<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
Bowlin Outdoor Advertising and Travel Centers Incorporated
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
PROSPECTUS
BOWLIN OUTDOOR ADVERTISING AND TRAVEL
CENTERS INCORPORATED
150 LOUISIANA NE
ALBUQUERQUE, NM 87108
Dear Bowlin Outdoor Advertising and Travel Centers Incorporated Stockholder:
You are cordially invited to attend the special meeting of the stockholders
of Bowlin Outdoor Advertising and Travel Centers to be held at 9:00 a.m.,
Mountain Standard Time, on January 19, 2001, at 150 Louisiana NE, Albuquerque,
New Mexico 87108. At the special meeting, you will be asked to consider and vote
upon a proposal to adopt the merger agreement among Bowlin, Lamar Advertising
Company and Lamar Southwest Acquisition Corporation, pursuant to which Bowlin
will become a wholly owned subsidiary of Lamar and you will become a shareholder
of Lamar.
Upon the closing of the merger, outstanding shares of Bowlin common stock
will convert into the right to receive 725,000 shares of Lamar common stock,
with each Bowlin stockholder entitled to a pro rata share of the 725,000 shares.
Bowlin common stock is traded on the American Stock Exchange under the
symbol "BWN." Lamar common stock is traded on the Nasdaq National Market under
the symbol "LAMR."
Your board of directors has carefully considered and approved the merger
and has determined that the merger is in your best interests. Accordingly, the
Bowlin board recommends that you vote for adoption of the merger agreement at
the special meeting. In reaching this determination, the Bowlin board has
received the written opinion of Sanders Morris Harris Inc. which states that the
consideration to be paid by Lamar in the merger is fair, from a financial point
of view, to you. A copy of this opinion is attached to the accompanying proxy
statement/prospectus as Annex C, and we urge you to read this opinion in its
entirety.
We have enclosed a notice of special meeting and a proxy
statement/prospectus discussing the proposed merger and the merger agreement to
be considered at the special meeting. A copy of the merger agreement is also
attached to the proxy statement/prospectus as Annex A. We encourage you to read
the merger agreement. Also enclosed is a proxy card so you can vote on the
proposals without attending the special meeting.
THE MERGER INVOLVES CERTAIN RISKS TO BOWLIN OUTDOOR ADVERTISING AND TRAVEL
CENTERS STOCKHOLDERS. SEE "RISK FACTORS," BEGINNING ON PAGE 12.
It is important that your shares be represented at the special meeting.
Whether or not you expect to attend in person, please promptly sign, date and
return the enclosed proxy card in the enclosed, postage prepaid envelope.
Thank you, and we look forward to seeing you at the special meeting.
Very truly yours,
/s/ MICHAEL L. BOWLIN
Michael L. Bowlin
Chief Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SHARES OF LAMAR ADVERTISING COMPANY
COMMON STOCK TO BE ISSUED UNDER THIS PROXY STATEMENT/ PROSPECTUS OR DETERMINED
IF THIS PROXY STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
This proxy statement/prospectus is dated December 1, 2000 and is first
being mailed to stockholders on or about December 14, 2000.
<PAGE> 3
BOWLIN OUTDOOR ADVERTISING AND TRAVEL CENTERS INCORPORATED
150 LOUISIANA NE
ALBUQUERQUE, NM 87108
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 19, 2001
To The Stockholders of Bowlin Outdoor Advertising and Travel Centers
Incorporated:
The special meeting of the stockholders of Bowlin Outdoor Advertising and
Travel Centers Incorporated, a Nevada corporation, will be held on January 19,
2001, at 9:00 a.m., Mountain Standard Time at 150 Louisiana NE, Albuquerque, New
Mexico 87108 for the following purposes:
1. To adopt and approve the merger agreement among Bowlin Outdoor
Advertising and Travel Centers Incorporated, Lamar Advertising Company and
Lamar Southwest Acquisition Corporation; and
2. To transact any other business that properly comes before the
meeting.
Your board of directors has determined that the merger agreement and the
merger are in your best interests and recommends that you vote for adoption of
the merger agreement.
The close of business on December 11, 2000 has been fixed by the board of
directors of Bowlin Outdoor Advertising and Travel Centers Incorporated as the
record date for determination of the stockholders of Bowlin entitled to notice
of, and to vote at, the special meeting or any postponement or adjournment.
Whether or not you plan to attend the special meeting, we urge you to complete,
sign and return the enclosed proxy card in the enclosed postage-paid envelope.
You may revoke your proxy at any time before it is voted by delivering a written
notice of such revocation or a duly executed, later-dated proxy to Bowlin
Outdoor Advertising and Travel Centers Incorporated at 150 Louisiana NE,
Albuquerque, New Mexico 87108, Attention: Corporate Secretary, or by attending
the special meeting and voting in person.
By Order of the Board of Directors
/s/ MICHAEL L. BOWLIN
Michael L. Bowlin
Chairman of the Board and
Chief Executive Officer
Albuquerque, New Mexico
December 14, 2000
You are invited to attend the special meeting in person. Even if you own only a
few shares, and whether or not you expect to be present at the meeting, please
vote, sign, date and mail the enclosed proxy in the accompanying postage-paid
reply envelope.
<PAGE> 4
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about Lamar and Bowlin from other documents that are not
included in or delivered with this proxy statement/ prospectus. This information
is available to you without charge upon your written or oral request. You can
obtain those documents, which are incorporated by reference in this proxy
statement/prospectus, by requesting them in writing or by telephone from the
appropriate company at the following address and telephone numbers:
<TABLE>
<S> <C>
Lamar Advertising Company Bowlin Outdoor Advertising &
5551 Corporate Boulevard Travel
Baton Rouge, LA 70808 Centers Incorporated
(225) 926-1000 150 Louisiana NE
Albuquerque, NM 87018
(505) 266-5985
</TABLE>
See "Where You Can Find More Information" on page 64.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Questions & Answers About The Merger........................ 1
Summary..................................................... 2
Lamar Advertising Company and Subsidiaries Selected
Historical Financial Information.......................... 6
Bowlin Outdoor Advertising and Travel Centers Incorporated
Selected Historical Financial Information................. 8
Comparative Per Share Data.................................. 9
Comparative Stock Prices and Dividends...................... 10
Risk Factors................................................ 12
Special Note Regarding Forward-Looking Statements........... 18
The Bowlin Special Meeting.................................. 19
Business of Lamar........................................... 20
Recent Developments......................................... 20
Completed Acquisitions.................................... 20
Pending Acquisitions...................................... 20
Business of Bowlin.......................................... 20
Bowlin Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 21
Overview.................................................. 21
Results of Operations..................................... 21
Liquidity and Capital Resources........................... 26
Quantitative and Qualitative Disclosures About Market
Risk.................................................... 27
Background and Reasons for the Merger....................... 28
Background................................................ 28
Bowlin's Reasons for the Merger........................... 29
Opinion of Financial Advisor to Bowlin's Board of
Directors............................................... 31
Potential Conflicts of Interest of Bowlin Management in
the Merger.............................................. 37
The Merger and the Merger Agreement......................... 38
General Description of the Merger......................... 38
Effective Time............................................ 39
Merger Consideration for Bowlin Stock and Exchange
Ratio................................................... 39
No Fractional Shares...................................... 39
Exchange of Bowlin Stock Certificates..................... 40
Treatment of Bowlin Stock Options......................... 40
Treatment of Bowlin Benefits.............................. 40
Accounting Treatment...................................... 41
Material United States Federal Income Tax Consequences of
the Merger.............................................. 41
Covenants Under the Merger Agreement...................... 42
Representations and Warranties............................ 43
Conditions to the Merger.................................. 45
Termination of the Merger Agreement....................... 46
Termination Fees and Expenses............................. 46
Amendments and Waivers.................................... 47
Appraisal or Dissenters' Rights........................... 47
Nasdaq Listing of Lamar Stock............................. 47
Delisting of Bowlin Stock................................. 47
No Listing of Bowlin Travel Stock......................... 47
Resales of Lamar Stock by Bowlin Affiliates............... 47
Regulatory Matters........................................ 48
Stock Ownership............................................. 49
Ownership of Lamar Stock.................................. 49
Ownership of Bowlin Stock................................. 51
Comparison of Rights of Lamar and Bowlin Stockholders....... 53
Legal Matters............................................... 63
Experts..................................................... 63
Future Bowlin Stockholder Proposals......................... 64
Other Matters............................................... 64
Where You Can Find More Information......................... 64
Index to Financial Statements............................... F-1
</TABLE>
Annex A -- Merger Agreement
Annex B -- Contribution Agreement
Annex C -- Fairness Opinion of Sanders Morris Harris Inc.
Annex D -- Bowlin's Annual Report on Form 10-K for the period ended January 31,
2000
i
<PAGE> 6
QUESTIONS & ANSWERS ABOUT THE MERGER
Q: WHAT DO I NEED TO DO NOW?
A: Carefully read and consider the information contained in this proxy
statement/prospectus. Then, please complete, sign and date your proxy and
return it as soon as possible so that your shares may be represented at the
special meeting. If you sign and send in your proxy, your shares will be
voted as you indicate in your proxy. If you sign and send in your proxy,
but do not indicate how you want to vote, we will count the shares
represented by your proxy as a vote FOR adoption of the merger agreement.
If you abstain from voting or do not vote, it will have the effect of a
vote against the merger agreement.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?
A: Yes. You can change your vote at any time before your proxy is voted. You
can do this in one of three ways. First, you can send a written notice
stating that you are revoking your proxy. Second, you can complete and
submit a new proxy dated after the date of your original proxy. If you
choose either of these two methods, you must submit your notice of
revocation or your new proxy to the Secretary of Bowlin at 150 Louisiana
NE, Albuquerque, New Mexico 87108. Third, you can attend the special
meeting and vote in person. Simply attending the meeting, however, will not
revoke your proxy; you must also vote at the special meeting.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker generally will vote your shares only if you provide
instructions on how to vote. Follow the information provided to you by your
broker. If your broker does not vote your shares, it will have the effect
of a vote against the merger.
Q: WHAT WILL I RECEIVE IN EXCHANGE FOR MY BOWLIN STOCK IN THE MERGER?
A: You will receive shares of Class A common stock of Lamar. Assuming the
exercise of all outstanding Bowlin options, the number of shares of Class A
common stock of Lamar that you will receive will equal the number of Bowlin
shares that you own multiplied by .15818.
Q: WHAT IS THE DIFFERENCE BETWEEN THE LAMAR CLASS A COMMON STOCK THAT I WILL
RECEIVE IN EXCHANGE FOR MY BOWLIN STOCK IN THE MERGER AND LAMAR'S CLASS B
COMMON STOCK?
A: The Class A common stock and the Class B common stock have the same rights
and powers, except that a share of Class A common stock entitles the holder
to one vote and a share of Class B common stock entitles the holder to ten
votes.
Q: SHOULD I SEND IN MY BOWLIN STOCK CERTIFICATES NOW?
A: No. After the merger is completed, you will receive written instructions
for exchanging your stock certificates. Please do not send in your stock
certificates with your proxy.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working toward completing the merger as quickly as possible. If
approved by the Bowlin stockholders, we expect to complete the merger
during the first quarter of 2001.
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: You can call Bowlin Investor Relations at (505) 266-5985 with questions
about the merger.
1
<PAGE> 7
SUMMARY
This summary highlights what we believe is the most important information
about the merger. Nonetheless, to fully understand the transaction, you should
read this entire proxy statement/prospectus, including the materials attached as
annexes, as well as the other documents to which we have referred you. See
"Where You Can Find More Information" on page 64 . The page references in
parentheses will direct you to a more detailed description of the topics
presented in this summary.
THE COMPANIES
LAMAR (SEE PAGE 20)
Lamar is one of the largest and most experienced owners and operators of
outdoor advertising structures in the United States. Lamar also operates the
largest logo sign business in the United States. Lamar has a holding company
structure, in which Lamar Advertising Company and its direct wholly-owned
subsidiary, Lamar Media Corp., serve as holding companies for Lamar's indirect
subsidiaries.
The principal executive offices of Lamar, a Delaware corporation, are
located at 5551 Corporate Boulevard, Baton Rouge, LA 70808 and its telephone
number at these offices is (225) 926-1000.
BOWLIN (SEE PAGE 20)
Bowlin is a regional leader in the operation of travel centers and outdoor
advertising displays dedicated to serving the traveling public in rural and
smaller metropolitan areas of the Southwestern United States. The travel center
assets are being "spun off," or transferred, to a separate entity and will not
be a part of Bowlin at the time of the merger.
The principal offices of Bowlin, a Nevada corporation, are located at 150
Louisiana NE, Albuquerque, New Mexico 87108 and its telephone number at these
offices is (505) 266-5985.
THE MERGER
SUMMARY OF THE TRANSACTIONS (SEE PAGE 38)
In the proposed merger, Lamar Southwest Acquisition Corporation, a Nevada
corporation and a wholly owned subsidiary of Lamar, will be merged into Bowlin.
Bowlin will be the surviving corporation and its name will be changed to Lamar
Southwest, Inc. On November 1, 2000, Bowlin and its subsidiary, Bowlin Travel
Centers, Inc., entered into a contribution agreement. The contribution agreement
provides that certain assets and liabilities related to Bowlin's travel centers
line of business will be contributed to Bowlin Travel. Bowlin will then
distribute the shares of Bowlin Travel to the Bowlin stockholders immediately
prior to completion of the merger. The business, assets and liabilities of the
travel centers line of business will not, therefore, be acquired by Lamar in the
merger with Bowlin. The shares of Bowlin Travel must be distributed to the
stockholders of Bowlin prior to the consummation of the merger. Also, as part of
the contribution agreement, Bowlin and Bowlin Travel entered into a tax
agreement that provides Bowlin Travel will be responsible for any taxes
resulting from the contribution of the travel centers assets to Bowlin Travel
and the distribution of the shares of Bowlin Travel to the stockholders of
Bowlin.
The proposed merger will occur following adoption of the merger agreement
by the Bowlin stockholders and satisfaction or waiver of all other conditions to
the merger. The merger agreement is attached as Annex A. We encourage you to
read it because it is the legal document that governs the merger.
2
<PAGE> 8
WHAT THE HOLDERS OF BOWLIN COMMON STOCK WILL RECEIVE IN THE MERGER (SEE PAGE 39)
In the proposed merger, Bowlin common stockholders will receive Lamar Class
A common stock, which is referred to in this proxy statement/prospectus as
"Lamar stock." When we complete the merger, all of the outstanding shares of
Bowlin common stock, which is referred to in this proxy statement/ prospectus as
"Bowlin stock," will be exchanged for 725,000 shares of Lamar stock. Assuming
the exercise of all outstanding options, each outstanding share of Bowlin stock
will convert into a right to receive .15818 of a share of Lamar stock. Lamar
will not issue any fractional shares of Lamar stock in the merger. Instead,
Bowlin stockholders will receive cash for fractional shares.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES (SEE PAGE 41)
We intend that the merger qualify as a reorganization within the meaning of
Section 368 of the Internal Revenue Code. If the merger does qualify as a
reorganization, no gain or loss will be recognized by Bowlin, Lamar or the
merger subsidiary by reason of the merger. In addition, you will not recognize
gain or loss on the exchange of your shares of Bowlin stock for shares of Lamar
stock, except for any cash you receive instead of fractional shares.
BECAUSE THE TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON EACH
BOWLIN STOCKHOLDER'S PARTICULAR CIRCUMSTANCES, WE URGE YOU TO CONSULT YOUR
OWN TAX ADVISORS ABOUT THE FEDERAL, STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES TO YOU OF THE MERGER.
APPRAISAL OR DISSENTERS' RIGHTS (SEE PAGE 47)
Bowlin stockholders do not have appraisal or dissenters' rights in
connection with the merger.
BOWLIN'S REASONS FOR THE MERGER (SEE PAGE 29)
The Bowlin board concluded that the separation of its two business
segments, the distribution to the Bowlin stockholders of Bowlin Travel stock,
and the merger were in the best interests of Bowlin and its stockholders. In
reaching its decision, the board considered, among other things, its belief
that:
- the separation of Bowlin into two separate entities, one to operate the
travel centers business, and the other to operate the outdoor advertising
business, would improve the travel centers business, and would improve
the ability of investors to value each business and as a result increase
stockholder value; and
- a merger with Lamar Advertising Company would further increase
stockholder value by giving Bowlin stockholders the opportunity to hold
shares in a much larger outdoor advertising company with greater
financial resources and opportunities for growth than Bowlin, as well as
a more liquid trading market for its shares.
FAIRNESS OPINION OF SANDERS MORRIS HARRIS INC. (SEE PAGE 31)
In deciding to approve the merger, the Bowlin board considered an opinion
from its financial advisor, Sanders Morris Harris Inc. On October 2, 2000,
Sanders Morris Harris Inc. delivered its written opinion to the Bowlin board
that as of that date and based on and subject to the matters set forth in the
opinion, the consideration pursuant to the merger agreement was fair, from a
financial point of view, to Bowlin stockholders. The full text of this written
opinion is attached as Annex C to this proxy statement/ prospectus. We encourage
you to read this opinion carefully in its entirety. The opinion of Sanders
Morris Harris Inc. is directed to the Bowlin board and is not a recommendation
to any stockholder on how to vote on the merger agreement.
3
<PAGE> 9
THE SPECIAL MEETING
DATE AND PURPOSE (SEE PAGE 19)
A special meeting of Bowlin stockholders will be held at Bowlin's
headquarters at 150 Louisiana NE, Albuquerque, New Mexico 87108 on January 19,
2001 at 9:00 a.m., Mountain Standard Time.
RECORD DATE; VOTING RIGHTS (SEE PAGE 19)
If you owned shares of Bowlin stock as of the close of business on December
11, 2000, the record date for the special meeting, you may vote on the adoption
of the merger agreement.
On that date, there were 4,573,348 shares of Bowlin stock outstanding.
Bowlin stockholders will have one vote at the meeting for each share of common
stock they owned on the record date.
QUORUM; REQUIRED VOTES (SEE PAGE 19)
The holders of a majority of the outstanding shares of Bowlin stock must be
present, in person or by proxy, at the Bowlin special meeting for there to be a
quorum. To approve the merger, holders of a majority of the outstanding shares
of Bowlin stock must vote to adopt the merger agreement. If you fail to vote or
abstain from voting, it will have the effect of a vote against the merger. A
broker who holds Bowlin stock as your nominee generally will not have authority
to vote your shares unless you provide the broker with voting instructions.
On the record date, directors and officers of Lamar as a group owned no
shares of Bowlin stock, and directors and officers of Bowlin as a group owned
approximately 58.8% of the outstanding shares of Bowlin stock.
RECOMMENDATION OF THE BOWLIN BOARD (SEE PAGE 29)
BOWLIN'S BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS IN THE BEST
INTEREST OF BOWLIN STOCKHOLDERS AND RECOMMENDS THAT YOU VOTE "FOR" ADOPTION OF
THE MERGER AGREEMENT.
OTHER SELECTED INFORMATION
TREATMENT OF STOCK OPTIONS (SEE PAGE 40)
Any options for Bowlin stock, other than options to purchase 10,000 shares
of Bowlin stock held by HD Brous & Co., Inc., that had not been exercised by
November 17, 2000, were cancelled and ceased to represent the right to receive
either Bowlin stock or Lamar stock.
EMPLOYEE MATTERS (SEE PAGE 40)
The Bowlin employees who become employed by Lamar will be eligible to
participate in Lamar's 401(k) plan and any assets held in their respective
accounts of Bowlin's plan will be transferred to Lamar's plan.
ACCOUNTING TREATMENT (SEE PAGE 41)
Lamar will account for the merger under the purchase method of accounting,
which means the assets and liabilities of Bowlin, including its intangible
assets, will be recorded on Lamar's books at their fair market values. The
results of operations and cash flows of Bowlin will be included in Lamar's
financial statements prospectively as of the closing of the merger.
4
<PAGE> 10
REGULATORY APPROVALS (SEE PAGE 48)
United States antitrust laws prohibit Lamar and Bowlin from completing the
merger until we have furnished information and materials about the companies and
the merger to the Antitrust Division of the Department of Justice and the
Federal Trade Commission and the required waiting period has expired. Lamar and
Bowlin have filed the required forms with these government agencies and the
appropriate waiting period has expired. We are not aware of any other
governmental or regulatory approvals required for closing the merger other than
compliance with federal securities laws.
CONDITIONS TO THE MERGER (SEE PAGE 45)
We must satisfy the following conditions before completing the merger:
- Bowlin stockholders must adopt the merger agreement; and
- the registration statement of which this proxy statement/prospectus is a
part must have been declared effective by the SEC and must not be the
subject of any stop order or related proceeding.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 46)
We can mutually terminate the merger agreement without completing the
merger. Either Lamar or Bowlin may terminate the agreement if the merger is not
completed by March 31, 2001, and under other circumstances, including failure to
obtain required stockholder approval. Bowlin may terminate the agreement if the
average closing share price of Lamar stock for the 30 trading days ending on the
last trading day immediately prior to the closing of the merger is below $40.00.
TERMINATION FEES AND EXPENSES (SEE PAGE 46)
If we do not complete the merger, each party generally will pay its own
expenses. If we complete the merger, Lamar will pay all of Bowlin's
merger-related expenses up to $1,250,000. Bowlin Travel will assume any costs
incurred by Bowlin in excess of $1,250,000. Bowlin has agreed to pay Lamar a
termination fee of $580,000 if either party terminates the merger agreement
because Bowlin's stockholders fail to adopt the merger agreement.
COMPARATIVE STOCKHOLDER RIGHTS (SEE PAGE 53)
When we complete the merger, Bowlin stockholders will hold shares of Lamar
stock. Their rights will thus be governed by Lamar's charter, by-laws and the
Delaware General Corporation Law.
COMPARATIVE STOCK PRICE INFORMATION (SEE PAGE 10)
Lamar stock is quoted on the Nasdaq National Market and Bowlin stock is
quoted on the American Stock Exchange. The following table presents the market
value of Lamar stock and the market value of Bowlin stock as of October 3, 2000,
the last business day before we publicly announced the merger agreement.
<TABLE>
<CAPTION>
LAMAR STOCK BOWLIN STOCK
------------------------- -----------------------
HIGH LOW CLOSING HIGH LOW CLOSING
------ ------ ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C>
October 3, 2000..................... $38.13 $37.13 $37.44 $6.56 $6.56 $6.56
</TABLE>
You are encouraged to obtain current market quotations for Lamar stock and
Bowlin stock.
5
<PAGE> 11
LAMAR ADVERTISING COMPANY AND SUBSIDIARIES
SELECTED HISTORICAL FINANCIAL INFORMATION
Lamar is providing the following information to aid you in your analysis of
the financial aspects of the merger. The table below represents selected
historical consolidated statement of operations and balance sheet data of Lamar
and its subsidiaries. Lamar derived this information from audited financial
statements for the years ended October 31, 1995 through October 31, 1996 and
December 31, 1997 through December 31, 1999 and from unaudited financial
statements for the nine months ended September 30, 1999 and September 30, 2000.
Effective January 1, 1997, Lamar changed its fiscal year from a twelve-month
period ending October 31 to a twelve-month period ending December 31.
In Lamar's opinion, the information for the nine months ended September 30,
1999 and 2000 reflects all adjustments, consisting only of normal recurring
adjustments, necessary to fairly present the results of operations and financial
condition. Results from interim periods should not be considered indicative of
results for any other periods or for the year. This information is only a
summary. You should read it in conjunction with Lamar's historical financial
statements and related notes and the "Management's Discussion and Analysis of
Financial Condition and Results of Operations," which are incorporated by
reference into this proxy statement/prospectus.
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
OCTOBER 31, YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------- --------------------------------- ---------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................... $102,408 $120,602 $ 201,062 $ 288,588 $ 444,135 $ 294,614 $ 509,026
Operating expenses:
Direct advertising
expenses................... 34,386 41,184 63,390 92,849 143,090 93,481 162,176
General and administrative
expenses................... 27,057 29,466 45,368 60,935 94,372 64,025 103,213
Depreciation and
amortization............... 15,597 16,712 48,317 88,791 177,138 104,951 231,533
-------- -------- --------- --------- --------- --------- ---------
Total operating
expenses............ 77,040 87,362 157,075 242,575 414,600 262,457 496,922
-------- -------- --------- --------- --------- --------- ---------
Operating income............... 25,368 33,240 43,987 46,013 29,535 32,157 12,104
-------- -------- --------- --------- --------- --------- ---------
Other expense (income):
Interest income.............. (199) (240) (1,723) (762) (1,421) (1,067) (968)
Interest expense............. 15,783 15,441 38,230 60,008 89,619 57,471 109,186
Loss (gain) on disposition of
assets..................... 1,476 91 (15) (1,152) (5,481) (5,666) (274)
-------- -------- --------- --------- --------- --------- ---------
Total other expense... 17,060 15,292 36,492 58,094 82,717 50,738 107,944
-------- -------- --------- --------- --------- --------- ---------
Earnings (loss) before income
taxes, extraordinary item and
cumulative effect of an
accounting change............ 8,308 17,948 7,495 (12,081) (53,182) (18,581) (95,840)
Income tax expense (benefit)... (2,390) 7,099 4,654 (191) (9,596) (362) (26,959)
-------- -------- --------- --------- --------- --------- ---------
Earnings (loss) before
extraordinary item and
cumulative effect of an
accounting change............ 10,698 10,849 2,841 (11,890) (43,586) (18,219) (68,881)
Extraordinary loss on debt
extinguishment............... -- -- -- -- (182) (182) --
-------- -------- --------- --------- --------- --------- ---------
Earnings (loss) before
cumulative effect of an
accounting change............ 10,698 10,849 2,841 (11,890) (43,768) (18,401) (68,881)
Cumulative effect of an
accounting change............ -- -- -- -- (767) (767) --
-------- -------- --------- --------- --------- --------- ---------
Net earnings (loss)............ 10,698 10,849 2,841 (11,890) (44,535) (19,168) (68,881)
Preferred stock dividends...... -- (365) (365) (365) (365) (365) (273)
-------- -------- --------- --------- --------- --------- ---------
Net earnings (loss) applicable
to common stock.............. 10,698 10,484 2,476 (12,255) (44,900) (19,533) (69,154)
======== ======== ========= ========= ========= ========= =========
</TABLE>
6
<PAGE> 12
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
OCTOBER 31, YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------- --------------------------------- ---------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) per common
share -- basic and diluted:
Earnings (loss) before
extraordinary item and
accounting change(1)....... $ 0.21 $ 0.25 $ 0.05 $ (.24) $ (.64) $ (.30) $ (.77)
Extraordinary loss on debt
extinguishment(1).......... -- -- -- -- -- -- --
Cumulative effect of a change
in accounting
principle(1)............... $ -- $ -- $ -- $ -- $ (.01) $ (0.01) $ --
-------- -------- --------- --------- --------- --------- ---------
Net earnings (loss)(1)....... $ 0.21 $ 0.25 $ 0.05 $ (.24) $ (.65) $ (.31) $ (.77)
======== ======== ========= ========= ========= ========= =========
Other Data:
EBITDA(2)...................... $ 40,965 $ 49,952 $ 92,304 $ 134,804 $ 206,673 $ 137,108 $ 243,637
EBITDA margin.................. 40% 41% 46% 47% 47% 47% 48%
Cash flows from operating
activities(3)................ $ 25,065 $ 32,493 $ 45,783 $ 72,498 $ 110,551 $ 65,311 $ 115,468
Cash flows from investing
activities(3)................ $(17,817) $(48,124) $(370,228) $(535,217) $(950,650) $(882,760) $(378,097)
Cash flows from financing
activities(3)................ $ (9,378) $ 18,175 $ 250,684 $ 584,070 $ 719,903 $ 699,630 $ 260,904
</TABLE>
<TABLE>
<CAPTION>
AS OF OCTOBER 31, AS OF DECEMBER 31, AS OF
------------------- ---------------------------------- SEPTEMBER 30,
1995 1996 1997 1998 1999 2000
-------- -------- -------- ---------- ---------- -------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......... $ 5,886 $ 8,430 $ 7,246 $ 128,597 $ 8,401 $ 6,676
Working capital................... 1,737 1,540 18,662 94,221 40,787 45,340
Total assets...................... 133,885 173,189 651,336 1,413,377 3,206,945 3,611,253
Long term debt (including current
maturities)..................... 146,051 131,955 539,200 876,532 1,615,781 1,875,657
Total long term obligations....... 143,944 130,211 551,865 857,760 1,730,710 1,998,488
Stockholders' equity (deficit).... (28,154) 19,041 68,713 466,779 1,391,529 1,508,495
</TABLE>
---------------
(1) After giving effect to the three-for-two split of Lamar's Class A and Class
B common stock effective in February 1998.
(2) "EBITDA" is defined as operating income before depreciation and
amortization. It represents a measure which management believes is
customarily used to evaluate the financial performance of companies in the
media industry. However, EBITDA is not a measure of financial performance
under generally accepted accounting principles and should not be considered
an alternative to operating income or net earnings as an indicator of
Lamar's operating performance or to net cash provided by operating
activities as a measure of its liquidity.
(3) Cash flows from operating, investing and financing activities are obtained
from the Company's consolidated statements of cash flows prepared in
accordance with generally accepted accounting principles.
7
<PAGE> 13
BOWLIN OUTDOOR ADVERTISING AND TRAVEL CENTERS INCORPORATED
SELECTED HISTORICAL FINANCIAL INFORMATION
The table below represents selected historical consolidated statement of
income and balance sheet data of Bowlin Outdoor Advertising and Travel Centers
Incorporated. Bowlin derived this information from audited consolidated
financial statements for the five years ended January 31, 2000 and from the
unaudited financial statements for the six months ended July 31, 2000 and 1999.
This information is only a summary. The data presented below should be read in
conjunction with the audited consolidated financial statements, related notes
and Management's Discussion and Analysis of Financial Condition and Results of
Operations, which are included in this proxy statement/prospectus and provided
in the enclosed materials.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS ENDED, JULY 31,
---------------------------------------------------- -------------------
1996 1997 1998 1999 2000 1999 2000
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................... $ 22,945 $ 24,848 $ 27,159 $ 30,295 $ 34,618 $ 17,727 $ 18,813
Cost of goods sold.................. (15,003) (16,340) (17,531) (18,848) (22,350) (11,188) (12,138)
-------- -------- -------- -------- -------- -------- --------
Gross profit........................ 7,942 8,508 9,628 11,447 12,268 6,539 6,675
General and administrative
expenses.......................... (6,408) (6,115) (6,568) (7,480) (8,069) (3,953) (3,862)
Depreciation and amortization....... (857) (780) (1,150) (1,895) (2,526) (1,201) (1,353)
Other operating income.............. 490 379 90 7 31 -- --
-------- -------- -------- -------- -------- -------- --------
Income from operations.............. 1,167 1,992 2,000 2,079 1,704 1,385 1,460
Interest expense.................... (612) (678) (722) (1,108) (1,934) (909) (1,076)
Other income (loss), net............ 81 194 469 139 813 291 188
-------- -------- -------- -------- -------- -------- --------
Income before income taxes.......... 636 1,508 1,747 1,110 583 767 572
Income taxes........................ 252 603 678 437 245 300 226
-------- -------- -------- -------- -------- -------- --------
$ 384 $ 905 $ 1,069 $ 673 $ 338 $ 467 $ 346
======== ======== ======== ======== ======== ======== ========
Basic and diluted earnings per
share............................. $ 0.11 $ 0.26 $ 0.24 $ 0.15 $ 0.08 $ 0.11 $ 0.08
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA:
Property & equipment................ $ 8,910 $ 9,971 $ 16,197 $ 26,425 $ 30,556 $ 29,594 $ 30,289
Total assets........................ $ 13,598 $ 21,843 $ 25,859 $ 37,489 $ 40,781 $ 40,298 $ 41,360
Long-term debt, including current
installments...................... $ 6,577 $ 6,695 $ 8,903 $ 20,252 $ 22,388 $ 21,356 $ 21,642
</TABLE>
8
<PAGE> 14
COMPARATIVE PER SHARE DATA
We are providing the following comparative per share information to aid you
in your analysis of the financial aspects of the merger. You should read this
information in conjunction with each of our historical financial statements and
unaudited pro forma consolidated financial statements and the related notes that
are included elsewhere in this proxy statement/prospectus or incorporated into
this proxy statement/ prospectus by reference. The unaudited pro forma
consolidated per share data presented below reflects the purchase method of
accounting for business combinations. The results may have been different if our
companies had always been consolidated. In addition, the per share data of
Bowlin does not reflect the effect of the anticipated spin-off of Bowlin Travel.
Lamar's fiscal year ends on December 31 and Bowlin's fiscal year ends on
January 31. For purposes of pro forma information (a) Lamar's nine month ended
September 30, 2000 was combined with Bowlin's three month period ended January
31, 2000 and six month period ended July 31, 2000, (b) Lamar's year ended
December 31, 1999 was combined with Bowlin's year ended January 31, 2000 and (c)
Lamar's balance sheet as of September 30, 2000 was combined with Bowlin's
balance sheet as of July 31, 2000. The Bowlin pro forma equivalent per share
data equals the exchange ratio, assuming the exercise of all outstanding
options, of .15818 multiplied by the Lamar pro forma consolidated per share
data. The pro forma per share data are not necessarily indicative of the results
that would have occurred if the merger had been completed on the dates indicated
or the results that will occur after the merger.
<TABLE>
<CAPTION>
LAMAR STOCKHOLDERS
----------------------
HISTORICAL PRO FORMA
---------- ---------
<S> <C> <C>
Loss per share:
Year ended December 31, 1999.............................. $ (.65) n/a
Nine months ended September 30, 2000...................... $ (.77) n/a
Loss per share before extraordinary item and cumulative
effect of an accounting change:
Year ended December 31, 1999.............................. $ (.64) $ (.67)
Nine months ended September 30, 2000...................... $ (.77) $ (.78)
Dividends per share:
Year ended December 31, 1999.............................. n/a n/a
Nine months ended September 30, 2000...................... n/a n/a
Book value per share at September 30, 2000.................. $16.32 $16.51
</TABLE>
<TABLE>
<CAPTION>
BOWLIN STOCKHOLDERS
-----------------------
PRO FORMA
HISTORICAL EQUIVALENT
---------- ----------
<S> <C> <C>
Earnings per share:
Year ended January 31, 2000............................... $ .08 n/a
Six months ended July 31, 2000............................ $ .08 n/a
Dividends per share:
Year ended January 31, 2000............................... n/a n/a
Six months ended July 31, 2000............................ n/a n/a
Loss per share before extraordinary item and cumulative
effect of an accounting change:
Year ended December 31, 1999.............................. n/a $ (.11)
Nine months ended September 30, 2000...................... n/a $ (.12)
Book value per share at July 31, 2000....................... $ 3.48 n/a
Book value per share at September 30, 2000.................. n/a $ 2.61
</TABLE>
9
<PAGE> 15
COMPARATIVE STOCK PRICES AND DIVIDENDS
Lamar stock is quoted on the Nasdaq National Market under the trading
symbol "LAMR." Bowlin stock is quoted on the American Stock Exchange under the
trading symbol "BWN." The following table sets forth the high and low bid prices
per share of Lamar stock as reported on the Nasdaq National Market and the high
and low sales prices of Bowlin stock as reported on the American Stock Exchange.
For purposes of comparison, the periods indicated reflect calendar year quarters
and do not reflect fiscal quarters corresponding to Bowlin's January 31 fiscal
year end.
<TABLE>
<CAPTION>
LAMAR STOCK BOWLIN STOCK
--------------- --------------
HIGH LOW HIGH LOW
------ ------ ------ -----
<S> <C> <C> <C> <C>
CALENDAR QUARTER 1998
First Quarter............................................. $38.50 $24.42 $ 9.50 $3.75
Second Quarter............................................ $36.75 $29.25 $10.88 $7.88
Third Quarter............................................. $41.50 $24.50 $ 9.13 $4.00
Fourth Quarter............................................ $39.25 $19.25 $ 6.00 $4.25
CALENDAR QUARTER 1999
First Quarter............................................. $41.63 $32.25 $ 7.00 $5.13
Second Quarter............................................ $43.00 $27.75 $ 7.13 $6.00
Third Quarter............................................. $50.69 $35.25 $ 6.88 $5.00
Fourth Quarter............................................ $64.50 $44.63 $ 5.88 $3.50
CALENDAR QUARTER 2000
First Quarter............................................. $70.25 $40.13 $ 6.00 $4.38
Second Quarter............................................ $50.38 $36.50 $ 7.50 $4.63
Third Quarter............................................. $50.75 $37.63 $ 7.13 $6.38
Fourth Quarter (through November 27, 2000)................ $49.00 $35.25 $ 7.00 $5.50
</TABLE>
RECENT CLOSING PRICES
The following table sets forth the high, low and closing sales prices per
share of Lamar stock as reported on the Nasdaq National Market and Bowlin stock
as reported on the American Stock Exchange on October 3, 2000, the last trading
day before our public announcement/execution of the merger agreement, and on
November 27, 2000, the last practicable trading day before the date of this
document.
<TABLE>
<CAPTION>
LAMAR STOCK BOWLIN STOCK
------------------------- -----------------------
HIGH LOW CLOSING HIGH LOW CLOSING
------ ------ ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C>
October 3, 2000............................. $38.13 $37.13 $37.44 $6.56 $6.56 $6.56
November 27, 2000........................... $40.50 $38.88 $40.13 $6.13 $6.00 $6.13
</TABLE>
The market price of Lamar stock is likely to fluctuate prior to the merger.
You should obtain current market quotations. We cannot predict the future prices
for Lamar stock, or on which markets it will be traded in the future.
DIVIDEND INFORMATION
No cash dividends have ever been paid or declared on the shares of Lamar
stock or on the Bowlin stock. Lamar does not intend to pay cash dividends on its
Class A common stock in the foreseeable future. Any future payment of dividends
on Lamar stock will be at the board's discretion and will depend upon, among
other things, Lamar's earnings, financial condition, capital requirements, level
of indebtedness and other factors that Lamar's board deems relevant.
10
<PAGE> 16
NUMBER OF STOCKHOLDERS AND NUMBER OF SHARES OUTSTANDING
As of November 27, 2000 there were 209 stockholders of Lamar of record who
held an aggregate of 79,918,110 shares of Lamar Class A common stock. The Reilly
Family Limited Partnership is the sole holder of Lamar's Class B common stock.
As of November 27, 2000, the RFLP held 17,000,000 shares of Class B common
stock.
As of November 27, 2000, there were 394 stockholders of Bowlin of record
who held an aggregate of 4,573,348 shares of Bowlin stock.
11
<PAGE> 17
RISK FACTORS
In addition to the other information included in this proxy
statement/prospectus, you should consider carefully the risk factors described
below in deciding how to vote on the merger proposal. It is especially important
that you keep these risk factors in mind when you read forward-looking
statements.
RISKS RELATING TO THE MERGER
THE NUMBER OF SHARES OF LAMAR STOCK THAT WILL BE EXCHANGED FOR BOWLIN STOCK IS
FIXED AND WILL NOT BE ADJUSTED IF THERE IS ANY CHANGE IN THE PRICE OF LAMAR
STOCK.
Assuming the exercise of all outstanding Bowlin stock options, in the
merger, each share of Bowlin stock will be exchanged for .15818 of a share of
Lamar stock. This exchange ratio is based upon the exchange of 725,000 shares of
Lamar stock upon conversion of the Bowlin stock and will not be adjusted as a
result of any change in the price of Lamar stock. The market value of Lamar
stock on and after the closing date of the merger may vary significantly from
the prices on the date of execution of the merger agreement, the date of this
proxy statement/prospectus or the date on which you vote on the merger. Any
change in the price of Lamar stock will affect the value of the consideration
that Bowlin stockholders receive in the merger. On October 3, 2000, the date of
the execution of the merger, the closing price of Lamar stock was $37.44 per
share. On November 29, 2000, the date preceding the filing of this proxy
statement/prospectus, the closing price of Lamar stock was $38.94 per share. We
encourage you to obtain current market quotations for Lamar stock.
LAMAR FACES DIFFERENT MARKET RISKS FROM THOSE FACED BY BOWLIN, AND THESE RISKS
MAY CAUSE THE VALUE OF THE SHARES OF LAMAR STOCK ISSUED TO YOU TO DECLINE.
