsidiaries or the Properties, or any orders,
requirements or demands of Governmental Authorities related thereto, including,
without limitation, reasonable attorney's and consultant's fees, investigation
and laboratory fees, response costs, court costs and litigation expenses, except
to the extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor. The
agreements in this paragraph shall survive repayment of the Loans and all other
amounts payable hereunder, and termination of the Commitments.
7.9 FINANCIAL COVENANTS.
(a) Leverage Ratio. There shall be maintained with respect to the
Parent and its Subsidiaries as of the end of each fiscal quarter to occur
during the periods shown, a Leverage Ratio of not greater than:
Closing Date through September 29, 1999 4.0 to 1.0
September 30, 1999 through September 29, 2000 3.5 to 1.0
September 30, 2000 and thereafter 3.0 to 1.0
(b) Senior Leverage Ratio. There shall be maintained with respect to
the Parent and its Subsidiaries as of the end of each fiscal quarter to
occur during the periods shown, a Senior Leverage Ratio, of not greater
than:
Closing Date through September 29, 1999 3.5 to 1.0
September 30, 1999 and thereafter 3.0 to 1.0
(c) Fixed Charge Coverage Ratio. There shall be maintained with
respect to the Parent and its Subsidiaries as of the end of each fiscal
quarter a Fixed Charge Coverage Ratio of at least 1.05 to 1.0.
(d) Net Worth. The Net Worth shall at all times (after giving effect
to the issuance of additional capital stock in connection with the Allright
Merger) be greater than or equal to $320,000,000, increased by the sum of
(i) on a cumulative basis as of the end of each fiscal quarter of the
Parent, commencing with the fiscal quarter ending March 31, 1999, an amount
equal to 50% of Net Income (to the extent positive) for the fiscal quarter
then ended plus (ii) an amount equal to the 100% of the Net Cash Proceeds
from any Equity Transaction occurring after the Closing Date.
7.10 USE OF PROCEEDS.
Extensions of Credit will be used solely for the purposes provided in Section
6.14.
7.11 ADDITIONAL CREDIT PARTIES.
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If any Domestic Subsidiary of the Parent which is not a Guarantor hereunder
(the "Non-Guarantor Subsidiary") shall at any time own assets which constitute
more than one-half of one percent (1/2%) of the consolidated total assets of the
Parent and its Subsidiaries, then the Parent will promptly notify the Agent
thereof and promptly cause such Non-Guarantor Subsidiary to become a "Guarantor"
hereunder by way of execution of a Joinder Agreement in substantially the same
form as Exhibit 7.11. The delivery of the Joinder Agreement shall be accompanied
by the delivery of such other documentation as the Agent may reasonably request
in connection with the foregoing, including, without limitation, certified
resolutions and other organizational and authorizing documents of such Person
and favorable opinions of counsel to such Person (which shall cover, among other
things, the legality, validity, binding effect and enforceability of the
documentation referred to above), all in form, content and scope reasonably
satisfactory to the Agent. Notwithstanding the foregoing, the PS Subsidiary
shall not be required to become a Guarantor pursuant to this Section 7.11 so
long as the only assets of the PS Subsidiary are the subordinated notes issued
to the PS Subsidiary by the Parent.
7.12 SUBSIDIARIES.
Set forth on Schedule 7.12 is a complete and accurate list of all
Subsidiaries of the Parent (both direct and indirect). The Parent shall,
directly or indirectly, own at all times the capital stock of each of its
Subsidiaries in the percentage as set forth on Schedule 7.12 (or such greater
percentage as may be hereafter acquired by the Parent to the extent permitted
hereunder).
7.13 INTEREST RATE PROTECTION AGREEMENT.
The Borrowers shall, on or before June 30, 1999, enter into interest rate
protection agreements protecting against fluctuations in interest rates as to
which the material terms are reasonably satisfactory to the Agent, which
agreements shall provide for coverage in a principal amount of at least
$100,000,000 for a duration of at least four years; provided, however, that the
Borrowers shall not have any obligation to keep such interest rate protection
agreements in place after repayment in full of the Term Loans.
7.15 YEAR 2000 COMPLIANCE.
The Credit Parties will promptly notify the Agent in the event any Credit
Party discovers or determines that any computer application (including those of
its suppliers, vendors and customers) that is material to its or any of its
Subsidiaries' business and operations will not be Year 2000 Compliant, except to
the extent that such failure could not reasonably be expected to have a Material
Adverse Effect.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party covenants and agrees that on the Closing Date, and so
long as this Credit Agreement is in effect and until the Commitments have been
terminated, no Obligations remain outstanding and all amounts owing hereunder or
in connection herewith, have been paid in full neither the Parent nor any of its
Subsidiaries shall:
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8.1 INDEBTEDNESS.
Contract, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness arising or existing under this Credit Agreement and
the other Credit Documents;
(b) Indebtedness set forth in Schedule 8.1, and renewals,
refinancings and extensions thereof on terms and conditions no less
favorable to the Credit Party than for such existing Indebtedness;
(c) purchase money Indebtedness (including Capital Lease Obligations)
incurred, in each case, to provide all or a portion of the purchase price
or costs of construction of an asset, provided that (i) such Indebtedness
when incurred shall not exceed the purchase price or cost of construction
of such asset, (ii) no such Indebtedness shall be refinanced for a
principal amount in excess of the principal balance outstanding thereon at
the time of such refinancing, and (iii) the total amount of all such
Indebtedness shall not exceed $25,000,000 at any time outstanding;
(d) Indebtedness in respect of Synthetic Leases, incurred, in each
case, to provide all or a portion of the purchase price or costs of
construction of an asset, provided that (i) such Indebtedness when incurred
shall not exceed the purchase price or cost of construction of such asset,
(ii) no such Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time of such
refinancing, and (iii) the total amount of all such Indebtedness shall not
exceed $40,000,000 at any time outstanding;
(e) Indebtedness and obligations owing under interest rate protection
agreements relating to the Obligations hereunder and under interest rate,
commodities and foreign currency exchange protection agreements entered
into in the ordinary course of business to manage existing or anticipated
risks and not for speculative purposes;
(f) Indebtedness (i) owing by one Credit Party to another Credit
Party and (ii) arising under the Subordinated Indebtedness; and
(g) other unsecured Indebtedness in an amount not to exceed
$35,000,000.
8.2 LIENS.
Contract, create, incur, assume or permit to exist any Lien with respect to
any of their respective property or assets of any kind (whether real or
personal, tangible or intangible), whether now owned or hereafter acquired,
except for Permitted Liens.
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8.3 NATURE OF BUSINESS.
Alter the character of their business in any material respect from that
conducted as of the Closing Date or engage in any business other than the
business conducted as of the Closing Date.
8.4 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS.
(a) Dissolve, liquidate or wind up their affairs or enter into any
transaction of merger or consolidation; provided, however that (i) the
Parent may merge or consolidate with any Subsidiary so long as the Parent
shall be the continuing or surviving corporation, (ii) any Credit Party
other than the Parent may merge or consolidate with any other Credit
Party, (iii) any Subsidiary of the Parent that is not a Credit Party may
be merged with or into any other Subsidiary of the Parent that is not a
Credit Party, (iv) any Subsidiary of the Parent that is not a Credit Party
may merge or consolidate with any Credit Party so long as the Credit Party
shall be the continuing or surviving corporation and (v) the Parent or any
Subsidiary of the Parent may merge with any other Person in connection
with a Permitted Acquisition if the Parent or such Subsidiary shall be the
continuing or surviving corporation.
(b) Make any Asset Dispositions other than (A) the sale of inventory
in the ordinary course of business for fair consideration, (B) the sale or
disposition of machinery and equipment no longer used or useful in the
conduct of such Credit Party's business, or (C) such other Asset
Dispositions for consideration not less than the fair market value of such
assets during any fiscal year, provided, that (i) with respect to each
Asset Disposition, the Parent shall apply (or cause to be applied) an
amount equal to the Net Cash Proceeds of such Asset Disposition to prepay
the Term Loans in accordance with the terms of Section 3.3(b)(iii) and
(ii) for any Asset Disposition in which the Net Cash Proceeds to be
received exceeds $15,000,000 or if the amount of Net Cash Proceeds to be
received for such Asset Disposition together with the Net Cash Proceeds
Received from other Assets Dispositions occurring during such fiscal year
would exceed $25,000,000, then no later than 20 days prior to such Asset
Disposition, the Agent and the Lenders shall have received (A) a
certificate of an officer of the Parent specifying the anticipated or
actual date of such Asset Disposition, briefly describing the assets to be
sold or otherwise disposed of and setting forth the net book value of such
assets, the aggregate consideration and the Net Cash Proceeds to be
received for such assets in connection with such Asset Disposition and (B)
such documents, instruments and certificates (including, without
limitation a Pro Forma Compliance Certificate) as the Agent may request so
as to evidence the Credit Parties to be in compliance with the terms of
Section 7.09 after giving effect to such Asset Disposition.
(c) Acquire all or substantially all of the assets or business of
any Person except in connection with a Permitted Acquisition.
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8.5 ADVANCES, INVESTMENTS AND LOANS.
Lend money or extend credit or make advances to any Person, or purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, or otherwise make an Investment in, any
Person except for Permitted Investments.
8.6 RESTRICTED PAYMENTS.
Directly or indirectly, (a) declare or pay any dividends or make any other
distribution upon any shares of its capital stock of any class other than (i)
stock dividends, (ii) dividends by Subsidiaries of the Parent to the Parent or
any Subsidiary of the Parent and (iii) provided that no Event of Default has
occurred and is continuing (A) cash dividends by the Parent in an amount not to
exceed the greater of $4,000,000 or fifteen percent (15%) of Net Income during
any fiscal year and (B) dividends on the Preferred Stock on the dates and at
the rate set forth in the description of the Preferred Stock contained in
Schedule 1.2, (b) purchase, redeem or otherwise acquire or retire or make any
provisions for redemption, acquisition or retirement of any shares of its
capital stock of any class or any warrants or options to purchase any such
shares other than (i) Permitted Investments and (ii) the purchase by the Parent
of its shares in connection with stock purchase agreements and shareholder
redemption agreements provided that the aggregate amount of such purchases does
not exceed $5,000,000 during the term of this Agreement; or (c) make any
prepayment, redemption, defeaseance or acquisition for value of (including
without limitation, by way of depositing money or securities with the trustee
with respect thereto before due for the purpose of paying when due), or refund,
refinance or exchange of any Funded Debt.
8.7 TRANSACTIONS WITH AFFILIATES; MODIFICATION OF DOCUMENTATION.
Enter into or permit to exist any transaction or series of transactions,
whether or not in the ordinary course of business, with any officer, director,
shareholder, Subsidiary or Affiliate other than (i) customary fees and expenses
paid to directors and (ii) where such transactions are on terms and conditions
substantially as favorable as would be obtainable in a comparable arm's-length
transaction with a Person other than an officer, director, shareholder,
Subsidiary or Affiliate.
8.8 FISCAL YEAR.
Change its fiscal year.
8.9 LIMITATION ON RESTRICTIONS.
Create or permit to exist any restriction of any kind on the ability of
any Subsidiary to (i) pay dividends or make any other distributions to the
Parent or any of its Subsidiaries, (ii) pay Indebtedness owed to the Parent or
any of its Subsidiaries, (iii) make loans or advances to the Parent or any of
its Subsidiaries or (iv) transfer any of its properties or assets to the Parent
or any of its Subsidiaries.
8.10 SALE LEASEBACKS.
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Except in connection with a transaction permitted under Section 8.1(c)
hereof, directly or indirectly become or remain liable as lessee or as
guarantor or other surety with respect to any lease, whether an Operating Lease
or a Capital Lease, or any Property (whether real or personal or mixed), whether
now owned or hereafter acquired, (i) which such Person has sold or transferred
or is to sell or transfer to any other Person other than a Credit Party or (ii)
which such Person intends to use for substantially the same purpose as any other
Property which has been sold or is to be sold or transferred by such Person to
any other Person in connection with such lease.
8.11 NO FURTHER NEGATIVE PLEDGES.
Except with respect to prohibitions against other encumbrances on specific
Property encumbered to secure payment of particular Indebtedness (which
Indebtedness relates solely to such specific Property, and improvements and
accretions thereto, and is otherwise permitted hereby), enter into, assume or
become subject to any agreement prohibiting or otherwise restricting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation.
8.12 SUBSIDIARIES, PARTNERSHIPS, JOINT VENTURES AND ACQUISITIONS.
Issue, sell, transfer, pledge or otherwise dispose of any shares of capital
stock or other equity or ownership interests ("Equity Interests") in any
Subsidiary, except (i) in connection with the sale of all of the capital stock
of a Subsidiary pursuant to a transaction permitted by Section 8.4(b), (ii) the
issuance, sale or transfer of Equity Interests by a Subsidiary (the "Issuing
Subsidiary") to the Parent or a Subsidiary of the Parent that owns such Issuing
Subsidiary and (iii) as needed to qualify directors under applicable law.
8.13 INFRINGEMENT OF PROPERTY RIGHTS.
The Parent shall not, and shall not permit any Subsidiary to, violate any
licenses, patents, patent applications, copyrights, trademarks, tradenames or
any other property rights of any Person.
SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the following
specified events (each an "Event of Default"):
(a) PAYMENT. The Borrowers shall
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(i) default in the payment when due of any principal of any of the Loans or
of any reimbursement obligations arising from drawings under Letters of
Credit, or
(ii) default, and such defaults shall continue for three (3) or more
Business Days, in the payment when due of any interest on the Loans or on any
reimbursement obligations arising from drawings under Letters of Credit, or of
any Fees or other amounts owing hereunder, under any of the other Credit
Documents or in connection herewith or therewith; or
(b) REPRESENTATIONS. Any representation, warranty or statement of the Parent
or any of its Subsidiaries made or deemed to be made herein, in any of the other
Credit Documents, or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in any material respect
on the date as of which it was deemed to have been made; or
(c) COVENANTS. A
(i) default in the due performance or observance of any term, covenant or
agreement contained in Section 7.2, 7.3(a), 7.9, or 8.1 through 8.13,
inclusive, or
(ii) default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in subsections(a), (b) or
(c)(i) of this Section 9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at least 30 days after the
earlier of a Responsible Officer of any Borrower becoming aware of such
default or notice thereof by the Agent; or
(d) OTHER CREDIT DOCUMENTS. (i) Any Credit Party shall default in the due
performance or observance of any material term, covenant or agreement in any of
the other Credit Documents (subject to applicable grace or cure periods, if
any), or (ii) any Credit Document shall fail to be in full force and effect or
to give the Agent and/or the Lenders any material part of the Liens, rights,
powers and privileges purported to be created thereby; or
(e) BANKRUPTCY, ETC. Any Bankruptcy Event shall occur with respect to the
Parent or any of its Subsidiaries; or
(f) DEFAULTS UNDER OTHER AGREEMENTS. With respect to any Indebtedness (other
than Indebtedness outstanding under this Credit Agreement) in which the
aggregate outstanding amount of such Indebtedness is in excess of $5,000,000,
(A) the Parent or any of its Subsidiaries shall (1) default in any payment
(beyond the applicable grace period with respect thereto, if any) with respect
to any such Indebtedness, or (2) default (after giving effect to any applicable
grace period) in the observance or performance relating to such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event or condition shall occur or condition exist,
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the effect of which default or other event or condition is to cause, or
permit, the holder or holders of such Indebtedness (or trustee or agent on
behalf of such holders) to cause (determined without regard to whether any
notice or lapse of time is required), any such Indebtedness to become due
prior to its stated maturity; or (B) any such Indebtedness shall be
declared due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity
thereof; or
(g) Judgments. The Parent or any of its Subsidiaries shall fail
within 30 days of the date due and payable to pay, bond or otherwise
discharge any judgment, settlement or order for the payment of money which
judgment, settlement or order is either (i) not covered by fully valid,
collectible insurance or (ii) when aggregated with all other such
judgments, settlements or orders due and unpaid at such time, exceeds
$2,000,000 and which is not stayed on appeal (or for which no motion for
stay is pending) or is not otherwise being executed; or
(h) ERISA. Any of the following events or conditions, if such event
or condition could reasonably be expected to have a Material Adverse
Effect: (1) any "accumulated funding deficiency," as such term is defined
in Section 302 of ERISA and Section 412 of the Code, whether or not waived,
shall exist with respect to any Plan, or any lien shall arise on the assets
of the Parent or any of its Subsidiaries or any ERISA Affiliate in favor of
the PBGC or a Plan; (2) an ERISA Event shall occur with respect to a Single
Employer Plan, which is, in the reasonable opinion of the Agent, likely to
result in the termination of such Plan for purposes of Title IV of ERISA;
(3) an ERISA Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the Agent,
likely to result in (i) the termination of such Plan for purposes of Title
IV of ERISA, or (ii) the Parent or any of its Subsidiaries or any ERISA
Affiliate incurring any liability in connection with a withdrawal from,
reorganization of (within the meaning of Section 4241 of ERISA), or
insolvency of (within the meaning of Section 4245 of ERISA) such Plan; or
(4) any prohibited transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Code) or breach of fiduciary responsibility shall
occur which may subject the Parent or any of its Subsidiaries or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i), or 502(l) of
ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which the Parent or any of its Subsidiaries or any
ERISA Affiliate has agreed or is required to indemnify any person against
any such liability; or
(i) Ownership. There shall occur a Change of Control.
9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter, the
Agent shall, upon the request and direction of the Required Lenders, by written
notice to the Parent (on behalf of each of the Borrowers) take any of the
following actions:
(i) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
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(ii) Acceleration. Declare the unpaid principal of and any accrued
interest in respect of all Loans, any reimbursement obligations arising
from drawings under Letters of Credit and any and all other indebtedness or
obligations of any and every kind owing by the Borrowers to the Agent
and/or any of the Lenders hereunder to be due whereupon the same shall be
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrowers.
(iii) Cash Collateral. Direct the Borrowers to pay (and the Borrowers
agree that upon receipt of such notice, or upon the occurrence of an Event
of Default under Section 9.1(e), it will immediately pay) to the Agent
additional cash, to be held by the Agent, for the benefit of the Lenders,
in a cash collateral account as additional security for the LOC Obligations
in respect of subsequent drawings under all then outstanding Letters of
Credit in an amount equal to the maximum aggregate amount which may be
drawn under all Letters of Credits then outstanding.
(iv) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(e) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations arising from drawings under Letters of
Credit, all accrued interest in respect thereof, all accrued and unpaid Fees and
other indebtedness or obligations owing to the Agent and/or any of the Lenders
hereunder automatically shall immediately become due and payable without
presentment, demand, protest or the giving of any notice or other action by the
Agent or the Lenders, all of which are hereby waived by the Borrowers.
SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT.
Each Lender hereby designates and appoints NationsBank, N.A. as Agent (in
such capacity, the "Agent") of such Lender to act as specified herein and the
other Credit Documents, and each such Lender hereby authorizes the Agent as the
Agent for such Lender, to take such action on its behalf under the provisions of
this Credit Agreement and the other Credit Documents and to exercise such powers
and perform such duties as are expressly delegated by the terms hereof and of
the other Credit Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere
herein and in the other Credit Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section are solely for the benefit of
the Agent and the Lenders and the Credit Parties shall not have any rights as a
third party beneficiary of the provisions hereof. In
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performing its functions and duties under this Credit Agreement and the other
Credit Documents, the Agent shall act solely as Agent of the Lenders and does
not assume and shall not be deemed to have assumed any obligation or
relationship of agency or trust with or for the Credit Parties or any of their
Affiliates.
10.2 DELEGATION OF DUTIES.
The Agent may execute any of their respective duties hereunder or under the
other Credit Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS.
The Agent and its officers, directors, employees, agents, attorneys-in-fact
or affiliates shall not be (i) liable for any action lawfully taken or omitted
to be taken by it or such Person under or in connection herewith or in
connection with any of the other Credit Documents (except for its or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by any of the Credit Parties contained herein or in any of the
other Credit Documents or in any certificate, report, document, financial
statement or other written or oral statement referred to or provided for in, or
received by the Agent under or in connection herewith or in connection with the
other Credit Documents, or enforceability or sufficiency therefor of any of the
other Credit Documents, or for any failure of the Credit Parties to perform
their obligations hereunder or thereunder. The Agent shall not be responsible to
any Lender for the effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Credit Agreement, or any of the other
Credit Documents or for any representations, warranties, recitals or statements
made herein or therein or made by the Credit Parties in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Lenders or by or on behalf of the Credit
Parties to the Agent or any Lender or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein nor as to the use of the
proceeds of the Loans or the use of the Letters of Credit or of the existence or
possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Credit Parties or their Affiliates.
10.4 RELIANCE ON COMMUNICATIONS.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrowers, independent accountants and other experts
selected by the Agent with reasonable care). The Agent may deem and treat the
Lenders as the owner of their respective interests hereunder for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Agent in accordance with Section 11.3(b) hereof. The
Agent shall be fully justified
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in failing or refusing to take any action under this Credit Agreement or under
any of the other Credit Documents unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, hereunder or under any of the other Credit Documents
in accordance with a request of the Required Lenders (or to the extent
specifically provided in Section 11.6, all the Lenders) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders (including their successors and assigns).
10.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless the Agent has received
notice from a Lender or one of the Credit Parties referring to the Credit
Document, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be directed by the Required Lenders.
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that each of the Agent and its officers,
directors, employees, agents, attorneys-in-fact or affiliates has not made any
representations or warranties to it and that no act by the Agent or any
affiliate thereof hereinafter taken, including any review of the affairs of the
Credit Parties or any of their Affiliates, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Credit Parties or their Affiliates and made its own
decision to make its Loans hereunder and enter into this Credit Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Credit
Agreement, and to make such investigation as it deems necessary to inform itself
as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Credit Parties and their
Affiliates. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Agent hereunder, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, assets, property, financial or
other conditions, prospects or creditworthiness of the Credit Parties or their
respective Affiliates which may come into the possession of the Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates.
10.7 INDEMNIFICATION.
The Lenders agree to indemnify the Agent in its capacity as such (to the
extent not reimbursed by the Credit Parties and without limiting the obligation
of the Credit Parties to do so),
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ratably according to their respective Commitments (or if the Commitments have
expired or been terminated, in accordance with the respective principal amounts
of outstanding Loans and Participation Interests of the Lenders), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any time
following the final payment of all of the obligations of the Credit Parties
hereunder and under the other Credit Documents) be imposed on, incurred by or
asserted against the Agent in its capacity as such in any way relating to or
arising out of this Credit Agreement or the other Credit Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section shall
survive the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder.
10.8 AGENT IN ITS INDIVIDUAL CAPACITY.
The Agent and its affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Parent, its Subsidiaries or
their respective Affiliates as though the Agent were not the Agent hereunder.
With respect to the Loans made by and all obligations of the Credit Parties
hereunder and under the other Credit Documents, the Agent shall have the same
rights and powers under this Credit Agreement as any Lender and may exercise
the same as though it were not the Agent, and the terms "Lender" and "Lenders"
shall include the Agent in its individual capacity.
10.9 SUCCESSOR AGENT.
The Agent may, at any time, resign upon twenty (20) days' written notice to
the Parent and the Lenders. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the notice of resignation, then the retiring
Agent shall select a successor Agent provided such successor is a Lender
hereunder or a commercial bank organized under the laws of the United States of
America or of any State thereof and has a combined capital and surplus of at
least $400,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations as Agent,
as appropriate, under this Credit Agreement and the other Credit Documents and
the provisions of this Section 10.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Credit
Agreement.
10.10 DOCUMENTATION AGENT, SYNDICATION AGENT AND CO-AGENTS.
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Neither the Documentation Agent or the Syndication Agent nor any of the
Lenders identified in this Credit Agreement as a "Co-Agent" shall have any
right, power, duty or obligation under this Credit Agreement or any of the
other Credit Documents other than those applicable to all Lenders as such.
Without limiting the foregoing, none of such Lenders shall have or be deemed to
have a fiduciary relationship with any Lender. Each Lender hereby makes the
same acknowledgments with respect to such Lenders as it makes with respect to
the Agent in Section 10.6.
SECTION 11
MISCELLANEOUS
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) with
receipt confirmed, to the number set out below, (iii) the day following the day
on which the same has been delivered prepaid to a reputable national overnight
air courier service, or (iv) the third Business Day following the day on which
the same is sent by certified or registered mail, postage prepaid, in each case
to the respective parties at the address, in the case of the Borrowers and the
Agent, set forth below, and, in the case of the Lenders, set forth on Schedule
11.1, or at such other address as such party may specify by written notice to
the other parties hereto:
if to the Borrowers:
c/o CENTRAL PARKING CORPORATION
2401 21st Avenue South, Suite 200
Nashville, Tennessee 37212
Attn: Monroe J. Carell, Jr.
Telephone: (615) 297-4255
Telecopy: (615) 297-6240
with a copy to:
CENTRAL PARKING CORPORATION
2401 21st Avenue South, Suite 200
Nashville, Tennessee 37212
Attn: Stephen A. Tisdell
Chief Financial Officer
Telephone: (615) 297-4255
Telecopy: (615) 297-6240
if to the Agent:
NATIONSBANK, N.A.
Independence Center, 15th Floor
NC1-001-15-04
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Charlotte, North Carolina 28255
Attn: Corporate Credit Services
Telephone: (704) 388-6482
Telecopy: (704) 386-9923
11.2 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
of an Event of Default, each Lender is authorized at any time and from time to
time, without presentment, demand, protest or other notice of any kind (all of
which rights being hereby expressly waived), to set-off and to appropriate and
apply any and all deposits (general or special) and any other indebtedness at
any time held or owing by such Lender (including, without limitation branches,
agencies or Affiliates of such Lender wherever located) to or for the credit or
the account of the Credit Parties against obligations and liabilities of such
Person to such Lender hereunder, under the Notes, the other Credit Documents or
otherwise, irrespective of whether such Lender shall have made any demand
hereunder and although such obligations, liabilities or claims, or any of them,
may be contingent or unmatured, and any such set-off shall be deemed to have
been made immediately upon the occurrence of an Event of Default even though
such charge is made or entered on the books of such Lender subsequent thereto.
Any Person purchasing a participation in the Loans and Commitments hereunder
pursuant to Section 3.13 or Section 11.3(d) may exercise all rights of set-off
with respect to its participation interest as fully as if such Person were a
Lender hereunder.
11.3 BENEFIT OF AGREEMENT.
(a) Generally. This Credit Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that the Credit Parties may not
assign or transfer any of its interests without prior written consent of
the Lenders; provided further that the rights of each Lender to transfer,
assign or grant participations in its rights and/or obligations hereunder
shall be limited as set forth in this Section 11.3, provided however that
nothing herein shall prevent or prohibit any Lender from (i) pledging its
Loans hereunder to a Federal Reserve Bank in support of borrowings made by
such Lender from such Federal Reserve Bank, or (ii) granting assignments or
selling participations in such Lender's Loans and/or Commitments hereunder
to its parent company and/or to any Affiliate or Subsidiary of such Lender.
(b) Assignments. Each Lender may assign all or a portion of its
rights and obligations hereunder, pursuant to an assignment agreement
substantially in the form of Exhibit 11.3(b), to (i) any Lender or any
Affiliate or Subsidiary of a Lender, or (ii) any other commercial bank,
financial institution or "accredited investor" (as defined in Regulation D
of the Securities and Exchange Commission) reasonably acceptable to the
Agent and, so long as no Default or Event of Default has occurred and is
continuing, the Parent; provided that (i) any such assignment (other than
any assignment to an existing Lender) shall be in a minimum aggregate
amount of $15,000,000 (or, if less, the remaining amount of the Commitment
being assigned by such Lender) of the Commitments and in integral multiples
of $1,000,000 above such amount and (ii) each such assignment shall be
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of a constant, not varying, percentage of all such Lender's rights and
obligations under this Credit Agreement (including specifically, without
limitation, an equal percentage of such Lender's Revolving Commitment Percentage
and outstanding principal balance of the Term Loan). Any assignment hereunder
shall be effective upon delivery to the Agent of written notice of the
assignment together with a transfer fee of $3,500 payable to the Agent for its
own account from and after the later of (i) the effective date specified in the
applicable assignment agreement and (ii) the date of recording of such
assignment in the Register pursuant to the terms of subsection (c) below. The
assigning Lender will give prompt notice to the Agent and the Parent of any such
assignment. Upon the effectiveness of any such assignment (and after notice to,
and (to the extent required pursuant to the terms hereof), with the consent of,
the Parent as provided herein), the assignee shall become a "Lender" for all
purposes of this Credit Agreement and the other Credit Documents and, to the
extent of such assignment, the assigning Lender shall be relieved of its
obligations hereunder to the extent of the Loans and Commitment components being
assigned. Along such lines the Borrowers agree that upon notice of any such
assignment and surrender of the appropriate Note or Notes, they will promptly
provide to the assigning Lender and to the assignee separate promissory notes in
the amount of their respective interests substantially in the form of the
original Note (but with notation thereon that it is given in substitution for
and replacement of the original Note or any replacement notes thereof). By
executing and delivering an assignment agreement in accordance with this Section
11.3(b), the assigning Lender thereunder and the assignee thereunder shall be
deemed to confirm to and agree with each other and the other parties hereto as
follows: (i) such assigning Lender warrants that it is the legal and beneficial
owner of the interest being assigned thereby free and clear of any adverse
claim; (ii) except as set forth in clause (i) above, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto or the financial condition of the Credit
Parties or any of their Affiliates or the performance or observance by the
Credit Parties of any of their obligations under this Credit Agreement, any of
the other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee represents and warrants that it
is legally authorized to enter into such assignment agreement; (iv) such
assignee confirms that it has received a copy of this Credit Agreement, the
other Credit Documents and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
assignment agreement; (v) such assignee will independently and without reliance
upon the Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this Credit
Agreement and the other Credit Documents; (vi) such assignee appoints and
authorizes the Agent to take such action on its behalf and to exercise such
powers under this Credit Agreement or any other Credit Document as are delegated
to the Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the
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obligations which by the terms of this Credit Agreement and the other
Credit Documents are required to be performed by it as a Lender.
(c) Maintenance of Register. The Agent shall maintain at one of its
offices in Charlotte, North Carolina a copy of each Lender assignment
agreement delivered to it in accordance with the terms of subsection (b)
above and a register for the recordation of the identity of the principal
amount, type and Interest Period of each Loan outstanding hereunder, the
names, addresses and the Commitments of the Lenders pursuant to the terms
hereof from time to time (the "Register"). The Agent will make reasonable
efforts to maintain the accuracy of the Register and to promptly update the
Register from time to time, as necessary. The entries in the Register shall
be conclusive in the absence of manifest error and the Borrowers, the Agent
and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Borrowers and each Lender, at any reasonable time and
from time to time upon reasonable prior notice.
(d) Participations. Each Lender may sell, transfer, grant or assign
participations in all or any part of such Lender's interests and
obligations hereunder; provided that (i) such selling Lender shall remain a
"Lender" for all purposes under this Credit Agreement (such selling
Lender's obligations under the Credit Documents remaining unchanged) and
the participant shall not constitute a Lender hereunder, (ii) no such
participant shall have, or be granted, rights to approve any amendment or
waiver relating to this Credit Agreement or the other Credit Documents
except to the extent any such amendment or waiver would (A) reduce the
principal of or rate of interest on or Fees in respect of any Loans in
which the participant is participating or (B) postpone the date fixed for
any payment of principal (including any extension of the Termination Date
but excluding the waiver of any mandatory prepayment), interest or Fees in
which the participant is participating, and (iii) sub-participations by the
participant (except to an affiliate, parent company or affiliate of a
parent company of the participant) shall be prohibited. In the case of any
such participation, the participant shall not have any rights under this
Credit Agreement or the other Credit Documents (the participant's rights
against the selling Lender in respect of such participation to be those set
forth in the participation agreement with such Lender creating such
participation) and all amounts payable by the Borrowers hereunder shall be
determined as if such Lender had not sold such participation, provided,
however, that such participant shall be entitled to receive additional
amounts under Sections 3.6, 3.8, 3.9, 3.10 and 3.11 on the same basis as if
it were a Lender.
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Agent or any Lender and the Credit Parties
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege
80
<PAGE> 86
hereunder or thereunder. The rights and remedies provided herein are cumulative
and not exclusive of any rights or remedies which the Agent or any Lender would
otherwise have. No notice to or demand on the Credit Parties in any case shall
entitle the Credit Parties to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the Agent or the
Lenders to any other or further action in any circumstances without notice or
demand.
11.5 PAYMENT OF EXPENSES, ETC.
The Credit Parties joint and severally agree to: (i) pay all reasonable
out-of-pocket costs and expenses (A) of the Agent in connection with the
negotiation, preparation, execution and delivery and administration of this
Credit Agreement and the other Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and expenses of Moore & Van Allen, PLLC, special counsel to the Agent,
subject to the limitation contained in a separate agreement between the Agent
and the Parent) and any amendment, waiver or consent relating hereto and thereto
including, but not limited to, any such amendments, waivers or consents
resulting from or related to any work-out, renegotiation or restructure relating
to the performance by the Credit Parties under this Credit Agreement and (B) of
the Agent and the Lenders in connection with enforcement of the Credit Documents
and the documents and instruments referred to therein (including, without
limitation, in connection with any such enforcement, the reasonable fees and
disbursements of counsel for the Agent and each of the Lenders); (ii) pay and
hold each of the Lenders harmless from and against any and all present and
future stamp and other similar taxes with respect to the foregoing matters and
save each of the Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to such Lender) to pay such taxes; and (iii) indemnify each Lender,
its officers, directors, employees, representatives and Agents from and hold
each of them harmless against any and all losses, liabilities, claims, damages
or expenses incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of (A) any investigation, litigation or other
proceeding (whether or not any Lender is a party thereto) related to the
entering into and/or performance of any Credit Document or the use of proceeds
of any Loans (including other extensions of credit) hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding or (B) the presence or Release of any Materials of Environmental
Concern at, under or from any Property owned, operated or leased by the Credit
Parties or any of their Subsidiaries, or the failure by the Credit Parties or
any of their Subsidiaries to comply with any Environmental Law (but excluding,
in the case of either of clause (A) or (B) above, any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of gross negligence
or willful misconduct on the part of the Person to be indemnified).
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any of the other Credit Documents, nor
any of the terms hereof or thereof may be amended, changed, waived, discharged
or terminated unless such amendment, change, waiver, discharge or termination is
in writing entered into by, or approved in writing by, the Required Lenders and
the Parent, provided, however, that no such amendment,
81
<PAGE> 87
change, waiver, discharge or termination shall, without the consent of each
Lender directly affected thereby,
(a) reduce the rate or extend the time of payment of interest (other than
as a result of waiving the applicability of any post-default increase in
interest rates) on any Loan or fees hereunder,
(b) extend (i) the Termination Date, (ii) the final maturity of any Loan or
postpone any other date fixed for any payment of principal (including any
scheduled amortization of a principal payment on the Term Loan but excluding the
waiver of any mandatory prepayment pursuant to Section 3.3(b)(ii), or (iii) the
time of payment of any reimbursement obligation, or any portion thereof, arising
from drawings under Letters of Credit,
(c) reduce the principal amount on any Loan;
(d) increase the Commitment of any Lender over the amount thereof in effect
(it being understood and agreed that a waiver of any Default or Event of Default
or of a mandatory reduction in the total commitments shall not constitute a
change in the terms of the Commitment of any Lender),
(e) release all or substantially all of the Guarantors from the Guaranty
Obligations hereunder,
(f) amend, modify or waive any provision of this Section 11.6 or Section
3.6, 3.10, 3.11, 3.12, 3.13, 9.1(a), 11.2, 11.3, 11.5 or 11.9, or
(g) reduce any percentage specified in, or otherwise modify, the definition
of "Required Lenders."
In addition to the foregoing, no provision of Section 2.3 may be amended
without the consent of the Issuing Lender and no provision of Section 10 may be
amended without the consent of the Agent.
11.7 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart.
11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
82
<PAGE> 88
11.9 SURVIVAL.
All indemnities set forth herein, including, without limitation, in Section
2.3(h), 3.9, 3.11, 10.7 or 11.5 shall survive the execution and delivery of this
Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder, and all
representations and warranties made by the Credit Parties herein shall survive
delivery of the Notes and the making of the Loans hereunder.
11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA. Any legal action or proceeding with respect to this Credit
Agreement or any other Credit Document may be brought in the courts of the State
of North Carolina, or of the United States for the Middle District of North
Carolina, and, by execution and delivery of this Credit Agreement, the Credit
Parties hereby irrevocably accept for themselves and in respect of their
property, generally and unconditionally, the nonexclusive jurisdiction of such
courts. The Credit Parties further irrevocably consent to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
it at the address set out for notices pursuant to Section 11.1, such service to
become effective three (3) Business Days after such mailing. Nothing herein
shall affect the right of the Agent to serve process in any other manner
permitted by law or to commence legal proceedings or to otherwise proceed
against the Credit Parties in any other jurisdiction.
(b) The Credit Parties hereby irrevocably waive any objection which they
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Credit Agreement or any
other Credit Document brought in the courts referred to in subsection (a) hereof
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS AND THE
CREDIT PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT
AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
83
<PAGE> 89
11.11 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 ENTIRETY.
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.13 BINDING EFFECT; TERMINATION.
(a) This Credit Agreement shall become effective at such time on or
after the Closing Date when it shall have been executed by the Credit
Parties and the Agent, and the Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear the signatures of
each Lender, and thereafter this Credit Agreement shall be binding upon and
inure to the benefit of the Credit Parties, the Agent and each Lender and
their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans, LOC
Obligations, Credit Party Obligations or any other amounts payable
hereunder or under any of the other Credit Documents shall remain
outstanding and until all of the Commitments hereunder shall have expired
or been terminated.
11.14 CONFIDENTIALITY.
The Agent and the Lenders agree to keep confidential (and to cause their
respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agent or any such Lender by or on behalf of the Credit Parties
(whether before or after the Closing Date) which relates to the Credit Parties
or any of their Subsidiaries (the "Information"). Notwithstanding the
foregoing, the Agent and each Lender shall be permitted to disclose Information
(i) to its affiliates, officers, directors, employees, agents and
representatives in connection with its participation in any of the transactions
evidenced by this Credit Agreement or any other Credit Documents or the
administration of this Credit Agreement or any other Credit Documents; (ii) to
the extent required by applicable laws and regulations or by any subpoena or
similar legal process, or requested by any Governmental Authority; (iii) to the
extent such Information (A) is or becomes publicly available other than as a
result of a breach of this Credit Agreement or any agreement entered into
pursuant to clause (iv) below, (B) is or becomes available to the Agent or such
Lender on a non-confidential basis from a source other than the Credit Parties
or (C) was available to the Agent or such Lender on a non-confidential basis
prior to its disclosure to the Agent or such Lender by the Credit Parties; (iv)
to any assignee or participant (or prospective assignee or participant) so long
as such assignee or participant (or prospective assignee on participant) first
specifically agrees in a
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<PAGE> 90
writing furnished to and for the benefit of the Credit Parties to be bound by
the terms of this Section 11.14; or (v) to the extent that the Parent shall
have consented in writing to such disclosure. Nothing set forth in this Section
11.14 shall obligate the Agent or any Lender to return any materials furnished
by the Borrowers.
11.15 SOURCE OF FUNDS.
Each of the Lenders hereby represents and warrants to the Credit Parties
that at least one of the following statements is an accurate representation as
to the source of funds to be used by such Lender in connection with the
financing hereunder:
(a) no part of such funds constitutes assets allocated to any separate
account maintained by such Lender in which any employee benefit plan (or
its related trust) has any interest;
(b) to the extent that any part of such funds constitutes assets
allocated to any separate account maintained by such Lender, such Lender
has disclosed to the Parent the name of each employee benefit plan whose
assets in such account exceed 10% of the total assets of such account as of
the date of such purchase (and, for purposes of this subsection (b), all
employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan);
(c) to the extent that any part of such funds constitutes assets of an
insurance company's general account, such insurance company has complied
with all of the requirements of the regulations issued under Section
401(c)(1)(A) of ERISA; or
(d) such funds constitute assets of one or more specific benefit plans
which such Lender has identified in writing to the Parent.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section
3 of ERISA.
11.16 CONFLICT.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
85
<PAGE> 91
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWERS: CENTRAL PARKING CORPORATION
a Tennessee corporation
By: /s/ Monroe Caroll
--------------------------
Name: Monroe Caroll
--------------------------
Title: CEO
--------------------------
CENTRAL PARKING SYSTEM, INC.,
a Tennessee corporation
By: /s/ Monroe Caroll
--------------------------
Name: Monroe Caroll
--------------------------
Title: CEO
--------------------------
CENTRAL PARKING SYSTEM REALTY, INC.,
a Tennessee corporation
By: /s/ Monroe Caroll
--------------------------
Name: Monroe Caroll
--------------------------
Title: CEO
--------------------------
CPC FINANCE OF TENNESSEE, INC.,
a Tennessee corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
CENTRAL PARKING SYSTEM OF
MASSACHUSETTS, INC.,
a Tennessee corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
<PAGE> 92
KINNEY SYSTEM OF SUDBURY ST., INC.,
a Massachusetts corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
ALLRIGHT HOLDINGS, INC.,
a Delaware corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
GUARANTORS: CENTRAL PARKING CORPORATION
a Tennessee corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
CENTRAL PARKING SYSTEM, INC.,
a Tennessee corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
CENTRAL PARKING SYSTEM REALTY, INC.,
a Tennessee corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
<PAGE> 93
CPC FINANCE OF TENNESSEE, INC.,
a Tennessee corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
CENTRAL PARKING SYSTEM OF
MASSACHUSETTS, INC.,
a Tennessee corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
KINNEY SYSTEM OF SUDBURY ST., INC.,
a Massachusetts corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
ALLRIGHT HOLDINGS, INC.,
a Delaware corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
CENTRAL PARKING SYSTEM REALTY OF
NEW YORK, INC., a Tennessee corporation
By: /s/ Stephen A. Tisdell
--------------------------
Name: Stephen A. Tisdell
--------------------------
Title: CFO
--------------------------
<PAGE> 94
CENTRAL PARKING SYSTEM OF TEXAS, INC.,
a Texas corporation
By: /s/ Stephen A. Tisdell
------------------------
Name: Stephen A. Tisdell
---------------------
Title: CEO
---------------------
CENTRAL PARKING SYSTEM OF FLORIDA, INC.,
a Tennessee corporation
By: /s/ Stephen A. Tisdell
------------------------
Name: Stephen A. Tisdell
---------------------
Title: CEO
---------------------
CENTRAL PARKING SYSTEM OF NEW YORK, INC.,
a Tennessee corporation
By: /s/ Stephen A. Tisdell
------------------------
Name: Stephen A. Tisdell
---------------------
Title: CEO
---------------------
CENTRAL PARKING SYSTEM OF NEW JERSEY, INC.,
(FORMERLY SQUARE PLUS OPERATING OF NEW JERSEY, INC.),
a New Jersey corporation
By: /s/ Stephen A. Tisdell
------------------------
Name: Stephen A. Tisdell
---------------------
Title: CEO
---------------------
CENTRAL PARKING SYSTEM OF TENNESSEE, INC.,
a Tennessee corporation
By: /s/ Stephen A. Tisdell
------------------------
Name: Stephen A. Tisdell
---------------------
Title: CEO
---------------------
<PAGE> 95
CENTRAL PARKING SYSTEM OF GEORGIA, INC.,
a Tennessee corporation
By: /s/ Stephen A. Tisdell
------------------------
Name: Stephen A. Tisdell
---------------------
Title: CEO
---------------------
DIPLOMAT PARKING CORPORATION,
a District of Columbia corporation
By: /s/ Stephen A. Tisdell
------------------------
Name: Stephen A. Tisdell
---------------------
Title: CEO
---------------------
KINNEY PARKING, INC.,
a Delaware corporation
By: /s/ Stephen A. Tisdell
------------------------
Name: Stephen A. Tisdell
---------------------
Title: CEO
---------------------
KINNEY SYSTEM, INC.,
a Delaware corporation
By: /s/ Stephen A. Tisdell
------------------------
Name: Stephen A. Tisdell
---------------------
Title: CEO
---------------------
KINNEY PARKING SYSTEM, INC.,
a New York corporation
By: /s/ Stephen A. Tisdell
------------------------
Name: Stephen A. Tisdell
---------------------
Title: CEO
---------------------
<PAGE> 96
KINNEY HACKENSACK, INC.,
a New Jersey corporation
By: Stephen A. Tisdell
---------------------
Name: Stephen A. Tisdell
-------------------
Title: CEO
------------------
12 WEST 48TH STREET CORP.,
a New York corporation
By: Stephen A. Tisdell
---------------------
Name: Stephen A. Tisdell
-------------------
Title: CEO
------------------
SQUARE PLUS OPERATING CORP.,
a New York corporation
By: Stephen A. Tisdell
---------------------
Name: Stephen A. Tisdell
-------------------
Title: CEO
------------------
SQUARE PHILADELPHIA CORP.,
a Pennsylvania corporation
By: Stephen A. Tisdell
---------------------
Name: Stephen A. Tisdell
-------------------
Title: CEO
------------------
ALLRIGHT CORPORATION,
a Delaware corporation
By: Stephen A. Tisdell
---------------------
Name: Stephen A. Tisdell
-------------------
Title: CEO
------------------
ALLRIGHT PARKING OF GEORGIA, INC.,
a Georgia corporation
By: Stephen A. Tisdell
---------------------
Name: Stephen A. Tisdell
-------------------
Title: CEO
------------------
<PAGE> 97
ALLRIGHT BOSTON PARKING, INC.,
a Massachusetts corporation
By: Stephen A. Tisdell
---------------------
Name: Stephen A. Tisdell
-------------------
Title: CEO
------------------
ALLRIGHT COLORADO, INC.,
a Colorado corporation
By: Stephen A. Tisdell
---------------------
Name: Stephen A. Tisdell
-------------------
Title: CEO
------------------
ALLRIGHT REALTY COMPANY,
a Texas corporation
By: Stephen A. Tisdell
---------------------
Name: Stephen A. Tisdell
-------------------
Title: CEO
------------------
APARKCO FINANCE, INC.
a Delaware corporation
By: Stephen A. Tisdell
---------------------
Name: Stephen A. Tisdell
-------------------
Title: CEO
------------------
<PAGE> 98
APARKCO INC.,
a Delaware corporation
By: /s/ Stephen A. Tisdell
------------------------------
Name: Stephen A. Tisdell
----------------------------
Title: CFO
---------------------------
<PAGE> 99
LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Agent
By: /s/ William H. Diahl
------------------------------
Name: William H. Diahl
----------------------------
Title: Sr. VP
---------------------------
<PAGE> 100
SUNTRUST BANK, NASHVILLE, N.A.,
individually in its capacity as a
Lender and in its capacity as Documentation Agent
By: /s/ Scott Copley
------------------------------
Name: Scott Copley
----------------------------
Title: Vice President
---------------------------
<PAGE> 101
FLEET BANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Syndication Agent
By: /s/ Richard Fischer
------------------------------
Name: Richard Fischer
----------------------------
Title: Vice President
---------------------------
<PAGE> 102
THE BANK OF NOVA SCOTIA,
individually in its capacity as a
Lender and in its capacity as Co-Agent
By: /s/ W.J. Brown
------------------------------------
Name: W.J. Brown
----------------------------------
Title: Vice President
---------------------------------
<PAGE> 103
NBD BANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Co-Agent
By: /s/ Thelma B. Ferguson
------------------------------------
Name: Thelma B. Ferguson
----------------------------------
Title: Senior Vice President
---------------------------------
<PAGE> 104
BARCLAYS BANK PLC,
individually in its capacity as a
Lender and in its capacity as Co-Agent
By: /s/ Marlene Wechselblatt
------------------------------------
Name: Marlene Wechselblatt
----------------------------------
Title: Vice President
---------------------------------
<PAGE> 105
CHASE BANK OF TEXAS, N.A.,
individually in its capacity as a
Lender and in its capacity as Co-Agent
By: /s/ Mike Listen
------------------------------------
Name: Mike Listen
----------------------------------
Title: Vice President
---------------------------------
<PAGE> 106
FIRST UNION NATIONAL BANK,
individually in its capacity as a
Lender and in its capacity as Co-Agent
By: /s/ Todd Kidd
-----------------------
Name: Todd Kidd
--------------------
Title: Vice President
-------------------
<PAGE> 107
FIRST AMERICAN NATIONAL BANK,
as a Lender
By: /s/ Russell S. Rogers
---------------------------
Name: Russell S. Rogers
------------------------
Title: Senior Vice President
-----------------------
<PAGE> 108
SOUTHTRUST BANK, N.A.,
as a Lender
By: /s/ Rett Dallas
-----------------------
Name: Rett Dallas
--------------------
Title: Vice President
-------------------
<PAGE> 109
WACHOVIA BANK, N.A.,
as a Lender
By: /s/ Stephen A. Racine
-----------------------
Name: Stephen A. Racine
--------------------
Title: Banking Officer
-------------------
<PAGE> 110
THE BANK OF NEW YORK,
as a Lender
By: /s/ Ann Marie Hughes
------------------------
Name: Ann Marie Hughes
------------------------
Title: Vice President
------------------------
<PAGE> 111
THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA
AGENCY, as a Lender
By: /s/ Kazuo Iida
-----------------------------
Name: Kazuo Iida
-----------------------------
Title: General Manager
-----------------------------
<PAGE> 112
KBC BANK, N.V.
as a Lender
By: /s/ Robert Snauffer
----------------------------
Name: Robert Snauffer
----------------------------
Title: First Vice President
----------------------------
<PAGE> 113
AMSOUTH BANK,
as a Lender
By: /s/ Andrew P. Grisham
-------------------------
Name: Andrew P. Grisham
-------------------------
Title: Vice President
-------------------------
<PAGE> 114
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED,
as a Lender
By: /s/ Rebecca J.S. Silbert
------------------------------------
Name: Rebecca J.S. Silbert
----------------------------------
Title: SVP
---------------------------------
<PAGE> 115
MERCANTILE BANK NATIONAL ASSOCIATION
as a Lender
By: /s/ Donald A. Adam
------------------------------------
Name: Donald A. Adam
----------------------------------
Title: Vice President
---------------------------------
<PAGE> 1
Exhibit 10.12
[NATIONSBANK LETTERHEAD]
NationsBank [LOGO]
June 25, 1999
Central Parking Corporation
2401 21st Avenue South, Suite 200
Nashville, Tennessee 37212
Attn: Stephen A. Tisdell
Chief Financial Officer
Re: Credit Agreement dated as of March 19, 1999 among Central Parking
Corporation, Central Parking System, Inc., Central Parking System
Realty, Inc., Central Parking System of Massachusetts, Inc., CPC
Finance of Tennessee, Inc., Kinney System of Sudbury St., Inc., and
Allright Holdings, Inc. (the "Borrowers"), The Guarantors from time
to time party thereto, the Lenders from time to time party thereto
and NationsBank, N.A., as Agent (the "Credit Agreement")
Gentlemen:
Reference is made to the Credit Agreement described above, the defined terms of
which are incorporated herein by reference.
