Risk Factors

        An investment in our Class A common stock involves significant degrees of risk. We urge you to carefully consider all of the information described in the section entitled "Risk Factors" beginning on page 10.

        The address of our principal executive offices is 900 North Michigan Avenue, Suite 1600, Chicago, Illinois 60611, and our telephone number is (312) 274-2000. Our website address is www.standardparking.com . You should not construe the information on our website to be a part of this prospectus.

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RISK FACTORS

         You should carefully consider the risks described below in connection with reviewing this prospectus. If any of the events referred to below actually occur, our business, financial condition, liquidity and results of operations could suffer. In that case, the trading price of our Class A common stock could decline and you may lose all or part of your investment. You should also refer to the other information in this prospectus, including our consolidated financial statements and the related notes.

Risks Related to Our Business

Our indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations.

        We have a significant amount of indebtedness. On September 30, 2003, on a pro forma basis giving effect to this offering and our proposed new senior credit facility and the use of proceeds therefrom, we would have had total indebtedness of approximately $    million, of which $49.7 million consisted of the 9 ¹ / 4 % senior subordinated notes due 2008 (including $0.8 million of carrying value in excess of principal), and the balance consisted of other debt, including our proposed new senior credit facility.

        Our indebtedness could have important consequences. For example, it could:

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increase our vulnerability to general adverse economic and industry conditions;



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require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, growth initiatives, acquisitions and other general corporate purposes;



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limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;



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limit our ability to engage in activities that may be in our long-term best interests;



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limit our ability to use capital as a means of retaining existing clients and attracting new clients;



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be required to be repaid if we experience a change of control;



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make it more difficult for us to satisfy our obligations with respect to our debt;



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place us at a competitive disadvantage compared to our competitors that have less debt and greater financial resources; and



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limit our ability to borrow additional funds.

        We cannot assure you that cash flow from operations, combined with additional borrowings under the senior credit facility and any future credit facility (including our proposed new senior credit facility), will be available in an amount sufficient to enable us to repay our indebtedness, or to fund other liquidity needs. We and our subsidiaries may be able to incur substantial additional indebtedness in the future, which could cause the related risks to intensify. We will need to refinance all or a portion of our indebtedness, including our proposed new senior credit facility and the 9 ¹ / 4 % notes, on or before their respective maturities. We cannot assure you that we will be able to refinance any of our indebtedness, including our proposed new senior credit facility and the 9 ¹ / 4 % notes, on commercially reasonable terms or at all. If we are unable to refinance our debt, we may default under the terms of our indebtedness, which could lead to an acceleration of the debt. We do not expect that we could repay all of our outstanding indebtedness if the repayment of such indebtedness were accelerated.

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We have sustained substantial net losses attributable to common stockholders and may not achieve profitability in the future.

        We have sustained substantial net losses attributable to common stockholders. We have a common stockholders' deficit of $159.2 million as of September 30, 2003. As of September 30, 2003, on a pro forma basis giving effect to this offering and our proposed new senior credit facility and the use of proceeds therefrom, which includes the redemption of our 14% notes, the repurchase, as required by the terms of our stockholders' agreement, of all shares of common stock from minority stockholders and the conversion of a management contract to a long-term lease, we would have had stockholders' equity of approximately $             million. Continued lack of profitability would harm our financial condition and adversely impact our business.

Our history of net losses may inhibit our ability to access the capital markets; however, if we are able to access the capital markets, our stockholders may experience significant dilution.

        We may seek to raise additional capital to further reduce our debt and to fund our operations or growth strategies, including acquisitions, through public or private equity or debt financing. We cannot assure you that additional financing will be available, if needed, on acceptable terms, or at all. If additional capital is needed and not available, we may need to change our business strategy to slow our rate of expansion or reduce our operations. If we raise additional funds by issuing equity securities, our stockholders may experience dilution.

Our working capital and liquidity may be affected if a significant number of our clients require us to deposit all parking revenues into their respective accounts.

        We frequently contract with clients to hold parking revenues in our account and remit the revenues, minus the operating expenses and our fee, to our clients at the end of the month. Some clients, however, require us to deposit parking revenues in their accounts on a daily basis. This type of arrangement requires us to pay costs as they are incurred and receive reimbursement and the management fee after the end of the month. There can be no assurance that a significant number of clients will not switch to the practice of requiring us to deposit all parking revenues into their respective accounts, which would have a material adverse effect on our liquidity and financial condition.