In the merger you will receive shares of Lamar stock. The business,
strategy and financial condition of Lamar are somewhat different from that of
Bowlin. Lamar's results of operations, as well as the price of Lamar stock, will
be affected by various factors different from those affecting Bowlin's results
of operations and its common stock price. Future events that may not have
affected the price of Bowlin stock may cause the price of Lamar stock to fall.
OFFICERS AND DIRECTORS OF BOWLIN HAVE CONFLICTS OF INTEREST THAT MAY HAVE
INFLUENCED THEIR DECISIONS REGARDING THE MERGER.
You should be aware of potential conflicts of interest, and the benefits
available to officers and directors of Bowlin when considering the Bowlin
board's recommendation of the merger. The officers and directors of Bowlin have
interests in the merger that are in addition to, or different from, their
interests as Bowlin stockholders. The Bowlin board was aware of these conflicts
of interest when it approved the merger. These interests include the right of
Bowlin's officers and directors to:
- exercise options to purchase Bowlin stock at an exercise price that is
less than the current trading price; and
- indemnification and insurance coverage with respect to acts and omissions
in their capacities as officers and directors of Bowlin. For a more
detailed discussion of potential conflicts of interests of Bowlin
management, see "Background and Reasons for the Merger -- Potential
Conflicts of Interests of Bowlin Management in the Merger" on page 37 of
this proxy statement/prospectus.
12
<PAGE> 18
RISKS RELATING TO LAMAR
LAMAR'S DEBT AGREEMENTS AND THOSE OF ITS WHOLLY-OWNED, DIRECT SUBSIDIARY LAMAR
MEDIA CORP. CONTAIN COVENANTS AND RESTRICTIONS THAT CREATE THE POTENTIAL FOR
DEFAULTS.
The terms of the indenture relating to Lamar's outstanding notes, Lamar
Media Corp.'s bank credit facility and the indentures relating to Lamar Media's
outstanding notes restrict, among other things, the ability of Lamar and Lamar
Media to:
- dispose of assets;
- incur or repay debt;
- create liens; and
- make investments.
Lamar Media's ability to make distributions to Lamar is also restricted
under the terms of these agreements.
Under Lamar Media's bank credit facility Lamar must maintain specified
financial ratios and levels including:
- interest coverage;
- fixed charges ratio;
- senior debt ratios; and
- total debt ratios.
If Lamar fails to comply with these tests, the lenders have the right to
cause all amounts outstanding under the bank credit facility to become
immediately due. If this were to occur and the lenders decide to exercise their
right to accelerate the indebtedness, it would create serious financial problems
for Lamar. Lamar's ability to comply with these restrictions, and any similar
restrictions in future agreements, depends on its operating performance. Because
Lamar's performance is subject to prevailing economic, financial and business
conditions and other factors that are beyond its control, Lamar may be unable to
comply with these restrictions in the future.
BECAUSE LAMAR HAS SIGNIFICANT FIXED PAYMENTS ON ITS DEBT, LAMAR MAY LACK
SUFFICIENT CASH FLOW TO OPERATE ITS BUSINESS AS IT HAS IN THE PAST AND MAY NEED
TO BORROW MONEY IN THE FUTURE TO MAKE THESE PAYMENTS AND OPERATE ITS BUSINESS.
Lamar has borrowed substantial amounts of money in the past and may borrow
more money in the future. At September 30, 2000, Lamar had approximately $288
million of convertible notes outstanding. At September 30, 2000, Lamar Media had
approximately $1,588 million of debt outstanding consisting of approximately
$1,037 million in bank debt, $541 million in various series of senior
subordinated notes of Lamar Media and $10 million in various other short-term
and long-term debt of Lamar Media.
A large part of Lamar's cash flow from operations must be used to make
principal and interest payments on its debt. If Lamar's operations make less
money in the future, it may need to borrow to make these payments. In addition,
Lamar finances most of its acquisitions through borrowings under Lamar Media's
bank credit facility which presently has a total committed amount of $1.25
billion in term and revolving credit loans. At September 30, 2000, there was
approximately $212 million available to borrow under this bank credit facility.
Since Lamar's borrowing capacity under Lamar Media's bank credit facility is
limited, Lamar may not be able to continue to finance future acquisitions at
Lamar's historical rates with borrowings under this bank credit facility. Lamar
may need to borrow additional amounts or seek other sources of financing to fund
future acquisitions. Lamar cannot guarantee that additional financing
13
<PAGE> 19
will be available or available on favorable terms. Lamar also may need the
consent of the banks under Lamar Media's bank credit facility, or the holders of
other indebtedness, to borrow additional money.
LAMAR'S BUSINESS COULD BE HURT BY CHANGES IN ECONOMIC AND ADVERTISING TRENDS.
Lamar sells advertising space to generate revenues. A decrease in demand
for advertising space could adversely affect Lamar's business. General economic
conditions and trends in the advertising industry affect the amount of
advertising space purchased. A reduction in money spent on Lamar's displays
could result from:
- a general decline in economic conditions;
- a decline in economic conditions in particular markets where Lamar
conducts business;
- a reallocation of advertising expenditures to other available media by
significant users of Lamar's displays; or
- a decline in the amount spent on advertising in general.
LAMAR'S OPERATIONS ARE IMPACTED BY THE REGULATION OF OUTDOOR ADVERTISING.
Lamar's operations are significantly impacted by federal, state and local
government regulation of the outdoor advertising business.
The federal government conditions federal highway assistance on states
imposing location restrictions on the placement of billboards on primary and
interstate highways. Federal laws also impose size, spacing and other
limitations on billboards. Some states have adopted standards more restrictive
than the federal requirements. Local governments generally control billboards as
part of their zoning regulations. Some local governments have enacted ordinances
which require removal of billboards by a future date. Others prohibit the
construction of new billboards and the reconstruction of significantly damaged
billboards, or allow new construction only to replace existing structures.
Local laws which mandate removal of billboards at a future date often do
not provide for payment to the owner for the loss of structures that are
required to be removed. Some federal and state laws require payment of
compensation in such circumstances. Local laws that require the removal of a
billboard without compensation have been challenged in state and federal courts
with conflicting results. Accordingly, Lamar may not be successful in
negotiating acceptable arrangements when its displays have been subject to
removal under these types of local laws.
Additional regulations may be imposed on outdoor advertising in the future.
Legislation regulating the content of billboard advertisements has been
introduced in Congress from time to time in the past. Additional regulations or
changes in the current laws regulating and affecting outdoor advertising at the
federal, state or local level may have a material adverse effect on Lamar's
results of operations.
LAMAR'S CONTINUED GROWTH THROUGH ACQUISITIONS MAY BECOME MORE DIFFICULT AND
INVOLVES COSTS AND UNCERTAINTIES.
Lamar has substantially increased its inventory of advertising displays
through acquisitions. Lamar's operating strategy involves making purchases in
markets where it currently competes as well as in new markets. However, the
following factors may affect Lamar's ability to continue to pursue this strategy
effectively:
- The outdoor advertising market has been consolidating, and this may
adversely affect Lamar's ability to find suitable candidates for
purchase.
- Lamar is also likely to face increased competition from other outdoor
advertising companies for the companies or assets that Lamar wishes to
purchase. Increased competition may lead to higher prices for outdoor
advertising companies and assets and decrease those that Lamar is able to
purchase.
14
<PAGE> 20
- Lamar does not know if it will have sufficient capital resources to make
purchases, obtain any required consents from its lenders, or find
acquisition opportunities with acceptable terms.
- Lamar must integrate newly acquired assets and businesses into its
existing operations. From January 1, 2000 to September 30, 2000, Lamar
completed 71 transactions involving the purchase of complementary outdoor
advertising assets. The process of integrating these acquisitions may
result in unforeseen difficulties and could require significant time and
attention from Lamar's management that would otherwise be directed at
developing its existing business. Further, Lamar cannot be certain that
the benefits and cost savings that it anticipates from these purchases
will develop.
LAMAR FACES COMPETITION FROM LARGER AND MORE DIVERSIFIED OUTDOOR ADVERTISERS AND
OTHER FORMS OF ADVERTISING THAT COULD HURT ITS PERFORMANCE.
Lamar cannot be sure that in the future it will compete successfully
against the current and future forms of outdoor advertising and other media. The
competitive pressure that Lamar faces could adversely affect its profitability
or financial performance. Although Lamar is the largest company focusing
exclusively on outdoor advertising, it faces competition from larger companies
with more diversified operations which also include radio and other broadcast
media. Lamar also faces competition from other forms of media, including
television, radio, newspapers and direct mail advertising. Lamar must also
compete with an increasing variety of other out-of-home advertising media that
include advertising displays in shopping centers, malls, airports, stadiums,
movie theaters and supermarkets, and on taxis, trains and buses.
In Lamar's logo sign business, it currently faces competition for
state-awarded service contracts from two other logo sign providers as well as
local companies. Initially, Lamar competes for state-awarded service contracts
as they are privatized. Because these contracts expire after a limited time,
Lamar must compete to keep its existing contracts each time they are up for
renewal.
THE REQUIRED DISPOSITION OF SHARES OF LAMAR STOCK CURRENTLY HELD BY CLEAR
CHANNEL COMMUNICATIONS, INC. COULD CAUSE THE MARKET PRICE OF THE LAMAR STOCK TO
DECLINE.
A wholly-owned subsidiary of Clear Channel Communications, Inc. currently
holds approximately 26 million shares of Lamar stock. These shares represent
approximately 34.8% of Lamar's outstanding Lamar Class A common stock and 28.4%
of all of Lamar's outstanding common stock as of September 30, 2000. Clear
Channel must dispose of all of these shares prior to January 1, 2003 under the
terms of a consent decree with the Department of Justice. The consent decree was
issued in connection with the merger of AMFM Inc. with Clear Channel, which was
subject to review and clearance by the Federal Trade Commission and U.S.
Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, because Clear Channel is also in the outdoor advertising business. These
shares were originally issued to a subsidiary of AMFM Inc. in connection with
Lamar's acquisition of the Chancellor outdoor advertising business. This
required disposition could adversely affect the market price of Lamar stock.
IF LAMAR'S CONTINGENCY PLANS RELATING TO HURRICANES FAIL, THE RESULTING LOSSES
COULD HURT LAMAR'S BUSINESS.
Although Lamar has developed contingency plans designed to deal with the
threat posed to its advertising structures by hurricanes, Lamar cannot guarantee
that these plans will work. If these plans fail, significant losses could
result.
A significant portion of Lamar's structures is located in the Mid-Atlantic
and Gulf Coast regions of the United States. These areas are highly susceptible
to hurricanes during the late summer and early fall. In the past, Lamar has
incurred significant losses due to severe storms. These losses resulted from
structural damage, overtime compensation, loss of billboards that could not be
replaced under applicable laws and reduced occupancy because billboards were out
of service.
Lamar has determined that it is not economical to obtain insurance against
losses from hurricanes and other storms. Instead, Lamar has developed
contingency plans to deal with the threat of hurricanes. For
15
<PAGE> 21
example, Lamar attempts to remove the advertising faces on billboards at the
onset of a storm, when possible, which permits the structures to better
withstand high winds during a storm. Lamar then replaces these advertising faces
after the storm has passed. However, these plans may not be effective in the
future and, if they are not, significant losses may result.
LAMAR'S LOGO SIGN CONTRACTS ARE SUBJECT TO STATE AWARD AND RENEWAL.
A portion of Lamar's revenues and operating income come from state-awarded
service contracts for logo signs. Lamar cannot predict what remaining states, if
any, will start logo sign programs or convert state-run logo sign programs to
privately operated programs. Lamar competed with many other parties for new
state-awarded service contracts for logo signs. Even when Lamar is awarded a
contract, the award may be challenged under state contract bidding requirements.
If an award is challenged, Lamar may incur delays and litigation costs.
Generally, state-awarded logo sign contracts have a term, including renewal
options, of ten to twenty years. States may terminate a contract early, but in
most cases must pay compensation to the logo sign provider for early
termination. Typically, at the end of the term of the contract, ownership of the
structures is transferred to the state without compensation to the logo sign
provider. Of Lamar's 20 logo sign contracts in place at September 30, 2000, two
are subject to renewal in January and February 2001. Lamar cannot guarantee that
it will be able to obtain new logo sign contracts or renew its existing
contracts. In addition, after Lamar receives a new state-awarded logo contract,
it generally incurs significant start-up costs. Lamar cannot guarantee that it
will continue to have access to the capital necessary to finance those costs.
LAMAR'S OPERATIONS COULD BE AFFECTED BY THE LOSS OF KEY EXECUTIVES.
Lamar's success depends to a significant extent upon the continued services
of its executive officers and other key management and sales personnel. Kevin P.
Reilly, Jr., Lamar's Chief Executive Officer, its nine regional managers and the
manager of its logo sign business, in particular, are essential to Lamar's
continued success. Although Lamar has designed its incentive and compensation
programs to retain key employees, Lamar has no employment contracts with any of
its employees and none of its executive officers have signed non-compete
agreements. Lamar does not maintain key man insurance on its executives. If any
of Lamar's executive officers or other key management and sales personnel
stopped working with Lamar in the future, it could have an adverse effect on
Lamar's business.
LAMAR HAS A CONTROLLING STOCKHOLDER THAT CAN CONTROL ANY VOTES TO EXCLUSION OF
THE OTHER HOLDERS OF LAMAR STOCK.
Recipients of Lamar stock under this prospectus will have no control over
the management or business practices of the company.
Kevin P. Reilly, Jr., Chief Executive Officer of Lamar, is the managing
general partner of the Reilly Family Limited Partnership. On September 30, 2000
this partnership beneficially owned all of the outstanding shares of Class B
common stock, which shares represented approximately 69% total voting power of
the Lamar common stock as of September 30, 2000. As a result, Mr. Reilly, or his
successor as managing general partner, controls the outcome of matters requiring
a stockholder vote. These matters include electing directors, amending Lamar's
certificate of incorporation or by-laws, adopting or preventing certain mergers
or other similar transactions, such as a sale of substantially all of Lamar's
assets. Mr. Reilly would also decide the outcome of transactions that could give
the holders of Lamar common stock the opportunity to realize a premium over the
then-prevailing market price for their shares.
Further, subject to contractual restrictions and general fiduciary
obligations, Lamar is not prohibited from engaging in transactions with
management or its principal stockholders or with entities in which members of
management or Lamar's principal stockholders have an interest. Lamar's
certificate of incorporation does not provide for cumulative voting in the
election of directors and, consequently, the Reilly Family Limited Partnership
can elect all the directors.
16
<PAGE> 22
LAMAR'S BY-LAWS AND CERTIFICATE OF INCORPORATION CONTAIN CERTAIN ANTI-TAKEOVER
PROVISIONS THAT MAY MAKE IT HARDER TO REALIZE A PREMIUM OVER THE COMMON STOCK'S
MARKET PRICE OR MAY AFFECT THE MARKET PRICE OF LAMAR STOCK.
Provisions of Lamar's certificate of incorporation and by-laws may
discourage a third party from offering to purchase Lamar. These provisions,
therefore, inhibit actions that would result in a change in control of Lamar.
Some of these actions would otherwise give the holders of Lamar stock the
opportunity to realize a premium over the then-prevailing market price of the
stock.
These provisions may also adversely affect the market price of Lamar stock.
For example, under Lamar's certificate of incorporation Lamar can issue "blank
check" preferred stock with such designations, rights and preferences as Lamar's
board of directors determines from time to time. If issued, this type of
preferred stock could be used as a method of discouraging, delaying or
preventing a change in control of Lamar. In addition, if Lamar issues preferred
stock, it may adversely affect the voting and dividend rights, rights upon
liquidation and other rights that holders of the common stock currently hold.
Lamar does not currently intend to issue any shares of this type of preferred
stock, but retains the right to do so in the future.
Furthermore, Lamar is subject to Section 203 of the Delaware General
Corporation Law, which may discourage takeover attempts. Section 203 generally
prohibits a publicly held Delaware corporation from engaging in a business
combination with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder.
YOU MAY NOT RECEIVE ANY CASH DIVIDENDS ON THE LAMAR STOCK.
Lamar has never paid cash dividends on its Class A common stock and does
not plan to do so in the foreseeable future.
17
<PAGE> 23
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus, including documents incorporated by
reference, contains forward-looking statements about Lamar's and Bowlin's
financial condition, results of operations, business strategies, market
opportunities, acquisition opportunities, plans and objectives of management and
other matters. These forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause our actual results,
performance or achievements, or industry results, to differ materially from any
future results, performance or achievements expressed or implied by these
forward-looking statements.
Generally, the words "anticipates," "believes," "expects," "intends" and
similar expressions identify forward-looking statements. These forward-looking
statements are found at various places throughout this proxy
statement/prospectus and other documents incorporated by reference.
Forward-looking statements, therefore, should be considered in light of all of
the information included or referred to in this proxy statement/prospectus,
including the information set forth under the heading "Risk Factors" on page 12
and included in the documents that we file from time to time with the SEC. See
"Where You Can Find More Information."
The forward-looking statements contained in this proxy statement/prospectus
speak only as of the date of this proxy statement/prospectus.
18
<PAGE> 24
THE BOWLIN SPECIAL MEETING
INTRODUCTION
This proxy statement/prospectus is being furnished to the stockholders of
Bowlin Outdoor Advertising and Travel Centers in connection with the special
meeting of stockholders of Bowlin to be held on January 19, 2001, and any
postponement or adjournment of that meeting. The approximate date this proxy
statement/prospectus is first being sent to Bowlin stockholders is December 14,
2000.
ACTION TO BE TAKEN AT THE BOWLIN SPECIAL MEETING
At the special meeting, holders of common stock, $.001 par value, of Bowlin
will be asked to consider and vote on a proposal to adopt the merger agreement
and to transact any other business that properly comes before the meeting. The
merger agreement is attached as Annex A to this proxy statement/ prospectus and
is incorporated herein by reference.
VOTING AT THE BOWLIN SPECIAL MEETING
Only stockholders of record at the close of business on December 11, 2000
will be entitled to vote at the special meeting. As of the close of business on
December 11, 2000, 4,573,348 shares of Bowlin stock were outstanding and
entitled to vote at the special meeting.
Any person giving a proxy in the form accompanying this proxy
statement/prospectus has the power to revoke it at any time before its exercise.
The proxy may be revoked by filing with the Secretary of Bowlin an instrument of
revocation or a duly executed proxy bearing a later date. The proxy also may be
revoked by affirmatively electing to vote in person while attending the special
meeting. A stockholder who attends the meeting, however, need not revoke the
proxy and vote in person unless the stockholder wishes to do so. All valid,
unrevoked proxies will be voted at the special meeting in accordance with the
instructions given. IF THE SIGNED PROXY IS RETURNED WITHOUT INSTRUCTIONS, IT
WILL BE VOTED FOR ADOPTION OF THE MERGER AGREEMENT. A majority of the shares of
the Bowlin stock entitled to vote, present in person or represented by proxy,
will constitute a quorum at the special meeting. The affirmative vote of the
holders of a majority of the shares of outstanding Bowlin stock is required to
adopt the merger agreement. Abstentions have the same effect as "no" votes in
determining whether the proposal is approved. Broker non-votes are counted for
purposes of determining whether a quorum exists at the special meeting and have
the same effect as "no" votes in determining whether the proposal is approved.
Although the Notice of Special Meeting of Bowlin Outdoor Advertising and Travel
Centers Stockholders provides for transaction of any other business as may
properly come before the meeting, the board of directors of Bowlin has no
knowledge of any matters to be presented at the meeting other than those
referred to herein. The accompanying proxy, however, gives discretionary
authority to the proxy holders to vote in accordance with the recommendation of
management if any other matters are presented.
SOLICITATION OF PROXIES
The accompanying proxy is being solicited on behalf of the board of
directors of Bowlin. The expense of preparing, printing, and mailing the form of
proxy and the material used in the solicitation thereof will be borne by Lamar
Advertising Company. See "Termination Fees and Expenses." In addition to the use
of the mails, proxies may be solicited by personal interview, telephone, and
telegram by directors, officers, and employees of Bowlin. Arrangements have also
been made with brokerage houses, banks, and other custodians, nominees, and
fiduciaries for the forwarding of solicitation materials to the beneficial
owners of Bowlin stock held of record by such person, and Bowlin will reimburse
them for reasonable out-of-pocket expenses they incur.
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<PAGE> 25
BUSINESS OF LAMAR
Lamar is one of the largest and most experienced owners and operators of
outdoor advertising structures in the United States. Lamar conducts a business
that has operated under the Lamar name since 1902. As of September 30, 2000,
Lamar operated approximately 130,600 displays in 43 states. Lamar also operates
the largest logo sign business in the United States. Logo signs are signs
located near highway exits which deliver brand name information on available
gas, food, lodging and camping services. As of September 30, 2000, Lamar
maintained over 89,000 logo sign displays in 20 states. Lamar also operates
transit advertising displays on bus shelters, bus benches and buses in several
markets.
RECENT DEVELOPMENTS
COMPLETED ACQUISITIONS
From January 1, 2000 to September 30, 2000, Lamar completed 71 acquisitions
of complementary outdoor advertising assets, for an aggregate price of
approximately $488 million. These acquisitions included approximately 15,400
displays. Lamar expects that these acquisitions will allow it to take advantage
of operating efficiencies and cross-market sales opportunities.
PENDING ACQUISITIONS
As of September 30, 2000, Lamar had entered into agreements relating to
several other acquisitions which are pending, including the acquisition of
Bowlin that is the subject of this proxy statement/ prospectus. If Lamar
completes all of these acquisitions, it will acquire approximately 6,200 outdoor
advertising displays for an aggregate purchase price of approximately $119
million. These acquisitions are subject to various conditions including the
satisfaction of customary closing conditions. Lamar cannot be sure whether or
when these acquisitions will be completed.
BUSINESS OF BOWLIN
For the most current description of Bowlin Outdoor Advertising and Travel
Centers business, please see Bowlin's annual report on Form 10-K for the fiscal
year ended January 31, 2000, as amended, a copy of which is being mailed with
this proxy statement/prospectus.
20
<PAGE> 26
BOWLIN MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The following is a discussion of the consolidated financial condition and
results of operations of Bowlin as of and for the periods ended July 31, 2000
and 1999. This discussion should be read in conjunction with the Consolidated
Financial Statements of Bowlin and the related notes included in Bowlin's Form
10-K for the fiscal year ended January 31, 2000, which is enclosed with this
proxy statement/prospectus as Annex D.
Bowlin operates in two industry segments: outdoor advertising and travel
centers. In order to perform a meaningful evaluation of Bowlin's performance in
each of its operating segments, Bowlin has presented selected operating data
which separately sets forth the revenue, expenses and operating income
attributable to each segment, and also separately sets forth the corporate
expenses of Bowlin which management does not allocate to either of Bowlin's
segments for purposes of determining their respective operating income. The
discussion of results of operations which follows compares such selected
operating data and corporate expense data for the interim periods presented.
RESULTS OF OPERATIONS
The following table presents certain income and expense items derived from
the Consolidated Statements of Income for the six and three months ended July 31
(unaudited and amounts in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
------------------ ------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
TRAVEL CENTERS:
Gross sales......................................... $14,753 $14,072 $7,987 $7,863
Discounts on sales.................................. 201 181 110 102
------- ------- ------ ------
Net sales........................................... 14,552 13,891 7,877 7,761
Cost of sales....................................... 10,171 9,475 5,361 5,261
------- ------- ------ ------
4,381 4,416 2,516 2,500
General and administrative expenses................. 3,042 3,160 1,592 1,652
Depreciation and amortization....................... 298 294 151 161
------- ------- ------ ------
Operating income.................................... 1,041 962 773 687
Interest expense.................................... 269 252 139 130
------- ------- ------ ------
Segment profit...................................... 772 710 634 557
OUTDOOR ADVERTISING:
Gross sales......................................... 4,261 3,836 2,205 1,998
Direct operating expenses........................... 1,967 1,713 1,002 913
------- ------- ------ ------
2,294 2,123 1,203 1,085
General and administrative expenses................. 540 514 260 236
Depreciation and amortization....................... 976 846 486 433
------- ------- ------ ------
Operating income.................................... 778 763 457 416
Interest expense.................................... 758 616 395 329
------- ------- ------ ------
Segment profit...................................... 20 147 62 87
</TABLE>
21
<PAGE> 27
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
------------------ ------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
CORPORATE AND OTHER:
General and administrative expenses................. (280) (279) (143) (145)
Depreciation and amortization....................... (79) (61) (45) (37)
Interest expense.................................... (49) (41) (26) (20)
Other income, net................................... 188 291 73 263
------- ------- ------ ------
INCOME BEFORE INCOME TAXES............................ 572 767 555 705
INCOME TAXES.......................................... 226 300 212 273
------- ------- ------ ------
NET INCOME............................................ $ 346 $ 467 $ 343 $ 432
======= ======= ====== ======
EBITDA(1) -- TRAVEL CENTERS........................... $ 1,339 $ 1,256 $ 924 $ 848
======= ======= ====== ======
EBITDA(1) -- OUTDOOR ADVERTISING...................... $ 1,754 $ 1,609 $ 943 $ 849
======= ======= ====== ======
EBITDA(1) -- TOTAL COMPANY............................ $ 2,813 $ 2,586 $1,724 $1,552
======= ======= ====== ======
EBITDA MARGIN -- TRAVEL CENTERS....................... 9.1% 8.9% 11.6% 10.8%
======= ======= ====== ======
EBITDA MARGIN -- OUTDOOR ADVERTISING.................. 41.2% 41.9% 42.8% 42.5%
======= ======= ====== ======
EBITDA MARGIN -- TOTAL COMPANY........................ 14.8% 14.4% 16.9% 15.7%
======= ======= ====== ======
</TABLE>
---------------
(1) EBITDA is defined as operating income before depreciation and amortization.
It represents a measure which management believes is customarily used to
evaluate the financial performance of companies in the media industry.
However, EBITDA is not a measure of financial performance under generally
accepted accounting principals and should not be considered an alternative
to operating income or net income as an indicator of Bowlin's operating
performance or to net cash provided by operating activities as a measure of
its liquidity.
Comparison of the Six Months Ended July 31, 2000 and July 31, 1999
OUTDOOR ADVERTISING. Gross sales from Bowlin's outdoor advertising
increased 11.1% to $4.261 million for the six months ended July 31, 2000, from
$3.836 million for the six months ended July 31, 1999. The increase was
primarily attributable to the continual assimilation of Bowlin's acquisitions,
internal development, increased usage of available sign inventory, and increases
in rates.
Direct operating expenses related to outdoor advertising consist of rental
payments to property owners for the use of land on which advertising displays
are located, production expenses and selling expenses. Selling expenses consist
primarily of salaries and commissions for salespersons and travel related to
sales. Direct operating costs increased 14.8% to $1.967 million for the six
months ended July 31, 2000, from $1.713 million for the six months ended July
31, 1999. The increase is principally due to increases in salaries, sign
repairs, cost of production and utilities. Direct operating expenses as a
percentage of gross revenues for the six months ended July 31, 2000 was 46.2%
compared to 44.7% for the six months ended July 31, 1999.
General and administrative expenses for outdoor advertising consist of
salaries and wages for administrative personnel, insurance, legal fees,
association dues and subscriptions and other indirect operating expenses.
General and administrative expenses were $540,000 for the six months ended July
31, 2000, compared to $514,000 for the six months ended July 31, 1999.
Depreciation and amortization expense increased 15.4% to $976,000 for the
six months ended July 31, 2000, from $846,000 for the six months ended July 31,
1999. The increase is attributable to scheduled depreciation of advertising
display structures as well as the amortization of goodwill and non-compete
covenants.
The above factors contributed to the increase in outdoor advertising
operating income of 2.0% to $778,000 for the six months ended July 31, 2000,
from $763,000 for the six months ended July 31, 1999.
22
<PAGE> 28
Interest expense increased 23.1% to $758,000 for the six months ended July
31, 2000, from $616,000 for the six months ended July 31, 1999 due to additional
borrowings to fund acquisitions and internal development.
Segment profit decreased 86.4% to $20,000 for the six months ended July 31,
2000, from $147,000 for the six months ended July 31, 1999 primarily as a result
of increases in depreciation and amortization, and interest expense.
EBITDA for outdoor advertising increased 9.0% to $1.754 million for the six
months ended July 31, 2000, from $1.609 million for the six months ended July
31, 1999. The EBITDA margin for outdoor advertising decreased to 41.2% for the
six months ended July 31, 2000, compared to 41.9% for the six months ended July
31, 1999.
TRAVEL CENTERS. Gross sales at Bowlin's travel centers increased by 4.8%
to $14.753 million for the six months ended July 31, 2000, from $14.072 million
for the six months ended July 31, 1999. Merchandise sales increased 1.1% to
$5.257 million for the six months ended July 31, 2000, from $5.200 million for
the six months ended July 31, 1999. Gasoline sales increased 8.6% to $7.114
million for the six months ended July 31, 2000, from $6.551 million for the same
period in 1999. Wholesale gasoline sales increased 16.2% to $945,000 for the six
months ended July 31, 2000, from $813,000 for the six months ended July 31,
1999. Restaurant sales decreased 4.7% to $1.437 million for the six months ended
July 31, 2000, from $1.508 million for the six months ended July 31, 1999.
Cost of goods sold for the travel centers increased 7.3% to $10.171 million
for the six months ended July 31, 2000, from $9.475 million for the six months
ended July 31, 1999. Merchandise cost of goods increased 0.5% to $2.350 million
for the six months ended July 31, 2000, from $2.338 million for the six months
ended July 31, 1999. Gasoline cost of goods increased 10.4% to $6.520 millions
for the six months ended July 31, 2000, from $5.905 million for the six months
ended July 31, 1999. Wholesale gasoline cost of goods increased 17.1% to
$917,000 for the six months ended July 31, 2000, from $783,000 for the six
months ended July 31, 1999. Restaurant cost of goods decreased 14.5% to $384,000
for the six months ended July 31, 2000, from $449,000 for the six months ended
July 31, 1999. Cost of goods sold as a percentage of gross revenues for the six
months ended July 31, 2000 was 68.9% compared to 67.3% for the six months ended
July 31, 1999.
Gross profit for the travel centers slightly decreased 0.8% to $4.381
million for the six months ended July 31, 2000, from $4.416 million for the six
months ended July 31, 1999. Lower margins on convenience store product sales and
gasoline sales for the six months ended July 31, 2000 continued to negatively
impact gross margin.
General and administrative expenses for travel centers consist of salaries,
bonuses and commissions for travel center personnel, property costs and repairs
and maintenance. General and administrative expenses for the travel centers
decreased 3.7% to $3.042 million for the six months ended July 31, 2000, from
$3.160 million for the six months ended July 31, 1999.
Depreciation and amortization expense increased 1.4% to $298,000 for the
six months ended July 31, 2000, from $294,000 for the six months ended July 31,
1999.
The above factors contributed to an overall increase in travel center
operating income of 8.2% to $1.041 million for the six months ended July 31,
2000, from $962,000 for the six months ended July 31, 1999.
Interest expense increased 6.7% to $269,000 for the six months ended July
31, 2000, from $252,000 for the six months ended July 31, 1999.
Segment profit increased 8.7% to $772,000 for the six months ended July 31,
2000 from $710,000 for the six months ended July 31, 1999 primarily as a result
of increases in gross sales with a corresponding decrease in general and
administrative expenses.
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<PAGE> 29
EBITDA for travel centers increased 6.6% to $1.339 million for the six
months ended July 31, 2000, from $1.256 million for the six months ended July
31, 1999. The EBITDA margin for travel centers increased to 9.1% for the six
months ended July 31, 2000, compared to 8.9% for the six months ended July 31,
1999.
CORPORATE AND OTHER. General and administrative expenses for corporate and
other operations of Bowlin consist primarily of executive and administrative
compensation and benefits, accounting, legal and investor relations fees.
General and administrative expenses increased to $280,000 for the six months
ended July 31, 2000, from $279,000 for the six months ended July 31, 1999.
Depreciation and amortization expenses for Bowlin's corporate and other
operations consist of depreciation associated with the corporate headquarters,
furniture and fixtures and vehicles. Depreciation and amortization expenses
increased to $79,000 for the six months ended July 31, 2000, from $61,000 for
the six months ended July 31, 1999.
Interest expense increased 19.5% to $49,000 for the six months ended July
31, 2000, from $41,000 for the six months ended July 31, 1999.
Other income, net, includes gains and/or losses from the sales of assets
and interest income. Other income, net, decreased 35.4% to $188,000 for the six
months ended July 31, 2000, from $291,000 for the six months ended July 31,
1999. The decrease is primarily due to a one-time gain of $227,000 from
insurance proceeds in fiscal year 2000 not present in fiscal year 2001.
Income before income taxes decreased 25.4% to $572,000 for the six months
ended July 31, 2000, from $767,000 for the six months ended July 31, 1999. As a
percentage of gross revenues, income before income taxes decreased to 3.0% for
the six months ended July 31, 2000, from 4.3% for the six months ended July 31,
1999.
Income taxes were $226,000 for the six months ended July 31, 2000, compared
to $300,000 for the six months ended July 31, 1999, as the result of lower
pretax income.
The foregoing factors contributed to an increase in Bowlin's net income for
the six months ended July 31, 2000 to $346,000 compared to $467,000 for the six
months ended July 31, 1999.
Increases in depreciation and amortization as well as interest expense have
been substantial. Management expects depreciation and amortization and interest
expense to continue to increase which may lead to future net losses.
Comparison of the Three Months Ended July 31, 2000 and July 31, 1999
OUTDOOR ADVERTISING. Gross sales from Bowlin's outdoor advertising
increased 10.4% to $2.205 million for the three months ended July 31, 2000, from
$1.998 million for the three months ended July 31, 1999. The increase was
primarily attributable to the continual assimilation of Bowlin's acquisitions,
internal development, increased usage of available sign inventory, and increases
in rates.
Direct operating expenses related to outdoor advertising consist of rental
payments to property owners for the use of land on which advertising displays
are located, production expenses and selling expenses. Selling expenses consist
primarily of salaries and commissions for salespersons and travel related to
sales. Direct operating costs increased 9.7% to $1.002 million for the three
months ended July 31, 2000, from $913,000 for the three months ended July 31,
1999. The increase is principally due to increases in salaries, sign repairs,
cost of production and utilities. Direct operating expenses as a percentage of
gross revenues for the three months ended July 31, 2000 was 45.4% compared to
45.7% for the three months ended July 31, 1999.
General and administrative expenses for outdoor advertising consist of
salaries and wages for administrative personnel, insurance, legal fees,
association dues and subscriptions and other indirect operating expenses.
General and administrative expenses were $260,000 for the three months ended
July 31, 2000, compared to $236,000 for the three months ended July 31, 1999.
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<PAGE> 30
Depreciation and amortization expense increased 12.2% to $486,000 for the
three months ended July 31, 2000, from $433,000 for the three months ended July
31, 1999. The increase is attributable to scheduled depreciation of advertising
display structures as well as the amortization of goodwill and non-compete
covenants.
The above factors contributed to the increase in outdoor advertising
operating income of 9.9% to $457,000 for the three months ended July 31, 2000,
from $416,000 for the three months ended July 31, 1999.
Interest expense increased 20.1% to $395,000 for the three months ended
July 31, 2000, from $329,000 for the three months ended July 31, 1999 due to
additional borrowings to fund acquisitions and internal development.
Segment profit decreased 28.7% to $62,000 for the three months ended July
31, 2000, from $87,000 for the three months ended July 31, 1999 primarily as a
result of increases in depreciation and amortization, and interest expense.
EBITDA for outdoor advertising increased 11.1% to $943,000 for the three
months ended July 31, 2000, from $849,000 for the three months ended July 31,
1999. The EBITDA margin for outdoor advertising increased to 42.8% for the three
months ended July 31, 2000, compared to 42.5% for the three months ended July
31, 1999.
TRAVEL CENTERS. Gross sales at Bowlin's travel centers increased by 1.6%
to $7.987 million for the three months ended July 31, 2000, from $7.863 million
for the three months ended July 31, 1999. Merchandise sales decreased 0.9% to
$3.032 million for the three months ended July 31, 2000, from $3.061 million for
the three months ended July 31, 1999. Gasoline sales increased 3.8% to $3.628
million for the three months ended July 31, 2000, from $3.495 million for the
same period in 1999. Wholesale gasoline sales increased 15.8% to $536,000 for
the three months ended July 31, 2000, from $463,000 for the three months ended
July 31, 1999. Restaurant sales decreased 6.3% to $791,000 for the three months
ended July 31, 2000, from $844,000 for the three months ended July 31, 1999.
Cost of goods sold for the travel centers increased 1.9% to $5.361 million
for the three months ended July 31, 2000, from $5.261 million for the three
months ended July 31, 1999. Merchandise cost of goods decreased 4.2% to $1.339
million for the three months ended July 31, 2000, from $1.398 million for the
three months ended July 31, 1999. Gasoline cost of goods increased 3.7% to
$3.290 millions for the three months ended July 31, 2000, from $3.174 million
for the three months ended July 31, 1999. Wholesale gasoline cost of goods
increased 16.8% to $521,000 for the three months ended July 31, 2000, from
$446,000 for the three months ended July 31, 1999. Restaurant cost of goods
decreased 13.2% to $211,000 for the three months ended July 31, 2000, from
$243,000 for the three months ended July 31, 1999. Cost of goods sold as a
percentage of gross revenues for the three months ended July 31, 2000 was 67.1%
compared to 66.9% for the three months ended July 31, 1999.
Gross profit for the travel centers increased 0.6% to $2.516 million for
the three months ended July 31, 2000, from $2.500 million for the three months
ended July 31, 1999. Lower margins on convenience store product sales and
gasoline sales for the three months ended July 31, 2000 continued to negatively
impact gross margin.
General and administrative expenses for travel centers consist of salaries,
bonuses and commissions for travel center personnel, property costs and repairs
and maintenance. General and administrative expenses for the travel centers
decreased 3.6% to $1.592 million for the three months ended July 31, 2000, from
$1.652 million for the three months ended July 31, 1999.
Depreciation and amortization expense decreased 6.2% to $151,000 for the
three months ended July 31, 2000, from $161,000 for the three months ended July
31, 1999.
The above factors contributed to an overall increase in travel center
operating income of 12.5% to $773,000 for the three months ended July 31, 2000,
from $687,000 for the three months ended July 31, 1999.
25
<PAGE> 31
Interest expense increased 6.9% to $139,000 for the three months ended July
31, 2000, from $130,000 for the three months ended July 31, 1999.
Segment profit increased 13.8% to $634,000 for the three months ended July
31, 2000 from $557,000 for the three months ended July 31, 1999 primarily as a
result of decreases in general and administrative expenses and depreciation and
amortization.
EBITDA for travel centers increased 9.0% to $924,000 for the three months
ended July 31, 2000, from $848,000 for the three months ended July 31, 1999. The
EBITDA margin for travel centers decreased slightly to 11.6% for the three
months ended July 31, 2000, compared to 10.8% for the three months ended July
31, 1999.
CORPORATE AND OTHER. General and administrative expenses for corporate and
other operations of Bowlin consist primarily of executive and administrative
compensation and benefits, accounting, legal and investor relations fees.
General and administrative expenses decreased to $143,000 for the three months
ended July 31, 2000, from $145,000 for the three months ended July 31, 1999.
Depreciation and amortization expenses for Bowlin's corporate and other
operations consist of depreciation associated with the corporate headquarters,
furniture and fixtures and vehicles. Depreciation and amortization expenses
increased to $45,000 for the three months ended July 31, 2000, from $37,000 for
the three months ended July 31, 1999.
Interest expense increased 30.0% to $26,000 for the three months ended July
31, 2000, from $20,000 for the three months ended July 31, 1999.
Other income, net, includes gains and/or losses from the sales of assets
and interest income. Other income, net, decreased 72.2% to $73,000 for the three
months ended July 31, 2000, from $263,000 for the three months ended July 31,
1999. The decrease is due to a one-time gain from insurance proceeds of $227,000
in fiscal year 2000 not present in fiscal year 2001.