The Lenders and the Credit Parties agree that Section 7.13 of the Credit
Agreement is hereby amended in its entirety to read as follows:
7.13 INTEREST RATE PROTECTION AGREEMENT.
The Borrowers shall, on or before October 29, 1999, enter into
interest rate protection agreements protecting against fluctuations in
interest rates as to which the material terms are reasonably satisfactory
to the Agent, which agreements shall provide for coverage in a principal
amount of at least $100,000,000 for a duration of at least four years;
provided, however, that the Borrowers shall not have any obligation to keep
such interest rate protection agreements in place after repayment in full
of the Term Loans.
All references in the Credit Agreement and the other Credit Documents to the
"Credit Agreement" shall be deemed to refer to the Credit Agreement as amended
hereby.
Except as amended or otherwise modified hereby, all of the terms and provisions
of the Credit Agreement and the other Credit Documents shall remain in full
force and effect.
<PAGE> 2
This letter agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina.
This letter agreement may be executed in one or more counterparts, each of
which constitute an original, and all of which taken together shall constitute
a single document.
Sincerely,
NATIONSBANK, N.A.,
as Agent
By: /s/ William H. Diehl
------------------------------------
Name: William H. Diehl
Title: Senior Vice President
ACCEPTED AND AGREED:
CENTRAL PARKING CORPORATION, for itself
and each of the other Borrowers and Guarantors
By:/s/ Stephen A. Tisdell
---------------------------------------
Title: CFO
<PAGE> 1
EXHIBIT 10.13
BANK OF AMERICA
Bank of America
Financial Strategies Group
414 Union Street
Nashville, TN 37239-1697
October 29, 1999
Central Parking Corporation
2401 21st Avenue South, Suite 200
Nashville, Tennessee 37212
Attn: Stephen A. Tisdell
Chief Financial Officer
Re: Credit Agreement dated as of March 19, 1999 among Central
Parking Corporation, Central Parking System, Inc., Central
Parking System Realty, Inc., Central Parking System of
Massachusetts, Inc., CPC Finance of Tennessee, Inc., Kinney
System of Sudbury St., Inc., and Allright Holdings, Inc. (the
"Borrowers"), the Guarantors from time to time party thereto,
the Lenders from time to time party thereto and Bank of
America, N.A. (formerly known as NationsBank, N.A.), as Agent,
as amended (the "Credit Agreement")
Gentlemen:
Reference is made to the Credit Agreement described above, the defined terms of
which are incorporated herein by reference.
The Lenders and the Credit Parties agree that Section 7.13 of the Credit
Agreement is hereby amended in its entirety to read as follows:
7.13 INTEREST RATE PROTECTION AGREEMENT.
The Borrowers shall enter into interest rate protection
agreements protecting against fluctuations in interest rates, which the
material terms are reasonably satisfactory to the Agent, each for a
duration of at least four years (except for the $25,000,000 interest
rate protection agreement entered into by the Borrowers on October 27,
1999, which is for a term of four years, but is cancelable after two
years), in an aggregate principal amount of at least (a) $50,000,000
prior to March 31, 2000, (b) $75,000,000 prior to June 30, 2000 and (c)
$100,000,000 prior to September 30, 2000; provided, however, that the
Borrowers shall not have any obligation to keep such interest rate
protection agreements in place after repayment in full of the Term
Loans.
All references in the Credit Agreement and the other Credit Documents to the
"Credit Agreement" shall be deemed to refer to the Credit Agreement as amended
hereby.
<PAGE> 2
Except as amended or otherwise modified hereby, all of the terms and provisions
of the Credit Agreement and the other Credit Documents shall remain in full
force and effect.
This letter agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina.
This letter agreement may be executed in one or more counterparts, each of which
constitute an original, and all of which taken together shall constitute a
single document.
Sincerely,
BANK OF AMERICA, N.A.
(FORMERLY KNOWN AS NATIONSBANK, N.A.,
as Agent
By: /s/ William H. Diehl
------------------------------------
Name: William H. Diehl
Title: Senior Vice President
ACCEPTED AND AGREED:
CENTRAL PARKING CORPORATION, for
itself and each of the other
Borrowers and Guarantors
By: /s/ Stephen A. Tisdell
---------------------------------
Title: Chief Financial Officer
------------------------------
<PAGE> 1
EXHIBIT 10.14
AMENDMENT AND WAIVER TO CREDIT AGREEMENT
THIS AMENDMENT AND WAIVER TO CREDIT AGREEMENT (this "Amendment, dated
as of December 28, 1999, is by and among Central Parking Corporation, Central
Parking System, Inc., Central Parking System Realty, Inc., Central Parking
System of Massachusetts, Inc., CPC Finance of Tennessee, Inc., Kinney System of
Sudbury St., Inc., and Allright Holdings, Inc. (the "Borrowers"), the Guarantors
from time to time party thereto, the Lenders from time to time party thereto and
Bank of America, N.A. (formerly known as NationsBank, N.A), as Agent, as amended
(the "Credit Agreement").
WITNESSETH
WHEREAS, the Borrowers, the Guarantors, the Lenders, and the Agent have
entered into that certain Credit Agreement dated March 19, 1999, as amended by
that certain Letter Amendment to Credit Agreement dated as of June 25, 1999, as
amended by that certain Letter Amendment to Credit Agreement dated as of October
27, 1999 (the "Existing Credit Agreement"); and
WHEREAS, the Borrowers have requested, and the Lenders have agreed, to
waive and amend certain provisions of the Existing Credit Agreement as more
fully set forth below.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
PART 1
DEFINITIONS
SUBPART 1.1 Certain Definitions. Unless otherwise defined herein or the
context otherwise requires, the following terms used in this Amendment,
including its preamble and recitals, have the following meanings:
"Amended Credit Agreement" means the Existing Credit Agreement
as amended hereby.
"Amendment Effective Date" is defined in Subpart 4.1.
SUBPART 1.2 Other Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its preamble
and recitals, have the meanings provided in the Amended Credit Agreement.
PART 2
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment Effective
Date, the Existing Credit Agreement is hereby amended in accordance with this
Part 2.
<PAGE> 2
SUBPART 2.1 Name Change. All references in the Credit Documents to
NationsBank Montgomery Securities LLC and to "NMS" shall hereafter refer to Banc
of America Securities LLC and "BAS", respectively.
SUBPART 2.2 Amendment to definition of "EBITDA" in Section 1.1. The
definition of "EBITDA" is hereby amended in its entirety to read as follows:
"EBITDA" means for any period with respect to the Parent and
its Subsidiaries on a consolidated basis the sum of Net Income plus
Interest Expense plus all provisions for any Federal, state, local and
other domestic and foreign income taxes paid during the applicable
period plus depreciation, amortization and other non-cash charges plus
non-recurring charges and costs of up to $38,000,000 (net of tax) for
the first twelve month period following the Closing Date arising in
connection with the Allright Merger as set forth on Schedule 1.1(b),
in each case determined in accordance with GAAP applied on a consistent
basis. Except as expressly provided otherwise, the applicable period
shall be for the four consecutive quarters ending as of the date of
determination.
SUBPART 2.3 Amendments to Section 7.1(b)(ii). Section 7.1(b)(ii) of
the Existing Credit Agreement is hereby amended in its entirety to read as
follows:
(ii) within 60 days after the end of each fiscal year, an
annual business plan and budget for the Parent and its Subsidiaries,
containing, among other things, pro forma financial statements for such
fiscal year; provided, however, that the annual business plan and
budget for the Parent and its Subsidiaries for the fiscal year ending
September 30, 2000, shall be due on or before January 10, 2000.
SUBPART 2.4 Amendments to Section 7.9(a). Section 7.9(a) of the
Existing Credit Agreement is hereby amended in its entirety to read as follows:
7.9 FINANCIAL COVENANTS.
(a) Leverage Ratio. There shall be maintained with respect to
the Parent and its Subsidiaries as of the end of each fiscal quarter to
occur during the periods shown, Leverage Ratio of not greater than:
<TABLE>
<S> <C>
September 30, 1999 through June 29, 2000 3.75 to 1.0
June 30, 2000 through December 30, 2000 3.50 to 1.0
December 31, 2000 through June 29, 2001 3.25 to 1.0
June 30, 2001 and thereafter 3.00 to 1.0
</TABLE>
2
<PAGE> 3
SUBPART 2.5 REPLACEMENT of Schedule 1.1(b). Schedule 1.1(b) of the
Existing Credit Agreement is hereby deleted in its entirety and a new schedule
in the form of Schedule 1.1(b) attached hereto is substituted therefor.
PART 3
WAIVER
SUBPART 3.1 Annual Budget. The Lenders hereby waive the requirement of
Section 7.1(b)(ii) of the Credit Agreement that the Agent be furnished "within
30 days after the end of each fiscal year, an annual business plan and budget
for the Parent and its Subsidiaries" with respect to the fiscal year ending
September 30, 1999. Subject to Subpart 2.3 hereof, the Lenders further agree
that the failure to observe Section 7.1(b)(ii) of the Credit Agreement with
respect to the fiscal year ending September 30, 1999, shall not constitute an
Event of Default under the terms of the Credit Agreement. This waiver is a one
time waiver and shall be effective only in the specific circumstances provided
for above and only for the purpose for which given. Except as waived or modified
hereby, all of the terms and provisions of the Credit Agreement shall remain in
full force and effect.
SUBPART 3.2 Leverage Ratio. The Lenders hereby waive the requirement of
Section 7.9(a) of the Credit Agreement for the fiscal quarter ending September
30, 1999. The Lenders further agree that the failure to observe Section 7.9(a)
of the Credit Agreement for fiscal quarter ending September 30, 1999, shall not
constitute an Event of Default under the terms of the Credit Agreement. This
waiver is a one time waiver and shall be effective only in the specific
circumstances provided for above and only for the purpose for which given.
Except as waived or modified hereby, all of the terms and provisions of the
Credit Agreement shall remain in full force and effect.
PART 4
CONDITIONS TO EFFECTIVENESS
SUBPART 4.1 Amendment Effective Date. This Amendment shall be and
become effective as of the date on which all of the conditions set forth in this
Part 4 shall have been satisfied or waived by the Required Lenders (the
"Amendment Effective Date") and thereafter this Amendment shall be known, and
may be referred to, as the "Amendment."
(a) Execution of Counterparts of Amendment. The Agent shall
have received counterparts of this Amendment, which collectively shall
have been duly executed on behalf of (i) each of the Borrowers, (ii)
each of the Guarantors and (iii) the Required Lenders (as determined
prior to giving effect to this Amendment).
(b) Payment of Amendment Fees. The Agent shall have received,
for the account of each Lender approving this Amendment on or before
December 28, 1999, an amendment fee equal to 0.125% the Commitment of
each such Lender under the Existing Credit Agreement.
3
<PAGE> 4
PART 5
MISCELLANEOUS
SUBPART 5.1 Representations and Warranties. Each of the Borrowers
hereby represents and warrants to the Agent and the Lenders that, after giving
effect to this Amendment, (a) no Default or Event of Default exists under the
Credit Agreement or any of the other Credit Documents and (b) the
representations and warranties set forth in Section 6 of the Existing Credit
Agreement are, subject to the limitations set forth therein, true and correct in
all material respects as of the date hereof (except for those which expressly
relate to an earlier date).
SUBPART 5.2 Reaffirmation of Credit Party Obligations. Each Credit
Party hereby ratifies the Credit Agreement and acknowledges and reaffirms (a)
that it is bound by all terms of the Credit Agreement applicable to it and (b)
that it is responsible for the observance and full performance of its respective
Credit Party Obligations.
SUBPART 5.3 Cross-References. References in this Amendment to any Part
or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
SUBPART 5.4 Instrument Pursuant to Existing Credit Agreement. This
Amendment is a Credit Document executed pursuant to the Existing Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Existing Credit Agreement.
SUBPART 5.5 References in Other Credit Documents. At such time as this
Amendment shall become effective pursuant to the terms of Subpart 4.1, all
references in the Credit Documents to the "Credit Agreement" shall be deemed to
refer to the Credit Agreement as amended by this Amendment.
SUBPART 5.6 Counterparts/Telecopy. This Amendment may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement. Delivery of executed counterparts of the Amendment by telecopy shall
be effective as an original and shall constitute a representation that an
original shall be delivered.
SUBPART 5.7 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NORTH
CAROLINA.
SUBPART 5.8 Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 5.9 General. Except as amended hereby, the Existing Credit
Agreement and all other Credit Documents shall continue in full force and
effect.
4
<PAGE> 5
IN WITNESS WHEREOF the Borrowers, the Guarantors and the Lenders have
caused this Amendment to be duly executed on the date first above written.
BORROWERS: CENTRAL PARKING CORPORATION
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
SUBSIDIARY
GUARANTORS: CENTRAL PARKING SYSTEMS, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
CENTRAL PARKING SYSTEM REALTY, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
CENTRAL PARKING SYSTEMS OF MASSACHUSETTS, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
CPC FINANCE OF TENNESSEE, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
KINNEY SYSTEM OF SUDBURY ST, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
(Signatures Continued)
5
<PAGE> 6
ALLRIGHT HOLDINGS, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
6
<PAGE> 7
AGENT: BANK OF AMERICA, N.A.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
LENDERS: SUNTRUST BANK
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
7
<PAGE> 8
KBC BANK N.V.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
8
<PAGE> 9
FIRST AMERICAN NATIONAL BANK
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
9
<PAGE> 10
MERCANTILE BANK, N.A.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
10
<PAGE> 11
NBD BANK, N.A.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
11
<PAGE> 12
THE BANK OF NOVA SCOTIA
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
12
<PAGE> 13
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
13
<PAGE> 14
FIRST UNION NATIONAL BANK
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
14
<PAGE> 15
WACHOVIA BANK, N.A.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
15
<PAGE> 16
GENERAL ELECTRIC CAPITAL CORP.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
16
<PAGE> 17
THE BANK OF NEW YORK
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
17
<PAGE> 18
SOUTHTRUST BANK, N.A.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
18
<PAGE> 19
BARCLAYS BANK PLC
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
19
<PAGE> 20
FLEET BANK, N.A.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
20
<PAGE> 21
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
21
<PAGE> 22
Schedule 1.1(b)
EBITDA SPECIAL ADJUSTMENTS
CENTRAL PARKING CORPORATION
SUMMARY OF TRANSACTION EXPENSES FOR ALLRIGHT MERGER
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Merger & integration expense Actual Forecast Variance
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Edison Transaction 7.0 -- 7.0
- --------------------------------------------------------------------------------
Legal 5.6 4.7 0.9
- --------------------------------------------------------------------------------
Accounting 1.9 1.9 --
- --------------------------------------------------------------------------------
Investment Banking 10.8 10.3 0.5
- --------------------------------------------------------------------------------
Printing .5 .5 --
- --------------------------------------------------------------------------------
Severance 18.3 17.3 1.0
- --------------------------------------------------------------------------------
Other 1.2 .7 0.5
- --------------------------------------------------------------------------------
Contingency 1.6
- --------------------------------------------------------------------------------
System Integration
- --------------------------------------------------------------------------------
Travel .5
- --------------------------------------------------------------------------------
Supplies & out of pocket 1.0
- --------------------------------------------------------------------------------
Other professional .5
-----
- --------------------------------------------------------------------------------
SUBTOTAL 3.6 3.5 0.1
- --------------------------------------------------------------------------------
1st Quarter 2000 5.0 5.0
- --------------------------------------------------------------------------------
Total Pre-Tax 52.9 38.9 14.0
- --------------------------------------------------------------------------------
Tax Benefit (15.1) (8.9) (6.2)
----- ---- ----
- --------------------------------------------------------------------------------
TOTAL NET OF TAX 37.8 30.0 7.8
- --------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 1
EXHIBIT 10.20
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (this "Agreement") made effective as of
February 12, 1998 by and between Central Parking Corporation (the "Company"),
and Lewis Katz (the "Consultant").
In consideration of the mutual covenants contained in this Agreement,
the parties hereby agree as follows:
SECTION I
ENGAGEMENT
The Company agrees to engage the Consultant and the Consultant agrees
to be engaged by the Company for the Period of Consulting as provided below upon
the terms and conditions provided in the Agreement.
SECTION II
TERMS AND DUTIES
A. Period of Consulting.
The period of the Consultant's employment under this Agreement will
commence as of February 12, 1998, and shall continue through February 12, 2003,
subject to termination as provided in this Agreement ("Period of Consulting").
B. Duties.
During the Period of Consulting, the Consultant
(a) shall, at Consultant's option, oversee the day to day
management of those locations on Exhibit "A";
(b) may, at Consultant's option, seek new business
opportunities in the form of leases in or management of parking facilities and
shall present such opportunities to the Company; and
(c) shall offer to the Company, for the greater of the Period
of Consulting or five (5) years from the date hereof, the option to acquire up
to 50% of the interest, if any, proposed to be acquired by the Consultant in
commercial real property or a long-term leasehold in respect of commercial
property in excess of 50 years in each case that is reasonably likely to be used
in the Company's parking business, wherever located, under the procedures and
terms described in Section
<PAGE> 2
7.12 of the Agreement and Plan of Merger among Company, affiliates of Consultant
and others dated as of November 7, 1997 ("Merger Agreement").
The Consultant will perform faithfully the duties which may be required
hereunder. The Consultant shall not be required to perform services hereunder at
any specific location or at any office of the Company. Consultant shall be
permitted to perform the services hereunder by telephone or other method.
Consultant shall be available on a reasonable basis from time to time.
SECTION III
COMPENSATION
A. Consulting Fee.
For all services rendered by the Consultant in any capacity during the
Period of Consulting, the Consultant shall be paid an annual fee (the "Base
Consulting Fee") of Two Hundred Thousand Dollars ($200,000.00), payable in years
two through five only, inclusive, of the Period of Consulting, in equal monthly
installments.
B. Participating Consulting Fee.
In addition to the Base Consulting Fee, the Consultant shall be
entitled to an annual fee in respect of opportunities presented pursuant to
Section II(B)(b) (the "Participating Consulting Fee") equal to (a) (i) 10% of
all Adjusted Operating Income (defined as Net Operating Income less a G & A cost
equal to 5% of the location's normal cost of operations. "Net Operating Income"
shall be defined as the amount computed by deducting from the gross receipts
realized from ongoing parking operations all normal costs of operations,
including, but not limited to, Profit Sharing Plan contributions, depreciation
and/or amortization expense on equipment or other up front costs or capital
expenditures, and taxes except for federal, state and city income taxes.)
derived from new leases where Consultant was primarily responsible for such
lease, and (ii) 10% of all Adjusted Operating Income derived from new management
agreements where Consultant was primarily responsible for securing the
management agreement; less (b) the Base Consulting Fee. The Participating
Consulting Fee will be paid to Consultant for five years from the date of
commencement of operation pursuant to the lease or management agreement. The
Participating Consulting Fee shall be computed and payable within 75 days of the
end of each fiscal year during the period such fees are due. Any properties in
which Consultant is an investor shall not be included in calculation of the
Participating Consulting Fee.
SECTION IV
BUSINESS EXPENSES
A. The Company will reimburse the Consultant for all reasonable travel
and other expenses incurred by the Consultant in connection with the performance
of his duties and obligations under this Agreement, subject to usual and
customary Company reimbursement policies.
2
<PAGE> 3
B. The Company shall provide Consultant with an office, a telephone, a
parking pass and a secretary during the Period of Consulting.
SECTION V
DEATH OR DISABILITY
In the event of the death or disability of the Consultant during the
Period of Consulting, the Company's obligation to make payments under this
Agreement shall cease as of the date of death or disability, except for earned
but unpaid Base Consulting Fee, which will be paid on a pro-rated basis for that
year, and the Participating Consulting Fee payable with respect to previously
secured leases and/or management agreements, which shall continue to be paid
until the fifth anniversary of the date such lease and/or management agreements
were secured. The term "disability" will have the same meaning as provided in
the United States Internal Revenue Code.
SECTION VI
EFFECT OF TERMINATION OF THIS AGREEMENT
A. If this Agreement is terminated due to a Without Cause Termination,
the Company will pay the Consultant the Base Consulting Fee for the balance of
the five year term and Consultant will continue to receive any previously earned
Participating Consulting Fees payable with respect to previously secured leases
and/or management agreements until the fifth anniversary of the date such lease
and/or management agreements were secured.
B. If this Agreement is terminated due to a Termination for Cause or
resignation or voluntary termination by Consultant, earned but unpaid Base
Consulting Fee will be paid on a pro-rated basis through the date of
termination. No other payments will be made or benefits provided by the Company,
and all Participating Consulting Fees shall terminate.
C. For this Agreement, the following terms have the following meanings:
1. "Termination for Cause" means termination of this Agreement
by the Company's Board of Directors acting in good faith by written notice to
the Consultant due to material breach of this Agreement or the Consultant's
misconduct with respect to his duties under this Agreement, that constitutes
theft, embezzlement, fraud, intentional mishandling of Company funds, or any
other material act or omission which is materially injurious to the financial
condition or business reputation of the Company.
2. "Without Cause Termination" means termination of this
Agreement by the Company other than due to death, disability or Termination for
Cause.
3
<PAGE> 4
SECTION VII
OTHER DUTIES OF THE CONSULTANT DURING
AND AFTER THE PERIOD OF CONSULTING
A. The Consultant will, with reasonable notice during or after the
Period of Consulting, furnish information as may be in his possession and
cooperate with the Company as may reasonably be requested in connection with any
claims or legal actions in which the Company is or may become a party.
B. The Consultant recognizes and acknowledges that all information
pertaining to the affairs, business, clients, customers or other relationships
of the Company and its subsidiaries and affiliates, other than that which has
been publicly disclosed, is confidential and is a unique and valuable asset of
the Company. Access to and knowledge of this information are essential to the
performance of the Consultant's duties under this Agreement. The Consultant will
not during the Period of Consulting or after except to the extent reasonably
necessary in performance of the duties under this Agreement, give to any person,
firm, association, corporation or governmental agency any information concerning
the affairs, business, clients, customers or other relationships of the Company,
except as required by law or court order. The Consultant will not make use of
this type of information for his own purposes or for the benefit of any person
or organization other than the Company. All records, memoranda and other
writings relating to the business of the Company, whether made by the Consultant
or otherwise coming into his possession, which are confidential and will remain
the property of the Company.
C. During the Period of Consulting, the Consultant will not use his
status with the Company to obtain loans, goods or services from another
organization on terms that would not be available to him in the absence of his
relationship to the Company. The Consultant will not (a) throughout the Period
of Consulting; (b) with respect to (i) and (iii) below only, for a thirty-six
(36) month period following the termination of the Period of Consulting, as it
relates to any managed or leased parking location or operation of the Company as
such exists at the termination date; and (c) for a twelve (12) month period
following the termination of the Period of Consulting within a 50 mile radius of
any parking location acquired by the Company under the terms of the Merger
Agreement engage in any of the following activities: (i) perform any acts
intended to advance the interests of any existing competitors of the Company in
any way that will materially injure the interests of the Company; (ii) directly
or indirectly own or hold any proprietary interest in, provide advice or
consulting services, operate or manage or be employed or receive compensation
from any business or activity engaged in the same or similar business as the
Company; or (iii) solicit the business of any manager, owner or lessor of the
Company, solicit any employee or members of then current managers, owners or
lessors of or to the Company, in each case with respect to existing contracts or
locations of the Company. For the purposes of the Agreement, proprietary
interest Means legal or equitable ownership, whether through stock holdings or
otherwise, of a debt or equity interest (including options, warrants, rights and
convertible interests) in a business firm or entity, or ownership of more than
5% of any class of debt or equity interest in a publicly-held company. The
Consultant acknowledges that the covenants contained herein are reasonable as to
geographic and temporal scope. For a thirty-six (36) month period after
termination of the Period of Consulting the
4
<PAGE> 5
Consultant will not directly or indirectly hire any then current employee of the
Company or solicit or encourage any such employee to leave the employ of the
Company.
D. If Consultant breaches, or threatens to commit a breach of, any of
the provisions contained in this Article VII, the Company shall have the
following rights and remedies with respect to, each of which rights and remedies
shall be independent of the others and severally enforceable, and each of which
is in addition to, and not in lieu of, any other rights and remedies available
to Company under law or in equity.
(a) the right and remedy to have the provisions of Article VII
specifically enforced by any court of competent jurisdiction, it being agreed
that any breach or threatened breach of the provisions of Article VII would
cause irreparable injury to the Company and that money damages would not provide
an adequate remedy to the Company; and
(b) the right and remedy to require Consultant to account for
and pay over to the Company, all compensation, profits, monies, accruals,
increments or other benefits derived or received by Consultant as the result of
any action constituting a breach of Article VII.
E. Consultant acknowledges and agrees that the provisions of Article
VII are reasonable and valid in geographical and temporal scope and in all other
respects. If any court determines that the provisions of Article VII, or any
part thereof, is unenforceable because of the duration or geographical scope of
such provision, such court shall have the power to reduce the duration or scope
of such provision, as the case may be, and, in its reduced form, such provision
shall be enforceable.
F. If any court determines that the provisions of Article VII, or any
part thereof, is invalid or unenforceable, the remainder of the provisions of
Article VII shall not thereby be affected and shall be given full effect without
regard to the invalid portions.
G. Notwithstanding the provisions of this Section VII, the Consultant
may, in accordance with the terms of the Shareholders Agreement and Agreement
Not to Compete among Company, Consultant and others dated February _, 1998
("Shareholders Agreement"), make the investments described in Section 4.01(b)
of the Shareholders Agreement.
H. The expiration of the term of any restrictive provision contained
herein shall not impair or affect the continuing validity or application of the
same, similar or related provisions contained in any other agreement entered
into between the parties hereunder.
SECTION VIII
INDEMNIFICATION, LITIGATION
The Company will indemnify the Consultant to the fullest extent
permitted by the laws of the state of incorporation in effect at that time, or
certificate of incorporation and by-laws of the Company, whichever affords the
greater protection to the Consultant.
5
<PAGE> 6
SECTION IX
INDEPENDENT CONTRACTOR
The Consultant is an independent contractor and not an employee of the
Company. The Company will not withhold from any payments under this Agreement
any federal, state, city or other taxes that would be required to be withheld or
paid pursuant to any law or governmental regulation relating to employees. The
Consultant shall be responsible for all such amounts and shall indemnify and
hold the Company harmless with respect to such amounts and the failure of
Company to withhold or pay such amounts.
SECTION X
EFFECTIVE PRIOR AGREEMENTS
This Agreement contains the entire understanding between the Company
and the Consultant with respect to the subject matter and supersedes any prior
employment, consulting or severance agreements between the Company and its
affiliates, and the Consultant.
SECTION XI
CONSOLIDATION, MERGER OR SALE OF ASSETS
Nothing in this Agreement shall preclude the Company from consolidating
or merging into or with, or transferring all or substantially all of its assets
to, another corporation or entity which assumes this Agreement and all
obligations and undertakings of the Company hereunder. Upon such a
Consolidation, Merger or Sale of Assets, the term "the Company" as used will
mean the other corporation or entity and this Agreement shall continue in full
force and effect.
SECTION XII
MODIFICATION
This Agreement may not be modified or amended except in writing signed
by the parties. No term or condition of this Agreement will be deemed to have
been waived, except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and will not constitute
a waiver for the future or act on anything other than that which is specifically
waived.
6
<PAGE> 7
SECTION XIII
GOVERNING LAW
This Agreement has been executed and delivered in the State of New York
and its validity, interpretation, performance and enforcement shall be governed
by the internal laws of that state. The parties consent to the exclusive venue
and jurisdictions of the federal and state courts of the State of New York.
SECTION XIV
NOTICES
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid by registered mail, return receipt requested,
or when delivered if by hand, overnight delivery service or confirmed facsimile
transmission, to the following:
(a) If to the Company, at 2401 21st Avenue South, Suite 200,
Nashville, Tennessee 37212, Attention: Chairman, or at such other address as may
have been furnished to the Consultant by the Company in writing, copy to Mark
Manner, Harwell, Howard, Hyne, Gabbert & Manner, P.C., 1800 First American
Center, 315 Deaderick Street, Nashville, Tennessee 37238; or
(b) If to the Consultant, at the address designated for
notices in the Shareholders Agreement, or such other address as may have been
furnished to the Company by the Consultant in writing.
SECTION XV
BINDING AGREEMENT
This Agreement shall be binding on the parties' successors, heirs and
assigns.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
COMPANY:
CENTRAL PARKING CORPORATION
By: /s/ Monroe J. Carell, Jr.
------------------------------------
Title: Chairman & C.E.O.
---------------------------------
CONSULTANT
/s/ LEWIS KATZ
----------------------------------------
LEWIS KATZ
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EXHIBIT 10.21
LIMITED PARTNERSHIP AGREEMENT
THIS LIMITED PARTNERSHIP AGREEMENT made and entered into as of this
eleventh day of August, 1999, by and between CPS of the Northeast, Inc., a
Tennessee corporation ("CPS"), and Arizin Ventures, L.L.C., a Delaware limited
liability company ("Arizin").
W I T N E S S E T H
WHEREAS, the parties desire to form a limited partnership to facilitate
their mutual goal of identifying and securing new leases and contracts for the
operation and management of parking facilities;
WHEREAS, the parties have determined that it is in their best interests
to conduct business as a partnership, and to form a limited partnership for the
purposes set forth herein, and desire to evidence their mutual rights and
obligations in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
FORMATION, NAME, PRINCIPAL
PLACE OF BUSINESS
1.1 FORMATION.
The Partners hereto hereby form and enter into a limited partnership under
and pursuant to the laws of the State of Tennessee, subject to the terms and
conditions contained in this Partnership Agreement.
1.2 NAME.
The name of the Partnership shall be "Northeast Limited Partnership". The
Partnership may adopt and conduct its business under such assumed or trade
names as the Partners may from time to time unanimously determine.
1.3 PRINCIPAL PLACE OF BUSINESS.
The principal place of business of the Partnership shall be 2401
Twenty-First Avenue South, Suite 200, Nashville, Tennessee 37212. The business
of the Partnership also may be conducted at such other or additional place or
places as may be designated by all of the Partners.
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1.4 CERTAIN DEFINITIONS.
As used herein, the following terms shall have the indicated meanings:
(a) "Katz" refers to Lewis Katz.
(b) "Partnership" means the partnership created by this Agreement.
(c) "Partners" means collectively, and "Partner" means individually, CPS and
Arizin, together with any additional partners admitted pursuant to the
provisions of this Agreement.
(d) "General Partner" means CPS.
(e) "Limited Partner" means Arizin.
(f) "Plurality in Interest" means Partners owning a Percentage Interest of 30%
or more of the Partnership.
(g) "Percentage Interest" shall have the meaning set forth in Section 4.2.
ARTICLE II
PURPOSE, SCOPE, POWERS AND MANAGEMENT
2.1 PURPOSE.
The purpose and business of the Partnership shall be:
(a) To own, lease, operate and manage parking and storage facilities for
automobiles and other motor vehicles, which facilities shall include those
set forth on Exhibit I hereto and any other facilities and management
agreements and renewals thereof with respect to which CPS or any affiliate
thereof has requested Katz' assistance and with respect to which, after the
date hereof, Katz is instrumental in bringing to the Partnership and the
Partnership so acquires or leases;
(b) To enter into and to perform contracts and agreements of any kind
necessary to, in connection with, related to or incidental to the purposes
specified in subsection (a) above;
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(c) To borrow money for any Partnership purposes and in connection
therewith to issue notes, debentures and other evidences of
indebtedness and to secure the same and to hypothecate any, all or
substantially all of the properties and assets of the Partnership by
mortgage, deed of trust, pledge or other lien in furtherance of the
foregoing purposes of the Partnership; and
(d) To carry on any other activities necessary to, in connection with, or
incidental to, the accomplishment of the foregoing purposes of the
Partnership.
2.2 POWERS AND LIMITATIONS.
The following acts may be done only with the unanimous written consent of
all the Partners:
(a) Borrow money in the Partnership's name;
(b) Acquire, by purchase, lease or otherwise, interests in real or
personal property;
(c) Transfer, hypothecate, compromise or release any Partnership claim,
except on payment in full or in the ordinary course of business;
(d) Sell, lease or hypothecate any Partnership property or enter into any
contract for such purposes;
(e) Any act in contravention of this Agreement;
(f) Any act which would make it impossible to carry on the ordinary
business of the Partnership;
(g) Confess a judgment against the Partnership;
(h) Possess Partnership property or assign a Partner's rights in specific
Partnership property for other than a Partnership purpose;
(i) Admit a person as a Partner;
(j) Act on behalf of the Partnership, except to the extent that the
ability to do so is delegated to the General Partner in this
Agreement or by law; or
(k) Amend this Agreement; or
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(l) The entry by the Partnership into any transaction with, or the
payment by the Partnership of any fees or compensation to, any
Partner or any affiliate of any Partner except as specifically
provided in this Agreement.
2.3 MATERIAL CONTRACTS.
All Material Contracts (as defined below) must bear the signature of CPS,
by its duly authorized officer, as the General Partner. For purposes of this
agreement, "Material Contracts" is defined as all leases of real property,
contracts providing for the management or operation of parking facilities and
any other contracts providing for the payment or receipt of more than $10,000.
2.4 DUTIES OF GENERAL PARTNER.
CPS shall serve as General Partner of the Partnership and as such shall
manage the day-to-day operations of the Partnership with respect to all parking
facilities leased, managed or operated by the Partnership. The General Partner
may employ third parties to perform such functions as are not assigned to
either of the Partners.
2.5 DUTIES OF KATZ.
Katz agrees to seek new business opportunities for the Partnership in the
form of leases of, or contracts to manage or operate, parking facilities, and
shall present all such opportunities to the Partnership.
2.6 PERFORMANCE BONDS.
In the event the General Partner obtains and itself pays for a Performance
Bond in connection with any of the Partnership's operations, the General
Partner shall be paid a fee by the Partnership equal to the cost of the bond.
ARTICLE III
CAPITAL
3.1 INITIAL CAPITAL CONTRIBUTIONS.
No Partner shall be required to make an initial contribution to the
capital of the Partnership.
3.2 ADDITIONAL CAPITAL CONTRIBUTIONS.
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In the event the cash receipts of the Partnership are insufficient to meet
the cash needs of the Partnership for operating expenses, debt service, or any
other current expense or obligation, each of the Partners shall contribute the
funds necessary therefor according to its Percentage Interest (as defined in
Section 4.2) within five (5) days of a call for a contribution by a Plurality in
Interest of the Partners.
If any Partner is unwilling or unable to make such contribution, the other
Partner may, at its option, advance the funds on behalf of the non-contributing
Partner. Advances on behalf of a non-contributing Partner shall be considered
loans to the non-contributing Partner and shall not increase the capital account
of the contributing Partner. The amount advanced to a non-contributing Partner
shall be considered a loan payable, together with interest at the rate of ten
percent (10%) per annum, or one percent (1%) above the prime lending rate of
Bank of America, N.A., whichever rate is greater. Any partnership distributions
of Cash Flow (as defined in Section 4.4, below) which would otherwise have been
made to the non-contributing Partner shall be first used to pay accrued interest
on advances, and then to repay the advances made on behalf of the
non-contributing Partner before any distributions are received by the
non-contributing Partner.
3.3 WITHDRAWAL AND RETURN OF CONTRIBUTIONS.
No Partner shall have the right to demand the return of or otherwise
withdraw its contribution or to receive any funds or property of the Partnership
except as specifically provided in this Agreement.
3.4 CAPITAL ACCOUNTS.
A capital account shall be established on the books of the Partnership for
each Partner, which capital account shall be maintained in accordance with
Section 704(b) of the Internal Revenue Code of 1986 as amended (the "Code") and
the U.S. Treasury Regulations promulgated thereunder. The capital account of a
Partner shall be credited with the amounts of such Partner's capital
contributions when made and share of net profits of the Partnership and shall be
charged with the amount of all distributions made to such Partner and the
Partner's share of net losses of the Partnership. No interest shall be paid on
capital contributions or on balances in capital accounts.
ARTICLE IV
NET PROFITS, NET LOSSES, CASH FLOW
4.1 DETERMINATION OF NET PROFITS AND NET LOSSES.
The net profit or net loss of the Partnership shall equal the combined Lot
Level Profit (as defined below) of each of the parking facilities leased,
managed or operated by
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the Partnership. Lot Level Profit shall be reduced by any administrative
charges paid to Katz. Lot Level Profit means gross revenue derived from a
location minus Location Operating Expenses. Location Operating Expenses means
the direct operating expenses incurred with respect to a location as set forth
on Schedule A hereto.
4.2 ALLOCATION OF NET PROFITS AND NET LOSSES; DEFINITION OF PERCENTAGE
INTEREST.
The net profits and net losses of the Partnership shall be allocated in
accordance with the Percentage Interest of each Partner as follows:
CPS (70%)
Arizin (30%)
4.3 DISTRIBUTION OF CASH FLOW.
Cash Flow (as defined in Section 4.4) shall be first applied to operating
expenses, then to the debt service on any accrued debt, then to the debt
service on any other debt, then to funding a reasonable working capital reserve
as may be established by the General Partner. Any remaining Cash Flow shall be
distributed to the Partners in accordance with their Percentage Interest from
time to time as determined by the General Partner, but no less often than
semi-annually. The parties agree that it is within Arizin's discretion to
determine whether any commissions or other transaction-based incentive
compensation will be paid in connection with any facilities included in the
Partnership and that such commissions or other incentive-based compensation
which has been so determined by Arizin will be deducted from Arizin's share of
any Cash Flow that is distributed.
4.4 DEFINITION OF CASH FLOW.
"Cash Flow" shall mean the net profit or net loss of the Partnership
determined pursuant to Section 4.1.
PLUS: (a) depreciation and any other non-cash deductions taken in
computing such net income;
(b) the amortization of financing costs (including points) and other
prepaid items (insurance, supplies, etc.) taken as deductions in
computing the aforementioned net profit or net loss to the
extent that such amortization relates to costs that were paid in
a period prior to the one in which such net income is computed;
and
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(c) any cash received in the current period included in the net
income of a prior period;
MINUS: (d) any cash expenditures which have not been deducted in
determining the net profits and net losses of the Partnership;
and
(e) any amounts included in net income for which no cash was received
by the Partnership in such period.
4.5 PROCEEDS FROM CERTAIN TRANSACTIONS.
In the event that the Partners elect at any time to refinance or obtain
additional long-term indebtedness or in the event proceeds are available from a
condemnation award, casualty insurance payment or insurance payment for loss of
title, after the utilization of the proceeds of such indebtedness or
condemnation award or insurance payment for the payment of operating expenses,
existing debt, rebuilding or curing title defects or otherwise as the Partners
may agree, any remaining proceeds, awards or payment shall be divided between
the Partners in accordance with their Percentage Interest. Any net proceeds
from the sale or other transfer of Partnership assets shall be distributed in
accordance with the Percentage Interests; provided that such proceeds shall be
first used to pay accrued interest on advances made on behalf of a
non-contributing Partner and then to repay such advances.
4.6 GAINS OR LOSSES IN PROCESS OF LIQUIDATION.
Any gain or loss on disposition of the Partnership properties in the
process of liquidation shall be credited or charged to the Partners in
accordance with their Percentage Interest. Any property distributed in kind in
the liquidation shall be valued and treated as though the property was sold and
the cash proceeds were distributed. The difference between the value of
property distributed in kind and its book value shall be treated as a gain or
loss on sale of the property and shall be credited or charged to the Partners
in accordance with their Percentage Interest.
ARTICLE V
FISCAL MATTERS
5.1 BOOKS AND RECORDS.
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Full and accurate books of the Partnership shall be maintained at its
principal place of business showing all receipts and expenditures, assets and
liabilities, profits and losses, and all other records necessary for recording
the Partnership's business and affairs. All Partners shall have access at all
reasonable times to the books and records of the Partnership. Unaudited income
statements shall be provided to the Partners on a semi-annual basis. Annual
income statements shall be certified by an officer of CPS.
5.2 FISCAL YEAR.
The fiscal year of the Partnership shall end on September 30 of each year.
5.3 ACCOUNTING DECISIONS.
All decisions as to accounting matters, except as specifically provided to
the contrary herein, shall be made by a majority of the Partners based on a
majority of Percentage Interest. Such decisions must be satisfactory to the
Partnership's accountants.
5.4 BANK ACCOUNTS.
All funds of the Partnership shall be deposited in its name in such
checking and savings accounts or time deposits or certificates of deposit as
shall be designated by the General Partner. Withdrawals therefrom shall be made
only upon signature of a duly authorized officer of CPS.
ARTICLE VI
DEATH OR INCAPACITY OF KATZ
It is understood that Katz is important to the success of this
Partnership. In the event of the death or incapacity of Katz, CPS will have the
right (but not the obligation), exercisable within one hundred eighty (180)
days after the actual receipt of notice of the death or incapacity of Katz, to
purchase Arizin's interest in the Partnership. The purchase price shall be the
fair market value of the Arizin Partnership interest, as determined pursuant to
Section 7.2(g) below.
For purposes of this section, Katz shall be deemed to be incapacitated if
he is disabled and unable to perform his duties under this Partnership
Agreement for a continuous period of at least six (6) months.
ARTICLE VII
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TRANSFERS OF PARTNERSHIP INTERESTS
7.1 DEFINITION OF TRANSFER.
The transfer of an interest in the Partnership shall mean the transfer,
alienation, sale, assignment, pledge, or other disposition or encumbrance of
all or any part of an existing interest in the Partnership, whether voluntarily
or involuntarily, whether for or without consideration, and includes a transfer
by the dissolution of a corporate Partner, by operation of law, by bankruptcy
of a Partner, by foreclosure or judicial sale or otherwise.
7.2 TRANSFERS OF INTEREST.
In no event may any Partner transfer all or any part of its interest in
the Partnership and no Partner shall withdraw from the Partnership if such
action would result in a sale or exchange of fifty percent (50%) or more of the
total interest in the capital and profits of the Partnership within a
twelve-month period such that the Partnership would be considered as terminated
under Section 708 of the Internal Revenue Code of 1986, as amended, or so as to
prevent the Partnership from continuing the use of accelerated methods of
depreciation theretofore used by the Partnership in connection with depreciable
property of the Partnership. The Partners agree that the restrictions on the
transfer of Partnership interests in this Agreement shall not in any way
restrict the ability of Central Parking Corporation or a subsidiary thereof
from selling or otherwise transferring all or a portion of its stock or assets.