Our business would suffer if the use of parking facilities we operate decreased.

        We derive a substantial portion of our revenues from the operation and management of parking facilities. Our business would suffer if the use of parking facilities in urban areas or at or near airports decreased. Further, our success depends on our ability to adapt and improve our products in response to evolving client needs and industry trends. If demand for parking is low due to decreased car and airplane travel resulting from increased gasoline prices, inclement weather, increased regulation, general economic slowdown or other factors, our business, financial condition, results of operations and our ability to achieve sufficient cash flow to service our indebtedness, may be materially adversely affected.

The operation of our business is dependent upon key personnel.

        Our success is, and will continue to be, substantially dependent upon the continued services of our executive management team. The loss of the services of one or more of the members of our executive management team could have a material adverse effect on our financial condition and results of operations. Although we have entered into employment agreements with, and historically have been successful in retaining the services of, our executive management, there can be no assurance that we will be able to retain them in the future. In addition, our continued growth depends upon our ability to attract and retain skilled operating managers and employees.

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We have significant financial obligations under our lease at Bradley International Airport.

        We are the lessee under a 25-year lease with the State of Connecticut that expires on April 6, 2025, under which we lease the surface parking and 3,500 new garage parking spaces at Bradley International Airport located in the Hartford, Connecticut metropolitan area. The parking garage was financed on April 6, 2000 through the issuance of $47.7 million of State of Connecticut special facility revenue bonds. The Bradley lease provides that we deposit with a trustee for the bondholders all gross revenues collected from operations of the surface and garage parking, and from these gross revenues, the trustee pays debt service on the special facility revenue bonds, operating and capital maintenance expenses of the surface and garage parking facilities and specific annual guaranteed minimum payments to the State. Principal and interest on the Bradley special facility revenue bonds increases from approximately $3.6 million in lease year 2002 to approximately $4.5 million in lease year 2025. Our annual guaranteed minimum payments to the State increase from approximately $8.3 million in lease year 2002 to approximately $13.2 million in lease year 2024.

        To the extent that monthly gross receipts are not sufficient for the trustee to make the required payments we are obligated, pursuant to our guaranty agreements, to deliver the deficiency amount to the trustee within three business days of notice. We are responsible for these deficiency payments regardless of the amount of utilization for the Bradley parking facilities. We made payments of $1.2 million in 2002, net of repayments of $0.4 million and $2.5 million in the first nine months of 2003, to cover these deficiency payments. Although the State of Connecticut has an obligation to raise parking rates to offset a decline in usage, there is no guarantee that the State of Connecticut will raise rates enough to offset a decline in usage or that any change in rates will result in revenues sufficient to cover the trustee's payments without resort to our guaranty. As of September 30, 2003, the discounted net receivable for this contract in the amount of $6.0 million, which includes deficiency payments of $3.7 million, is included in long-term receivables. Although we expect to recover all amounts owed to us, we expect we will have to make material additional deficiency payments in the near term.

Our business would be harmed if fewer clients purchase insurance through us.

        Many of our clients have historically chosen to purchase liability insurance for the locations we manage through us. Clients do, however, have the option of purchasing such insurance independently, as long as we are named as an additional insured pursuant to an additional insured endorsement. We purchase insurance policies at prices that we believe represent a discount to the prices that would typically be charged to parking facility owners on a stand-alone basis. Pursuant to our management contracts, we charge our clients for insurance at rates we believe are competitive. A material reduction in the amount of insurance purchased through us could have a material adverse effect on our operating income.

Additional funds would need to be reserved for future insurance losses if such losses are worse than expected.

        We provide liability and worker's compensation insurance coverage consistent with our obligations to our clients under our various management contracts and leases. We are obligated to reimburse our insurance carrier for each loss incurred in the current policy year up to the amount of a deductible specified in our insurance policies. The deductible for our various liability and workers' compensation policies is $250,000. We also purchase group health insurance for eligible full-time employees and family members and self-insure for up to $125,000 per year per covered individual in eligible incurred medical expenses. Our financial statements reflect our funding of all such obligations based upon guidance and evaluation we have received from third party insurance professionals. There can be no assurance, however, that the ultimate amount of our obligations will not exceed the amount presently funded or accrued, in which case we would need to set aside additional funds to reserve for any such excess. Our obligations could increase if we receive a greater number of insurance claims or the cost of

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claims generally increases. A material increase in insurance costs due to a change in the number of claims, claims costs or premiums paid by us could have a material adverse effect on our operating income.