Income before income taxes decreased 21.3% to $555,000 for the three months
ended July 31, 2000, from $705,000 for the three months ended July 31, 1999. As
a percentage of gross revenues, income before income taxes decreased to 5.4% for
the three months ended July 31, 2000, from 7.1% for the three months ended July
31, 1999, primarily as a result of increased depreciation and amortization, and
interest expense.
Income taxes were $212,000 for the three months ended July 31, 2000,
compared to $273,000 for the three months ended July 31, 1999, as the result of
lower pretax income.
The foregoing factors contributed to a decrease in Bowlin's net income for
the three months ended July 31, 2000 to $343,000 compared to $432,000 for the
three months ended July 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 2000, Bowlin had working capital of $4.065 million and a
current ratio of 1.9:1, compared to working capital of $4.166 million and a
current ratio of 2.1:1 at January 31, 2000. Net cash provided by operating
activities was $2.695 million for the six months ended July 31, 2000, compared
to $2.446 million for the six months ended July 31, 1999. Net cash provided in
the current period is primarily attributable to increased depreciation and
amortization expense and other operating assets and liabilities.
Net cash used in investing activities for the six months ended July 31,
2000 was $1.048 million, of which $1.257 million was used for purchases of
property and equipment, partially offset by proceeds from sales of assets. For
the six months ended July 31, 1999, net cash used for investing activities was
$3.683 million, of which $2.814 was used for purchases of property and equipment
and $1.516 million was used for acquisitions.
Net cash used in financing activities for the six months ended July 31,
2000 was $70,000 as compared to cash provided by financing activities of $1.667
million for the six months ended July 31, 1999. At July 31, 2000 and 1999,
financing activities were primarily a result of borrowings and payments on debt.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The principal market risks Bowlin is exposed to are interest rates on
Bowlin's debt. Bowlin's interest sensitive liabilities are its debt instruments.
Variable interest on the majority of Bowlin's debt equals LIBOR plus an
applicable margin. Because rates may increase or decrease at any time, Bowlin is
exposed to market risk as a result of the impact that changes in these base
rates may have on the interest rate applicable to Bowlin's borrowings.
Management does not, however, believe that any risk inherent in the variable
rate nature of its debt is likely to have a material effect on Bowlin's
financial position, results of operations or liquidity.
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<PAGE> 33
BACKGROUND AND REASONS FOR THE MERGER
BACKGROUND
The terms and conditions of the merger were determined through arm's length
negotiations between the senior managements, boards of directors and financial
advisors of Lamar and Bowlin. In determining the form of the transaction and the
form and amount of the consideration, numerous factors were reviewed by the
senior managements and boards of directors of Lamar and Bowlin. The following is
a brief discussion of the contacts and negotiations that have occurred between
Lamar and Bowlin.
Prior to the beginning of the year, the board of directors and senior
management of Bowlin and Rudy R. Miller, Chairman, President and CEO of Miller
Capital Corporation, Bowlin's financial advisor, discussed structuring the
company so as to maximize stockholder value. Because Bowlin operated two very
separate and distinct businesses (outdoor advertising and travel centers), it
was uncertain that the trading price of Bowlin's common stock was capturing the
value of each of the business operations.
In mid January 2000, after consultation with, and at the request of, the
board of directors of Bowlin, Miller Capital contacted REGENT Communications,
Inc.; Eller Outdoor, a part of Clear Channel; Outdoor Systems, a part of
Infinity Broadcasting; and Lamar Advertising Company, to discuss a possible
transaction. At that time, Miller Capital mailed public information to REGENT,
Outdoor Systems and Lamar. Of the companies contacted, Lamar was the only
company that expressed an interest in pursuing negotiations with Bowlin.
On March 27, 2000, a meeting was held in Baton Rouge, Louisiana where Lamar
is headquartered. Attending the meeting were:
Kevin Reilly, Chairman of the Board, President and CEO, Lamar
Sean Reilly, Board member and Vice President/Director of Acquisitions,
Lamar
Rod Rackley, Vice President Real Estate, Lamar
Mike Bowlin, Chairman, President and CEO, Bowlin
Chris Bess, Executive Vice President and COO, Bowlin
Rudy Miller, Chairman, President and CEO, Miller Capital
At this meeting Lamar provided a list of additional information they required to
evaluate a potential transaction. Bowlin assembled the requested diligence
materials on or about May 10, 2000.
On April 13, 2000, Bowlin announced its fiscal year financial results. In
that announcement, Michael Bowlin, Chairman, President and Chief Executive
Officer of Bowlin stated that the company believed that its stock remained
"undervalued when applying an analysis of Bowlin's assets as compared to other
outdoor related companies with a standard industry multiple of EBITDA." Mr.
Bowlin also stated that the company continued to analyze strategies that
included both the outdoor advertising business and the travel centers business
that might enhance stockholder value.
On May 5, 2000, the board of directors of Bowlin held a meeting to discuss
further a plan to enhance stockholder value. The board discussed separating its
two business segments into separate entities, contributing all of the travel
center assets and liabilities to a new travel center entity, and pursuing a
separate transaction or disposition of the outdoor advertising business.
Negotiations between Lamar and Bowlin continued. Throughout the process,
all communications between Lamar and Bowlin were mediated through Miller
Capital.
On June 8, 2000, Bowlin announced its financial results for the quarter
ended April 30, 2000. In that press release, Mr. Bowlin stated that the company
was actively pursuing transactions to accomplish the separation of the outdoor
advertising company and the travel centers business to enhance stockholder
value.
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<PAGE> 34
On June 15, 2000, Lamar submitted a letter of intent to Bowlin, indicating
that it was interested in pursuing an acquisition of the outdoor advertising
business.
On June 22, 2000, Mike Bowlin signed the letter of intent.
At that time Bowlin brought in their outside counsel, Squire, Sanders &
Dempsey, and in concert with Miller Capital and Bowlin's senior management,
began working on a definitive agreement for the transaction.
On September 11, 2000, Bowlin retained Sanders Morris Harris Inc., Houston,
Texas, a registered broker/dealer to review all aspects of the transaction and
to prepare and issue a fairness opinion to Bowlin.
On September 13, 2000, Bowlin announced its financial results for the
quarter ended July 31, 2000. In that press release Mr. Bowlin stated that the
company was moving forward with the previously announced plan to divide the
company into two separate operating entities and that it expected to announce
the details and time frame of the process within the next 30 days.
On September 14, 2000, the board of directors of Bowlin met, along with
Miller Capital and Squire, Sanders & Dempsey, to discuss the potential
transaction with Lamar. The board discussed in detail the acquisition by Lamar,
the contribution of assets and liabilities to a newly formed subsidiary, Bowlin
Travel Centers, Inc., the registration of the shares of Bowlin Travel Centers,
and the anticipated spin-off of the shares of Bowlin Travel Centers to the
stockholders of Bowlin.
On September 29, 2000, Bowlin held another special board meeting, which
included Sanders Morris Harris Inc., Miller Capital and Squire Sanders as
meeting guests, to discuss the fairness opinion issued by Sanders Morris Harris
Inc. This meeting provided board members another opportunity to ask additional
questions from all the outside professionals invited to participate in the
meeting. At this meeting, the board concluded that the transaction was fair to
the stockholders from a financial point of view and in the best interest of
Bowlin and its stockholders and approved the definitive agreement in
substantially the form presented to the board at that meeting.
On October 3, 2000, a definitive agreement was signed by Lamar and Bowlin.
Directors and officers of Bowlin have interests in the merger different
from the interests of other Bowlin stockholders. See "Potential Conflicts of
Interest of Bowlin Management in the Merger."
BOWLIN'S REASONS FOR THE MERGER
The following discussion of Bowlin's reasons for the merger contains a
number of forward-looking statements that reflect the current views of Bowlin
with respect to future events that may have an effect on their future financial
performance. These forward-looking statements include statements regarding the
markets for Lamar's, Bowlin's and the combined company's services, their planned
response to the demands of their markets, their business strategies, and certain
potential technological and operating synergies intended to be achieved by the
merger. These forward-looking statements are subject to various risks and
uncertainties that could cause actual results of Lamar, Bowlin and the combined
company to differ materially from those currently anticipated, including the
ability of Lamar and Bowlin to successfully integrate their operations and
achieve expected synergies; the ability of Bowlin to retain key employees
following announcement of the merger; changes in business conditions and growth
trends affecting Lamar's and Bowlin's markets, the outdoor advertising industry
and the economy in general; and a variety of other competitive factors. These
and other factors that could cause actual results to differ materially are
described under "Risk Factors" and elsewhere in this proxy statement/prospectus.
The Bowlin board believes that the terms of the merger are fair to, and in
the best interests of, Bowlin and its stockholders. ACCORDINGLY THE BOWLIN BOARD
HAS APPROVED THE PROPOSED MERGER AND RECOMMENDS THAT BOWLIN STOCKHOLDERS VOTE
FOR ADOPTION OF THE MERGER AGREEMENT. In reaching their
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<PAGE> 35
decision, the directors considered, with the assistance of management and its
legal and financial advisors, the following factors:
- the financial and other terms and conditions of the merger agreement,
including the 725,000 shares of Lamar stock being offered to the
stockholders of Bowlin in exchange for their Bowlin stock;
- the fact that Bowlin's obligation to consummate the merger is conditioned
upon the approval of Bowlin's stockholders and other conditions as set
forth in the merger agreement;
- the historical market price of, and recent trading activity in, the Lamar
stock;
- the opportunity for Bowlin stockholders to participate in the long-term
growth and appreciation of Bowlin's business through their ownership
interest in Lamar;
- the strategic fit between the outdoor advertising businesses of Bowlin
and Lamar;
- anticipated cost savings resulting from the merger, including (a) the
consolidation of corporate, administrative and support functions, and (b)
the elimination of public reporting obligations of Bowlin (the Bowlin
board did not consider any quantified amount of such cost savings in
reaching its decision to engage in the merger);
- the opinion of Sanders Morris Harris Inc. that, as of October 2, 2000,
the consideration to be paid in the transaction is fair, from a financial
point of view, to the Bowlin stockholders (See "Fairness Opinion of
Bowlin's Financial Advisor");
- the financial presentation and analysis of Sanders Morris Harris Inc.
prepared in connection with its fairness opinion;
- the familiarity of the board with the business, results of operations,
properties and financial condition of Bowlin and the nature of the
industry in which it operates;
- the Bowlin board considered the financial and other terms of the merger,
including the fact that Bowlin's board is prevented from seeking out
alternative transactions under the merger agreement; notwithstanding this
restriction, the Bowlin board may provide information to or enter into
discussions or negotiations with other persons if it determines that it
is necessary to fulfill the directors' fiduciary duties to Bowlin's
stockholders;
- publicly available information with respect to the financial condition
and business of Lamar, including, among other things, Lamar's recent
operating performance and future prospects;
- the capital structure of Lamar;
- reports from management and legal advisors on specific terms of the
merger agreement;
- information received concerning the financial performance, condition,
business operations and prospects of each of Bowlin and Lamar; and
- the proposed terms, timing and structure of the merger.
The Bowlin board also considered a number of risks associated with the
merger, including:
- the possibility of management disruption associated with the merger and
the risk that, despite the efforts of the combined company, key
management personnel of Bowlin might not continue their employment with
the combined company;
- the possibility that certain of the operating economies of scale such as
the elimination of redundant administrative costs sought to be achieved
as a result of the merger might not be realized; and
- the possibility of Bowlin's failure to be successfully integrated into
Lamar.
On balance, however, the Bowlin board determined that the benefits of the
merger outweighed the potential risks and approved the merger.
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<PAGE> 36
The foregoing discussion of information and factors considered by the
Bowlin board is not intended to be exhaustive but is intended to include the
material factors considered. In view of the wide variety of factors considered,
the Bowlin board did not find it practical to, and did not, quantify or
otherwise assign relative weight to the specific factors considered and
individual directors may have given different weights to different factors.
OPINION OF FINANCIAL ADVISOR TO BOWLIN'S BOARD OF DIRECTORS
The Bowlin board retained Sanders Morris Harris Inc., who we refer to as
SMH, to act as its financial advisor in connection with the proposed transaction
and to render an opinion as to the fairness, from a financial point of view, to
the stockholders of Bowlin of the consideration to be received in the proposed
transaction. SMH is an independent investment banking firm that has no ownership
interest in Bowlin and that is not an affiliate of Bowlin. On October 2, 2000,
SMH rendered its opinion to the board of directors of Bowlin to the effect that,
as of such date and based upon and subject to the various considerations
described in the opinion, the consideration was fair, from a financial point of
view, to the stockholders of Bowlin.
The full text of SMH's written opinion dated as of October 2, 2000 which
sets forth, among other things, the assumptions made, matters considered, and
scope and limitations on the review undertaken, is attached as Annex C hereto
and is incorporated by reference. Stockholders are urged to, and should, read
SMH's opinion carefully and in its entirety. SMH's opinion was prepared for the
use of the board of directors in connection with the transaction and does not
address the relative merits of the proposed transaction or constitute a
recommendation to the stockholders as to how they should vote in connection with
the transaction. In addition, the opinion addresses only the financial fairness
of the terms of the transaction to the stockholders and does not address the
relative merits of the transaction or any alternatives, the underlying decision
of the board to engage in the transaction or any other aspect of the
transaction. The summary of SMH's opinion set forth below is qualified in its
entirety by reference to SMH's opinion and should be read together with the full
text of the opinion.
In arriving at its opinion, SMH has, among other things:
1. Reviewed a draft of the Agreement and Plan of Merger dated
September 20,2000;
2. Reviewed a Letter of Intent from Lamar dated June 15, 2000;
3. Reviewed Bowlin's audited financials and annual reports for the
years ended January 31, 2000 and January 31, 1999;
4. Reviewed Bowlin's unaudited financial statements for the quarters
ended July 31, 2000 and April 30, 2000;
5. Reviewed Lamar's audited financial statements for the year ended
December 31, 1999;
6. Reviewed Lamar's unaudited financial statements for the six months
ended June 30, 2000;
7. Reviewed Lamar's Form S-3 (i.e., prospectus relating to the sale of
26.2 million shares of Lamar by Clear Channel Communications) dated
September 8, 2000;
8. Reviewed Bowlin's Form 10 (i.e., registration statement for the
travel centers spin-off) draft dated September 14, 2000;
9. Reviewed Bowlin management's outdoor advertising segment budget for
the year ending January 31, 2001;
10. Reviewed historical market prices and trading volume for common
stocks of both Bowlin and Lamar;
11. Reviewed recent Lamar equity research reports;
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<PAGE> 37
12. Reviewed a 1999 Confidential Memorandum prepared by Miller Capital
Corporation regarding the sale of Bowlin's travel center segment;
13. Reviewed Bowlin's December 17, 1996 Prospectus prepared by HD
Brous & Co., Inc.;
14. Discussed various assets, liabilities and operations of Bowlin
involved in the transaction; and
15. Reviewed such other financial studies and analyses and performed
such other investigations as SMH deemed appropriate.
In conducting its analyses, SMH also held discussions with members of
Bowlin's senior management regarding the past and current business operations,
financial condition and future prospects of Bowlin. SMH assumed that the merger
agreement had been executed and delivered by the parties thereto on terms
substantially the same to those contained in the most recent draft thereof
supplied to and reviewed by SMH as of the date of its opinion. SMH relied upon
and assumed the accuracy and completeness of the financial and other information
made available to it and did not assume responsibility for independent
verification of such information. SMH assumed, and the management of Bowlin has
represented, that the information provided by Bowlin, including projections, had
a reasonable basis and reflected the best currently available estimates and
judgments of Bowlin's management as to the recent and likely future performance
of Bowlin. SMH also relied on representations of Bowlin's management that they
were not aware of any information or fact that would make the information
provided to SMH incomplete or misleading.
In rendering its opinion, SMH assumed and relied upon, without independent
verification, the accuracy and completeness of all information reviewed by it
for the purposes of its opinion. SMH assumed that the transaction would be
consummated on the terms set forth in the merger agreement and that, in the
course of obtaining necessary regulatory and third-party consents for the
transaction, no restriction would be imposed that would have a material adverse
effect on the future results of operations or financial condition of Bowlin. SMH
did not make any independent valuation or appraisal of the assets or liabilities
of Bowlin. SMH's opinion was necessarily based on economic, market, financial
and other conditions as they existed on, and on the information made available
to SMH as of, the date of such opinion. It should be understood that, although
subsequent developments may affect its opinion, except as agreed upon by Bowlin,
SMH does not have any obligation to update, revise or reaffirm its opinion.
In arriving at its opinion, SMH was not authorized to solicit, and did not
solicit, indications of interest from any potential buyers of part or all of
Bowlin nor did it have discussions with any party other than Bowlin's affiliates
with respect to the acquisition of Bowlin or any of its assets. Furthermore, SMH
was not authorized to negotiate the terms of the transaction and has based its
opinion solely on the terms of the merger agreement as negotiated by others.
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<PAGE> 38
The following is a summary of the most significant factors considered and
the principal financial analyses performed by SMH to arrive at its opinion dated
October 2, 2000:
(1) Value Range Comparison. SMH's fairness analysis was primarily that the
value received per share for 100% of Bowlin was equal to or greater
than the midpoint of the range of fair market value per share for 100%
of Bowlin's common stock given up by its stockholders. The following
table summarizes SMH's Value Range Comparison:
<TABLE>
<S> <C>
Estimated Fair Market Value Per Share of Bowlin Stock "Given
Up"....................................................... $6.00-$7.00
APPROXIMATE MID-POINT VALUE OF STOCK "GIVEN UP"............. $6.50
Estimated Fair Market Value Per Share for approximately
0.165 Shares of Lamar Stock............................... $6.61(A)
"Received" for Each Share of Bowlin Stock
Additional Value Per Share "Received" from Spin-Off of
Travel Center Division.................................... $1.50-$3.00
Approximate Mid-Point....................................... $2.25
Total Range of "Value Received"............................. $8.11-$9.61
APPROXIMATE MID-POINT OF TOTAL VALUE "RECEIVED"............. $8.86
Premium of $8.86 over $6.50................................. 36%
</TABLE>
---------------
(A) Based on a minimum Lamar price of $40.00 per share.
Since the mid-point of the value per share of 100% of Bowlin's common
stock "given up" by its stockholders was approximately $6.50 and the
"value received" for (a) the Lamar common stock and (b) the travel
center spin-off was $8.86 per share, the exchange appeared to be fair to
Bowlin's stockholders. SMH also noted that Lamar has a much larger
market capitalization and a more liquid market for its stock than
Bowlin's stock.
(2) Analysis of value for Bowlin stock. In valuing Bowlin's stock, SMH
believed the current stock market price, recent historical stock prices
as well as past and current Bowlin financials were the best indicators
of fair market value. Based on Bowlin's October 1, 2000 stock market
price of $6.50 per share, Bowlin's past trading history and a review of
Bowlin's financial information, SMH believed the range of fair market
value for Bowlin's common stock was between $6.00 and $7.00 per share,
with a mid-point of $6.50.
(3) Analysis of value for Lamar common stock. Based on Lamar's relatively
large market capitalization, recent trading history, analyst comments
and valuations from recent equity research reports on Lamar, and SMH's
overall business judgment, SMH believed the current fair market value
per share of Lamar's common stock was approximately $35.00-$45.00, with
a mid-point of $40.00. In applying this mid-point to BOWLIN stock, SMH
multiplied 725,000 shares to be issued to Bowlin stockholders by the
$40.00 mid-point (i.e., $29.0 million) and then divided by 4,390,098
total outstanding shares of Bowlin stock to arrive at $6.61 per share
of value "received" per share of Bowlin "given up" by its stockholders.
(4) Analysis of value for 100% of the Travel Center Division.
- EBITDA multiple valuation. SMH began by calculating a preliminary
enterprise value for the travel center division. A range of multiples
was applied, but a midpoint of 6 was used in the analysis. SMH then
applied the 6 multiple to the average of the travel center division's
fiscal 2000 earnings before interest, taxes, depreciation and
amortization ("EBITDA") and the first 6 months of fiscal 2001
annualized EBITDA. This gave an implied equity value per share of
$1.22 ($10.0 million minus $6.6 million of debt plus $1.9 million of
cash divided by 4.4 million shares) for the travel center division.
- Discounted Cash Flow Analysis. SMH's primary methodology to value the
travel center division was a discounted cash flow analysis (i.e., an
internal rate of return or IRR analysis),
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<PAGE> 39
which is one method SMH believes investors use to evaluate similar
businesses and divisions. SMH discussed appropriate assumptions for
such analysis with BOWLIN management on September 15, 2000 and on
September 21, 2000. SMH began with fiscal 2001 estimated EBITDA and
grew EBITDA at 5% per year based on discussions with management. SMH
used a pre-tax discount rate of 15% because of the risk involved in
investments in this industry and used the present value of 4-6 times
2005 estimated EBITDA as the terminal value. Based on these
parameters, SMH arrived at an implied fair market value for 100% of
the division's equity of $10.1 million, or $2.31 per share.
Based on SMH's valuations of the travel center division, but giving more
weight to its DCF analysis, SMH believed the travel center division's
fair market value was $1.50-$3.00 per share. Although the financial
analyses employed by SMH imply a market value for 100% of the division,
SMH does not express an opinion on what the travel center division's
stock might trade for after the spin-off. The values implied by the
analyses do not purport to suggest future trading prices for the stock
of the spin-off company.
(5) Premium Over Recent Stock Prices. SMH believed a premium of 30-40% was
clearly fair and attractive to a Bowlin stockholder whose alternative
at the time of SMH's analysis was to sell the stock at $6.50. Such
premiums can range from zero to more than 100% due to special
circumstances, but SMH believed a normal range was probably 20-60%
based on industry and size of operations.
As reported in Mergerstat Review, average premiums offered for 1999 and
1998 were 43.3% and 40.7%, respectively. Reported figures for 1999 were
based on 723 announced public deals and 1998 were based on 523 announced
public deals. Mergerstat defines premiums offered as price over seller's
closing market price five days prior to announcement.
(6) Comparable Company Analysis for Bowlin Travel. Since the companies
used in this analysis were not very comparable to Bowlin (due to their
size and business mix) and the fact that the multiples derived were
extremely high in comparison to most companies, SMH did not give any
weight to the analysis. Nevertheless, SMH reviewed certain financial
ratios for the following public companies:
- Infinity Broadcasting Corporation
- Obie Media Corporation
- Lamar Advertising Company
The three key valuation multiples used in their analysis were: (1)
Enterprise Value (i.e., market value of equity plus total debt) to
EBITDA, (2) Enterprise Value to earnings before interest and taxes
("EBIT") and (3) Enterprise Value to Revenues. All of these multiples
were based on trailing-twelve month financials. In addition to
individual company multiples, SMH calculated the mean (i.e., average),
and adjusted mean (i.e., average excluding highest and lowest multiples)
of each ratio.
Key Comparable Company Multiples
<TABLE>
<CAPTION>
HIGH LOW MEAN ADJUSTED MEAN
------ ----- ------ -------------
<S> <C> <C> <C> <C>
Enterprise Value to:
EBITDA....................... 29.5x 12.5x 21.1x 21.2x
EBIT......................... 540.7x 19.2x 202.0x 46.1x
Revenues..................... 13.3x 1.5x 8.2x 9.9x
</TABLE>
EBITDA multiples for the three guideline companies ranged from 12.5x to
29.5x on September 26, 2000. The adjusted mean multiple for the three
guideline companies was 21.2x.
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SMH multiplied 21.2 by the division's trailing-twelve month EBITDA of
$3,115,000, which resulted in an implied enterprise value of
$66,038,000.
The next multiple was Enterprise Value/EBIT. EBIT multiples for the
three public comparables ranged from 19.2x to 540.7x. The adjusted mean
multiple for the three guideline companies was 46.1x. SMH multiplied
46.1 by the division's trailing-twelve month EBIT of $1,178,000, which
resulted in an implied enterprise value of $54,305,800.
The next multiple was the ratio of Enterprise Value to trailing-twelve
month Revenues. The three guideline public companies had a range of
enterprise value/revenue ratios from 1.5x to 13.3x. The adjusted mean
revenue multiple for the three guideline companies was 9.9x. SMH then
multiplied 9.9 by the division's trailing-twelve month Revenue of
$8,187,000, which resulted in an implied enterprise value of
$81,051,300.
SMH then averaged the three enterprise values cited above for the
division to arrive at an average enterprise value of $67,131,700. In
order to arrive at an implied equity value, SMH subtracted debt and
added excess cash. As of June 30, 2000, Bowlin had $220,000 in cash and
$15,426,000 in total debt. This gave the outdoor advertising division an
implied equity value of $54,925,700 (i.e., $67,131,700 minus $15,426,000
plus $220,000), or $11.83 per share as of September 26, 2000.
(7) Comparable Transactions and Premiums. SMH considered several
transactions from the past year and a half in the outdoor advertising
industry, but none were comparable enough to the transaction to make
their analysis of such transactions more important than the other
valuation methodologies used. The following table summarizes the
transactions and price to trailing twelve months EBITDA (prior to
acquisitions) multiples. Bowlin's outdoor division had trailing twelve
month ("TTM") EBITDA of $3.1 million as of July 31, 2000, which
represents a purchase multiple (from $45 million) of 14.7 times. Based
on the adjusted mean (i.e., excluded highest and lowest multiples)
price to TTM EBITDA multiple from these transactions of 15.2x compared
to the price to TTM EBITDA multiple of 14.2x for the outdoor division,
the multiple Bowlin common stockholders will receive appeared to be
fair.
<TABLE>
<CAPTION>
PRICE PRICE/
ACQUIRER TARGET DATE ($ MIL.) TTM EBITDA
-------- ------ ---- -------- ----------
<S> <C> <C> <C> <C>
Lamar Root Outdoor & Ohio
Outdoor Holding Corp. 5/00 60.0 14.5x
Lamar Macon, GA Properties 5/00 75.0 22.1x
Lamar Advantage Outdoor 5/00 170.0 12.7x
Infinity Giraudy Outdoor Advert. 3/00 425.0 11.1x
Clear Channel Ackerly Florida Outdoor 10/99 330.0 34.0x
Clear Channel Plankanda Holdings 7/99 102.4 12.5x
Clear Channel Dauphin OTA 6/99 250.0 11.3x
Lamar AMFM Inc. Outdoor 6/99 1,600.0 14.9x
Lamar Vivid, Inc. 6/99 22.1 14.4x
Infinity Broadcasting Outdoor Systems 5/99 8,300.0 19.1x
Lamar Frank Hardie, Inc. 4/99 20.3 15.6x
Lamar KJS LLC. 2/99 40.5 12.1x
Lamar American Displays, Inc. 1/99 14.5 18.4x
-----
MEAN 16.4X
HIGH 34.0X
LOW 11.1X
ADJUSTED MEAN(1) 15.2X
</TABLE>
The preparation of a fairness opinion is a complex process involving
subjective judgments and is not necessarily susceptible to a partial analysis or
summary description. SMH believes that selecting any portion of SMH's analyses,
without considering all analyses, would create a misleading or incomplete view
of the processes underlying the analyses and its opinion. In addition, SMH may
have deemed various assumptions more or less probable than other assumptions, so
that the ranges of valuations resulting for
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<PAGE> 41
any particular analysis described above should not be taken to be SMH's view of
the actual value of Bowlin, which may be more or less than suggested by the
analyses.
The analyses performed by SMH are not necessarily indicative of actual
value, which may be significantly more or less favorable than suggested by such
analyses. Such analyses were performed solely as part of SMH's analysis of
whether the consideration to be received pursuant to the Agreement and Plan of
Merger was fair from a financial point of view to Bowlin stockholders, and were
conducted in connection with the delivery of SMH's opinion. The analyses do not
purport to be appraisals or to be indicative of actual values or future results,
or to reflect the prices at which Bowlin or its assets might actually be sold.
As described above, SMH's opinion provided to the board of directors was
one of a number of factors taken into consideration by the board in making its
determination to recommend adoption of the Agreement and Plan of Merger and the
transaction resulting from it. Consequently, SMH's analyses described above
should not be viewed as determinative of the opinion of the board of directors
or management with respect to the value of Bowlin or its divisions. The Lamar
common stock to be received by the stockholders pursuant to the Agreement and
Plan of Merger was determined through negotiations between representatives of
Bowlin and was approved by the entire board.
SMH was selected by the board of directors to render a fairness opinion in
connection with the transaction because of SMH's reputation and expertise as an
investment banking firm. SMH, as part of its investment banking business, is
regularly engaged in the valuation of businesses and their securities in
connection with going-private transactions, mergers and acquisitions,
underwritings of equities, private placements and valuations for estate,
corporate and other purposes. In the ordinary course of its business, SMH may
actively trade Bowlin's equity securities for its own account and for the
accounts of customers and, accordingly, may at any time hold a long or
short-term position in such securities.
In accordance with its engagement letter, the opinion of SMH is addressed
to the board of directors for its use in connection with its review and
evaluation of the proposed transaction. Neither the opinion nor the underlying
SMH analyses may be relied upon by any person other than the members of the
board without the prior written consent of SMH. Accordingly, under the terms of
the engagement letter and the opinion letter prepared pursuant to the engagement
letter, no stockholders of Bowlin may rely or allege any reliance on SMH's
opinion or analysis in connection with the stockholder's consideration of the
merits of the transaction or otherwise. It is SMH's position that its duties in
connection with its fairness opinion are solely to the board of directors, and
that it has no legal responsibility to any other persons, including stockholders
of Bowlin, under the laws of the State of Texas, the governing law of the
engagement letter. SMH would likely assert the substance of this disclaimer as a
defense to claims, if any, that might be brought against it by stockholders of
Bowlin with respect to its fairness opinion. Further, courts interpreting Texas
law have strictly limited the persons who can sue for professional negligence to
the parties to the agreement that provided for the engagement of the
professional. SMH believes that the principles adopted in these cases would
limit its liability solely to the board of directors. However, since no Texas
court has ruled specifically on these issues in the context of SMH's engagement,
they necessarily would have to be resolved by a court of competent jurisdiction.
Pursuant to the engagement letter agreement between the board of directors
and SMH, dated September 11, 2000, Bowlin agreed to pay SMH (i) a non-refundable
retainer of $25,000 upon execution of the engagement letter and (ii) an
additional $75,000 payable upon submission of SMH's opinion. In addition to any
fees for professional services, SMH will also be reimbursed by Bowlin for
expenses incurred in connection with SMH's assignment. Bowlin has also agreed to
indemnify SMH against specified liabilities, including liabilities under the
federal securities laws, related to, arising out of or in connection with the
engagement of SMH by the board of directors.
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POTENTIAL CONFLICTS OF INTEREST OF BOWLIN MANAGEMENT IN THE MERGER
In considering the merger, you should be aware of the interests executive
officers and directors of Bowlin have in the merger that are different from your
interests and their interests as stockholders. Michael L. Bowlin, Chairman,
President and Chief Executive Officer, beneficially owns approximately 36.8% of
the outstanding common stock. All directors and executive officers as a group
own approximately 58.8% of the outstanding common stock of Bowlin. Directors
have a fiduciary duty to act in the best interest of the stockholders. Officers
have a duty to act in the best interest of the company. However, because the
directors and officers of Bowlin are also stockholders of Bowlin, they might be
inclined to vote to adopt the merger agreement if they believe it is in their
own individual best interests as a stockholder, irrespective of the impact of
that vote on other stockholders. In addition, some directors and officers may
have held options to purchase shares of Bowlin stock at an exercise price that
was less than the current trading price. Although the officers and directors of
Bowlin have not signed any agreements that require them to vote for the merger,
they have indicated their intention to vote in favor of the transaction.
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THE MERGER AND THE MERGER AGREEMENT
The following is a summary of significant provisions of the merger
agreement. For a more complete understanding of the merger agreement, you should
read the agreement. The agreement is attached as Annex A and is incorporated
into this proxy statement/prospectus by reference.
GENERAL DESCRIPTION OF THE MERGER
In the merger, Lamar Southwest Acquisition Corporation, a newly formed,
wholly owned subsidiary of Lamar, will merge with and into Bowlin. Bowlin will
be the surviving corporation and will continue to exist under Nevada law as a
wholly owned subsidiary of Lamar. The articles of incorporation of Bowlin, which
will be amended and restated and filed with the articles of merger, will be the
articles of incorporation of the surviving corporation. The by-laws of Lamar
Southwest, as in effect immediately before the merger, will be the by-laws of
the surviving corporation.
Bowlin and its subsidiary, Bowlin Travel Centers, Inc., entered into a
contribution agreement dated as of November 1, 2000 in the form attached as
Annex B to this proxy statement/prospectus. This contribution agreement provides
that certain assets and liabilities of Bowlin related to Bowlin's travel centers
line of business will be contributed to Bowlin Travel. Bowlin intends to
distribute the shares of Bowlin Travel to the Bowlin stockholders immediately
prior to the completion of the merger. The business, assets and liabilities of
the travel center's line of business, therefore, will not be acquired by Lamar
in the merger.
Contribution Agreement
Under the contribution agreement, Bowlin contributed all of the assets and
liabilities directly associated with the ownership and operation of the travel
centers business to Bowlin Travel Centers, Inc. Bowlin and Bowlin Travel each
represented that it was duly organized, had the authority to enter into the
agreement, and that there were no conflicts or violations resulting from, or
consents required by, the execution and delivery of the agreement. Bowlin Travel
also covenants under the agreement to offer employment to all of the employees
of Bowlin that work in the travel centers business, on the same terms and
conditions of employment they currently enjoy with Bowlin, and to assume all
obligations and liabilities associated with those employees. Under the
agreement, Bowlin Travel agreed to indemnify Bowlin, its directors, officers,
shareholders, employees, affiliates, successors and assigns for any and all
losses, liabilities, claims, demands, penalties, fines, settlements, damages, or
expenses (including, without limitation, interest, penalties, costs of
preparation and investigation, and the reasonable fees, disbursements and
expenses of attorneys, accountants and professional advisors) incurred by any of
the Bowlin indemnitees:
- arising under federal, state or local environmental laws and arising out
of or in connection with the travel center business or the ownership or
operation of any of the assets or assumed liabilities;
- resulting from any labor or employment dispute arising out of or in
connection with the operation of the travel center business or otherwise
involving a travel centers business employee; and
- any attempt (whether or not successful) by any person to cause or require
Bowlin to discharge or pay any assumed liability, or otherwise arising
out of or relating to any assumed liability.
Tax Sharing and Disaffiliation Agreement
As part of the Contribution Agreement, Bowlin and Bowlin Travel entered
into a Tax Sharing and Disaffiliation Agreement, which we refer to as the Tax
Agreement. The Tax Agreement sets forth rights and obligations of Bowlin and
Bowlin Travel with respect to taxes imposed on their respective businesses both
before and after the distribution of Bowlin Travel shares to the Bowlin
shareholders and with respect to "Restructuring Taxes." For purposes of the Tax
Agreement, "Restructuring Taxes" are taxes imposed in connection with the
contribution by Bowlin of the travel centers-related assets and liabilities to
Bowlin Travel and the distribution.
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General Taxes. Under the Tax Agreement, Bowlin Travel will be liable for
and indemnify Bowlin against any taxes that are attributable to the travel
centers business (both before and after transfer of such business to Bowlin
Travel), Restructuring Taxes and sales, transfer and other similar taxes
incurred in connection with the contribution and distribution. Bowlin will be
liable for and indemnify Bowlin Travel against any taxes that are attributable
to the outdoor advertising business. The Tax Agreement sets forth additional
rules for determining the tax obligations of Bowlin and Bowlin Travel.
Restructuring Taxes. Under the Tax Agreement, Bowlin Travel is generally
responsible for all Restructuring Taxes. Bowlin and Bowlin Travel anticipate
that the contribution will not result in any tax liability and that the
distribution will not result in any tax liability to Bowlin shareholders.
However, Bowlin may be liable for Restructuring Taxes in connection with the
distribution. More specifically, Bowlin will be required to pay tax on gain (if
any) equal to the value of Bowlin Travel on the date of the distribution, less
Bowlin's basis in Bowlin Travel shares immediately before the distribution.
Bowlin and Bowlin Travel plan to base the value of Bowlin Travel on the
first-day trading price of Bowlin Travel shares. Therefore, the amount of this
gain and any consequent Restructuring Taxes will not be determined until the
time of the distribution. Depending upon the value of Bowlin Travel as of the
distribution, the amount of Restructuring Taxes could be substantial. In
addition, it is possible that the IRS may successfully challenge any valuation
of Bowlin Travel for this purpose and thereby assess additional Restructuring
Taxes. As stated previously, under the Tax Agreement, Bowlin Travel is required
to reimburse Bowlin for any Restructuring Taxes.
Administrative Matters. The Tax Agreement also sets forth the obligations
of Bowlin and Bowlin Travel with respect to the filing of tax returns, the
administration of tax contests and other matters.
Reasons for the Distribution
The distribution of the Bowlin Travel stock is being carried out for the
purpose of facilitating the tax-free acquisition of Bowlin by Lamar because
Lamar is not interested in acquiring the travel center business.
EFFECTIVE TIME
We expect to close the merger during the first quarter of 2001. The merger
will be effective upon the filing of articles of merger with the Nevada
Secretary of State, or a later time that we specify in the articles of merger.
We plan to file the articles of merger soon after the Bowlin special meeting.
MERGER CONSIDERATION FOR BOWLIN STOCK AND EXCHANGE RATIO
At the effective time of the merger, each share of Bowlin stock will be
converted into the right to receive Lamar stock equal to the product of (A) one
share of Lamar stock and (B) the quotient of (x) 725,000, divided by (y) the
total number of shares of Bowlin stock issued and outstanding. Assuming that all
outstanding Bowlin stock options are exercised prior to the closing of the
merger, there would be 4,583,348 shares of Bowlin stock outstanding and the
exchange ratio would be .15818. Cash will be paid for any fractional shares. In
no event will Lamar issue more than 725,000 shares of Lamar stock for the
outstanding shares of Bowlin stock. The exchange formula was agreed to in
arm's-length negotiations between representatives of Lamar and Bowlin.
The 725,000 shares of Lamar stock issuable in the merger represent
approximately .91% of the total Lamar stock that will be outstanding after the
issuance.
NO FRACTIONAL SHARES
Lamar will not issue fractional shares in the merger. Instead, Lamar will
pay cash to each Bowlin stockholder who otherwise would be entitled to receive a
fractional share of Lamar stock. The cash amount will equal the fractional share
number multiplied by the average of the closing sales prices of a
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share of Lamar stock as reported on the Nasdaq National Market System for the 30
trading days ending on the last trading day immediately prior to the closing of
the merger.
EXCHANGE OF BOWLIN STOCK CERTIFICATES
Promptly after the effective time, the exchange agent will mail transmittal
forms to each person who held shares of Bowlin stock as of the effective time
for use in exchanging Bowlin stock certificates for Lamar stock certificates and
any cash for fractional shares. The transmittal forms will include instructions
specifying details of the exchange.
DO NOT SEND IN YOUR BOWLIN CERTIFICATES UNTIL YOU RECEIVE A TRANSMITTAL
FORM.
If certificates for any shares of Bowlin stock have been lost, stolen or
destroyed, the holder must submit appropriate evidence regarding the ownership,
loss, theft or destruction of the certificate, an affidavit to that effect and a
customary indemnification agreement to the exchange agent.
Lamar will honor a request from a person surrendering a Bowlin stock
certificate that the Lamar stock being given in exchange be issued to a person
other than the registered holder of the certificate on the exchange agent's
books, so long as the requesting person:
- submits all documents necessary to evidence and effect the transfer to
the new holder; and
- pays any transfer or other taxes for issuing shares of Lamar stock to a
person other than the registered holder of the certificate, unless the
requesting person satisfactorily establishes to Lamar that any tax has
been paid or is inapplicable.
Holders of Bowlin stock exchanged for Lamar stock in the merger will be
entitled to receive dividends and other distributions on Lamar stock (without
interest) that are declared or made with a record date after the effective time.
Dividends or other distributions will not be paid to any former holder of Bowlin
stock, however, until that holder surrenders its shares of Bowlin stock to the
exchange agent.