Except as provided in this Agreement, no Partner shall transfer its Partnership
interest except on the following conditions:
(a) All Partners consent, which consent shall not be unreasonably
withheld, to the proposed transfer in writing after full
disclosure of the proposed transfer;
(b) CPS may assign, without consent, its interest in the Partnership
to another legal entity provided that a majority of such
entity's stock or other ownership interest is owned by Central
Parking Corporation or a subsidiary thereof;
(c) Arizin may assign, without consent, its interest in the
Partnership to another legal entity provided that a majority of
such entity's stock or other ownership interest is owned by Katz;
(d) With respect to any proposed voluntary transfer to a third party;
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(i) The selling Partner shall deliver written notice to the
other Partner and to the Partnership, which notice shall
state the name of the prospective purchaser and the price
and terms offered by such prospective purchaser. The other
Partner shall have an option to purchase the Partnership
interest of the selling Partner, at the price and on the
same terms set forth in such written notice. The other
Partner shall have sixty (60) days following the receipt of
such notice to exercise such option by giving notice of
such election to the selling Partner.
(ii) If the interest of the Partner desiring to sell is not
purchased in accordance with paragraph d(i), then for a
period of sixty (60) days after the expiration of the
option referred to in such paragraph, the selling Partner
may sell such interest to the person or persons named in
such written notice but only at a price not less than and
on terms no more favorable to the buyer than the price and
terms set forth in the written notice provided to the other
Partner under paragraph (d)(i). After the expiration of the
sixty-day period, no portion of the interest shall be sold
without first being reoffered to the other Partner in
accordance with paragraph d(i).
(e) With respect to transfers due to the dissolution of a Partner,
in the event of dissolution of a Partner, such Partner's
representative shall give notice of the fact of dissolution to
the other Partner, and the Partnership shall purchase from the
dissolved Partner, and said dissolved Partner shall sell to the
Partnership, the dissolved Partner's entire interest in the
Partnership. The purchase price shall be the fair market value
of the Partnership interest, as determined pursuant to paragraph
(g) below. The Partnership shall pay for the Partnership
interest in twelve (12) equal monthly installments of principal
and interest, said interest to be at the rate of ten percent
(10%) per annum and said indebtedness shall be evidenced by a
Promissory Note duly executed by the Partnership.
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(f) With respect to involuntary transfers due to bankruptcy,
foreclosure, judicial sale, operation of law, or otherwise, the
Partner whose interest is subject to such involuntary transfer
shall give notice of such transfer to the other Partner. Upon
receipt of such notice, the Partnership shall have the right,
but not the obligation, to purchase the interest of said Partner
in the Partnership for a consideration equal to the fair market
value of the Partnership interest, as determined pursuant to
paragraph (g), below. This purchase option must be exercised
with in three (3) months of the notice of said transfer.
(g) The fair market value of a Partner's interest in the Partnership
shall be that specified in a written stipulation by all
Partners, dated not more than twelve (12) months prior to the
dissolution or purported transfer giving rise to the purchase
option. In the event that no such written stipulation is in
effect, then the fair market value of an interest in the
Partnership shall be determined by one appraiser who is a member
of the American Institute of Real Estate Appraisers (an "MAI
appraiser"), and who is satisfactory to the Partners. If such
persons cannot agree upon the selection of one appraiser, then
the selling or transferring Partner shall select one MAI
appraiser and the other Partner shall select a second MAI
appraiser. The appraiser(s) shall take into consideration any
outstanding indebtedness, liabilities and obligations of the
Partnership, including, without limitation, the establishment of
reasonable reserves for contingent claims. Upon the resolution
of such contingent claims, any unused reserves shall be
distributed as they would have been had there been no reserves.
If two MAI appraisers are engaged as mentioned above, and they
are unable to agree upon the fair market value, then their
appraisals shall be averaged. The appraised value so determined
shall be final and binding. The fees and expenses of one
appraisal shall be borne by the Partnership, and if a second MAI
appraiser is engaged, his fees and expenses shall be paid as a
deduction from the purchase price paid to the selling Partner.
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(h) The closing of any sale of a Partner's interest in the
Partnership under this Section shall occur within thirty (30)
days of the later to occur of (i) the Partners' consent under
paragraph (a); (ii) the last election by a Partner to purchase
the selling Partner's interest under paragraph (d); (iii) receipt
of the notice required under paragraph (e) or (f); or (iv) the
establishment of the fair market value of the interest in the
Partnership if an appraisal is required under paragraph (g) with
respect to the options arising under paragraph (e) or (f).
7.3 SPECIAL PROVISION WITH RESPECT TO THE PURCHASE OF ARIZIN'S INTEREST.
Notwithstanding any provisions herein to the contrary, CPS shall have the
right (but not the obligation) to buy the interest of Arizin in this Partnership
at any time during the term of the Partnership upon the occurrence of any of the
following events:
(a) Katz breaches the Shareholders' Agreement and Agreement Not to
Compete by and among Central Parking Corporation, Monroe J.
Carell, Jr., Lewis Katz and Saul Schwartz, dated as of February
12, 1998 (the "Shareholder Noncompetition Agreement"); or
(b) The commission of fraud or defalcation by Katz involving funds or
other assets of the Partnership; or the conviction of, or plea of
nolo contendre by, Katz of a felony.
The amount to be paid by CPS under this Section 7.3 will be the fair market
value of Arizin's interest in the Partnership determined in accordance with
Section 7.2(g).
7.4 TRANSFEREE TO ASSUME PARTNERSHIP OBLIGATIONS.
In the event that, pursuant to this Section 7, any Partner (the
"Transferor") transfers his Percentage Interest to any person or entity other
than one or more of the other Partners or the Partnership (the "Transferee"), no
such transfer shall become effective until the proposed Transferee agrees in
writing to assume and be bound by all the obligations and restrictions to which
the Transferor is subject under the terms of this Agreement and any further
agreement with respect to the business of the Partnership.
ARTICLE VIII
TERM, TERMINATION, WINDING UP
8.1 TERM.
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The term of the Partnership shall commence on the date of execution of this
Agreement, and shall continue for a period of fifty (50) years from the date
hereof, unless earlier terminated in accordance with the provisions hereof or as
provided by law. The term of the Partnership may be extended and continued for
such additional periods of time as the Partners may unanimously agree.
8.2 EVENTS CAUSING DISSOLUTION AND TERMINATION.
Unless the Partnership is continued as provided in this Agreement, the
Partnership shall be dissolved (a) upon the expiration of the term of the
Partnership stated in this Agreement; (b) upon the sale of all or substantially
all of the assets of the Partnership and the distribution of the net proceeds
therefrom; (c) in the event of the dissolution or withdrawal of a Partner; (d)
at any time with the written consent of the Partners; or (e) as may be otherwise
provided by law.
The Partnership shall be terminated when the winding up of Partnership
affairs has been completed following dissolution.
8.3 WINDING UP AFFAIRS ON DISSOLUTION.
Upon dissolution of the Partnership, the General Partner, or the persons
required or permitted by law to carry out the winding up of the affairs of the
Partnership, shall promptly notify all Partners of such dissolution; shall wind
up the affairs of the Partnership; shall prepare and file all instruments or
documents required by law to be filed to reflect the dissolution of the
Partnership; and, after paying or providing for the payment of all liabilities
and obligations of the Partnership, shall distribute the assets of the
Partnership as provided by law and the terms of this Agreement.
8.4 DISTRIBUTION UPON DISSOLUTION.
Upon dissolution and sale of any Partnership assets or upon termination of
this Partnership, the proceeds of such sale or the assets of this Partnership
shall be disbursed as set forth below:
(a) To pay all outstanding liabilities and expenses of the
Partnership, including, without limitation, those liabilities and
expenses which are not assumed by a single Partner or the
succeeding owner of such real estate, and upon which either the
Partnership or a Partner has personal liability.
(b) The balance, if any, to the Partners in accordance with their
respective Percentage Interests.
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8.5 TRADE NAME AND DISSOLUTION.
Upon dissolution of the Partnership, CPS shall retain all rights in and to
the use of all names used by the Partnership, including, but not limited to,
"CPS of the Northeast, Inc." and "Central Parking System". Said names shall not
be used in any way by Arizin following such dissolution.
ARTICLE IX
OTHER AGREEMENTS
9.1 CONSULTING AGREEMENT.
Nothing in this Agreement shall be deemed to amend or otherwise modify the
terms of the Consulting Agreement between Central Parking Corporation and Katz
dated as of February 12, 1998 (the "Consulting Agreement"), except that Arizin
shall not be entitled to receive the Participating Consulting Fee described in
Section III (B) of the Consulting Agreement for any opportunities presented to
the Partnership under Section 2.5 of this Agreement.
9.2 SHAREHOLDER NONCOMPETITION AGREEMENT.
Nothing in this Agreement shall be deemed to amend or otherwise modify the
terms of the Shareholders' Agreement and Agreement Not to Compete by and among
Central Parking Corporation, Monroe J. Carell, Jr., Katz and Saul Schwartz
dated as of February 12, 1998 (the "Shareholder Noncompetition Agreement");
provided, however, that it is understood by the parties hereto that the
presentation to the Partnership by Katz of any opportunities under Section 2.5
of this Agreement and Katz' participation in this Partnership shall not be
deemed by the parties hereto to be a violation of Katz' obligation under
Section 4.01(b)(i) or (ii) of the Shareholder Noncompetition Agreement.
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ARTICLE X
GENERAL PROVISIONS
10.1 LIMITATION ON DUTIES OF CPS.
The Parties to this Agreement hereby acknowledge the following:
(a) That the terms of this Agreement do not create or impose upon CPS or
its affiliates the affirmative duty to develop, acquire, seek out,
establish or otherwise create parking facility opportunities, through
acquiring, owning, leasing, operating, managing or otherwise, for the
Partnership.
(b) That the terms of this Agreement shall in no way limit the right of
CPS or its affiliates to own, manage, lease or otherwise engage in the
business of operating or managing parking facilities directly or with
third parties not related to the Partnership, including parking
facilities that compete with the parking facilities owned, operated or
managed by this Partnership.
10.2 NOTICES.
All notices, consents, waivers, directions, requests, votes or other
instruments or communications provided for under this Agreement shall be in
writing, signed by the Party giving the same, and shall be deemed properly given
when actually received or when mailed, if sent by registered or certified United
States mail, postage prepaid, addressed:
If to the Partnership:
Northeast Limited Partnership
c/o Monroe Carell
Central Parking System
2401 Twenty-First Avenue South, Suite 200
Nashville, Tennessee 37212
If to the Partners:
CPS of New York, Inc.
c/o Monroe Carell
Central Parking System
2401 Twenty-First Avenue South, Suite 200
Nashville, Tennessee 37212
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Arizin:
Arizin Ventures
c/o Lewis Katz
Katz, Lane, Ettin, Levine & Kurzwell
905 North King's Highway
Cherry Hill, NJ 08034
with a copy to Robert M. Segal
Wolf, Block, Schorr & Solis-Cohen
1650 Arch Street, 22nd Floor
Philadelphia, PA 19102
or to such address as any party may specify in writing to the other parties.
10.3 MEETINGS.
Meetings of all Partners may be called by any of the Partners by written
notice to all Partners at least ten (10) days in advance of such meeting. The
notice must specify the purpose(s) of the meeting. Any such meetings shall be
held at the Partnership's principal place of business, unless another meeting
place is specified by the General Partner.
10.4 INTEGRATION.
This Agreement embodies the entire agreement and understanding between the
Partners and supersedes all prior agreements and understandings, if any, among
and between the Partners relating to the subject matter hereof.
10.5 APPLICABLE LAW.
This Agreement and the rights of the Partners shall be governed by and
construed and enforced in accordance with the laws of the State of Tennessee.
10.6 ARBITRATION.
The following arbitration provision shall govern this Agreement and the
rights and remedies of the parties in the event of any dispute arising with
respect to the interpretation or application of this Agreement, or with respect
to the performance by any party of its duties or obligations hereunder:
The Partners agree to submit to binding arbitration any and all claims,
disputes and controversies between or among them (and their respective
employees, officers, directors, attorneys, and other agents) relating to this
Agreement. Such arbitrations shall proceed in
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New York, New York, shall be governed by Tennessee law, and shall be conducted
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). Judgment upon the award rendered by the arbitrator(s) may
be entered in any court having final jurisdiction.
10.7 SEVERABILITY.
In case any one or more of the provisions contained in this Agreement or
any application thereof shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and any other application thereof shall not in any way be
affected or impaired thereby.
10.8 BINDING EFFECT.
Except as herein otherwise provided to the contrary, this Agreement shall
be binding upon, and inure to the benefit of, the Partners and their respective
heirs, executors, administrators, successors and assigns.
10.9 TAX MATTERS.
The General Partner shall serve as the tax matters partner (the "Tax
Matters Partner") for purposes of the Code. The Tax Matters Partner shall keep
the other Partners informed as to the status of any audit of the Partnership's
tax affairs by the Internal Revenue Service (the "IRS") and shall not, without
first obtaining the written approval of the other Partners (i) enter into a
settlement agreement with the IRS which purports to bind any of the Partners
other than the Tax Matters Partner, (ii) file a petition pursuant to Sections
6226(a) or 6228 of the Code, (iii) intervene in any action pursuant to Section
6226(b)(5) of the Code, or (iv) enter into an agreement extending the statute
of limitations. Additionally, if an audit of any of the Partnership's tax
returns shall occur, the Tax Matters Partner shall not settle or otherwise
compromise assertions of the auditing agent which may be adverse to the other
Partners without the prior written consent of the other Partners
17
<PAGE> 18
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first set forth above.
CPS OF THE NORTHEAST, INC.
Attest: /s/ XXXXX BY: /s/ MONROE J. CARELL, JR.
------------------------ --------------------------------
Monroe J. Carell, Jr., Chairman
ARIZIN VENTURES, L.L.C.
Attest: /s/ XXXXX BY: /s/ LEWIS KATZ
------------------------ --------------------------------
Lewis Katz
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<PAGE> 19
SCHEDULE A
"Location Operating Expenses" shall include all ordinary, direct and
reasonable expenses of operating a parking facility including, without
restricting the generality of the foregoing:
(1) Wages of all employees, including supervisory personnel, attendants,
cashiers, clerical and audit staff, and all benefits paid to such
employees, including without limitation, workers' compensation insurance,
unemployment insurance, social security, vacation, paid leave, medical,
dental, vision and life insurance and retirement or pension costs;
(2) Rental payments and amortization of key money;
(3) Courier service expense;
(4) Credit card fees;
(5) Snow removal;
(6) Telephone expenses;
(7) Occupancy and other business taxes;
(8) License and permit fees;
(9) Advertising and promotion costs;
(10) Insurance required under a management agreement or lease;
(11) Sundry items such as uniforms, tickets and janitorial supplies;
(12) Payroll processing and accounts receivable processing expenses;
(13) Cost of maintaining accounting records and preparing financial statements;
(14) Voluntary settlements of patrons' claims for vehicle damage or loss of
contents;
(15) Normal maintenance and repairs of the parking facility including, but not
limited to, repainting stall markings, replacement or repair of signs and
ticket dispensing
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<PAGE> 20
equipment, elevators, sprinklers, and ventilation systems and any other
maintenance or repairs required under a management agreement or lease;
(16) Legal or audit charges directly attributable to an occurrence or event at
the parking facility;
(17) Utilities expenses;
(18) Payment of the "deductible" amount of slip and fall and automobile
insurance claims and payment of claims in excess of policy limits;
(19) Property tax payments;
(20) Depreciation of capital expenditures;
(21) Amortization of debt and other financing costs;
(22) Cost of payroll and equipment of security personnel; and
(23) Cost of premiums for fire and extended coverage insurance.
20
<PAGE> 21
EXHIBIT I
Boston
Devonshire Place (location #1518)
Miami
Fountainbleu Hotel (location #6125)
Philadelphia
23rd and Arch (location #4130)
Gallery II (location #4343)
New York
Parkchester (location #130)
Court House Lot (location #126)
Savoy Hotel (location #141)
Newport (locations #3249, 3252, 3253, 3254, 3255)
St. Peters (location #3260)
1100 Raymond Boulevard (location #3151)
Belmeade (location #3259)
EDC (location #137)
Robert Wood Johnson (location #3245, 3258, 3251)
Patterson Street Deck (location #3284)
411 - 413 Broadway (location #2407)
34th Street Lot (location #2149)
Hilton (location #2116)
Waldorf (location #2173)
Lewis Katz will share with any associate due a part of the above commissions.
<PAGE> 1
EXHIBIT 10.22
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (as amended or supplemented from time
to time, this "Agreement") is hereby made this 12 day of February, 1998 by and
among Central Parking Corporation, a Tennessee corporation (the "Company"),
Lewis Katz and Saul Schwartz (collectively, the "KSHC Holders")(the "Initial
Holders," and each, and "Initial Holder").
Preliminary Statements
Contemporaneously with the execution and delivery of this Agreement, and
pursuant to that certain Acquisition Agreement and Plan of Merger by and among
the Company and Kinney System Holding Corp. and KSHC Parallel Parking, Inc.
dated as of November 7, 1997 (the "Merger Agreement"), the Company will issue
an aggregate of 882,422 shares of the Company's Common Stock (as defined below)
to the KSHC Holders. In connection with the transactions contemplated by the
Merger Agreement, and as a condition thereto, the Initial Holders and the
Company are required to execute and deliver this Agreement.
IN CONSIDERATION of the foregoing premises and the mutual promises,
covenants and agreements contained in this Agreement, the parties, intending to
be legally bound, hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings, and defined terms used herein but
not defined herein shall have the meaning ascribed to them in the Merger
Agreement:
(a) Common Stock shall mean the Company's common stock, par value
$0.01 per share.
(b) Commission shall mean the Securities and Exchange Commission, or
any successor organization thereto.
(c) Company Shares shall mean any shares of Common Stock held by the
Company.
(d) Exchange Act shall mean the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder, as amended and supplemented
from time to time, or any successors thereto.
(e) Fair Market Value of a share of Common Stock, as of any date,
means the daily closing price per share of the Common Stock on such date. As
used in this definition, the daily closing price per share shall be the closing
price for NYSE-Composite transactions in Common stock as reported by the NYSE
or, if such Common Stock, is not then listed or admitted to trading on such
exchange, on the principal national securities exchange on which such Common
Stock is listed or admitted to trading or, if not listed or admitted to trading
on any securities exchange, on the Nasdaq National Market, or if such Common
Stock is not then listed or admitted to trading on a national
<PAGE> 2
securities exchange or quoted on the Nasdaq National Market, the average of the
closing bid and asked prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm selected by the Company or if no such bid
prices are available, the fair market value per share as determined in good
faith by the Board, provided, that the Board shall not discount any such
determination of fair market value to reflect the fact that any shares of
Common Stock are subject to the restrictions of this Agreement or the
Shareholders' Agreement (as defined below).
(f) Holders shall mean each of the Initial Holders, their Permitted
Transferees, and any other Person that shall hereafter acquire, by purchase or
otherwise, any Registerable Shares from the Initial Holders and their Permitted
Transferees, and that shall have executed and delivered a joinder agreement.
(g) Initiating Holders shall mean any Holder or Holders making the
initial request for registration pursuant to Section 2(a) or Section 3(a), as
applicable.
(h) Merger Shares shall mean the shares of Common Stock received by the
KSHC Holders pursuant to the Merger Agreement.
(i) Other Shares shall mean any issued and outstanding shares of Common
Stock held by any Person other than the Company or an Initial Holder and its
Permitted Transferee.
(j) Permitted Transferee shall have the meaning set forth in
Section 15(a).
(k) Person shall mean any natural person, corporation, general
partnership, limited partnership, limited liability company, proprietorship,
joint venture, trust, association, entity, or other form of business
organization.
(l) Registerable Shares shall mean: (i) shares of Common Stock held by
any Holder; and (ii) any shares of Common Stock or other equity securities
issued pursuant to a stock dividend, subdivision, split-up, combination, or
other recapitalization with respect to any of the shares described in (i)
above, excluding such shares or such other equity securities: (x) that have been
registered under the Securities Act pursuant to an effective registration
statement filed thereunder (other than pursuant to the S-4 Registration
Statement); (y) with respect to which public sale (without volume limitations)
is permitted to Rule 144 or any other rule or regulation permitting public sale
without registration under the Securities Act (in any case, as amended or
supplemented from time to time, or any successors thereto) promulgated under the
Securities Act; or (z) that are no longer held by a Holder or any Permitted
Transferee.
(m) Registration Expenses shall mean all expenses incurred by the Company
in complying with the registration requirements of Section 2 and Section 3
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses incurred in connection with complying with
state securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc., fees of transfer agents and registrars, costs of
insurance, but excluding any Selling Expenses.
2
<PAGE> 3
(n) Securities Act shall mean the Securities Act of 1933 and the
rules and regulations promulgated thereunder, as amended and supplemented from
time to time, or any successors thereto.
(o) Selling Expenses shall mean all underwriting discounts, selling
commissions, transfer taxes and other similar expenses applicable to the sale
for Registerable Shares.
(p) Substantial Amount shall mean (i) with respect to registration
under Section 2, that number of Registerable Shares that equals fifty percent
(50%) or more of all of the Registerable Shares, and (ii) with respect to a
registration under Section 3, that number of Registerable Shares that equals
twenty-five percent (25%) or more of all of the Registerable Shares.
(q) Termination Date shall mean the fifth anniversary date of this
Agreement.
(r) Transfer shall mean any sale, assignment, transfer, pledge,
hypothecation, gift or any other disposition.
2. Demand Registration
(a) At any time and from time to time on or after the earlier of the
third anniversary of the date hereof and the date upon which the transfer
restrictions affecting shares of Registerable Securities lapse pursuant to the
terms of the Shareholders' Agreement and Agreement Not to Compete dated ______,
1998 among the Company, the KSHC Holders and Monroe J. Carell, Jr.
("Shareholders' Agreement") and prior to the Termination Date, the Holders of a
Substantial Amount of Registerable Shares shall have the right, subject to the
further provisions for this Section 2 and of Section 4, to request that the
Company effect registrations on Form S-3 with respect to all or at least a
Substantial Amount of Registerable Shares. The Holders may request that the
Company effect registrations on Forms S-1 or S-2 in the event Form S-3 is not
available for use by the Company, provided the request is to register shares of
Common Stock with an aggregate Fair Market Value of $20,000,000 or more. Each
such request shall be in writing, shall specify the Registerable Shares to be
sold or disposed by the Holders thereof, and shall state the intended method of
disposition of such Registerable Shares. Upon the Company's receipt of any such
request, the Company shall:
(i) as promptly as practicable give written notice of the
proposed registration to all other Holders; and
(ii) use its best efforts as expeditiously as practicable to
effect a registration of the Registerable Shares as may be so requested and
as would permit the sale and distribution of such portion of the Initiating
Holders' Registerable Shares as are specified in such request and such
portion of the Registerable Shares of any other Holder or Holders joining
in such request within fifteen (15) days after respective receipt of
written notice from the Company.
3
<PAGE> 4
(b) If the Initiating Holders intend to distribute the Registerable Shares
covered by their request by means of underwriting, then (i) such Initiating
Holders shall so advise the Company as part of their request made pursuant to
Section 2(a), (ii) the Company shall include such information in its written
notice referred to in Section 2(a)(i), and (iii) the Company and the Holders
proposing to distribute their securities shall enter into an underwriting
agreement in customary form with the underwriter(s) selected for such
underwriting by the Company.
(c) The Company shall be entitled to include in any registration requested
pursuant to this Section 2 Company Shares and other Shares; provided, that if
the managing underwriter, if any, or if the registration pursuant to this
Section 2 is not, in whole or in part, an underwritten offering, the Company,
shall be of the opinion that the inclusion of all of the Registration Shares,
the Company Shares and the Other Shares proposed to be included in such
registration would interfere with the successful marketing of all of such
securities, then the number of Registerable Shares, Company shares and Other
Shares to be included in the registration statement shall, subject to Section
4(d), be included in the offering in the following order and priority:
FIRST: the Holders shall have the right to participate in accordance
with their respective registration rights hereunder on a prorata basis, to the
extent that the managing underwriter in such offering, or if such offering is
not, in whole or in part, an underwritten offering, the Company, reasonably
believes in good faith that the inclusion of such Registerable Shares will not
materially and adversely affect such offering; and then
SECOND: the Company shall have the right to participate to the extent
that the managing underwriter in such offering, or if such offering is not, in
whole or in part, an underwritten offering, the Company, reasonably believes in
good faith that the inclusion of such Company Shares will not materially
adversely affect such offering; and then
THIRD: the holders of Other Shares that have Company granted
registration rights shall have the right to participate in accordance with
their respective registration rights on a pari passu basis ratably in
accordance with the ratio that the number of shares proposed to be included in
such registration each such holder bears to the total number of such Other
Shares proposed to be included in such registration to the extent that the
managing underwriter in such offering, or if such offering is not, in whole or
in part, an underwritten offering, the Company, reasonably believes in good
faith that the inclusion of such Other Shares will not materially and
adversely affect such offering; and then
FOURTH: the holders of Other Shares that do not have Company granted
registration rights shall have the right, to the extent, if at all, that the
Company proposes to include such Other Shares therein, to participate to the
extent that the managing underwriter in such offering, or if such offering is
not, in whole or in part, an underwritten offering, the Company, reasonably
believes in good faith that the inclusion of such Other Shares will not
materially and adversely affect such offering.
4
<PAGE> 5
(d) The Company shall not be required to file and cause to become
effective any such registration pursuant to this Section 2(x) subject to Section
4(c), after the Company has filed three (3) registrations under this Section 2,
or (y) within one hundred twenty (120) days after the effective date of any
other registration filed by the Company under the Securities Act as to which the
Holders had registration rights under Section 3. Any registration proceeding
begun pursuant to this Section 2 that is subsequently withdrawn by the Holders
of a majority of the Registerable Shares requested to be registered shall count
toward the three (3) registration statements that the Holders have the right to
cause the Company to effect pursuant to this Section 2.
3. "Piggy-Back" Registration.
(a) If the Company proposes to register any Company Shares or any Other
Shares or both under the Securities Act for sale to the public (except with
respect to (x) any registration statement relating to any demand pursuant to
Section 2 and (y) any registration statements on Forms S-4, S-8 or any other
form not generally available for registering the Registerable Shares for sale
to the public) at any time and from time to time on or after the earlier of the
third anniversary of the date hereof and the date upon which the transfer
restrictions affecting shares of Registerable Securities lapse pursuant to the
terms of the Shareholders' Agreement and prior to the Termination Date, then
each such time, the Company shall:
(i) as promptly as practicable give written notice to all Holders
holding Registerable Shares of its intention so to do; and
(ii) upon the written request of any such Holder, received by the
Company within thirty (30) days after the giving of any such notice by the
Company, to register any of such Holders' Registerable Shares (which request
shall state the intended method of disposition thereof), the Company will use
its best efforts to cause the Registerable Shares as to which registration
shall have been so requested to be included with the Company Shares and the
Other Shares to be covered by the registration statement proposed to be filed
by the Company, all to the extent requisite to permit the sale or other
disposition by the Holder (in accordance with its written request) of such
Registerable Shares so registered.
(b) If the registration of which the Company gives notice under Section
3(a)(i) involves, in whole or in part, an underwriting, then the Company shall
so advise the Holders as a part of such notice. In such event, the right of any
Holder to include Registerable Shares in such registration pursuant to this
Section 3 shall be subject to the inclusion of such Holder's Registerable
Shares in the underwriting. All Holders proposing to distribute their
Registerable Shares shall together with the Company and any other holders
distributing their respective Other Shares through such underwriting, enter
into an underwriting agreement in customary form with the underwriter(s)
selected for such underwriting by the Company.
(c) If the managing underwriter, if any, or if the registration pursuant
to this Section 3, is not, in whole or in part, an underwritten offering, the
Company, shall be of the opinion that the inclusion of all of the Company
Shares, the Other Shares and Registerable Shares proposed to be included in such
registration would interfere with the successful marketing of all securities
5
<PAGE> 6
proposed to be included in such registration, then the number of Registerable
Shares, Company Shares and Other Shares to be included in the registration
statement shall, subject to Section 4(d), be included in the offering in the
following order and priority:
FIRST: the Company shall have the right to participate; and then
SECOND: the Holders shall have the right to participate on the basis
as set forth in Section 2(c) "FIRST"; and then
THIRD: the holders of Other Shares that have Company granted
registration rights shall have the right to participate in accordance with
their respective registration rights on a pari passu basis ratable in
accordance with the ratio that the number of shares proposed to be
included in such registration by each such holder bears to the total
number of such Other Shares proposed to be included in such registration
to the extent that the managing underwriter in such offering, or if such
offering is not, in whole or in part, an underwritten offering, the
Company, reasonable believes in good faith that the inclusion of such
Other Shares will not materially adversely affect such offering; and then
FOURTH: the holders of Other Shares that do not have Company granted
registration rights shall have the right, to the extent, if at all, that
the Company proposes to include such Other Shares therein, to participate
to the extent that the managing underwriter in such offering, of if such
offering is not, in whole or in part, an underwritten offering, the
Company, reasonably believes in good faith that the inclusion of such
Other Shares will not materially and adversely affect such offering.
4. Limitations on Registration Rights.
(a) Notwithstanding anything to the contrary contained in this
Agreement, the Company may delay the filing or effectiveness of a registration
statement under Section 2 (i) for such time as may reasonably be required by
the Company to obtain such audited and unaudited financial statements as may be
required by law to be included in the registration statement, (ii) for up to
ninety (90) days if the Company's board of directors believes that the offering
of Registerable Shares pursuant thereto would interfere with or be detrimental
to a planned offering by the Company of any of the Company's securities,
whether debt or equity, (iii) for up to ninety (90) days if the Company's board
of directors believes that an offering of Registerable Shares thereunder would
have a material adverse effect on the business, prospects, operations, results
of operations, assets, liabilities, or condition (financial or otherwise) of
the Company (a "Material Adverse Effect"), or (iv) for such time as may
reasonably be required, not to exceed 120 days, by the Company at any time when
the Company would be required to disclose in such registration statement
material information that it would not otherwise be required to disclose in its
filings with the Commission pursuant to the Exchange Act and that it has not
then disclosed in such filings with the Commission.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the Company may delay the filing or effectiveness of, or may
withdraw, any registration statement referred under Section 3 at any time if in
the opinion of the Company such offering would have a
6
<PAGE> 7
Material Adverse Effect, without thereby incurring any liability or obligation
of any kind whatsoever to any Holder of Registerable Shares or Other Shares.
(c) If during any period when a registration statement covering
Registerable Shares filed pursuant to Section 2 is effective, the Company
proposes to file a registration statement of Forms S-1 or S-4 (or any of their
respective successor forms), then the Company shall have the right to terminate
the effectiveness of the registration statement covering such Registerable
Shares for a period of not more than one hundred twenty (120) days. During such
one hundred twenty (120) day period the company shall use reasonable efforts to
prepare and file a registration statement (the "Company Registration Statement")
covering the share of Common Stock sought to be registered by the Company and
the Registerable Shares for which such effective registration statement was
filed. In any such event, the participating Holders shall include such
Registerable Shares in the Company Registration Statement. If such Registerable
Shares are not sold within such one hundred twenty (120) day period, then the
Holders shall have one additional right to require registration under Section 2.
(d) The Company shall have the right to grant registration rights to any
other Person holding any of the Company's securities pursuant to such other
agreements as the Company, in its sole discretion, desires. Such Company granted
registration rights may rank junior, senior, or equally with the registration
rights established under this Agreement, provided however, that with respect to
any rights which rank senior or equally with the registration rights established
in this Agreement, such rights shall provide, and the Initial Holders and their
Permitted Transferees agree, that with respect to priority of distribution in
the case of demand rights of the type granted pursuant to Section 2 hereof to
the Initial Holders and their Permitted Transferees, that the holder of such
registration rights first requesting registration by notice to the Company shall
have priority over any other holder with demand rights which purport to be equal
or senior.
5. Holdback Agreement. In addition to any other restrictions on Transfer
of the Registerable Shares contained in this Agreement, if the Company shall at
any time register shares of Common Stock under the Securities Act (including,
without limitation, any registration pursuant to Section 2 or Section 3) for
offer or sale to the public, then none of the holders of Registerable Shares
shall make any short sale of, grant an option for the Transfer of, or otherwise
Transfer, any Registerable Shares (other than for the public sale of those
Registerable Shares included in and sold pursuant to such registration in
accordance with Section 2 or Section 3) without the prior written consent of
the Company for such period as may be designated by the Company, or, if the
registration shall be, in whole or in part, an underwritten offering, the
managing underwriter, in writing to the Holders, which period shall not begin
more than the (10) days prior to the effectiveness of the registration statement
pursuant to which such public offer or sale will be made and shall not last more
than one hundred twenty (120) days after the effective date of such registration
statement.
6. Registration Procedures. If and to the extent that the Company is
required by the provisions of Section 2 or Section 3 to use its best efforts to
effect the registration of any Registerable Shares under the Securities Act,
then the Company shall, as expeditiously as practicable:
7
<PAGE> 8
(a) prepare and file with the Commission a registration statement with
respect to such Registerable Shares and use its best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby (such period to be determined as hereinafter
provided);
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for the period
specified in paragraph (a) above and to comply with the provisions of the
Securities Act with respect to the disposition of all Registerable Shares
covered by such registration statement in accordance with the sellers'
respective intended method of disposition set forth in such registration
statement for such period;
(c) furnish to each seller of Registerable Shares and to each underwriter
such number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons reasonably may
request to facilitate the public sale or other disposition of the Registerable
Shares covered by such registration statement;
(d) use its reasonable efforts to register or qualify the Registerable
Shares covered by such registration statement under the securities or "blue sky"
laws of such jurisdictions as the sellers of Registerable Shares or, in the case
of an underwritten public offering, the managing underwriter reasonably shall
request, provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not then so qualified, to consent to general
service of process in any such jurisdiction or submit to liability for state or
local taxes where it is then not otherwise liable for such taxes;
(e) use its reasonable efforts to list the Registerable Shares covered by
such registration statement with the securities exchange or to cause such
Registerable Shares to be designated or approved for designation as a national
market system security on the interdealer quotation system on which the Common
Stock is then listed or designated;
(f) immediately notify each seller of Registrable Shares and each
underwriter under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained 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;
(g) if the offering is underwritten and at the request of any seller of
Registerable Shares, use its reasonable efforts to furnish on the date that
Registerable Shares are delivered to the underwriters for sale pursuant to such
registration (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the seller or sellers making such request;
and (ii) at the request of either the Company
8
<PAGE> 9
or sellers of Registerable Shares, a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion
of such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to
the period ending no more than five business days prior to the date of such
letter) with respect to such registration as such underwriters reasonably may
request; and
(h) make available for inspection by each seller of Registerable Shares,
any underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement.
For purposes of Section 6(a) and Section 6(b), the period of distribution
of Registerable Shares in a firm commitment underwritten public offering shall
be deemed to extend until each underwriter has completed the distribution of
all securities purchased by it, and the period of distribution of Registerable
Shares in any other registration shall be deemed to extend until the earlier
of the sale of all Registerable Shares covered thereby or one hundred twenty
(120) days after the effective date thereof.
7. Information by Holders. In connection with each registration under
this Agreement, the sellers of Registerable Shares shall furnish to the Company
such information with respect to themselves and the proposed distribution by
them as the Company shall deem reasonably necessary or desirable to assure
compliance with federal and applicable state securities laws.
8. Expenses.
(a) Registration Expenses. The Company shall pay all Registration
Expenses incident to the Company's compliance with the provisions of Section 2
and Section 3; provided, that the Holders of Registerable Shares sought to be
included in any such registration shall pay the fees, expenses and disbursements
of counsel (other than Company counsel) for such Holders. Notwithstanding the
preceding sentence, the Company shall not be required to pay any Registration
Expenses for any registration in which the Company does not sell shares for its
own account. All Registration Expenses required to be borne by the participating
sellers of Registerable Shares shall be borne in proportion to the number of
Registerable Shares sold by each, or as such participating sellers may otherwise
agree.
(b) Selling Expenses. All Selling Expenses in connection with each
registration statement under Section 2 or Section 3 shall be borne by the
participating sellers of Registerable Shares in proportion to the number of
shares sold by each, or as such participating sellers may otherwise agree.
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<PAGE> 10
9. Indemnification and Contribution.
(a) In the event of a registration of any of the Registerable Shares
under the Securities Act pursuant to Section 2 or Section 3, the Company shall
indemnify and hold harmless each seller of such Registerable Shares thereunder,
each underwriter of such Registerable Shares thereunder and each other person,
if any, who controls such seller or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such Registerable
Shares were registered under the Securities Act pursuant to Section 2 or
Section 3, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or (ii) the omission or alleged omission
to state in such registration statement, prospectus, amendment or supplement a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements were made,
not misleading, and will reimburse each such seller, each such underwriter and
each such controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, provided, however, that the Company shall
not be liable to or be required to indemnify or hold harmless a particular
seller in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by any such seller, any such underwriter or any such
controlling person in writing for use in such registration statement,
prospectus, amendment or supplement.
(b) In the event of a registration of any of the Registerable Shares
under the Securities Act pursuant to Section 2 or Section 3, the sellers of
such Registerable Shares thereunder, severally and not jointly, shall indemnify
and hold harmless the Company, each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who signs
the registration statement, each director of the Company, each underwriter and
each person who controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint or several, to
which the Company or such officer, director, underwriter or controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement
of any material fact contained in the registration statement under which such
Registerable Shares were registered under the Securities Act pursuant to
Section 2 or Section 3, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, (ii) the omission or
alleged omission to state in such registration statement, prospectus, amendment
or supplement a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which such
statements were made, not misleading, and will reimburse the Company and each
such officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that any such seller will be liable hereunder in any such case if and only to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement
10
<PAGE> 11
or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with information pertaining to such seller, furnished in
writing to the Company by such seller for use in such registration statement,
prospectus, amendment or supplement.
(c) Promptly after receipt by an indemnified party under this Section 9 of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9, notify the indemnifying party in writing thereof, but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to such indemnified party other than under this Section 9 and shall
only relieve it from any liability which it may have to such indemnified party
under this Section 10 if and to the extent the indemnifying party is prejudiced
by such omission. 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 in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 9 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected;
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
that are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, then the indemnified
party shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) To provide for just and equitable contribution to joint liability
under the Securities Act in any case in which (i) either (x) the Company or any
controlling person (within the meaning of the Securities Act) of the Company, or
(y) any Holder of Registerable Shares exercising registration rights under this
Agreement, or any controlling person (within the meaning of the Securities Act)
of any such Holder, if any, makes a claim for indemnification pursuant to this
Section 9, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 9 provided for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of the Company, any such selling Holder or any such
controlling person in circumstances for which indemnification is provided under
this Section 9; then, and in each such case, the Company and such Holder will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) as is appropriate to reflect the
relative fault of the Company and such Holder in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as the relative benefit received by the Company and such Holder as a result
of the offering in question, it being understood that the parties acknowledge
that the overriding equitable consideration to be given effect in consideration
11
<PAGE> 12
with this provision is the ability of one party or the other to correct the
statement or omission which resulted in such losses, claims, damages or
liabilities, and that it would not be just and equitable if contribution
pursuant hereto were to be determined by pro rata allocation or by any other
method of allocation which does not take into consideration the foregoing
equitable considerations; provided, however, that, in any such case no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
10. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit
the sale of the Registerable Shares to the public without registration, at all
times following the ninety (90) day period after any registration statement
covering a public offering of securities of the Company under the Securities
Act shall have become effective, through the Termination Date, the Company
shall:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities
Act and the Exchange Act; and
(c) furnish to each holder of Registerable Shares forthwith upon request
a written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as such holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such holder to sell any Registerable Shares without
registration.
11. Restrictive Legend. Each certificate representing the Registerable
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, WHETHER
BY SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE, GIFT, REQUEST, APPOINTMENT OR
OTHERWISE, EXCEPT IN CERTAIN CIRCUMSTANCES PURSUANT TO AND SUBJECT TO THAT
CERTAIN SHAREHOLDERS' AGREEMENT AND AGREEMENT NOT TO COMPETE AMONG CENTRAL
PARKING CORPORATION AND THE SHAREHOLDERS NAMED THEREIN. A COPY OF SUCH
AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES
12
<PAGE> 13
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OF SUCH LAWS.
12. Transfer Restrictions. Each holder of Registerable Shares shall execute
any restrictive agreement or "lock-up" agreement that any underwriter engaged
by the Company in connection with any underwritten public offering shall
reasonably request for so long as any holder shall (i) be an officer or
director of the Company or (ii) be the beneficial owner of five percent (5%) or
more of the outstanding Shares, provided that such agreement is required to be
executed by all such other similarly situated shareholders. The Company may
impose stop transfer instructions with respect to the Registerable Shares until
the end of any restrictive period provided for pursuant to Section 5 or this
Section 12.
13. Representations and Warranties of the Company. The Company represents
and warrants to the Holders as follows:
(a) The Company's execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby by the Company (i)
are within the Company's corporate powers and duly authorized by all necessary
corporate action on the part of the Company and (ii) do not (x) require any
action by or in respect of, or filing with, any governmental or regulatory
authority, except as set forth in this Agreement or (y) contravene, violate or
constitute a default under, any requirement of law applicable to Company or any
of its properties or any contract, understanding or agreement to which the
Company or any of its properties is bound or subject.
(b) This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws relating to or
affecting the rights and remedies of creditors generally and by general
principals of equity.
14. Representations and Warranties of the Holders. Each of the Holders
hereby severally, and not jointly, represent and warrant to the Company as
follows:
(a) The Holder's execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby by the Holder (i)
are within the Holder's legal power and authority and (ii) do not (x) require
any action by or in respect of, or filing with, any governmental or regulatory
authority, except as set forth in this Agreement or (y) contravene, violate or
constitute a default under, any requirement of law applicable to the Holder or
any of their respective properties or any contract, understanding or agreement
to which the Holder or any of such Holder's properties is bound or subject.
(b) This Agreement has been duly executed and delivered by the Holder and
constitutes the legal, valid and binding obligation of the Holder, enforceable
in accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency,
13
<PAGE> 14
reorganization, receivership, moratorium and other similar laws relating to or
affecting the rights and remedies of creditors generally and by general
principals of equity.
15. Miscellaneous.
(a) Assignment; Binding Effect. This agreement shall be binding upon each
of the parties to this Agreement and their respective personal representatives,
successors and permitted assigns, and shall inure to the benefit of the Company
and its successors and assigns. None of the Holders shall have the right or
power to assign the registration rights established under this Agreement to any
transferee of the Registered Shares, whether by Transfer of the Registerable
Shares or otherwise, without the Company's prior written consent, except that
such registration rights may be assigned: (i) by any Holder in conjunction with
a Transfer of such Holder's Registerable Shares to any of the following persons
solely for estate planning purposes: (x) such Holder's parents and such parents'
siblings and such siblings' children; (y) such Holder's children or (z) such
Holder's lineal descendants, or to trusts for the exclusive benefit of any such
class of persons; and (ii) to the applicable Holder's estate and to any Person
acquiring such Holder's Registerable Shares directly from such estate by such
Holder's will or by virtue of the laws of descent or intestacy; provided, that
any proposed transferee of registration rights under this Section 15(a) executes
and delivers to the Company such proposed transferee's written agreement to be
bound by, and to hold the Registerable Shares so transferred subject to, the
terms and conditions of this Agreement (each, a "Permitted Transferee").
(b) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement among the Holders and the Company with respect to the subject matter
of this Agreement and supersedes all prior agreements, understandings and
negotiations, whether written or oral, with respect to the subject matter of
this Agreement. None of the terms and provisions contained in this Agreement
can be changed without a writing signed by the Company and the Holders of
two-thirds of the then outstanding Registerable Shares.
(c) Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or such provisions, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
(d) No Waiver of Rights. No failure or delay on the part of any Holder or
the Company in the exercise of any power or right under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power or right. The waiver by any Holder or the Company of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any other or subsequent breach under this Agreement.
(e) Notices. All notices required to be given to any of the parties of
this Agreement shall be in writing and shall be deemed to have been
sufficiently given, subject to the further provisions of this Section 15(e),
for all purposes when presented personally to such party or sent by certified
or registered mail, return receipt requested, with proper postage prepaid, or
any
14
<PAGE> 15
national overnight delivery service, with proper charges prepaid, to such party
at its address set forth below such party's signature line on the signature
pages to this Agreement or below such party's signature line to such party's
Joinder Agreement. Such notice shall be deemed to be received when delivered if
delivered personally, the next business day after the date sent if sent by a
national overnight delivery service, or three (3) business days after the date
mailed if mailed by certified or registered mail. Any notice of any change in
such address shall also be given in the manner set forth above. Whenever the
giving of notice is required, the giving of such notice may be waived in
writing by the party entitled to receive such notice.
(f) No Third Party Beneficiaries. This Agreement is not intended to, and
does not, create any rights in or confer any benefits upon anyone other than
the parties hereto except as set forth in Section 9.
(g) Headings. The headings used in this Agreement are for convenience
only and are not intended to define or limit the contents or substance of any
provision of this Agreement.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(i) Governing Law. This Agreement shall be governed and construed as to
its validity, interpretation and effect by the laws of Tennessee
notwithstanding the choice of law rules of New York or any other jurisdiction.
IN ADDITION, IN THE CASE OF ANY DISPUTE UNDER OR IN CONNECTION WITH THIS
AGREEMENT, EACH HOLDER AND THE COMPANY HEREBY CONSENTS TO THE EXCLUSIVE
JURISDICTION AND VENUE OF THE COURTS OF TENNESSEE IN AND FOR THE COUNTY OF
DAVIDSON OR THE FEDERAL DISTRICT COURT FOR SUCH GEOGRAPHIC LOCATION, PROVIDED
THAT SUCH FEDERAL COURT HAS SUBJECT MATTER JURISDICTION OVER SUCH DISPUTE, AND
EACH HOLDER HEREBY WAIVES ANY CLAIM THAT SUCH SHAREHOLDER MAY HAVE AT ANY TIME
AS TO FORUM NON CONVENIENS WITH RESPECT TO SUCH VENUE. Notwithstanding anything
to the contrary set forth in the preceding sentence, the Company shall have the
right to institute any legal action arising out of or relating to this
Agreement in any appropriate court and in any jurisdiction.
15
<PAGE> 16
IN WITNESS WHEREOF, each of the parties to this Agreement have caused this
Agreement to be duly executed as of the date first written above.
CENTRAL PARKING CORPORATION
By:
-------------------------------------------
Monroe J. Carell, Jr.