We could face considerable business and financial risk in implementing our growth strategy.

        We face substantial risks in growing our business, either organically or through acquisitions. Risks include:

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Difficulties in the integration of new operations, technologies, products and personnel;



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Competitive pressures;



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Inability to maintain our standards, controls and procedures;



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Risks of entering new geographic or service markets in which we have no or limited prior experience;



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Potential loss of employees;



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Limited availability of capital for working capital, capital expenditures, acquisitions and investment in information technology systems upgrades;



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Diversion of management's attention; and



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Expenses of any undisclosed or potential liabilities of any acquired company.

        Our growth will be directly affected by the results of operations of added parking facilities, which will depend, in turn, upon the competitive environment for acquisitions and new contracts and our ability to obtain suitable financing, contract terms and government licenses and approvals.

Our ability to expand our business will be dependent upon the availability of adequate capital.

        The rate of our expansion will depend in part upon the availability of adequate capital, which in turn will depend in large part upon cash flow generated by our business and the availability of equity and debt capital. We cannot assure you that we will be able to obtain equity or debt capital on acceptable terms or at all. Our proposed new senior credit facility is expected to contain and the indenture governing our 9 ¹ / 4 % notes contains provisions that restrict our ability to incur additional indebtedness and make substantial asset sales which might otherwise be used to finance our expansion. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness. Our obligations under the proposed new senior credit facility are expected to be secured by substantially all of our personal property, which may further limit our access to certain capital markets or lending sources. As a result, we cannot assure you that we will be able to finance our current growth strategy.

The failure to successfully integrate possible future acquisitions or new contracts could have a negative impact on our business and the market price of our common stock.

        We plan to pursue acquisitions on a selective basis in the future. Successful integration and management of additional facilities will depend on a number of factors, many of which are beyond our control. There can be no assurance that suitable acquisitions or new contract candidates will be identified, that such acquisitions or new contracts will be consummated or that the acquired operations or new contracts can be integrated successfully. In addition, because of the price paid by us or because of the performance of acquired locations in operations after such acquisitions, there can be no assurance that the results of the acquired locations in operations will not be dilutive to our per share earnings. Any acquisition contemplated or completed by us may result in adverse short-term effects on our reported operating results, divert management's attention, introduce difficulties in retaining, hiring

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and training key personnel, and introduce risks associated with unanticipated problems or legal liabilities, cause the incurrence of additional debt, cause the issuance of additional equity, contingent liabilities and amortization of expenses related to intangible assets, some or all of which could reduce our profitability and harm our business.

Our management contracts and leases expose us to certain risks.

        As of September 30, 2003, we operated approximately 84% of our parking facilities pursuant to management contracts. Under these contracts, we typically receive a base monthly fee for managing the facility as well as amounts attributable to ancillary services, and we may also receive an incentive fee based on the achievement of facility performance objectives. However, some management contracts, which are referred to as "reverse" management contracts, usually provide for larger management fees and require the facility manager to pay certain of these parking facility costs, which exposes us to greater risk. Many of these contracts are for a one-year term and may be canceled by the client for various reasons, including development of the real estate for other uses. Many of these contracts are cancelable on as little as 30 days' notice without cause. Our ability to continue operating in these facilities is based on the client's satisfaction with our performance.

        As of September 30, 2003, we operated approximately 16% of our parking facilities pursuant to leases. Although there is generally more potential for income from leased facilities than from management contracts, they also generally carry more risk. Under some of these lease contracts, we are obligated to pay to the owner of the facility a fixed base rent, often regardless of the actual utilization of the facility. Some of these leases can be for periods exceeding ten years. Maintenance and operating expenses for leased facilities are borne by us and are not passed through to the owner, unlike management contracts. A decline in facility utilization could result in lease payments exceeding the revenues received for operating the parking facility. Many of these leases may be canceled by the client for various reasons, including development of the real estate for other uses. Some are cancelable on as little as 30 days' notice without cause.