TREATMENT OF BOWLIN STOCK OPTIONS
Any options for Bowlin stock that were issued to directors or employees
under Bowlin's option plans that had not been exercised by November 17, 2000
were cancelled and no longer represent the right to receive Bowlin stock or
Lamar stock. On October 17, 2000, Bowlin notified each holder of an option to
purchase Bowlin stock, except HD Brous & Co., Inc., that they had the right to
exercise any and all options to purchase Bowlin stock, whether or not currently
exercisable according to their respective terms, prior to November 17, 2000. A
total of 244,500 of these options were not exercised by November 17, 2000 and
have been automatically terminated. The only options currently outstanding are
options to purchase 10,000 shares of Bowlin stock at an exercise price of $5.00
per share, held by HD Brous & Co., Inc. These options will expire on the earlier
to occur of (i) 5:00 p.m. Arizona time on the business day immediately prior to
the date on which the merger is effectuated, or (ii) 5:00 p.m. Arizona time on
December 31, 2000.
TREATMENT OF BOWLIN BENEFITS
The Bowlin employees who remain employees of the surviving corporation will
be eligible to participate in Lamar's 401(k) plan and any assets that they have
in the Bowlin plan will be transferred to Lamar's plan. After the spin-off of
Bowlin Travel, Bowlin Travel will continue to maintain the Bowlin 401(k) plan as
a successor employer to those employees who do not remain with the surviving
corporation following the merger.
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ACCOUNTING TREATMENT
Lamar will account for the merger using the purchase method of accounting
for a business combination. Under this method of accounting, the assets and
liabilities of Bowlin, including intangible assets, will be recorded at their
fair market values. The results of operations and cash flows of Bowlin will be
included in Lamar's financial statements following the completion of the merger.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the material U.S. federal income tax
consequences of the merger. The discussion is based on the Internal Revenue
Code, related regulations, existing administrative interpretations and court
decisions, all of which may change, possibly with retroactive effect. This
discussion assumes that Bowlin stockholders hold their shares of Bowlin stock as
capital assets within the meaning of Section 1221 of the Internal Revenue Code.
This discussion does not address all aspects of U.S. federal income taxation
that may be important to you either in light of your particular circumstances or
if you are subject to special rules. These special rules include those relating
to:
- stockholders who are not U.S. citizens or residents or that are foreign
corporations, partnerships, estates or trusts;
- financial institutions;
- tax-exempt organizations;
- insurance companies;
- dealers in securities;
- stockholders who acquired their Bowlin stock by exercising options or
similar derivative securities or otherwise as compensation; and
- stockholders who hold their Bowlin stock as part of a hedge, straddle,
appreciated financial position or conversion transaction.
This section, as it relates to matters of United States federal income tax
law, constitutes the opinion of Squire, Sanders & Dempsey L.L.P., counsel to
Bowlin. These opinions are based on a number of assumptions, representations and
covenants, including the assumption that the merger will be completed as
described in this document. The opinions neither bind the IRS nor preclude the
IRS from adopting a position contrary to that expressed in the opinions. Bowlin
and Lamar cannot assure you that contrary positions will not be successfully
asserted by the IRS or adopted by a court if the issues are litigated. Neither
of us intends to obtain a ruling from the IRS with respect to the tax
consequences of the merger.
Tax Consequences to Bowlin Stockholders
Except as discussed below, Bowlin stockholders will not recognize gain or
loss for U.S. federal income tax purposes on the exchange of Bowlin stock for
Lamar stock in the merger. The aggregate tax basis of Lamar stock received in
the merger will be the same as the aggregate tax basis of the Bowlin stock
surrendered in exchange therefor, reduced by the portion of the tax basis of the
Bowlin stock allocable to fractional shares of Lamar stock for which cash is
received instead. The holding period of Lamar stock received as a result of the
exchange will include the holding period of the Bowlin stock surrendered in
exchange. Bowlin stockholders will recognize gain or loss for U.S. federal
income tax purposes on the cash they receive in place of fractional shares of
Lamar stock. The gain or loss will be measured by the difference between the
amount of cash received and the portion of the tax basis of the Bowlin stock
surrendered in the merger that is allocable to those fractional shares of Lamar
stock.
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Tax Consequences to Lamar and Bowlin
Lamar, including its merger subsidiary, and Bowlin will not recognize gain
or loss for U.S. federal income tax purposes by reason of the merger. However,
Bowlin may be liable for taxes imposed in connection with the contribution by
Bowlin of the travel centers-related assets and liabilities to Bowlin Travel and
the distribution. More specifically, Bowlin will be required to pay tax on the
gain (if any) equal to the value of Bowlin Travel on the date of the
distribution, less Bowlin's basis in the Bowlin Travel shares immediately before
the distribution. Bowlin Travel has agreed to indemnify Bowlin for these taxes.
See "General Description of the Merger -- Tax Sharing and Disaffiliation
Agreement."
Backup Withholding
Unless a stockholder complies with reporting and/or certification
procedures or is an exempt recipient under the backup withholding and
information reporting provisions of the Internal Revenue Code and Treasury
regulations, the holder may be subject to a 31% backup withholding tax on any
cash payments received in the merger. Any amounts withheld under the backup
withholding rules may be allowed as a refund or a credit against the holder's
federal income tax liability, provided the required information is furnished to
the IRS.
THE FOREGOING DISCUSSION IS ONLY INTENDED TO PROVIDE YOU WITH A GENERAL
SUMMARY. IT IS NOT A COMPLETE ANALYSIS OR DESCRIPTION OF EVERY POTENTIAL U.S.
FEDERAL INCOME TAX CONSEQUENCE OR ANY OTHER CONSEQUENCE OF THE MERGER. IN
ADDITION, THE DISCUSSION DOES NOT ADDRESS TAX CONSEQUENCES THAT MAY VARY WITH,
OR ARE CONTINGENT ON, YOUR INDIVIDUAL CIRCUMSTANCES. MOREOVER, THIS DISCUSSION
DOES NOT ADDRESS ANY NON-INCOME TAX OR ANY FOREIGN, STATE OR LOCAL TAX
CONSEQUENCES OF THE MERGER. ACCORDINGLY, WE STRONGLY URGE YOU TO CONSULT WITH
YOUR TAX ADVISOR TO DETERMINE THE PARTICULAR U.S. FEDERAL, STATE, LOCAL OR
FOREIGN TAX CONSEQUENCES TO YOU OF THE MERGER.
COVENANTS UNDER THE MERGER AGREEMENT
Bowlin's Interim Operations
Until the closing of the merger and except regarding the contribution of
Bowlin's travel center assets and liabilities to Bowlin Travel in connection
with the spin-off, Bowlin has agreed to operate its business solely in the
ordinary course. Bowlin also agreed to:
- use best efforts to preserve its assets;
- use best efforts to preserve the goodwill of its suppliers, customers and
others having business relations with it;
- do nothing to impair its ability to keep and preserve its business.
Joint Interim Obligations
Bowlin and Lamar have agreed that they will not do anything or fail to do
anything that will result in a breach of any of the agreements or commitments
made in the merger agreement. Each also has agreed that it will not do anything
or fail to do anything that would cause any of its representations and
warranties in the merger agreement to become untrue.
No Solicitation by Bowlin
Bowlin has agreed not to directly or indirectly (1) solicit any person
regarding either a business combination or any other transaction with Bowlin as
an alternative to this merger, (2) participate in any negotiations with, or
provide information to, any person to seek any alternative transaction to this
merger, (3) agree to or recommend an alternative transaction or (4) enter into
any agreements regarding an alternative transaction to the merger, unless prior
to the adoption of the merger agreement by the Bowlin's stockholders, Bowlin's
board is required to do so by its fiduciary duties. Bowlin has agreed to inform
Lamar of any inquiry it receives relating to an alternative transaction.
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Recommendation of the Bowlin Board
The Bowlin board has agreed to take all lawful action that does not
interfere with its fiduciary duties to secure the vote of its stockholders
adopting the merger agreement, including recommending this transaction to its
stockholders.
Other Covenants
The merger agreement contains covenants of both parties relating to, among
other things, public announcements, notifications, regulatory filings, employee
matters, and cooperation in obtaining consents and approvals.
Bowlin has also agreed, among other things, to grant Lamar access to
company information as is reasonably necessary to investigate Bowlin and to
confer with Lamar on a regular basis to report material operational matters and
report the general status of its operations.
Lamar has also agreed, among other things, to use its best efforts to cause
the shares of Lamar stock that it will issue in the merger to be approved for
listing on the Nasdaq National Market.
REPRESENTATIONS AND WARRANTIES
Each of Lamar, Lamar Southwest Acquisition Corporation and Bowlin has made
customary representations and warranties to the other in the merger agreement
regarding, among other things:
- its organization and similar corporate matters;
- the authorization, execution, delivery, performance and enforceability of
the merger agreement;
- its capital structure;
- reports and financial statements filed with the SEC and the accuracy of
the information contained in those documents;
- the absence of any undisclosed liabilities since their latest audited
balance sheet;
- necessary governmental consents and filings;
- the absence of conflicts, violations or defaults under its organizational
documents and other agreements and documents as a result of executing the
merger agreement and the consummation of the merger;
- the absence of conflicts with or violations of any laws as a result of
executing the merger agreement;
- merger-related brokers' and finders' fees; and
- the accuracy of the information in this proxy statement/prospectus.
Bowlin has made additional representations and warranties to Lamar
regarding, among other things:
- its advertising revenues and lease expense over certain prescribed
periods, as well as the level of its long-term debt as of the effective
time of the merger;
- its material contracts;
- its owned real property;
- the type, location and condition of its outdoor advertising faces;
- insurance coverage;
- the absence of litigation;
- legal proceedings;
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- its accounts receivable;
- the intellectual property it uses in its business;
- the filing of tax returns and payment of taxes;
- its employee benefit plans;
- its bank accounts;
- employee matters;
- possession of all necessary permits;
- compliance with all applicable laws;
- compliance with governmental regulations concerning employees and
relations with employees;
- compliance with environmental laws and other environmental matters;
- board approval of the merger;
- the voting requirements for stockholder approval of the merger;
- the absence of a stockholder rights plan;
- adherence to corporate formalities; and
- transactions with related parties.
Bowlin has also made the following representations and warranties to Lamar
that, since its latest audited balance sheet, with several exceptions, it has
not:
- amended its certificate of incorporation or bylaws;
- incurred any liability exceeding $50,000 individually or $100,000 in the
aggregate;
- permitted any of its assets to be subject to any mortgage or other
encumbrance;
- merged with another entity, agreed to acquire any business or sold any of
its assets;
- made any material capital expenditures;
- declared any dividends or redeemed any outstanding securities;
- adopted or changed any employee benefit plans;
- made any bonus or profit sharing distributions;
- made any loans;
- changed any banking arrangements;
- entered into or amended any employment agreements;
- canceled or released any debts;
- entered into any transactions that were not negotiated at arm's-length;
- suffered any material losses; or
- incurred any liability with respect to a labor or collective bargaining
agreement.
Lamar has made additional representations and warranties to Bowlin
regarding, among other things, its intention to satisfy certain requirements so
that the merger qualifies as a tax free reorganization.
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CONDITIONS TO THE MERGER
Conditions to Each Party's Obligation to Effect the Merger
Lamar and Bowlin do not have to consummate the merger unless the following
conditions are met or, where permissible, waived:
- Bowlin stockholders must adopt the merger agreement;
- the registration statement of which this proxy statement/prospectus is a
part must have been declared effective and not be subject to any stop
order or related proceeding;
- Lamar and Bowlin must obtain all required approvals from governmental
entities and satisfy any required waiting periods;
- no injunction or other judgment is in effect to prohibit the consummation
of the merger;
- no litigation or other proceeding is pending or threatened that would
adversely affect Lamar or the entity surviving the merger; and
- the shares to be issued in the merger have been authorized for listing on
the Nasdaq National Market System.
Conditions to the Obligation of Lamar and Lamar Southwest Acquisition
Corporation
Lamar and Lamar Southwest Acquisition Corporation do not have to consummate
the merger unless the following additional conditions are met or waived by
Lamar:
- Bowlin must have performed and complied in all material respects with all
its agreements and covenants in the merger agreement, and the
representations and warranties of Bowlin contained in the merger
agreement must be true and correct when made and as of the closing date
as if made as of that date, except for any inaccuracies or failures to
perform that would not reasonably be expected to have a material adverse
effect on Bowlin;
- nothing has occurred after the signing of the merger agreement that could
reasonably be expected to have a material adverse effect on Bowlin;
- all necessary consents and approvals must be obtained;
- Bowlin's working capital must not be less then $100,000;
- Bowlin's long-term debt must not exceed $14,500,000;
- none of Bowlin's assets will secure any debts or obligations of Bowlin
Travel;
- certain outdoor advertising faces that are to be completed prior to the
closing of the merger must be completed in suitable condition;
- the contribution of assets to, and assumption of liabilities by, Bowlin
Travel in the spin-off transaction must have been completed in accordance
with the terms of the contribution agreement;
- Bowlin must distribute all of the shares of Bowlin Travel to the Bowlin
stockholders;
- Lamar must receive the resignations of all of the directors of Bowlin;
- Lamar must receive the customary closing documents described in the
merger agreement; and
- each affiliate of Bowlin must deliver to Lamar an agreement regarding
restrictions on the resale of the shares of Lamar stock issued in the
merger.
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Conditions to the Obligation of Bowlin
Bowlin does not have to consummate the merger unless the following
additional conditions are met or waived by Bowlin:
- Lamar must have performed and complied in all material respects with all
its agreements and covenants in the merger agreement, and the
representations and warranties of Lamar contained in the merger agreement
must be true and correct when made as of the closing date as if made as
of that date, except for any inaccuracies or failures to perform that
would not reasonably be expected to have a material adverse effect on
Lamar;
- nothing has occurred after the signing of the merger agreement that could
reasonably be expected to have a material adverse effect on Bowlin;
- nothing has occurred since the signing of the merger agreement that has a
material adverse effect on Lamar;
- all necessary consents and approvals must be obtained; and
- Bowlin must receive the customary closing documents described in the
merger agreement.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time before the effective
time, whether before or after its adoption by Bowlin stockholders:
- by mutual written consent of Lamar and Bowlin;
- by either Lamar or Bowlin:
-- for material uncured breaches of representations by the other party;
-- if the merger has not occurred by March 31, 2001, unless the
terminating party's own breach of the agreement is the reason that the
merger has not been consummated and, with respect to Bowlin, only if
the applicable termination fee is paid;
-- if there is a non-appealable government order prohibiting the
consummation of the merger; or
-- if the Bowlin stockholders fail to approve the merger, unless the
failure is caused by that party's failure to perform any obligation
under that agreement;
- by Bowlin if the average closing share price of Lamar stock for the 30
trading days ending on the last trading day immediately prior to the
closing of the merger is below $40.00.
TERMINATION FEES AND EXPENSES
Payment of Termination Fee
Bowlin has agreed to pay Lamar a termination fee of $580,000 if either
party terminates the merger agreement because Bowlin's stockholders have failed
to adopt the merger agreement.
Payment of Expenses
If the merger is consummated, Lamar will pay up to $1,250,000 of Bowlin's
merger-related fees and expenses and Bowlin Travel will assume any merger costs
incurred by Bowlin in excess of $1,250,000. If the merger is not consummated,
Lamar and Bowlin will each pay its own merger-related fees and expenses.
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AMENDMENTS AND WAIVERS
Generally, Lamar and Bowlin may amend or waive any provision of the merger
agreement before the effective time of the merger. However, if a material
condition is waived, Lamar will amend the registration statement of which this
proxy statement/prospectus forms a part, and Bowlin will resolicit proxies for
the adoption of the merger agreement. In addition, after Bowlin stockholders
have approved the merger, their further approval would be required to modify the
amount or type of consideration that they will receive in the merger, to alter
the charter of the surviving corporation or to otherwise alter the merger
agreement in a manner materially adverse to them.
APPRAISAL OR DISSENTERS' RIGHTS
Under Nevada law, Bowlin stockholders are not entitled to appraisal or
dissenters' rights in connection with the merger because:
- Bowlin stock was, as of the record date for the special meeting,
designated and reported for trading on the American Stock Exchange; and
- Bowlin stock will be converted into shares of Lamar stock, which will be
designated and reported for trading on the Nasdaq National Market.
NASDAQ LISTING OF LAMAR STOCK
Lamar has agreed to file a listing notification with Nasdaq concerning the
Lamar stock to be issued to Bowlin stockholders in the merger.
DELISTING OF BOWLIN STOCK
If the merger is completed, Bowlin stock will cease to be quoted on the
American Stock Exchange.
NO LISTING OF BOWLIN TRAVEL STOCK
Bowlin Travel does not intend to apply for the listing of its stock on any
securities exchange.
RESALES OF LAMAR STOCK BY BOWLIN AFFILIATES
Bowlin stockholders may freely transfer the shares of Lamar stock received
in the merger, unless they are individuals and entities who are deemed to be
"affiliates" of Bowlin before the merger or affiliates of Lamar after the
merger. Persons who may be deemed to be affiliates of Bowlin or Lamar include
individuals or entities that control, are controlled by, or are under common
control with Bowlin or Lamar and may include executive officers and directors as
well as principal stockholders. These affiliates or their brokers may be
characterized as "underwriters" when they sell shares of Lamar stock received in
the merger. The United States securities laws require registration of shares
sold by underwriters. An affiliate and its broker can avoid being characterized
as an underwriter and, therefore, avoid the Securities Act registration
requirements by selling shares in compliance with Rule 145 or Rule 144 under the
Securities Act. Rule 145 covers sales by Bowlin affiliates, and Rule 144 covers
sales by Lamar affiliates. Each rule limits the number of shares an affiliate
can sell in a particular period of time. The merger agreement requires Bowlin to
use its best efforts to cause each of its affiliates to execute and deliver to
Lamar a written agreement to the effect that the affiliate will not offer or
sell or otherwise dispose of Lamar stock issued to the affiliate in the merger
in violation of the Securities Act or the related rules and regulations adopted
by the SEC. The receipt of these "affiliate letters" is a condition to Lamar's
obligation to close the merger.
This proxy statement/prospectus does not cover resales of Lamar stock
received by any person who may be deemed to be an affiliate of Bowlin and/or
Lamar.
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<PAGE> 53
REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act and related rules,
this merger may not be completed unless information and materials about the
companies and the merger are furnished to the Antitrust Division of the
Department of Justice and the Federal Trade Commission and the appropriate
waiting period requirements have been satisfied. Lamar and Bowlin have made the
required filings with both agencies and the required waiting period has expired.
At any time before or after the completion of the merger, however, the
Department of Justice, the Federal Trade Commission or others could take action
under the antitrust laws, including seeking to prevent the merger, to rescind
the merger or to conditionally approve the merger upon the divestiture of
substantial assets of Lamar or Bowlin. Lamar and Bowlin cannot guarantee that a
challenge to the merger on antitrust grounds will not be made or, if a challenge
is made, that it would not be successful.
Lamar and Bowlin are not aware of any other material governmental or
regulatory requirements that must be complied with regarding the merger, other
than federal securities laws and the filing of documents describing principal
terms of the merger agreement with the secretary of state of Nevada.
48
<PAGE> 54
STOCK OWNERSHIP
OWNERSHIP OF LAMAR STOCK
The following table sets forth certain information with respect to the
beneficial ownership of Lamar stock as of October 31, 2000:
- each person, or group of affiliated persons, who is known by Lamar to
beneficially own more than 5% of the common stock;
- each of its directors;
- each of its named executive officers; and
- all of its directors and current executive officers as a group.
Except as otherwise noted, the persons or entities in this table have sole
voting and investing power with respect to all shares of Lamar stock
beneficially owned by them.
The "Percent of Class" column below is based on 75,392,608 shares of Lamar
stock outstanding as of October 31, 2000. For purposes of the table below, Lamar
deems shares of Lamar stock subject to options that are currently exercisable or
exercisable within 60 days of October 31, 2000, to be outstanding and to be
beneficially owned by the person holding the options for the purpose of
computing the percentage ownership of the person, but does not treat them as
outstanding for the purpose of computing the percentage ownership of any other
person.
The following table and footnotes set forth certain information regarding
the beneficial ownership of Lamar stock as of October 31, 2000 by (i) persons
known by Lamar to be beneficial owners of more than 5% of either class of common
stock, (ii) the Chief Executive Officer and each of the other executive officers
other than the Chief Executive Officer, (iii) each director and nominee for
election as a director of Lamar and (iv) all current executive officers and
directors of Lamar as a group:
<TABLE>
<CAPTION>
PERCENT
DIRECTORS, OFFICERS TITLE OF NUMBER OF OF
AND 5% STOCKHOLDERS CLASS SHARES(1) CLASS
------------------- -------- ---------- --------
<S> <C> <C> <C>
Kevin P. Reilly, Jr. ....................... Class B(2) 17,000,000(3) 100.0%(4)
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
Sean E. Reilly.............................. Class B(2) 17,000,000(3) 100.0%(4)
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
Wendell Reilly.............................. Class B(2) 17,000,000(3) 100.0%(4)
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
Clear Channel Communications, Inc. ......... Class A 26,227,273(5) 34.8%
1845 Woodall Rodgers Freeway
Suite 1300
Dallas, TX 75201
Putnam Investments, Inc. ................... Class A 7,117,044(6) 9.4%
One Post Office Square
Boston, MA 02109
</TABLE>
49
<PAGE> 55
<TABLE>
<CAPTION>
PERCENT
DIRECTORS, OFFICERS TITLE OF NUMBER OF OF
AND 5% STOCKHOLDERS CLASS SHARES(1) CLASS
------------------- -------- ---------- --------
<S> <C> <C> <C>
Janus Capital Corporation................... Class A 5,912,671(7) 7.8%
100 Fillmore Street
Denver, CO 80206
Charles W. Lamar, III....................... Class A 5,071,259(8) 6.7%
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
AMVESCAP PLC................................ Class A 4,478,394(9) 5.9%
11 Devonshire Square
London ECZ2M 4YR
England
Gerald H. Marchand.......................... Class A 133,362(10) *
Keith A. Istre.............................. Class A 51,512(11) *
T. Everett Stewart, Jr. .................... Class A 76,800(12) *
Stephen P. Mumblow.......................... Class A 5,000(13) *
John Marshall Hamilton...................... Class A 4,000(14) *
Thomas Reifenheiser......................... Class A 4,000(14) *
All Directors and Executive Officers as a
Group (10 Persons)........................ Class A 22,345,933(15) 24.2%(16)
</TABLE>
---------------
* Less than 1%
(1) The persons and entities named in the table have sole voting and investment
power with respect to all shares beneficially owned by them, except as
noted below.
(2) Upon the sale of any shares of Class B common stock to a person other than
to a permitted transferee, such shares will automatically convert into
shares of Class A common stock. Permitted transferees include (i) Kevin P.
Reilly, Sr.; (ii) a descendant of Kevin P. Reilly, Sr.; (iii) a spouse or
surviving spouse (even if remarried) of any individual named or described
in (i)or (ii) above; (iv) any estate, trust, guardianship, custodianship,
curatorship or other fiduciary arrangement for the primary benefit of any
one or more of the individuals named or described in (i), (ii) and (iii)
above; and (v) any corporation, partnership, limited liability company or
other business organization controlled by and substantially all of the
interests in which are owned, directly or indirectly, by any one or more of
the individuals and entities named or described in (i), (ii), (iii) and
(iv) above. Except for voting rights, the Class A and Class B common stock
are substantially identical. The holders of Class A common stock and Class
B common stock vote together as a single class (except as may otherwise be
required by Delaware law), with the holders of Class A common stock
entitled to one vote per share and the holders of Class B common stock
entitled to ten votes per share, on all matters on which the holders of
common stock are entitled to vote.
(3) Consists of shares held by the RFLP, of which Kevin Reilly, the President
and Chief Executive Officer of the Company, is the managing general
partner. Kevin Reilly's three siblings, Wendell S. Reilly, Sean E. Reilly
and Anna Reilly Cullinan, are the other general partners of the RFLP. The
managing general partner has sole voting power over the shares but
dispositions of the shares require the approval of 50% of the general
partnership interests of the RFLP.
(4) Represents 18.4% of the Class A common stock if all shares of Class B
common stock are converted into Class A common stock.
(5) Clear Channel shares investment power over these shares with AMFM, Inc.,
AMFM Holdings, Inc., Capstar Broadcasting Partners, Inc. and AMFM Operating
Inc. Based on the Schedule 13D filed by Clear Channel with the SEC on
September 6, 2000. Pursuant to the terms of a consent decree with
50
<PAGE> 56
the Department of Justice, neither Clear Channel nor any of its affiliates
may exercise voting control with respect to these shares. The shares must
be voted in the same proportion as the vote of all holders of voting stock
not held by Clear Channel.
(6) Putnam Investments, Inc. ("PI") shares voting power as to 97,750 of these
shares with The Putnam Advisory Co., Inc. and shares investment power with
Putnam Investment Management, Inc. and The Putnam Advisory Co., Inc. as to
6,812,827 and 304,217 of these shares, respectively. Based on the Schedule
13G/A for the year ended December 31, 1999 filed by PI with the SEC.
(7) Based on the Schedule 13G/A filed with the SEC by Janus Capital Corporation
for the year ended December 31, 1999.
(8) Includes (a) 200,000 shares of which Mr. Lamar may, on November 19, 2001,
put to a broker at $50.36 per share and the broker has the right to call
Mr. Lamar at $76.95 per share; (b) 425,000 shares that Mr. Lamar has
exchanged for units in exchange funds over which he retains voting power;
(c) 1,289,967 shares held in trust for Mr. Lamar's two minor children who
reside with him, 250,000 shares of which the trusts may, on October 5,
2001, put to a broker at $39.07 per share and the broker has the right to
call the trusts at $61.64 per share; Mr. Lamar disclaims beneficial
ownership to these shares (d) 80,000 shares that the trusts for Mr. Lamar's
two minor children who reside with him have exchanged for units in an
exchange fund over which they retain voting power; Mr. Lamar disclaims
beneficial ownership to these shares; (e) 2,225,000 shares of held by
limited liability companies and a trust as to which Mr. Lamar is deemed the
beneficial owner and (f) 30,750 shares owned by Mr. Lamar's spouse, as to
which Mr. Lamar disclaims beneficial ownership.
(9) AMVESCAP PLC shares voting and investment power over these shares with AVZ,
Inc., AIM Management Group, Inc., AMVESCAP Group Services, Inc., INVESCO
Inc., INVESCO Capital Management, Inc., INVESCO Management & Research,
Inc., INVESCO Realty Advisers, Inc., INVESCO North America Holdings, Inc.,
INVESCO Funds Group, Inc. and INVESCO (NY) Asset Management, Inc. Based on
the Schedule 13G/A for the year ended December 31, 1999 filed by AMVESCAP
PLC with the SEC.
(10) Includes 16,000 shares of Class A common stock subject to stock options
exercisable within 60 days of October 31, 2000, and 51,282 shares owned by
the Marchand Family Partnership of which Mr. Marchand is a partner. Mr.
Marchand shares voting power over the partnership shares with his wife.
(11) Includes 50,200 shares of Class A common stock subject to stock options
exercisable within 60 days of October 31, 2000.
(12) Includes 18,000 shares of Class A common stock subject to stock options
exercisable within 60 days of October 31, 2000.
(13) Includes 4,000 shares of Class A common stock subject to stock options
exercisable within 60 days of October 31, 2000.
(14) Subject to stock options exercisable within 60 days of October 31, 2000.
(15) See Notes 2, 4, 6, 10, 12, 13 and 14.
(16) Assumes the conversion of all shares of Class B common stock into shares of
Class A common stock.
OWNERSHIP OF BOWLIN STOCK
The following table sets forth information concerning the beneficial
ownership of Bowlin stock as of October 31, 2000, by:
- each stockholder known by Bowlin to own beneficially more than five
percent of the outstanding shares of Bowlin stock;
- each director of Bowlin;
51
<PAGE> 57
- each of its named executive officers; and
- all directors and current executive officers as a group.
Except as otherwise noted, the persons or entities in this table have sole
voting and investing power with respect to all shares of common stock
beneficially owned by them.
The following table and footnotes set forth certain information as of
October 31, 2000, concerning the beneficial ownership of shares of common stock
of Bowlin by (i) all persons known by Bowlin to be the beneficial owners of more
than five percent of the outstanding shares of common stock; (ii) each Director
and Director-Nominee of Bowlin; (iii) the executive officers of Bowlin; and (iv)
all Directors and executive officers of Bowlin as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2) OF CLASS
--------------------------- ----------------------- ---------
<S> <C> <C>
Michael L. Bowlin(3).................................... 1,687,829 37.7%
C. Christopher Bess(4).................................. 488,623 10.9%
Nina J. Pratz........................................... 146,802 3.3%
William J. McCabe....................................... 101,590 2.3%
Michael Mons............................................ 10,330 *
Cynthia K. Biggers...................................... 9,000 *
Johnny Riley............................................ 15,100 *
Robert J. Beckett....................................... 135,646 3.0%
Harold Van Tongeren(5).................................. 56,099 1.3%
James A. Clark.......................................... 37,000 *
Jack Ayers.............................................. 9,000 *
Monica A. Bowlin(6)..................................... 1,687,829 37.7%
The Francis W. McClure and Evelyn Hope McClure Revocable
Trust................................................. 371,695 8.3%
Wellington Management Company, LLP...................... 228,000 5.1%
All directors and executive officers as a group (10
persons)(3)(4)(5)(6).................................. 2,697,019 60.3%
</TABLE>
---------------
* Less than 1.0%
All of the holders have an address at c/o Bowlin, 150 Louisiana NE,
Albuquerque, NM, 87108.
(1) Unless otherwise noted and subject to community property laws, where
applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of common stock as shown
beneficially owned by them.
(2) As of October 31, 2000, there were 4,475,348 shares of Bowlin stock
outstanding. The shares and percentages shown include the shares of common
stock actually owned as of October 31, 2000, and the shares of common stock
which the person had the right to acquire beneficial ownership within sixty
days of such date pursuant to options. All shares of common stock the
identified person had the right to acquire within sixty days of October 31,
2000 upon the exercise of options are deemed outstanding when computing the
percentage of the securities owned by such person, but are not deemed to be
outstanding when computing the percentage of securities owned by any other
person.
(3) Includes 425,687 shares held by Mr. Bowlin's wife and 171,332 shares held by
each of three daughters. Mr. Bowlin disclaims beneficial ownership of an
aggregate of 513,996 of such shares, which are held by three of his
daughters.
(4) Includes 48,006 shares held by Mr. Bess' wife and 26,623 shares held by Mr.
Bess' minor daughter.
(5) All of such 56,099 shares are held by Mr. Van Tongeren jointly with his
wife.
(6) Includes 747,930 shares held by Mrs. Bowlin's husband and 171,332 shares
held by each of her three daughters. Mrs. Bowlin disclaims beneficial
ownership of an aggregate of 513,996 of such shares, which are held by three
of her daughters.
52
<PAGE> 58
COMPARISON OF RIGHTS OF LAMAR AND BOWLIN STOCKHOLDERS
Lamar is a Delaware corporation subject to the provisions of the Delaware
General Corporation Law or DGCL. Bowlin is a Nevada corporation subject to the
provisions of the Nevada General Corporation Law or NRS. Upon completion of the
merger, Bowlin stockholders, whose rights are governed by the Bowlin charter,
bylaws and the NRS, will become stockholders of Lamar and the Lamar charter,
by-laws and the DGCL will govern their rights.
The following description summarizes material differences that may affect
the rights of holders of Bowlin stock. This is not a complete statement of all
those differences, or a complete description of the specific provisions referred
to in this summary. The identification of specific differences is not intended
to indicate that other equally or more significant differences do not exist. For
additional information regarding the specific rights of holders of Lamar Class A
common stock, see the description of Lamar's Class A common stock incorporated
by reference into this proxy statement/prospectus. You should read carefully the
relevant provisions of the DGCL and the NRS, the charter and by-laws of Lamar
and the charter and bylaws of Bowlin, which are incorporated by reference into
this proxy statement/prospectus.
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
------------------------ -------------------------
<S> <C> <C>
CORPORATE GOVERNANCE.......... Delaware law and Lamar's Nevada law and Bowlin's
charter and by-laws govern the charter and by-laws currently
rights of Lamar stockholders. govern the rights of Bowlin
Upon completion of the merger, stockholders. Upon completion
the rights of Lamar of the merger, the rights of
stockholders will continue to Bowlin stockholders when they
be governed by Delaware law become Lamar stockholders in
and Lamar's charter and the merger will be governed by
by-laws. Delaware law and Lamar's
charter and by-laws.
AUTHORIZED CAPITAL STOCK...... The authorized capital of The authorized capital stock
Lamar consists of 175,000,000 of Bowlin consists of
shares of Class A common 100,000,000 shares of common
stock, $.001 par value per stock, $.001 par value per
share, 37,500,000 shares of share, and 10,000,000 shares
Class B common stock, $.001 of preferred stock, $.001 par
par value per share; 10,000 value per share.
shares of Class A preferred
stock, $638 par value per With respect to Bowlin's
share, and 1,000,000 shares of preferred stock, the Bowlin
undesignated preferred stock board is authorized, without
$.001 par value per share, of stockholder approval, to issue
which 5,720 shares of Series shares of preferred stock in
AA Preferred Stock are one or more series and to
currently outstanding. determine the preferences,
voting powers, qualifications,
With respect to Lamar's and special or relative rights
undesignated preferred stock, or privileges of that series.
the Lamar board is authorized,
without stockholder approval,
to issue shares of preferred
stock in one or more series
and to determine the
preferences, voting powers,
qualifications, and special or
relative rights or privileges
of that series.
</TABLE>
53
<PAGE> 59
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
------------------------ -------------------------
<S> <C> <C>
DIVIDENDS..................... Dividends are payable on Lamar Dividends are payable on
stock only when, as and if Bowlin stock as Bowlin's board
declared by Lamar's board of of directors may from time to
directors, out of funds time declare. Under the NRS, a
legally available for corporation may pay dividends
distribution. Under the DGCL, unless, after giving effect to
a corporation may pay the proposed dividend, (i) the
dividends out of surplus or corporation would not be able
net profits for the current or to pay its debts as they
preceding fiscal year, become due in the usual course
provided that the capital of of business or (ii) the
the corporation is not less corporation's total assets
than the aggregate liquidation would be less than the sum of
preference of the its total liabilities plus the
corporation's outstanding amount that would be needed,
stock having a preference upon if the corporation were to be
distribution of assets. dissolved at the time of
distribution, to satisfy the
preferential rights upon
dissolution of stockholders
whose preferential rights are
superior to those receiving
the distribution.
LIQUIDATION RIGHTS............ Upon liquidation or Subject to the rights of any
dissolution, after payment has preferred stock, upon
been made to any holder of liquidation, dissolution or
preferred stock of the full winding up of Bowlin, the
amount to which they are holders of Bowlin stock are
entitled, the holders of Lamar entitled to receive the net
stock are entitled to share assets of the corporation
ratably according to the available for distribution in
number of shares of common proportion to their interest
stock held by them in all therein.
remaining assets of the
company available for
distribution to its
stockholders.
VOTING RIGHTS................. Stockholders of Lamar stock Bowlin stockholders vote
vote together as one class on together as one class on all
all matters on which common matters that common
stockholders generally are stockholders are entitled to
entitled to vote. The Lamar vote. Holders of Bowlin stock
stock that Bowlin stockholders are entitled to one vote for
will receive in the merger is each share of stock held at
Class A common stock. The any meeting of stockholders.
Class A common stock is
entitled to one vote per
share. Lamar also has Class B
common stock. The Class B
common stock is entitled to
ten votes per share, but is
otherwise identical to the
Class A common stock. Holders
of Series AA preferred stock
are entitled to one vote per
share and the holders of Class
A preferred stock have no
</TABLE>
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<PAGE> 60
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
------------------------ -------------------------
<S> <C> <C>
voting rights, except as
provided by the DGCL.
CUMULATIVE VOTING FOR ELECTION
OF DIRECTORS................ Neither Lamar's charter nor Neither Bowlin's charter nor
its by-laws provide for its by-laws provide for
cumulative voting in the cumulative voting in the
election of directors, which election of directors, which
means that the holders of a means that the holders of a
majority of the shares voted majority of the shares voted
can elect all of the directors can elect all of the directors
then outstanding for election. then nominated for election.
MEETINGS OF STOCKHOLDERS;
NOTICE...................... A special meeting of Lamar's A special meeting of Bowlin's
stockholders may be called stockholders may be called
only by the chief executive only by the President, the
officer or by a majority of Chairman of the Board or by a
the board of directors. majority of the board of
directors.
A written notice stating the
date, time, place and purpose A written notice stating the
of the meeting shall be given date, time, place and purpose
not less than 10 nor more than of the meeting shall be given
60 days before the meeting to not less than 10 nor more than
each stockholder entitled to 60 days before the date of the
vote at the meeting. meeting to each stockholder
entitled to vote at the
meeting.
STOCKHOLDER ACTION BY WRITTEN
CONSENT..................... Lamar's by-laws permit Bowlin's charter and bylaws
stockholders to act without a permit stockholders to act
meeting, prior notice or vote, without a meeting, prior
if they do so by written notice or vote, if they do so
consent. by written consent.
STOCKHOLDER PROPOSALS......... Lamar's by-laws provide that Bowlin's by-laws provide that
for a stockholder proposal to the order of business at a
be brought properly before an meeting of stockholders may be
annual meeting, the changed by the vote of the
stockholder must notify Lamar stockholders holding a
of the proposal the earlier majority of the shares present
of: (a) not less than 75 days in person or by proxy at such
before the anniversary date of meeting and entitled to vote.
the prior years' annual
meeting; unless, there was no
annual meeting in the prior
year or if the date of the
current annual meeting is more
than 30 days from the
anniversary date of the prior
year's annual meeting, in
which case this provision does
not apply, or (b) 45 days
prior to the current years'
annual meeting.
QUORUM FOR MEETING OF
STOCKHOLDERS................ The holders of one-third of The holders of a majority of
all outstanding stock entitled all outstanding stock entitled
to vote to vote
</TABLE>
55
<PAGE> 61
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
------------------------ -------------------------
<S> <C> <C>
at a Lamar stockholder at a Bowlin stockholder
meeting, present in person or meeting, present in person or
represented by proxy, represented by proxy,
constitute a quorum for constitute a quorum for
transacting business at a transacting business at a
meeting. meeting.
STOCKHOLDER INSPECTION
RIGHTS...................... Under the DGCL, any Under the NRS, any stockholder
stockholder has the right to who has been a stockholder of
inspect the company's stock record for at least 6 months
ledger, stockholder list, and or is authorized in writing by
other books and records for a holders of at least 5 percent
purpose reasonably related to of all outstanding shares has,
the person's interest as a upon 5 days' written demand,
stockholder. the right to inspect the
company's stock ledger,
stockholder list, and other
books and records.
NUMBER OF DIRECTORS........... Lamar currently has ten Bowlin currently has seven
directors. Lamar's by-laws directors. Bowlin's by-laws
provide that the board of provide that the board of
directors shall consist of at directors shall be at least
least one director. The number five. The number of directors
of directors is fixed by the is fixed by the board and may
board and may be enlarged at be enlarged at any time by a
any time by a vote of the vote of the majority of
majority of directors. directors.
CLASSIFICATION OF BOARD OF
DIRECTORS................... Lamar does not have a Bowlin's charter provides that
classified board, which means the board of directors will
that all members of Lamar's consist of three classes, with
board of directors are up for each class being as equal in
re-election every year. size as possible. Each class
of directors is elected for a
three-year term at alternating
annual meetings of the
stockholders.
REMOVAL OF DIRECTORS.......... Under the DGCL, directors may Bowlin's by-laws provide that
be removed, with or without directors may be removed only
cause, by the holders of a for cause and by the
majority of the shares affirmative vote of at least
entitled to vote for the 66 2/3% of the outstanding
election of directors. Under stock of Bowlin. Bowlin's
Lamar's by-laws, vacancies on by-laws also provide that,
the board may be filled by the vacancies on the board
board by a majority vote of resulting from an increase in
the directors then in office, the number of directors may be
though less than a quorum, or filled by a majority of the
by the sole remaining board, though less than a
director. quorum, or by the sole
remaining director. If there
is a vacancy due to death,
resignation or other causes
and no directors remain in
office, any officer or
stockholder or an executor,
administrator or trustee or
guardian of a stockholder, may
call a special meeting of
</TABLE>
56
<PAGE> 62
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
------------------------ -------------------------
<S> <C> <C>
stockholders to elect
directors, may be filled only
by the affirmative vote of a
majority of the remaining
directors then in office,
though less than a quorum.