Chairman of the Board of Directors
and Chief Executive Officer
/s/ Lewis Katz
----------------------------------------------
Lewis Katz
----------------------------------------------
Saul Schwartz
16
<PAGE> 17
IN WITNESS WHEREOF, each of the parties to this Agreement have caused this
Agreement to be duly executed as of the date first written above.
CENTRAL PARKING CORPORATION
By: /s/
-----------------------------------
Monroe J. Carell, Jr.
Chairman of the Board of Directors
and Chief Executive Officer
---------------------------------------
Lewis Katz
/s/ SAUL SCHWARTZ
---------------------------------------
Saul Schwartz
17
<PAGE> 18
IN WITNESS WHEREOF, each of the parties to this Agreement have caused this
Agreement to be duly executed as of the date first written above.
CENTRAL PARKING CORPORATION
By: /s/ MONROE J. CARELL, JR.
-----------------------------------
Monroe J. Carell, Jr.
Chairman of the Board of Directors
and Chief Executive Officer
---------------------------------------
Lewis Katz
---------------------------------------
Saul Schwartz
18
<PAGE> 1
EXHIBIT 10.23
EXECUTION COPY
SHAREHOLDERS' AGREEMENT
AND AGREEMENT NOT TO COMPETE
By And Among
CENTRAL PARKING CORPORATION
MONROE J. CARELL, JR.,
LEWIS KATZ and
SAUL SCHWARTZ
Dated As Of
February 12, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
ARTICLE I. Definitions ........................................................1
Section 1.01 Certain Definitions ...................................1
ARTICLE II. Board Representation ..............................................4
Section 2.01 Board of Directors ....................................4
Section 2.02 Removal of Designated Directors; Vacancies ............5
Section 2.03 Charter and By-Laws; Fiduciary Duties .................5
Section 2.04 Voting ................................................5
Section 2.05 No Duty to Designate ..................................6
Section 2.06 Directors and Officers Insurance Policy ...............6
ARTICLE III. Transfers ........................................................6
Section 3.01 Transfers of Securities ...............................6
ARTICLE IV. Non Competition ...................................................7
Section 4.01 KSHC Shareholder Non Competition ......................7
ARTICLE V. Representations and Warranties .....................................9
Section 5.01 Representations and Warranties of the Parent ..........9
Section 5.02 Representations and Warranties of the Shareholders ...10
ARTICLE VI. Indemnification; Releases ........................................11
Section 6.01 Obligation of the KSHC Shareholders to Indemnify .....11
Section 6.02 Certain Indemnification Procedures ...................11
Section 6.03 Releases; Obligation of the Parent to Indemnify ......14
Section 6.04 Releases .............................................15
Section 6.05 No Other Representations and Warranties ..............15
ARTICLE VII. Shareholders Representatives ....................................16
Section 7.01 KSHC Shareholder Representative ......................16
ARTICLE VIII. Miscellaneous ..................................................17
Section 8.01 Further Assurances ...................................17
Section 8.02 Effectiveness ........................................17
Section 8.03 Notices ..............................................17
Section 8.04 Legends ..............................................19
Section 8.06 Amendments, Waivers, Etc. ............................19
Section 8.07 Successors and Assigns ...............................19
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 8.08 Entire Agreement .....................................20
Section 8.09 Severability .........................................20
Section 8.10 Enforcement ..........................................20
Section 8.11 Remedies Cumulative ..................................20
Section 8.12 No Waiver ............................................20
Section 8.13 No Third Party Beneficiaries .........................20
Section 8.14 Governing Law ........................................20
Section 8.15 Consent to Jurisdiction and Service of Process .......21
Section 8.16 Waiver of Jury Trial .................................21
Section 8.17 Inspection ...........................................21
Section 8.18 Name, Headings .......................................21
Section 8.19 Counterparts .........................................21
Schedule I: Common Stock Ownership
Schedule 1.01: Excepted KSHC Restricted Assets
Schedule 6.01: Shareholder Percentages
Exhibit A: Form of Joinder Agreement
Exhibit B: KSHC Shareholder Release
Exhibit C-1: Schwartz Release
Exhibit C-2: KSHC Release
Exhibit C-3: Katz Release
</TABLE>
<PAGE> 4
SHAREHOLDERS' AGREEMENT
AND AGREEMENT NOT TO COMPETE
SHAREHOLDERS' AGREEMENT AND AGREEMENT NOT TO COMPETE, dated as of February
12, 1998 (this "Agreement"), by and among CENTRAL PARKING CORPORATION, a
Tennessee corporation ("Parent"), MONROE J. CARELL, JR., LEWIS KATZ ("Katz"),
and SAUL SCHWARTZ ("Schwartz"). Capitalized terms used without definition
herein shall have the meanings ascribed thereto in the Merger Agreement (as
defined below).
W I T N E S S E T H:
WHEREAS, KSHC, Parent and certain wholly-owned Subsidiaries of the Parent
have entered into an Acquisition Agreement and Plan of Merger, dated as of
November 7, 1997 (as the same may be amended, modified or supplemented from
time to time, the "Merger Agreement");
WHEREAS, pursuant to the Merger Agreement, the execution and delivery of
this Agreement is a condition to the consummation of the Transactions;
WHEREAS, upon the consummation of the Transactions, Katz and Schwartz
shall Beneficially Own the number of shares of the common stock, par value $.01
per share, of the Parent (the "Common Stock") set forth opposite his name on
Schedule I hereto.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Certain Definitions. The following terms, when used in
this Agreement, shall have the following meanings (such definitions to be
equally applicable to both singular and plural terms of the terms defined):
"Board" means the Board of Directors of the Parent.
"By-Laws" means the By-Laws of the Parent, as amended.
"Carell Shareholders" means Monroe J. Carrell, Jr. and each of his
direct and indirect Permitted Transferees.
<PAGE> 5
"Change in Control" means the acquisition by any Person (other than
any of the Shareholders or their respective Affiliates) of Beneficial Ownership
of Voting Securities representing 40% or more of the outstanding Voting
Securities.
"Charter" means the certificate of incorporation of the Parent, as
amended.
"Common Stock" has the meaning ascribed thereto in the recitals to
this Agreement.
"Designated Director Vacancy" shall have the meaning ascribed
thereto in Section 2.02(b).
"Designated Environmental Engineer" means an independent, qualified
environmental engineer or environmental engineering consultant, who is also an
attorney, of nationally recognized standing and mutually acceptable to the
applicable parties.
"Environmental Activity Proposal" has the meaning ascribed thereto
in Section 6.02.
"First Indemnity Threshold" shall have the meaning ascribed thereto
in Section 6.01(a).
"IRS" means the United States Internal Revenue Service.
"Katz Consulting Agreement" means the Consulting Agreement, dated as
of the date hereof, between Parent and Katz.
"Katz Release" shall have the meaning set forth in Section 6.04(d).
"KSHC Director" means Katz, or in the event of his disability or
death, a member of the Board designated by Katz or the executor of his estate,
as the case may be, who is reasonably acceptable to Parent.
"KSHC Release" shall have the meaning set forth in Section 6.04(c).
"KSHC Representative" shall have the meaning ascribed thereto in
Section 7.01(a).
"KSHC Restricted Area" means any area within a 50 mile radius of any
KSHC Restricted Asset.
"KSHC Restricted Assets" means the assets owned or operated by the
KSHC Entities (other than the KSHC Entities set forth on Schedule 1.01) on the
Closing Date.
2
<PAGE> 6
"KSHC Restricted Person" has the meaning ascribed thereto in Section
4.01(b).
"KSHC Shareholders" means Katz and Schwartz.
"Lowest Cost Response" means any compliance activity or any
investigation, cleanup, remediation, removal action or other response activity
that (a) meets or exceeds (i) the least stringent standards (including any
lesser standards resulting from any site-specific risk assessment) required
under all applicable Environmental Laws and (ii) the standards set forth in any
applicable KSHC Real Property Contract, in each case as in effect on the
Closing Date based on the use of the applicable property on the Closing Date
and (b) can be achieved for the lowest financial cost as compared with other
potential response activities that satisfies this definition.
"Nominating Committee" means the Nominating Committee of the Board.
"NYSE Rules" means the then-current rules and regulations of the New York
Stock Exchange.
"Other Directors" means the directors of the Parent, other than the KSHC
Director.
"Outside Director" means any director of the Parent who is not (a) a KSHC
Director or (b) an officer or employee of the Parent or any Subsidiary.
"Parent Acquisition Notice" shall have the meaning ascribed thereto in
Section 4.01(b).
"Parent Indemnitees" has the meaning ascribed thereto in Section 6.01(a).
"Permitted Transferee" means, with respect to any Person who is a natural
Person, the spouse or any lineal descendant (including by adoption and
stepchildren) of such Person, or any trust of which such Person is the trustee
and which is established solely for the benefit of any of the foregoing
individuals and the terms of which are not inconsistent with the terms of this
Agreement, in each case who shall have executed and delivered a Joinder
Agreement substantially in the form of Exhibit A hereto, and thereby become a
party to this Agreement.
"Post-Closing Event" means any of the following events: (a) the slate of
directors actually nominated by the Nominating Committee (or if the Nominating
Committee makes no such recommendation, the Board) for election, to the Board
does not include the KSHC Director required to be so nominated pursuant to
Section 2.01; or (b) the KSHC Director becomes unable to serve by reason of any
event during his or her term and the Parent shall have failed to comply with
Section 2.02(b).
3
<PAGE> 7
"Schwartz Release" shall have the meaning set forth in Section
6.04(b).
"Second Indemnity Threshold" shall have the meaning ascribed thereto
in Section 6.01(a).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shareholders" means the KSHC Shareholders and the Carell
Shareholders.
"Subsidiary" means any Subsidiary of the Parent.
"Subsidiary Board" means the Board of Directors of any Subsidiary.
"Total Voting Power" means, at any time, the aggregate number of votes
which may be cast by holders of outstanding Voting Securities.
"Transfer" means sell, transfer, assign, pledge, hypothecate, give
away or in any manner dispose of, or enter into any voting agreement with
respect to, any shares of Common Stock.
"Voting Securities" means the shares of Common Stock and other
securities (including without limitation voting preferred stock) issued by
the Parent which are entitled to vote generally for the election of
directors of the Parent, whether currently outstanding or hereafter issued
(other than securities having such powers only upon the occurrence of a
contingency).
ARTICLE II.
BOARD REPRESENTATION
Section 2.01 Board of Directors. During the term of this Agreement,
Parent convenants and agrees as follows:
(a) Except as contemplated by this Agreement or as otherwise agreed to by
the KSHC Director, the Parent shall not take or recommend to its shareholders
any action which would result in any amendment to the By-Laws or the Subsidiary
Documents of any Subsidiary, in each case as in effect on the Closing Date, that
would impose any qualifications to the eligibility of directors of the Parent or
any Subsidiary thereof to serve on any committee of the Board, any Subsidiary
Board or any committee of any such Subsidiary Board, except as may be required
under the NYSE Rules or by applicable law.
(b) From and after the Closing Date through and including the third
anniversary thereof, the Parent shall use its best efforts to cause the
Nominating Committee (or if the
4
<PAGE> 8
Section 2.05 No Duty to Designate. Nothing contained in this Article II
shall be construed as requiring Katz or the executor of his estate, as the
case may be, to designate any KSHC Director or to require any KSHC Director to
continue to serve in office if such KSHC Director elects to resign.
Section 2.06 Directors and Officers Insurance Policy. The Parent shall
cause the KSHC Director to be covered by directors and officers liability
insurance to the same extent and in the same amount as any Outside Director.
Nominating Committee makes no such recommendation, the Board) to recommend for
election to the Board the KSHC Director.
Section 2.02 Removal of Designated Directors; Vacancies.
(a) Katz or the executor of his estate, as the case may be, shall have
the right, with or without cause, to request the removal from the Board of any
KSHC Director serving as a result of a disability or death of Katz. Any such
removal shall be subject to the applicable provisions of the Charter and the
By-Laws (including without limitation, any shareholder vote requirement), as
well as applicable statutory provisions; provided, that the Parent shall use
its best efforts to cause the Other Directors to vote in favor of such
requested removal.
(b) If any such KSHC Director serving as a result of a disability or
death of Katz for any reason ceases to serve as a member of the Board during
his or her term of office, and if at such time Katz or the executor of his
estate, as the case may be, would have the right to a designation under
Section 2.01 if an election for the resulting vacancy were to be held, (i) the
director to fill such vacancy (the "Designated Director Vacancy") shall be
designated by Katz or the executor of his estate, as the case may be, if Katz
or the executor of his estate, as the case may be, has the right under
Section 2.01 to so designate at such time, and (ii) Parent shall use its best
efforts to cause such Designated Director Vacancy to be filled by the person so
designated in accordance with the Charter; provided, that nothing in this
subsection 2.02(b) shall require Parent to call a special shareholders meeting.
Section 2.03 Charter and By-Laws; Fiduciary Duties. The obligations of
the Parent set forth in this Article II shall be subject to compliance with the
applicable provisions of the Charter and the By-Laws, and the fiduciary duties
of the members of the Board and the Nominating Committee, to the shareholders of
the Parent. Nothing contained in this Article II shall require the Parent to
violate any such provisions or to require any member of the Board to breach any
such fiduciary duty.
Section 2.04 Voting.
(a) During the term of this Agreement, the Carell Shareholders shall take
all such action as may be required so that all Voting Securities Beneficially
Owned by such Carell Shareholders are voted (in person or in proxy) for the
Parent's nominees to the Board, in accordance with the recommendation of the
Nominating Committee (or, if the Nominating Committee makes no such
recommendation, the Board).
(b) Each of the Carell Shareholders shall use its best efforts to be
present, in person or by proxy, at all duly held meetings of the shareholders
of the Parent so that all Voting Securities held by the Carell Shareholders
may be counted for the purposes of determining the presence of a quorum at such
meetings.
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Section 2.05 No Duty to Designate. Nothing contained in this Article II
shall be construed as requiring Katz or the executor of his estate, as the case
may be, to designate any KSHC Director or to require any KSHC Director to
continue to serve in office if such KSHC Director elects to resign.
Section 2.06 Directors and Officers Insurance Policy. The Parent shall
cause the KSHC Director to be covered by directors and officers liability
insurance to the same extent and in the same amount as any Outside Director.
ARTICLE III.
TRANSFERS
Section 3.01 Transfers of Securities. During the period from the
Closing Date through and until the second anniversary thereof, neither Katz nor
Schwartz shall Transfer any shares of Common Stock Beneficially Owned by such
Person, except:
(a) to any Permitted Transferee of Katz or Schwartz, as the case may
be;
(b) to Parent;
(c) pursuant to a merger or consolidation, or plan of liquidation of
the Parent, in each case which has been approved by the affirmative vote of a
majority of the members of the Board then in office;
(d) pursuant to a tender offer or exchange offer by any Person in
connection with which the Board (i) recommends that the shareholders of the
Parent tender their shares in such tender or exchange offer or (ii) states that
it is neutral with respect to such tender or exchange offer;
(e) to any Person in any other transaction after the occurrence of (i)
a Change in Control, (ii) the sale of all or substantially all of the assets of
the Parent and the Subsidiaries, taken as a whole, or (iii) a Post-Closing
Event;
(f) (i) in the case of Katz, to any Person in any other transaction,
so long as Katz holds such number of shares of Common Stock (rounded to the
nearest whole number) having an aggregate value equal to $28 million (based on
a per share price equal to the Base Period Trading Price as of the Closing, as
adjusted thereafter for any securities paid, issued or distributed in respect
of any shares of Common Stock by way of stock dividend or distribution or stock
split or in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise), (ii) in the case of
Schwartz, to any Person in any other transaction, so long as Schwartz holds
such number of shares of Common Stock (rounded to the nearest whole number)
having an aggregate value equal to $9 million (or $8.75 million after giving
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effect to the charitable contribution of Common Stock, if applicable, as more
fully set forth in the proviso to this subsection) based on a per share price
equal to the Base Period Trading Price as of the Closing, as adjusted thereafter
for any securities paid, issued or distributed in respect of any shares of
Common Stock by way of stock dividend or distribution or stock split or in
connection with a combination of shares, recapitalization, reorganization,
merger, consolidation or otherwise; provided that, notwithstanding the
foregoing, pursuant to an agreement between the KSHC Shareholders, Schwartz may
pledge, at his option, such number of shares of Common Stock (rounded to the
nearest whole number) having an aggregate value of $250,000, based on a per
share price equal to the Base Period Trading Price at Closing, to a charitable
organization designated by Katz; or
(g) to any Person by any Permitted Transferee or the estate of Katz or
Schwartz, after the death of Katz or Schwartz, as the case may be.
ARTICLE IV.
NON COMPETITION
Section 4.01 KSHC SHAREHOLDER NON COMPETITION.
(a) For a period of five years following the date on which the term of any
KSHC Real Property Contract relating to a KSHC Restricted Asset effectively
expires, terminates or is not otherwise extended or renewed, each KSHC
Shareholder severally agrees that it shall not, directly or indirectly,
through any Person Controlled by such KSHC Shareholder or otherwise, in any form
or manner, acquire or seek to acquire the applicable KSHC Restricted Asset, for
its own account or for the account of any other Person (other than Parent or any
of its Subsidiaries).
(b) For a period of three years following the Closing date, except as
contemplated or permitted under the Transaction Documents, each KSHC Shareholder
severally agrees that it shall not, directly or indirectly, through any Person
Controlled by such KSHC Shareholder or otherwise, in any form or manner; (i)
engage in any activities in the KSHC Restricted Area relating to the Business,
for its own account or for the account of any other Person; or (ii) become
interested in any Person (other than Parent or any of its Subsidiaries) engaged
in activities relating to the Business in the KSHC Restricted Area (a "KSHC
restricted person") as a partner, shareholder, member, principal, agent,
employee, trustee, consultant or in any other relationship or capacity;
provided, however, that (A) such KSHC Shareholder may own, directly or
indirectly, solely as a passive investment, securities of any KSHC Restricted
Person if (x) such KSHC Shareholder or any Affiliate of such KSHC Shareholder,
as the case may be, (1) is not a Person in Control of, or a member of a group
that Controls, such KSHC Restricted Person and (2) does not, directly or
indirectly, own 5% or more of any voting class of securities of such KSHC
Restricted Person, and (y) such KSHC Restricted Person does not, directly or
indirectly, derive 10% or more of its total revenues from activities related to
the Business in the KSHC Restricted Area (it being expressly understood that any
other activity by such KSHC Shareholder
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related to such contemplated purchase otherwise prohibited by the provisions
of this Section 4.01(b) shall not be permitted) and (B) notwithstanding the
provisions above, on or after the Closing Date, in the event that Katz or
Schwartz, as the case may be, proposes to Parent to acquire commercial real
property or a long-term leasehold in respect of commercial property in excess
of 50 years, in each case that is reasonably likely to be used in the Business,
by notice in writing to Parent setting forth the proposed consideration,
description of the property and any other terms that Katz or Schwartz deems
material (a "Property Acquisition Notice"), and Parent notifies Katz or
Schwartz in writing within 15 calendar days after receipt by Parent of the
Property Acquisition Notice that Parent wishes to acquire up to 50% of all of
the interests offered to Katz or Schwartz, Katz or Schwartz, as the case may
be, may own, directly or indirectly, solely as a passive investment, such other
offered interest in any such commercial real property or a long-term leasehold
in respect of commercial property in excess of 50 years; provided, that, Parent
shall have the right to manage or lease any parking facility acquired on
commercially reasonable terms and conditions, when and to the extent such
facility becomes reasonably available; and provided, further, that Katz or
Schwartz or their respective Affiliates (other than KSHC and its Subsidiaries)
may not actively participate, directly or indirectly, in the operation of any
such parking facility acquired and (C) notwithstanding the provisions above, on
or after the Closing Date, in the event that Katz or Schwartz delivers to
Parent a Property Acquisition Notice to Parent and Parent notifies Katz or
Schwartz, as the case may be, that Parent does not wish to purchase any
interest in such transaction within 15 calendar days after receipt by Parent of
a Property Acquisition Notice (or Katz or Schwartz does not receive written
notice from Parent within such 15 calendar day period), Katz or Schwartz may
own, directly or indirectly, solely as a passive investment, up to 100% of the
interest to be acquired; provided, that Katz or Schwartz or their respective
Affiliates (other than KSHC and its Subsidiaries) may not actively participate,
directly or indirectly, in the operation of any such parking facility acquired;
and provided, further, that such acquisition is subject to Section 4.01(c),
below and (D) in the event that Parent has not removed the Special Philadelphia
Asset as an Investment Asset to be sold by KSHC to Katz prior to Closing by
written notice to KSHC, Katz may manage or lease any parking facility relating
to the Special Philadelphia Asset.
(c) (i) If the events described in clause (C) of Section 4.01(b), above,
occur, Katz or Schwartz, as the case may be, shall give Parent written notice
of the consummation of such acquisition and, in the case of any available
parking facility acquired, shall set forth the proposed terms and conditions of
any management contract or lease in connection therewith, including the
proposed consideration, term, and any other provisions which Katz or Schwartz
deems material.
(ii) Parent shall have 20 calendar days from receipt of such notice
to review such terms and conditions and enter into a management agreement or
lease with Katz or Schwartz or their respective Affiliates on such terms and
conditions. If, at the end of such 20 calendar day period, Parent has elected
not to enter into a management agreement on such terms and conditions, Katz or
Schwartz or their respective Affiliates may enter into a management agreement
or lease with any third party on substantially no less favorable terms.
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(iii) If Katz or Schwartz or their respective Affiliates does not
enter into any such management agreement or Lease with a third party, then Katz
or Schwartz or their respective Affiliates may either (A) elect not to enter
into any such management agreement, subject to the provisos in clause (C) of
Section 4.01(b) or (B) propose revised terms and conditions for any such
management agreement or lease that would remain subject to the procedures set
forth in clauses (i) and (ii) of this Section 4.01(c).
(d) If any KSHC Shareholder breaches, or threatens to commit a breach of,
any of the provisions contained in Sections 4.01(a) or (b), the Parent shall
have the following rights and remedies with respect to such KSHC Shareholder,
each of which rights and remedies shall be independent of the others and
severally enforceable, and each of which is in addition to, and not in lieu of,
any other rights and remedies available to the Parent under law or in equity:
(i) the right and remedy to have the provisions of Sections 4.01(a)
or (b) specifically enforced by any court of competent jurisdiction, it being
agreed that any breach or threatened breach of the provisions of Sections
4.01(a) or (b) would cause irreparable injury to the Parent and that money
damages would not provide an adequate remedy to the Parent; and
(ii) the right and remedy to require such KSHC Shareholder to account
for and pay over to the Parent, all compensation, profits, monies, accruals,
increments or other benefits derived or received by such KSHC Shareholder as
the result of any action constituting a breach of Sections 4.01(a) or (b).
(e) Each of the KSHC Shareholders acknowledges and agrees that the
provisions of Sections 4.01(a) and (b) are reasonable and valid in geographical
and temporal scope and in all other respects. If any court determines that the
provisions of Sections 4.01(a) or (b), or any part thereof, is unenforceable
because of the duration or geographical scope of such provision, such court
shall have the power to reduce the duration or scope of such provision, as the
case may be, and, in its reduced form, such provision shall be enforceable.
(f) If any court determines that the provisions of Sections 4.01(a) or
(b), or any part thereof, is invalid or unenforceable, the remainder of the
provisions of Sections 4.01(a) or (b) shall not thereby be affected and shall
be given full effect without regard to the invalid portions.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.01 Representations and Warranties of the Parent. Parent
represents and warrants to the other parties hereto as follows:
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Tennessee.
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(b) Parent has all necessary power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery by Parent of this
Agreement has been duly and validly authorized by all necessary corporate,
including the approval of the Board, and no other corporate proceedings on the
part of Parent are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by a duly authorized officer of the Parent and
constitutes a valid and binding obligation of the Parent, enforceable against
the Parent in accordance with its terms, except as limited by (i) bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
creditors' rights generally or (ii) general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law, and to the
discretion of the court before which any proceeding therefor may be brought.
(c) Neither the execution or delivery of this Agreement nor the
consummation by the Parent of the transactions contemplated hereby conflicts
with or constitutes a violation of or default under (ii) the Charter or the
By-Laws, (ii) any federal or state law, rule, regulation, order judgment or
decree applicable to the Parent or by which any of its respective properties is
bound or affected or (iii) any contract, commitment, agreement, arrangement or
restriction of any kind to which the Parent is a party.
Section 5.02 Representations and Warranties of the Shareholders. Each of
the Shareholders represents and warrants, severally and not jointly, to the
other parties hereto as follows:
(a) such Shareholder has full right, power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby;
and
(b) neither the execution or delivery of this Agreement nor the
consummation by such Shareholder of the transactions contemplated hereby will
violate any provisions of any law, rule or regulation applicable to such
Shareholder or any contract or agreement to which such Shareholder is a party.
Section 5.03 Representations and Warranties of KSHC Shareholders. Each of
the KSHC Shareholders represents and warrants, severally and not jointly, to
Parent as follows:
(a) The shares of Common Stock are being or will be acquired by each KSHC
Shareholder pursuant to the Schwartz Stock Purchase Agreement or the Merger
Agreement, as the case may be, for his own account and with no intention of
distributing or reselling such securities or any part thereof in any transaction
that would be in violation of the securities laws of the United States of
America, or any state, without prejudice, however, to the rights of such KSHC
Shareholder at all times to sell or otherwise dispose of all or any part of the
shares of Common Stock owned by such KSHC Shareholder under an effective
registration statement
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under the Securities Act, or under an exemption from such registration
available under the Securities Act, and subject, nevertheless, to the
disposition of such KSHC shareholder's property pricing at all times within his
control. If such KSHC Shareholder should in the future decide to dispose of any
of the shares of Common Stock received pursuant to the Schwartz Stock Purchase
Agreement or the Merger Agreement, such KSHC Shareholder understands and agrees
that it may do so only in compliance with this Agreement, the Securities Act
and applicable state securities laws, as then in effect.
(b) Each KSHC Shareholder is an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
ARTICLE VI.
INDEMNIFICATION; RELEASES
Section 6.01 Obligation of the KSHC Shareholders to Indemnify.
(a) The KSHC Shareholders shall, severally and not jointly, on a
percentage basis equal to the percentages set forth opposite their respective
names on Schedule 6.01 attached hereto, indemnify, defend and hold harmless, to
the fullest extent permitted under applicable law, the Parent and its
Subsidiaries (including KSHC after Closing) and their respective directors,
officers and employees (for purposes of this Agreement, other than Katz,
collectively referred to as the "Parent Imdemnitees") from and against eighty
percent (80%) of each Loss (net of all general reserves and accruals for
liabilities that are the subject of indemnification pursuant to this Section
6.01(a) and set forth as a line item on the KSHC Closing Date Balance Sheet,
insurance proceeds and indemnification payments from third parties) that arise
from (i) item no. 5 set forth in Schedule 4.11 of the KSHC Disclosure Schedule
as in effect as of the date of execution of the Merger Agreement (without giving
effect to subsequent disclosures on such Schedule after such date and prior to
the Effective Time), (ii) all of the items set forth in Schedule 4.09 of the
KSHC Disclosure Schedule as in effect as of the date of execution of the Merger
Agreement (without giving effect to subsequent disclosures on such Schedule
after such date and prior to the Effective Time) and (iii) all of the items set
forth in Schedule 4.17 of the KSHC Disclosure Schedule as in effect as of the
date of execution of the Merger Agreement (without giving effect to subsequent
disclosures on such Schedule after such date and prior to the Effective Time),
until the aggregate amount of all such Losses exceeds $10 million (the "First
Indemnity Threshold"). All such losses in excess of the First Indemnity
Threshold shall be paid one hundred percent (100%) in full by the KSHC
Shareholders on a percentage basis equal to the percentages set forth opposite
their respective names on Schedule 6.01 until the aggregate amount of all Losses
under this Section 6.01(a) exceeds $40 million (the "Secondary Indemnity
Threshold"), in which event all such Losses in excess of the Second Indemnity
Threshold shall be paid one hundred percent (100%) in full by Parent.
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(b) In addition to the indemnification set forth in Section 6.01(a),
the KSHC Shareholders shall, severally and not jointly, on a percentage basis
equal to the percentages set forth opposite their respective names on Schedule
6.01, indemnify, defend and hold harmless, to the fullest extent permitted under
applicable law, the Parent Indemnitees from and against each Loss (net of all
general reserves and accruals for liabilities that are the subject of
indemnification pursuant to this Section 6.01(b) and set forth as a line item on
the KSHC Closing Date Balance Sheet, insurance proceeds and indemnification
payments from third parties) to the extent arising out of (i) the operations of
any of the KSHC Excluded Entities or any of the KSHC Designated Entities prior
to or after the Closing Date (other than any such Losses to the extent arising
from or based upon the management or operation of any KSHC Excluded Entity or
KSHC Designated Entity (A) prior to the Closing Date, by any KSHC Entity or (B)
on or after the Closing Date, by the Parent or any Subsidiary) and (ii) clause
(A) of paragraph 3 of each of the severance agreements, dated June 9, 1997, as
amended, between Kinney System, Inc. and each of Scott E. Shafer, Michael Beck,
Vincent Garguilo, Alix Vincent, Hector Chevalier, Gary Campbell, Philip
Mittleman, Daniel Stark, Victor Lopez and Sabry Assal.
(c) Promptly after receipt by the Parent of notice of any demand,
claim or circumstance received by Parent on or after the Closing Date that,
with or without the lapse of time, the Parent has reason to believe may result
in any such Losses described in clauses (i) and (ii) of Section 6.01(a) or
Section 6.01(b), Parent shall give notice thereof to each of the KSHC
Shareholders, which notice shall describe such demand, claim or circumstance in
reasonable detail and shall indicate the amount (estimated, if necessary) of
the Losses that have been or may be suffered by Parent. The KSHC Shareholders
shall compromise or defend, by their own counsel, any such demand, claim or
circumstance and all fees and expenses related thereto shall be subject to
Section 6.01(a) or 6.01(b), as applicable. Parent shall cooperate in the
compromise of, or defense against, such demand, claim or circumstance and shall
make available to the KSHC Shareholders and their counsel any books, records or
other documents within its control that are necessary or appropriate for such
compromise or defense.
(d) Parent shall reimburse the KSHC Shareholders, on a percentage
basis equal to the percentages set forth opposite their respective names on
Schedule 6.01, in an amount equal to twenty percent (20%) of all premiums paid
by the KSHC Shareholders in respect of one or more insurance policies providing
coverage up to $10 million in the aggregate for Losses that are subject to
indemnification by the KSHC Shareholders pursuant to Section 6.01(a); provided,
that all such premiums shall be included in computing the First and Second
Indemnity Thresholds; and provided, further, that, the KSHC Shareholders shall
consult with Parent with respect to the terms and conditions of such insurance
policies, including, without limitation, the premiums to be paid with respect
thereto, prior to obtaining any such coverage.
Section 6.02 Certain Indemnification Procedures. Notwithstanding
anything in Section 6.01 to the contrary, Parent shall have the right to
determine the manner of resolution of, and control, conduct and direct any
activities (including but not limited to investigation and remediation
activities) that may result in Losses arising out of the items set forth in
Schedule
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4.17 of the KSHC Disclosure Schedule (clause (iii) of Section 6.01(a));
provided, however, that the KSHC Representative and Parent shall comply with
the following procedures for indemnification of any such Losses resulting from
such activities for any particular matter:
(a) Parent shall notify the KSHC Representative in writing of the action
it proposes to take, describing in reasonable detail the matter to be
investigated, remediated, prevented or complied with, the scope of the work to
be performed and the estimated cost associated with such activities
("Environmental Activity Proposal"). Parent shall provide the KSHC
Representative with (i) copies of all work plans for, and test results, surveys
and other data generated by, the investigations performed by Parent or their
consultants promptly upon the availability thereof, (ii) final and any prior
drafts of all reports, plans and other documents to be filed with any
Governmental Body upon the availability thereof and in any event prior to any
such filing being made, (iii) an opportunity to meet with Parent and their
representatives prior to and following any substantive communications with
Governmental Bodies, and (iv) a timely opportunity to discuss and comment upon
the foregoing and any other proposed determinations or actions relating to the
investigation, testing and remediation of any relevant property and the
reporting thereon with Governmental Bodies.
(b) In the event that the KSHC Representative objects to the Environmental
Activity Proposal in whole or in part, the KSHC Representative shall notify
Parent in writing of its disagreement (and its basis therefor) regarding such
Environmental Activity Proposal and, if the KSHC Representative desires, shall
provide an alternative proposal within 30 calendar days of its receipt of notice
of the Environmental Activity Proposal. Parent and the KSHC Representative shall
thereafter negotiate in good faith in an attempt to reach agreement as to the
disputed Environmental Activity Proposal. In the event that Parent and the KSHC
Representative are unable to resolve the dispute within 20 calendar days after
the Parent's receipt of such written notice, the KSHC Representative or Parent
may provide written notice to the other of its intent to submit the matter to
the Designated Environmental Engineer, which shall resolve such items in dispute
within a 30-calendar day determination period following submission of such items
in dispute to such Designated Environmental Engineer, based on independent
review of (i) written submissions by the KSHC Representative and the Parent and
(ii) any environmental engineering studies or reports prepared in conjunction
with the submission of the Environmental Activity Proposal or the written
notice.
(c) Any review by the Designated Environmental Engineer conducted
pursuant to this Section 6.02 shall be limited to the Environmental Activity
Proposal and resolution of the dispute set forth in the written notice, and the
Designated Environmental Engineer shall have no jurisdiction or authority to
resolve any claims not so related, whether arising by way of asserted rights,
offsets or otherwise. The Designated Environmental Engineer may order that the
Environmental Activity Proposal be implemented or that the KSHC
Representative's alternative proposal as set forth in the written notice be
implemented or that different activities be implemented, so long as the
activity ordered by the Designated Environmental Engineer is consistent with
the Lowest Cost Response and is required by applicable Environmental Laws.
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The Designated Environmental Engineer's decision shall be final and binding on
the KSHC Representative and the Parent. Any award by the Designated
Environmental Engineer shall be enforceable in any court of competent
jurisdiction. The parties hereby consent to such jurisdiction and to entry of
judgment thereon. The costs of dispute resolution by the Designated
Environmental Engineer shall be borne equally by the Parent and the KSHC
Shareholders and as between the KSHC Initial Shareholders, on a percentage
basis equal to the percentages set forth opposite their respective names on
Schedule 6.01.
(d) Notwithstanding anything in this Agreement to the contrary, the
indemnity obligation for Losses arising out of the disclosed items set forth in
Schedule 4.17 of the KSHC Disclosure Schedule shall be limited to activities
required by Environmental Law and the applicable provisions in any KSHC Real
Property Contract or satisfied by implementation or indemnification of the
Lowest Cost Response. Should Parent, at the Parent's sole discretion,
undertake remedial action or such other action that exceeds the requirements of
the Lowest Cost Response, Parent shall bear the incremental costs, if any,
incurred in implementing the more stringent remedy.
(e) The KSHC Representative and Parent shall cooperate with each other
with respect to making claims under (i) any occurrence-based policies written
by third party insurance companies, to the extent such policies were applicable
to the relevant properties prior to the Closing Date, (ii) any acquisition
agreements with third parties, to the extent such agreements are in effect as
of the Closing Date and afford indemnification rights for the benefit of such
entities and (iii) any underground storage tank or similar environmental
reimbursement program, to the extent such programs are available to such
entities at any time after the Closing Date, for reimbursement or contribution
in connection with environmental matters disclosed on Schedule 4.17 of the KSHC
Disclosure Schedule. Such cooperation shall include making all reasonable
claims and demands against such third parties with respect to such
environmental matters and pursuing such claims and demands in a commercially
reasonable manner.
(f) Parent and the KSHC Representative will not initiate or encourage
any action by any third party, including any Governmental Body, which could
reasonably be expected to lead to a claim by such third party with respect to
any environmental matter of the KSHC Shareholders for which the KSHC
Shareholders are responsible pursuant to Section 6.01, except to the extent
required by Environmental Law; provided, however, that nothing herein shall
prevent Parent from conducting and implementing environmental audits in the
ordinary course of business.
(g) Indemnification claimed by the Parent under Section 6.01 is the
exclusive remedy available to the Parent for all Losses arising out of all
matters covered thereby and the Parent waives its rights for relief against the
KSHC Shareholders under any other applicable law.
Section 6.03 Releases; Obligation of the Parent to Indemnify.
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(a) (i) Parent shall use its commercially reasonable efforts to obtain
the release of each of the KSHC Shareholders, within 120 days following the
Closing Date, from any and all guarantees made by such KSHC Shareholder in
connection with (x) any KSHC Assumed Indebtedness and (y) any letters of credit
or similar instruments of any KSHC Entity assumed by the Parent as a result of
the consummation of the KSHC Merger, by providing replacement guarantees,
letters of credit for the account of the Parent or any Subsidiary thereof, or
other reasonable financial assurances.
(ii) Parent shall indemnify, defend and hold harmless, to the fullest
extent permitted under applicable law, each of the KSHC Shareholders from and
against all Losses arising out of (x) any KSHC Assumed Indebtedness and (y) any
letters of credit or similar instruments of any KSHC Entity assumed by the
Parent as a result of the consummation of the KSHC Merger after the Closing
Date.
(iii) Promptly after receipt by any KSHC Shareholder of any demand,
claim or circumstance that, with or without the lapse of time, may result in
any Losses described in Section 6.03(a)(ii), such KSHC Shareholder shall give
notice thereof to the Parent, which notice shall describe such demand, claim or
circumstance in reasonable detail and shall indicate the amount (estimated, if
necessary) of the Losses that have been or may be suffered by such KSHC
Shareholder. The Parent shall compromise or defend, at its own expense and by
its own counsel, any such demand, claim or circumstance, and such KSHC
Shareholder shall cooperate, at the expense of the Parent, in the compromise or
defense thereof. Such KSHC Shareholder shall make available to the Parent and
its counsel any books, records or other documents within its control that are
necessary or appropriate for such compromise or defense.
(iv) Parent shall reimburse the KSHC Shareholders for any fees
relating to letters of credit or similar instruments issued for the account of
any KSHC Entity that any such KSHC Shareholder incurs for any period on or
after the Closing Date, payable in immediately available funds to such KSHC
Shareholder on a quarterly basis within ten business days following the last
day of each March, June, September and December in each applicable year.
(v) Parent shall promptly reimburse Katz for eighty percent (80%) of
any amount received by KSHC or any Affiliate thereof after the Closing Date
arising out of (a) any tax appeal relating to the Lease, dated November 1,
1983, between Richard H. Rubin and Myrna Putziger, Trustees of Government
Center Garage Realty Trust, and Kinney System of Sudbury St., Inc, as amended
by amendment dated as of November 15, 1991, for all time periods on or prior to
December 31, 1996 or (b) that certain pending reimbursement claim against the
City of New York for electric bills paid on behalf of the City of New York by
KSHC or any Affiliate thereof relating to the properties at Shea Stadium in
Flushing, New York, in each case within ten Business Days of receipt of any
such amount by Parent.
Section 6.04 Releases. Simultaneously with the execution of this
Agreement:
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(a) Each KSHC Shareholder shall execute a release substantially in the
form of Exhibit B hereto.
(b) In addition, Schwartz shall execute a release substantially in form
of Exhibit C-1 hereto (the "Schwartz Release").
(c) KSHC shall execute a release substantially in the form of Exhibit C-2
hereto ("KSHC Release").
(d) Katz shall execute a release substantially in the form of Exhibit C-3
hereto ("Katz Release").
Section 6.05 No Other Representations and Warranties. Each party hereto
agrees that it has not made or shall be deemed to have made, any representation
or warranty, express or implied, to any other party hereto or in the case of
the Parent, to any Affiliate or shareholder thereof or any of their respective
partners, members, officers, directors, employees or representatives with
respect to (a) the execution and delivery of this Agreement or the
Transactions, (b) any financial projections heretofore or hereafter delivered
to or made available to any such Persons or their counsel, accountants,
advisors, representatives or Affiliates, and agrees that it has not and will
not rely on such financial projections in connection with its evaluation of any
other party or the Transactions or (c) any information, statement or document
heretofore or hereafter delivered to or made available to any such Persons or
their counsel, accountants, advisors, representatives or Affiliates with
respect to any other party or the businesses, operations or affairs of any
other party, except to the extent and as expressly covered by a representation
and warranty contained in this Agreement, the Merger Agreement, the Lock-Up
Agreement or the other agreements expressly referred to herein or therein.
ARTICLE VII.
SHAREHOLDER REPRESENTATIVES
Section 7.01 KSHC Shareholder Representative.
(a) Katz shall act as the KSHC Representative (the "KSHC Representative")
in all matters relating to Article III of the Merger Agreement In the event
Katz is unable to serve in such capacity for any reason, a successor KSHC
Representative shall be appointed by Katz and Schwartz.
(b) The KSHC Representative shall be fully authorized to take any action
(or to determine to take no action) with respect to all disputes, and all other
notices and communications relating to Article III of the Merger Agreement in
the manner set forth therein as the KSHC Representative then serving hereunder
may deem appropriate, including, without limitation, the institution or defense
of litigation on behalf of any KSHC Shareholder and the
16
<PAGE> 20
settlement or compromise of any dispute or controversy. The KSHC Representative
shall have no duties or obligations hereunder except those specifically set
forth herein and such duties and obligations shall be determined solely by
Article III of the Merger Agreement. In connection with the duties hereunder,
the KSHC Representative, in his capacity as such, shall be protected in acting
or refraining from acting upon any written notice, request, consent,
certificate, order, affidavit, letter, telegram or other document furnished in
connection with Article III of the Merger Agreement and believed by the KSHC
Representative to be genuine and to have been signed or sent by the proper
party or parties and the KSHC Representative shall not be liable for anything
the KSHC Representative may do or refrain from doing in connection with his
duties as the KSHC Representative except as a result of his own gross
negligence, willful misconduct or bad faith. The KSHC Representative may, at
his expense, consult counsel and shall be protected in respect of any action,
claim or proceeding brought against the KSHC Representative by another party
hereto if the KSHC Representative took or omitted taking any action in good
faith on the advice of such counsel.
(c) In connection with the payment of and KSHC Post Closing Adjustment
Consideration which is finally determined to be due and owing from the Parent to
Katz, the KSHC Representative (in the event the KSHC Representative is a Person
other that Katz) shall provide written notification to Katz of the amount due
Katz and shall request in writing that the Parent pay to Katz the amount
attributable to him pursuant to Article III of the Merger Agreement. In the
event Katz gives the KSHC Representative (in the event the KSHC Representative
is a person other than Katz) notice that the Parent has failed to pay any KSHC
Post Closing Adjustment Consideration which is due, in accordance with the terms
of Article III of the Merger Agreement, the KSHC Representative shall use
commercially reasonable efforts to assist Katz in enforcing his rights under
Article III of the Merger Agreement; provided, however, in no event shall the
KSHC Representative be required to incur any expense or obligation or waive any
of its rights in connection with such assistance. Nothing contained herein is
intended or shall be construed to constitute a guarantee by the KSHC
Representative of collection or payment, with respect to any KSHC Post Closing
Adjustment Consideration due from Parent.
(d) In connection with the payment of any KSHC Post Closing Adjustment
Consideration which is finally determined to be due and owing from Katz to the
Parent, the KSHC Representative (in the event the KSHC Representative is a
Person other than Katz) shall provide written notification to Katz of the
amount of such KSHC Post Closing Adjustment Consideration and shall request in
writing that Katz pay such amount to Parent. Nothing contained herein is
intended or shall be construed to constitute a guarantee by the KSHC
Representative of collection, payment, or otherwise with respect to any KSHC
Post Closing Adjustment Consideration due to the Parent.
17
<PAGE> 21
ARTICLE VIII.
MISCELLANEOUS
Section 8.01 Further Assurances. Each party hereto shall execute and
deliver such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate, carry out
and comply with all of their obligations under this Agreement.
Section 8.02 Effectiveness. It is a condition precedent to the
effectiveness of this Agreement that the Transactions shall have been
consummated.
Section 8.03 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to either or both of the KSHC Shareholders, to:
c/o Katz, Ettin, Levine, Kurzweil & Weber
905 North Kings Highway
Cherry Hill, New Jersey 08034
Telecopier No.: (609) 482-5531
Telephone No.: (609) 667-6440
Attention: Lewis Katz, Esq.
and
Parker Chapin Flattau & Klimpl
1211 Avenue of the Americas
New York, New York 10036
Telecopier No.: (212) 704-6000
Telephone No.: (212) 704-6290
Attention: Charles Greenman, Esq.
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Telecopier No.: (212) 309-6273
Telephone No.: (212) 309-6000
Attention: Philip H. Werner, Esq.
18
<PAGE> 22
(b) If to the Parent or the Carell Shareholders, to:
Central Parking Corporation
2401 21st Avenue South
Suite 200
Nashville, Tennessee 37212
Attention: Monroe J. Carell, Jr.
with a copy to:
Harwell Howard Hyne Gabbert & Manner, P.C.
1800 First American Center
Nashville, Tennessee 37238
Telecopier No.: (615) 251-1059
Telephone No.: (615) 256-0500
Attention: Mark Manner, Esq.
Section 8.04 Legends. Each KSHC Shareholder and Parent shall cause any
and all certificates evidencing the shares of Common Stock acquired by each
KSHC Shareholder after the date hereof to bear the following legends:
(a) for so long as such shares shall be subject to the transfer
restrictions set forth in Article III:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
WHETHER BY SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE, GIFT, REQUEST,
APPOINTMENT OR OTHERWISE, EXCEPT IN CERTAIN CIRCUMSTANCES PURSUANT TO
AND SUBJECT TO THAT CERTAIN SHAREHOLDERS' AGREEMENT AND AGREEMENT NOT
TO COMPETE AMONG CENTRAL PARKING CORPORATION AND THE SHAREHOLDERS
NAMED THEREIN. A COPY OF SUCH AGREEMENT IS ON FILE WITH THE SECRETARY
OF THE PARENT."
(b) for so long as required by law:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION TO THE
19
<PAGE> 23
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
Section 8.05 Fees and Expenses. Other than as expressly provided herein,
all fees and expenses incurred in connection with the transactions contemplated
hereby shall be paid by the party incurring such expenses.
Section 8.06 Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated except by an
instrument in writing, signed by each of the parties hereto.
Section 8.07 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns, including without limitation, in
the case of any corporate party hereto any corporate successor by merger or
otherwise. Except with the prior written consent of the other parties hereto or
as otherwise provided herein, no party may assign any of its rights or
obligations hereunder.
Section 8.08 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof and except as otherwise expressly provided herein. There are no
representations, warranties or covenants by the parties hereto relating to such
subject matter other than those expressly set forth in this Agreement.