        The loss or renewal on less favorable terms of a substantial number of management contracts or leases could have a material adverse effect on our business, financial condition and results of operations. In addition, because certain management contracts and leases are with state, local and quasi-governmental entities, changes to certain governmental entities' approaches to contracting regarding parking facilities could affect such contracts. A material reduction in the operating income associated with ancillary services we provide under management contracts and leases, including increases in costs or claims associated with, or a reduction in the number of clients purchasing, insurance we provide, could have a material adverse effect on our business, financial condition and results of operations. To the extent that management contracts and leases are cancelable without cause, most of these contracts would also be cancelable in the event of bankruptcy, despite the automatic stay provisions under bankruptcy law.

Our business may be harmed as a result of terrorist attacks.

        Any terrorist attacks, particularly in the United States or Canada, may negatively impact our business and results of operations. Attacks have resulted in, and may continue to result in, increased government regulation of airlines and airport facilities, including imposition of minimum distances between parking facilities and terminals, resulting in the elimination of currently managed parking facilities, and increased security checks of employees and passengers at airport facilities. These types of regulations could impose costs that we may not be able to pass on to clients and reduce revenues. To the extent that these attacks deter people either from flying or congregating in public areas, demand for parking at airports and at urban centers may decline. This decline may result in fewer owners of these facilities hiring us to manage their parking facilities and lower incentive payments under those contracts where we receive an incentive fee based on facility utilization or other factors. If these attacks

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cause or exacerbate a slowdown in the general economy, a similar effect may occur. An overall economic slowdown could reduce traffic at parking facilities we operate. Additional terrorist attacks, an escalation of hostilities abroad or war could have a material adverse impact on our business, financial condition and results of operations.

We operate in a very competitive business environment.

        Competition in the field of parking facility management is intense. The market is fragmented and is served by a variety of entities ranging from single lot operators to large regional and national multi-facility operators, as well as municipal and other governmental entities that choose not to outsource their parking operations. Competitors with greater resources may be able to adapt more quickly to changes in customer requirements, or devote greater resources to the promotion and sale of their products. Competitors with greater financial resources may also be able to win contracts that require larger investments in working capital or capital expenditures on the parking facility. Many of our competitors also have long-standing relationships with our clients. Providers of parking facility management services have traditionally competed on the basis of cost and service. As we have worked to establish ourselves as one of the principal members of the industry, we compete predominately on the basis of high levels of service and strong relationships. We may not be able to, or may choose not to, compete with certain competitors on the basis of price. As a result, a greater proportion of our clients may switch to other service providers or self-manage during an economic downturn.

Increased government regulation of airports and reduced air travel may affect our performance.

        We derive a significant percentage of our gross profit from parking facilities and parking related services in and around airports. For the nine months ended September 30, 2003, approximately 20% of gross profit was derived from those operations. The Federal Aviation Administration generally prohibits parking within 300 feet of airport terminals during periods of heightened security. While the prohibition is not currently in effect, there can be no assurance that this governmental prohibition will not again be reinstated. The existing regulations governing parking within 300 feet of airport terminals or future regulations may prevent us from using certain parking spaces. Reductions in the number of parking spaces and air travelers may reduce our revenues and cash flow for both our leased facilities and those facilities we operate under management contracts.

The sureties for our performance bond program will require additional collateral to issue or renew performance bonds in support of certain contracts.

        Under substantially all of our contracts with municipalities, government entities and airports, we are required to provide a performance bond to support our obligations under the contract. Due to our current financial condition and the financial state of the surety bond industry, the sureties for our performance bond program require us to collateralize our performance bonds with letters of credit. Our need to collateralize surety bonds reduces the availability of funds under our senior credit facility and limits funds available for debt service, investments in our growth strategies, working capital and capital expenditure requirements. If we are unable to provide sufficient collateral in the future, our sureties may not issue performance bonds to support our obligations under certain contracts. As of September 30, 2003, we had approximately $4.8 million of letters of credit outstanding as collateral with respect to our surety's issuance of performance bonds.

        As is customary in the industry, a surety provider can refuse to provide a bond principal with new or renewal surety bonds. If any existing or future surety provider refuses to provide us with surety bonds, there can be no assurance that we would be able to find alternate providers on acceptable terms, or at all. Our inability to provide surety bonds could also result in the loss of existing contracts. Failure to find a provider of surety bonds, and our resulting inability to bid for new contracts or renew existing contracts, could have a material adverse effect on our business and financial condition.

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We believe that our client base is becoming more concentrated.