LIMITATION ON PERSONAL
LIABILITY OF DIRECTORS AND
OFFICERS.................... Lamar's charter provides that Bowlin's charter provides that
directors shall not be directors shall not be
personally liable to Lamar or personally liable to Bowlin or
its stockholders for monetary its stockholders for monetary
damages for breaching their damages for breaching their
fiduciary duties except: fiduciary duties except for:
- breaches of their duty of - acts or omissions which
loyalty to Lamar or its involve intentional
stockholders; misconduct, fraud or knowing
violation of law; and
- acts or omissions not in
good faith or involving - authorizing the payment of
intentional misconduct or a dividends in violation of
knowing violation of law; the NRS.
- unlawful payment of
dividends or unlawful
repurchases of stock; or
- transactions from which the
directors derived improper
personal benefit.
INDEMNIFICATION OF DIRECTORS
AND OFFICERS................ Delaware law permits and Nevada law permits and
Lamar's by-laws provide for, Bowlin's charter provides for,
indemnification of directors indemnification of directors,
and officers for expenses, officers, employees and agents
judgments or settlements for expenses, judgments or
actually and reasonably settlements actually and
incurred by them in legal reasonably incurred by them in
proceedings if they acted in legal proceedings if they
good faith and in a manner acted in good faith and in a
they reasonably believed to be manner they reasonably
in Lamar's best interests. believed to be in or not
opposed to Bowlin's best
Lamar's by-laws provide that interests. Whether
indemnification is a contract indemnification is proper
right for the benefit of the shall be determined:
directors, officers and other
persons entitled to be - by the stockholders;
indemnified.
- by a majority vote of a
The DGCL does not permit a quorum of disinterested
corporation to indemnify directors; or
persons against judgments in
actions brought by or in the - if a quorum of disinterested
right of the corporation. directors so directs, by
</TABLE>
57
<PAGE> 63
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
------------------------ -------------------------
<S> <C> <C>
independent legal counsel in
a written opinion.
AMENDMENTS TO CHARTER......... Under the DGCL, a charter may Under the NRS, a charter may
be amended by the affirmative be amended by the affirmative
vote of a majority of the vote of a majority of the
outstanding stock and a outstanding stock and a
majority of the outstanding majority of the outstanding
shares of each class entitled shares of each class entitled
to vote as a class. Lamar's to vote as a class. Bowlin's
charter provides for charter reserves the right to
amendments to be made in the amend any provision in its
manner prescribed by Delaware charter, but requires the
law. affirmative vote of the
holders of at least 66 2/3% of
the outstanding stock entitled
to vote to amend any provision
in a manner inconsistent with
the charter.
AMENDMENTS TO BY-LAWS......... Lamar's by-laws may be altered Bowlin's by-laws may be
or repealed, and new by-laws altered or repealed and new
may be made by a majority of by-laws may be made by the
the board of directors. affirmative vote of the
Lamar's by-laws may also be holders of a majority of the
altered, amended or repealed, outstanding stock entitled to
and new by-laws may be vote at meeting of
adopted, by the stockholders stockholders or by a majority
at an annual or special of the board of directors. The
meeting of stockholders. In affirmative vote of 66 2/3% of
the case of a special meeting, outstanding stock, however, is
a description of the required to repeal, alter or
alteration, amendment, repeal amend the provisions relating
or adoption must be included to the nomination of
in the notice of the special directors, removal of
meeting. directors and indemnification
of directors.
ANTI-TAKEOVER PROVISIONS...... Section 203 of the DGCL Bowlin's charter provides that
prohibits a Delaware the affirmative vote of not
corporation from engaging in a less than 66 2/3% of the votes
"business combination" with a entitled to be cast by the
person owning 15% or more of holders of all outstanding
the corporation's voting stock stock entitled to vote on the
(an "interested stockholder") election of directors,
for three years following the excluding shares held by the
time that person became an subject interested
interested stockholder, stockholder, must approve a
unless: "business combination" with
any person who (a) is or has
- the board, before the time announced or publicly
the person became an disclosed a plan or intention
interested stockholder, to become the beneficial owner
approved either the business of 10% or more of the voting
combination or the stock of Bowlin or (b) is an
transaction that resulted in affiliate or associate of
the person becoming an Bowlin and at any time within
interested stockholder; the two- year period
immediately prior to the date
- the person became an in question, was a beneficial
interested stockholder and owner of 10% of voting
85%
</TABLE>
58
<PAGE> 64
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
------------------------ -------------------------
<S> <C> <C>
owner of the voting stock in stock (an "interested
the transaction, excluding stockholder"), unless:
shares owned by directors
and officers and shares - the board approved either
owned by some employee stock the business combination
plans; or specifically or as a
transaction which is within
- the combination transaction an approved category of
is approved by the board and transactions (whether or not
authorized by the the interested stockholder
affirmative vote of at least was an interested
two-thirds of the stockholder at the time of
outstanding voting stock not that approval) by a majority
owned by the interested of the directors of Bowlin
stockholder. who are not affiliated with
the interested stockholder
A Delaware corporation can ("independent directors");
elect in its charter or or
by-laws not to be governed by
Section 203. Lamar has not - all of the following are
made that election. met:
-- the aggregate amount of
cash and the fair market
value as of the date of the
closing of the business
combination of
consideration other than
cash to be received by the
holders of the capital
stock in the business
combination shall be at
least equal to the highest
of (x) the highest per
share price paid by or on
behalf of the interested
stockholder for any share
of that class of stock of
Bowlin to be exchanged or
in the transaction in which
the stockholder became an
interested stockholder and
(y) the fair market value
per share of that class of
stock to be exchanged on
the higher of the date the
first public announcement
of the business combination
was made or the date of the
transaction in which the
stockholder became an
interested stockholder;
-- the consideration received
by holders of a particular
class of stock of Bowlin
shall be in the same form
as paid by the interested
stockholder for those
shares and if it varied as
</TABLE>
59
<PAGE> 65
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
------------------------ -------------------------
<S> <C> <C>
to form, either cash or the
form used to acquire the
majority of the shares;
-- after the date of the
transaction in which the
stockholder became an
interested stockholder and
prior to the closing the
business combination there
shall have been no failure
to declare a dividend
(except as approved by a
majority of the independent
directors), no reduction in
the annual rate of
dividends and no increase
in the annual rate of
dividends paid on the
common stock and no
increase in the ownership
percentage of the
interested stockholder;
-- after the date of the
transaction in which the
stockholder became an
interested stockholder, the
interested stockholder
shall not have received the
benefit any financial
assistance form Bowlin;
-- a proxy or information
statement describing the
proposed business
combination shall be mailed
to all stockholder of
Bowlin at lease 30 days
prior to the closing of the
business combination; and
-- the interested stockholder
shall not have made any
major changes in Bowlin's
business or equity capital
structure without the
approval of a majority of
the independent directors.
If the business combination
does not involve the payment
of consideration to holders of
Bowlin's outstanding capital
stock, both conditions above
must be met.
</TABLE>
60
<PAGE> 66
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
------------------------ -------------------------
<S> <C> <C>
STOCKHOLDER RIGHTS PLAN....... Lamar does not have a Bowlin does not have a
stockholders rights plan. stockholders right plan.
PROVISIONS RELATING TO SOME
BUSINESS COMBINATIONS....... The DGCL generally requires The NRS generally requires
that a merger and that a merger or exchange be
consolidation, or sale, lease approved by the directors and
or exchange of all or by a majority of the
substantially all of a outstanding stock. A
corporation's property and corporation's charter may
assets be approved by the require a greater vote.
directors and by a majority of Bowlin's charter does not
the outstanding stock. A provide for a greater vote.
corporation's charter may
require a greater vote. Under the NRS, a surviving
Lamar's charter does not corporation need not obtain
provide for a greater vote. stockholder approval for a
merger if:
Under the DGCL, a surviving
corporation need not obtain - the articles of
stockholder approval for a incorporation of the surviving
merger if: corporation will not differ
from its articles before the
- each share of the surviving merger;
corporation's stock
outstanding prior to the - each share of the surviving
merger remains outstanding corporation's stock
in identical form after the outstanding prior to the
merger; merger remains outstanding
in identical form after the
- the merger agreement does merger;
not amend the charter of the
surviving corporation; and - the number of voting shares
outstanding immediately
- either no shares of common after the merger, plus the
stock of the surviving number of voting shares
corporation are to be issued issued as a result of the
or delivered in the merger merger, either by conversion
or, if common stock will be of securities issued
issued or delivered, it will pursuant to the merger or
not increase the number of the exercise of rights and
shares of common stock warrants issued pursuant to
outstanding prior to the the merger, will not exceed
merger by more than 20%. by more than 20 per cent the
total number o voting shares
of the surviving corporation
outstanding immediately
before the merger; and
- the number of participating
shares outstanding
immediately after the
merger, plus the numbers of
participating shares
issuable as a result of the
merger, either by the
conversion of securities
issue pursuant to the merger
or the exercise of rights
and warrants
</TABLE>
61
<PAGE> 67
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
------------------------ -------------------------
<S> <C> <C>
issued pursuant to the
merger, will not exceed by
more than 20 percent the
total number of
participating shares
outstanding immediately
before the merger.
APPRAISAL OR DISSENTERS'
RIGHTS...................... Under Delaware law, the right Under Nevada law, the right of
of dissenting stockholders to dissenting stockholders to
obtain the fair value for obtain the fair value for
their shares is available in their shares is available in
connection with some mergers connection with some mergers
or consolidations. Unless or consolidations. Unless
otherwise provided in the otherwise provided in the
corporate charter, appraisal corporate charter, appraisal
rights are not available to rights are not available to
stockholders when the stockholders when no vote of
corporation will be the its stockholders is required
surviving corporation in a to approve the merger. In
merger and no vote of its addition, no appraisal rights
stockholders is required to are available to holders of
approve the merger. In shares of any class of stock
addition, no appraisal rights which is either:
are available to holders of
shares of any class of stock - listed on a national
which is either: securities exchange or
included in the national
- listed on a national market system by the NASD,
securities exchange or or
designated as a national
market system security on an - held of record by more than
interdealer quotation system 2,000 stockholders,
by the NASD, or
unless those stockholders are
- held of record by more than required by the terms of the
2,000 stockholders, merger to accept anything
other than (1) shares of stock
unless those stockholders are of the surviving corporation,
required by the terms of the (2) shares of stock of another
merger to accept anything corporation which, on the
other than (1) shares of stock effective date of the merger
of the surviving corporation, or consolidation, are of the
(2) shares of stock of another kind described above, (3)
corporation which, on the cash, owners' interests or
effective date of the merger owners' interests and cash in
or consolidation, are of the lieu of fractional shares of
kind described above, (3) cash stock, or (4) any combination
instead of fractional shares of the consideration set forth
of stock, or (4) any in (1) through (3). Since
combination of the Bowlin's stock is listed on
consideration set forth in (1) the American Stock Exchange
through (3). and stockholders will receive
shares of Lamar common stock
in the merger, Bowlin
stockholders are not entitled
to appraisal rights.
</TABLE>
62
<PAGE> 68
LEGAL MATTERS
Palmer & Dodge LLP, Boston, Massachusetts, counsel to Lamar Advertising,
will give Lamar Advertising an opinion on the validity of the securities offered
by this proxy statement/prospectus.
EXPERTS
The consolidated financial statements of Lamar Advertising Company and
subsidiaries as of December 31, 1999 and 1998 and for each of the years in the
three-year period ended December 31, 1999, incorporated by reference into this
proxy statement/prospectus and registration statement have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of such firm as experts in accounting and
auditing. The report of KPMG LLP covering the December 31, 1999 financial
statements refers to a change in the method of accounting for the costs of
start-up activities.
The consolidated balance sheet of Chancellor Media Outdoor Corporation as
of December 31, 1998 and the consolidated statements of operations, equity and
cash flows for the period from July 22, 1998 to December 31, 1998, the
statements of income, divisional equity and cash flows of The Outdoor Division
of Whiteco Industries, Inc. for the eleven months ended November 30, 1998, the
statements of operations, partners' capital and cash flows of Martin Media, L.P.
for the seven months ended July 31, 1998, and the statements of operations,
retained earnings and cash flows of Martin & MacFarlane, Inc. for the seven
months ended July 31, 1998, incorporated in this registration statement by
reference to the Current Report on Form 8-K of Lamar Advertising Company dated
July 6, 1999 have been so incorporated in reliance upon the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of the Outdoor Advertising Division of Whiteco
Industries, Inc., incorporated by reference in this proxy statement/prospectus
have been audited by BDO Seidman, LLP, independent certified public accountants,
to the extent and for the periods set forth in their report incorporated herein
by reference, and are incorporated herein in reliance upon such report given the
authority of said firm as experts in auditing and accounting.
The balance sheets of Martin Media as of December 31, 1997 and 1996 and the
related statements of operations, partners' capital (deficit) and cash flows for
each of the years ended December 31, 1997, 1996, and 1995 and the balance sheets
of Martin & MacFarlane, Inc. as of December 31, 1997 and 1996 and the related
statements of income, retained earnings and cash flows for each of the years
ended December 31, 1997 and 1996 and the six-month period ended December 31,
1995, all of which have been incorporated by reference in this proxy
statement/prospectus and in the registration statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
The balance sheet of Martin & MacFarlane, Inc. as of June 30, 1995 and the
related statements of income, retained earnings and cash flows of Martin &
MacFarlane, Inc. for the year ended June 30, 1995, all of which have been
incorporated by reference in this prospectus and in the registration statement
have been incorporated by reference herein and in the registration statement in
reliance upon the report of Barbich Longcrier Hooper & King, Accounting
Corporation, independent certified public accountants, incorporated by reference
herein, and upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Bowlin Outdoor Advertising and
Travel Centers Incorporated as of January 31, 2000 and 1999, and for each of the
years in the three-year period ended January 31, 2000, have been included in
this proxy statement/prospectus and registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of such firm as experts in accounting
and auditing.
63
<PAGE> 69
FUTURE BOWLIN STOCKHOLDER PROPOSALS
If the stockholders of Bowlin do not approve the merger agreement or if the
merger is not consummated, Bowlin anticipates holding its next annual meeting of
stockholders as soon as practicable following the special meeting. Stockholder
proposals to be presented at that meeting should be submitted by December 31,
2000, in order to be considered for inclusion in the proxy materials for that
meeting.
OTHER MATTERS
Bowlin has separated its travel centers business from its outdoor
advertising business. Bowlin contributed its existing travel center business to
Bowlin Travel Centers, Inc., a newly formed subsidiary. Prior to consummation of
the merger, Bowlin intends to distribute all of the capital stock of Bowlin
Travel held by Bowlin to the Bowlin stockholders on a pro rata basis.
Accordingly, each holder of Bowlin's common stock as of the record date would
receive one share of the common stock of Bowlin Travel for each share of the
common stock of Bowlin they own on that date. The record date for the
distribution has not yet been determined. This spin-off must occur prior to the
merger of Bowlin with Lamar. It is anticipated that the stock of Bowlin Travel
will be distributed to stockholders of Bowlin immediately prior to the closing
of the merger with Lamar.
Neither Lamar nor Bowlin presently intends to bring before the Bowlin
special meeting any matters other than those specified in the notice and
accompanying this proxy statement/prospectus, and neither Lamar nor Bowlin has
any knowledge of any other matters that may be brought up by other persons.
However, if any other matters come before the Bowlin special meeting or any
adjournments of the meeting, the persons named in the enclosed proxy, including
any substitutes, will use their best judgment to vote the proxies.
WHERE YOU CAN FIND MORE INFORMATION
Bowlin and Lamar each file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
document that Bowlin and Lamar files at the SEC's public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549, and in New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Bowlin's and Lamar's SEC filings are also
available on the SEC's Website at "http://www.sec.gov." Copies of Lamar's
materials can also be inspected and copied at the office of the Nasdaq National
Market, 1735 K Street, N.W., Washington, D.C. 20006-1500.
The SEC allows Lamar and Bowlin to "incorporate by reference" information
from other documents that it files with them, which means that Lamar and Bowlin
can disclose important information by referring to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information that Lamar and Bowlin file later with the SEC will
automatically update and supersede this information. Lamar and Bowlin each
incorporate by reference the documents listed below. Lamar incorporates by
reference any future filings it makes with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 prior to the sale of all the
shares covered by this proxy statement/prospectus. Bowlin has also included or
enclosed with this proxy statement/prospectus its Annual Report on Form 10-K and
10-K/A for the fiscal year ended January 31, 2000.
- Annual Report on Form 10-K of Lamar for the year ended December 31, 1999;
- Quarterly Reports on Form 10-Q of Lamar for the quarters ended March 31,
2000, June 30, 2000 and September 30, 2000;
- Current Reports on Form 8-K of Lamar filed with the SEC on July 7, 1999,
November 23, 1999, February 9, 2000, August 31, 2000 and September 6,
2000; and
- The description of the Class A common stock contained in the Registration
Statement on Form 8-A/A of Lamar filed with the SEC on July 27, 1999.
64
<PAGE> 70
- Annual Report on Form 10-K and 10-K/A of Bowlin for the fiscal year ended
January 31, 2000 (attached as Annex D);
- Quarterly Reports on Form 10-Q of Bowlin for the quarters ended April 30,
2000 and July 31, 2000; and
- Current Reports on Form 8-K of Bowlin filed with the SEC on October 17,
2000 and October 30, 2000.
You may request a copy of these filings, at no cost, by writing or
telephoning using the following contact information:
So that you will receive requested documents in time to vote, we urge
Bowlin stockholders to make any request by January 12, 2001, 5 business days
prior to the Bowlin Special Meeting.
<TABLE>
<S> <C>
Shareholder Services Investor Relations
Lamar Advertising Company Bowlin Outdoor Advertising &
5551 Corporate Boulevard Travel
Baton Rouge, LA 70808 Centers Incorporated
(225) 926-1000 150 Louisiana NE
Albuquerque, NM 87018
(505) 266-5985
</TABLE>
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus. Lamar and Bowlin have not
authorized anyone to provide information different from that contained or
incorporated by reference in this proxy statement/prospectus. Neither the
delivery of this proxy statement/prospectus nor the sale of the Class A common
stock offered by this proxy statement/ prospectus means that information
contained or incorporated by reference in this proxy statement/ prospectus from
previous filings by Lamar Advertising and Bowlin are correct after the date of
this proxy statement/prospectus. This proxy statement/prospectus is not an offer
to sell or solicitation of an offer to buy Class A common stock offered by this
proxy statement/prospectus in any circumstance under which the offer or
solicitation is unlawful.
65
<PAGE> 71
INDEX TO FINANCIAL STATEMENTS
BOWLIN OUTDOOR ADVERTISING AND TRAVEL CENTERS INCORPORATED
FINANCIAL STATEMENTS
The following financial statements are a part of this report and filed as a
part thereof:
- Balance Sheets as of January 31, 2000 and as of July 31, 2000;
- Statements of Income for the three-month and six-month periods ended July
31, 2000 and July 31, 1999;
- Statements of Cash Flows for the six-month periods ended July 31, 2000
and July 31, 1999; and
- Notes to Financial Statements.
(Information as of July 31, 2000 and for the three and six-month periods ended
July 31, 2000 and 1999 is unaudited)
F-1
<PAGE> 72
BOWLIN CONSOLIDATED FINANCIAL STATEMENTS
BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31, 2000 JANUARY 31, 2000
------------- ----------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 3,136 $ 1,559
Accounts receivable, Outdoor Advertising, net............. 678 595
Accounts receivable, other................................ 259 559
Accounts receivable, related parties...................... 123 122
Inventories............................................... 3,448 3,534
Prepaid expenses and other current assets................. 946 693
Income taxes.............................................. 174 849
Notes receivable, related parties......................... 14 14
------- -------
Total current assets................................... 8,778 7,925
Property & equipment, net................................... 30,289 30,556
Intangible assets, net...................................... 1,869 2,024
Other assets................................................ 424 276
------- -------
Total assets...................................... $41,360 $40,781
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings, bank............................... $ 907 $ 242
Accounts payable.......................................... 1,381 1,417
Current installments of long-term debt.................... 1,568 1,503
Accrued liabilities....................................... 624 455
Deferred income........................................... 233 142
------- -------
Total current liabilities.............................. 4,713 3,759
Deferred income taxes..................................... 972 898
Long-term debt, less current installments................. 20,074 20,886
------- -------
Total liabilities...................................... 25,759 25,543
Stockholders' equity:
Common stock, $.001 par value; authorized 100,000,000
shares; issued and outstanding 4,389,098 and 4,384,848
shares................................................. 4 4
Additional paid-in capital................................ 11,621 11,604
Retained earnings...................................... 3,976 3,630
------- -------
Total stockholders' equity........................ 15,601 15,238
------- -------
Total liabilities and stockholders' equity........ $41,360 $40,781
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE> 73
BOWLIN CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- -----------------------
JULY 31, JULY 31, JULY 31, JULY 31,
2000 1999 2000 1999
---------- ---------- ---------- ----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C>
Gross sales.................................. $ 10,192 $ 9,861 $ 19,014 $ 17,908
Less discounts on sales...................... 110 102 201 181
---------- ---------- ---------- ----------
Net sales.................................. 10,082 9,759 18,813 17,727
Costs of goods sold.......................... 6,363 6,174 12,138 11,188
---------- ---------- ---------- ----------
Gross profit............................... 3,719 3,585 6,675 6,539
General and administrative expenses.......... (1,995) (2,033) (3,862) (3,953)
Depreciation and amortization................ (682) (631) (1,353) (1,201)
---------- ---------- ---------- ----------
Operating income........................... 1,042 921 1,460 1,385
Non-operating income (expense):
Interest income............................ 36 26 57 49
Gain from insurance proceeds............... -- 227 -- 227
Gain on sale of property and equipment..... 37 10 131 15
Interest expense........................... (560) (479) (1,076) (909)
---------- ---------- ---------- ----------
Total non-operating income
(expense)........................ (487) (216) (888) (618)
Income before income taxes................... 555 705 572 767
---------- ---------- ---------- ----------
Income taxes................................. 212 273 226 300
---------- ---------- ---------- ----------
Net income......................... $ 343 $ 432 $ 346 $ 467
========== ========== ========== ==========
Weighted average common shares............... 4,385,941 4,384,848 4,385,397 4,384,848
Weighted average common and potential
dilutive common shares..................... 4,457,647 4,384,848 4,445,604 4,384,848
Earnings per share
Basic...................................... $ 0.08 $ 0.10 $ 0.08 $ 0.11
========== ========== ========== ==========
Diluted.................................... $ 0.08 $ 0.10 $ 0.08 $ 0.11
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 74
BOWLIN CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JULY 31, 2000
-----------------------------------------------------------
ADDITIONAL
NUMBER COMMON PAID-IN RETAINED
OF SHARES STOCK, AT PAR CAPITAL EARNINGS TOTAL
--------- ------------- ---------- -------- -------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C>
Balance at January 31, 2000.............. 4,384,848 $4 $11,604 $3,630 $15,238
--------- -- ------- ------ -------
Stock option exercises................... 4,250 17 17
Net income............................... 346 346
--------- -- ------- ------ -------
Balance at July 31, 2000................. 4,389,098 $4 $11,621 $3,976 $15,601
--------- -- ------- ------ -------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 75
BOWLIN CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
-------------------
JULY 31, JULY 31,
2000 1999
-------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 346 $ 467
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 1,353 1,201
Amortization of loan fees.............................. 89 78
Provision for bad debts................................ 57 18
Gain from insurance proceeds........................... -- (227)
Gain on sales of property and equipment................ (131) (15)
Deferred income taxes.................................. 74 187
Imputed interest....................................... 5 6
Changes in operating assets and liabilities, net....... 902 731
------- -------
Net cash provided by operating activities......... 2,695 2,446
Cash flows from investing activities:
Proceeds from sale of assets.............................. 202 31
Business acquisitions..................................... -- (1,516)
Purchases of property and equipment, net.................. (1,257) (2,814)
Proceeds from insurance................................... -- 599
Capital received from partnership......................... -- 15
Proceeds from notes receivable, net....................... 7 2
------- -------
Net cash used in investing activities............. (1,048) (3,683)
Cash flows from financing activities:
Short-term borrowings, bank, net.......................... 665 569
Borrowings on long-term debt.............................. 48 1,750
Payments on long-term debt................................ (800) (652)
Proceeds from stock option exercises...................... 17 --
------- -------
Net cash (used in) provided by financing
activities....................................... (70) 1,667
Net increase in cash and cash equivalents................... 1,577 430
Cash and cash equivalents at beginning of period............ 1,559 2,199
------- -------
Cash and cash equivalents at end of period.................. $ 3,136 $ 2,629
======= =======
Supplemental disclosure of cash flow information:
Sale of property and equipment in exchange for note
receivable............................................. $ 166 $ --
======= =======
Acquisitions:
Fair value of assets acquired and liabilities assumed
at the date of the acquisitions were as follows:
Prepaid expenses..................................... $ -- $ 3
Billboards........................................... -- 1,463
Covenants not to compete............................. -- 50
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The consolidated financial statements for the three and six months ended
July 31, 2000 and 1999 are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the financial position and operating
results for the interim periods. The consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes,
together with management's discussion and analysis of financial condition and
results of operations, contained in Bowlin's annual report on Form 10-K for the
fiscal year ended January 31, 2000. Results of operations for interim periods
are not necessarily indicative of results that may be expected for the year as a
whole.
2. In May 2000, Bowlin sold certain assets, including land and equipment,
to a third party for $25,000 cash and a note receivable for $400,000. The note
receivable has a stated rate of interest of 8 percent and is payable in annual
installments of $37,500 through 2004 with the balance due in 2005. The assets
sold had a carrying value of $170,258 and the costs incurred to sell the assets
was $6,043. The gain on the sale of the property was $248,699, of which $14,625
was recognized initially and $234,074 was deferred and will be recognized into
income using the installment method as payments are received. The deferred gain
is reflected as a reduction to the note receivable in the accompanying balance
sheet.
3. Earnings per Share. The following table is a reconciliation of the
numerators and denominators of the basic and diluted per share computations for
income from continuing operations.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JULY 31,
---------------------------------------------------------------------------------
2000 1999
--------------------------------------- ---------------------------------------
INCOME SHARES PER SHARE INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS -- net income......... $343,000 4,385,941 $0.08 $432,000 4,384,848 $0.10
Effect of Dilutive Securities
Stock options................. 71,706 --
-------- --------- ----- -------- --------- -----
Diluted EPS -- net income....... $343,000 4,457,647 $0.08 $432,000 4,384,848 $0.10
======== ========= ===== ======== ========= =====
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 31,
---------------------------------------------------------------------------------
2000 1999
--------------------------------------- ---------------------------------------
INCOME SHARES PER SHARE INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS -- net income......... $346,000 4,385,397 $0.08 $467,000 4,384,848 $0.11
Effect of Dilutive Securities
Stock options................. 60,207 --
-------- --------- ----- -------- --------- -----
Diluted EPS -- net income....... $346,000 4,445,604 $0.08 $467,000 4,384,848 $0.11
======== ========= ===== ======== ========= =====
</TABLE>
4. Segment Information: Travel center operations, which represents 77
percent of net sales of Bowlin, and outdoor advertising operations, which
represents 23 percent of net sales, are Bowlin's reportable segments under SFAS
No. 131, Disclosure about Segments of an Enterprise and Related Information. The
travel center segment provides for the retail sale of merchandise, food and
gasoline to the traveling public while the outdoor advertising segment operates
billboard advertising displays which are situated on interstate highways,
primarily in the Southwestern United States. No single customer accounted for 10
percent of consolidated net sales in any period.
Effective February 1, 2000, Bowlin measures its segments' results of
operations (segment profit) based on operating income less allocable interest
expense. Accordingly, segment profit for all periods presented has been
retroactively restated to conform to the new presentation. The accounting
policies used to measure segment results of operations are the same as those
described in note 1 to the consolidated financial statements included in Form
10-K for the year ended January 31, 2000.
F-6
<PAGE> 77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Summarized financial information concerning Bowlin's reportable segments as
of and for the respective periods ended July 31, are shown in the following
table.
<TABLE>
<CAPTION>
TRAVEL OUTDOOR
CENTER ADVERTISING CORPORATE
(IN THOUSANDS) OPERATIONS OPERATIONS AND OTHER(1) TOTAL
-------------- ---------- ----------- ------------ ------
<S> <C> <C> <C> <C> <C>
Three months ended July 31, Net sales(2)....... 2000 $ 7,877 2,205 -- 10,082
1999 7,761 1,998 -- 9,759
Segment profit(3) (Income before income
taxes)....................................... 2000 $ 634 62 (141) 555
1999 557 87 61 705
Six months ended July 31, Net sales(2)......... 2000 $14,552 4,261 -- 18,813
1999 13,891 3,836 -- 17,727
Segment profit(3) (Income before income
taxes)....................................... 2000 $ 772 20 (220) 572
1999 710 147 (90) 767
</TABLE>
---------------
(1) Corporate and other results of operations include costs associated with
certain members of executive management, the corporate accounting and
finance function and other typical administrative functions not considered
in assessing segment profit.
(2) There were no inter-segment sales.
(3) Management does not consider interest income, non-operating income and
expense amounts or income tax expense in the determination of the operating
performance of the reportable segments. However, the amount reported for
corporate and other includes interest income and non-operating income and
expense. The total segment profit agrees to income before income taxes in
the consolidated statements of income.
F-7
<PAGE> 78
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LAMAR ADVERTISING COMPANY,
LAMAR SOUTHWEST ACQUISITION CORPORATION,
ON THE ONE HAND,
AND
BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS INCORPORATED,
ON THE OTHER
DATED OCTOBER 3, 2000
<PAGE> 79
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated October 3,
2000, is by and among Lamar Advertising Company, a Delaware corporation
("Lamar"), and Lamar Southwest Acquisition Corporation, a Nevada corporation
("NewCo"), on the one hand, and Bowlin Outdoor Advertising & Travel Centers
Incorporated, a Nevada corporation ("Bowlin"), on the other. Capitalized terms
not otherwise defined in this Agreement have the meanings ascribed to them in
Article 8.
BACKGROUND
A. The respective Boards of Directors of Lamar, NewCo and Bowlin have
approved the merger of NewCo with and into Bowlin (the "Merger") in accordance
with Nevada law, whereby, among other things, all outstanding shares of Bowlin
common stock, $.001 par value per share ("Bowlin Common Stock") will be
converted into the right to receive a certain number of shares of Class A Common
Stock, par value $.001 per share, of Lamar ("Lamar Common Stock") in the manner
set forth in Article 2 of this Agreement.
B. Prior to the Merger, Bowlin and its subsidiary, Bowlin Travel Centers, a
Nevada corporation ("Bowlin Travel"), will enter into a Contribution Agreement
in the form of Exhibit A (the "Contribution Agreement") pursuant to which Bowlin
will contribute to Bowlin Travel certain specified assets and liabilities used
or usable by, or incurred in connection with, its travel centers line of
business.
C. Immediately prior to the Merger, Bowlin will distribute the shares of
Bowlin Travel to the holders of Bowlin Common Stock (the "Spin-Off") in
accordance with their respective interests.
D. The respective Boards of Directors of Bowlin, Lamar and NewCo have
determined that the Merger is in furtherance of their respective long-term
business interests, and is fair to and in the best interests of their respective
stockholders.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth in this Agreement, Lamar, NewCo and Bowlin agree as
follows:
ARTICLE 1
THE CLOSING; THE MERGER; EFFECTS OF THE MERGER
1.1 Closing.
(1) The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at 10:00 a.m. on the third business day following the
satisfaction or waiver of each of the closing conditions set forth in Article 6
(other than those conditions that can only be satisfied on or as of the Closing
Date, which must be satisfied or waived at or as of the Closing) of this
Agreement at the offices of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P., Fifth Floor, Four United Plaza, 8555 United Plaza Boulevard,
Baton Rouge, Louisiana, 70809.
(2) At the Closing, each party to this Agreement will:
(1) deliver the documents and certificates required to be delivered by
it pursuant to Article 6;
(2) provide proof or indication of the satisfaction or waiver of each
of the conditions to the other party's obligations set forth in Article 6;
(3) cause its appropriate officers to execute and deliver Articles of
Merger in the form of Exhibit B (the "Articles of Merger") in accordance
with the Nevada Revised Statutes, Chapter 92A, Mergers and Exchanges of
Interest (the "Law"); and
A-1
<PAGE> 80
(4) consummate the Merger by causing to be filed properly executed
Articles of Merger with the Secretary of State of the State of Nevada in
accordance with Section 200 of the Law.
1.2 The Merger; Effective Date and Effective Time. On the terms and
subject to the conditions of this Agreement, and in accordance with the
applicable provisions of the Law, NewCo will merge with and into Bowlin at the
Effective Time (as defined below). Following the Merger, the separate existence
of NewCo will cease and Bowlin will continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of NewCo in accordance with the Law. The Merger will be effective as
of the date and time specified in the Articles of Merger (the "Effective Date"
and the "Effective Time," respectively).
1.3 Effects of Merger. The Merger will have the effects set forth under
the Law and as set forth in this Agreement, including, without limitation, those
specified in Section 250 of the Law.
1.4 Articles of Incorporation and Bylaws of the Surviving Corporation.
(1) The Articles of Incorporation of Bowlin, as amended and restated and
filed with the Articles of Merger with the Secretary of State of the State of
Nevada, shall be the Articles of Incorporation of the Surviving Corporation
thereafter unless and until amended in accordance with the terms of the Articles
of Incorporation and as provided by law.
(2) The Bylaws of NewCo, as in effect at the Effective Time, shall be the
Bylaws of the Surviving Corporation thereafter unless and until amended in
accordance with their terms, the terms of the Articles of Incorporation and as
provided by law.
1.5 Directors and Officers of the Surviving Corporation. The directors and
officers of NewCo immediately prior to the Effective Time will be the directors
and officers of the Surviving Corporation thereafter, each to hold a
directorship or office in accordance with the Articles of Incorporation and
Bylaws of the Surviving Corporation until the earlier of their resignation or
removal, or until their respective successors are duly elected or appointed and
qualified, as the case may be.
ARTICLE 2
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any further action on the part of Lamar, NewCo, Bowlin or the
stockholders of such entities:
(1) Capital Stock of NewCo. Each issued and outstanding share of
capital stock of NewCo will be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(2) Cancellation of Bowlin Treasury Stock. Each share of Bowlin
capital stock that is held in treasury by Bowlin (or by any Bowlin
subsidiary) shall be canceled and no Lamar Common Stock or other
consideration will be delivered in exchange therefor.
(3) Conversion of Bowlin Common Stock.
(1) Subject to Sections 2.1(b) and 2.1(c)(ii), each share of Bowlin
Common Stock issued and outstanding immediately prior to the Effective
Time (including shares of Bowlin Common Stock issued upon the exercise
of options prior to the Effective Time but excluding treasury shares
cancelled pursuant to Section 2.1(b)) will be converted into the right
to receive a number of validly issued, fully paid and nonassessable
shares of Lamar Common Stock equal to the product of (A) one share of
Lamar Common Stock and (B) the quotient of (x) 725,000, divided by (y) a
number equal to the total number of shares of Bowlin Common Stock issued
and outstanding at the Effective Time (including shares of Bowlin Common
Stock issued upon the exercise of options prior to the Effective Time
but excluding treasury shares cancelled
A-2
<PAGE> 81
pursuant to Section 2.1(b)). In no event will Lamar be required to issue
in connection with the Merger more than 725,000 shares of Lamar Common
Stock (the "Merger Shares") (except to reflect adjustment for any stock
splits, combinations or recapitalizations relating to Lamar Common Stock
effected by Lamar after the date of this Agreement).
(2) No certificates or scrip representing fractional shares of
Lamar Common Stock will be issued upon conversion of the shares of
Bowlin Common Stock, and fractional share interests will not entitle the
owners of the fractional interests to vote or to any rights of a holder
of Lamar Common Stock. Any holder of Bowlin Common Stock who would
otherwise be entitled to receive a fraction of a share of Lamar Common
Stock (after aggregating all fractional shares issuable to such holder)
shall, in lieu of such fraction of a share, be entitled to receive an
amount in cash, without interest and rounded to the nearest cent, equal
to the product of (A) such fraction and (B) the Average Closing Share
Price. Payments for fractional shares will be made at the time the
Merger Shares are delivered to the Bowlin stockholders pursuant to
Section 2.2.
2.2 Exchange of Stock Certificates; Record Date.
(1) Prior to the Effective Time, Lamar will appoint the American Stock
Transfer & Trust Company or another entity (the "Exchange Agent") to arrange for
the exchange of certificates that, immediately prior to the Effective Time,
represented issued and outstanding shares of Bowlin Common Stock (the "Bowlin
Certificates") for the Merger Shares. On or before the Closing Date, Lamar will
deliver to the Exchange Agent, in trust for the benefit of each holder of record
of Bowlin Common Stock, (x) stock certificates representing all of the shares of
Lamar Common Stock issuable pursuant to Section 2.1(c)(i), and (y) sufficient
funds to make cash payments in lieu of fractional Merger Shares pursuant to
Section 2.1(c)(ii). As soon as practicable after the Effective Time, Lamar will
cause the Exchange Agent to mail a notice and letter of transmittal to each
recordholder of Bowlin Common Stock advising such recordholder of the
effectiveness of the Merger and providing instructions for surrendering to the
Exchange Agent the Bowlin Certificates representing Bowlin Common Stock in
exchange for the Merger Shares and any cash payment in lieu of fractional Merger
Shares. Each holder of Bowlin Certificates, upon proper surrender thereof and a
duly completed letter of transmittal to the Exchange Agent, will be entitled to
receive from the Exchange Agent in exchange for the Bowlin Certificates (subject
to any taxes required to be withheld) the number of Merger Shares determined in
accordance with Section 2.1(c). Until properly surrendered, after the Effective
Time each Bowlin Certificate will be deemed for all purposes to evidence only
the right to receive Merger Shares and any cash payment in lieu of fractional
shares. Holders of Bowlin Certificates will not be entitled to receive
certificates representing Merger Shares or any cash payment in lieu of
fractional shares until their Bowlin Certificates are properly surrendered.
(b) If any Bowlin Certificate has been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming the Bowlin
Certificate to be lost, stolen or destroyed (a "Missing Certificate"), Lamar
will direct the Exchange Agent to issue in exchange for the shares of Bowlin
Common Stock represented by the Missing Certificate, the Merger Shares issuable
pursuant to Section 2.1(c) and any cash payment in lieu of fractional shares.
The Board of Directors of Lamar may, in its discretion and as a condition to the
issuance of any Merger Shares or cash payment in lieu of fractional shares to
the owner of shares of Bowlin Common Stock represented by a Missing Certificate,
require the owner to provide Lamar with an affidavit and a bond in a sum as
Lamar may reasonably direct as an indemnity against any claim that may be made
against Lamar or the Exchange Agent with respect to the Missing Certificate.
2.3 No Further Rights in Bowlin Common Stock. As of the Effective Time,
all shares of Bowlin Common Stock will no longer be outstanding and will
automatically be canceled and retired and will cease to exist, and each holder
of a Bowlin Certificate representing shares of Bowlin Common Stock as of the
Effective Time will cease to have any rights with respect to the Bowlin Common
Stock, except the right to receive Merger Shares and any cash payment in lieu of
fractional shares as provided in this Agreement.
A-3
<PAGE> 82
2.4 Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared on or after the Effective Time with respect to
shares of Lamar Common Stock will be paid to any Bowlin stockholder with respect
to any Merger Shares that such Bowlin stockholder has the right to receive in
the Merger until the stockholder has properly surrendered shares of Bowlin
Common Stock in exchange for Lamar Common Stock (and any fractional payment) in
accordance with this Article 2. Subject to Applicable Law, following the proper
surrender of any Bowlin Certificate by a Bowlin stockholder and delivery to such
stockholder of a certificate representing whole shares of Lamar Common Stock,
Lamar will pay to such stockholder, without interest, the amount of any
dividends or other distributions declared by Lamar on or after the Effective
Time.