Section 8.09 Severability. If any term or other provisions of this
Agreement is invalid, illegal or incapable or being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
Section 8.10 Enforcement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms. It is accordingly
agreed that the parties hereto shall be entitled to specific performance of the
terms hereof, this being in addition to any other remedy to which they are
entitled at law or in equity.
Section 8.11 Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative
20
<PAGE> 24
and not alternative, and the exercise or beginning of the exercise of any
thereof by any party hereto shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
Section 8.12 No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
Section 8.13 No Third Party Beneficiaries. This Agreement is not intended
to be for the benefit of and shall not be enforceable by any person or entity
who or which is not a party hereto.
Section 8.14 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to any principles of conflicts of law that might indicate the applicability of
the laws of any jurisdiction.
Section 8.15 Consent to Jurisdiction and Service of Process. EACH OF THE
PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES
THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY MAY BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS RESPECTIVE PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES HERETO FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTY AT THE ADDRESS
SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 DAYS AFTER
SUCH MAILING, NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF
ANY PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND
DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN
JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OF THE
OTHER PARTIES HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE
PERMITTED BY ANY APPLICABLE LAW.
21
<PAGE> 25
Section 8.16 Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND FOR ANY
COUNTERCLAIM THEREIN.
Section 8.17 Inspection. For so long as this Agreement shall remain in
effect, this Agreement shall be made available for inspection by any KSHC
Shareholder at the principal executive offices of Parent.
Section 8.18 Name Headings. The name assigned to this Agreement and 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 8.19 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Each counterpart may
consist of a number of copies each signed by less than all, but together signed
by all, the parties hereto.
22
<PAGE> 26
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
CENTRAL PARKING CORPORATION
By: /s/ Monroe Carell
-------------------------------------
Name: Monroe Carell
Title: Chairman & C.E.O.
/s/ MONROE J. CARELL, JR.
----------------------------------------
MONROE J. CARELL, JR.
----------------------------------------
LEWIS KATZ
----------------------------------------
SAUL SCHWARTZ
23
<PAGE> 27
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
CENTRAL PARKING CORPORATION
By: /s/
--------------------------------
Name:
Title:
-----------------------------------
MONROE J. CARELL, JR.
/s/ LEWIS KATZ
-----------------------------------
LEWIS KATZ
-----------------------------------
SAUL SCHWARTZ
24
<PAGE> 28
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
CENTRAL PARKING CORPORATION
By:
--------------------------------
Name:
Title:
------------------------------------
MONROE J. CARELL, JR.
------------------------------------
LEWIS KATZ
/S/ SAUL SCHWARTZ
------------------------------------
SAUL SCHWARTZ
25
<PAGE> 29
SCHEDULE I
COMMON STOCK BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
NAME NO. OF SHARES
- ---- -------------
<S> <C>
Lewis Katz 667,779
Saul Schwartz 214,643 (5,806 of which were transferred to
the Jewish Federation of Southern New
Jersey (a charity designated by Katz) on the
Closing Date.)
</TABLE>
26
<PAGE> 30
SCHEDULE 1.01
(1) Silou Corp.
(2) Lousil Corp.
(3) Cromwell Louisville Associates L.P.
(4) Cromwell Louisville Inc.
(5) Cromwell Silver Towers L.P.
(6) Cromwell Silver Towers Inc.
(7) Cromwell Underhill Associates L.P.
(8) Cromwell Underhill Inc.
(9) Samuel Rappaport Partnership
(10) Ztak Aviation, Inc.
(11) SK Travel L.L.C.
27
<PAGE> 31
EXHIBIT A
Form of Joinder Agreement
SCHEDULE 6.01
Percentage Allocation Schedule
Katz 83.75
Schwartz 16.25
28
<PAGE> 32
EXHIBIT A
Form of Joinder Agreement
<PAGE> 33
EXHIBIT A
TO SHAREHOLDERS' AGREEMENT
Form of
JOINDER AGREEMENT
FOR PERMITTED TRANSFEREES
Central Parking Corporation
and the Other Persons Parties to
the Shareholders' Agreement (as
defined herein)
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [DESCRIBE SECURITY
BEING TRANSFERRED] of Central Parking Corporation, a Tennessee corporation (the
"Parent"), the undersigned represents that [HE] [SHE] [IT] shall become a party
to and a Permitted Transferee as defined in that certain Shareholders'
Agreement, dated as of __________, 1998, (as such agreement may have been
amended, supplemented or modified from time to time (the "Agreement"), among the
Parent and the persons named therein, and as a Permitted Transferee shall be
fully bound by, and subject to, all of the covenants, terms and conditions of
the Agreement that are applicable to the undersigned's transferor, as though an
original party thereto and shall be deemed a [KSHC SHAREHOLDER] [CARELL
SHAREHOLDER] for all purposes thereof.
Executed as of the ___ day of ________, 199_.
SIGNATORY: /s/
-------------------------------
Address:
-------------------------------
-------------------------------
A-1
<PAGE> 34
ACKNOWLEDGED AND ACCEPTED:
CENTRAL PARKING CORPORATION
By: /s/
-------------------------
Name
Title
----------------------------
MONROE J. CARELL, JR.
----------------------------
LEWIS KATZ
----------------------------
SAUL SCHWARTZ
A-2
<PAGE> 35
EXHIBIT B
KSHC Shareholder Release
<PAGE> 36
EXHIBIT B
TO SHAREHOLDERS' AGREEMENT
RELEASE OF CLAIMS
In consideration of $1.00 (the receipt and sufficiency of which is hereby
acknowledged), the undersigned (the "KSHC Releasing Shareholder"), in his
capacity as shareholder of Kinney System Holding Corp. (the "Parent"), for
himself and his successors and assigns, hereby releases, waives, discharges and
covenants not to sue each present or former officer or director of the Parent,
any of its present or former subsidiaries or any of its successors and assigns
by operation of law or otherwise ("KSHC Released Persons") from and against any
and all claims, actions, causes of action, suits and demands whatsoever, known
or unknown, fixed, conditional or contingent, in law or in equity, which the
KSHC Releasing Shareholder, ever had, now has or hereafter can, shall or may
have against any of the KSHC Released Persons arising out of or based upon (a)
any indemnity obligation of the Parent to the KSHC Releasing Shareholder
resulting from facts or circumstances existing on or before the Closing Date of
any kind whatsoever and (b) the consummation of the Transactions by the Parent
or by any other shareholder thereof. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the
Acquisition Agreement and Plan of Merger, dated as of November 7, 1997, among
the parties named herein.
/s/
-------------------------------
[KSHC RELEASING SHAREHOLDER]
Dated:____________, 1998.
<PAGE> 37
EXHIBIT C-1
Schwartz Release
<PAGE> 38
EXHIBIT C-1
TO SHAREHOLDER'S AGREEMENT
SCHWARTZ RELEASE
In consideration for the payment of the consideration to the undersigned
pursuant to the Schwartz Stock Purchase Agreement, the undersigned hereby
releases, waives and discharges, covenants not to sue and agrees to hold
harmless KSHC or any of its present and former Affiliates, Subsidiaries,
shareholders, employees, directors, officers, representatives, agents,
successors or assigns from all actions, causes of action, suits, liabilities,
claims, obligations and rights whatsoever, known or unknown, fixed, conditional
or contingent, in law or in equity, that the undersigned or any of his
successors or assigns ever had, now has or hereafter can, shall or may have for
any matters based upon or arising out of (a) the Employment and Equity
Agreement, dated December 19, 1994, between Schwartz and Kinney System, Inc.,
(b) Employment Agreement dated May 17, 1991, between KSHC and Schwartz, (c)
Stock Purchase Agreement, dated May 17, 1991, between Katz and Schwartz, (d) the
Shareholders' Agreement, dated May 17, 1991, among Katz, Schwartz and KSHC, (e)
Agreement between Kinney System, Inc. and Schwartz relating to deferred
compensation for the years 1995 and 1996, (f) any promissory note issued by KSHC
or any of its subsidiaries in favor of Schwartz, or (g) any similar agreement
among Schwartz, Katz and/or KSHC and its consolidated Subsidiaries, and any and
all claims, costs, expenses and attorneys' fees with respect to any of the
foregoing. Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Acquisition Agreement and Plan of
Merger, dated as of November 7, 1997, among the parties named therein.
------------------------------------------
Saul P. Schwartz
Dated: ____________, 1998.
<PAGE> 39
EXHIBIT C-2
KSHC Release
<PAGE> 40
EXHIBIT C-2
TO SHAREHOLDERS' AGREEMENT
KSHC RELEASE
In consideration of $1.00 (the receipt and sufficiency of which is hereby
acknowledged) the undersigned, on behalf of itself and its subsidiaries, hereby
releases, waives and discharges, covenants not to sue and agrees to hold
harmless Katz or Schwartz, as the case may be, or any of their respective
representatives, agents, successors or assigns from all actions, causes of
action, suits, liabilities, claims, obligations and rights whatsoever, known or
unknown, fixed, conditional or contingent, in law or in equity, that the
undersigned or any of his successors or assigns ever had, now has or hereafter
can, shall or may have for any matters based upon or arising out of (a) the
Employment and Equity Agreement, dated December 19, 1994, between Schwartz and
Kinney System, Inc., (b) Employment Agreement dated May 17, 1991, between KSHC
and Schwartz, (c) Stock Purchase Agreement, dated May 17, 1991, between Katz and
Schwartz, (d) the Shareholders' Agreement, dated May 17, 1991, among Katz,
Schwartz and KSHC, (e) Agreement between Kinney System, Inc. and Schwartz
relating to deferred compensation for the years 1995 and 1996, (f) any
promissory note issued by KSHC or any of its subsidiaries in favor of Schwartz,
or (g) any similar agreement among Schwartz, Katz and/or KSHC and its
consolidated Subsidiaries, and any and all claims, costs, expenses and
attorneys' fees with respect to any of the foregoing. Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to them
in the Acquisition Agreement and Plan of Merger, dated as of November 7, 1997,
among the parties named therein.
KINNEY SYSTEM HOLDING CORP.
By: /s/
-----------------------
Name:
Title:
Dated: ___________, 1998.
<PAGE> 41
EXHIBIT C-3
Katz Release
<PAGE> 42
EXHIBIT C-3
TO SHAREHOLDERS' AGREEMENT
KATZ RELEASE
In consideration for the payment of the consideration to the undersigned
pursuant to the Merger Agreement, the undersigned hereby releases, waives and
discharges, covenants not to sue and agrees to hold harmless KSHC or any of its
present and former Affiliates, Subsidiaries, Shareholders, employees, directors,
officers, representatives, agents, successors or assigns from all actions,
causes of action, suits, liabilities, claims, obligations and rights whatsoever,
known or unknown, fixed, conditional or contingent, in law or in equity, that
the undersigned or any of his successors or assigns ever had, now has or
hereafter can, shall or may have for any matters based upon or arising out of
(a) the Stock Purchase Agreement, dated May 17, 1991, between Katz and Schwartz,
(b) the Shareholders' Agreement, dated May 17, 1991, among Katz, Schwartz and
KSHC or (c) any similar agreement amount Schwartz, Katz and/or KSHC and its
consolidated Subsidiaries, and any and all claims, costs, expenses and
attorneys' fees with respect to any of the foregoing. Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to them
in the Acquisition Agreement and Plan of Merger, dated as of November 7, 1997,
among the parties named therein.
----------------------------------
Lewis Katz
Dated: _________ __, 1998.
<PAGE> 1
EXHIBIT 10.24
LEASE AGREEMENT
This Lease, made and entered in to this 6th day of October, 1995, by and between
The Carell Family LLC, a Tennessee Limited Liability Company, (hereinafter
referred to as "Lessor"), and Central Parking System of Tennessee, Inc., a
Tennessee corporation (hereinafter referred to as "Lessee").
WITNESSETH:
1. Description:
Lessor hereby leases to Lessee for use as a parking lot that certain
tract of real estate located in Nashville, Tennessee bounded by 2nd and
3rd Avenues South, Demonbreun Street and Sparkman Street, commonly
known as the Alloway Parking Lot, together will all improvements
thereon, and appurtenances thereto, hereinafter referred to as
"Premises".
2. Quiet Possession:
Lessor covenants that it has fee simple title to the demised premises,
and Lessor covenants and agrees with Lessee that so long as Lessee
keeps and performs all the covenants and conditions to be kept and
performed by the Lessee, Lessee shall have quiet, undisturbed and
continued possession, free from all claims of any kind, nature or
description.
3. Term:
This lease shall commence on October 1, 1995 and continue for a period
of ten (10) years through September 30, 2005.
4. Rental:
(a) Lessee covenants and agrees to pay the Lessor an annual rental
of One Hundred Thousand Dollars ($100,000.00) in equal,
advance monthly payments of $8,333.33 on the first day of each
month during the term of this Lease.
Gross Parking Revenue as used in this lease shall mean all
revenues received and collected by the Lessee in the operation
of the premises less any sales tax, parking tax, license fee,
levy, impost, or other charge which Lessee may be required by
law, ordinance or other governmental regulation (i) to collect
from patrons of the premises (ii) or impose on the parking
spaces or stalls on the premises (excluding ad valorem
taxation of
1
<PAGE> 2
the premises) or (iii) vehicles entering the premises and
remit to a political subdivision or other agency without
regard to legality, constitutionality or enforceability of
such law, ordinance or other government regulation.
5. Maintenance and Replacement:
(a) Lessor leases the premises to the Lessee ""As Is", in its
condition at the inception of this lease and Lessor shall have
no obligation whatsoever to make any alterations, improvements
or repairs to the premises prior to the inception of this
Lease Agreement or during the term hereof.
(b) Lessee agrees to use reasonable diligence in the care,
protection and maintenance of the leased Premises during the
term of this lease, and to surrender said Premises at the
termination of this Lease in as good condition as received,
ordinary wear and tear and other casualty excepted. Lessee
shall make all necessary repairs to the Premises and to the
sidewalks and curbs adjoining Premises.
(c) Lessee will have the right to erect on the Premises a coin
collection box and professional parking signs as long as its
signs do not violate city ordinances.
6. Alterations and Improvements
(a) Lessee may, with approval of Lessor, which shall not be
unreasonably withheld, make alterations and improvements, at
Lessee's expense, to the leased Premises as may be required
for the purpose of Lessee's business; provided, however, that
the Lessor, upon the expiration of Lease, may require Lessee
to restore the leased Premises as nearly as possible to its
condition at the beginning of the Lease, ordinary wear and
tear than thirty (30) days before the expiration of this Lease
or any extension thereof.
(b) Lessee may (if not in default hereunder) prior to the
expiration of the Lease or any extension thereof, remove all
fixtures and equipment which have been place on the Premises
by Lessee.
2
<PAGE> 3
7. Use of Premises:
Premises shall be used by Lessee for the purposes of operating a
parking lot for use by the general public, and for the sale of such
merchandise and services as are customarily associated with the
operation of a parking lot. The Premises shall not be used for any
illegal purpose, nor in any manner to create any nuisance, or trespass.
8. Insurance:
(a) Prior to commencement, and during the term of this Lease,
Lessee agrees to maintain the following types of insurance
with limits not less than those set forth below:
(1) Commercial General Liability Insurance:
$1,000,000.00 Combined Single Limit each occurrence
for Bodily Injury and Property Damage $1,500,000.00
Excess Liability Coverage
(2) Garagekeepers Legal Liability:
$2,500,000 Combined
Single Limit each occurrence
(3) Crime Insurance:
$10,000.00 Commercial Blanket Bond
$10,000.00 Broad Form Money - Inside
$10,000.00 Broad Form Money - Outside
(4) Worker's Compensation Insurance:
Coverage A - Statutory
Coverage B - $100,000.00
Lessor shall be included as an additional insured under the
above listed liability coverages.
9. Waiver of Subrogation:
Lessor does hereby waive all rights of recover, if any, against Lessee
for damage to, or destruction of, the parking facility in the event
such damage or destruction is caused by fire or other casualty which
may be covered by a standard fire and extended coverage insurance
policy.
10. Assignment and Subletting:
Lessee shall not assign this lease in whole or in part, or sublet all
or any part of the leased Premises without the prior written consent of
Lessor in each instance, which consent will not be unreasonably
withheld.
3
<PAGE> 4
11. Default:
In the event of a default in the performance by Lessee of any condition
herein contained, after more than thirty (30) days after receipt of
written notice of such default by Lessor to Lessee by registered or
certified mail, then in any such case, Lessor elects to terminate this
lease upon a specified date not less than thirty (30) days after such
written notice and this lease shall then terminate on that date so
specified, and the Lessor shall have the right to re-enter, repossess,
or re-rent the property upon such date. If the Lessor shall at any time
fail to perform any of the covenants, conditions, or provisions of this
Lease, and such default is not removed within thirty (30) days after
receipt of written notice thereof from Lessee, then, in any such cases.
Lessee may serve written notice upon Lessor that Lessee elects to
terminate this Lease upon a specified date, not less than thirty (30)
days after such written notice, and this Lease shall then terminate on
the date so specified. No default shall be deemed waived unless such
waiver be in writing.
12. Indemnity:
Lessee shall defend, indemnify and hold Lessor harmless from and
against any and all actions, costs, claims, losses, expense and/or
damages, arising out of Lessee's operation of the premises from any
cause.
13. Condemnation:
In the event of any total taking by eminent domain, or conveyance in
lieu thereof, this Lease shall terminate on date of taking and all
charges shall be prorated to such date. In the event of any partial
taking, rental shall abate pro-rata, according to the space condemned,
seized, or appropriated.
14. Destruction of, or Damage to Premises:
If the Premises are totally destroyed by fire, storm, lightning,
earthquake, or other casualty, and including destruction due to
bombing, shelling, or other war damage, this Lease shall be terminated
and the rental accounted for as between Lessor or Lessee as of that
date. If the Premises are damaged but not wholly destroyed by any such
casualties, rental shall abate in such proportion as use of Premises
has been destroyed, or made inaccessible or unusable, and Lessor shall
either restore Premises to substantially the same condition as before
damages as speedily as practicable, whereupon full rental shall
recommence or terminate the Agreement.
4
<PAGE> 5
15. Holding Over:
If Lessee remains in possession of Premises after expiration of the
term hereof, with Lessor's acquiescence and without any express
agreement of parties, Lessee shall be a Lessee at will at rental rate
in effect at the end of the Lease; and there shall be no renewal of
this lease by operation of law.
16. Entry for Carding, etc.:
Lessor may card Premises "For Rent" or "For Sale" at any time during
the term of this lease. Lessor may enter the Premises at reasonable
hours to exhibit same to prospective purchasers or tenants.
17. Taxes and Assessments:
Lessee will be responsible for payment of all property taxes and
special assessments on the Premises.
18. Sale of Premises:
In the event of a bona fide sale of the Premises, Lessor shall have the
right to terminate this lease by providing (60) days written notice to
Lessee. In the event of such cancellation, Lessor shall pay the Lessee
a sum equal to 25% of the appreciation in the value of the premises
during the term hereof. For the purpose of calculating the appreciation
of the premises, the appreciation shall be equal to the sales price
received by Lessor net of any and all expenses associated with the
sale, including but not limited to commissions, attorney's fees, and
closing costs, less the value of the property at the inception of this
lease of $940,000.00. Lessor's obligation to make such payment will
only apply to a sale that is closed on or before September 30, 2005.
19. Miscellaneous Provisions:
It is mutually covenanted and agreed by and between the parties as
follows:
(1) That this Lease shall be construed under the laws of the state
of Tennessee.
(2) That the captions of the Article of this lease are inserted
for identification only, and shall not govern the
construction, nor alter, vary, or change any of the term,
conditions, or provisions of this lease or any Article
thereof.
5
<PAGE> 6
(3) Each provision herein shall be deemed separate and distinct
from all other provisions, and if any one of them shall be
declared illegal or unenforceable, the same shall not affect
the legality or enforceability of the other terms, conditions,
and provisions hereof, which shall remain in full force and
effect.
(4) Lessor will grant at Lessee's expense whatever easements are
reasonably necessary to provide the utilities for all
improvements on or places on said property and access to the
property during the term hereof.
(5) Any person, firm or corporation who may acquire an interest in
the Premises leased hereby, or in the improvements thereon,
shall take notice of all the terms and conditions set out
herein as well as the covenants referred to herein, and shall
be bound thereby.
(6) Lessee shall pay all utility charges resulting from Lessee's
use of Premises.
6
<PAGE> 7
20. Notices:
In the event notices are required to be sent under the provisions of
this Lease, the will be mailed, postage prepaid by certified or
registered mail, return receipt requested, addressee as follows:
If to the Lessee: If to the Lessor:
----------------- -----------------
James H. Bond, President Monroe J. Carell, Jr.
Central Parking System of TN, Inc. Carell Family Trust
2401 21st Avenue South 2401 21st Avenue South
Nashville, Tennessee 37212 Nashville, TN 37212
Either party may, by such notice, designate a new or other address to
which notice may be mailed.
IN WITNESS WHEREOF, the parties hereto have caused their names to be hereto
signed by their duly authorized officer on the date hereinbefore first written.
THE CARELL FAMILY LLC
ATTEST: BY: /s/ Monroe J. Carell, Jr.
------------------------- -------------------------------------
Edie Johnson, Secretary Monroe J. Carell, Jr., Chairman
CENTRAL PARKING SYSTEM OF TENNESSEE, INC.
ATTEST: /s/ Henry J. Abbott BY: /s/ James H. Bond
------------------------- -------------------------------------
Henry J. Abbott, Secretary James H. Bond, President
7
<PAGE> 1
EXHIBIT 10.25
FIRST AMENDMENT TO LEASE AGREEMENT
THIS FIRST AMENDMENT TO LEASE AGREEMENT ("Amendment") is made and entered into
as of the 29th day of July, 1997, by and between THE CARELL FAMILY LLC, a
Tennessee Limited Liability Company ("Lessor") and CENTRAL PARKING SYSTEM OF
TENNESSEE, INC., a Tennessee Corporation ("Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee have entered into a certain Lease Agreement dated
October 6, 1995, (the "Lease") whereby Lessor has leased to Lessee a certain
parking lot located in Nashville, Tennessee, a more particular description of
which is attached to the Lease; and
WHEREAS, the parties desire to amend the Lease as provided herein below.
NOW, THEREFORE, for and consideration of Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, for themselves, their successors and assigns,
do hereby agree to amend the Lease as follows:
1. Capitalized Terms. Any capitalized terms used in this Amendment that
are not defined herein shall have the meanings given those terms in the
Lease.
2. Percentage Rent. Paragraph 4(a) of the Lease is hereby amended to
include the following provision related to percentage rent:
Additionally, effective April 1, 1997, Lessee shall pay Lessor
quarterly on or before the 30th day following the end of the
previous calendar quarter an amount equal to 60% of Gross
Parking Revenue, as defined in the Lease, collected by Lessee
in the operation of a parking facility on the Premises in
excess of $400,000 annualized per Lease Year (the "Percentage
Rent Threshold"). Lessee shall submit to Lessor no later than
the 30th day after the expiration of each calendar quarter a
verified
<PAGE> 2
report showing Gross Parking Revenue, a calculation of the
percentage rent and payment of the then due percentage rent,
if any.
3. No Other Changes. Except as herein expressly amended, the Lease shall
remain in full force and effect. All covenants, terms, conditions, and
obligations of the Lease not modified or amended by this Amendment are
hereby ratified and affirmed.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day first
above written.
LESSOR:
THE CARELL FAMILY LLC
BY: /s/ Monroe J. Carell
-------------------------------------
Monroe J. Carell, Chief Manager
LESSEE:
CENTRAL PARKING SYSTEM OF TENNESSEE, INC.
ATTEST:
/s/ Alexander S. Fuqua BY: /s/ James H. Bond
------------------------- -------------------------------------
Alexander S. Fuqua James H. Bond
Associate Counsel President
<PAGE> 1
EXHIBIT 10.26
LEASE AGREEMENT
This Lease, made and entered in to this 6th day of October, 1995, by and between
The Carell Family LLC, a Tennessee Limited Liability Company, (hereinafter
referred to as "Lessor"), and Central Parking System of Tennessee, Inc., a
Tennessee corporation (hereinafter referred to as "Lessee").
WITNESSETH:
1. Description:
Lessor hereby leases to Lessee for use as a parking lot that certain
tract of real estate located in Nashville, Tennessee on the northeast
corner of the intersection of Second Avenue North and Church Street,
bounded by First and Second Avenues North, Church Street and Bank
Street, commonly known as the 2nd and Church Parking Lot, together will
all improvements thereon, and appurtenances thereto, hereinafter
referred to as "Premises".
2. Quiet Possession:
Lessor covenants that it has fee simple title to the demised premises,
and Lessor covenants and agrees with Lessee that so long as Lessee
keeps and performs all the covenants and conditions to be kept and
performed by the Lessee, Lessee shall have quiet, undisturbed and
continued possession, free from all claims of any kind, nature or
description.
3. Term:
This lease shall commence on October 1, 1995 and continue for a period
of ten (10) years through September 30, 2005.
4. Rental:
(a) Lessee covenants and agrees to pay the Lessor an annual rental
of One Hundred Thousand Dollars ($190,000.00) in equal,
advance monthly payments of $15,833.33 on the first day of
each month during the term of this Lease.
Gross Parking Revenue as used in this lease shall mean all
revenues received and collected by the Lessee in the operation
of the premises less any sales tax, parking tax, license fee,
levy, impost, or other charge which Lessee may be required by
law, ordinance or other governmental regulation (i) to collect
from patrons of
1
<PAGE> 2
the premises) or (ii) or impose on the parking spaces or
stalls on the premises (excluding ad valorem taxation of the
premises) or (iii) vehicles entering the premises and remit to
a political subdivision or other agency without regard to
legality, constitutionality or enforceability of such law,
ordinance or other government regulation.
5. Maintenance and Replacement:
(a) Lessor leases the premises to the Lessee "As Is", in its
condition at the inception of this lease and Lessor shall have
no obligation whatsoever to make any alterations, improvements
or repairs to the premises prior to the inception of this
Lease Agreement or during the term thereof.
(b) Lessee agrees to use reasonable diligence in the care,
protection and maintenance of the leased Premises during the
term of this lease, and to surrender said Premises at the
termination of this Lease in as good condition as received,
ordinary wear and tear and other casualty excepted. Lessee
shall make all necessary repairs to the Premises and to the
sidewalks and curbs adjoining Premises.
(c) Lessee will have the right to erect on the Premises a coin
collection box and professional parking signs as long as its
signs do not violate city ordinances.
6. Alterations and Improvements
(a) Lessee may, with approval of Lessor, which shall not be
unreasonably withheld, make alterations and improvements, at
Lessee's expense, to the leased Premises as may be required
for the purpose of Lessee's business; provided, however, that
the Lessor, upon the expiration of Lease, may require Lessee
to restore the leased Premises as nearly as possible to its
condition at the beginning of the Lease, ordinary wear and
tear than thirty (30) days before the expiration of this Lease
or any extension thereof.
(b) Lessee may (if not in default hereunder) prior to the
expiration of the Lease or any extension thereof, remove all
fixtures and equipment which have been placed on the Premises
by Lessee.
2
<PAGE> 3
7. Use of Premises:
Premises shall be used by Lessee for the purposes of operating a
parking lot for use by the general public, and for the sale of such
merchandise and services as are customarily associated with the
operation of a parking lot. The Premises shall not be used for any
illegal purpose, nor in any manner to create any nuisance, or trespass.
8. Insurance:
(a) Prior to commencement, and during the term of this Lease,
Lessee agrees to maintain the following types of insurance
with limits not less than those set forth below:
(1) Commercial General Liability Insurance:
$1,000,000.00 Combined Single Limit each occurrence
for Bodily Injury and Property Damage
$1,500,000.00 Excess Liability Coverage
(2) Garagekeepers Legal Liability:
$2,500,000 Combined Single Limit each occurrence
(3) Crime Insurance:
$10,000.00 Commercial Blanket Bond
$10,000.00 Broad Form Money - Inside
$10,000.00 Broad Form Money - Outside
(4) Worker's Compensation Insurance:
Coverage A - Statutory
Coverage B - $100,000.00
Lessor shall be included as an additional insured under the
above listed liability coverages.
9. Waiver of Subrogation:
Lessor does hereby waive all rights of recover, if any, against Lessee
for damage to, or destruction of, the parking facility in the event
such damage or destruction is caused by fire or other casualty which
may be covered by a standard fire and extended coverage insurance
policy.
10. Assignment and Subletting:
Lessee shall not assign this lease in whole or in part, or sublet all
or any part of the leased Premises without the prior written consent of
Lessor in each instance, which consent will not be unreasonably
withheld.
3
<PAGE> 4
11. Default:
In the event of a default in the performance by Lessee of any condition
herein contained, after more than thirty (30) days after receipt of
written notice of such default by Lessor to Lessee by registered or
certified mail, then in any such case, Lessor elects to terminate this
lease upon a specified date not less than thirty (30) days after such
written notice and this lease shall then terminate on that date so
specified, and the Lessor shall have the right to re-enter, repossess,
or re-rent the property upon such date. If the Lessor shall at any time
fail to perform any of the covenants, conditions, or provisions of this
Lease, and such default is not removed within thirty (30) days after
receipt of written notice thereof from Lessee, then, in any such cases.
Lessee may serve written notice upon Lessor that Lessee elects to
terminate this Lease upon a specified date, not less than thirty (30)
days after such written notice, and this Lease shall then terminate on
the date so specified. No default shall be deemed waived unless such
waiver be in writing.
12. Indemnity:
Lessee shall defend, indemnify and hold Lessor harmless from and
against any and all actions, costs, claims, losses, expense and/or
damages, arising out of Lessee's operation of the premises from any
cause.
13. Condemnation:
In the event of any total taking by eminent domain, or conveyance in
lieu thereof, this Lease shall terminate on date of taking and all
charges shall be prorated to such date. In the event of any partial
taking, rental shall abate pro-rata, according to the space condemned,
seized, or appropriated
14. Destruction of, or Damage to Premises:
If the Premises are totally destroyed by fire, storm, lightning,
earthquake, or other casualty, and including destruction due to
bombing, shelling, or other war damage, this Lease shall be terminated
and the rental accounted for as between Lessor or Lessee as of that
date. If the Premises are damaged but not wholly destroyed by any such
casualties, rental shall abate in such proportion as use of Premises
has been destroyed, or made inaccessible or unusable, and Lessor shall
either restore Premises to substantially the same condition as before
damages as speedily as practicable, whereupon full rental shall
recommence or terminate the Agreement.
4
<PAGE> 5
15. Holding Over:
If Lessee remains in possession of Premises after expiration of the
term hereof, with Lessor's acquiescence and without any express
agreement of parties, Lessee shall be a Lessee at will at rental rate
in effect at the end of the Lease; and there shall be no renewal of
this lease by operation of law.
16. Entry for Carding, etc.:
Lessor may card Premises "For Rent" or "For Sale" at any time during
the term of this lease. Lessor may enter the Premises at reasonable
hours to exhibit same to prospective purchasers or tenants.
17. Taxes and Assessments:
Lessee will be responsible for payment of all property taxes and
special assessments on the Premises.
18. Sale of Premises:
In the event of a bona fide sale of the Premises, Lessor shall have the
right to terminate this lease by providing (60) days written notice to
Lessee. In the event of such cancellation, Lessor shall pay the Lessee
a sum equal to 25% of the appreciation in the value of the premises
during the term hereof. For the purpose of calculating the appreciation
of the premises, the appreciation shall be equal to the sales price
received by Lessor net of any and all expenses associated with the
sale, including but not limited to commissions, attorney's fees, and
closing costs, less the value of the property at the inception of this
lease of $1,900,000.00. Lessor's obligation to make such payment will
only apply to a sale that is closed on or before September 30, 2005.
19. Miscellaneous Provisions:
It is mutually covenanted and agreed by and between the parties as
follows:
(1) That this Lease shall be construed under the laws of the state
of Tennessee.
(2) That the captions of the Article of this lease are inserted
for identification only, and shall not govern the
construction, nor alter, vary, or change any of the term,
conditions, or provisions of this lease or any Article
thereof.
5
<PAGE> 6
(3) Each provision herein shall be deemed separate and distinct
from all other provisions, and if any one of them shall be
declared illegal or unenforceable, the same shall not affect
the legality or enforceability of the other terms, conditions,
and provisions hereof, which shall remain in full force and
effect.
(4) Lessor will grant at Lessee's expense whatever easements are
reasonably necessary to provide the utilities for all
improvements on or places on said property and access to the
property during the term hereof.
(5) Any person, firm or corporation who may acquire an interest in
the Premises leased hereby, or in the improvements thereon,
shall take notice of all the terms and conditions set out
herein as well as the covenants referred to herein, and shall
be bound thereby.
(6) Lessee shall pay all utility charges resulting from Lessee's
use of Premises.
6
<PAGE> 7
20. Notices:
In the event notices are required to be sent under the provisions of
this Lease, the will be mailed, postage prepaid by certified or
registered mail, return receipt requested, addressee as follows:
If to Lessee: If to Lessor:
------------- -------------
James H. Bond, President Monroe J. Carell, Jr.
Central Parking System of TN, Inc. Carell Family Trust
2401 21st Avenue South 2401 21st Avenue South
Nashville, Tennessee 37212 Nashville, TN 37212
Either party may, by such notice, designate a new or other address to
which notice may be mailed.
IN WITNESS WHEREOF, the parties hereto have caused their names to be hereto
signed by their duly authorized officer on the date hereinbefore first written.
THE CARELL FAMILY LLC
ATTEST: BY: /s/ Monroe J. Carell, Jr.
------------------------- -------------------------------------
Edie Johnson, Secretary Monroe J. Carell, Jr., Chairman
CENTRAL PARKING SYSTEM OF TENNESSEE, INC.
ATTEST: /s/ Henry J. Abbott BY: /s/ James H. Bond
------------------------- -------------------------------------
Henry J. Abbott, Secretary James H. Bond, President
7
<PAGE> 1
EXHIBIT 10.27
FIRST AMENDMENT TO LEASE AGREEMENT
THIS FIRST AMENDMENT TO LEASE AGREEMENT ("Amendment") is made and entered into
as of the 4th day of November, 1997, by and between THE CARELL FAMILY LLC, a
Tennessee Limited Liability Company ("Lessor") and CENTRAL PARKING SYSTEM OF
TENNESSEE, INC., a Tennessee Corporation ("Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee have entered into a certain Lease Agreement dated
October 6, 1995, (the "Lease") whereby Lessor has leased to Lessee a certain
parking lot (Second Avenue North and Church Street) located in Nashville,
Tennessee, a more particular description of which is attached to the Lease; and
WHEREAS, the parties desire to amend the Lease as provided herein below.
NOW, THEREFORE, for and consideration of Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, for themselves, their successors and assigns,
do hereby agree to amend the Lease as follows:
1. Capitalized Terms. Any capitalized terms used in this Amendment that
are not defined herein shall have the meanings given those terms in the
Lease.
2. Percentage Rent. Paragraph 4(a) of the Lease is hereby amended to
include the following provision related to percentage rent:
Additionally, effective October 1, 1997, Lessee shall pay
Lessor quarterly on or before the 30th day following the end
of the previous calendar quarter an amount equal to 60% of
Gross Parking Revenue, as defined in the Lease, collected by
Lessee in the operation of a parking facility on the Premises
in excess of $800,000 annualized per Lease Year (the
"Percentage Rent Threshold"). Lessee shall submit to Lessor no
later than the 30th day after the expiration of each calendar
quarter a verified
<PAGE> 2
report showing Gross Parking Revenue, a calculation of the
percentage rent and payment of the then due percentage rent,
if any.
3. No Other Changes. Except as herein expressly amended, the Lease shall
remain in full force and effect. All covenants, terms, conditions, and
obligations of the Lease not modified or amended by this Amendment are
hereby ratified and affirmed.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day first
above written.
LESSOR:
THE CARELL FAMILY LLC
BY: /s/ Monroe J. Carell
-------------------------------------
Monroe J. Carell, Chief Manager
LESSEE:
CENTRAL PARKING SYSTEM OF TENNESSEE, INC.
ATTEST: /s/ Alexander S. Fuqua BY: /s/ James H. Bond
------------------------- -------------------------------------
Alexander S. Fuqua James H. Bond
Associate Counsel President
<PAGE> 1
EXHIBIT 13
CENTRAL PARKING CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA
On March 19, 1999, Central Parking completed a merger with Allright
Holdings, Inc. ("Allright"). The transaction constituted a tax-free
reorganization and has been accounted for as a pooling-of-interests under
Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations."
Accordingly, Central Parking's consolidated financial statements have been
restated to reflect the combined results of operations, financial position and
cash flows of Central Parking and Allright as if Allright had been part of
Central Parking since Allright's inception date of October 31, 1996. Prior to
the consummation of the merger, Allright's fiscal year end was June 30. In
recording the business combination, Allright's consolidated financial statements
as of June 30, 1997 and for the eight months period then ended, and as of June
30, 1998 and for the year then ended, have been combined with Central Parking's
consolidated financial statements for the fiscal years ended September 30, 1997
and 1998, respectively. There were no material transactions between Central
Parking and Allright prior to the Merger. Certain reclassifications have been
made to Allright's historical financial statements to conform to Central
Parking's presentation.
Set forth below are selected consolidated financial data of the Company for
each of the periods indicated. The statement of earnings, per share, and balance
sheet data were derived from the audited consolidated financial statements of
the Company. All of the information set forth below should be read in
conjunction with the Company's Consolidated Financial Statements and the Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 1999 VS 1998
-------------------------------------------------------------- 5 YEAR
GROWTH
1995 1996 1997 1998 1999 INCREASE (DECREASE) RATE
---- ---- ---- ---- ---- ------------------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Revenues: % %
Parking $ 94,383 $ 109,272 $ 295,692 $ 534,573 $ 645,075 $ 110,502 20.7 61.7
Management contract 30,630 32,534 43,245 65,826 91,386 25,560 38.8 31.4
Total revenues 125,013 141,806 338,937 600,399 736,461 136,062 22.7 55.8
Costs and expenses before
merger costs 111,411 124,874 298,511 528,747 659,032 130,285 24.6 56.0
Merger costs -- -- -- -- 40,970 40,970
Operating earnings 13,602 16,932 40,426 71,652 36,459 (35,193) -49.1 28.0
Percentage of total revenues
(3) 10.9% 11.9% 11.9% 11.9% 5.0% -25.9%
Interest income (expense), net 1,462 2,303 (15,922) (24,555) (20,312) 4,243 17.3
Dividends on company-obligated
mandatorily redeemable
convertible securities of a
subsidiary trust -- -- -- (3,247) (5,926) (2,679) -82.5
Net gains (losses) on sales and
divestitures of property and
equipment 81 1,192 3,118 (639) 4,222 4,861
Equity in partnership and
joint venture earnings 362 641 4,238 5,246 5,233 (13) -0.2
Minority Interest -- -- (163) (1,939) (2,612) (673) 34.7
Earnings before income tax 15,507 21,068 31,697 46,518 17,064 (29,454) -63.3 28.0
Income taxes 5,563 7,232 13,011 20,373 12,380 (7,993) -39.2 22.0
Income tax percentage of
earnings before income tax 35.9 34.3R 41.0R 43.8R 72.6R
Net earnings 9,944 13,836 17,654 26,145 3,682 (22,463) -85.9 -21.8
Percentage of total revenues
(3) 8.0 9.8 5.2 4.4 0.5R
PER SHARE DATA:
Net earnings before
extraordinary item - basic $ 0.43 $ 0.54 $ 0.62 $ 0.72 $ 0.13 $ (0.59) -81.9
Net earnings before
extraordinary item - diluted $ 0.43 $ 0.53 $ 0.61 $ 0.72 $ 0.13 $ (0.59) -81.9
Basic weighted average common
shares 23,058 25,762 30,070 34,618 36,349 1,731 5.0
Diluted weighted average
common shares 23,058 26,042 30,512 35,312 37,056 1,744 4.9
Dividends per common share(3) $ -- $ 0.05 $ 0.05 $ 0.05 $ 0.06R -- --
Net book value per common
share outstanding at Sept
30 (3) $ 1.79 $ 2.93 $ 5.28 $ 9.36 $ 9.44 $ 0.01 0.1
Merger cost per diluted common
share $ -- $ -- $ -- $ -- $ 0.81 $ 0.81
</TABLE>
22
<PAGE> 2
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------------------------------------
1999 VS 1998
1995 1996 1997 1998 1999 INCREASE (DECREASE)
-------- ---------- ---------- ---------- ---------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (2): %
Cash and cash equivalents $ 10,218 $ 28,605 $ 17,308 $ 39,495 $ 53,669 $ 14,174 35.9
Working capital 2,676 19,707 (17,520) (30,897) (30,659) 238 0.8
Goodwill, net -- -- 65,428 288,170 277,800 (10,370) -3.6
Total assets 70,440 107,212 598,693 954,022 1,064,577 110,555 11.6
Long-term debt and capital
lease obligations, less
current portion -- -- 73,725 283,319 337,481 54,162 19.1
Company-obligated mandatorily
redeemable convertible
securities of subsidiary
holding solely parent
debentures -- -- -- 110,000 110,000 -- --
Shareholders' equity 41,360 76,793 173,114 341,914 347,119 5,205 1.5
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------
1999 VS 1998
1995 1996 1997 1998 1999 INCREASE (DECREASE)
---- ---- ---- ---- ---- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA: %
Depreciation and amortization $ 2,882 $ 3,420 $13,547 $28,674 $ 43,131 $ 14,457 50.7
Employees (2) (3) 6,000 6,600 14,300 17,450 16,700 (750) -4.3
Number of shareholders (2) (3) 3,000 5,500 7,000 8,100 10,325 2,225 27.5
Market capitalization in
millions (1) (2) (3) N/A $ 568 $ 1,000 $ 1,840 $ 1,075
Return on equity (3) (4) 27.2% 23.4% 14.1% 10.2% 1.1%
</TABLE>
(1) Reflects the recapitalization, initial and subsequent public offering
of shares, and subsequent stock splits of the Company described in Note
10 to the Company's 1999 Consolidated Financial Statements.
(2) Reflects information as of September 30 of the respective fiscal year,
rounded to the nearest thousand, except ratio data.
(3) Unaudited information.
(4) Reflects return on equity calculated using fiscal year net earnings
divided by average shareholders' equity for the fiscal year.
23
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FOR YEARS ENDING SEPTEMBER 30, 1997, 1998, AND 1999
Allright Merger
On March 19, 1999, Central Parking completed a merger with Allright
Holdings, Inc. ("Allright"). The transaction constituted a tax-free
reorganization and has been accounted for as a pooling-of-interests under
Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations."
Accordingly, prior period financial statements presented have been restated to
include the combined results of operations, financial position and cash flows of
Allright as if it had been part of Central Parking from the date of Allright's
inception, October 31, 1996. Refer to notes 1 and 2 to the accompanying
consolidated financial statements.
As a result of the aforementioned Allright merger, the Company significantly
expanded its operations by obtaining approximately 2,300 locations and adding
$272.5 million in revenues for fiscal year 1999. The highlights of the Allright
merger are as follows:
- - Added 2,300 locations
- - Revenues, which are included in the restated revenues of the Company
were $272.5 million for 1999
- - Added new market presence in 25 cities and expanded market presence in
approximately 70 cities.
- - Assumed debt of Allright of approximately $260 million including costs
of the transaction
- - Issued 7.0 million shares of common stock and 0.5 million options and
warrants to purchase common stock
During the year, the Company recorded merger costs, pre-tax, of
approximately $41.0 million, which resulted in reducing after tax earnings by
$30.0 million or $0.81 per share.
The following discussion of the results of operations should be read in
conjunction with the Consolidated Financial Statements and Notes thereto.
OVERVIEW
The Company operates parking facilities under three types of arrangements:
leases, fee ownership, and management contracts. The Company's strategy is to
grow both internally from adding locations and increasing same location revenues
and adding properties through acquisitions.
Parking revenues consist of 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 in fiscal 1999
increased to $645.1 million from $534.6 million in fiscal 1998, an increase of
$110.5 million, or 20.7%. Of the $110.5 million increase, $53.4 million, or
48.3% of the increase, resulted from the acquisition of Kinney System Holding
Corp ("Kinney"), Turner Parking ("Turner"), and Sterling Parking ("Sterling")
leased and owned locations.
Although the Company experienced a net decline in the number of leased and
owned locations in 1999 of 112, (233 added leased and owned locations offset by
345 lost locations), the Company generally added larger locations with the
potential to generate higher revenues and profits than the locations that were
lost. The net reduction in locations is primarily a result of the merger with
Allright. Of the locations lost, 22 properties were divested as a result of an
agreement entered into with the Antitrust Division of the U.S. Department of
Justice and 180 lost locations resulted from the Allright merger and 43
locations were closed because they were not profitable.
Parking revenues from owned properties amounted to $40.9 million, $62.1
million, and $70.5 million for the years ended September 30, 1997, 1998 and
1999, respectively. Owned properties parking revenues, as a percentage of all
parking revenues, amounted to 13.8% in 1997, 11.6% in 1998, and 10.9% in 1999.
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. As the owner, all changes in owned facility revenue
and expense flow directly to the Company. Additionally, the Company has the
potential to realize benefits of appreciation in the value of the underlying
real estate if the property is sold for owned facilities. Central Parking
assumes complete responsibility for all aspects of
24
<PAGE> 4
the property, including all structural, mechanical, or electrical maintenance or
repairs and property taxes.
Parking revenues from leased facilities amounted to $254.8 million, $472.5
million, and $574.6 million for the years ended September 30, 1997, 1998, and
1999 respectively. Leased properties parking revenues, as a percentage of
parking revenues, accounted for 86.2% in 1997, 88.4% in 1998, and 89.1% in 1999.
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 more stable
source of revenue and a greater opportunity for long-term revenue growth. Under
its leases, the Company is typically responsible for all facets of the parking
operations, except for structural, mechanical, or electrical maintenance or
repairs, or property taxes. Lease arrangements are typically for terms of three
to ten years, with renewal options.
Management contract revenues include revenues from managed facilities. In
fiscal year 1999, management contract revenues increased 38.8% to $91.4 million,
primarily as a result of the addition of 543 managed facilities acquired in 1998
from the transactions with National Garages, Inc. ("National"), Kinney, Turner,
and Sterling, and from the net addition of 159 additional management locations.
Management contract revenues amounted to $43.2 million, $65.8 million, and $91.4
million for the years ended September 30, 1997, 1998, and 1999, respectively.