        Due to the fact that national property owners, managers and developers and other property management companies tend to own or manage multiple properties, our ability to provide parking services for a large number of properties becomes dependent on our relationships with these entities. As this happens, such clients become more significant to our business. The loss of one of these clients or the sale of properties they own to clients of our competitors could have a material adverse effect on our business and financial condition. Additionally, large clients with extensive portfolios have greater negotiating power when negotiating contracts, which could adversely affect our profit margins.

We must comply with regulations that may impose significant costs on us.

        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. These laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In connection with the operation of parking facilities, we may be potentially liable for such costs. Although we are currently not aware of any material environmental claims pending or threatened by any party against us or any of our operated parking facilities, no assurances can be given that a material environmental claim will not be asserted against us or against the parking facilities we operate. The cost of defending against claims of liability, or of remediating a contaminated property, could have a material adverse effect on our business, financial condition and results of operations.

        Various other governmental regulations affect our operation of parking facilities, both directly and indirectly, including air quality laws, licensing laws and the Americans with Disabilities Act of 1990, or 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. A determination that we or the facility owner is not in compliance with the ADA could result in the imposition of fines or damage awards against us. In addition, several state and local laws have been passed in recent years that encourage car pooling and the use of mass transit. For example, a Los Angeles, California law prohibits employers from reimbursing employee parking expenses. Laws and regulations that reduce the number of cars and vehicles being driven could adversely impact our business.

        We collect and remit sales/parking taxes and file tax returns for and on behalf of ourselves and our clients. We are affected by laws and regulations that may impose a direct assessment on us for failure to remit sales/parking taxes and filing of tax returns for ourselves and on behalf of our clients.

Prior transactions may, and this offering will, limit our ability to utilize our remaining net operating losses and may accelerate future payment of taxes.

        We have substantial net operating losses, or NOLs, for U.S. federal and state income tax purposes. Depending on the value of any equity interests issued or transferred within any three-year period to unaffiliated parties in relation to the total value of our equity interests, an ownership change may be deemed to occur for purposes of a U.S. federal income tax code Section 382 that may limit our ability to utilize our remaining NOLs in future taxable years to reduce our taxable income.

        In 2002, we and AP Holdings, Inc., completed a debt and equity restructuring which, depending on the resolution of various issues, may have resulted in an ownership change for Section 382 purposes that would limit our ability to utilize our remaining NOLs for future taxable years.

        We expect that the offering plus other related transactions will result in an ownership change for Section 382 purposes, thereby limiting our future usage of the NOLs.

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We may be unable to renew our insurance coverage.

        Our liability and worker's compensation insurance coverage expires on an annual basis. Failure to renew the existing coverage or to procure new coverage would have a material adverse effect on our business, financial condition and results of operations by preventing us from accepting new contracts and by placing us in default under a majority of our existing contracts. There can be no assurance that our insurance carriers will in fact be willing to renew our coverage at any rate at the expiration date.

        During the past several years we have solicited insurance quotes from alternate insurance carriers, but there can be no assurance, given the current state of the insurance industry and our current financial condition, that any alternate insurance carriers will offer to provide similar coverage to us or, if they will, that their quoted premiums will not exceed those received from our current carrier. A material increase in the cost of insurance premiums could adversely affect our financial condition and results of operations.

Many of our employees are covered by collective bargaining agreements.

        Approximately 25% of our employees are represented by labor unions. Approximately 23% of our collective bargaining contracts, representing 8% of our employees, are up for renewal in 2004. There can be no assurance that we 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 we would be able to staff sufficient employees for our short-term needs. Any such labor strike or our inability to negotiate a satisfactory contract upon expiration of the current agreements could have a negative effect on our business and financial results.

        We make contributions to multiemployer benefit plans on behalf of certain employees covered by collective bargaining agreements and could be responsible for paying unfunded liabilities incurred by such benefit plans, which amount could be material.

Economic and demographic trends could materially adversely affect our business.

        Our business operations are located in North America and tend to be concentrated in large urban areas. To the extent that economic or demographic factors result in: the movement of white-collar jobs from urban centers to suburbs or even out of North America; increased office vacancies in urban areas or movement toward home office alternatives; or lower consumer spending or employment levels, our business could be materially adversely affected.

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Risks Related to this Offering and Our Capital Structure

The price of our Class A common stock may fluctuate substantially.