2.5 Undelivered Merger Consideration. Any certificates representing
shares of Lamar Common Stock or cash that remain undistributed by the Exchange
Agent to former holders of Bowlin Common Stock as of the date that is one year
after the Effective Date shall be returned by the Exchange Agent to Lamar upon
demand, and any holder of Bowlin Certificates who has not theretofore
surrendered his or her shares of Bowlin Common Stock in accordance with Section
2.2 shall thereafter look only to Lamar for satisfaction of his or her claims
for Lamar Common Stock, cash in lieu of fractional shares of Lamar Common Stock
and any dividends or distributions with respect to Lamar Common Stock.
2.6 Escheat. Neither Lamar nor the Surviving Corporation shall be liable
to any holder or former holder of Bowlin Common Stock or to any other Person
with respect to any shares of Lamar Common Stock (or dividends or distributions
with respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property law, escheat law, or similar legal
requirement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BOWLIN
Bowlin represents and warrants to Lamar and NewCo that as of the date of
this Agreement and as of the Closing Date:
3.1 Organization; Qualification; Subsidiaries. Schedule 3.1 lists the
jurisdiction of incorporation, the number of authorized and issued shares of
capital stock and the members of the Board of Directors of Bowlin. Bowlin is
duly organized, validly existing and in good standing under the laws of its
state of organization, having all requisite power and authority to own its
property and to carry on its business as it is now being conducted. Except as
disclosed in Schedule 3.1, Bowlin does not, directly or indirectly, own of
record or beneficially, or have the right or obligation to acquire, any direct
or indirect ownership interest, capital stock, membership interest, partnership
interest, joint venture interest or other equity interest in any Person. All
outstanding shares of capital stock of Bowlin have been validly issued and are
fully paid, nonassessable and free and clear of any Adverse Claim. No actions or
proceedings to dissolve Bowlin are pending. Bowlin is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the
property owned, leased or operated by it or the conduct of its business requires
qualification or licensing, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect.
3.2 Bowlin Capital Stock. The authorized capital stock of Bowlin consists
exclusively of 100,000,000 shares of common stock, $.001 par value per share, of
which as of September 29, 2000, 4,390,098 shares were outstanding and no shares
were held in treasury. All of the issued and outstanding shares of Bowlin have
been validly issued, are fully paid and nonassessable and are free of preemptive
rights. As of September 29, 2000, (a) 429,750 shares of Bowlin Common Stock were
reserved for issuance pursuant to the exercise of stock options granted and
outstanding under the stock option plan designated Bowlin's Incorporated 1996
Stock Option Plan (the "Option Plan"), which is the only stock option plan
adopted by Bowlin pursuant to which stock options have been or may be granted,
(b) 10,000 shares of Bowlin Common Stock were reserved for issuance to H.D.
Brous & Co., Inc. pursuant to options granted on September 19, 2000 (the options
referred to under (a) and (b), are referred to individually as a "Bowlin Option,
and collectively, as the "Bowlin Options"). Schedule 3.2 sets forth the
following
A-4
<PAGE> 83
information with respect to the Bowlin Options outstanding as of September 29,
2000: (i) the name of the optionee for each outstanding Bowlin Option; (ii) the
number of shares of Bowlin Common Stock subject to such Bowlin Option; and (iii)
the per share exercise price of such Bowlin Option. Except as disclosed in
Schedule 3.2, no share of capital stock of Bowlin will be, or may be required to
be, reacquired by Bowlin for any reason or is, or may be required to be, issued
by Bowlin for any reason, including, without limitation, by reason of any
option, warrant, security or right convertible into or exchangeable for such
shares, or any agreement to issue any of the foregoing.
3.3 Authority; Enforceability.
(1) Bowlin has all requisite corporate power and authority to enter into
and carry out its obligations under this Agreement or any of the other
agreements referred to in this Agreement to which it is a party. The execution,
delivery and performance of this Agreement, the Contribution Agreement or any of
the other agreements referred to in this Agreement to which it is a party and
the consummation of the transactions contemplated hereby or thereby has been
duly authorized by all necessary corporate action on the part of Bowlin, except
for the approval of this Agreement by the stockholders of Bowlin.
(2) This Agreement, the Contribution Agreement and each other agreement
executed or to be executed by Bowlin in connection with the transactions
contemplated by this Agreement have been, or when executed will be, duly
executed and delivered by Bowlin and constitute, or when executed and delivered
will constitute, valid and binding obligations of Bowlin, enforceable against
Bowlin in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and
equitable principles which may limit the availability of certain equitable
remedies in certain instances.
3.4 No Conflicts or Consents.
(1) Except as set forth on Schedule 3.4, neither the execution, delivery or
performance of this Agreement, the Contribution Agreement or any of the other
agreements referred to in this Agreement to which Bowlin is a party by Bowlin
nor the consummation of the transactions contemplated by this Agreement, the
Contribution Agreement or any of the other agreements referred to in this
Agreement to which Bowlin is a party:
(1) will violate, conflict with, or result in a breach of any
provision of, constitute a default (or an event that, with notice or lapse
of time or both, would constitute a default) under, result in the
termination of, or accelerate the performance required by, or result in the
creation of any Adverse Claim against any of the material properties or
material assets of Bowlin under, (A) its articles of incorporation or
bylaws, (B) any note, bond, mortgage, indenture, deed of trust, or other
debt obligation (other than ordinary course trade credit) to which Bowlin
is a party or by which any of its assets are bound, or (C) any lease,
agreement or other instrument or other obligation that is material to the
business or operations of Bowlin and to which Bowlin is a party, or by
which any of its assets are bound; or
(2) violate any order, writ, injunction, decree, judgment, statute,
rule or regulation of any Governmental Entity to which Bowlin is subject or
by which any of its assets are bound.
(2) No filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to Bowlin in
connection with the execution and delivery of this Agreement by Bowlin, or is
necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement, except for: (i) the filing of a premerger
notification and report form (the "HSR Report") by each of Lamar and Bowlin
under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing and recordation requirements of the Law with respect
to the Articles of Merger, (iii) the filing of the Registration Statement and
the Proxy Statement/Prospectus with the SEC and any other filings required by
the Securities Act or the Exchange Act, and (iv) the filing of appropriate
documents with the relevant authorities of other states in which Bowlin is
qualified to do business.
A-5
<PAGE> 84
3.5 Advertising Revenues. The Advertising Revenues for the one-month
period ending April 30, 2000 exceeded $700,000.
3.6 Lease Expense. The Lease Expense did not exceed $108,000.
3.7 Bowlin Long-Term Debt. As of the date of this Agreement and as of the
Effective Date, the Bowlin Long-Term Debt does not and will not exceed
$14,500,000.
3.8 Leases and Advertising Contracts. Schedule 3.8 sets forth a complete
and accurate list of the Leases and Advertising Contracts in effect as of the
date of this Agreement, indicating any Leases that will expire on or before
December 31, 2000. Except as set forth on Schedule 3.8, or for deficiencies, not
material individually or in the aggregate, that are customary for the outdoor
advertising industry, each of the Leases and Advertising Contracts is in full
force and effect, and constitutes a valid and binding agreement that is
enforceable in accordance with its terms. Except as set forth on Schedule 3.8,
no member of the Bowlin Group or any other party is in default under any Lease
or Advertising Contract, and there is no condition or circumstance which with
the giving of notice or the passage of time could become such a default under
any Lease or Advertising Contract. Except as set forth on Schedule 3.8, all
Lease rental payments that are due by any member of the Bowlin Group have been
made and are current. Except as set forth on Schedule 3.8, no member of the
Bowlin Group has been informed by a lessor or its representative that a lessor
does not intend to renew an existing Lease.
3.9 Faces. Schedule 3.9 sets forth a complete and correct list of the
type and location of each outdoor advertising face (a "Face") owned or leased by
Bowlin, designating those Faces that Bowlin owns and those Faces that Bowlin
leases from third parties (including Bowlin Travel). Except as set forth in
Schedule 3.9, Bowlin owns and operates at least 609 poster Faces, 2730 bulletin
panel Faces and 754 eight-sheet Faces, except as the number of Faces leased or
owned by Bowlin may be reduced by customary and usual attrition of Leases that
is consistent with the historical experience of Bowlin. Schedule 3.9 reflects
the Advertising Revenue attributable to each of the Faces for the one month
period ended September 30, 2000. Except as set forth in Schedule 3.9, each Face
(a) is legal and conforming or legal and non-conforming, (b) available for sale,
and (c) is standing and in good condition acceptable within the standards of the
outdoor advertising industry. Except as set forth on Schedule 3.9, each Face is
operated under a Lease or is located on Owned Real Property (as defined below).
3.10 Permits; Compliance with Laws.
(1) Bowlin has (i) all permits, licenses and governmental authorizations
required for the ownership and operation of each Face and (ii) all other
material permits, licenses and governmental authorizations required for the
lease, ownership, occupancy or operation of its other properties and assets and
the carrying on of its business as presently conducted (subsections (i) and (ii)
collectively, the "Permits"). No suspension, cancellation or termination of any
Permits is threatened or imminent. Schedule 3.10 sets forth a complete and
accurate list of each of the Permits.
(2) Without limiting the scope of Section 3.10(a), each member of the
Bowlin Group, to its Knowledge, has conducted its business in compliance with
and is in compliance with all Applicable Laws, except where the failure to
comply would not have a Material Adverse Effect.
3.11 Owned Real Property.
(1) Schedule 3.11 sets forth a complete and correct list of all real
property owned in fee by Bowlin ("Owned Real Property"). Bowlin has good and
marketable fee simple title to all of its Owned Real Property, free and clear of
any Adverse Claims, subject in each case to Permitted Liens.
(2) Except as set forth on Schedule 3.11, there are no pending or
threatened condemnation proceedings with respect to any portion of Owned Real
Property, or litigation or administrative actions relating to any portion of
Owned Real Property.
(3) All Owned Real Property and related improvements are supplied with
utilities and other services necessary for the operation of the facilities
currently operated on the property.
A-6
<PAGE> 85
3.12 Corporate Formalities; Corporate Documents and Stockholder
Agreements.
(1) Each member of the Bowlin Group has maintained its separate corporate
existence and complied with all necessary corporate formalities such as the
holding of annual meetings of directors and stockholders.
(2) Bowlin has delivered to Lamar true and complete copies of its articles
of incorporation and bylaws, as amended or restated through the date of this
Agreement, as well as the articles of incorporation and bylaws governing each
other member of the Bowlin Group. The minute books of each member of the Bowlin
Group contain complete and accurate records of all corporate actions of the
equity owners of the various entities and of the boards of directors or other
governing bodies, including committees of such boards or governing bodies of the
various entities. The stock transfer records of Bowlin contain complete and
accurate records of all issuances, and redemptions of stock by Bowlin.
(3) There are no agreements among or between any of the Bowlin stockholders
with respect to the capital stock of Bowlin to which Bowlin is a party or of
which Bowlin has Knowledge.
3.13 SEC Documents; Financial Statements; Liabilities.
(1) Bowlin has timely filed all required reports, schedules, forms,
statements and other documents with the SEC since February 1, 1997 (the "Bowlin
SEC Documents"). The Bowlin SEC Documents, and any such reports, forms and
documents filed by Bowlin with the SEC after the date of this Agreement,
complied, or will comply, at the time of filing as to form in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to the Bowlin SEC Documents, and except to the extent that
information contained in any Bowlin SEC Document has been superseded by a later
filed Bowlin SEC Document, none of the Bowlin SEC Documents at the time of
filing contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(2) The Bowlin Financial Statements included in the Bowlin SEC Documents
complied at the time of filing with the SEC as to form in all material respects
with the applicable accounting requirements and published rules and regulations
of the SEC with respect thereto, were prepared in accordance with GAAP applied
on a basis consistent with prior periods, and fairly present the consolidated
financial position of Bowlin and the other members of the Bowlin Group at such
dates and the consolidated results of operations and cash flow for the
respective periods then ended, subject, in the case of the Bowlin Interim
Financial Statements, to normal, recurring year-end audit adjustments that are
not, individually or in the aggregate, material in amount. The Bowlin Audited
Financial Statements have been audited by KPMG, LLP, independent auditors of
Bowlin, in accordance with generally accepted auditing standards. No member of
the Bowlin Group has, nor are any of their respective assets subject to, any
liability, commitment, debt or obligation (of any kind whatsoever whether
absolute or contingent, accrued, fixed, known, unknown, matured or unmatured) of
a type required by GAAP to be reflected in the Bowlin Financial Statements,
except, (i) as and to the extent reflected on the Bowlin Latest Balance Sheet or
the footnotes that are a part of the Bowlin Financial Statements, (ii) as may
have been incurred or may have arisen since the date of the Bowlin Latest
Balance Sheet in the ordinary course of business and that are not material
individually or in the aggregate or (iii) are permitted or contemplated by this
Agreement or the Contribution Agreement. Except as set forth in the Bowlin SEC
Documents, since February 1, 1997, Bowlin has not made any change in the
accounting policies or practices applied in the preparation of the Bowlin
Financial Statements. Bowlin's independent auditors have not issued any audit
reports or other reports on internal controls which indicate that the internal
controls associated with or otherwise covering Bowlin have had any material
weaknesses or that the accounting records associated with or otherwise covering
Bowlin contained or could contain any material errors.
(3) The Bowlin Latest Balance Sheet includes appropriate reserves for all
Taxes and other known liabilities incurred as of such date but not yet payable.
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(4) The statements of income included in the Bowlin Financial Statements do
not contain any income or revenue realized from products or services that the
Surviving Corporation would be prohibited or restricted from offering after the
Effective Time pursuant to any covenant or provision in any Material Contract to
which any member of the Bowlin Group is a party.
3.14 Documents and Written Materials. Originals or true and complete
copies of all documents or other written materials requested by Lamar have been
furnished or made available to Lamar in the form in which each of such documents
is in effect, and will not be modified in any material respect prior to the
Closing Date without Lamar's prior written consent (not to be unreasonably
withheld).
3.15 Absence of Certain Changes or Events. Since the date of the Bowlin
Latest Balance Sheet, each member of the Bowlin Group has conducted its business
only in the ordinary course, and, except as set forth on Schedule 3.15, has not:
(1) amended its certificate of incorporation, bylaws or similar
organizational documents;
(2) except for capital expenditures set forth on Schedule 3.15(e),
incurred any liability or obligation of any nature (whether absolute or
contingent, accrued, fixed, known, unknown, matured or unmatured),
including, without limitation, increasing indebtedness for borrowed money,
except in the ordinary course of business and not exceeding $50,000
individually or $100,000 in the aggregate;
(3) suffered or permitted any of its assets to be or remain subject to
any mortgage or other encumbrance, except for Permitted Liens;
(4) merged or consolidated with another entity or acquired or agreed
to acquire any business or any corporation, partnership or other business
organization, or sold, leased, transferred or otherwise disposed of any
assets except for assets sold for fair value in the ordinary course of
business;
(5) made any capital expenditure or commitment therefor, except in the
ordinary course of business and, in the aggregate, not materially in excess
of those capital expenditures made or proposed to be made for the period
after the Bowlin Latest Balance Sheet that are set forth on Schedule
3.15(e);
(6) declared or paid any dividend or made any distribution with
respect to any of its equity interests, or redeemed, purchased or otherwise
acquired any of its equity interests, or issued, sold or granted any equity
interests or any option, warrant or other right to purchase or acquire any
such interest;
(7) adopted any employee benefit plan or made any change in any
existing employee benefit plans;
(8) made any bonus or profit sharing distribution or payment of any
kind, except bonuses and profit sharing distributions made to employees of
Bowlin who are not directors or officers of Bowlin, which payments or
distributions do not exceed $40,000 in the aggregate in any calender month;
(9) made any loan to any Person;
(10) made any change affecting any banking, safe deposit or power of
attorney arrangements;
(11) except for employment agreements entered into in the ordinary
course of business and consistent with past practices with employees of
Bowlin who are not directors or officers of Bowlin, entered into or amended
any employment, severance or similar agreement or arrangement with any
director, officer or employee, or granted any increase in the rate of
wages, salaries, bonuses or other compensation or benefits of any director,
officer or employee;
(12) canceled, waived, released or otherwise compromised any debt,
claim or right, except in the ordinary course of business consistent with
past practices;
(13) made any change in any method of accounting or auditing practice;
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(14) suffered the termination, suspension or revocation of any license
or permit necessary for the operation of its business;
(15) entered into any transaction other than on an arm's-length basis;
(16) suffered any damage, destruction or loss (whether or not covered
by insurance) which has had or could have a Material Adverse Effect on
Bowlin;
(17) agreed, whether or not in writing, to do any of the foregoing;
(18) been the subject of, or incurred any liability under or with
respect to, any determination made by an arbitrator with respect to a
grievance filed under any collective bargaining or other labor agreement to
which Bowlin is a party.
3.16 Legal Proceedings. Except as set forth in Schedule 3.16, there is no
lawsuit, action, suit, claim or other proceeding at law or in equity, or
investigation, before or by any court or Governmental Entity or before any
arbitrator that is pending or, to the Knowledge of Bowlin, threatened against
any member of the Bowlin Group, or any unsatisfied judgment, order or decree or
any open injunction binding upon any member of the Bowlin Group. Except as
specifically set forth on Schedule 3.16, no lawsuits, actions, suits, claims,
proceedings, investigations, unsatisfied judgments, orders, decrees or open
injunctions will or is reasonably likely to have a Material Adverse Effect or
adversely effect the ability of Bowlin to enter into and perform its obligations
under this Agreement.
3.17 Accounts Receivable. All of the accounts receivable reflected on the
Bowlin Financial Statements or arising thereafter that have not been collected
have arisen only from bona fide transactions in the ordinary course of business,
represent valid obligations owing to Bowlin and have been accrued in accordance
with GAAP. On the Closing Date, the allowance for doubtful receivables (the "AR
Allowance") reflected in the Pre-Closing Balance Sheet (as defined in Section
5.8(b)(i)) will be at least equal to the aggregate amount of Bowlin's accounts
receivable that will have been outstanding for more than 90 days as of the
Closing Date. On the Closing Date, the accounts receivable of Bowlin will be, to
the Knowledge of Bowlin, collectible in full when due, without any counterclaim
or set-off (net of the AR Allowance).
3.18 Contracts.
(1) Schedule 3.18 lists and describes all Material Contracts. A complete
and correct copy of each Material Contract has been furnished to or made
available to Lamar. To the Knowledge of Bowlin, each Material Contract is valid,
binding and enforceable, except to the extent that enforcement may be limited by
bankruptcy, reorganization, insolvency and other similar laws and court
decisions relating to or affecting the enforcement of creditors' rights
generally and by general equitable principles. Bowlin and, to the Knowledge of
Bowlin, each other party to each Material Contract are in compliance in all
material respects with the provisions of each Material Contract by which such
party is bound.
(2) Except as may be set forth in the Bowlin SEC Documents or described on
Schedule 3.18, Bowlin is not a party to:
(1) any collective bargaining agreement;
(2) any written or oral employment or other agreement or contract with
or commitment to any employee;
(3) any agreement, contract or commitment containing any covenant
limiting its freedom to engage in any line of business or to compete with
any Person;
(4) any oral or written obligation of guaranty or indemnification
arising from any agreement, contract or commitment, except as provided in
its certificate of incorporation or bylaws;
(5) any joint venture, partnership or similar contract involving a
sharing of profits or expenses;
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(6) any non-disclosure agreement, non-competition agreement, agreement
with an officer, director or employee of Bowlin, tax indemnity, tax sharing
or tax allocation agreement, or any severance, bonus or commission
agreement;
(7) any indenture, mortgage, loan, credit, sale-leaseback or similar
contract under which Bowlin has borrowed any money or issued any note, bond
or other evidence of indebtedness for borrowed money or guaranteed
indebtedness for money borrowed by others; or
(8) any hedge, swap, exchange, futures or similar agreements or
contracts.
3.19 Environmental Matters. Bowlin is not in violation in any material
respect of any Applicable Law relating to the environment or is a party to any
proposed removal, response or remedial action. Except as set forth on Schedule
3.19, Bowlin has not received any notice with respect to its business, its
leased or owned properties, or the use by third parties of its assets that:
(1) any investigation, administrative order, consent order and
agreement, removal or remedial action, litigation or settlement with
respect to any environmental permit, law or regulation is proposed,
threatened, anticipated or in existence;
(2) any release of any hazardous substances, pollutant or contaminant
into the environment by Bowlin has occurred; or
(3) any exposure of any person or property to any hazardous substance,
pollutant or contaminant has occurred.
Except as set forth on Schedule 3.19, the properties currently and previously
leased or owned by Bowlin are not and have never been on or associated with any
"national priorities" list or any equivalent state list or any federal or state
"superlien" list. Bowlin has made available to Lamar all internal and external
environmental audits and studies relating to the Leases or Owned Real Property,
and all correspondence on substantial environmental matters relating to the
Leases or the Owned Real Property is in the possession of Bowlin.
3.20 Employee Matters.
(1) Schedule 3.20(a) sets forth:
(1) a list of the name, title, current annual compensation rate
(including bonus and commissions) of each employee of Bowlin;
(2) organizational charts;
(3) employment, consulting, employee confidentiality or similar
agreements;
(4) any employee handbook(s); and
(5) any reports and/or plans prepared or adopted pursuant to the Equal
Employment Opportunity Act of 1972, as amended. Accruals with respect to
the bonus, sick leave and vacation benefits of the employees of Bowlin
Group have been made in accordance with the terms of the applicable
Employee Plans and GAAP.
(2) Each of the following is true:
(1) (A) each member of the Bowlin Group is in compliance with all
Applicable Laws respecting employment and employment practices, terms and
conditions of employment, wages and hours and occupational safety and
health; (B) no member of the Bowlin Group is engaged in any unfair labor
practice within the meaning of Section 8 of the National Labor Relations
Act; and (C) there is no proceeding pending or threatened, or any
investigation pending or threatened, against any member of the Bowlin
Group, relating to subsections (A) or (B) above, and no member of the
Bowlin Group has any Knowledge of any basis for any such proceeding or
investigation;
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(2) none of the employees of any member of the Bowlin Group is a
member of, or represented by, any labor union and there are no efforts
being made to unionize any of such employees; and
(3) there are no charges of, formal, informal or internal complaints
of, or proceedings involving, discrimination or harassment (including but
not limited to discrimination or harassment based upon sex, age, marital
status, race, religion, color, creed, national origin, sexual preference,
handicap or veteran status) pending or, to Bowlin's Knowledge, threatened,
nor is there any investigation pending or threatened, including, but not
limited to, investigations before the Equal Employment Opportunity
Commission or any federal, state or local agency or court, with respect to
any member of the Bowlin Group.
3.21 ERISA and Related Matters.
(1) Schedule 3.21(a) lists each Employee Plan that Bowlin or a member of
the Bowlin Group maintains, administers or contributes to. Bowlin has provided
Lamar a true and complete copy of each such Employee Plan, current summary plan
description, (and, if applicable, related trust documents) and all amendments
thereto together with (i) the most recent annual report, if any, that has been
prepared in connection with each Employee Plan; (ii) all material communications
received from or sent to the Internal Revenue Service or the Department of Labor
within the last two years; and (iii) the most recent Internal Revenue Service
determination letter with respect to each Employee Plan, if any, and the most
recent application for a determination letter, if any.
(2) Schedule 3.21(b) identifies each Benefit Arrangement that Bowlin or a
member of the Bowlin Group maintains or administers. Bowlin has furnished to
Lamar copies or descriptions of each Benefit Arrangement. To the Knowledge of
Bowlin, each Benefit Arrangement has been maintained in substantial compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations which are applicable to such Benefit Arrangement.
(3) Except as set forth on Schedule 3.21(c), no member of the Bowlin Group
maintains or has ever maintained an "employee benefit plan" (as defined in
Section 3(3) of ERISA) which is or was (i) a plan subject to Title IV of ERISA
or (ii) a "multiemployer plan" (as defined in Section 3(37) of ERISA).
(4) Benefits under any Employee Plan or Benefit Arrangement are as
represented in said documents and have not been increased or modified (whether
written or not written) subsequent to the dates of such documents. No member of
the Bowlin Group has communicated to any employee or former employee any
intention or commitment to modify any Employee Plan or Benefit Arrangement or to
establish or implement any other employee or retiree benefit or compensation
arrangement.
(5) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code satisfies in form the requirements of that Section except to
the extent amendments are not required by law to be made until a date after the
Closing Date, has received a favorable determination letter from the Internal
Revenue Service regarding such qualified status, and no event has occurred
regarding the adoption of such plan that would adversely affect such
qualification. Each trust created in connection with each Employee Plan forming
a part thereof is exempt from tax pursuant to Section 501(a) of the Code. Each
Employee Plan has been maintained and administered in compliance with its terms
and with the requirements prescribed by any and all applicable statutes, orders,
rules and regulations, including but not limited to ERISA and the Code. Except
as set forth on Schedule 3.21(e), no Employee Plan has been operated in a manner
which could give rise to penalties, excise taxes or adverse tax consequences to
Bowlin or to its employees, and no Employee Plan has violated in a material
manner any provision of the Code or of ERISA.
(6) Full payment has been made of all amounts which each member of the
Bowlin Group has, or has been required to have, paid as contributions to any
Employee Plan or Benefit Arrangement under Applicable Law or under the terms of
any such plan or any arrangement. All amounts withheld by Bowlin from its
employees have been paid to the appropriate Employee Plan or Benefit Arrangement
by the due date prescribed by the Department of Labor to avoid penalties.
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(7) No member of the Bowlin Group has any current or projected liability in
respect of post-retirement or post-employment health, life or other welfare
benefits for retired, current or former employees.
(8) Except as set forth on Schedule 3.21(h) or in this Agreement, no
employee or former employee of a member of the Bowlin Group will become entitled
to any bonus, retirement, severance, job security or similar benefit or enhanced
benefit (including acceleration of compensation, an award, vesting or exercise
of an incentive award) or any fee or payment of any kind solely as a result of
any of the transactions contemplated by this Agreement.
3.22 Taxes. For purposes of this Section 3.22, the "Bowlin Group" means,
individually and collectively, Bowlin and any individual, trust, corporation,
partnership or any other entity as to which Bowlin is liable for Taxes incurred
by such individual or entity either as transferee or pursuant Treasury
Regulation Section 1.1502-6 or pursuant to any other provision of federal,
territorial, state, local, or foreign law or regulations. Except as set forth on
Schedule 3.22:
(1) All Returns required to be filed by or on behalf of members of the
Bowlin Group have been duly filed on a timely basis and such Returns
(including all attached statements and schedules) are true, complete and
correct. All Taxes shown to be payable on the Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis,
and no other Taxes are payable by the Bowlin Group with respect to items or
periods covered by such Returns (whether or not shown on or reportable on
such Returns) or with respect to any period prior to the date of this
Agreement. No member of the Bowlin Group is currently the beneficiary of
any extension of time within which to file any Return.
(2) Each member of the Bowlin Group has withheld and paid over all
Taxes required to have been withheld and paid over (including any estimated
taxes), and has complied with all information reporting and backup
withholding requirements, including maintenance of required records with
respect thereto, in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party.
(3) There are no Liens on any of the assets of Bowlin or its
subsidiaries with respect to Taxes other than Liens for Taxes not yet due
and payable, or for Taxes that are being contested in good faith through
appropriate proceedings and for which appropriate reserves have been
established.
(4) Bowlin has furnished or made available to Lamar true and complete
copies of: (i) all federal and state income and franchise tax returns of
the Bowlin Group for all periods beginning on or after February 1, 1995
through the date of this Agreement, and (ii) all tax audit reports, work
papers, statements of deficiencies, closing or other agreements received by
any member of the Bowlin Group, or on their behalf relating to Taxes.
Neither Bowlin nor any member of the Bowlin Group do business in or derive
income from any state, local, territorial or foreign taxing jurisdiction
for which Returns must be filed other than those for which all Returns have
been furnished to Lamar. To its Knowledge, no claim has ever been made by a
taxing authority in a jurisdiction in which Bowlin or any member of the
Bowlin Group does not file a tax return that it is or may be subject to
taxation by that jurisdiction.
(5) The Returns of the Bowlin Group are not currently the subject of
any audit by a governmental or taxing authority.
(6) No deficiencies exist or are expected to be asserted with respect
to Taxes of the Bowlin Group, and there is no basis for the assertion of
any material deficiency of Taxes. No notice (either in writing or verbally,
formally or informally) has been received by any member of the Bowlin Group
that it has not filed a Return or paid Taxes required to be filed or paid
by it.
(7) No member of the Bowlin Group is a party to any pending action or
proceeding for assessment or collection of Taxes, nor has such action or
proceeding been asserted or threatened
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(either in writing or verbally, formally or informally) against any member
of the Bowlin Group, or any of its assets.
(8) No waiver or extension of any statute of limitations is in effect
with respect to Taxes or Returns of any member of the Bowlin Group.
(9) Bowlin and each member of the Bowlin Group has disclosed on its
federal income tax returns all positions taken thereon that could give rise
to a substantial understatement penalty within the meaning of Section 6662
of the Code.
(10) There are no requests for rulings, subpoenas or requests for
information pending with respect to any member of the Bowlin Group.
(11) No currently effective power of attorney has been granted by any
member of the Bowlin Group with respect to any matter relating to Taxes.
(12) The amount of Bowlin's liability or the liability of any member
of the Bowlin Group for unpaid Taxes for all periods ending on or before
the date of this Agreement do not, in the aggregate exceed the amount of
current liability accruals for Taxes (excluding reserves for deferral of
Taxes) as of the date of this Agreement, and the amount of Bowlin's
liability or the liability of any member of the Bowlin Group for unpaid
Taxes for all periods ending on or before the Closing Date will not, in the
aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred Taxes), as such accruals are reflected on
the balance sheets of Bowlin or its subsidiaries, respectively, as of the
Closing Date.
(13) Neither Bowlin nor any member of the Bowlin Group has made an
election, or is required to treat any asset as owned by another person for
federal income tax purposes or as tax-exempt bond financed property or
tax-exempt use property within the meaning of section 168 of the Code.
(14) Neither Bowlin nor its subsidiaries has issued or assumed any
indebtedness that is subject to Section 279(b) of the Code.
(15) No member of the Bowlin Group has entered into any compensatory
agreements with respect to the performance of services which payment
thereunder will result in a nondeductible expense pursuant to Section 280G
of the Code or an excise tax to the recipient of such payment pursuant to
Section 4999 of the Code.
(16) No consent under Section 341(f) of the Code has been filed with
respect to any member of the Bowlin Group.
(17) Neither Bowlin nor its subsidiaries has agreed, nor is required
to make, any adjustment under Code Section 481(a) by reason of change in
accounting method or otherwise.
(18) Neither Bowlin nor its subsidiaries has disposed of any property
that has been accounted for under the installment method.
(19) Neither Bowlin nor its subsidiaries is a party to any interest
rate swap, currency swap or similar transaction.
(20) No member of the Bowlin Group has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the period specified in Section 897(c)(1)(A)(ii) of the Code,
and Lamar is not required to withhold tax on the acquisition of the stock
of Bowlin by reason of Section 1445 of the Code.
(21) No member of the Bowlin Group has participated in any
international boycott as defined in Code Section 999.
(22) Neither Bowlin nor its subsidiaries is subject to any joint
venture, partnership or other arrangement or contract that is treated as a
partnership for federal income tax purposes.
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(23) No member of the Bowlin Group has made any of the foregoing
elections or is required to apply any of the foregoing rules under any
comparable state or local income tax provisions.
(24) No member of the Bowlin Group has or has ever had a permanent
establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
(25) Set forth in Schedule 3.22 or in documents furnished or made
available to Lamar is accurate and complete information with respect to
each of the following:
(1) Any tax elections made by any member of the Bowlin Group
currently in effect or that would otherwise affect Bowlin or any member
of the Bowlin Group;
(2) Any tax carryovers of Bowlin or its subsidiaries;
(3) Bowlin's basis in its assets;
(4) Bowlin's current and accumulated earnings and profits;
(5) Excess loss accounts in the Bowlin Group; and
(6) Deferred intercompany transactions in the Bowlin Group.
(26) Neither Bowlin nor its subsidiaries is a party to any Tax
allocation or sharing agreement or has any liability for the Taxes of any
person under Treasury Regulation Section 1. 1502-6 (or any similar
provision of local, state or federal law), as transferee or successor, by
contract or otherwise.
(27) No member of the Bowlin Group has prepared or filed any Return
inconsistent with past practice or, on any such Return, taken any position,
made any election or adopted any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar
Returns in prior periods, or settled or compromised any material federal,
state or local income tax liability.
(28) Bowlin operates at least one significant business line (other
than any business line that will be contributed to Bowlin Travel in the
Spin-Off), or owns at least a significant portion of its historic business
assets (considering the impact of the Spin-Off), in each case within the
meaning of Treasury Regulation Section 1.368-1(d).
3.23 Transactions with Related Parties.
(1) Schedule 3.23(a) and the Bowlin SEC Documents list each transaction
between February 1, 1997 and the date of this Agreement involving or for the
benefit of Bowlin, on the one hand, and any director or officer of Bowlin or any
Affiliate of such director or officer, on the other hand, including without
limitation, (i) any debtor or creditor relationship, (ii) any transfer or lease
of real or personal property, (iii) wages, salaries, commissions, bonuses and
agreements relating to employment and (iv) purchases or sales of products or
services.
(2) Schedule 3.23(b) lists (i) all agreements and claims of any nature that
any officer or director of any member of the Bowlin Group or any Affiliate of
such officer or director has with or against any member of the Bowlin Group as
of the date of this Agreement that are not identified on the Bowlin Latest
Balance Sheet and (ii) all agreements and claims of any nature that any member
of the Bowlin Group has with or against any officer or director of any member of
the Bowlin Group or any Affiliate of such officer or director as of the date of
this Agreement that are not identified on the Bowlin Latest Balance Sheet.
3.24 Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Bowlin Common Stock entitled to vote on
the Merger is the only vote of the holders of any class or series of Bowlin's
capital stock necessary to approve this Agreement and the transactions described
in this Agreement.
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3.25 State Takeover Statutes; Rights Plan.
(1) Except as set forth in Schedule 3.25, the Board of Directors of Bowlin
(at a meeting duly called and held) (i) has unanimously determined that the
Merger is advisable and fair and in the best interests of Bowlin and its
stockholders, and (ii) has unanimously approved the execution, delivery and
performance of this Agreement and the transactions described in this Agreement
and has unanimously approved the Merger. No state takeover statute or similar
statute or regulation applies or purports to apply to Bowlin in connection with
the Merger, this Agreement or any of the transactions described in this
Agreement.
(2) The Bowlin stockholders are not entitled to any rights to acquire
capital stock of Bowlin pursuant to a stockholder rights plan.
3.26 Intellectual Property. Bowlin either owns or has valid rights to use
all material patents, copyrights and trademarks used in its business as
presently conducted, subject to limitations contained in the agreements
governing the use of same, which limitations are customary for companies engaged
in businesses similar to Bowlin. There are no limitations contained in any such
agreements which will alter any such rights, breach any such agreement or any
third-party vendor, or require payments of additional sums thereunder. Bowlin is
in compliance with all such licenses and agreements and there are no pending or
threatened proceedings challenging or questioning the validity or effectiveness
of any license or agreement relating to such property or the right of Bowlin to
use, copy, modify, or distribute the same.
3.27 Insurance. Lamar has been provided copies of or access to all
insurance policies or binders that relate to the businesses of each member of
the Bowlin Group. All premiums due under the policies and binders have been paid
or accrued for and all policies and binders are in full force and effect. As of
the date of this Agreement, no notice of cancellation or non-renewal of any
policy or binder and no notice of disallowance of any claim under any insurance
policy or binder, has been received by any member of the Bowlin Group. Except as
provided in the applicable policy or binder, no member of the Bowlin Group has
any liability for or exposure to any premium expense for expired policies and
there are no current claims by any member of the Bowlin Group under any such
policy or binder as to which coverage has been denied or disputed by the
underwriters of such policies, nor are there any material insured losses for
which claims have not been made.
3.28 Bank Accounts; Power of Attorney. Schedule 3.28 sets forth with
respect to each bank account or cash account maintained by Bowlin at any bank,
brokerage or other financial firm, the name of the institution at which such
account is maintained, the number of the account, and the names of the
individuals having authority to withdraw funds from such account.
3.29 Registration Statement and Proxy Statement/Prospectus. None of the
information (other than information provided by Lamar or NewCo) included or
incorporated by reference in the Registration Statement will (a) in the case of
the Registration Statement, at the time it becomes effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein, in light of the circumstances under which they were made, or
necessary in order to make the statements therein not misleading, or (b) in the
case of the Proxy Statement/Prospectus, at the time of the mailing thereof, at
the time of the Bowlin Special Meeting, and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to any member of the
Bowlin Group or its respective directors or officers shall occur which is
required to be described in the Proxy Statement/ Prospectus or the Registration
Statement, such event shall be so described, and an appropriate amendment or
supplement will be promptly filed with the SEC and, to the extent required by
law, disseminated to the Bowlin stockholders. With respect to information
relating to Bowlin, the Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act, and the Proxy
Statement/Prospectus will comply (with respect to Bowlin) as to form in all
material respects with the provisions of the Exchange Act.
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3.30 No Finder's Fee. Neither Bowlin nor any member of the Bowlin Group
has incurred or become liable for any broker's commission or finder's fee
related to the transactions contemplated by this Agreement, except fees to be
paid pursuant to Section 5.12.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF LAMAR AND NEWCO
Lamar and NewCo represent and warrant to Bowlin, as of the date of this
Agreement and as of the Closing Date, as follows:
4.1 Organization. Each of Lamar and NewCo is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to own its
properties and carry on its business as now being conducted.
4.2 Lamar Capital Stock.
(1) The authorized capital stock of Lamar consists exclusively of (i)
175,000,000 shares of Class A common stock, $.001 par value per share, (ii)
37,500,000 shares of Class B common stock, $.001 par value per share, (iii)
1,000,000 shares of Series AA Preferred Stock, $.001 par value per share, and
(iv) 10,000 shares of Class A Preferred Stock, $638 par value per share, and as
of September 29, 2000, the following shares are outstanding: (A) 75,260,974
shares of Class A common stock, (B) 17,000,000 shares of Class B common stock,
(C) 5,719.49 shares of Series AA Preferred Stock, and (D) no shares of Class A
Preferred Stock. No shares of any class are held in treasury. All of the issued
and outstanding shares of Lamar have been validly issued, are fully paid and
nonassessable and are free of preemptive rights. As of the date of this
Agreement, 2,715,223 shares of the Class A common stock of Lamar are reserved
for issuance pursuant to the exercise of stock options granted and outstanding
under the stock option plan designated the Lamar Advertising 1996 Equity
Incentive Plan.
(2) The authorized capital stock of NewCo consists exclusively of 1,000
shares of Class A common stock, par value $.01 per share, of which 1,000 shares
of outstanding and no shares are held in treasury.
4.3 Authority; Enforceability.
(1) Each of Lamar and NewCo has the requisite corporate power and authority
to enter into this Agreement and to carry out its obligations under this
Agreement and any of the other agreements referred to in this Agreement to which
it is a party. The execution, delivery and performance of this Agreement and any
of the other agreements referred to in this Agreement to which it is a party and
the consummation of the transactions contemplated hereby or thereby have been
(or, in the case of NewCo, will be prior to the Effective Time) duly authorized
by all necessary corporate action on the part of Lamar and NewCo.
(2) This Agreement and each other agreement executed or to be executed by
Lamar and NewCo in connection with the transactions contemplated by this
Agreement have been, or when executed will be, duly executed and delivered by
Lamar and NewCo and constitute, or when executed and delivered will constitute,
valid and binding obligations of Lamar and NewCo, enforceable against Lamar and
NewCo in accordance with their terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors' rights generally or by equitable principles which
may limit the availability of certain equitable remedies in certain instances.