Management contract revenues consist of management fees (both fixed and
percentage of revenues) and fees for ancillary services such as insurance,
accounting, equipment leasing, and consulting. The cost of management contracts
includes insurance premiums and claims and other indirect overhead. The
Company's responsibilities under a management contract as a facility manager
include hiring, training, and staffing parking personnel, and providing
collections, accounting, record keeping, insurance, and facility marketing
services. In general, Central Parking is not responsible under its management
contracts for structural, mechanical, or electrical maintenance or repairs, or
for providing security or guard services or for paying property taxes. The
typical management contract is for a term of one to three years and generally is
renewable for successive one-year terms, but is cancelable by the property owner
on short notice. The Company's renewal rates for each of the past five fiscal
years were in excess of 90%.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SEPTEMBER 30,
HISTORICAL FINANCIAL SUMMARY ($ MILLIONS) 1995 1996 1997 1998 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Parking revenues 94.4 109.3 295.7 534.6 645.1
% Growth over prior year 13.9% 15.8% 170.6% 80.8% 20.7%
Management contract revenues 30.6 32.5 43.2 65.8 91.4
% Growth over prior year 7.7% 6.2% 32.9% 52.2% 38.8%
Total revenues 125.0 141.8 338.9 600.4 736.5
% Growth over prior year 12.3% 13.4% 139.0% 77.1% 22.7%
Cost of parking and management contracts 95.7 107.5 259.8 456.7 568.9
% of total revenues 76.6% 75.8% 76.7% 76.1% 77.2%
General and administrative expenses
excluding merger costs 15.7 17.4 37.0 63.7 77.3
% of total revenues 12.6% 12.3% 10.9% 10.6% 10.5%
Goodwill and non-compete amortization -- -- 1.7 8.3 11.6
% of total revenues -- -- 0.5% 1.4% 1.6%
Depreciation and amortization -
excluding goodwill 2.9 3.4 11.9 20.4 31.5
Merger costs -- -- -- -- 41.0
% of total revenue -- -- -- -- 5.6%
Operating earnings 13.6 16.9 40.4 71.7 36.5
% of total revenues 10.9% 11.9% 11.9% 11.9% 5.0%
Interest income (expense), net 1.5 2.3 (15.9) (24.6) (20.3)
Dividends on company-obligated mandatorily
redeemable securities of subsidiary trust
holding solely parent debentures -- -- (3.2) (5.9)
Equity in partnerships & joint venture earnings 0.4 0.6 4.2 5.2 5.2
Net gains (losses) on sales of
property & equipment -- 1.2 3.1 (0.6) 4.0
Net earnings before extraordinary items 9.9 13.8 18.7 26.1 4.7
% of total revenues 8.0% 9.8% 5.5% 4.4% 0.6
</TABLE>
The Company'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 size and claims experience, the Company
purchases such insurance at prices that, management believes, represent a
discount to the prices that would be charged to parking facility owners on a
stand-alone basis. Accordingly, Central Parking historically has generated
profits on the insurance provided under its management contracts.
As of September 30, 1999, Central Parking operated 2,096 parking facilities
through management contracts, leased 2,455 parking facilities, and owned 259
parking facilities, either independently or in joint venture 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>
SEPTEMBER 30,
1997 1998 1999
------------------------------------------------
<S> <C> <C> <C>
Managed 1,241 1,937 2,096
Leased 2,024 2,565 2,455
Owned 237 261 259
------------- ------------- -----------
Total 3,502 4,763 4,810
============= ============= ===========
</TABLE>
25
<PAGE> 5
A summary of the facilities operated domestically and internationally by
Central Parking as of September 30, 1999 is as follows:
<TABLE>
<CAPTION>
PERCENT
MANAGED LEASED OWNED TOTAL OF TOTAL SPACES
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total U.S. and Puerto Rico 1,845 2,293 257 4,395 91.4% 1,455,662
----------------------------------------------------------------------
United Kingdom 164 60 -- 224 4.7% 70,096
Mexico (1) 48 39 -- 87 1.8% 44,796
Germany (1) -- 12 -- 12 0.2% 6,494
Canada 35 44 2 81 1.6% 49,239
Ireland 4 4 0.1% 500
Spain (1) -- 3 -- 3 0.1% 1,693
Malaysia 1 -- -- 1 0.0% 5,400
Chile 3 -- -- 3 0.1% 1,276
----------------------------------------------------------------------
Total foreign 251 162 2 415 8.6% 179,494
----------------------------------------------------------------------
Total facilities 2,096 2,455 259 4,810 100.0% 1,635,156
======================================================================
</TABLE>
(1) Operated through 50% owned joint ventures
The table below sets forth certain information regarding the Company's managed,
leased and owned facilities in the periods indicated.
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997 1998 1999
------------------------------------------------
<S> <C> <C> <C>
Managed Facilities (1):
Beginning of year 770 1,241 1,937
----------------------------------------------------------------------------------
Acquired or merged during year (2) 392 543 18
Added during year 218 294 354
Deleted during year (3)(4) (139) (141) (213)
------------------------------------------------------------------------------------
End of year 1,241 1,937 2,096
-----------------------------------------------------------------------------------
Renewal Rate 90.6% 93.2% 91.6%
Leased Facilities (1):
Beginning of year 552 2,024 2,565
-----------------------------------------------------------------------------------
Acquired or merged during year(2) 1,394 380 1
Added during year (4) 260 368 225
Deleted during year (5) (182) (207) (336)
------------------------------------------------------------------------------------
End of year 2,024 2,565 2,455
-----------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
Owned Facilities (1)(6):
Beginning of year 37 237 261
-----------------------------------------------------------------------------------
Acquired or merged during
year(2)(3) 198 11 -
Purchased during year 12 20 7
Sold during year (10) (7) (9)
------------------------------------------------------------------------------------
End of year 237 261 259
-----------------------------------------------------------------------------------
Total facilities (end of year) 3,502 4,763 4,810
-----------------------------------------------------------------------------------
Percentage net growth including
acquisitions in number of facilities:
Managed 61.2% 56.1% 8.2%
Leased 266.7% 26.7% (4.3%)
Owned 540.5% 10.1% (3.3%)
----------- ---------- ---------
Total facilities 157.7% 36.0% 1.0%
=========== ========== =========
</TABLE>
(1) Includes 48 managed, 54 leased and 16 owned properties operated under joint
venture agreements at September 30, 1999. (2) Includes Allright merged
locations of 254 managed, 1,273 leased and 178 owned in the fiscal 1997
acquisitions. (3) Fiscal 1997 includes four facilities that were previously
managed and subsequently purchased. (4) Includes Central Parking's lease in
fiscal 1997, 1998 and 1999 of one facility, 11 facilities, and two
facilities, respectively, that were previously managed. (5) 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. Excluded in 1999 are 17 management
accounts which were transfered to lease location (6) Includes the Company's
corporate headquarters in Nashville, Tennessee.
The renewal rate calculation is 100% minus lost locations divided by the
sum of the beginning of the year, acquired and added during the year for
management locations.
Net gains/(losses) derived from sales and divestiture of property and
equipment were $3.1 million, $(639) thousand, and $4.2 million for fiscal 1997,
1998, and 1999, respectively.
27
<PAGE> 7
MERGER WITH ALLRIGHT
On March 19, 1999, Central Parking completed a merger with Allright
Holdings, Inc. ("Allright"), pursuant to which, approximately 7.0 million shares
of Central Parking stock, and approximately 0.5 million options and warrants to
purchase such common stock of Central Parking were exchanged for all of the
outstanding shares of common stock and options and warrants to purchase common
stock of Allright. Each outstanding share of Allright common stock and each
outstanding option or warrant to purchase such common stock was exchanged for
87.637 shares of Central Parking common stock. The transaction constituted a
tax-free reorganization and has been accounted for as a pooling-of-interests
under Accounting Principles Board ("APB") Opinion No. 16, "Business
Combinations." Accordingly, prior period financial statements presented have
been restated to include the combined results of operations, financial position
and cash flows of Allright as if it had been part of Central Parking from the
date of Allright's inception, October 31, 1996. Refer to notes 1 and 2 to the
accompanying consolidated financial statements.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information
derived from the Company's consolidated financial statements expressed as a
percentage of total revenues.
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997 1998 1999
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Parking revenues 87.2% 89.0% 87.6%
Management contract revenues 12.8 11.0 12.4
----------------------------------------------------------------------------------------------
Total revenues 100.0 100.0 100.0
Cost of parking and management contracts 76.7 76.1 77.2
General and administrative expenses
excluding merger costs and impairment loss 10.9 10.6 10.5
Goodwill and non-compete amortization 0.5 1.4 1.6
Impairment loss -- -- 0.2
Merger costs -- -- 5.5
----------------------------------------------------------------------------------------------
Operating earnings 11.9 11.9 5.0
Interest income (expense), net (4.8) (4.1) (2.7)
Dividends on company-obligated mandatorily
redeemable securities of subsidiary
trust holding solely parent debentures -- (0.5) (0.8)
Net gains on sales and divestiture of property
and equipment 0.9 (0.1) 0.5
Minority interest and divestitures -- (0.3) (0.4)
Equity in partnership and joint venture earnings 1.3 0.9 0.7
-----------------------------------------------------------------------------------------------
Earnings before income taxes 9.3 7.8 2.3
Income taxes 3.8 3.4 1.7
-----------------------------------------------------------------------------------------------
Net earnings before extraordinary item 5.5% 4.4% 0.6%
-----------------------------------------------------------------------------------------------
</TABLE>
YEAR ENDED SEPTEMBER 30, 1999 COMPARED TO YEAR ENDED SEPTEMBER 30, 1998
Parking revenues include revenue from leased and owned facilities. Parking
revenues in fiscal 1999 increased to $645.1 million from $534.6 million in
fiscal 1998, an increase of $110.5 million, or 20.7%. Of the $110.5 million
increase, $53.4 million, or 48.3% of the increase, resulted from the following
acquisitions of leased and owned locations: Kinney, $38.5 million; Turner, $1.3
million; Sterling, $2.1 million; and Allied Parking $11.5 million. The remaining
increase of $57.1 million, or 10.7%, is from a combination of increased rates
and higher utilization of parking spaces at existing facilities and 215 new
locations being larger in revenue and size than the 336 lost locations.
Management contract revenues in fiscal 1999 increased to $91.4 million from
$65.8 million in fiscal 1998, an increase of $25.6 million, or 38.8%. Of the
$25.6 million increase, $3.1 million, or 12.2%, resulted from the acquisitions
of Kinney, $0.3 million; Turner, $0.1 million; Sterling, $0.2 million and
National, $2.5 million. The
28
<PAGE> 8
remaining increase resulted primarily from the addition of 159 net new
locations.
Revenues from foreign operations increased to $34.2 million in 1999 from
$33.9 million in 1997. The increase of 0.8% in revenues from foreign operations
resulted primarily from increased revenues on existing locations.
Cost of parking in fiscal 1999 increased to $541.2 million from $441.7
million in fiscal 1998, an increase of $99.5 million, or 22.5%. Rent expense
increased $59.1 million, principally as a result of new locations from merger
and acquisitions and additional rent on existing locations. Of the remaining
$40.4 million increase in cost of parking, payroll expense accounted for $19.5
million. The payroll expense increase was attributable to a combination of
acquisitions, new locations and increases in existing payroll. Cost of parking,
as a percentage of parking revenues, decreased to 73.5% in fiscal 1999 from
73.6% in fiscal 1998. This decrease 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 1999 increased to $27.7 million from
$15.0 million in the comparable period in 1998, an increase of $12.7 million, or
84.9%. 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, increased to 30.4% in fiscal 1999 from 22.8% in fiscal 1998.
The increase in the cost of management contracts as a percentage of management
contract revenue is primarily a result of higher group insurance expense related
to medical claims. The renewal rates for management contracts of 91.4% in 1998,
and 93.2% in 1999, are generally consistent with the Company's five year average
renewal rates.
General and administrative expenses, excluding goodwill and non-compete
amortization, increased to $77.3 million in 1999 from $63.7 million in fiscal
1998, an increase of $13.6 million, or 21.3%. This increase was primarily a
result of an increase in payroll expense of $4.6 million associated with the
additional general and administrative expenses of acquired and merged
operations, as well as opening of additional managed, leased, and owned
locations and additional incentive compensation payments as a result of
increased profits. General and administrative expenses decreased as a percentage
of total revenue to 10.5% in 1999 from 10.6% in 1998. This is a result of
spreading of general and administrative expenses over a broader revenue base and
eliminating some duplicative costs after merging with Allright.
Amortization expense of goodwill and non-compete agreements increased
significantly to $11.6 million in fiscal 1999 from $8.3 million in fiscal 1998,
an increase of $3.3 million. This increase was a result of recording
amortization expense for the entire year on $233.6 million in goodwill and
non-compete assets recorded in connection with the acquisitions of National,
Kinney, the remaining 50% of CPS-Louisiana, Turner, and Sterling. Goodwill and
non-compete agreements are amortized over periods ranging from 5 to 30 years.
The Company incurred merger costs related to the merger of Allright of
approximately $41.0 million during the second, third, and fourth quarters of
fiscal 1999. Included in these costs are approximately $20.7 million for
professional fees, comprised of investment banking, legal, accounting, and
consulting fees; $11.3 million related to employment agreements; $7 million
related to the restructuring agreement with the limited partner of Edison
Parking Management, L.P.; and the balance of $2.0 million in travel, supplies,
printing, and other out of pocket costs. There were no merger related costs
incurred in prior years.
Interest income in fiscal 1999 increased to $6.6 million from $5.7 million
in fiscal 1998. This increase of $0.9 million was primarily attributable to
increased investment in notes receivable from $47.9 million at September 30,
1998 to $60.4 million at the end of fiscal 1999.
Interest expense decreased to $27.0 million in 1999 compared to $30.2
million in 1998. The decrease in interest expense of $3.2 million was primarily
attributable to the lower interest rates achieved by repaying the Allright
indebtedness, which carried a higher rate, with the lower interest rate on the
New Credit Facility described in Note 8 to the Company's Consolidated Financial
Statements. The weighted average balance outstanding under such indebtedness was
$334.3 million during 1999, at a weighted average interest rate of 8.1% compared
to $310.5 million during 1998, at a weighted average interest rate of 9.7%.
Dividends on Company-obligated mandatorily redeemable convertible
securities of a subsidiary trust increased to $5.9 million in the fiscal year
ended September 30, 1999 from $3.2 million in the prior year as a result of
having
29
<PAGE> 9
the balance outstanding for the entire fiscal year 1999 compared to
approximately 6 months of the prior year.
Equity in partnership and joint venture earnings for fiscal 1999 remained
constant at approximately $5.2 million in fiscal 1998 and 1999.
The Company's effective income tax rate related to earnings before
extraordinary items was 72.5% for fiscal 1999 compared to 43.8% for fiscal 1998.
The rate increase was attributable to nondeductible merger related costs in the
current year, increased nondeductible goodwill, amortization expenses primarily
due to amortizing goodwill from Kinney for the entire year, and decreased
earnings. (see Note 12 to the Company's Consolidated Financial Statements). The
unusual 1999 effective tax rate of 72.5% caused primarily by merger costs, is
not expected to continue in the future.
YEAR ENDED SEPTEMBER 30, 1998 COMPARED TO YEAR ENDED SEPTEMBER 30, 1997
Parking revenues include revenue from leased and owned facilities. Parking
revenues in fiscal 1998 increased to $534.6 million from $295.7 million in
fiscal 1997, an increase of $238.9 million, or 80.8%. Of the $238.9 million
increase, $102.6 million, or 42.9% of the increase, resulted from the following
acquisitions of leased and owned locations: Diplomat, $19.6 million; Kinney,
$81.7 million; Turner, $1.1 million; and Sterling, $0.2 million. With respect to
the Kinney acquisition, Central Parking achieved lower than expected increases
in revenues, particularly in the fourth quarter of fiscal 1998. Kinney was
acquired on February 12, 1998 and its partial year parking revenues of $81.6
million represent 15.3% of total fiscal year parking revenues. The Company's
operating results may be significantly impacted by the results derived from the
Kinney acquired locations. The remaining increase of $136.3 million, or 57.1%,
is from a combination of the addition of 174 net locations, increased rates and
higher utilization of parking spaces at existing facilities.
Management contract revenues in fiscal 1998 increased to $65.8 million from
$43.2 million in fiscal 1997, an increase of $22.6 million, or 52.2%. Of the
$22.6 million increase, $9.4 million, or 41.6%, resulted from the acquisitions
of Diplomat, $2.1 million; Kinney, $4.9 million; Turner, $0.5 million; Sterling,
$0.1 million and National, $1.8 million. The remaining increase resulted
primarily from the addition of 153 net new locations.
Revenues from foreign operations increased to $33.9 million in 1998 from
$26.2 million in 1997. The increase of 29.4% in revenues from foreign operations
resulted primarily from the net addition of 51 locations in the United Kingdom
and increased revenues on existing locations.
Cost of parking in fiscal 1998 increased to $441.7 million from $248.1
million in fiscal 1997, an increase of $193.6 million, or 78.1%. Rent expense
increased $114.7 million, principally as a result of new locations from merger
and acquisitions and additional rent on existing locations. Of the remaining
$78.9 million increase in cost of parking, payroll expense accounted for $48.9
million. The payroll expense increase was attributable to a combination of
acquisitions, new locations and increases in existing payroll. Cost of parking,
as a percentage of parking revenues, decreased to 82.6% in fiscal 1998 from
83.9% in fiscal 1997. This decrease 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 1998 increased to $15.0 million from
$11.8 million in the comparable period in 1997, an increase of $3.2 million, or
27.2%. 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 22.8% in fiscal 1998 from 27.3% in fiscal 1997.
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 renewal rates for management
contracts of 93.2% in 1998, and 91.6% in 1997, are generally consistent with the
Company's five year average renewal rates.
General and administrative expenses, excluding goodwill and non-compete
amortization, increased to $63.7 million from $37.0 million in fiscal 1997, an
increase of $26.7 million, or 72.2%. This increase was primarily a result of an
increase in payroll expense of $12.2 million associated with the additional
general and administrative expenses of acquired and merged operations, as well
as opening of additional managed, leased, and owned locations and additional
incentive compensation payments as a result of increased profits. General and
administrative expenses decreased as a percentage of total revenue to 10.6% in
1998 from 10.9% in 1997. This is a result of
30
<PAGE> 10
spreading of general and administrative expenses over a broader revenue base.
Amortization expense of goodwill and non-compete agreements increased
significantly to $8.3 million in fiscal 1998 from $1.7 million in fiscal 1997,
an increase of $6.6 million. This increase was a result of $233.6 million in
goodwill and non-compete assets recorded in connection with the acquisitions of
Diplomat, National, Kinney, the remaining 50% of CPS-Louisiana, Turner, and
Sterling. Goodwill and non-compete agreements are amortized over periods ranging
from 5 to 30 years.
Interest income in fiscal 1998 increased to $5.7 million from $2.6 million
in fiscal 1997. This increase of $3.1 million was primarily attributable to
increased investment in notes receivable and interest income associated with
restructuring activities as a result of the merger with Allright.
Interest expense increased to $30.2 million in 1998 compared to $18.5
million in 1997. The increase in interest expense of $11.7 million was primarily
attributable to the increase in indebtedness under the Company's credit
facilities. The weighted average balance outstanding under such credit
facilities was $310.5 million during 1998, at a weighted average interest rate
of 9.7%.
Dividends on Company-obligated mandatorily redeemable convertible
securities to a Subsidiary trust amounted to $3.2 million in fiscal 1998. There
were no manditorily redeemable convertible securities outstanding in 1997.
Equity in partnership and joint venture earnings for fiscal 1998 increased
to $5.2 million from $4.2 million in fiscal 1997. The increase of $1.0 million
resulted primarily from increases in domestic partnerships and joint ventures of
$692,000, due largely to partnership interests acquired in connection with
Kinney, and an increase in equity in joint venture earnings of the German joint
venture of $296,000 over balances in the prior year.
The Company's effective income tax rate related to earnings before
extraordinary items was 43.8% for fiscal 1998 compared to 41.0% for fiscal 1997.
The rate increase was attributable to the increase in the Company's addition of
nondeductible goodwill amortization and the increase in the effective state
income tax rate (see Note 12 to the Company's Consolidated Financial
Statements).
QUARTERLY RESULTS
The Company experiences fluctuations in its quarterly net earnings as a
result of merger costs incurred in the second, third and fourth quarters of
fiscal 1999 and recognition of intermittent gains on sales and divestitures of
properties. The Company restated its second fiscal quarter ended March 31, 1999
to record a pre-tax merger cost of $7 million. Additionally, the Company has and
may continue to experience fluctuations in revenues and related expenses due to
acquisitions, pre-opening costs, travel and transportation patterns affected by
weather and calendar related events, and local and national economic conditions.
The Company's increased concentration of parking facilities in the northeastern
and mid-atlantic part of the United States, primarily a result of the Edison
Parking Management, L.P. ("Edison"), Kinney, Square and Diplomat acquisitions,
has increased the risk of weather related fluctuations such as severe winter
snow storms. Additionally, the Company services the parking for a number of
sports stadiums and arenas and can be impacted by the relative degree of success
of various sports teams. The following table sets forth certain quarterly
statements of earnings data for the eight fiscal quarters preceding the end of
the fiscal year and the percentage of net revenues represented by the line items
presented (except in the case of per share amounts). The quarterly statements
were impacted by the acquisition of Diplomat (October 1997), National (December
1997), Kinney (February 1998), CPS -Louisiana (March 1998), Turner (April 1998),
Sterling (July 1998) and net gains on sales of property and equipment of $2.9
million in the quarter ended March 31, 1999. The quarterly statement of earnings
data set forth below was derived from unaudited financial statements of the
Company and includes all adjustments, consisting only of normal recurring
adjustments, which the Company considers necessary for a fair presentation
thereof. The per share numbers have been restated to reflect the three for two
stock splits (see Note 10 to the Company's Consolidated Financial Statements).
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<PAGE> 11
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
1998 FISCAL YEAR
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 121,255 100.0% $ 142,800 100.0% $ 165,596 100.0% $ 170,748 100.0%
Operating earnings 14,599 12.0 17,510 12.3 19,654 11.9 19,889 11.6
Net gains on sales and
divestitures of property
& equipment (38) -- (654) -0.5 (17) -- 70 --
Earnings before Income taxes 9,667 8.0 9,787 6.9 13,113 7.9 13,950 8.2
Net earnings $ 5,515 4.5% $ 6,034 4.2% $ 7,751 4.7% $ 6,844 4.0%
Earnings per share - basic $ 0.17 $ 0.18 $ 0.21 $ 0.19
Earnings per share - diluted $ 0.17 $ 0.18 $ 0.21 $ 0.19
</TABLE>
<TABLE>
<CAPTION>
1999 FISCAL YEAR
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 180,665 100.0% $ 183,223 100.0% $ 190,718 100.0% $ 181,855 100.0%
Operating earnings (1) 23,390 12.9 (15,225) -4.5 19,345 10.1 8,949 1.1
Net gains (losses) on sales
and divestitures of
property & equipment (85) -- 2,893 1.6 379 0.2 1,035 0.4
Earnings before income taxes
and extraordinary item 16,576 0.9 (19,379) -6.8 14,843 7.8 5,024 -1.1
Net earnings before
extraordinary items $ 10,139 0.6% $ (16,577) -7.1% $ 8,674 4.5% $ 2,448 -1.2%
Earnings before extraordinary
items per share - basic $ 0.28 $ (0.48) $ 0.24 $ 0.07
Earnings before extraordinary
items per share - diluted $ 0.27 $ (0.48) $ 0.23 $ 0.07
</TABLE>
(1) - Includes a deduction for merger costs of $34.3 million, $2.9 million, and
$3.8 million for the quarters ended March 31, June 30, and September 30, 1999,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for fiscal 1999 was $34.2 million,
a decrease of $42.0 million from net cash provided by operating activities of
$76.2 million during the same period in fiscal 1998. The primary factors which
contributed to this change were decreased net earnings of $21.5 million,
primarily as a result of merger costs of $30.3 million after income tax effect,
increases in management accounts receivable of $11.4 million, increases in other
accounts receivable of $7.3 million, partially offset by increases in
depreciation of $7.8 million and amortization expense of $6.7 million, and net
increases in other working capital of $16.3 million during fiscal 1999.
Net cash used in investing activities was $90.7 million for fiscal 1999, a
decrease in cash used in investing activities of $193.5 million from net cash of
$284.2 million used in investing activities during fiscal 1998. The acquisitions
of Edison, Diplomat, Kinney, National, Turner, and Sterling utilized cash of
$216.5 million, net of cash acquired and land, property and equipment purchases
used $72.2 million in fiscal 1998, while investments in notes receivable,
purchase of property and equipment, purchase of contract rights, and purchase of
interest in LLC used $114.5 million, partially offset by $25.3 million provided
by proceeds from sales of property and equipment during fiscal 1999.
Net cash provided by financing activities for fiscal 1999 was $59.2 million,
a decrease of $170.9 million from net cash of $230.1 million provided by
financing activities for fiscal 1998. The Company generated proceeds from
issuance of notes payable, Company-obligated mandatorily redeemable securities,
and common stock of $333.8 million, less principal repayments on notes and
capital leases of $107.8 million during fiscal 1998, compared to net borrowings
of $98.7 million, and issuance of stock of $3.4 million, partially offset by net
repayments of notes payable of $38.8 million in fiscal 1999.
On March 19,1999, the Company established a new credit facility (the "New
Credit Facility") providing for an aggregate availability of up to $400 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 $200 million
five-year term loan. The principal amount of the term loan shall be repaid in
quarterly payments of $12.5 million commencing June 30, 2000 and continuing
until the loan is repaid. Interest is payable on borrowings under the New Credit
Facility, at the election of the Company, at either a "Base Rate" or a
"Eurodollar Rate" (each as defined in the New Credit Facility agreement), plus a
grid based margin based upon the Company achieving certain financial ratios
(prior to and including June 30, 1999, borrowings under the New Credit Facility
were fixed at either prime rate plus 0.5% or LIBOR plus a margin of 1.125%). The
New Credit Facility contains covenants including those that require the Company
to maintain certain financial ratios, restrict further indebtedness and limit
the amount of dividends paid. The Company used the
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<PAGE> 12
New Credit Facility to replace the Company's previous credit facility and to
refinance the existing debt of Allright Holdings, Inc. The amount outstanding
under the Company's New Credit Facility as of September 30, 1999 is $349.1
million with a weighted average interest rate of 6.45% for the period from March
19, 1999 through September 30, 1999.
The Company had previously established a credit facility (the "Previous
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 $100 million term loan was repaid with proceeds from debt and equity
offerings completed in March 1998, and the remaining balance of the revolving
credit facility was repaid with proceeds from the New Credit Facility.
The Company is required under the New Credit Facility to enter into certain
interest rate protection agreements designed to fix interest rates on variable
rate debt and reduce exposure to fluctuations in interest rates. On October 27,
1999 the Company entered into a $25 million interest rate swap for a term of
four years, cancelable after two years at the option of the counterparty, under
which the Company will pay to the counterparty a fixed rate of 6.16%, and the
counterparty will pay to the Company a variable rate equal to LIBOR. The
transaction involved an exchange of fixed rate payments for variable rate
payments and do not involve the exchange of the underlying nominal value.
On December 28, 1999 the Company entered into an amendment and waiver to
the New Credit Facility agreement relating to the waiver of noncompliance with
certain financial covenants. This amendment and waiver contains, among other
things, provisions for up-front fees of 0.125%. Interest rates are not to be
affected by the amendment and will continue to be based upon the existing grid
and determined based on certain financial ratios, as amended.
Depending on the timing and magnitude of the Company'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. In the ordinary course of business,
Central Parking is required to maintain and, in some cases, make capital
improvements to the parking facilities it operates. however, as of September 30,
1999, Central Parking had no material outstanding commitments for capital
improvements expenditures. On May 10, 1999 Central Parking announced that it had
signed a definitive agreement to purchase a parking facility that is being
developed in Chicago by a wholly owned subsidiary of Prime Group Realty Trust.
The agreement is valued at approximately $37.3 million. Central Parking expects
to finance this purchase through a synthetic lease or borrow through other
indebtedness. 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 seeking to
amend the credit facility to obtain additional indebtedness. The Allright
Registration Rights Agreement, as noted in "Risk Factors", provides certain
limitations and restrictions upon Central Parking's ability to issue new shares
of Central Parking common stock. Until certain shareholders of Central Parking
have received at least $350 million from the sale of Central Parking common
stock in either registered offerings or otherwise, Central Parking cannot sell
any shares of its common stock on its own behalf, subject to certain exceptions.
While Central Parking does not expect this limitation to affect its working
capital needs, it could have an impact on Central Parking's ability to complete
significant acquisitions. The recent decrease in the market value of Central
Parking common stock also could have an impact on Central Parking's ability to
complete significant acquisitions or raise additional capital. Central Parking
believes that it has the ability to increase its credit facility if needed for
significant acquisitions, although no assurances can be given that such
increases would be available at the time needed to complete any such
acquisition.
MERGERS AND ACQUISITIONS
The Company's acquisition strategy focuses primarily on acquisitions that
will enable Central Parking to become a more efficient and cost-effective
provider in selected markets. Central Parking believes it can recognize
economies of scale by making acquisitions in markets where the Company 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 generally can improve acquired operations by
applying its operating strategies and professional management techniques. The
Company's mergers and acquisitions over the last two years are as follows:
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<PAGE> 13
MERGER
As described in Note 2 to the Company Consolidated Financial Statements,
Central Parking completed the Merger with Allright Holdings, Inc. on March 19,
1999.
ACQUISITIONS
Diplomat Parking Corporation
On October 1, 1997, Central Parking acquired the stock and certain assets
of Diplomat for approximately $22.2 million in cash and notes payable. The
acquisition was financed through borrowings under the 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.
National Garages, Inc.
On December 1, 1997, Allright purchased substantially all of the assets of
National Garages, Inc. ("National"), a privately owned parking company based in
Detroit, which operated 210 facilities located primarily in the Midwestern
United States. The purchase price of approximately $3.7 million was paid in cash
and financed through working capital and $2.2 million in debt under Allright's
previous revolving line of credit.
Kinney System Holding Corp.
On February 12, 1998, Central Parking acquired the stock of Kinney, a
privately held company headquartered in New York City which operated 403 parking
facilities containing approximately 168,800 spaces, including approximately
76,700 in the New York City metropolitan area, 42,800 in Boston, 31,100 in
Philadelphia and 10,300 in Washington, D.C. At the time of the acquisition,
Kinney's facility mix was comprised of 225 leased sites, 170 managed sites and 8
owned sites.
The purchase price was approximately $208.8 million, including $171.8
million in cash, including transaction fees and other related expenses, and
$37.0 million (882,422 shares) in Central Parking common stock. In connection
with this transaction, Central Parking assumed $10.3 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 Preferred
Securities. In connection with the Kinney acquisition, the remaining 50%
interest in Spectrum Parking Associates ("Spectrum") was acquired for $3.6
million.
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 $2.5
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 System, 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 thousand (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, a privately-held parking company headquartered in Atlanta, Georgia
for $4.3 million, including $2.1 million in cash and $2.2 million in Central
Parking common stock (54,358 shares). Central Parking financed the cash portion
of the Sterling purchase
34
<PAGE> 14
with borrowings under the Credit Facility. At the time of the acquisition,
Sterling operated 31 parking facilities in Georgia, Florida, Virginia,
California, and Kentucky.
Allied Parking
On October 1, 1998, Allright purchased from Allied Parking, Inc. ("Allied
Parking") four leases relating to parking facilities in Manhattan, maturing in
years ranging from 2006 to 2029 for approximately $14.2 million. 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 thousand.
On November 8, 1998, Allright purchased six additional leases from Allied
Parking maturing in years ranging from 1999 to 2008 for $5.1 million. Allright
also purchased the right to use the "Allied Parking" name associated with these
leases for $300 thousand.
INTERNATIONAL FOREIGN CURRENCY EXPOSURE
The Company operates wholly owned subsidiaries in the United Kingdom,
Canada and the Netherlands. Total revenues from wholly owned foreign operations
amounted to 7.7%, 5.7%, and 4.6% for the years ended September 30, 1997, 1998,
and 1999, respectively. Additionally, the Company operates through joint
ventures in Germany, Spain, and Mexico. The Company intends to invest in foreign
leased or owned facilities, usually through joint ventures, and may become
increasingly exposed to foreign currency fluctuations. The Company, in limited
circumstances, has denominated contracts in U.S. dollars to limit currency
exposure. Presently, the Company has limited exposure to foreign currency risk
and has no hedge programs. The Company anticipates implementing a hedge program
if such risk materially increases. For the year ended September 30, 1999,
revenues from the United Kingdom and Canada operations represented 62.5% and
34.17%, respectively, of total revenues generated by foreign operations,
excluding earnings from joint ventures.
ECONOMIC AND MONETARY UNION
On January 1, 1999, eleven of the fifteen member countries of the European
Union established fixed conversion rates between their existing sovereign
currencies and a new currency called the "euro." These countries adopted the
euro as their common legal currency on that date. The euro now trades on
currency exchanges and is available for non-cash transactions. Thereafter and
until January 1, 2002, the euro is scheduled to replace the sovereign legal
currencies of these countries. While the vast majority of Central Parking's
operations within the European Union are currently in the United Kingdom, a
European Member which is not scheduled to participate in the euro conversion,
the Company has operations in countries which have adopted the euro. The Company
has assessed the impact of the euro conversion to its operations in the
participating countries, including the need to adopt new information technology,
parking related equipment and other systems to accommodate euro-denominated
transactions, as well as the impact to currency risk and contractual
relationships. Based on management's assessment of the impact of the euro
conversion, Central Parking does not believe that the euro conversion will have
a material impact on its operations or financial condition.
IMPACT OF INFLATION AND CHANGING PRICES
The primary sources of revenues to the Company are parking revenues from
owned and leased locations and management contract revenue (net of expense
reimbursements) on managed parking facilities. The Company believes that
inflation has had a limited impact on its overall operations for fiscal years
ended September 30, 1997, 1998 and 1999.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income." Statement 130 established standards for
reporting and display of comprehensive income and its components. Comprehensive
income is the change in equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources.
Comprehensive income includes all changes in equity except those resulting from
investments by and distributions to owners. This pronouncement was adopted by
the Company in 1999.
35
<PAGE> 15
within the financial statements. The Company adopted SFAS 130 in fiscal year
1999.
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. The Company has adopted SFAS 131 in fiscal
year 1999.
In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, "Employers' Disclosures about Pensions and Other Post-retirement Benefits,"
which amends SFAS Nos. 87, 88, and 106. This pronouncement is effective for
fiscal years beginning after December 15, 1997. The Company has adopted SFAS 132
in fiscal year 1999. The pronouncement did not significantly impact the
presentation of Central Parking's consolidated financial statements.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," effective for fiscal years
beginning after December 16, 1998. SOP 98-1 defines which costs incurred to
develop or purchase internal-use software should be capitalized and which should
be expensed. The Company is in the process of determining what impact, if any,
this pronouncement will have its 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. Statement 133 established reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts. Under SFAS No. 133, the Company would recognize all derivatives
as either assets or liabilities, measured at their fair value, in the statement
of financial position. This Statement is currently expected to be effective for
all fiscal quarters of fiscal years beginning after June 15, 2000. Management is
evaluating the impact of SFAS 133 to Central Parking's consolidated financial
statements.
YEAR 2000
The Company has considered the impact of Year 2000 issues on its computer
systems and applications and has developed remediation plans. These plans are
part of the Company'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 have been accounted for
as regular capital expenditures and are being depreciated over their estimated
useful lives of 3 - 5 years. The ongoing expenses of training and testing are
expensed as they are incurred. Through September 30, 1999, the Company has spent
in excess of $6 million upgrading its computer
36
<PAGE> 16
information systems in accordance with its plans for technological enhancement.
Such expenditures are not material to the Company's liquidity. System hardware
and software that in management's estimation are not Year 2000 compliant have
been fully depreciated. Central Parking has tested newly installed systems to
determine their compliance with Year 2000 issues.
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. Substantially all such equipment that
is not Year 2000 compliant has available certain program modifications that will
enable it to function adequately in the Year 2000. In the event remediation is
not complete at any of these sites prior to the Year 2000, and a failure of such
equipment were to occur due to processing incompatibilities in the Year 2000,
manual override systems and procedures are in place at all locations. Given the
limited technology required 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.
Certain property management systems that were not previously Year 2000
compliant have been replaced with systems that management believes adequately
address the Year 2000 issue. All such systems are Year 2000 compliant.
Central Parking has communicated, by means of Year 2000 questionnaires,
with each of its major vendors to determine third party compliance with Year
2000 issues. While Central Parking does not expect to be materially affected by
any third party's Year 2000 issues, no assurance can be given that a third
party's failure to adequately address their Year 2000 issues could not
materially effect Central Parking's business or financial results.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document, and documents that have been incorporated herein by
reference, include various forward-looking statements regarding the Company that
are subject to risks and uncertainties, including, without limitation, the
factors set forth under the caption "Risk Factors." Forward-looking statements
include, but are not limited to, discussions regarding the Company's operating
strategy, growth strategy, acquisition strategy, cost savings initiatives,
industry, economic conditions, financial condition, liquidity and capital
resources and results of operations. Such statements include, but are not
limited to, statements preceded by, followed by or that otherwise include the
words "believes," "expects," "anticipates," "intends," "estimates" or similar
expressions. For those statements, the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
The following important factors, in addition to those discussed elsewhere
in this document, and the documents which are incorporated herein by reference,
could affect the future financial results of the Company 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 integrating Allright and Kinney Systems, 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;
- - successful implementation of the Company'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, player strikes or other events affecting major league sports
and local, national and international economic conditions;
- - the ability of the Company to form and maintain its strategic
relationships with certain large real estate owners and operators;
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<PAGE> 17
- - the ability of the Company to successfully complete Year 2000
Compliance measures; and 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.
RISK FACTORS
IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE ALLRIGHT, WE COULD LOSE KEY
EMPLOYEES, CUSTOMERS AND FAIL TO REALIZE THE EXPECTED BENEFITS OF THE MERGER.
The Allright merger involves the integration of two companies that have
previously operated independently. Although Central Parking has acquired and
integrated various companies into its organizational and financial structure in
the past, Allright is a larger company than any of the companies Central parking
has acquired previously. As a result of the merger, Central Parking has
substantially increased the number of persons it employs, the number of
facilities it operates, and the geographic markets it services. Although Central
Parking believes that it can successfully manage the acquired operations and
achieve certain economies of scale, there can be no assurance that Allright will
be successfully integrated 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.
THE FAILURE TO SUCCESSFULLY INTEGRATE PAST AND FUTURE ACQUISITIONS COULD
HAVE A NEGATIVE IMPACT ON CENTRAL PARKING'S BUSINESS AND THE MARKET PRICE OF ITS
COMMON STOCK. Central Parking completed the acquisition of Allright Holdings,
Inc. in fiscal 1999. In addition, Central Parking completed three acquisitions
in fiscal 1997 and four acquisitions in fiscal 1998, including the Kinney System
Holding Corp. acquisition in February 1998, and plans to pursue additional
acquisitions in the future. 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 negative effect on Central Parking's business and
financial results.
IF CENTRAL PARKING IS UNABLE TO MAINTAIN ITS HISTORICAL PERCENTAGE GROWTH
RATE, THE MARKET PRICE OF ITS STOCK MAY BE ADVERSELY AFFECTED. As Central
Parking continues to expand its operations, its ability to maintain its
historical percentage growth rate is expected to become increasingly difficult.
The merger with Allright significantly increased the size of the company, which
is likely to reduce the impact of future acquisitions on the results of
operations of Central Parking. Central Parking's growth rate also will be
directly affected by the increasingly competitive environment for acquisitions
of other operators and Central Parking's ability to obtain suitable financing
for acquisitions. In addition, the growth rate will be affected by the results
of operations of added parking facilities, which will depend largely upon
Central Parking's ability to integrate acquired operations. There can be no
assurance that Central Parking's failure to maintain its historical percentage
growth rate will not negatively affect the market price of its stock.
IF SIGNIFICANT SHAREHOLDERS OF CENTRAL PARKING SELL A SUBSTANTIAL AMOUNT OF
THEIR STOCK AT THE SAME TIME, THESE SALES COULD HAVE AN ADVERSE IMPACT ON THE
MARKET PRICE OF CENTRAL PARKING COMMON STOCK. There are several shareholders who
own significant blocks of Central Parking common stock. If each of these
significant shareholders sold a substantial amount of Central Parking common
stock as allowed under the Securities Act at the same time, such sales could
have a significant negative impact on the market price of Central Parking common
stock. In order to provide a mechanism for these significant shareholders to
dispose of their shares of Central Parking common stock with a minimized impact
on Central Parking's trading market, Central Parking agreed to allow certain
shareholders to require Central Parking to register such shares under the
federal securities laws. In connection with the acquisition of Allright, Central
Parking entered into a registration rights agreement (the "Allright Registration
Rights Agreement"), which requires Central Parking to register up to $350
million worth of Central Parking common stock. In addition, Central Parking
entered into a registration rights agreement in connection with the acquisition
of Kinney System Holding Corp. (the "Kinney Registration Rights Agreement"),
which requires Central Parking to register up to 882,422 shares of Central
Parking common stock upon certain terms
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<PAGE> 18
and conditions. The exercise of such registration rights under the Allright
Registration Rights Agreement or the Kinney Registration Rights Agreement could
result in a large number of shares of Central Parking common stock being sold in
the market which, in turn, could result in a reduction in the market price of
Central Parking common stock.
THE SALE OF A SUBSTANTIAL NUMBER OF SHARES OF CENTRAL PARKING COMMON STOCK
BY MONROE CARELL, CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF CENTRAL PARKING, THE
CARELL CHILDREN'S TRUST AND VARIOUS OTHER CARELL FAMILY TRUSTS AND FOUNDATIONS
UNDER THE ALLRIGHT REGISTRATION RIGHTS AGREEMENT, COULD NEGATIVELY AFFECT THE
MARKET PRICE OF CENTRAL PARKING COMMON STOCK. The Allright Registration Rights
Agreement grants Monroe Carell, Jr., The Carell Children's Trust and various
other Carell family trusts and foundations rights to sell up to $100 million of
Central Parking common stock in an initial underwritten offering and up to $150
million in subsequent offerings. Although Monroe Carell and the other entities
described above will remain significant shareholders following such sales, the
sale of substantial amounts of stock by insiders, such as Monroe Carell, could
be perceived negatively by the securities market. As a result, these sales could
adversely affect the market price of Central Parking common stock.
CENTRAL PARKING WILL BE UNABLE TO RAISE MONEY THROUGH COMMON STOCK
OFFERINGS UNTIL IT COMPLETES ITS OBLIGATIONS UNDER THE ALLRIGHT REGISTRATION
RIGHTS AGREEMENT. The Allright Registration Rights Agreement provides certain
limitations and restrictions upon Central Parking's ability to issue new shares
of Central Parking common stock. Until certain shareholders of Central Parking
have received at least $350 million from the sale of Central Parking common
stock in either registered offerings or otherwise, Central Parking cannot 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. There can be no assurance or guarantee that the
restrictions upon Central Parking's ability to raise funds through common stock
offerings will not have a negative effect on Central Parking.
INCREASED INDEBTEDNESS COULD ADVERSELY AFFECT CENTRAL PARKING'S ABILITY TO
BORROW ADDITIONAL FUNDS IN THE FUTURE. Primarily as a result of the merger with
Allright, Central Parking's indebtedness increased from approximately $286.2
million, as of September 30, 1998, to approximately $369.2 million as September
30, 1999, which may affect its ability to borrow additional funds in the future.
Central Parking's existing credit facility provides for an aggregate
availability of $400 million. 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 Central Parking's increased debt
level will not have a negative effect on Central Parking.
THE INCREASED NUMBER OF LEASED AND OWNED FACILITIES RESULTING FROM THE
ALLRIGHT MERGER WILL INCREASE THE RISK THAT THE COMPANY MAY NOT BE ABLE TO COVER
THE FIXED COSTS OF ITS LEASED AND OWNED FACILITIES. The Company leases and owns
significantly more facilities than it did prior to the Allright merger. Although
there is more potential for income 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 because a
significant part of the costs to operate such facilities typically is fixed. For
example, in the case of leases, there are typically minimum lease payments, and
in the case of owned facilities, there are the normal risks of ownership and
costs of capital. In addition, maintenance and operating expenses for both
leased and owned facilities are borne by Central Parking and are not passed
through to the owner, as is the case with management contracts. Generally,
performance of Central Parking's parking facilities depend, in part, on its
ability to negotiate favorable contract terms, its 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.
IF OUR INFORMATION SYSTEMS OR PARKING OPERATIONS EXPERIENCE INTERRUPTIONS
DUE TO YEAR 2000 NON-COMPLIANCE, OUR REVENUES MAY BE ADVERSELY AFFECTED. As the
year 2000 approaches, an issue impacting all companies has emerged regarding how
existing application software programs and operating systems can accommodate
this date. In brief, many existing programs and systems in the marketplace were
designed to accommodate a two digit date position which represents the year
(e.g., "98" is stored on the system and represents the year 1998). Consequently,
the year 2000 could be inaccurately processed as the year 1900.
39
<PAGE> 19
The Company has considered the impact of Year 2000 issues on its computer
systems and applications and has developed remediation plans. However, there can
be no assurance that the mediation plans will be adequate to address all
potential Year 2000 issues. Central Parking has communicated, by means of Year
2000 questionnaires, with each of its major vendors to determine third party
compliance with Year 2000 issues. While Central Parking does not expect to be
materially affected by any third party's Year 2000 issues, no assurance can be
given that a third party's failure to adequately address their Year 2000 issues
could not materially effect Central Parking's business or financial results.
WE HAVE FOREIGN OPERATIONS THAT MAY BE ADVERSELY AFFECTED BY FOREIGN
CURRENCY EXCHANGE RATE FLUCTUATIONS. Central Parking operates in the United
Kingdom, Germany, Mexico, the Republic of Ireland, Chile, , 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 year
ended September 30, 1999, revenues from foreign operations represented 4.9%] of
Central Parking's total revenues. Of these foreign revenues, revenues from
United Kingdom operations represented 62.5% 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.
IF WE INCREASE OPERATIONS IN EUROPE, THE EURO CONVERSION MAY ADVERSELY
AFFECT OUR BUSINESS. On January 1, 1999, eleven of the fifteen member countries
of the European Union established fixed conversion rates between their existing
sovereign currencies and a new currency called the "euro." These countries
adopted the euro as their common legal currency on that date. The euro trades on
currency exchanges and is available for non-cash transactions. Until January 1,
2002, the existing sovereign currencies will remain legal tender in these
countries. On January 1, 2002, the euro is scheduled to replace the sovereign
legal currencies of these countries. While the vast majority of Central
Parking's operations within the European Union are currently in the United
Kingdom, a European Member which is not scheduled to participate in the euro
conversion, Central Parking has operations in countries which have adopted the
euro. Central Parking is in the process of assessing the impact of the euro
conversion to its operations in the participating countries, including the need
to adopt new information technology, parking related equipment and other systems
to accommodate euro-denominated transactions, as well as the impact to currency
risk and contractual relationships. Based on management's assessment of the
impact of the euro conversion, Central Parking does not believe that the euro
conversion will have a material impact on its operations or financial condition.