        The market price of our Class A common stock may fluctuate substantially due to many factors, including:

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actual or anticipated fluctuations in our results of operation;



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announcements of significant contracts by us or our competitors;



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the commencement of our involvement in litigation;



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major catastrophic events;



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inclement weather that reduces urban parking, air travel and airport parking or increases parking maintenance costs, such as for snow removal;



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increases in interest rates;



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our sale of Class A common stock or other securities in the future;



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investor perceptions of the conditions and trends in the parking industry in general and our company in particular;



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change in market valuation or earnings of our competitors;



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the trading volume of our Class A common stock;



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loss of external funding sources;



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sales of large blocks of stock or sales by insiders;



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increases in gasoline or jet fuel prices that reduce airport use or automobile use;



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increases in insurance related costs or losses;



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departures of key personnel;



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changes in analyst estimates or ratings;



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changes in the estimation of the future size and growth rate of our markets; and



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general economic conditions.

        In addition, the stock market in general, and The NASDAQ National Market in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of quoted companies. These broad market and industry factors may materially harm the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted against that company. Such litigation, if instituted against us, could result in substantial costs and diversion of management's attention and resources.

We cannot assure you that an active market will develop for our Class A common stock or what the market price for our Class A common stock will be in the future and, in the event that an active trading market does not develop, you may be unable to resell your shares.

        Prior to this offering, there has been no public market for our Class A common stock. Although we have applied to have our Class A common stock quoted on The NASDAQ National Market, there can be no assurance that such application will be approved or, if approved, that an active trading market will develop or continue after this offering or that the market price of our Class A common stock will not decline below the initial public offering price. The initial public offering price of our

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Class A common stock will be determined by negotiations among us and the representatives of the underwriters, and may not be indicative of the market price for shares of our Class A common stock after this offering. Prices for the shares of our Class A common stock after this offering will be determined in the market and may be influenced by many factors, including the depth and liquidity of the market for our Class A common stock, investor perception of us and our business, the parking management industry as a whole and general economic and market conditions. In the event an active trading market does not develop for our Class A common stock, you may be unable to resell your shares at a price acceptable to you or at all.

Future sales of our Class A or Class B common stock, or the perception in the public markets that these sales may occur, could depress our stock price.

        Sales of substantial amounts of our Class A or Class B common stock in the public market, or the perception in the public markets that these sales may occur, could cause the market price of our Class A common stock to decline. This could also impair our ability to raise additional capital through the sale of our equity securities. Upon completion of this offering, we will have    shares of our Class A common stock outstanding. In addition, we will have options to purchase a total of    shares outstanding under our long-term incentive plan, of which    will be vested. We intend to file a Form S-8 registration statement to register all the shares of common stock issuable under our plan. Our current Class A stockholders and holders of options to acquire our common stock, on a fully-diluted basis assuming exercise of all outstanding options are expected to own    % of the outstanding shares of our Class A common stock, or    % of the outstanding shares of our Class A common stock if the underwriters' over-allotment option is exercised in full. Following the expiration of a 180-day "lock-up" period, to which over    % of our outstanding shares of Class A common stock, 100% of our Class B common stock and shares issuable upon the exercise of outstanding options are subject, the holders of those shares will generally be entitled to freely transfer those shares, subject to the limitations of Rule 144. Please see "Shares Eligible for Future Sale." Moreover, William Blair & Company may, at its sole discretion and at any time without notice, release those holders from the sale restrictions on their shares. In addition to the adverse effect a price decline could have on holders of our Class A common stock, such a decline could impede our ability to raise capital or to make acquisitions through the issuance of additional shares of our Class A common stock or other equity securities.

As a new investor, you will immediately experience substantial dilution in book value as a result of this offering.

        The initial public offering price per share of Class A common stock is expected to be substantially higher than the book value per share of Class A common stock immediately after the offering. Assuming an offering price of $    , you will incur immediate and substantial dilution of $    in the net tangible book value per share of the Class A common stock from the price you paid. Following this offering, the Class A common stockholders will have contributed            % of the book value of our capital stock but will own only            % of our capital stock. There are outstanding options to purchase an aggregate of    of our shares of Class A common stock at a weighted average exercise price of $    per share,    of which will be vested and exercisable upon completion of this offering. You will realize further dilution as a result of the exercise of these options.