4.4 No Conflicts or Consents.
(1) Neither the execution, delivery or performance of this Agreement or any
of the other agreements referred to in this Agreement by Lamar and NewCo nor the
consummation of the transactions contemplated by this Agreement or any of the
other agreements referred to in this Agreement will violate, conflict with, or
result in a breach of any provision of, constitute a default (or an event that,
with notice or lapse of time or both, would constitute a default) under, result
in the termination of, or accelerate the performance required by, or result in
the creation of any Adverse Claim against any of the properties or
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assets of Lamar or NewCo under the articles of incorporation, bylaws or any
other organizational documents of Lamar or NewCo; any note, bond, mortgage,
indenture, deed of trust, or other debt obligation (other than ordinary course
trade credit) to which Lamar or NewCo is a party, or by which Lamar or NewCo or
any of their respective assets are bound; or any lease, agreement or other
instrument or other obligation that is material to the business or operations of
Lamar or NewCo and to which Lamar or NewCo is a party, or by which Lamar or
NewCo or any of their respective assets are bound; or violate any order, writ,
injunction, decree, judgment, statute, rule or regulation of any Governmental
Entity to which either Lamar or NewCo is subject or by which Lamar or NewCo or
any of their respective assets are bound.
(2) No filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to Lamar or NewCo in
connection with the execution and delivery of this Agreement by Lamar and NewCo,
or is necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement, except for: (i) the filing of an HSR Report by
each of Lamar and Bowlin under the HSR Act, (ii) the filing and recordation
requirements of the Law with respect to the Articles of Merger, and (iii) the
filing of the Registration Statement with the SEC.
4.5 SEC Documents; Financial Statements; Liabilities.
(1) Except as set forth on Schedule 4.5(a), Lamar has timely filed all
required reports, schedules, forms, statements and other documents with the SEC
since February 1, 1997 (the "Lamar SEC Documents"). The Lamar SEC Documents, and
any such reports, forms and documents filed by Lamar with the SEC after the date
of this Agreement, complied, or will comply, at the time of filing as to form in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to the Lamar SEC Documents, and except to the
extent that information contained in any Lamar SEC Document has been superseded
by a later filed Lamar SEC Document, none of the Lamar SEC Documents at the time
of filing contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(2) The Lamar Financial Statements included in the Lamar SEC Documents
complied at the time of filing with the SEC as to form in all material respects
with the applicable accounting requirements and published rules and regulations
of the SEC with respect thereto, were prepared in accordance with GAAP applied
on a basis consistent with prior periods, and fairly present the financial
position of Lamar at such dates and the results of operations and cash flow for
the respective periods then ended, subject, in the case of the Lamar Interim
Financial Statements, to normal, recurring year-end adjustments that are not,
individually or in the aggregate, material in amount. The Lamar Audited
Financial Statements have been audited by KPMG, LLP, independent auditors of
Lamar, in accordance with generally accepted auditing standards. Lamar does not
have, nor are any of its assets subject to, any liability, commitment, debt or
obligation (of any kind whatsoever whether absolute or contingent, accrued,
fixed, known, unknown, matured or unmatured) of a type required by GAAP to be
reflected in the Lamar Financial Statements, except (i) as and to the extent
reflected on the Lamar Latest Balance Sheet or the footnotes that are a part of
the Lamar Financial Statements, (ii) as may have been incurred or may have
arisen since the date of the Lamar Latest Balance Sheet in the ordinary course
of business and that are not material individually or in the aggregate or (iii)
are permitted by this Agreement. Except as set forth in the Lamar SEC Documents,
since February 1997, Lamar has not made any change in the accounting policies or
practices applied in the preparation of the Lamar Financial Statements. Lamar's
independent auditors have not issued any audit reports or other reports on
internal controls which indicate that the internal controls associated with or
otherwise covering Lamar have had any material weaknesses or that the accounting
records associated with or otherwise covering Lamar contained or could contain
any material errors.
(3) The Lamar Latest Balance Sheet includes appropriate reserves for all
Taxes and other known liabilities incurred as of such date but not yet payable.
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4.6 Registration Statement and Proxy Statement/Prospectus. None of the
information (other than information provided by Bowlin) included or incorporated
by reference in the Registration Statement will (a) in the case of the
Registration Statement, at the time it becomes effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, or (b) in the case
of the Proxy Statement/Prospectus, at the time of the mailing thereof, at the
time of the Bowlin Special Meeting, and at the Effective Time contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Lamar, its directors or
officers or any of its subsidiaries shall occur which is required to be
described in the Proxy Statement/Prospectus or the Registration Statement, such
event shall be so described, and an appropriate amendment or supplement shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the Bowlin stockholders. The Registration Statement shall comply as to form in
all material respects with the provisions of the Securities Act, and the Proxy
Statement/Prospectus shall comply as to form in all material respects with the
provisions of the Exchange Act, in each case other than as to information
provided for inclusion therein by Bowlin.
4.7 No Finder's Fee. Neither Lamar nor NewCo has incurred or become
liable for any broker's commission or finder's fee related to the transactions
contemplated by this Agreement.
4.8 Reorganization Representations.
(1) Lamar has no plan or intention to cause Bowlin to issue additional
shares of its stock after the Closing that would result in Lamar losing control
of Bowlin within the meaning of Code Section 368(c).
(2) Lamar has no plan or intention to liquidate Bowlin; to merge Bowlin
into another corporation; to cause Bowlin to sell or otherwise dispose of any of
its assets, except for dispositions made in the ordinary course of business; or
to sell or otherwise dispose of any of Bowlin Common Stock acquired pursuant to
this Agreement, except for transfers described in Code Section 368(a)(2)(C).
(3) Lamar has no plan or intention to reacquire any Lamar Common Stock
issued pursuant to this Agreement.
(4) Lamar shall pay its own expenses incurred in connection with the
transactions contemplated by this Agreement.
(5) Lamar does not own, directly or indirectly, nor has it owned during the
past five years, directly or indirectly, any stock of Bowlin.
(6) Lamar will not pay Bowlin's dissenting shareholders (if any) the value
of their stock out of its own funds and no funds will be supplied for that
purpose, directly or indirectly, by Lamar nor will Lamar directly or indirectly
reimburse Bowlin for any payments to dissenters. Nothing in the preceding
sentence will preclude Lamar from making capital contributions to Bowlin in the
ordinary course of business.
(7) Following the Closing, Bowlin will continue its historic business or
use a significant portion of its historic business assets in a business.
ARTICLE 5
COVENANTS
5.1 Regulatory Approvals; Cooperation and Best Efforts.
(1) (i) Lamar and Bowlin shall use all reasonable efforts to file, as soon
as practicable after the date of this Agreement, all notices, reports and other
documents required to be filed with any Governmental Entity with respect to the
Merger and the other transactions contemplated by this Agreement, and to submit
promptly any additional information requested by any such Governmental Entity.
Without limiting
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the generality of the foregoing, Lamar and Bowlin shall, within ten Business
Days of the date of this Agreement, prepare and file the notifications required
to be filed under the HSR Act. Lamar and Bowlin shall respond as promptly as
practicable (A) to any inquiries or requests received from the Federal Trade
Commission or the Department of Justice for additional information or
documentation and (B) to any inquiries or requests received from any state
attorney general, foreign antitrust authority or other Governmental Entity in
connection with antitrust or related matters.
(ii) Each of Bowlin and Lamar shall (A) give the other party prompt notice
of the commencement or threat of commencement of any Proceedings by or before
any Governmental Entity with respect to the Merger or any of the other
transactions contemplated by this Agreement, (B) keep the other party informed
as to the status of any such Proceeding or threat, and (C) promptly inform the
other party of any communication to or from the Federal Trade Commission, the
Department of Justice or any other Governmental Entity regarding the Merger.
Except as may be prohibited by any Governmental Entity or by any legal
requirement, Bowlin and Lamar will consult and cooperate with one another, and
will consider in good faith the views of one another, in connection with any
analysis, appearance, presentation, memorandum, brief, argument, opinion or
proposal made or submitted in connection with any Legal Proceeding under or
relating to the HSR Act or any other foreign, federal or state antitrust or fair
trade law.
(iii) Notwithstanding the foregoing, neither party will be required to
accept any conditions that may be imposed by the FTC or the DOJ in connection
with such filings that would require the divestiture of any Lamar or Bowlin
assets or otherwise have a Material Adverse Effect on such party.
(2) Each party will cooperate with the other and use its reasonable best
efforts to (i) receive all necessary and appropriate consents of third parties
to the transactions contemplated by this Agreement, (ii) satisfy all
requirements prescribed by law for, and all conditions set forth in this
Agreement to, the consummation of the Merger, and (iii) effect the Merger in
accordance with this Agreement at the earliest practicable date.
5.2 Bowlin Special Meeting.
(1) Bowlin will take all action necessary under law to call, give notice of
and convene a meeting of its stockholders (the "Bowlin Stockholders Meeting") to
be held as promptly as practicable for the purpose of voting upon a proposal to
adopt this Agreement. The Bowlin Stockholders Meeting shall be held (on a date
selected by Bowlin in consultation with Lamar) as promptly as practicable after
the Registration Statement is declared effective under the Securities Act.
(2) Subject to Section 5.2(c), (i) the Proxy Statement/Prospectus shall
include a recommendation (the "Board Recommendation") of the Board of Directors
of Bowlin that Bowlin's stockholders vote to adopt this Agreement at the Bowlin
Special Meeting and (ii) the Bowlin Board Recommendation shall not be withdrawn
or modified in a manner adverse to Lamar, and no resolution by the Board of
Directors of Bowlin or any committee thereof to withdraw or modify the Board
Recommendation shall be adopted or proposed.
(3) Notwithstanding anything to the contrary contained in Section 5.2(b),
at any time prior to the adoption of this Agreement by the Bowlin stockholders,
the Board Recommendation may be withdrawn or modified in a manner adverse to
Lamar if: (i) a proposal to acquire (by merger or otherwise) all of the
outstanding shares of Bowlin Common Stock is made to Bowlin and is not
withdrawn; (ii) Bowlin's Board of Directors determines in good faith (based upon
a written opinion of an independent financial advisor of nationally recognized
reputation) that such offer constitutes a Superior Proposal; (iii) Bowlin's
Board of Directors determines in good faith, after having taken into account the
written advice of Bowlin's outside legal counsel, that, in light of such
Superior Proposal, the withdrawal or modification of the Board Recommendation is
required in order for Bowlin's Board of Directors to comply with its fiduciary
obligations to Bowlin's stockholders under applicable law; and (iv) neither
Bowlin nor any of its Representatives shall have violated any of the
restrictions set forth in Section 5.5.
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(4) Bowlin shall comply with all provisions of the Exchange Act and the Law
in the solicitation of proxies from its stockholders to vote upon the proposal
to adopt this Agreement.
5.3 Preparation of the Proxy Statement/Prospectus and the Registration
Statement.
(1) Lamar and Bowlin shall jointly prepare the Proxy Statement/Prospectus,
and Lamar shall file with the SEC the Registration Statement, in which the Proxy
Statement/Prospectus shall be included. Bowlin will cooperate with Lamar to
promptly respond to any SEC comments on the Proxy Statement/ Prospectus or
Registration Statement and each of Lamar and Bowlin will use its commercially
reasonable efforts to resolve all SEC comments as promptly as practicable to the
satisfaction of the SEC and to have the Registration Statement declared
effective under the Securities Act as promptly as practicable after its filing.
Lamar will also take any action (other than qualifying to do business in any
jurisdiction in which it is now not so qualified) required to be taken under any
applicable state securities laws in connection with the issuance of the Lamar
Common Stock in connection with the Merger. Bowlin will furnish all information
concerning Bowlin and the Bowlin stockholders as may be reasonably requested by
Lamar in connection with any such action.
(b) Lamar and Bowlin will comply with the Exchange Act and the Law in the
preparation, filing and distribution of the Proxy Statement/Prospectus.
5.4 Conduct of Business Prior to the Closing Date.
(1) During the period from the date of this Agreement to the Effective
Time, Bowlin will, except as contemplated by the Contribution Agreement or as
necessary to effect the Spin-Off, (i) conduct its business only in the ordinary
course and (ii) use its best efforts to preserve the possession and control of
all of its assets other than those consumed or disposed of for value in the
ordinary course of business or pursuant to the terms of this Agreement, to
preserve the goodwill of suppliers, customers and others having business
relations with it and to do nothing to impair its ability to keep and preserve
its business as it exists on the date of this Agreement.
(2) Without the prior written consent of the other party, neither Lamar nor
Bowlin will commit or omit to do any act that (i) would cause a breach of any of
its agreements, commitments or covenants contained in this Agreement, or (ii)
would cause its representations and warranties contained in Article 3 or Article
4, as the case may be, to become untrue.
5.5 No Solicitation.
(1) No member of the Bowlin Group will directly or indirectly, through any
officer, director, representative, agent or affiliate (a "Bowlin
Representative") of any member of the Bowlin Group, (i) initiate, solicit,
encourage, induce or otherwise facilitate the initiation or submission of any
inquiries, proposals or offers that constitute or may reasonably be expected to
lead to an Acquisition Proposal (as defined below), (ii) furnish any information
regarding any member of the Bowlin Group to any Person in connection with or in
response to an Acquisition Proposal or an inquiry or indication of interest that
could reasonably be expected to lead to an Acquisition Proposal, unless required
by Applicable Law (iii) enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries or to obtain an
Acquisition Proposal, (iv) agree to, approve, recommend or endorse any
Acquisition Proposal, or (v) enter into any letter of intent, contract or
similar agreement contemplating or otherwise relating to any Acquisition
Proposal; provided, however, that prior to the adoption of this Agreement by the
Bowlin stockholders, this Section 5.5 (a) shall not prohibit Bowlin from
furnishing nonpublic information regarding any member of the Bowlin Group to, or
entering into discussions with, any Person in response to a Superior Proposal
that is submitted to Bowlin by such Person (and not withdrawn) if (w) neither
Bowlin nor any Bowlin Representative shall have violated any of the restrictions
set forth in this Section 5.5, (x) the Board of Directors of Bowlin concludes in
good faith, after having taken into account the written advise of its outside
legal counsel, that such action is required in order for the Board of Directors
of Bowlin to comply with its fiduciary obligations to Bowlin's stockholders
under applicable law, (y) at or prior to furnishing any such nonpublic
information to, or entering into discussions with, such Person, Bowlin gives
Lamar written notice of the identify of such Person and of Bowlin's intention to
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furnish nonpublic information to, or enter into discussions with, such Person,
and Bowlin receives from such Person an executed confidentiality agreement
containing provisions no less favorable to Bowlin than those contained in the
Confidentiality Agreement (as defined below) between Bowlin and Lamar, and (z)
at or prior to furnishing any such nonpublic information to such Person, Bowlin
furnishes such nonpublic information to Lamar (to the extent such nonpublic
information has not been previously furnished by Bowlin to Lamar). Without
limiting the generality of the foregoing, Bowlin acknowledges and agrees that
any violation of or the taking of any action inconsistent with any of the
restrictions set forth in the preceding sentence by any Bowlin Representative,
whether or not such Bowlin Representative is purporting to act on behalf of
Bowlin, shall be deemed to constitute a breach of this Section 5.5 by Bowlin.
(2) For purposes of this Agreement, "Acquisition Proposal" means a proposal
for any of the following (other than the transactions contemplated by this
Agreement, including the Spin-Off) that involves (i) prior to the Spin-Off, any
member of the Bowlin Group, and (ii) after the Spin-Off, any member of the
Bowlin Group except Bowlin Travel: (A) any merger, reorganization,
consolidation, share exchange, recapitalization, business combination,
liquidation, dissolution, or other similar transaction involving, or, any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of, all or any
significant portion of the assets or 10% or more of the equity securities of,
any member of the Bowlin Group; (B) any tender offer or exchange offer for 20%
or more of the outstanding shares of capital stock of Bowlin or the filing of a
registration statement under the Securities Act in connection therewith; or (C)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
(3) For purposes of this Agreement, "Superior Proposal" means a bona fide
proposal made by a third party to acquire Bowlin pursuant to an Acquisition
Proposal that the Board of Directors of Bowlin determines in its good faith
judgment (after considering the written advice of Bowlin's independent advisors)
to merit the withdrawal of the Board Recommendation because such third party
proposal has more favorable economic terms than the transactions contemplated by
this Agreement.
(4) Bowlin will immediately notify Lamar after receipt of any Acquisition
Proposal or any request for nonpublic information relating to any member of the
Bowlin Group in connection with an Acquisition Proposal or for access to any of
the premises, books or records of any member of the Bowlin Group by any person
or entity that informs Bowlin or its Board of Directors, formally or informally,
that it is considering making, or has made, an Acquisition Proposal. Such notice
to Lamar will be made orally and in writing and will indicate in reasonable
detail the identity of the offering party and the terms and conditions of such
proposal, inquiry or contact; except such disclosure will be made to Lamar only
to the extent such disclosure does not violate the fiduciary responsibilities of
the Board of Directors of Bowlin, after being advised by its legal counsel, in
which case Bowlin will provide Lamar with a summary of the terms and conditions
of such proposal, inquiry or contact.
(5) Nothing contained in this Section 5.5 will prevent Bowlin from
complying with Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act,
if applicable, with regard to an Acquisition Proposal made in the form of a
tender offer by a third party.
(6) Bowlin shall immediately cease and cause to be terminated any
pre-existing discussions with any Person that relates to any Acquisition
Proposal; provided, however, that any such discussions may be recommenced so
long as Bowlin complies with the provisions of this Section 5.5.
5.6 Press Releases. Bowlin and Lamar will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press releases or other public statements with respect to any transactions
described in this Agreement, including the Merger, and will not issue any such
press releases or make any such public statement prior to such consultation,
except as may be required by Applicable Law, court process or by obligations
pursuant to a listing agreement with American Stock Exchange or Nasdaq.
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5.7 Access to Information and Confidentiality.
(1) Prior to the Closing Date, Bowlin will afford to Lamar and its
officers, employees, accountants, counsel, financial advisors and other
representatives, reasonable access during normal business hours to its premises,
books and records and will furnish to Lamar (i) a copy of each report, schedule,
registration statement and other documents filed by it during such period
pursuant to the requirements of federal or state securities laws, and (ii) such
other information with respect to its business and properties as Lamar
reasonably requests.
(2) The confidentiality obligations of Bowlin and Lamar will continue to be
governed by the Confidentiality Agreement dated September 6, 2000 (the
"Confidentiality Agreement") by and between Bowlin and Lamar.
5.8 Consultation and Reporting.
(1) During the period from the date of this Agreement to the Closing Date,
Bowlin will confer with Lamar on a regular and frequent basis to report material
operational matters with respect to its business and to report on the general
status of its ongoing operations. Bowlin will notify Lamar of any unexpected
emergency or other change in the normal course of its business or in the
operation of its properties and of any governmental complaints, investigations,
adjudicatory proceedings, or hearings (or communications indicating that the
same may be contemplated) and will keep Lamar fully informed of such events and
permit Lamar's representatives prompt access to all materials prepared by Bowlin
or on its behalf or served on Bowlin in connection therewith.
(2) At least two Business Days prior to Closing, Bowlin will provide Lamar:
(1) a copy of Bowlin's balance sheet dated the last day of the month
immediately preceding the month of the Closing, unless the Closing occurs
prior to the 15th day of any month, in which case the balance sheet will be
dated the last day of the month immediately preceding the month before
Closing (in either case, the "Pre-Closing Balance Sheet"), along with an
aged accounts receivable report, pre-paid lease amortization schedule,
copies of notes payable and notes receivable, accounts payable journals and
any other detailed lists supporting such balance sheet;
(2) a written statement calculating the Working Capital of Bowlin
after the Spin-Off; and
(3) a written statement calculating the Bowlin Long-Term Debt after
the Spin-Off.
5.9 Notification of Changes.
(1) Bowlin, on the one hand, and Lamar and NewCo, on the other hand, will
promptly notify the other parties of any event that causes any representation or
warranty given by the other parties, respectively, in Articles 3 and 4 to become
untrue.
(2) Bowlin, on the one hand, and Lamar and NewCo, on the other hand, will
each have the right until the Closing to supplement or amend any of the
Schedules described in Articles 3 or 4 with respect to any matter arising or
discovered after the date of this Agreement which, if existing or known on the
date of this Agreement, would have been required to be set forth or described in
such Schedules. For all purposes of this Agreement, including for purposes of
determining whether the conditions set forth in Article 6 have been fulfilled,
the Schedules will be deemed to include only that information contained therein
on the date of this Agreement and will be deemed to exclude all information
contained in any supplement or amendment thereto, except to the extent that they
reflect an event or condition that would not have a Material Adverse Effect on
the party making the representation and warranty; provided, however, that if the
Closing will occur, then all matters disclosed pursuant to any such supplement
or amendment will be deemed included in the Schedules at Closing (without
necessity of a written waiver or other action on the part of any party) and to
modify the applicable representations and warranties for all purposes.
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5.10 Stock Option Plan. The Board of Directors of Bowlin will, in
connection with the Merger and the transactions contemplated by this Agreement,
notify in writing the holders of Bowlin Options issued under the Option Plan of
their right to exercise their options as to all shares that are subject to
Bowlin Options. Such notice will be given pursuant to Section 11 of the Option
Plan at least 30 days prior to the Closing Date.
5.11 Faces to Be Completed. Bowlin will use its best efforts to complete
the faces on Schedule 5.11 (the "Q3 Faces") prior to the Closing Date.
5.12 Fees and Expenses. If the Merger is consummated, Lamar will pay or
will cause the Surviving Corporation to pay, up to $1,250,000 of Bowlin's
aggregate costs and expenses associated with the consummation of the Merger and
the other transactions contemplated by this Agreement, including financial
advisory fees, a fairness opinion, legal fees and accounting fees (the "Closing
Costs"). Under the terms of the Contribution Agreement, Bowlin Travel will
expressly assume the obligation to pay any Closing Costs in excess of
$1,250,000.
5.13 Affiliate Agreements. Bowlin shall use all reasonable efforts to
cause each Person identified on Schedule 5.13 and each other Person who is or
becomes (or may be deemed to be) an affiliate (as that term is used in Rule 145
under the Securities Act) of Bowlin to execute and deliver to Lamar, prior to
the date of mailing of the Proxy Statement/Prospectus to Bowlin's stockholders,
an Affiliate Letter in the form of Exhibit C.
5.14 Listing. Lamar shall use its best efforts to cause the Merger Shares
to be approved for listing (subject to notice of issuance) on the Nasdaq
National Market System.
5.15 Bowlin 401(k) Plan.
(1) Within 30 days after the date of this Agreement, Bowlin will deliver to
Lamar for review and approval by Lamar, an amendment (the "401(k) Amendment") to
Bowlin's 401(k) Plan (the "Plan") whereby, in addition to any other provisions
reasonably requested by Lamar, Bowlin Travel will (i) expressly assume the
obligation to maintain the Plan as successor employer, (ii) cause the assets
held in Plan accounts of employees who remain employed by the Surviving
Corporation to be transferred from the Plan to The Lamar Savings and Profit
Sharing Plan Trust, (iii) report the transfer of Plan assets to any employees
and regulatory authorities as required by Applicable Law.
(2) Bowlin Travel will execute any and all documents as needed for the
401(k) Amendment to comply with IRS requirements and will provide Lamar with
copies of any IRS filings.
(3) Bowlin Travel will provide a list of all participating employees to
Lamar at Closing.
5.16 Repair of Faces. Bowlin will repair each of the Faces listed in
Schedule 3.9(5) to the extent repairs are commercially reasonable, so that, at
Closing, each Face will be (a) legal and conforming or legal and non-conforming,
(b) available for sale, and (c) standing and in good condition acceptable within
the standards of the outdoor advertising industry.
5.17 Management Agreement. Bowlin will give Bowlin Travel written notice
at least 31 days prior to the Closing Date that the Agreement for Management
Services dated August 1, 2000 between Bowlin and Bowlin Travel will be
terminated effective as of the day prior to the Closing Date.
5.18 Contribution Agreement; Spin-Off.
(1) Bowlin will, and will cause Bowlin Travel to, (i) within 15 days after
the date of this Agreement, execute the Contribution Agreement in a form
reasonably satisfactory to Lamar, and (ii) within 45 days after the date of this
Agreement, complete and provide any schedules and exhibits to the Contribution
Agreement in forms reasonably satisfactory to Lamar.
(2) Bowlin will contribute to Bowlin Travel the assets and liabilities
related to Bowlin's travel center business in accordance with the terms and
conditions of the Contribution Agreement; provided, however,
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that Lamar will have consented to the terms and conditions of the Contribution
Agreement under Section 5.18(a).
(3) Bowlin will distribute all of the shares of Bowlin Travel to the Bowlin
stockholders in compliance with Section 78.288 of the Nevada Revised Statutes.
ARTICLE 6
CLOSING CONDITIONS
6.1 Conditions Applicable to all Parties. The respective obligations of
each party to consummate the transactions contemplated by this Agreement are
subject to the satisfaction or, where permissible, waiver by such party of the
following conditions at or prior to the Closing Date:
(1) Bowlin Stockholder Approval. The Merger will have been duly
approved by holders of at least a majority of the outstanding shares of
Bowlin Common Stock in accordance with the Law and the Articles of
Incorporation of Bowlin.
(2) Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall
have been initiated, or to the Knowledge of Lamar or Bowlin, threatened by
the SEC. All necessary state securities authorizations (including filings,
authorizations, orders and approvals, if any, as may be required by state
takeover laws) will have been received and shall be in full force and
effect.
(3) HSR Act. The waiting periods (and any extensions thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired and no condition will have been imposed on Bowlin or
Lamar to obtain such termination that would require the divestiture of any
Bowlin or Lamar assets or otherwise have a Material Adverse Effect on
either party.
(4) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order, judgment or decree to
restrain or prohibit the consummation of the Merger or any of the other
transactions described in this Agreement shall have been issued and remain
in effect.
(5) Litigation. There shall not have been instituted or pending, or
threatened, any Proceeding by any Governmental Entity as a result of this
Agreement or any of the transactions contemplated hereby which, if such
Governmental Entity were to prevail, would reasonably be expected to have a
Material Adverse Effect on Lamar or the Surviving Corporation.
(6) Listing of Merger Shares. The Merger Shares shall have been
authorized for listing on the Nasdaq National Market System, subject to
official notice of issuance.
6.2 Conditions to Lamar's and NewCo's Obligations. The obligations of
Lamar and NewCo to consummate the transactions contemplated by this Agreement
are subject to the satisfaction of the following conditions, unless waived in
writing by Lamar:
(1) Representations and Warranties. The representations and
warranties of Bowlin set forth in this Agreement, disregarding all
qualifications and exceptions relating to materiality or Material Adverse
Effect, will be true and correct in all respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement, and
except where the failure of any representations and warranties,
individually or in the aggregate, would not have a Material Adverse Effect.
(2) Covenants. Bowlin will have performed or complied in all material
respects with the obligations and covenants required to be complied with or
performed by it under this Agreement at or prior to the Closing Date.
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(3) No Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any Material Adverse Effect with respect to
Bowlin, and no event shall have occurred or circumstance shall exist that,
in combination with any other events, could reasonably be expected to have
a Material Adverse Effect on the Bowlin Group.
(4) Consents and Approvals. All consents and approvals of third
parties necessary for the consummation of the transactions contemplated by
this Agreement shall have been obtained.
(5) Working Capital. The Working Capital at Closing shall be not less
than $100,000.
(6) Bowlin Long-Term Debt. The Bowlin Long-Term Debt shall not exceed
$14,500,000.
(7) Bowlin Assets. None of Bowlin's assets will secure any debts or
other obligations of Bowlin Travel.
(8) Closing Certificate. Lamar will have received a certificate
executed by the Chief Executive Officer and Chief Financial Officer of
Bowlin dated the Closing Date, certifying that the conditions specified in
Section 6.2(a) through (g) have been fulfilled.
(9) Q3 Faces. The Q3 Faces that have been completed prior to Closing
will be in suitable condition to enable Lamar to use those structures for
outdoor advertising purposes, and the advertising contracts, Leases and
Permits applicable to the completed Q3 Structures will be in effect.
(10) Affiliates Letters. Lamar shall have received the letters
described in Section 5.13.
(11) Contribution Agreement; Spin-Off. The contribution from Bowlin
to Bowlin Travel of the assets and liabilities related to Bowlin's travel
center business will have been effected under the terms and conditions
specified in the Contribution Agreement, and Bowlin will have distributed
all of the shares of Bowlin Travel to the Bowlin stockholders.
(12) Director and Officer Resignations. Lamar shall have received
resignations from all of the directors and officers of Bowlin, such
resignations to be effective as of the Effective Time.
(13) Bowlin Travel Agreements. Bowlin will have terminated any leases
or other agreements between Bowlin and Bowlin Travel other than the
Contribution Agreement that Lamar requests Bowlin to terminate.
(14) Solvency Certificate. Lamar will have received a certificate
executed by the Chief Executive Officer and Chief Financial Officer of
Bowlin dated the Closing Date, certifying that each of Bowlin and Bowlin
Travel was solvent immediately prior to the Spin-Off and remained solvent
from the date of the Spin-Off through the Closing Date.
(15) 401(k) Amendment. Bowlin and Bowlin Travel will have executed
the 401(k) Amendment.
6.3 Conditions to Obligations of Bowlin. The obligations of Bowlin to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions, unless waived in writing by Bowlin:
(1) Representations and Warranties. The representations and
warranties of Lamar and NewCo set forth in this Agreement, disregarding all
qualifications and exceptions relating to materiality or Material Adverse
Effect, will be true and correct in all respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement, and
except where the failure of any representations and warranties,
individually or in the aggregate, would not have Material Adverse Effect.
(2) Covenants. Each of Lamar and NewCo will have performed or
complied in all material respects with all obligations and covenants
required to be complied with or performed by it under this Agreement at or
prior to the Closing Date.
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(3) No Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any Material Adverse Effect with respect to
Lamar or NewCo, and no event shall have occurred or circumstance shall
exist that, in combination with any other events, could reasonably be
expected to have a Material Adverse Effect on Lamar or NewCo.
(4) Consents and Approvals. All consents and approvals of third
parties necessary for the consummation of the transactions contemplated by
this Agreement shall have been obtained.
(5) Closing Certificate. The receipt by Bowlin of a certificate
executed by the Chief Executive Officer and Chief Financial Officer of
Lamar dated the Closing Date, certifying that the conditions specified in
Section 6.3(a) through (d) have been fulfilled.
ARTICLE 7
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated and the Merger
contemplated by this Agreement abandoned at any time before the Effective Time,
whether before or after approval by the Bowlin stockholders as follows:
(1) Mutual Consent. By the mutual consent of the Boards of Directors
of Bowlin and Lamar.
(2) Material Breach. By the Board of Directors of either Bowlin or
Lamar if there has been a material breach by the other of any
representation or warranty contained in this Agreement or of any covenant
contained in this Agreement, which in either case cannot be, or has not
been, cured within 15 days after written notice of such breach is given to
the party committing such breach; provided that the right to effect such
cure will not extend beyond the date set forth in Section 7.1(c) below.
(3) Abandonment. By the Board of Directors of either Bowlin or Lamar
if the Merger has not occurred by March 31, 2001, unless the failure to
consummate the Merger is attributable to a failure on the part of the party
seeking to terminate this Agreement to perform any material obligation
required under the terms and provisions of this Agreement to be performed
by it.
(4) Government Action. By the Board of Directors of either Bowlin or
Lamar if any Governmental Entity shall have issued a final, non-appealable
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger.
(5) Failure to Obtain Required Vote of Bowlin Stockholders. By either
Bowlin or Lamar if the Bowlin Special Meeting (including any adjournments
and postponements thereof) shall have been held and completed and this
Agreement shall not have been adopted by the required affirmative vote of
the Bowlin stockholders at such meeting; provided, however, that (i) a
party shall not be permitted to terminate this Agreement pursuant to this
Section 7.1(e) if the failure to obtain such stockholder approval is
attributable to a failure on the part of such party to perform any material
obligation required to be performed by it at or prior to the Effective
Time, and (ii) Bowlin shall not be permitted to terminate this Agreement
pursuant to this Section 7.1(e) unless Bowlin shall have made the
payment(s) required to be made to Lamar pursuant to Section 7.3.
(6) Average Closing Share Price. By the Board of Directors of Bowlin,
if the Average Closing Share Price is below $40.00.
7.2 Effect of Termination. Upon termination of this Agreement pursuant to
this Article 7, this Agreement will be void and of no effect, other than the
obligation to pay the Termination Fee referred to in Section 7.3, if applicable,
and will result in no obligation of or liability to any party or their
respective directors, officers, employees, agents or stockholders, unless such
termination was the result of an intentional breach of any representation,
warranty or covenant in this Agreement in which case the party who breached the
representation, warranty or covenant will be liable to the other party for
damages.
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7.3 Expenses; Termination Fees. Except as set forth in this Section 7.3
or Section 5.12, all fees and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses, whether or not the Merger is consummated;
provided, however, that if this Agreement is terminated by Bowlin or Lamar
pursuant to Section 7.1(e), then Bowlin shall pay to Lamar, in cash at the time
specified in the next sentence, a nonrefundable fee in the amount equal to
$580,000 (the "Termination Fee"). In the case of termination of this Agreement
by Bowlin pursuant to Section 7.1(e), the Termination Fee shall be paid by
Bowlin prior to the time of such termination; and in the case of termination of
this Agreement by Lamar pursuant to Section 7.1(e), the fee referred to in the
preceding sentence shall be paid by Bowlin within two business days after such
termination.
ARTICLE 8
DEFINED TERMS
8.1 Definitions. In addition to the other defined terms used in this
Agreement, the following terms when capitalized have the meanings indicated.
"Adverse Claim" has the meaning assigned thereto in Section 8.102(a) of the
Uniform Commercial Code.
"Advertising Contracts" means advertising contracts associated with the
Faces.
"Advertising Revenues" means Bowlin's outdoor advertising space revenue
(net of discounts, rebates, tradeouts, commercial sales, paper sales, production
revenue, agency commissions and revenue attributable to the advertising faces
(i) damaged or in need of repair that are listed in Schedule 3.9(5), and (ii)
that will be contributed to Bowlin Travel in the Contribution Agreement) under
the Advertising Contracts.
"Affiliate" will have the meaning ascribed by Rule 12b-2 promulgated under
the Exchange Act.
"Agreement" means this Agreement and Plan of Merger, including the exhibits
and schedules, as amended or otherwise modified from time to time.
"Applicable Law" means any statute, law, rule or any judgment, order, writ,
injunction or decree of any Governmental Entity to which a specified Person or
its property is subject.
"Average Closing Share Price" means the average of the closing sales prices
of a share of Lamar Common Stock as reported on the Nasdaq National Market
System for the 30 trading days ending on the last trading day immediately prior
to the Closing Date.
"Benefit Arrangement" means any employment, severance or similar contract,
or any other contract, plan, policy or arrangement (whether or not written)
providing for compensation, bonus, profit-sharing, stock option or other stock
related rights or other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured arrangement), health or
medical benefits, disability benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health, medical or life
insurance benefits), other than the Employee Plans, that is maintained,
administered or contributed to by the employer and covers any employee or former
employee of any member of the Bowlin Group.
"Bowlin Audited Financial Statements" means the audited consolidated
balance sheets and related consolidated statements of income, retained earnings
and cash flow, and the related notes thereto of Bowlin for the years ended
January 31, 1998, 1999 and 2000.
"Bowlin Financial Statements" means the Bowlin Audited Financial Statements
and the Bowlin Interim Financial Statements.
"Bowlin Group" means, collectively, Bowlin and its subsidiaries (if any).
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"Bowlin Interim Financial Statements" means the unaudited balance sheet,
and the related unaudited statements of income, retained earnings and cash flows
of Bowlin for the six-month period ended July 31, 2000.
"Bowlin Latest Balance Sheet" means the latest balance sheet of Bowlin
included in the Bowlin Audited Financial Statements.
"Bowlin Long-Term Debt" means Bowlin's long-term debt (excluding current
portions thereof) and any payments on employment contracts and non-competition
agreements to which Bowlin (or a predecessor in interest of Bowlin) is a party,
including, without limitation, contingent severance obligations.
"Bowlin Special Meeting" means the special meeting of the Bowlin
stockholders for the purpose of approving this Agreement.
"Business Day" means any day (other than Saturday or Sunday) on which
commercial banks in Baton Rouge, Louisiana and Albuquerque, New Mexico are open
for business.
"Closing" means the consummation of the Merger and the other transactions
contemplated by this Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Employee Plan" means a plan or arrangement as defined in Section 3(3) of
ERISA, that (a) is subject to any provision of ERISA, (b) is maintained,
administered or contributed to by any member of the Bowlin Group and (c) covers
any employee or former employee of any member of the Bowlin Group.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended.
"GAAP" means accounting principles generally accepted in the United States.
"Governmental Entity" means any court or tribunal of competent jurisdiction
in any jurisdiction or any public, governmental or regulatory body, agency,
department, commission, board, bureau or other authority or instrumentality.
"Knowledge" means, when given to qualify or limit a representation or
warranty otherwise made by Bowlin or Lamar, respectively, the actual knowledge,
after reasonable inquiry, of the officers and directors of Bowlin or Lamar,
respectively.
"Lamar Audited Financial Statements" means the audited balance sheets and
related statements of income, retained earnings and cash flow, and the related
notes thereto of Lamar for the years ended December 31, 1997, 1998 and 1999.
"Lamar Financial Statements" means the Lamar Audited Financial Statements
and the Lamar Interim Financial Statements.
"Lamar Interim Financial Statements" means the unaudited balance sheet, and
the related unaudited statements of income, retained earnings and cash flows of
Lamar for the six-month period ended June 30, 2000.
"Lamar Latest Balance Sheet" means the latest balance sheet of Lamar
included in the Lamar Audited Financial Statements.
"Leases" means any (i) ground lease or (ii) office, warehouse or facility
lease (in each of (i) and (ii), whether or not reduced to writing), to which
Bowlin (or any predecessor in interest of Bowlin) is subject.
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"Lease Expense" means Bowlin's total lease expense for the real property
and structures upon which the Faces are located for the one-month period ended
December 31, 1999.
"Liens" means pledges, liens, defects, leases, licenses, equities,
conditional sales contracts, charges, claims, encumbrances, security interests,
easements, restrictions, chattel mortgages, mortgages or deeds of trust, of any
kind or nature whatsoever.
"Material Adverse Effect" means any change in, effect on, or circumstance
that, individually or in the aggregate, has had or would reasonably be likely to
have a material and adverse effect on the operations, business, prospects,
results of operations or financial condition of Lamar on a consolidated basis or
Bowlin.
"Material Contract" means any executory contract, agreement or other
understanding, whether or not reduced to writing, that is not cancellable within
30 days, to which Bowlin or its property is subject, which provides for future
payments to another Person by the relevant entity or entities of more than
$50,000 in the aggregate in any calendar year.
"Multiemployer Plan" means a plan or arrangement as defined in Section
4001(a)(3) and 3(37) of ERISA.
"Nasdaq" means the National Association of Securities Dealers Automated
Quotation System.
"Permitted Liens" means (i) Liens securing Bowlin's credit facility, (ii)
Liens for Taxes not yet due and payable, and (iii) mechanics liens and similar
Liens incurred in the ordinary course of business that will not, in any case or
in the aggregate, materially detract from the value of the assets subject
thereto or cause a Material Adverse Effect with respect to Bowlin.
"Person" means an individual, firm, corporation, general or limited
partnership, limited liability company, limited liability partnership, joint
venture, trust, governmental authority or body, association, unincorporated
organization or other entity.
"Pre-Closing Periods" means all Tax periods ending at or before the Closing
Date and, with respect to any Tax period that includes but does not end at the
Closing Date, the portion of such period that ends at and includes the Closing
Date.
"Proceedings" means any suit, action, proceeding, dispute or claim before
or investigation by any Governmental Entity.
"Proxy Statement/Prospectus" means (a) the proxy statement of Bowlin to be
included in the Registration Statement for the purpose of soliciting proxies
from the Bowlin stockholders to vote in favor of the adoption of this Agreement
at the Bowlin Special Meeting, and (b) the prospectus of Lamar to be used for
the purpose of offering the Lamar Common Stock to be issued to the Bowlin
stockholders upon consummation of the Merger, together with any accompanying
letter to stockholders, notice of meeting and form of proxy.
"Registration Statement" means the registration statement on Form S-4,
including the Proxy Statement/Prospectus, to be filed by Lamar with the SEC for
the purpose, among other things, of registering the Lamar Common Stock which
will be issued to the Bowlin stockholders upon consummation of the Merger.