IN CONNECTION WITH THE OWNERSHIP OR OPERATION OF PARKING FACILITIES,
CENTRAL PARKING MAY BE POTENTIALLY LIABLE FOR ENVIRONMENTAL PROBLEMS. 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. 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
negative effect on Central Parking's business and financial results.
IF WE CANNOT MAINTAIN POSITIVE RELATIONSHIPS WITH LABOR UNIONS REPRESENTING OUR
EMPLOYEES, A WORK STOPPAGE MAY ADVERSELY AFFECT OUR BUSINESS. Approximately
3,479 employees of Central Parking and are represented by labor unions. There
can be no assurance that Central Parking 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 would be able to staff
sufficient employees for its short-term needs. Any such labor strike or the
inability of Central Parking to negotiate a satisfactory contract upon
expiration of the current agreements could have a negative effect on Central
Parking's business and financial results.
40
<PAGE> 20
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, 1998 and 1999, and the
related consolidated statements of earnings, shareholders' equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended September 30, 1999. 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. Separate
financial statements of Allright Holdings, Inc. also included in the 1997 and
1998 restated consolidated financial statements were audited by other auditors
whose report dated October 9, 1998, expressed an unqualified opinion on those
statements and referred to business combination effective October 31, 1996 which
resulted in new basis of accounting for the assets and liabilities of Allright
Holdings, Inc., the successor company. Our opinion, insofar as it relates to
the amounts included for Allright Holdings, Inc., is based solely on the report
of the other auditors.
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, based on our audits and the reports of the other auditors,
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, 1998 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended September 30, 1999, in conformity with generally accepted accounting
principles.
KPMG LLP
Nashville, Tennessee
December 8, 1999, except as to note 8,
which is as of December 28, 1999.
41
<PAGE> 21
CENTRAL PARKING CORPORATION
CONSOLIDATED BALANCE SHEETS
Amounts in thousands, except share data
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 39,495 $ 53,669
Management accounts receivable 19,847 33,288
Accounts receivable - other 13,449 18,966
Current portion of notes receivable (including amounts due
from related parties of $238 in 1998 and $509 in 1999) 1,472 12,503
Prepaid rent 15,930 14,222
Prepaid other expenses 6,765 7,438
Deferred income taxes 545 247
Prepaid and refundable income taxes 1,266 5,374
- ----------------------------------------------------------------------------------------------------
Total current assets 98,769 145,707
Investments, at amortized cost (fair value
$5,355 in 1998 and $5,480 in 1999) 5,087 5,488
Notes receivable, less current portion 46,524 47,870
Property, equipment, and leasehold improvements, net 382,506 421,090
Contracts and lease rights, net 62,472 97,158
Goodwill, net 288,170 277,800
Investment in and advances to partnerships and joint ventures 40,376 32,218
Other assets 30,118 37,246
- ----------------------------------------------------------------------------------------------------
$ 954,022 $ 1,064,577
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital lease
obligations $ 2,881 $ 31,682
Accounts payable 54,918 74,778
Accrued payroll and related costs 16,908 12,268
Accrued expenses 27,403 20,051
Management accounts payable 26,611 33,416
Income taxes payable 945 4,171
- ----------------------------------------------------------------------------------------------------
Total current liabilities 129,666 176,366
Long-term debt and capital lease obligations, less current portion 283,319 337,481
Deferred rent 14,875 17,681
Deferred compensation 11,359 12,058
Deferred income taxes 32,894 27,702
Minority interest 23,103 31,112
Other liabilities 6,892 5,058
- ----------------------------------------------------------------------------------------------------
Total liabilities 502,108 607,458
- ----------------------------------------------------------------------------------------------------
Company-obligated mandatorily redeemable convertible securities of
Subsidiary holding solely parent debentures 110,000 110,000
Shareholders' equity
Common stock, $0.01 par value; 50,000,000 shares
authorized, 36,521,500 and 36,753,977 shares issued and
outstanding in 1998 and 1999, respectively 366 368
Additional paid-in capital 256,405 259,853
Foreign currency translation adjustment (150) (20)
Retained earnings 85,795 87,364
Deferred compensation on restricted stock (502) (446)
- ----------------------------------------------------------------------------------------------------
Total shareholders' equity 341,914 347,119
- ----------------------------------------------------------------------------------------------------
Commitments and contingencies
$ 954,022 $ 1,064,577
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
42
<PAGE> 22
CENTRAL PARKING CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1997 1998 1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Parking $ 295,692 $ 534,573 $ 645,075
Management contract 43,245 65,826 91,386
- ---------------------------------------------------------------------------------------------------------------------
Total revenues 338,937 600,399 736,461
- ---------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of parking 248,052 441,704 541,157
Cost of management contracts 11,793 15,000 27,740
General and administrative 37,011 63,726 77,312
Goodwill and non-compete amortization 1,655 8,317 11,607
Impairment loss -- -- 1,216
Merger costs -- -- 40,970
- ---------------------------------------------------------------------------------------------------------------------
Total costs and expenses 298,511 528,747 700,002
- ---------------------------------------------------------------------------------------------------------------------
Operating earnings 40,426 71,652 36,459
- ---------------------------------------------------------------------------------------------------------------------
Other income (expenses):
Interest income 2,575 5,677 6,639
Interest expense (18,497) (30,232) (26,951)
Dividends on company-obligated mandatorily redeemable
convertible securities of a subsidiary trust -- (3,247) (5,926)
Net gains (losses) on sales and divestitures of property and equipment 3,118 (639) 4,222
Minority interest (163) (1,939) (2,612)
Equity in partnership and joint venture earnings 4,238 5,246 5,233
- ---------------------------------------------------------------------------------------------------------------------
Earnings before income taxes and extraordinary item 31,697 46,518 17,064
Income tax expense:
Current 12,676 17,596 15,423
Deferred 335 2,777 (3,043)
- ---------------------------------------------------------------------------------------------------------------------
Total income taxes 13,011 20,373 12,380
Net earnings before extraordinary item 18,686 26,145 4,684
Extraordinary item, net of tax (1,032) -- (1,002)
- ---------------------------------------------------------------------------------------------------------------------
Net earnings $ 17,654 $ 26,145 $ 3,682
========= ========= =========
Basic earnings per share:
Net earnings before extraordinary item $ 0.62 $ 0.76 $ 0.13
Extraordinary item, net of tax $ (0.03) $ -- $ 0.03
Net earnings $ 0.59 $ 0.76 $ 0.10
Diluted earnings per share:
Net earnings before extraordinary item $ 0.61 $ 0.74 $ 0.13
Extraordinary item, net of tax $ (0.03) $ -- $ 0.03
Net earnings $ 0.58 $ 0.74 $ 0.10
</TABLE>
See accompanying notes to consolidated financial statements.
43
<PAGE> 23
CENTRAL PARKING CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
Amounts in thousands, except per share data
<TABLE>
<CAPTION>
FOREIGN DEFERRED
ADDITIONAL CURRENCY COMPENSATION
NUMBER OF COMMON PAID-IN TRANSLATION RETAINED ON RESTRICTED
SHARES STOCK CAPITAL ADJUSTMENT EARNINGS STOCK TOTAL
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1996 26,216 $ 262 $ 31,660 $ 59 $ 45,449 $(637) $ 76,793
----------------------------------------------------------------------------------------------------------------------------
Initial formation of Allright 5,950 60 72,869 -- -- -- 72,929
Issuance of common stock 528 5 6,016 -- -- -- 6,021
Issuance under restricted stock -- -- 46 -- -- -- 46
plan
Common stock dividends -- -- -- -- (1,532) -- (1,532)
Exercise of stock options and
related tax benefits 88 1 1,137 -- -- -- 1,138
Amortization of deferred
compensation -- -- -- -- -- 67 67
Comprehensive income:
Net earnings -- -- -- -- 17,654 -- 17,654
Foreign currency translation
adjustment -- -- -- (2) -- -- (2)
------------
Total Comprehensive income 17,652
----------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1997 32,782 $ 328 $111,728 $ 57 $ 61,571 $(570) $ 173,114
----------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for
acquisitions 1,006 10 42,528 -- -- -- 42,538
Issuance of common stock, net of
offering and issuance costs 2,612 26 99,854 -- -- -- 99,880
Issuance under restricted stock
plan and employment agreements 3 -- 129 -- -- -- 129
Issuance under Employee Stock
Ownership Plan 67 1 926 -- -- -- 927
Common stock dividends -- -- -- -- (1,921) -- (1,921)
Exercise of stock options and
related tax benefits 52 1 1,240 -- -- -- 1,241
Amortization of deferred
compensation -- -- -- -- -- 68 68
Comprehensive income:
Net earnings 26,145 26,145
Foreign currency translation
adjustment -- -- -- (207) -- -- (207)
------------
Total comprehensive income 25,938
----------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1998 36,522 $ 366 $256,405 $(150) $ 85,795 $(502) $ 341,914
----------------------------------------------------------------------------------------------------------------------------
Allright equity adjustment to
conform fiscal years -- -- -- -- (20) -- (20)
Issuance under restricted stock
plan and employment agreements 1 -- 74 -- -- -- 74
Issuance under Employee Stock
Ownership Plan 48 -- 1,401 -- -- -- 1,401
Common stock dividends -- -- -- -- (2,093) -- (2,093)
Exercise of stock options and
related tax benefits 183 2 1,973 -- -- -- 1,975
Amortization of deferred
compensation -- -- -- -- -- 56 56
Comprehensive income:
Net earnings -- -- -- -- 3,682 -- 3,682
Foreign currency translation
adjustment -- -- -- 130 -- -- 130
---------
Total comprehensive income 3,812
----------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1999 36,754 $ 368 $259,853 $ (20) $ 87,364 $(446) $ 347,119
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
44
<PAGE> 24
CENTRAL PARKING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in thousands
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1997 1998 1999
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings before extraordinary item $ 18,686 $ 26,145 $ 4,684
Extraordinary item, net of tax (1,032) -- (1,002)
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization of property 8,642 15,063 22,872
Amortization of goodwill and non-compete agreements 1,655 8,317 11,607
Amortization of contract and lease rights, straight-line rent,
deferred financing fees and other 3,250 5,294 8,652
Equity in partnership and joint venture earnings (4,238) (5,246) (5,233)
Distributions from partnerships and joint ventures 2,990 4,369 5,149
Net (gains) losses on sales and divestitures of property and equipment (3,118) 639 (4,222)
Impairment loss -- -- 1,216
Deferred income taxes (196) 2,777 (3,043)
Minority interest 163 1,939 2,612
Charge for Edison minority interest write-up -- -- 7,000
Changes in operating assets and liabilities, excluding effects of
acquisitions:
Management accounts receivable (3,160) (1,955) (13,441)
Accounts receivable - other (3,658) 1,870 (5,432)
Prepaid rent (3,915) (6,767) 1,708
Prepaid expenses - other (289) 735 (1,673)
Prepaid and refundable income taxes (533) 888 (4,108)
Other assets 1,176 (321) (10,864)
Accounts payable, accrued expenses,
and deferred compensation 10,032 13,114 7,653
Management accounts payable 2,876 12,269 6,805
Income taxes payable 178 (2,970) 3,226
-------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 29,509 76,160 34,166
-------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales and divestitures of property and equipment 15,170 6,975 25,252
Investments in notes receivable, net (17,651) (395) (12,377)
Purchase of property, equipment, and leasehold improvements (14,634) (72,222) (38,000)
Purchase of assets held for resale (45,962) -- --
Proceeds from sale of assets held for resale 45,962 -- --
Purchase of contract and lease rights (3,850) (1,573) (43,338)
Investments in and advances to partnerships, joint ventures
and unconsolidated subsidiaries (47,720) (223) (219)
Purchase of remaining interest in unconsolidated subsidiary -- -- (20,789)
Acquisitions of companies, net of cash acquired (270,837) (216,454) (785)
Proceeds from maturities and calls of investments 330 374 712
Purchase of investments (601) (707) (1,113)
-------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (339,793) (284,225) (90,657)
-------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Dividends paid (1,488) (1,871) (1,986)
Net borrowings under revolving credit agreement, net of issuance costs 70,352 (24,360) 98,677
Proceeds from issuance of company-obligated mandatorily redeemable
securities, net of issuance costs -- 106,477 --
Proceeds from issuance of notes payable, net of issuance costs 168,211 125,137 263,615
Capital contributions upon formation of Allright 67,428 -- --
Payment to minority interest partner -- -- (2,103)
Principal repayments on notes payable (21,775) (107,759) (302,413)
Distribution of debt proceeds from partnerships and joint ventures -- 30,285 --
Proceeds from issuance of common stock and exercise of stock options, net 7,205 102,177 3,448
-------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 289,933 230,086 59,238
-------------------------------------------------------------------------------------------------------------------------
Foreign currency translation 134 166 178
-------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (20,217) 22,187 2,925
Cash and cash equivalents at beginning of period 28,605 17,308 39,495
Cash and cash equivalents derived from Allright merger 8,920 -- 11,249
-------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 17,308 $ 39,495 $ 53,669
-------------------------------------------------------------------------------------------------------------------------
Non-cash transactions:
Purchase of property and equipment in exchange for liabilities $ -- $ 1,314 $ --
Note receivable on property sale $ 10,225 $ -- $ --
Issuance of stock in acquisitions $ -- $ 42,538 $ --
Issuance of restricted stock $ -- $ 129 $ 74
Effects of acquisitions:
Estimated fair value of assets acquired $ 457,021 $ 94,718 $ 285
Purchase price in excess of the net assets acquired (goodwill) 33,633 233,333 500
Estimated fair values of liabilities assumed (204,728) (62,587) --
Common stock issued -- (42,538) --
-----------------------------------------------------------------------------------------------------------------------
Cash paid $ 285,926 $ 222,926 $ 785
Less cash acquired (15,089) (6,472) --
-----------------------------------------------------------------------------------------------------------------------
Net cash paid for acquisitions $ 270,837 $ 216,454 $ 785
========== ========= ========
</TABLE>
See accompanying notes to consolidated financial statements
45
<PAGE> 25
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 and Basis of Presentation
Central Parking Corporation ("CPC") is a United States company chartered in
the State of Tennessee. The consolidated financial statements include accounts
of Central Parking Corporation and its subsidiaries (the "Company" or "Central
Parking") including Central Parking System, Inc. ("CPS") and its wholly-owned
U.S. subsidiaries; Kinney System Holdings, Inc. and its wholly owned
subsidiaries ("Kinney"); Central Parking System of the United Kingdom, Ltd. and
its wholly-owned subsidiary ("CPS-UK"); Central Parking System Realty, Inc. and
its wholly-owned subsidiaries ("Realty"); Allright Holdings, Inc. and its
wholly-owned subsidiaries ("Allright"), including Edison Parking Management,
L.P. ("Edison"), a 50% owned partnership under Allright control. The results of
operations of the remaining 50% of Edison are eliminated as a minority interest.
Central Parking Finance Trust was established during the year ended September
30, 1998. All significant inter-company transactions have been eliminated.
The accompanying consolidated financial statements have been restated to
reflect the impact of the merger between Central Parking and Allright, which was
consummated on March 19, 1999. The transaction constituted a tax-free
reorganization and has been accounted for as a pooling-of-interests under
Accounting Principles Board ("APB") Opinion No. 16. "Business Combinations."
Accordingly, Central Parking's financial statements have been restated to
reflect the combined results of operations, financial position and cash flows of
Central Parking and Allright as if Allright had been part of Central Parking
since Allright's inception date of October 31, 1996. Prior to the consummation
of the merger, Allright's fiscal year end was June 30. In recording the merger,
Allright's historical consolidated financial statements as of and for the
eight-month period ended June 30, 1997 and as of and for the year ended June 30,
1998, have been combined with the Company's consolidated financial statements as
of and for the Company's fiscal years ended September 30, 1997 and 1998,
respectively. As a result of conforming Allright's fiscal year with that of the
Company's, the historical results of operations of Allright for the three-month
period ended September 30, 1998 have been recorded directly to the Company's
consolidated shareholders' equity. In addition, the consolidated income tax
provision has been restated on a combined basis. The impact of the restatement
was to increase net earnings by $849 thousand in 1997 and to decrease net
earnings by $533 thousand and 1998. There were no material transactions between
Central Parking and Allright prior to the Merger.
The Company provides parking consulting services and manages parking
facilities throughout the world, principally in the United States and United
Kingdom. The Company manages and operates owned or leased parking facilities,
manages and operates parking facilities owned or leased by third parties, and
provides financial and other advisory services to clients.
(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.
Management accounts payable reflected on the accompanying consolidated
balance sheets is reflected net of cash. 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.
(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 which include investments with original maturities of three
months or less.
(d) Investments
Investment securities consist of debt obligations of states and political
subdivisions and are classified into one of
46
<PAGE> 26
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. At September 30, 1998 and 1999, all
of the Company's investment securities were classified as held-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 write-down is
reflected in earnings.
(e) Property, Equipment, and Leasehold Improvements
Property, equipment, computer software, computer hardware, and leasehold
improvements are recorded at cost. Depreciation is provided principally on a
straight-line basis over a period of one to fifteen years for furniture,
fixtures, and equipment, over three years for computer software, over five years
for computer hardware, and over thirty to forty years for buildings. Leasehold
improvements are amortized over the remaining base lease term or the estimated
useful life of the asset, whichever is shorter.
(f) Investment in Partnerships and Joint Ventures
The Company has a number of joint ventures 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 generally accounted for under the equity method and
are included in equity in partnership and joint venture earnings in the
accompanying consolidated statements of earnings with the exception of Edison,
which is consolidated into the Company's financial statements, with the
remaining 50% eliminated through minority interest.
(g) Investment in Edison Parking Management, L.P.
On June 1, 1997, Allright acquired a 50 percent controlling interest in
Edison. Edison's assets include management contracts contributed by the limited
partner, Park Fast Parking Management, L.P. ("Park Fast"), a third party. These
management contracts were recorded at their estimated fair market value and are
being amortized on a straight-line basis over their estimated lives, which
average 12 years.
In conjunction with the Company's merger with Allright, Allright entered into
a restructuring agreement whereby Allright loaned an additional $9.9 million to
the limited partner and amended certain other related agreements. In addition,
the parties agreed that the limited partner's capital account would be increased
to $29.4 million as of the effective date of the restructuring, which coincided
with the consummation date of the merger with Allright. As a result of this
increase in the limited partner's capital account, the Company recorded a $7
million charge to operations concurrent with the merger. Such charge is
reflected in merger costs in the accompanying consolidated statement of earnings
for fiscal 1999.
(h) Contract and Lease Rights
Contract and lease rights consist of capitalized payments made to
third-parties, which provide the Company the opportunity to manage or lease
facilities. Contract and lease rights are allocated among respective locations
and are amortized principally on a straight-line basis over the terms of related
agreements which range from five to thirty years, or an estimated term
considering anticipated terminations and renewals.
(i) 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, ranging from 5 - 30 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.
(j) Other assets
Other assets is comprised of a combination of the cash surrender value of key
man life insurance policies, security deposits, key money deposits with clients,
deferred issuance costs related to the sale of Preferred Securities discussed in
Note 9, deferred debt issuance costs related to the Company's credit facilities,
and non-compete
47
<PAGE> 27
agreements. Key money represents deposits and prepayments tendered to clients at
the inception of long-term relationships, and is amortized over the life of the
applicable lease. Non-compete agreements are amortized over the life of the
agreement, or economic useful life whichever is shorter. Deferred issuance costs
related to the Preferred Securities are amortized over the 30 year life of the
underlying subordinated debentures. Deferred debt issuance costs are amortized
over the life of the related debt.
(k) 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 rent. The difference between actual lease payments and straight-line
lease expenses over the lease term is included in accrued expense or deferred
rent, as appropriate.
In connection with its acquisitions, the Company revalued certain leases to
estimated fair market value at the time of the respective acquisition. Favorable
operating leases of entities acquired represent the present value of the excess
of the current market rental over the contractual lease payments. Unfavorable
operating leases of entities acquired represent the present value of the excess
of the contractual lease payments over the current market rental. Such write-ups
and write-downs are amortized on a straight-line basis over the remaining life
of the underlying lease, or 30 years, whichever is shorter. Favorable and
unfavorable lease rights are reflected on the accompanying consolidated balance
sheets in contract and lease rights and other liabilities, respectively.
(l) Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions
of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." This Statement requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount which the
carrying amount of the assets exceed the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.
The Company periodically reviews the carrying value of long-lived assets,
including goodwill, contract and lease rights, and non-compete agreements, to
determine if the net book values of such assets continue to be recoverable over
the remainder of the original estimated useful life. In performing this review
for recoverability, the Company estimates the future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of the
expected net future cash flows (undiscounted and without interest charges) is
less than the carrying amount of the asset, an impairment loss is recognized
based on the estimated diminution of value. If the assets involved are to be
held and used in the operations of the Company, consideration is also given to
actions or remediations the Company might take in order to achieve the original
estimates of cash flows.
(m) 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. Work opportunity 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.
(n) Pre-opening Expenses
The direct and incremental costs of hiring and training personnel associated
with the opening of new parking facilities and the associated internal
development costs are expensed as incurred.
(o) Per Share and Share Data
48
<PAGE> 28
Effective October 1, 1997, the Company adopted the provisions of the
Financial Accounting Standards Board Statement No. 128, ("SFAS No. 128"),
"Earnings Per Share." Statement 128 replaced the previously reported primary and
fully diluted earning 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 reflect 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 in accordance with SFAS No. 128. 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 completed in December 1997.
(p) 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 generally included in the currency
translation adjustment in shareholders' equity.
(q) 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, 1999. Book value approximates fair value for
substantially all of the Company's assets and liabilities that fall under the
fair value disclosure requirements.
(r) Stock Option Plan
The Company applies the intrinsic value based method of accounting prescribed
by Accounting Principles Board opinion No. 25 ("APB No. 25") Accounting for
Stock Issued to Employees, and related interpretations in accounting for its
stock options. As such, compensation expense would be recorded on the date of
grant only if the current market price of the underlying stock exceeded the
exercise price.
(s) Business Concentration
Approximately 40% of the Company's total revenues for fiscal year 1999 were
attributable to parking and management contract operations geographically
located in the Northeastern area of the United States. See also Note 17.
(t) Risk Management
The Company utilizes a combination of indemnity and self insurance coverages
up to certain maximum losses for liability, health and workers' compensation
claims. The accompanying consolidated balance sheets reflect the estimated
losses related to such risks. These policies have deductibles which must be
met before the insurance companies are required to reimburse the Company for
costs and liabilities related to covered claims.
(u) 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.
(v) Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 established
standards for reporting and display of comprehensive income and its components.
Comprehensive income is the change in equity of a business enterprise during a
period from transactions and other events and circumstances from non-owner
sources. Comprehensive income includes all changes in equity except those
resulting from investments by and distributions to owners. This pronouncement is
effective for fiscal years beginning after December 15, 1997 and requires the
reporting of comprehensive income
49
<PAGE> 29
within the financial statements. The Company adopted SFAS No. 130 in fiscal year
1999. Prior years financial statements have been reclassified to conform to SFAS
No. 130.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information," which
supercedes SFAS No. 14. This pronouncement is effective for fiscal years
beginning after December 15, 1997. The Company has adopted SFAS No. 131 in
fiscal 1999. See Note 17.
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. The Company adopted SFAS No. 132
in fiscal 1999. The pronouncement did not impact the presentation of Central
Parking's consolidated financial statements or disclosure.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
established reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts. Under SFAS No. 133, the
Company would recognize all derivatives as either assets or liabilities,
measured at fair value, in the statement of financial position. In July 1999,
SFAS No. 137 "Accounting for Derivative Instruments and Hedging Activities -
Deferral of Effective Date of FASB No. 133, An Amendment of FASB Statement No.
133" was issued deferring the effective date of SFAS 133 to fiscal years
beginning after June 15, 2000. The Company is in the process of evaluating the
impact, if any, these pronouncements will have on its consolidated financial
statements.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," effective for fiscal years
beginning after December 16, 1998. SOP 98-1 defines which costs incurred to
develop or purchase internal use software should be capitalized and which should
be expensed. The Company is in the process of determining what impact, if any,
this pronouncement will have on its consolidated financial statements.
(w) Reclassifications
Certain prior year amounts have been reclassified to conform to the current
year presentation. Certain reclassifications have been made to Allright's
historical financial statements to conform to the Company's presentation.
(2) BUSINESS COMBINATIONS
ALLRIGHT MERGER
On March 19, 1999, Central Parking completed a merger with Allright, pursuant
to which approximately 7.0 million shares of Central Parking common stock and
approximately 0.5 million options and warrants to purchase common stock of
Central Parking, were exchanged for all of the outstanding shares of common
stock and options and warrants to purchase common stock of Allright. Each
outstanding share of Allright common stock and each outstanding option or
warrant to purchase such common stock was exchanged for 87.6367273 shares of
Central Parking common stock. The transaction has been accounted for as a
pooling-of-interests under APB Opinion No. 16. Accordingly, Central Parking's
consolidated financial statements have been restated to reflect the combined
results of operations, financial position and cash flows of Central Parking and
Allright as if Allright had been part of Central Parking since October 31, 1996,
the date of Allright's inception.
The Company incurred merger costs of approximately $41.0 million in fiscal
1999 in connection with the merger with Allright. These costs, which are
directly attributable to the merger and incremental to the combining
50
<PAGE> 30
companies, are recognized when incurred and are reflected in the accompanying
statement of earnings as merger costs. Included in these costs are approximately
$20.7 million for professional fees; comprised of investment banking, legal,
accounting, and consulting fees; $11.3 million related to employment agreements
and severance contracts; $7 million related to the restructuring agreement with
the limited partner of Edison (See Note 1(g)); and the balance of $2.0 million
in travel, supplies, printing, and other out of pocket costs. In connection with
the merger, Allright entered into certain employment and management continuity
agreements with certain employees. See Note 13.
Following are the results of operations for the separate companies prior to the
merger and the combined amounts presented in the consolidated financial
statements (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30
1997 1998
-------------------------------
<S> <C> <C>
Total revenue:
Central Parking $220,454 $383,175
Allright 118,483 217,224
-------- --------
$338,937 $600,399
======== ========
Earnings (loss) before income taxes
and
Extraordinary item:
Central Parking $ 32,412 $ 44,224
Allright (715) 2,294
-------- --------
$ 31,697 $ 46,518
======== ========
</TABLE>
PURCHASE ACQUISITIONS
Civic Parking LLC.
On December 31, 1996, the Company purchased for cash, Civic Parking LLC
("Civic"), 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 Central Parking under management agreements. The purchase price was
approximately $91.0 million, which was financed through working capital and
$67.2 million of borrowings under the Company's credit facilities. 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 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 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. No gain or loss was recognized on the sale of the 50% interest.
The Company accounts for the remaining interest in Civic under the equity
method. Such results are included in the accompanying consolidated financial
statements from December 31, 1996. Central Parking continues to operate these
garages pursuant to a management contract with Civic.
Square Industries, Inc.
On January 18, 1997, Central Parking 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,
Central Parking assumed $23.2 million of existing Square debt. As of September
30, 1997, the Company refinanced $18.9 million of the debt assumed from Square
through a draw on the Company's credit facilities.
Square operated facilities primarily in the Northeastern, part of the United
States. 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.
Car Park Corporation.
On May 29, 1997, the Company acquired for cash certain assets and leases of
Car Park Corporation ("Car Park")
51
<PAGE> 31
for $3.5 million; consisting of parking facilities in the San Francisco
metropolitan area. 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
excess of purchase price over the fair value of the net assets acquired of $3.3
million is being amortized on a straight-line basis over 25 years.
Diplomat Parking Corporation
On October 1, 1997, Central Parking acquired the stock and certain assets of
Diplomat for approximately $22.2 million in cash and notes payable. Diplomat
operated parking facilities located primarily in Washington, D.C. and Baltimore,
Maryland. The acquisition was accounted for as a purchase, and accordingly, the
results of operations of Diplomat have been included in the Company's
consolidated financial statements from the date of acquisition. The excess of
purchase price over the fair value of the net assets acquired of $20.7 million
is being amortized on a straight-line basis over 25 years.
National Garages, Inc.
On December 1, 1997, Allright purchased substantially all of the assets of
National Garages, Inc. ("National"), a privately owned parking company based in
Detroit, which operated facilities located primarily in the Midwestern United
States. The purchase price of approximately $3.7 million was paid in cash and
financed through working capital and $2.2 million in debt under Allright's
previous revolving line of credit.
Kinney System Holding Corp.
On February 12, 1998, Central Parking acquired Kinney System Holding Corp
("Kinney"), a privately held parking company headquartered in New York City, for
approximately $208.8 million, including $171.8 million in cash, including
transaction fees and related expenses, and $37.0 million (882,422 shares) in
Central Parking common stock. In connection with this transaction, Central
Parking assumed $10.3 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 Company's credit
facility, and ultimately from the issuance of Central Parking common stock and
Central Parking obligations pursuant to the Trust Issued Preferred Securities.
Kinney operated parking facilities in the New York City metropolitan area,
Boston, Philadelphia and Washington, D.C. The acquisition was accounted for as a
purchase and the results of operations are included in the Company's
consolidated financial statements from February 12, 1998. The excess of purchase
price over the fair value of net assets acquired of $197.6 million is being
amortized on a straight-line basis over 30 years.
In connection with the Kinney acquisition, the remaining 50% interest in
Spectrum Parking Associates ("Spectrum") was acquired for $3.6 million. The
acquisition was accounted for as a purchase and the results of operations are
included from February 13, 1998. The excess of purchase price over the fair
value of net assets acquired of $2.2 million is being amortized on a
straight-line basis over 18 years.
Central Parking System of Louisiana, Inc.
Central Parking has historically owned 50% of Central Parking System of
Louisiana ("CPS-Louisiana") and on March 30, 1998, purchased the remaining 50%
from Property Service Corporation for $2.5 million in Central Parking common
stock (52,631 shares). The acquisition was accounted for as a purchase and,
accordingly, the purchase price has been allocated to CPS-Louisiana assets and
liabilities. The excess of purchase price over fair value of net assets acquired
of $2.5 million is being amortized on a straight-line basis over 5 years.
Turner Parking System, Inc.
On April 1, 1998, Central Parking purchased substantially all of the assets
of Turner Parking System, 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 Central Parking common stock. Turner
operated parking facilities in Texas, Florida, California, Georgia, and
Washington, D.C. The results of operations are included in the Company's
consolidated financial statements from April 1, 1998. The acquisition was
accounted for as a purchase and, accordingly, the purchase price has been
allocated to Turner's assets and liabilities. The excess of purchase price over
fair value of net assets acquired of $3.7 million is being amortized on a
straight-line basis over 10 years.
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 $4.3 million, including $2.1 million in
52
<PAGE> 32
cash, including transaction fees and other related expenses, and $2.2 million
(54,358 shares) in Central Parking common stock. Sterling operated parking
facilities in Georgia, Florida, Virginia, California, and Kentucky. The results
of operations are included in the Company's consolidated financial statements
from July 1, 1998. The acquisition was accounted for as a purchase and,
accordingly, the purchase price has been allocated to Sterling's assets and
liabilities. The excess of purchase price over fair value of net assets acquired
of $4.5 million is being amortized on a straight-line basis over 10 years.
Allied Parking
On October 1, 1998, Allright purchased from Allied Parking, Inc. ("Allied")
four leases relating to parking facilities in New York City, with maturities
ranging from 2006 to 2029 for approximately $14.2 million. Allied agreed to
lease to Allright two more lots for 19 years, each in exchange for a note
receivable of $4.9 million, secured by an assignment of rents. Allright also
purchased the right to use the "Allied Parking" name associated with these
leases for $835 thousand. On November 8, 1998, Allright purchased six additional
leases from Allied Parking with maturities ranging from 1999 to 2008 for $5.1
million. Allright also purchased the right to use the "Allied Parking" name
associated with these leases for $300 thousand. During April 1999, the Company
purchased an additional lease from Allied Parking which matures in 2020 for $3.0
million, and also purchased the right to use the "Allied Parking" name
associated with it as part of the purchase price.
New York Partnership
On May 28, 1999 the Company purchased the remaining 60% interest in a
partnership, a limited liability company, which operates a parking facility in
New York City for $20.5 million in cash. The Company previously owned 40% of the
partnership. The previous partner will continue to manage the garage for the
next 7 years.
The following unaudited pro forma condensed results of operations give effect to
the acquisition of Square, Civic Parking, Car Park, Diplomat, Kinney,
CPS-Louisiana, Turner and Sterling as if such transactions had occurred at
October 1, 1997 (in thousands except for earnings per share):
<TABLE>
<CAPTION>
Twelve Months Ended
September 30, 1998
------------------
<S> <C>
Total revenues $ 653,122
Earnings before income taxes and extraordinary item 42,232
Net earnings, before extraordinary item 22,461
Basic earnings before extraordinary item per share $ 0.64
Basic weighted average common shares outstanding 34,982
Diluted earnings before extraordinary item per share $ 0.63
Diluted weighted average common shares outstanding 35,682
</TABLE>
The foregoing unaudited proforma amounts are based upon certain assumptions
and estimates, including, but not limited to, the recognition of interest
expense on debt incurred to finance the acquisitions and amortization of
goodwill over 5 to 30 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. The pro forma results of operations for the year ended
September 30, 1998 do not reflect certain operational and financial combination
benefits which, in management' opinion, are the direct result of the Square and
Kinney acquisitions.
Prime Group Realty Trust
On May 10, 1999, the Company announced a definitive agreement to purchase a
parking facility that is being developed in Chicago by a wholly owned subsidiary
of Prime Group Realty Trust (NYSE: PGE). The purchase price is approximately
$37.3 million. The garage will have a total of 1,018 parking spaces as well as
4,200 square feet suitable for retail. Under the terms of the agreement, the
purchase will occur upon completion of the parking facility, which is expected
in the latter part of 2000.
53
<PAGE> 33
(3) NOTES RECEIVABLE
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 was included in
net gains on sales and divestitures of property and equipment in the
consolidated statement of earnings for fiscal 1997.
In connection with the Kinney acquisition, the Company acquired a note
receivable from the City of New York (the "City") related to two parking garages
which were built on behalf of the City. The Company also has a long-term
management agreement to operate the parking garages. Amounts advanced for the
construction of the garages were recorded as a note receivable and are being
repaid by the City in monthly installments of $156 thousand including interest
at 8.0% through December 2007. In connection with the purchase, the note
receivable was recorded at estimated fair value. At September 30, 1999, the book
value of the note receivable was $11.5 million.
In June 1997, Allright loaned the limited partner of Edison $16.5 million
in connection with Allright's acquisition of its general partnership interest in
Edison. In conjunction with the merger of Allright and Central Parking, the
partnership agreement was restructured and an additional $9.9 million was
advanced to the limited partner. The amended note receivable totals $26.4
million and bears interest at 10%. The note matures June 1, 2006 and is secured
by a pledge of, and security interest in, the limited partner's partnership
interest in Edison.
In connection with the Allright merger, the Company acquired a mortgage
note of $2.5 million, bearing interest at 7.7%, from a partnership which is
secured by a parking garage and rental assignments. The loan is a balloon note
which matures in August 2010. In connection with the acquisition of Allied, the
Company obtained notes receivables totaling $4.9 million, secured by an
assignment of rents from the properties being leased. The notes are payable
monthly and bear interest at the rate of 7%.
The remainder of the notes receivable consist of notes ranging from $17
thousand to $1.1 million at the end of fiscal 1998, and notes ranging from $10
thousand to $1.5 million at the end of fiscal 1999. The notes bear interest at
rates ranging from 8% to 12% at the end of fiscal 1999.
(4) INVESTMENTS
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,
1998 1999
------------------------------
<S> <C> <C>
Amortized cost $ 5,087 $ 5,488
Unrealized gains 276 67
Unrealized losses (8) (75)
----------- -------------
Fair value $ 5,355 $ 5,480
=========== =============
</TABLE>
The amortized cost and approximate fair value of debt securities at
September 30, 1999 by average estimated maturity are shown below (in thousands):
<TABLE>
<CAPTION>
AMORTIZED COST FAIR VALUE
------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 679 $ 675
Due after one year through five years 1,714 1,763
Due after five years through ten years 1,920 1,939
Due after ten years 1,175 1,103
----------- -------------
Total securities $ 5,488 $ 5,480
=========== =============
</TABLE>
54
<PAGE> 34
(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,
1998 1999
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Leasehold improvements $ 25,364 $ 38,579
Buildings and garages 52,482 72,302
Operating equipment 36,662 52,907
Furniture and fixtures 3,657 5,101
Capital leases 5,127 5,096
Aircraft 4,250 4,250
----------- -------------
$ 127,542 $ 178,235
Less accumulated depreciation and amortization 28,836 46,667
----------- -------------
98,706 131,568
Land 283,800 289,522
----------- -------------
Property, equipment and
leasehold improvements, net $ 382,506 $ 421,090
=========== =============
</TABLE>
In the fourth quarter of fiscal 1999, the Company recognized an impairment
loss of approximately $1.2 million related to a parking garage which the Company
intends to dispose of. The net book value of the property before impairment
charge approximated $4.6 million and the estimated net realizable value, based
on a signed sale contract, is estimated to be $3.4 million. The sale is expected
to close in January 2000.
(6) INTANGIBLE AND OTHER ASSETS.
Contract and lease rights and accumulated amortization are as follows (in
thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998 1999
----------------------------------------------------------------------------------------
<S> <C> <C>
Contract and lease rights $ 71,403 $ 115,535
Less accumulated amortization 8,931 18,377
----------- -------------
Contract and lease rights, net $ 62,472 $ 97,158
=========== =============
</TABLE>
Goodwill at September 30, 1998 and 1999 consists of (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998 1999
----------------------------------------------------------------------------------------
<S> <C> <C>
Excess of purchase price over net assets acquired $ 298,082 $ 298,831
Less accumulated amortization 9,912 21,031
----------- -------------
Goodwill, net $ 288,170 $ 277,800
=========== =============
</TABLE>
Amortization of goodwill amounted to $1.5 million, $8.0 million, and $11.1
million for the years ended September 30, 1997, 1998, and 1999, respectively.
Included in other assets are unamortized balances related to non-competition
agreements of $1.8 million at September 30, 1998, and $1.9 million at September
30, 1999.
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<PAGE> 35
(7) INVESTMENTS IN AND ADVANCES TO 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, 1998 and
1999, and for the three years ended September 30, 1999 (in thousands):
<TABLE>
<CAPTION>
INVESTMENT IN
AND ACCUMULATED ADVANCES
LOSSES IN TO PARTNERSHIPS
PARTNERSHIPS AND AND JOINT
JOINT VENTURES VENTURES
1998 1999 1998 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Civic Parking, LLC $ 14,907 $ 14,439 $ -- $
Commerce Street Joint Venture (872) (898) 721 688
Larimer Square Parking Associates 1,007 1,003 2,212 2,022
12 West 48th Street, LLC 8,585 -- -- --
Lodo Parking Garage 1,230 1,200 -- --
Arizona Stadium Parking Garage LLC 1,505 1,540 -- --
CPS Mexico 976 1,615 2,313 3,222
157166 Canada, Inc. (47) (46) 1,138 1,150
Walnut-12 1,197 932 -- --
Other 5,464 3,995 40 1,356
----------- ----------- ----------- ---------
$ 33,952 $ 23,780 $ 6,424 $ 8,438
=========== =========== =========== =========
</TABLE>
<TABLE>
<CAPTION>
EQUITY IN PARTNERSHIPS AND JOINT VENTURES
JOINT VENTURES EARNINGS DEBT
1997 1998 1999 1998 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Civic Parking, LLC $ 2,877 $ 2,383 $ 1,844 $ 59,709 $ 59,060
Commerce Street Joint Venture 504 602 584 7,346 7,058
Larimer Square Parking Associates 59 103 164 3,334 3,137
12 West 48th Street, LLC -- 548 510 -- --
Lodo Parking Garage 126 145 203 -- --
Arizona Stadium Parking Garage LLC -- 230 20 1,976 1,969
CPS Mexico 514 505 638 -- --
157166 Canada, Inc. (3) (4) 5 -- --
Walnut-12 143 164 158 -- --
Other 18 570 1,107 4,481 4,343
--------- --------- --------- --------- ---------
$ 4,238 $ 5,246 $ 5,233 $ 76,846 $ 75,567
========= ========= ========= ========= =========
</TABLE>
(a) Civic Parking, LLC
The Company has a 50% joint venture ownership in Civic Parking LLC ("Civic")
which owns four parking garages and retail space in St. Louis Missouri. The
Company's results of operations include 50% of the net earnings of Civic for the
periods presented.
In March 1998, Civic obtained financing with a financial institution for
approximately $60 million. Civic distributed the loan proceeds to its
shareholders, and as a result, Central Parking received in 1998 net proceeds of
$30.3 million from this transaction, which reduced the Company's carrying value
of its investment in partnerships and joint ventures. Unaudited summary
information for Civic Parking is as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998 1999
-------------------------------------
<S> <C> <C>
Financial position:
Land, property and equipment, net $ 89,124 $ 88,304
Cash 1,662 1,121
Other assets 108 344
Liabilities (60,932) (60,567)
------------- -------------
Net assets $ 29,962 $ 29,202
============= =============
</TABLE>
56
<PAGE> 36
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1998 1999
-------------------------------------
<S> <C> <C>
Results of operations:
Revenue $ 9,241 $ 10,038
Cost of operations 4,649 6,704
------------- -------------
Net earnings $ 4,592 $ 3,334
Distributions to Central Parking $ 32,910 $ 2,313
============= =============
</TABLE>
(b) Commerce Street Joint Venture Realty
Commerce Street Joint Venture Realty, a subsidiary of Central Parking
Corporation, 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 $8.6 million (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 rate terms.
Also included in investments in and advances to partnerships and joint
ventures are the Series B Bonds purchased in April 1994 relating to the Commerce
Street Joint Venture in the amounts of $743 thousand and $716 thousand at
September 30, 1998 and 1999, respectively. The Bonds require monthly interest
and principal payments at the index rate (prime) plus 250 basis points (11% at
September 30, 1999) through 2009. 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. The remainder of the
Series B Bonds are owned by the other joint venture partner.
(c) Larimer Square Parking Associates
The Company owns a 50% interest in a joint venture that owns 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 thousand in the joint venture and loaned the joint venture $1.1 million in
the form of a construction note, bearing interest at 9.5%, which was converted
to a term note in August 1996, following completion of the project. An
additional $1.4 million 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) 12 West 48th Street, LLC
In connection with the Kinney acquisition, the Company acquired a 40%
interest in a limited liability company which owns and operates a garage and two
adjacent buildings in New York City. Kinney's carrying value of $4.4 million was
increased by $3.8 million to reflect the estimated fair value of the
partnership's underlying net assets. During 1999, the Company purchased the
remaining 60% interest in the limited liability company for $20.5 million in
cash. The previous partner will continue to manage the garage for the next seven
years.
(e) Lodo Parking Garage, LLC
In March 1995, the Company acquired a 50% interest in a joint venture which
holds a parking complex in Denver, Colorado. The Company invested $1.4 million
in the joint venture and manages the parking facility for the joint venture.
(f) Arizona Stadium Parking Garage, LLC
The Company owns a 50% interest in a joint venture which constructed the
Arizona Diamondback Stadium Parking Garage. The Company operates this parking
facility for the joint venture. The Company purchased the remaining interest in
this partnership in November 1999 for $1.5 million.
57
<PAGE> 37
(g) CPS Mexico, Inc.
The Company holds 50% interest in a Mexican joint venture which manages and
leases various parking structures in Mexico. The Company also has advanced $2.3
and $3.2 million at September 30, 1998 and 1999, respectively, to the affiliate.
These loans bear interest between 10% and 15% and require principal payments
over various terms through 2001.
(h) 157166 Canada, Inc.
In September 1998, the Company acquired a 50% interest in a Canadian joint
venture which holds a parking facility in Montreal, Quebec. The Company operates
this parking facility for the joint venture.
(8) LONG TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long term debt and capital lease obligations consisted of the following (in
thousands):
<TABLE>
<CAPTION>
As of September 30,
1998 1999
--------------------------
<S> <C> <C>
New Credit Facility
Term note payable $ -- $ 200,000
Revolving credit facility -- 149,100
Previous Credit Facility
Term note payable -- --
Revolving credit facility 48,150 --
Allright Facilities
CSFB Term Loans 184,954 --
Permitted Acquisition Loan 31,260 --
Other notes payable 8,048 6,715
Capital lease obligations 13,788 13,348
-------- ----------
Total 286,200 369,163
Less: current maturities of long term obligations (2,881) (31,682)
-------- ----------
Total long term obligations $283,319 $ 337,481
======== ==========
</TABLE>
On March 19,1999, the Company established a new credit facility (the "New
Credit Facility") providing for an aggregate availability of up to $400 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 $200 million
five-year term loan. The principal amount of the term loan shall be repaid in
quarterly payments of $12.5 million commencing June 30, 2000 and continuing
until the loan is repaid. Interest is payable on borrowings under the New Credit
Facility, at the election of the Company, at either a "Base Rate" or a
"Eurodollar Rate" (each as defined in the New Credit Facility agreement), plus a
grid based margin based upon the Company achieving certain financial ratios
(prior to and including June 30,1999, borrowings under the New Credit Facility
were fixed at either prime rate plus 0.5% or LIBOR plus a margin of 1.125%). The
Company used the New Credit Facility to replace the Company's previous credit
facility and to refinance the existing debt of Allright. The amount outstanding
under the Company's New Credit Facility as of September 30, 1999 is $349.1
million with a weighted average interest rate of 6.45% as of September 30, 1999.
The New Credit Facility contains covenants including those that require the
Company to maintain certain financial ratios, restrict further indebtedness and
limit the amount of dividends paid. On December 28, 1999 the Company entered
into an amendment and waiver to the New Credit Facility agreement relating to
the waiver of non-compliance with certain loan covenants at September 30, 1999.
This amendment and waiver contains, among other things, provisions for up-front
fees of 0.125%. Interest rates are not be affected by the amendment and will
continue to be based upon the existing grid and determined based on certain
financial ratios, as amended.