Our certificate of incorporation, by-laws and Delaware law contain provisions that may prevent or delay a change of control that may otherwise be in the best interest of our stockholders.

        Certain provisions of our certificate of incorporation and by-laws, as well as provisions of the General Delaware Corporation Law, may make it more difficult or expensive or otherwise discourage a tender offer or a change in control or takeover attempt by a third-party, even if such a transaction

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would be beneficial to our stockholders. The existence of these provisions may have a negative impact on the price of our Class A common stock by discouraging third-party investors from purchasing our Class A common stock. In particular, we intend to amend our certificate of incorporation and by-laws prior to the offering to include provisions that would:

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permit a special meeting of our stockholders to be called only by: the chairperson of our board of directors; our board of directors acting pursuant to a resolution adopted by a majority of the members of the entire board; or the holders of a majority of the voting power of the issued and outstanding common stock;



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prohibit the stockholders from effecting any action by written consent, but only after the holders of our Class B common stock cease to own 15% of the outstanding common stock;



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permit our board of directors to issue, without approval of our stockholders, preferred stock with such terms as our board of directors may determine;



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establish a staggered board of Class A directors;



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prohibit a Class A director from being removed other than for cause; and



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require a separate vote by the holders of the Class B common stock to approve any changes to the by-laws or certificate of incorporation that adversely affect the rights, powers or preferences of the Class B common stock.

        In addition, after the holders of our Class B common stock cease to own 15% of the outstanding common stock, we will be subject to Section 203 of the Delaware General Corporation Law, which provides certain restrictions on business combinations between us and any party acquiring a 15% or greater interest in our voting stock other than in a transaction approved by our board of directors and, in certain cases, by our stockholders. For additional information, please see "Description of Capital Stock."

We may incur increased costs as a result of recently enacted and proposed changes in laws and regulations.

        Recently enacted and proposed changes in the laws and regulations affecting public companies, including the provisions of the Sarbanes-Oxley Act of 2002 and rules proposed by the Securities and Exchange Commission and by The NASDAQ Stock Market, Inc., could result in increased costs to us as we evaluate the implications of any new rules and respond to their requirements. The new rules could make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

Risks Related to Our Dual Class Common Stock

Our parent company, [Steamboat Industries, Inc.], will control our major corporate decisions, and its interests may conflict with yours.

        After this offering, our new parent company, [Steamboat Industries, Inc.], will own 100% of our outstanding Class B common stock, which will represent    % of the combined voting power of all classes of our voting stock or    % of the combined voting power of all classes of our voting stock if the underwriters exercise their over-allotment option in full. In addition, some of the members of our board of directors (currently a majority) also serve as directors of [Steamboat Industries, Inc.] As a result, [Steamboat Industries, Inc.] will have control over us, the election and removal of five of the seven directors on our board of directors, the nomination of the two Class A directors and our

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management and policies. [Steamboat Industries, Inc.] will also have control over all matters requiring stockholder approval, including the amendment of certain provisions of our certificate of incorporation and by-laws and the approval of fundamental corporate transactions, including merger, takeover or any other transaction resulting in a change of control. Such a transaction potentially could be beneficial to our business or to our stockholders. This may in turn reduce the price that investors are willing to pay in the future for shares of our Class A common stock.

        This concentration of ownership may harm the market price of our Class A common stock by, among other things:

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Impeding the development of an active market for our common stock;



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Delaying, deferring or preventing a merger, consolidation, takeover, or other business combination involving our company;



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Causing us to enter into transactions or agreements that are not in the best interests of all stockholders;



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Discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company; or



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Discouraging third-party investors.

        Unless an active market develops for our Class A common stock, it may be difficult for us to raise capital by selling additional shares of Class A common stock. This could harm our ability to raise additional capital, which we may need to fund our business, and to acquire other companies by using our Class A common stock as consideration.

The limited voting rights of our Class A common stock could impact its attractiveness to investors and its liquidity and, as a result, its market value.

        The holders of our Class A and Class B common stock generally have identical rights, except that holders of our Class A common stock are entitled to one vote per share and holders of our Class B common stock are entitled to ten votes per share on all matters to be voted on by stockholders. We will be selling our Class A common stock in this offering. The difference in the voting rights of the Class A and Class B common stock could diminish the value of the Class A common stock to the extent that investors or any potential future purchasers of our Class A common stock ascribe value to the superior voting rights of the Class B common stock.

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