The Company is required under the New Credit Facility to enter into certain
interest rate protection agreements designed to fix interest rates on variable
rate debt and reduce exposure to fluctuations in interest rates. On October
58
<PAGE> 38
27, 1999 the Company entered into a $25 million interest rate swap for a term of
four years, cancelable after two years at the option of the counterparty, under
which the Company will pay to the counterparty a fixed rate of 6.16%, and the
counterparty will pay to the Company a variable rate equal to LIBOR. The
transaction involved an exchange of fixed rate payments for variable rate
payments and do not involve the exchange of the underlying nominal value.
The Company had previously established a credit facility (the "Previous
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 $100 million term loan was repaid with proceeds from securities
offerings completed in March 1998, and the remaining balance of the revolving
credit facility was repaid with proceeds from the New Credit Facility.
In October 1996, Allright entered into a credit agreement for the purpose
of financing the purchase of Allright Corporation ("CFSB Term Loan").
Additionally, in October 1996, Allright defeased all of its Industrial
Development Revenue Bonds (IRBs) in the amount of $17.9 million and recorded an
extraordinary loss of $1.0 million, net of tax. At September 30, 1999,
approximately $15.0 million of the IRB's remain outstanding in a trust secured
by U.S. Treasury Bills which were used to defease these instruments. The credit
facility was obtained in two tranches with two sub-portions to the first
tranche. The first tranche, sub-part A of $30 million, bore an annual interest
rate of one month LIBOR plus 3.00% through October 30, 1998, and LIBOR plus
3.25% thereafter. The first tranche, sub-part B of $125 million bore an annual
interest rate of LIBOR plus 3.00% through October 31, 1998, and LIBOR plus 3.25%
thereafter. The second tranche, of $30 million, bore an annual interest rate of
12.25% up to October 30, 1998, and 12.5% thereafter. All tranches were set to
mature October 30, 1999. These obligations were repaid upon consummation of the
merger of Allright and the Company from proceeds of the New Credit Facility,
described above. In connection with the repayment of such amounts, the Company
recognized an extraordinary loss of $1.0 million, net of tax.
Allright had a revolving line of credit (Permitted Acquisition Loan) with a
maximum borrowing capacity of $75 million, maturing October 30, 1999. The
Permitted Acquisition Loan provided for interest per annum equal to LIBOR plus
3.75 percent on outstanding borrowings. Allright also had a revolving line of
credit and letter of credit agreement ("revolver") with a maximum borrowing
capacity of $5.1 million, maturing October 1, 1999. The revolver provided 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 revolver and
permitted acquisition facilities were terminated in conjunction with the merger.
In addition to the Credit Facility, the Company also has several notes
payable outstanding totaling $6.7 million, which are secured by related real
estate and equipment and bear interest at rates ranging from 6.1% to 10.0%.
These balances mature from dates in 1999 to 2021. Future maturities under these
notes payable are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
----------------
<S> <C> <C>
2000 $ 2,683
2001 397
2002 355
2003 390
2004 426
Thereafter 2,464
----------------
$ 6,715
================
</TABLE>
In connection with the Kinney acquisition, the Company assumed an agreement
whereby a parking structure and the corresponding land upon which it sits are
leased under a long-term arrangement. The parking structure is accounted for as
a capital lease, and the underlying land is accounted for as an operating lease.
The original agreement called for lease payments over a twenty-year term at a
17.4% interest rate. In connection with purchase accounting, the carrying value
of the related obligation was recorded at fair value. The carrying amount of the
capital lease obligation at September 30, 1999 was $7.9 million, bearing
interest at a rate of 8.0% per annum and requiring monthly payments of
approximately $167,000 per month. The operating lease requires a payment of
59
<PAGE> 39
approximately $183,000 per month. The lease agreements run through December
2003.
The future minimum lease payments under all capital lease obligations are
as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER
<S> <C> <C>
2000 $ 4,991
2001 3,616
2002 3,214
2003 2,605
2004 814
Thereafter 1,742
-------------
16,982
Less interest portion at rates ranging from
6.1% to 10% (3,635)
Less current portion (3,999)
-------------
$ 9,348
=============
</TABLE>
(9) CONVERTIBLE TRUST ISSUED PREFERRED SECURITIES OFFERINGS
On March 18, 1998, 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 $106.5 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 Company's consolidated balance sheets reflect the Preferred Securities
of the Trust as company-obligated mandatorily redeemable convertible securities
of subsidiary holding solely parent debentures.
(10) SHAREHOLDERS' EQUITY
On March 13, 1998, the Company completed a secondary public offering of
common stock in which 2,137,500 shares were sold which generated net proceeds to
the Company of $89.1 million.
On November 21, 1997 the Company's Board of Directors approved a
three-for-two stock split which was 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.
In connection with Allright's acquisition of Allright Corporation in
October 1996, warrants to purchase 1,177 shares of Allright common stock at
$0.01 exercise price were issued. The fair value of the warrants on the date of
grant, estimated at $1,177,000, was recorded as additional purchase
consideration in the formation of Allright. As a result of the Company's merger
with Allright, such warrants represent rights to acquire 103,148 shares of
Central Parking common stock.
Effective October 1, 1997, the Company adopted the provisions of SFAS No.
128. SFAS No. 128 replaced the
60
<PAGE> 40
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.
The following tables set forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1998 SEPTEMBER 30, 1999
Income Common Income Common Income Common
Available Shares Per-share Available Shares Per-share Available Shares Per-share
($000's) (000's) Amount ($000's) (000's) Amount ($000's) (000's) Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic earnings per
share before
extraordinary item $18,686 30,070 $0.62 $26,145 34,618 $0.76 $4,684 36,349 $0.13
Effects of dilutive
stock and options:
Stock option plan
and warrants -- 210 (.01) -- 474 (0.02) -- 466 --
Restricted stock plan -- 185 -- -- 172 -- -- 173 --
Deferred stock unit plan -- -- -- -- 9 -- -- 30 --
Employee stock
Purchase plan -- 47 -- -- 39 -- -- 38 --
------- ------ ----- ------- ------ ----- ------ ------ -----
Diluted earnings per
share before
extraordinary item $18,686 30,512 $0.61 $26,145 35,312 $0.74 $4,684 37,056 $0.13
======= ====== ===== ======= ====== ===== ====== ====== =====
</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 and deferred compensation agreement, because under the
related agreements the holders of restricted stock will forfeit such shares if
certain employment or service requirements are not met. 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 were anti-dilutive for all periods. At
September 30, 1999, such securities were convertible into 2,000,000 shares of
common stock. Options to acquire 481,573 shares of common stock were excluded
from the 1999 diluted earnings per share calculation because they were
antidilutive.
(11) 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 2101.
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 and subleases are as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------
Fixed Sub-rental Net
Rent Income Rent
------------------------------------------------
<S> <C> <C> <C>
2000 $ 196,116 $ 5,734 $ 190,382
2001 165,201 4,681 160,520
2002 135,256 3,664 131,592
2003 111,678 3,350 108,328
2004 92,278 2,779 89,499
Thereafter 622,379 8,008 614,371
------------ ----------- -------------
Total future operating lease commitments $ 1,322,908 $ 28,216 $ 1,294,692
============ =========== =============
</TABLE>
61
<PAGE> 41
Rental expense for all operating leases and rental income from subleases are
reflected in cost of parking and were as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER
1997 1998 1999
----------------------------------------------
<S> <C> <C> <C>
Rentals:
Minimum $ 108,169 $ 206,241 $ 237,684
Contingent 36,131 60,989 75,732
----------- ---------- -----------
Total rent expense 144,300 267,230 313,416
Less sub-lease income 4,809 8,433 12,706
----------- ----------------------------
Total rent expense, net $ 139,491 $ 258,797 $ 300,710
=========== ========== ===========
</TABLE>
(12) INCOME TAXES
Income tax expense consists of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER
1997 1998 1999
----------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 9,940 $ 13,593 $ 12,781
Jobs credit, net of federal tax benefit (98) (247) (325)
----------- ---------- ------------
Net federal current tax expense 9,842 13,346 12,456
State 1,940 3,251 1,355
Non-U.S 894 999 1,612
----------- ---------- ------------
12,676 17,596 15,423
Deferred:
Federal and state 366 2,780 (3,043)
Non-U.S. (31) (3) --
----------- ---------- ------------
335 2,777 (3,043)
----------- ---------- ------------
Total income tax expense from continuing operations $ 13,011 $ 20,373 $ 12,380
=========== ========== ===========
</TABLE>
Total income taxes are allocated as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER
1997 1998 1999
----------------------------------------------
<S> <C> <C> <C>
Income tax expense from continuing operations $ 13,011 $ 20,373 $ 12,380
Acquisition related expenses for tax purposes
in excess of amounts recognized for financial
reporting purposes (1,423) (1,467) (707)
Shareholders' equity, for compensation expense for
tax purposes in excess of amounts recognized for
financial reporting purposes (213) (568) (635)
Extraordinary item (502) -- (587)
----------- ---------- -----------
Total income taxes $ 10,873 $ 18,338 $ 10,451
=========== ========== ===========
</TABLE>
Provision has not been made for U.S. or additional foreign taxes on
approximately $11.9 million, $12.1 million and $14.8 million at September 30,
1997, 1998, and 1999, respectively, of undistributed earnings of foreign
subsidiaries, as those earnings are intended to be permanently reinvested.
A reconciliation between actual income taxes and amounts computed by
applying the federal statutory rate to earnings before income taxes and
extraordinary item is summarized as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended September 30,
1997 1998 1999
$ % $ % $ %
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Federal statutory rate on earnings before
income taxes and extraordinary loss $ 11,094 35.0% $ 16,281 35.0% $ 5,972 35.0%
State and city income taxes, net of federal
</TABLE>
62
<PAGE> 42
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
income tax benefits 1,296 4.1 2,113 4.5 881 5.2
Jobs credits, net of federal tax benefit (98) -0.3 (247) -0.5 (325) -1.9
Non-deductible goodwill amortization 524 1.7 2,598 5.6 3,438 20.1
Non-deductible merger costs -- -- -- -- 3,820 22.4
Other 195 0.5 (372) -0.8 (1,406) -8.3
--------------------------------------------------------------
Income tax expense from continuing operations $ 13,011 41.0% $ 20,373 43.8% $ 12,380 72.5
==============================================================
</TABLE>
Sources of deferred tax assets and deferred tax liabilities are as follows (in
thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998 1999
----------------------------
<S> <C> <C>
Deferred tax assets:
Deferred compensation expense $ 6,182 $ 6,105
Accrued expenses and reserves 104 25
Prepaid expenses 333 288
Charitable contribution of property 1,922 696
Net operating loss carry forwards 19,990 21,200
Capitalized leases 2,554 2,396
Tax credit carry forwards 587 849
Temporary differences related to Edison and its management contracts 702 4,030
Deferred and capitalized expenses 4,635 5,518
Other 462 397
---------- -----------
Total gross deferred tax assets 37,471 41,504
Deferred tax liabilities:
Deferred tax gain on sales of properties (1,367) (1,367)
Deferred installment gain on sale of property (2,019) (2,019)
Timing differences in recognition of partnership earnings (702) (590)
Accrued expenses and reserves -- (833)
Property, plant and equipment, due to differences in
depreciation and purchase business combinations (47,923) (46,402)
Other (446) (384)
---------- -----------
Total gross deferred tax liabilities (52,457) (51,595)
Valuation allowance on net operating loss carry forwards (17,363) (17,364)
---------- -----------
Net deferred tax liabilities $ (32,349) $ (27,455)
========== ===========
</TABLE>
As of September 30, 1999, the Company has Federal net operating loss carry
forwards of approximately $46.1 million, state and city net operating loss carry
forwards of approximately $76.5 million, and foreign net operating loss carry
forwards of approximately $0.5 million which expire between 2002 and 2014. The
ability of the Company to fully utilize these net operating losses is limited
due to changes in ownership of the companies which generated these losses. These
limitations have been considered in determining the deferred tax asset valuation
allowance shown above. Management believes that it is more likely than not that
the results of operations will generate sufficient taxable income to realize
deferred tax assets after giving consideration to the valuation allowance. The
valuation allowance has been provided for loss carry forwards for which
recoverability is not deemed to be more likely than not.
(13) EMPLOYEE BENEFIT PROGRAMS
(a) Stock Plans
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 2,317,500 common shares have been reserved for issuance
under these two plans combined. Options representing 1,145,546 shares are
outstanding under this plan at September 30, 1999. 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, 1999, 279,311 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.
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-
63
<PAGE> 43
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
211,500 shares are outstanding under this plan at September 30, 1999.
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, 1999, 175,400 shares had been issued under this
plan.
As part of the transactions effecting the formation of Allright in October
1996, management of the Allright Corporation was granted an effective interest
equal to $5.5 million. $1.7 million of this commitment was granted in October
1996.
Effective January 1, 1998, the 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 Allright's board of directors could fulfill the commitment made to
management of Allright Corporation, the predecessor company. Effective May 20,
1998, 1,605 incentive stock options (ISOs) were issued to management of Allright
to purchase 1,605 shares of Allright's common stock at a 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. One-third of the ISOs vested on
May 20, 1998, one-third on January 1, 1999, and the remaining third will vest
on January 1, 2000. The ISOs expire January 1, 2008. In connection with the
merger, these options were converted into options to purchase 140,657 shares of
Central Parking common stock.
In February 1997, stock options to purchase 2,917 shares of Allright's
common stock were granted to an executive of Allright 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 connection with
the merger, these options were converted into options to purchase 255,636 shares
of Central Parking common stock.
In July 1997, stock options to purchase 740 shares of common stock were
granted to an executive of Allright at an option price per share above market on
the date of grant. The options were scheduled to vest 25 percent on July 25,
1998, 1999, 2000 and 2001. In connection with the merger, these options were
converted into options to purchase 64,851 shares of Central Parking common
stock.
Based on the terms in the respective agreements, all options to acquire
Allright's common stock outstanding at June 30, 1999 accelerated at various
rates due to the consummation of the merger between Allright and Central
Parking.
The following table summarizes the transactions pursuant to the Company's
stock option plans for the last three fiscal years:
<TABLE>
<CAPTION>
NUMBER OPTION PRICE
OF SHARES RANGE PER SHARE
---------------------------------------------------------------------------------------------------------
Outstanding at September 30, 1996 319,425 $8.00 to $21.67
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Granted 537,609 $12.55 to $30.50
Exercised 45,525 $8.00
Canceled 18,000 $21.25
----------------------------------------------------------------------------------------------------------
Outstanding at September 30, 1997 793,509 $8.00 to $30.50
----------------------------------------------------------------------------------------------------------
Granted 587,155 $19.40 to $51.06
Exercised 52,370 $8.00 to $22.50
Canceled 53,250 $21.25 to $43.44
---------------------------------------------------------------------------------------------------------
Outstanding at September 30, 1998 1,275,044 $8.00 to $51.06
----------------------------------------------------------------------------------------------------------
Granted 330,370 $27.75 to $50.38
Exercised 174,836 $8.00 to $32.54
Canceled 73,532 $21.25 to $50.38
---------------------------------------------------------------------------------------------------------
Outstanding at September 30, 1999 1,357,046 $8.00 to $51.06
----------------------------------------------------------------------------------------------------------
</TABLE>
64
<PAGE> 44
At September 30, 1999, options to purchase 853,601 shares of common stock
were exercisable at a weighted average exercise price of $20.32. Such options
had a weighted average remaining contractual life of 7.8 years.
The range of exercise prices per share for such options was $8.00 to $51.06.
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>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1997 1998 1999
----------------------------------------------------
<S> <C> <C> <C>
As reported:
Net income (in thousands) $ 17,654 $ 26,145 $ 3,682
Basic earnings per share 0.59 0.76 0.10
Diluted earnings per share 0.58 0.74 0.10
Pro Forma - SFAS 123
Net income (in thousands) $ 16,462 $ 23,114 $ 1,807
Basic earnings per share 0.55 0.67 0.05
Diluted earnings per share 0.54 0.65 0.05
</TABLE>
The estimated weighted average fair value of the options granted were
$8.64 for 1997 option grants, $12.00 for 1998 option grants, and $16.02 for
1999 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 37%, 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.
(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 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.
A trusteed noncontributory profit sharing plan covered substantially all of
the employees of Allright and was merged with the Company's existing profit
sharing plan effective July 1, 1999.
Employer expense associated with these plans was $1.8 million, $2.8
million, and $2.3 million in years 1997, 1998, and 1999, 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 $5.2 million, $5.8 million, and $5.0 million
in years 1997, 1998 and 1999, respectively.
(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
65
<PAGE> 45
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 thousand 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 thousand until his death and, in the event his wife
survives him, she is entitled to annual payments of $300 thousand 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.
Compensation expense associated with these agreements was approximately $88
thousand, $330 thousand, and $370 thousand in fiscal years 1997, 1998 and 1999,
respectively.
Agreements with certain former key executives of Allright provide for
aggregate annual payments ranging from $20 thousand to $144 thousand 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 $9.3 million have been purchased to fund, as necessary, the
benefits under these agreements. The cash surrender value of the life insurance
contracts is approximately $1.1 million and $1.5 million at June 30, 1998 and
September 30, 1999, respectively, and is included in other non-current assets.
The plan is a nonqualified plan and is not subject to ERISA funding
requirements. Net deferred compensation costs for 1997, 1998 and 1999 were $316
thousand, $494 thousand and $557 thousand, respectively. At September 30, 1999,
the Company had recorded a liability of $7.4 million for accrued pension costs
associated with this plan. 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%.
(e) Deferred Unit Plan
On December 19, 1996, the Board of Directors approved the adoption of the
Company's Deferred Stock Unit Plan. Under the plan, certain key employees 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, 1999 $1.1 million of compensation has been deferred under
this plan.
(f) Employment Agreements
In connection with the Allright merger, Allright and the Company entered
into various employment agreements with employees of Allright. These agreements
included (a) retention payments to be made at the closing date of the merger if
the individuals were still employees at such date, (b) two-year employment
agreements, 50% of each employee's benefit thereunder to be paid at the closing
date of the merger and the other 50% to be paid two years after such date,
assuming the individuals were still employed with the Company, and (c)
continuity benefits which were to be paid six months after the closing date of
the merger, assuming the individuals were still employed at such date. As of
September 30, 1999, payments made under these agreements total $9.3 million.
Accrued and unpaid amounts related to the second installment of the two-year
employment agreements totaled $300 thousand at September 30, 1999. All expenses
associated with these agreements have been recognized in fiscal 1999, except for
66
<PAGE> 46
the unearned portion of the second installment of the two-year employment
agreements ($700 thousand).
(14) RELATED PARTIES
The Company leases two properties from an entity 50% owned by the Company's
chairman for $290 thousand per year for a 10-year term and pays percentage rent
to the entity. Total rent expense, including percentage rent, was $354 thousand,
$442 thousand, and $531 thousand in 1997, 1998 and 1999, respectively. The
Company will receive 25% of the gain in the event of a sale of these properties
during the term of the lease pursuant to the lease agreements. 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.
In connection with the acquisition of Kinney, the Company entered into a
consulting agreement with a director of the Company. The Company paid $200
thousand to the director pursuant to this agreement during fiscal 1999.
Additionally, the Company has entered into a limited partnership agreement with
the same director whereby the director has agreed to seek new business
opportunities in the form of leases and management contracts and renewals of
existing leases and contracts as requested by the Company. During the
fiscal year ended September 30, 1999, the Company paid or accrued approximately
$418 thousand to the director in connection with this agreement.
(15) 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 various dollar amounts, subject to annual aggregate limits.
In connection with the initial formation of Allright and its acquisition of
Allright Corporation (predecessor company), Nedinco Delaware Incorporated
("Nedinco") and Hang Lung Development Company Ltd. agreed to indemnify Allright
for certain costs and liabilities incurred in connection with or arising out of
Allright's Corporation's operations prior to October 31, 1996. A $25 million
letter of credit supports this indemnification.
(16) SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments made for interest and income taxes were as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1997 1998 1999
----------------------------------------------
<S> <C> <C> <C>
Interest $ 14,837 $ 27,516 $ 32,971
Income tax 12,231 17,901 12,181
</TABLE>
(17) BUSINESS SEGMENTS
The Company's business activities consist of domestic and foreign
operations. Foreign operations are conducted primarily in the United Kingdom,
Canada, and Ireland. The Company also conducts business through joint ventures
in Mexico, Germany, Poland, Spain and Chile. Revenues attributable to foreign
operations were less than 10% of consolidated revenues for each of fiscal years
1997, 1998 and 1999. In 1999, the United Kingdom and Canada account for 62.5%
and 34.1% of total foreign revenues, respectively. Therefore, the Company
includes all foreign operations in a single reporting segment.
67
<PAGE> 47
A summary of information about the Company's operations by segments is as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER
1997 1998 1999
----------------------------------------------
<S> <C> <C> <C>
Total revenues:
Domestic $ 312,719 $ 566,472 $ 702,260
Foreign 26,218 33,927 34,201
----------- ----------- -----------
Consolidated $ 338,937 $ 600,399 $ 736,461
=========== =========== ===========
Operating earnings:
Domestic $ 37,798 $ 68,140 $ 31,370
Foreign 2,628 3,512 5,089
----------- ----------- -----------
Consolidated $ 40,426 $ 71,652 $ 36,459
=========== =========== ===========
</TABLE>
<TABLE>
Earnings before income taxes and extraordinary item:
<S> <C> <C> <C>
Domestic $ 28,858 $ 42,801 $ 10,999
Foreign 2,839 3,717 6,065
----------- ----------- -----------
Consolidated $ 31,697 $ 46,518 $ 17,064
=========== =========== ===========
Identifiable assets:
Domestic $ 587,594 $ 935,210 $ 1,040,644
Foreign 11,099 18,812 23,933
----------- ----------- -----------
Consolidated $ 598,693 $ 954,022 $ 1,064,577
=========== =========== ===========
</TABLE>
The Company is managed based on segments administered by senior vice
presidents. These segments are generally organized geographically, with
exceptions depending on the needs of specific regions. The following is a
summary of revenues, costs, and other expenses by segment for the year ended
September 30, 1999. It is impractical for the Company to report such segment
information for prior years due to the numerous acquisitions in those periods,
the Allright merger, and the Company's computer conversions in 1999 (in
thousands).
<TABLE>
<CAPTION>
All others
One Two Three Four Five Int'l & gen'l Corp Total
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Parking revenue $ 90,371 $ 268,802 $95,177 $101,772 $61,832 $27,121 $ -- $ 645,075
Management contract 16,814 22,616 16,733 12,573 15,570 7,080 -- 91,386
-------------------------------------------------------------------------------------
Total revenues 107,185 291,418 111,910 114,345 77,402 34,201 -- 736,461
Cost of parking 78,782 214,816 83,244 85,252 54,043 25,020 -- 541,157
Cost of management 4,878 7,424 7,409 4,383 3,985 (339) -- 27,740
General & admin, goodwill,
impairment and merger costs 11,311 34,614 14,130 9,763 8,591 4,431 48,265 131,105
-------------------------------------------------------------------------------------
Operating earnings 12,214 34,564 7,127 14,947 10,783 5,089 (48,265) 36,459
Interest income/(expense)/
dividends, net (295) (18,325) (2,640) (308) (647) (138) (3,885) (26,238)
Gains / losses 4,222 4,222
Minority interest -- (2,612) -- -- -- -- -- (2,612)
Equity in partnerships and
joint ventures 746 -- -- -- 139 1,114 3,234 5,233
---------------------------------------------------------------------
Earnings before income tax
and extraordinary items 12,665 13,627 4,487 14,639 10,275 6,065 (44,694) 17,064
Income tax 12,380
------
Net earnings before
extraordinary items 4,684
Extraordinary items,
net of tax (1,002)
------
Net earnings 3,682
=====
Identifiable assets $ 52,514 $ 352,937 $84,489 $ 32,805 $42,366 $23,933 $475,533 $1,064,577
=====================================================================================
</TABLE>
Segment One encompasses the western region of the United States, including West
Texas, and Louisiana.
Segment Two encompasses the northeastern region of the United States, including
New York, New Jersey, Eastern Pennsylvania, and New England.
Segment Three encompasses the southeastern region of the United States, and also
includes Washington D.C.
68
<PAGE> 48
Segment Four encompasses parts of the mid-western region of the United States,
and also includes upstate New York. The executive responsible for Segment
Four administers parts of Canada as well.
Segment Five encompasses the inter-mountain region of the United States,
including Northern Texas and parts of the Mid-west.
69
<PAGE> 1
Exhibit 21
CENTRAL PARKING CORPORATION & SUBSIDIARIES
FEIN 62-1052916
FOR YEAR ENDING 9/30/99
ALL CORPORATION HAVE THE FOLLOWING ADDRESS:
2401 21ST AVE SOUTH #200
NASHVILLE, TN 37212
<TABLE>
<CAPTION>
STATE/COUNTRY
NUMBER OF INCORPORATION COMPANY NAME
- ----------------------------------------------------------------------------------------
<S> <C>
1 UK CENTRAL PARKING SYSTEM OF UK, LTD.
2 GERMANY CENTRAL PARKING SYSTEM DEUTSCHLAND, GMBH
3 CZECH REPUBLIC CENTRAL PARKING SYSTEM OF THE CZECH REPUBLIC, S.R.O.
4 UK CONTROL PLUS PARKING SYSTEM OF UK, LTD.
5 MEXICO SERVICIOS CORPORATIVOS PARA ESTACIONAMIENTOS, S.A. DE C.V.
6 MEXICO CENTRAL PARKING SYSTEM OF MEXICO, S.A. DE C.V.
7 CANADA 774201 ONTARIO, INC.
8 CANADA 811462 ONTARIO, INC.
9 CANADA CENTRAL PARKING SYSTEM OF CANADA, INC.
10 CANADA ALLRIGHT AUTO PARKS CANADA, INC.
11 CANADA IDEAL PARKING, INC.
12 CANADA 157166 CANADA, INC.
13 BRITISH COLUMBIA ALLRIGHT PARK VANCOUVER LTD.
14 IRELAND CENTRAL PARKING SYSTEM IRELAND LIMITED
15 SPAIN CENTRAL PARKING SYSTEM ESPANA, S.A.
16 POLAND CENTRAL PARKING SYSTEM POLAND LIMITED
17 TN CENTRAL PARKING SYSTEM, INC
18 TN CENTRAL PARKING SYSTEM REALTY, INC
19 TN CENTRAL PARKING SYSTEM OF ST. LOUIS, INC.
20 TN CENTRAL PARKING SYSTEM OF KANSAS CITY, INC.
21 TN CENTRAL PARKING SYSTEM OF KENTUCKY, INC.
22 TN CENTRAL PARKING SYSTEM - AIRPORT SERVICES, INC.
23 TX CENTRAL PARKING SYSTEM OF TEXAS, INC.
24 TN CENTRAL PARKING SYSTEM OF OKLAHOMA, INC.
25 TN CENTRAL PARKING SYSTEM OF LOUISIANA, INC.
26 TN CENTRAL PARKING SYSTEM OF PENNSYLVANIA, INC.
27 TN CENTRAL PARKING SYSTEM OF FLORIDA, INC.
28 TN CENTRAL PARKING SYSTEM OF MARYLAND, INC.
29 TN CENTRAL PARKING SYSTEM OF VIRGINIA, INC.
30 TN CENTRAL PARKING SYSTEM OF GEORGIA, INC.
31 TN CENTRAL PARKING SYSTEM OF IOWA, INC.
32 TN CENTRAL PARKING SYSTEM OF RHODE ISLAND, INC.
33 TN CENTRAL PARKING SYSTEM OF WISCONSIN, INC.
34 TN CENTRAL PARKING SYSTEM OF OHIO, INC.
35 TN CENTRAL PARKING SYSTEM OF ALABAMA, INC.
36 TN CENTRAL PARKING SYSTEM OF WASHINGTON, INC.
37 TN CENTRAL PARKING SYSTEM OF TENNESSEE, INC.
38 TN CENTRAL PARKING SYSTEM OF MISSISSIPPI, INC.
39 TN CENTRAL PARKING SYSTEM OF ILLINOIS, INC.
40 TN CENTRAL PARKING SYSTEM OF CONNECTICUT, INC.
41 TN CENTRAL PARKING SYSTEM OF NEW YORK, INC.
42 TN CENTRAL PARKING SYSTEM OF MASSACHUSETTS, INC.
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
43 TN CENTRAL PARKING SYSTEM OF PUERTO RICO, INC.
44 IN CENTRAL PARKING SYSTEM OF INDIANA, INC.
45 TN CENTRAL PARKING SYSTEM OF NEW ORLEANS, INC.
46 TN SHERIDAN HERITAGE DEVELOPMENT CORP.
47 TN LARIMER DEVELOPMENT CORP.
48 TN CPC FINANCE OF TENNESSEE, INC.
49 TN CENTRAL PARKING SYSTEM OF ASIA, INC.
50 TN CENTRAL PARKING SYSTEM OF NORTH CAROLINA, INC.
51 TN CENTRAL PARKING SYSTEM OF SOUTH CAROLINA, INC.
52 TN CENTRAL PARKING SYSTEM REALTY OF MISSOURI, INC
53 TN CENTRAL PARKING SYSTEM REALTY OF NEW YORK, INC
54 TN DENVER BASEBALL STADIUM GARAGE
55 DC DIPLOMAT PARKING CORPORATION
56 NY 12 WEST 48TH STREET CORP.
57 NY 38 WEST PARKING CORP.
58 NY HARMUR ENTERPRISES, INC.
59 NY HSM MANAGEMENT, INC.
60 CA KINCAL, INC.
61 NY KINNEY - 40TH ST. INC
62 NY KINNEY - 9TH STREET, INC.
63 NY KINNEY - CARS, INC.
64 NY KINNEY - CIVIC CENTER, INC.
65 NY KINNEY - GUNHILL, INC.
66 PA KINNEY - KENNEDY BOULEVARD, INC.
67 NJ KINNEY - MARINA, INC.
68 NJ KINNEY - PATH, INC.
69 NJ KINNEY - PAVONIA, INC.
70 DC KINNEY 1225 19TH ST., INC.
71 NY KINNEY 345 W. 58TH ST., INC.
72 NY KINNEY 360 E. 65TH ST., INC.
73 NY KINNEY 444 TENTH AVE., INC.
74 PA KINNEY AIRPORT PARKING, INC.
75 MA KINNEY BATTERY WHARF, INC.
76 NJ KINNEY BOARDWALK OF ATLANTIC CITY, INC.
77 DC KINNEY CAPITAL, INC.
78 MA KINNEY CUSTOM HOUSE, INC.
79 NY KINNEY DELTA CORP.
80 PA KINNEY DEVELOPMENT, INC.
81 FL KINNEY DUPONT PLAZA, INC.
82 NY KINNEY EAST 75TH STREET, INC.
83 NJ KINNEY EAST KINNEY, INC.
84 PA KINNEY GARAGES DEVELOPMENT, INC.
85 NJ KINNEY GARAGES OF ATLANTIC CITY, INC.
86 MD KINNEY GARAGES OF MARYLAND INC.
87 NJ KINNEY GARDEN STATE, INC.
88 NJ KINNEY HACKENSACK, INC.
89 NJ KINNEY HALSEY STREET, INC.
90 NJ KINNEY HOBOKEN AT OBSERVER HIGHWAY, INC.
91 DC KINNEY HOTEL SYSTEM, INC.
92 PA KINNEY INDEPENDENCE MALL, INC.
93 NJ KINNEY INTERNATIONAL INC.
94 NY KINNEY JOHNSON AVENUE, INC.
95 NJ KINNEY LOMBARDY STREET, INC.
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
96 NY KINNEY LONDON TERRACES, INC.
97 NJ KINNEY LONG BRANCH, INC.
98 PA KINNEY LUDLOW ST., INC.
99 NJ KINNEY MAXWELL, INC.
100 MA KINNEY METROPOLITAN OF BOSTON, INC.
101 NY KINNEY METROPOLITAN TOWER, INC.
102 NJ KINNEY MONROE, INC.
103 NJ KINNEY MONTGOMERY INC.
104 MA KINNEY MYSTIC CENTER, INC.
105 NY KINNEY NORTH MOORE STREET, INC.
106 NY KINNEY OF 18TH ST., INC.
107 NY KINNEY OF AMERICA, INC.
108 NY KINNEY OF ARCHER AVENUE, INC.
109 NJ KINNEY OF ATLANTIC CITY, INC.
110 NJ KINNEY OF BAYONNE, INC.
111 NY KINNEY OF BROOKLYN, INC.
112 NJ KINNEY OF CAMDEN, INC.
113 NJ KINNEY OF EXCHANGE PLACE, INC.
114 FL KINNEY OF HOLLYWOOD BEACH, INC
115 NY KINNEY OF JANE STREET, INC.
116 NJ KINNEY OF JOURNAL SQUARE, INC.
117 KY KINNEY OF KENTUCKY, INC.
118 NY KINNEY OF LONG ISLAND, INC.
119 NY KINNEY OF MULBERRY ST., INC.
120 NJ KINNEY OF NORTHERN NEW JERSEY, INC.
121 VA KINNEY OF NORTHERN VIRGINIA, INC.
122 PA KINNEY OF PENNSYLVANIA INC.
123 PA KINNEY OF PHILADELPHIA, INC.
124 PA KINNEY OF RACE STREET, INC
125 NY KINNEY OF ROOSEVELT, INC.
126 DC KINNEY OF WASHINGTON, INC.
127 NY KINNEY ON 11TH STREET, INC.
128 PA KINNEY ON MARKET ST., INC.
129 NY KINNEY PARKING OF 40TH ST., INC.
130 NJ KINNEY PARKING OF ATLANTIC CITY, INC.
131 MA KINNEY PARKING OF LOWELL, INC.
132 MD KINNEY PARKING OF MARYLAND INC.
133 MA KINNEY PARKING OF MASSACHUSETTS, INC.
134 MA KINNEY PARKING OF SUFFOLK COUNTY, INC.
135 NY KINNEY PARKING OF THE BRONX, INC.
136 VA KINNEY PARKING OF VIRGINIA INC.
137 DC KINNEY PARKING OF WASHINGTON, INC.
138 OH KINNEY PARKING SYSTEM OF DAYTON, INC.
139 NY KINNEY PARKING SYSTEM, INC.
140 DE KINNEY PARKING, INC.
141 NY KINNEY PROMENADE, INC.
142 PA KINNEY SANSOM ST., INC.
143 NJ KINNEY SOMERVILLE, INC.
144 NJ KINNEY SOUTH JERSEY, INC.
145 MA KINNEY ST. JAMES, INC.
146 MA KINNEY SYSTEM - NAHANT, INC.
147 NY KINNEY SYSTEM EASTSIDE PARKING, INC.
148 NY KINNEY SYSTEM HOLDING CORP.
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
149 NY KINNEY SYSTEM MANAGEMENT, INC.
150 NJ KINNEY SYSTEM OF ATLANTIC CITY, INC
151 MD KINNEY SYSTEM OF BALTIMORE INC.
152 MD KINNEY SYSTEM OF BETHESDA INC.
153 MA KINNEY SYSTEM OF BOSTON, INC.
154 CT KINNEY SYSTEM OF CONNECTICUT, INC.
155 DC KINNEY SYSTEM OF D.C. INC.
156 CO KINNEY SYSTEM OF DENVER, INC.
157 DC KINNEY SYSTEM OF FIFTH ST., INC.
158 FL KINNEY SYSTEM OF FLORIDA, INC.
159 NY KINNEY SYSTEM OF GREATER NEW YORK, INC.
160 CT KINNEY SYSTEM OF HARTFORD, INC.
161 NJ KINNEY SYSTEM OF HOBOKEN, INC.
162 MD KINNEY SYSTEM OF MARYLAND, INC.
163 FL KINNEY SYSTEM OF MIAMI, INC.
164 MA KINNEY SYSTEM OF NEW ENGLAND, INC.
165 NJ KINNEY SYSTEM OF NEW JERSEY, INC.
166 NJ KINNEY SYSTEM OF NEWARK, INC.
167 PA KINNEY SYSTEM OF PHILADELPHIA, INC.
168 RI KINNEY SYSTEM OF PROVIDENCE ,INC.
169 MA KINNEY SYSTEM OF PROVINCE STREET INC.
170 MD KINNEY SYSTEM OF ROCKVILLE, INC.
171 MA KINNEY SYSTEM OF SUDBURY ST., INC.
172 DC KINNEY SYSTEM OF WASHINGTON SQUARE, INC.
173 DC KINNEY SYSTEM OF WASHINGTON, INC.
174 MA KINNEY SYSTEM OF WORCESTER INC.
175 DE KINNEY SYSTEM, D.C., INC.
176 DE KINNEY SYSTEM, INC.
177 NY KINNEY TOWER, INC.
178 MA KINNEY TRANSPORTATION, INC.
179 NJ KINNEY UNIVERSITY STREET, INC.
180 MA KINNEY VALET OF MASSACHUSETTS, INC.
181 NY KINNEY VALET PARKING, INC.
182 NY KINNEY VARICK BROADWAY, INC.
183 NY KINNEY WEST 58TH ST., INC.
184 NY KINNEY WEST 83RD ST., INC.
185 NY KINNEY YORK AVENUE, INC.
186 NY LCB PARKING CORP.
187 NY LK 36 ENTERPRISES, INC.
188 NY METROPOLITAN KINNEY INC.
189 NJ MULBERRY STREET PARKING, INC.
190 NY MUNICIPAL KINNEY, INC.
191 NY S&M ENTERPRISES, INC.
192 NY SAMPLE PARKING CORP.
193 DC SARBOV PARKING CORPORATION
194 NY SAS PARKING SERVICES, INC.
195 NY SLATE PARKING CORP.
196 NY SONAR PARKING CORP.
197 NY SPACE PARKING SERVICES, INC.
198 NY SPECIALIZED PARKING SYSTEM, INC.
199 NY SPS PARKING GROUP, INC.
200 NY SPS PARKING SERVICES, INC.
201 NY STOP - PARK GARAGE CORP.
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
202 NY SUTPHIN BLVD. PARKING CORP.
203 DC THE KINNEY CORPORATION
204 NY TRIPLE S PARKING SERVICES, INC.,
205 NY VANDERBILT PARKING CORP.
206 NJ WASHINGTON KINNEY, INC.
207 NY WILKE PARKING ASSOCIATES, LTD.
208 GA SQUARE INDUSTRIES OF ATLANTA
209 NJ CENTRAL PARKING SYSTEM OF NEW JERSEY, INC
210 NY SQUARE PLUS OPERATING CORP
211 PA SQUARE PHILADELPHIA CORP
212 NY SQUARE INDUSTRIES, INC.
213 NY 112 W 25TH ST. SQUARE CORP.
214 NJ 125 HALSEY CORP.
215 PA 12TH & SANSOM PARKING CORPORATION
216 NJ 4 WEST PARK STREET CORP.
217 NJ 400 CARNEGIE AVE CORP.
218 NJ 6 & 8 WEST PARK STREET, INC.
219 NJ 643 BROAD ST. CORP.
220 NY 70 E. 10TH ST. SQUARE CORP.
221 NY 711 WEST END AVE GARAGE CORP.
222 PA 805 SQUARE CORP.
223 NJ 808 SQUARE CORP.(NJ)
224 NY 808 SQUARE CORP.(NY)
225 NJ 810 SQUARE CORP.
226 NY 839 6TH CORP.
227 PA 955 PENN CORP.
228 NJ ATLANTIC SQUARE CORP.
229 NJ BROAD NEWARK CORP.
230 NY LESLIE CRAIG CORP.
231 PA PENNSYLVANIA SQUARE CORP.
232 PA REBOY DEVELOPMENT CORP.
233 PA S.L. SCHWARTZ, INC.
234 NJ S.P. PARKING, INC.
235 PA SII CORPORATION
236 PA SQUARE 224 CORP.
237 NY SQUARE 30TH ST. CORP.
238 PA SQUARE 3RD & LOMBARD CORP.
239 DE SQUARE 88 CORP
240 NY SQUARE ALPHA CORP.
241 PA SQUARE BROAD CORP.
242 PA SQUARE CHESTNUT CORPORATION
243 PA SQUARE FOURTH AVE CORP.
244 PA SQUARE FULTON CORP.
245 PA SQUARE JUNIPER CORP.
246 NJ SQUARE KENTUCKY CORP.
247 NY SQUARE LAFAYETTE GARAGE CORP.
248 PA SQUARE LIBERTY CORP.
249 NJ SQUARE MALL CORP.
250 NY SQUARE PARKING CANADA, INC.
251 GA SQUARE PEACH CORPORATION
252 GA SQUARE PEACH WEST CORPORATION
253 PA SQUARE RODMAN CORP.
254 PA SQUARE SANSOM CORP.
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
255 NJ SQUARE SHORE CORP.
256 NY SQUARE STEWART CORP.
257 PA SQUARE THIRD AVE CORP.
258 PA SQUARE WALNUT CORP.
259 DE SQUARE WILMINGTON CORP
260 DE ALLRIGHT HOLDINGS, INC.
261 DE ALLRIGHT CORPORATION
262 AL ALLRIGHT BIRMINGHAM, INC.
263 AR ALLRIGHT L.R., INC.
264 CA ALLRIGHT CAL., INC.
265 CO ALLRIGHT COLORADO, INC.
266 DE ALLRIGHT PARKING MANAGEMENT, INC.
267 DE APARKCO FINANCE, INC.
268 DE APARKCO, INC.
269 DC ALLRIGHT PARKING WASHINGTON, INC.
270 FL ALLRIGHT FLORIDA, INC.
271 FL ALLRIGHT MIAMI, INC.
272 FL ALLRIGHT NEW ORLEANS, INC.
273 FL ALLRIGHT WEST PALM BEACH, INC.
274 GA ALLRIGHT PARKING OF GEORGIA, INC.
275 IL ALLRIGHT PARKING OF CHICAGO, INC.
276 IN ALLRIGHT PARKING OF INDIANAPOLIS, INC.
277 KY ALLRIGHT LOUISVILLE CO., INC.
278 LA ALLRIGHT BATON ROUGE, INC.
279 LA ALLRIGHT SHREVEPORT, INC.
280 MD ALLRIGHT BALTIMORE, INC.
281 MA AZURE PROP., INC.
282 MA ALLRIGHT BOSTON PARKING, INC.
283 MI HONOR GUARD SERVICE, INC.
284 MI NATIONAL GARAGES, INC.
285 MN ALLRIGHT PARKING MINNESOTA, INC.
286 MO ALLRIGHT CARPARK, INC.
287 MO ALLRIGHT MISSOURI, INC.
288 NE ALLRIGHT PARKING OMAHA, INC.
289 NV ALLRIGHT SIERRA PARKING, INC.
290 NJ ALLRIGHT NEW JERSEY, INC.
291 NM ALLRIGHT NEW MEXICO, INC.
292 NY ALLRIGHT NEW YORK PARKING, INC.
293 NY ALLRIGHT PARKING BUFFALO, INC.
294 NY ALLRIGHT PARKING SYRACUSE, INC.
295 NY 22 ANSON PLACE, INC.
296 NY ALLRIGHT PARKING NY, LLC
297 NY 401 SOUTH CLINTON, LLC
298 NC ALLRIGHT PARKING CHARLOTTE, INC.
299 OH ALLRIGHT CINCINNATI, INC.
300 OH ALLRIGHT COLUMBUS PARKING, INC.
301 OH ALLRIGHT DAYTON PARKING, INC.
302 OH ALLRIGHT TOLEDO, INC.
303 OH ALLRIGHT PARKING CLEVELAND, INC.
304 PA DECIMAL HOLDINGS, INC.
305 PA PENNSYLVANIA PARKING, INC.
306 PA TWELVE WALSAN CORPORATION
307 TN KNOX ALLRIGHT, INC.
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
308 TN ALLRIGHT SYSTEM PARKING, INC.
309 TN ALLRIGHT NASHVILLE PARKING, INC.
310 TX ALLRIGHT PARKING OF AUSTIN, INC.
311 TX ALLRIGHT BEAUMONT COMPANY
312 TX ALLRIGHT PARKING SYSTEM, INC.
313 TX ALLRIGHT PARKING EL PASO, INC.
314 TX ALLRIGHT PARKING CORPORATION
315 TX ALLRIGHT PARKING TEXAS, INC.
316 TX ALLRIGHT SAN ANTONIO PARKING, INC.
317 TX ALLRIGHT REALY COMPANY
318 VA ALLRIGHT PARKING VIRGINIA, INC.
319 VA ALLRIGHT ROANOKE PARKING, INC.
320 WA NORTHWEST PARKING SERVICES, INC.
321 WI ALLRIGHT PARKING OF MILWAUKEE, INC.
</TABLE>
<PAGE> 1
Exhibit 23
Accountants' Consent
The Board of Directors
Central Parking Corporation
We consent to incorporation by reference in the registration statements (Nos.
33-98118, 33-98120, 33-98122, 333-37909 and 333-74837) on Form S-8 and the
registration statement (No. 333-52497) on Form S-3 of our report dated December
8, 1999, except as to Note 8 which is as of December 28, 1999, relating to the
consolidated balance sheets as of September 30, 1998 and 1999, and the related
consolidated statements of earnings, shareholders' equity and comprehensive
income, and cash flows for each of the years in the three year period ended
September 30, 1999, which report is incorporated by reference into the September
30, 1999 Form 10-K of Central Parking Corporation.
KPMG LLP
Nashville, Tennessee
December 28, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CENTRAL PARKING CORP. FOR THE TWELVE MONTHS ENDED
SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> SEP-30-1998 SEP-30-1999
<PERIOD-START> OCT-01-1997 OCT-01-1998
<PERIOD-END> SEP-30-1998 SEP-30-1999
<CASH> 39,495 53,669
<SECURITIES> 0 0
<RECEIVABLES> 36,240 64,757
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 98,769 145,707
<PP&E> 382,506 421,090
<DEPRECIATION> 15,063 22,872
<TOTAL-ASSETS> 954,022 1,064,577
<CURRENT-LIABILITIES> 129,666 176,366
<BONDS> 0 0
110,000 110,000
0 0
<COMMON> 366 368
<OTHER-SE> 341,548 346,751
<TOTAL-LIABILITY-AND-EQUITY> 954,022 1,064,577
<SALES> 0 0
<TOTAL-REVENUES> 600,399 736,461
<CGS> 456,704 568,897
<TOTAL-COSTS> 528,747 700,002
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 30,232 26,951
<INCOME-PRETAX> 46,518 17,064
<INCOME-TAX> 20,373 12,380
<INCOME-CONTINUING> 26,145 4,684
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (1,002)
<CHANGES> 0 0
<NET-INCOME> 26,145 3,682
<EPS-BASIC> 0.76 0.10
<EPS-DILUTED> 0.74 0.10
</TABLE>