"Returns" means all returns, reports, estimates, declarations and
statements of any nature relating to, or required to be filed in connection
with, any Taxes, including information returns or reports with respect to backup
withholding and other payments to third parties.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
"Spin-Off" means the series of transactions contemplated by Bowlin whereby
the assets and liabilities of Bowlin directly related to the operation of
Bowlin's travel centers will be contributed to Bowlin Travel,
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and, upon completion and satisfaction of all approvals and other requirements
from the SEC and all other necessary parties, Bowlin would declare and
distribute as a dividend to the stockholders of Bowlin, shares of Bowlin Travel
proportionate to each stockholder's current holdings of common stock in Bowlin.
"Spin-Off Date" means the date the shares of Bowlin Travel are distributed
to the shareholders of Bowlin.
"Taxes" means any federal, state, local or other taxes (including, without
limitation, income, alternative minimum, franchise, property, sales, use, lease,
excise, premium, payroll, wage, employment or withholding taxes), fees, duties,
assessments, withholdings or governmental charges of any kind whatsoever
(including interest, penalties and additions to tax).
"Working Capital" means the consolidated or combined current assets of the
relevant entity less the consolidated or combined current liabilities of Bowlin.
ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices under this Agreement must be in writing and will
be deemed to have been given upon receipt of delivery by: (a) personal delivery
to the designated individual; (b) certified or registered mail, postage prepaid,
return receipt requested; (c) a nationally recognized overnight courier service
(against a receipt therefor); or (d) facsimile transmission with confirmation of
receipt. All such notices must be addressed as follows or to such other address
as to which any party hereto may have notified the other in writing:
If to Lamar, to:
Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attn: James R. McIlwain
Facsimile transmission no.: (225) 926-1005
With a copy to:
Jones, Walker, Waechter, Poitevent Carrere & Denegre, L.L.P.
Fifth Floor, Four United Plaza
8555 United Plaza Boulevard
Baton Rouge, Louisiana 70809-7000
Attn: Brad J. Axelrod
Facsimile transmission no.: (225) 231-3336
If to Bowlin, to:
Bowlin Outdoor Advertising & Travel Centers Incorporated
150 Louisiana N.E.
Albuquerque, New Mexico 87108
Attn: Michael Bowlin
Facsimile transmission no.: (505) 266-1422
With a copy to:
Squire, Sanders & Dempsey L.L.P.
40 North Central Ave.,
Suite 2700
Phoenix, AZ 85044
Attn: Christopher D. Johnson
Facsimile transmission no.: (602) 253-8129
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<PAGE> 109
9.2 Headings; Gender. When a reference is made in this Agreement to a
section, exhibit or schedule, such reference will be to a section, exhibit or
schedule of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and will
not affect in any way the meaning or interpretation of this Agreement. All
personal pronouns used in this Agreement will include the other genders, whether
used in the masculine, feminine or neuter gender, and the singular will include
the plural and vice versa, whenever and as often as may be appropriate.
9.3 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the documents, exhibits and instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements, and
understandings and communications, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon any
person other than the parties to this Agreement any rights or remedies under
this Agreement.
9.4 Governing Law. This Agreement will be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable principles of conflicts of law.
9.5 Assignment. Neither this Agreement nor any of the rights, interests
or obligations under it will be assigned by any of the parties to this Agreement
(whether by operation of law or otherwise) without the prior written consent of
the other parties.
9.6 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by reason of any rule of law or
public policy, all other conditions and provisions of this Agreement will
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 adverse
manner to any party.
9.7 Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original and all of which taken
together will constitute one and the same document.
9.8 Amendment. This Agreement may only be amended by an instrument in
writing signed by each of the parties to this Agreement.
9.9 Effect of Spin-Off on Certain Bowlin Representations and
Warranties. The parties acknowledge and agree that Bowlin has proposed, and
Lamar has accepted, that Bowlin will not be deemed to be in breach of this
Agreement by failing to disclose against the representations and warranties set
forth in Sections 3.11, 3.15, 3.17, 3.19, 3.20(a), 3.23(a) and 3.26 with respect
to any asset, liability, act, event or circumstance relating solely to (i)
Bowlin's travel center line of business prior to the Spin-Off, and (ii) Bowlin
Travel after the Spin-Off; provided, however, that to the extent that such
non-disclosure would cause a failure of the closing condition set forth in
Section 6.2(a), Lamar shall be entitled to assert such matter as a basis for not
closing the transactions contemplated herein.
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<PAGE> 110
IN WITNESS WHEREOF, the parties to this Agreement have caused it to be
signed by their respective duly authorized officers as of the date first above
written.
LAMAR ADVERTISING COMPANY
By: /s/ KEVIN P. REILLY, JR.
----------------------------------
Name: Kevin P. Reilly, Jr.
Title: President, Chief Executive
Officer
LAMAR SOUTHWEST ACQUISITION
CORPORATION
By: /s/ KEVIN P. REILLY, JR.
----------------------------------
Name: Kevin P. Reilly, Jr.
Title: President, Chief Executive
Officer
BOWLIN OUTDOOR ADVERTISING &
TRAVEL CENTERS INCORPORATED
By: /s/ MICHAEL BOWLIN
----------------------------------
Name: Michael Bowlin
Title: Chairman of the Board, Chief
Executive
Officer and President
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<PAGE> 111
EXHIBIT A
CONTRIBUTION AGREEMENT
See Annex B to this proxy statement/prospectus.
<PAGE> 112
EXHIBIT B
ARTICLES OF MERGER
of
LAMAR SOUTHWEST ACQUISITION CORPORATION
(A NEVADA CORPORATION)
WITH AND INTO
BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS INCORPORATED
(A NEVADA CORPORATION)
(FILED PURSUANT TO SECTION 92A.200 OF THE NEVADA REVISED STATUTES)
The undersigned corporation, acting pursuant to Section 92A.200 of the
Nevada Revised Statutes, hereby certifies as follows:
1. The name and jurisdiction of organization of each constituent
corporation are as follows:
<TABLE>
<CAPTION>
JURISDICTION OF
NAME ORGANIZATION
---- ---------------
<S> <C>
Lamar Southwest Acquisition Corporation Nevada corporation
(the "Merging Corporation")
Bowlin Outdoor Advertising & Travel Nevada corporation
Centers, Incorporated (the "Surviving
Corporation")
</TABLE>
2. An Agreement and Plan of Merger dated October 3, 2000 by and among Lamar
Advertising Company, a Delaware corporation, and the Merging Corporation, on the
one hand, and the Surviving Corporation, on the other (the "Merger Agreement"),
providing for the merger of the Merging Corporation with and into the Surviving
Corporation (the "Merger"), has been adopted by the Merging Corporation and the
Surviving Corporation.
3. The Merger Agreement was approved by the written consent of the sole
stockholder of the Merging Corporation.
4. The Merger Agreement was submitted to a vote of the stockholders of the
Surviving Corporation pursuant to Chapter 92A of the Nevada Revised Statutes.
The stockholders of the Surviving Corporation approved the Merger Agreement,
with votes cast, of which were cast to approve the Merger
Agreement and of which were cast against the Merger Agreement.
5. The Articles of Incorporation of the Surviving Corporation will be
amended and restated in the form attached to these Articles of Merger as Exhibit
"A" (the "Amended Articles"). The Amended Articles will change the name of the
Surviving Corporation to Lamar Southwest, Inc.
6. A copy of the Merger Agreement is on file at the principal place of
business of the Surviving Corporation at 5551 Corporate Boulevard, Baton Rouge,
Louisiana 70808.
These Articles of Merger have been executed on this day of
, 2001 by the Surviving Corporation.
BOWLIN OUTDOOR ADVERTISING &
TRAVEL CENTERS INCORPORATED
By:
----------------------------------
Name:
Title:
<PAGE> 113
EXHIBIT C
FORM OF AFFILIATES' LETTER
[Date]
Mr. Keith Istre, Vice President and Chief Financial Officer
Lamar Advertising Company
5551 Corporate Blvd.
Baton Rouge, LA 70808
Dear Mr. Istre:
Pursuant to the Agreement and Plan of Merger dated October 3, 2000 (the
"Merger Agreement") by and among Lamar Advertising Company, a Delaware
corporation ("Lamar"), and Lamar Southwest Acquisition Corporation, a Nevada
corporation and a wholly owned subsidiary of Lamar ("NewCo"), on the one hand,
and Bowlin Outdoor Advertising & Travel Centers Incorporated, a Nevada
corporation ("Bowlin"), I will receive shares of Lamar's Class A Common Stock,
$.001 par value per share (the "Lamar Stock"). I am aware and acknowledge that
as a director or executive officer of Bowlin or the beneficial owner of 10% or
more of the outstanding common stock of Bowlin, I may be deemed an "affiliate"
of the Company as that term is defined in the Securities Act of 1933, as amended
(the "Securities Act"), and the regulations promulgated under the Securities
Act.
I understand that, as a result of my status as an affiliate of Bowlin, I
may not resell or otherwise dispose of the shares of Lamar Stock that I acquire
pursuant to the Merger Agreement (the "Acquired Shares") except in compliance
with Rule 145 promulgated under the Securities Act.
On the basis of the foregoing, and in consideration of the delivery to me
of the Acquired Shares, I agree that I will not, directly or indirectly, offer,
sell, transfer, pledge or otherwise alienate, encumber or dispose of any of the
Acquired Shares in violation of the Securities Act or the rules and regulations
promulgated under it.
Very truly yours,
<PAGE> 114
ANNEX B
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of the
1st day of November, 2000 (the "Contribution Date") by and between BOWLIN TRAVEL
CENTERS, INC., a Nevada corporation (the "Company"), and BOWLIN OUTDOOR
ADVERTISING & TRAVEL CENTERS INCORPORATED, a Nevada corporation ("BOWLIN").
RECITALS
A. BOWLIN owns and operates both travel centers and outdoor advertising
displays in the Southwestern United States. Under its travel centers business
segment, BOWLIN owns or leases and operates fifteen full-service travel centers
located along interstate highways in Arizona and New Mexico, which offer brand
name food and gasoline and a variety of Southwestern merchandise to the
traveling public (the "Travel Centers Business").
B. The Company was formed by BOWLIN on August 8, 2000, as a Nevada
corporation and is a wholly owned subsidiary of BOWLIN.
C. BOWLIN wishes to contribute the Travel Centers Business to the Company
in exchange for which BOWLIN shall receive shares of common stock in the Company
subject to the terms and conditions of this Agreement.
D. BOWLIN and the Company intend to treat BOWLIN's contribution of the
Travel Centers Business to the Company as a transfer of assets in return for
control of the Company in accordance with Section 351 of the Internal Revenue
Code of 1986, as amended (the "Code").
E. BOWLIN is a party to an Agreement and Plan of Merger by and among
BOWLIN, Lamar Advertising Company ("Lamar"), and Lamar Southwest Acquisition
Corporation, dated as of October 3, 2000 (the "Merger Agreement"), pursuant to
which Lamar Southwest Acquisition Corporation will merge with and into BOWLIN
(the "Merger").
F. Immediately prior to consummation of the Merger, BOWLIN intends to
distribute its shares of the Company's common stock to BOWLIN's shareholders
(the "Spin-Off").
In consideration of the foregoing and the mutual representations,
warranties, covenants and agreements herein contained, BOWLIN and the Company
agree as follows:
All capitalized terms used herein shall have the meanings ascribed to them
in Appendix A hereto.
SECTION 1
CONTRIBUTION OF ASSETS BY BOWLIN
1.1 Contribution of the Assets.
(a) Subject to the terms and conditions of this Agreement, on the
Contribution Date, BOWLIN hereby assigns, transfers, and delivers to the
Company, as a contribution, and in an "as is, where is" condition, all of the
assets, properties, and business of every kind and description, wherever located
whether real, personal, or mixed, tangible or intangible, owned or held, that
are used primarily in the conduct of the Travel Centers Business by BOWLIN as
the same shall exist on the Contribution Date
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(collectively, the "Assets"), including without limitation, all assets and
property shown on the Contributed Business Balance Sheet, and all right, title,
and interest of BOWLIN in, to, and under:
(i) The real property listed and described in Schedule 1.1(a)(i) (the
"Real Property");
(ii) The outdoor advertising faces and underlying structures listed
and described in Schedule 1.1(a)(ii) (the "Faces");
(iii) The machinery, equipment, furniture, vehicles, and other
tangible property, other than Inventory (including, without limitation,
maintenance and operating supplies, fuel, and spare parts for such
machinery and equipment), used primarily in connection with the Travel
Centers Business and listed and described in Schedule 1.1(a)(iii)
(collectively, the "Equipment");
(iv) The raw materials, finished goods, work-in-process, supplies, and
inventories, used or usable primarily in connection with the Travel Centers
Business (collectively, the "Inventory");
(v) Those patents, copyrights, trademarks, trade names, technology,
know-how, processes, trade secrets, inventions, proprietary data, formulae,
research and development data, computer software programs, and other
intangible property, and any applications for the same, used primarily in
the Travel Centers Business (and the use of and any right in and to the
name "BOWLIN") and described in Schedule 1.1(a)(v) and all goodwill
associated with such intangible property (collectively, the "Intangible
Property");
(vi) The leases of certain real property used or usable primarily in
connection with the Travel Centers Business described in Schedule
1.1(a)(vi), together with all fixtures, office equipment, furnishings,
furniture, and other tangible property located at such property and
(collectively, the "Leased Property");
(vii) All of BOWLIN's rights, claims, credits, causes of action, or
rights of setoff against third parties relating solely to the Assets and
the Travel Centers Business, including, without limitation, unliquidated
rights under manufacturers' and vendors' warranties (collectively,
"Claims");
(viii) Those contracts, agreements, leases, licenses, and other
instruments, arrangements and commitments being assumed by the Company
pursuant to Section 1.3 of this Agreement (collectively, "Rights");
(ix) All certificates of occupancy and other transferable licenses,
permits, registrations, authorizations, use agreements, orders, or
approvals of governmental or quasi-governmental agencies and authorities
(whether federal, state, local, municipal, or foreign) or private parties
relating solely to the construction, use, operation, or enjoyment of the
Travel Centers Business (collectively, "Permits");
(x) All accounts receivable arising out of sales in the ordinary and
usual course of the operation of the Travel Centers Business prior to the
close of business on the Contribution Date (collectively, "Receivables");
(xi) All transferable bonds or deposits made by BOWLIN or its
predecessors in title (or its agents) with any governmental agency or
authority or with any utility company or third party relating solely to the
construction, use, operation, or enjoyment of the Assets;
(xii) All prepaid rentals and other prepaid expenses for goods or
services arising from payments made by BOWLIN prior to the close of
business on the Contribution Date in the ordinary and usual course of the
operation of the Travel Centers Business and related solely to the Assets;
(xiii) Originals or copies of all books, records, files, and papers,
whether in hard copy or computer format, used in the Travel Centers
Business, including without limitation, engineering information, manuals
and data, sales and advertising materials, sales and purchase
correspondence, lists of present and former suppliers, and personnel and
employment records and, with respect to information relating to any Tax,
only information that is necessary for the preparation of Tax returns
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to be filed by the Company after the Contribution Date or the determination
of the tax basis of the Assets (collectively, "Files and Records");
(xiv) All lists of present, and, to the extent available, future
customers of the Travel Center Business and goodwill associated with the
Assets; and
(xv) All cash and other monetary assets attributable solely to the
Travel Center Business and all bank accounts listed on Schedule 1.1(xv).
1.2 Conveyance Instruments. In order to effectuate the contribution of
the Assets and the assumption of the Assumed Liabilities by the Company, BOWLIN
and the Company have, or will hereafter, execute and deliver, or cause to be
executed and delivered, all such documents or instruments of assignment,
transfer, or conveyance, in each case dated as of the Contribution Date
(collectively, the "Conveyance Instruments"), necessary or appropriate to vest
in or confirm title to the Assets to the Company.
1.3 Assumed Liabilities. Subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties, covenants and
agreements of the parties contained herein, the Company hereby assumes and
agrees to pay, perform, discharge and fulfill the following liabilities and
obligations (collectively, the "Assumed Liabilities"):
(i) all of the liabilities and obligations set forth on Schedule 1.3,
and
(ii) any and all liabilities and obligations, whether known or
unknown, absolute or contingent, arising before, on or after the
Contribution Date and directly relating to (A) any of the Assets or (B) any
act, event or occurrence involving the ownership or use of the Assets or
the conduct of the Travel Centers Business by either BOWLIN or the Company.
1.4 Excluded Liabilities. Notwithstanding any provision of this Agreement
or any Conveyance Instrument to the contrary, the Company is assuming only the
Assumed Liabilities and is not assuming any other liability or obligation of
BOWLIN (or any predecessor owner of all or part of its business and assets) of
whatever nature whether presently in existence or arising hereafter, and all
such other liabilities and obligations shall be retained by and remain
liabilities of BOWLIN (all of such liabilities and obligations not being assumed
hereinafter referred to as the "Excluded Liabilities").
SECTION 2
EVENTS OCCURRING ON THE CONTRIBUTION DATE
2.1 Deliveries by Bowlin and the Company. Contemporaneously with the
execution hereof, and subject to Section 4.1(a), each of BOWLIN and the Company
has duly executed and delivered to the other the following:
(a) The Conveyance Instruments to effect the contribution of the
Assets to the Company and the assumption of the Assumed Liabilities by the
Company;
(b) A copy of the resolutions of its Board of Directors, certified by
its Secretary, authorizing or ratifying its execution and delivery of this
Agreement, and the consummation of the transactions contemplated hereby and
thereby;
(c) A copy of its Articles of Incorporation certified as of a date
within five (5) days of the Contribution Date by the Secretary of State (or
equivalent official) of Nevada;
(d) A certificate from the Secretary of State (or equivalent official)
of Nevada as to its good standing in Nevada certified as of a date within
five (5) days of the Contribution Date; and
(e) The executed counterpart copies of all consents, approvals,
authorizations, and Permits, if any, from third parties referred to in
Section 4.1(a) hereof.
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2.2 Effect of Contributions. In exchange for the transfer of the Assets
to, and assumption of the Assumed Liabilities by, the Company, BOWLIN shall
receive 4,582,848 shares of the common stock of the Company (equal to the total
number of outstanding shares of common stock of Bowlin, on the Contribution
Date).
SECTION 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Bowlin
(a) Organization. BOWLIN is a corporation which is duly organized, validly
existing, and in good standing under the laws of Nevada, with the corporate
power and authority to own, lease, and operate its properties and to carry on
its business as now being conducted. The copies of the Articles of Incorporation
and all amendments thereto of BOWLIN, as certified by the Secretary of State (or
equivalent official) of Nevada, and the Bylaws, as amended to date, of BOWLIN,
as certified by its Secretary and delivered to the Company, are true, complete,
and correct copies of the Articles of Incorporation and Bylaws, as amended and
presently in effect, of BOWLIN.
(b) Authority. BOWLIN has the corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery by BOWLIN of this Agreement, and the consummation of
the transactions contemplated hereby, have been duly authorized by the Board of
Directors of BOWLIN; no other corporate proceedings on the part of BOWLIN or any
other person or entity, whether pursuant to the Articles of Incorporation or
Bylaws of BOWLIN or by law or otherwise, are necessary to authorize BOWLIN to
enter into this Agreement or to consummate the transactions contemplated hereby;
and this Agreement is the legal, valid, and binding obligation of BOWLIN.
(c) No Violations. Neither the execution nor the delivery of this
Agreement nor the consummation of the transactions contemplated hereby:
(i) Requires any filing or registration with, or consent,
authorization, approval, or permit of, any governmental or regulatory
authority on the part of BOWLIN;
(ii) Violates or will violate (A) any order, writ, injunction,
judgment, decree, or award of any court or governmental or regulatory
authority, or (B) to the knowledge of BOWLIN, violates or will violate any
law of any governmental or regulatory authority to which BOWLIN or any of
its properties or assets are subject;
(iii) Violates or will violate, or conflicts with or will conflict
with, any provision of, or constitutes a default under, the Articles of
Incorporation or Bylaws of BOWLIN; or
(iv) Except as set forth on Schedule 3.1(c), violates or breaches or
constitutes a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or give rise to a right to
terminate, any mortgage, contract, agreement, deed of trust, license,
lease, or other instrument, arrangement, commitment, obligation,
understanding, or restriction of any kind to which BOWLIN is a party or by
which its properties may be bound, or (ii) will cause, or give any person
grounds to cause, to be accelerated (with notice or lapse of time or both)
the maturity of, or will increase, any liability or obligation of BOWLIN
which violation, breach, default, liability, or obligation, individually or
in the aggregate, is or would be material to the business or financial
condition of BOWLIN or the Travel Centers Business taken as a whole.
3.2 Representation and Warranties of the Company
(a) Organization. The Company is a corporation which is duly organized,
validly existing, and in good standing under the laws of Nevada, with the
corporate power and authority to own, lease, and operate its properties and to
carry on its business as now being conducted. The copies of the Articles of
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Incorporation and all amendments thereto of the Company, as certified by the
Secretary of State (or equivalent official) of Nevada, and the Bylaws, as
amended to date, of the Company, as certified by its Secretary and delivered to
the Company, are true, complete, and correct copies of the Articles of
Incorporation and Bylaws, as amended and presently in effect, of the Company.
(b) Authority. The Company has the corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this
Agreement, and the consummation of the transactions contemplated hereby, have
been duly authorized by the Board of Directors of the Company; no other
corporate proceedings on the part of the Company or any other person or entity,
whether pursuant to the Articles of Incorporation or Bylaws of the Company or by
law or otherwise, are necessary to authorize the Company to enter into this
Agreement or to consummate the transactions contemplated hereby; and this
Agreement is the legal, valid, and binding obligation of the Company.
(c) No Violations. Neither the execution nor the delivery of this
Agreement nor the consummation of the transactions contemplated hereby:
(i) Requires any filing or registration with, or consent,
authorization, approval, or permit of, any governmental or regulatory
authority on the part of the Company;
(ii) Violates or will violate (A) any order, writ, injunction,
judgment, decree, or award of any court or governmental or regulatory
authority, or (B) to the knowledge of the Company, violates or will violate
any law of any governmental or regulatory authority to which the Company or
any of its properties or assets are subject;
(iii) Violates or will violate, or conflicts with or will conflict
with, any provision of, or constitutes a default under, the Articles of
Incorporation or Bylaws of the Company; or
(iv) Except as set forth on Schedule 3.2(c), violates or breaches or
constitutes a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or give rise to a right to
terminate, any mortgage, contract, agreement, deed of trust, license,
lease, or other instrument, arrangement, commitment, obligation,
understanding, or restriction of any kind to which the Company is a party
or by which its properties may be bound, or (ii) will cause, or give any
person grounds to cause, to be accelerated (with notice or lapse of time or
both) the maturity of, or will increase, any liability or obligation of the
Company which violation, breach, default, liability, or obligation,
individually or in the aggregate, is or would be material to the business
or financial condition of the Company or the Travel Centers Business taken
as a whole.
SECTION 4
COVENANTS OF THE PARTIES
4.1 Consents, Permits, Etc.
(a) BOWLIN (i) has maintained in full force and effect and renewed, when
required, all Permits, and (ii) has obtained, or will obtain at the earliest
practicable date hereafter, all consents, approvals, governmental filings,
authorizations, and Permits necessary for (A) the consummation of the
transactions contemplated by this Agreement, and (B) the continued conduct of
the Travel Centers Business by the Company after the Contribution Date as it is
presently conducted by BOWLIN, and delivers herewith, or will deliver when
obtained hereafter, to the Company copies of each such consent, approval,
governmental filing, authorization, and Permit.
(b) To the extent that any of the contracts, leases, agreements, Permits,
plans, commitments, purchase orders, or other binding arrangements relating to
the Assets cannot be assumed by or assigned to the Company without the consent
of another party, and such consent has not been obtained as of the Contribution
Date, each of the parties hereto agrees to cooperate with the other to obtain
such consents.
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BOWLIN will promptly pay to the Company when received all monies received by
BOWLIN under any such agreements.
4.2 Employee Matters.
(a) Schedule 4.2 sets forth a list of the name, title, current annual
compensation rate (including bonus and commissions) of each employee engaged
primarily in the operation of the Bowlin Travel Centers Business (the "Travel
Centers Business Employees") as well as any employment, consulting, employee
confidentiality or similar agreements of each Travel Centers Business Employee.
(b) The Company shall offer employment with the Company to each of the
Travel Centers Business Employees on the same terms and conditions of employment
as they currently enjoy under Bowlin. All such Travel Centers Business Employees
who are offered employment by the Company and who accept such employment shall
be collectively referred to as the "Transferred Employees."
(c) Except as specifically provided for in this Agreement, the Company
covenants and agrees to assume all responsibility and liability with respect to
the accrued benefits (including any claims with respect to any medical benefits
that were incurred but not reported prior to the Contribution Date) of the
Travel Centers Business Employees (including any beneficiary or dependent
thereof) under BOWLIN employee welfare benefit plans, employee pension benefit
plans, and employee fringe benefit arrangements and any other liabilities or
obligations relating to BOWLIN employee benefits or compensation (including
accrued vacation and sick pay, if any), for periods ending on or prior to the
Contribution Date.
(d) On the Contribution Date, BOWLIN and the Company will enter into an
amendment (the "401(k) Amendment") to BOWLIN's 401(k) Plan (the "Plan") whereby
the Company will (i) expressly assume the obligation to maintain the Plan as
successor employer, (ii) as soon as practicable after the closing of the Merger,
cause the assets held in the Plan accounts of employees who remain employed by
BOWLIN to be transferred from the Plan to The Lamar Savings and Profit Sharing
Plan Trust, (iii) report the transfer of Plan assets to any employees and
regulatory authorities as required by Applicable Law. The Company will execute
any and all documents as needed for the 401(k) Amendment to comply with IRS
requirements and will provide BOWLIN with copies of any IRS filings. The Company
will provide a list of all participating employees to BOWLIN at Closing.
Contemporaneously with the closing of the Merger, BOWLIN will execute and
deliver a participation termination to the administrator of the Plan terminating
its participation in the Plan.
SECTION 5
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
5.1 Survival. The representations, and warranties of BOWLIN contained
herein or in any certificate or other writing delivered pursuant hereto or in
connection herewith will not survive the Closing. The representations,
warranties and covenants of the Company contained herein and the obligations of
the Company arising under this Section 5, will survive indefinitely.
5.2 Indemnification by the Company. (a) The Company and its successors
and assigns, jointly and severally, hereby agree to indemnify and hold harmless
BOWLIN, and upon consummation of the Merger, Lamar, and each of BOWLIN's and
Lamar's directors, officers, shareholders, employees, Affiliates, successors and
assigns (each a "BOWLIN Indemnitee") and will reimburse the Bowlin Indemnitees
for, from and against:
(a) any and all losses, liabilities, claims, demands, penalties,
fines, settlements, damages, or expenses (including, without limitation,
interest, penalties, costs of preparation and investigation, and the
reasonable fees, disbursements and expenses of attorneys, accountants and
professional advisors) (collectively, "Losses") incurred by any of the
Bowlin Indemnitees:
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(i) arising under federal, state or local environmental laws and
arising out of or in connection with the Travel Center Business or the
ownership or operation of any of the Assets or Assumed Liabilities;
(ii) resulting from any labor or employment dispute arising out of
or in connection with the operation of the Travel Center Business or
otherwise involving a Travel Centers Business Employee; and
(iii) any attempt (whether or not successful) by any Person to
cause or require Bowlin to discharge or pay any Assumed Liability, or
otherwise arising out of or relating to any Assumed Liability.
(b) any and all tax liabilities for which the Company provides
indemnification to BOWLIN as set forth in the Tax Agreement between the
Company and BOWLIN, dated as of the date of this Agreement and attached
hereto as Exhibit A.
5.3 Control of Litigation.
(a) The BOWLIN Indemnitees agree to give prompt notice to the Company of
the assertion of any third party claim, or the commencement of any third party
suit, action, or proceeding in respect of which indemnity may be sought under
Section 5.2 of this Agreement and of any Loss which any such Indemnitee deems to
be reimbursable under Section 5.2 of this Agreement (specifying with reasonable
particularity the basis therefore) and will give the Company such information
with respect thereto as the Company may reasonably request; provided, however,
that the failure to give such notice by the Indemnitee shall not abrogate
Indemnitee's rights hereunder unless such failure materially impairs the rights
or ability of the Company to defend the suit, action or proceeding or to
otherwise provide indemnification to the Indemnitee. The Company may, at its own
expense, participate in and, upon notice to such Indemnitee, assume the defense
of any such suit, action or proceeding, provided that the Company's counsel is
reasonably satisfactory to such Indemnitee. The Company shall thereafter consult
with such Indemnitee upon such Indemnitee's reasonable request for such
consultation from time to time with respect to such suit, action, or proceeding,
and the Company shall not, without such Indemnitee's consent, which consent
shall not be unreasonably withheld, settle or compromise any such suit, action
or claim. If the Company assumes such defense, such Indemnitees shall have the
right (but not the duty) to participate in the defense thereof and to employ
counsel, at their own expense, separate from the counsel employed by the
Company. In the event that the Company, within ten days after the notice of any
such action or claim, does not assume the defense thereof, the Indemnitee will
have the right to undertake the defense, compromise or settlement of any action,
claim or proceeding for the account of the Company. For any period during which
the Company has not assumed the defense thereof, the Company shall be liable for
the fees and expenses of counsel employed by any Indemnitee. If the Indemnitees
conduct the defense thereof, the Indemnitees shall consult with the Company upon
the Company's reasonable request for such consultation with respect to such
suit, action or proceeding and the Indemnitees shall not, without the Company's
consent, which consent shall not be unreasonably withheld, settle or compromise
any such suit, action or claim. Whether or not the Company chooses to defend or
prosecute any claim, all of the parties hereto shall cooperate in the defense or
prosecution thereof.
(b) The Company shall not be liable under Section 5.2 hereof with respect
to any Loss resulting from a claim or demand the defense of which the Company
was not offered the opportunity to assume to the extent the Company's liability
under Section 5.2 hereof is materially prejudiced as a result thereof. No
investigation by any BOWLIN Indemnitee or BOWLIN Indemnitee Affiliate prior to
the Contribution Date shall relieve the Company of any liability hereunder.
5.4 Transfer Taxes. The Company shall pay, or cause to be paid, all Taxes
or recording fees imposed on any transfers by BOWLIN of real property and
tangible and intangible personal property, including without limitation
Intellectual Property, applicable to the transfers of the Assets contemplated by
this Agreement and all sales and use Taxes applicable to transfers by BOWLIN of
the Assets contemplated by this Agreement.
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SECTION 6
ARBITRATION
If any dispute arises out of this Agreement, the Company and BOWLIN shall,
upon the request of either party, attend a meeting in Baton Rouge, Louisiana
(or, if the Merger has not been consummated, in Albuquerque, New Mexico) to
attempt a resolution of the dispute. If the Company and BOWLIN fail to resolve
all differences at the end of the meeting, they will jointly request the
American Arbitration Association to appoint an arbitrator in Baton Rouge,
Louisiana (or, if the Merger has not been consummated, in Albuquerque, New
Mexico) to settle the dispute in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect. If either party
fails to join in making a joint request for arbitration, then the other party
may make the request unilaterally after giving ten days notice to the party
refusing to join in the request for arbitration. The award rendered by the
arbitrator(s) shall be final and judgment upon the award rendered by the
arbitrator(s) may be entered upon it in any court having jurisdiction thereof.
The arbitrator(s) shall possess the powers to issue mandatory orders and
restraining orders in connection with such arbitration. The expenses of the
arbitration shall be borne by the losing party unless otherwise allocated by the
arbitrator(s); provided, however, that if the dispute is resolved by agreement
of the Company and BOWLIN following the designation of an arbitrator, the
Company and BOWLIN each will pay one-half of any costs and expenses of the
arbitrator already designated. The agreement to arbitrate shall be specifically
enforceable under the prevailing arbitration law. During the continuance of any
arbitration proceedings, the parties shall continue to perform their respective
obligations under this Agreement.
SECTION 7
MISCELLANEOUS PROVISIONS
7.1 Amendment and Modification. This Agreement may be amended, modified
or supplemented only by written agreement of the parties hereto.
7.2 Waiver of Compliance; Consents. Any failure of a party to comply with
any obligation, covenant, agreement or condition herein may be waived by the
other party; provided, however, that any such waiver may be made only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requests or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 7.2, with appropriate notice in
accordance with Section 7.7 of this Agreement.
7.3 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Any party may assign any of its rights
hereunder but only with the consent of the other party hereto, which consent
shall not be unreasonably withheld, but no such assignment shall relieve it of
its obligations hereunder. Nothing in this Agreement, expressed or implied, is
intended or shall be construed to confer upon any person other than the parties,
any successors and permitted assigns, any rights, remedy, or claim under or by
reason of this Agreement or any provisions herein contained.
7.4 Further Assurances. From time to time, at the request of BOWLIN or
the Company and without further consideration, each party, at its own expense,
will execute and deliver such other documents, and take such other action, as
BOWLIN or the Company may reasonably request in order to consummate more
effectively the transactions contemplated hereby. BOWLIN hereby constitutes and
appoints, effective as of the Contribution Date, the Company and its successors
and permitted assigns as the true and lawful attorney of BOWLIN with full power
of substitution in the name of the Company or in the name of BOWLIN, but for the
benefit of the Company, to collect for the account of the Company any items of
Assets and to institute and prosecute all proceedings which the Company may in
its reasonable discretion deem proper in order to assert or enforce any right,
title or interest in, to or under
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the Assets, and to defend or compromise any and all actions, suits, or
proceedings in respect of the Assets. The Company shall be entitled to retain
for its own account any amounts collected pursuant to the foregoing powers,
including any amounts payable as interest in respect thereof. The Company shall,
in each instance, give notice to BOWLIN of its exercise of the power of attorney
granted to it under this Section 7.4.
7.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of New Mexico (without regard to its
conflicts of law doctrines).
7.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
Agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
7.7 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed by registered or certified mail (return receipt requested) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
Prior to the Merger
If to BOWLIN: BOWLIN Outdoor Advertising & Travel Centers, Incorporated
150 Louisiana NE
Albuquerque, NM 87108
Attention: President
with a copy to: Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attention: Christopher Johnson
After the Merger
If to BOWLIN Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attn: James R. McIlwain
Facsimile transmission no.: (225) 926-1005
With a copy to: Jones, Walker, Waechter, Poitevent Carrere & Denegre,
L.L.P.
Fifth Floor, Four United Plaza
8555 United Plaza Boulevard
Baton Rouge, Louisiana 70809-7000
Attn: Brad J. Axelrod
If to the Company: Bowlin Travel Centers, Inc.
150 Louisiana NE
Albuquerque, NM 87108
Attention: President
with a copy to: Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attention: Christopher Johnson
7.8 Specific Performance. Each of the parties acknowledge that money
damages would not be a sufficient remedy for any breach of this Agreement and
that irreparable harm would result if this Agreement were not specifically
enforced. Therefore, the rights and obligations of the parties under this
Agreement shall be enforceable by a decree of specific performance issued by any
court of competent
B-9
<PAGE> 123
jurisdiction, and appropriate injunctive relief may be applied for and granted
in connection therewith. A party's right to specific performance shall be in
addition to all other legal or equitable remedies available to such party.
7.9 Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
7.10 Entire Agreement. This Agreement, the Tax Agreement, and the
exhibits, schedules and other documents and instruments referred to herein and
therein, embody the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
7.11 Severability. If any one or more provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.
7.12 Exhibits. All Exhibits and Schedules attached hereto are hereby
incorporated in and made a part as if set forth in full herein.
[Remainder of page intentionally left blank]
B-10
<PAGE> 124
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
BOWLIN OUTDOOR ADVERTISING & TRAVEL
CENTERS, INCORPORATED,
a Nevada corporation
/s/ MICHAEL L. BOWLIN
------------------------------------
By: Michael L. Bowlin
Title: President and Chief Executive
Officer
BOWLIN TRAVEL CENTERS, INC.,
a Nevada corporation
/s/ MICHAEL L. BOWLIN
------------------------------------
By: Michael L. Bowlin
Its: President and Chief Executive
Officer
B-11
<PAGE> 125
APPENDIX A
DEFINITIONS
For the purpose of this Agreement, the following terms have the following
meanings:
"Affiliate" means, with respect to any person, any person directly or
indirectly controlling, controlled by, or under common control with such other
person .
"Assets" has the meaning ascribed to it in Section 1.1(a) of the Agreement.
"Assumed Liabilities" has the meaning ascribed to it in Section 1.3 of the
Agreement.
"Claims" means all rights, claims, credits, causes of action, or rights of
setoff against third parties relating solely to the Assets, including, without
limitation, unliquidated rights under manufacturers' and vendors' warranties and
the Travel Centers Business.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contribution Date" means the date on which BOWLIN contributes the Assets
to the Company and the Company assumes the Assumed Liabilities under the
Agreement.
"Contributed Business Balance Sheet" means the balance sheet of BOWLIN,
setting forth the assets, liabilities and shareholder's equity of the Travel
Centers Business, dated as of the Contribution Date.
"Conveyance Instruments" means all documents or instruments of assignment,
transfer, or conveyance, in each case dated as of the Contribution Date as the
parties and their respective counsel shall reasonably deem necessary or
appropriate to vest in or confirm title to the Assets to the Company.
"Equipment" means the machinery, equipment, furniture, vehicles, and other
tangible property (including, without limitation, maintenance and operating
supplies, fuel, and spare parts for such machinery and equipment) used in
connection with the Travel Centers Business.
"Excluded Liabilities" means all liabilities and obligations of BOWLIN (or
any predecessor owner of all or part of its business and assets) of whatever
nature whether presently in existence or arising after the Contribution date,
that are not Assumed Liabilities.
"Faces" means the outdoor advertising faces and underlying structures owned
or leased by BOWLIN on the Contribution Date and used solely in the Travel
Centers Business.
"Files and Records" means originals or copies of all books, records, files,
and papers, whether in hard copy or computer format, used in the Travel Centers
Business, including without limitation, engineering information, manuals and
data, sales and advertising materials, sales and purchase correspondence, lists
of present and former suppliers, and personnel and employment records and, with
respect to information relating to any Tax, only information that is necessary
for the preparation of Tax returns to be filed by the Company after the
Contribution Date or the determination of the tax basis of the Assets.
"Indemnitor" means the Company, as obligated pursuant to Section 5.2.
"Intangible Property" means those patents, copyrights, trademarks, trade
names, technology, know-how, processes, trade secrets, inventions, proprietary
data, formulae, research and development data, computer software programs, and
other intangible property, and any applications for the same, used primarily in
the Travel Centers Business (including use of and any right in and to the name
"BOWLIN") and all goodwill associated with such intangible property.
"Inventory" means the raw materials, finished goods, work-in-process,
supplies, and inventories, with respect to the Travel Centers Business.
"Leased Property" means real property leased by BOWLIN and used primarily
in the Travel Centers Business, together with all fixtures, office equipment,
furnishings, furniture, and other tangible property located at such property.
"Leases" means all leases for the Leased Properties.
<PAGE> 126
"Merger Agreement" means the Agreement and Plan of Merger by and among
BOWLIN, Lamar Advertising Company, and Lamar Southwest Acquisition Corporation,
dated as of October 3, 2000.
"Permits" means all certificates of occupancy and other transferable
licenses, permits, registrations, authorizations, use agreements, orders, or
approvals of governmental or quasi-governmental agencies and authorities
(whether federal, state, local, municipal, or foreign) or private parties
relating solely to the construction, use, operation, or enjoyment of the Travel
Centers Business.
"Person" or "person" means an individual, firm, corporation, general or
limited partnership, limited liability company, limited liability partnership,
joint venture, trust, governmental authority or body, association,
unincorporated organization or other entity.
"Real Property" means the 15 travel centers owned by BOWLIN and the real
property listed and described in Schedule 1.1(a)(i)
"Receivables" means all accounts receivable arising out of sales in the
ordinary and usual course of the operation of the Travel Centers Business prior
to the close of business on the Contribution Date.
"Rights" means those contracts, agreements, leases, licenses, and other
instruments, arrangements and commitments being assumed by the Company with
respect to the Assets pursuant to Section 1.3 of this Agreement.
"Spin-Off" means the distribution by BOWLIN of its shares of the Company's
common stock to the shareholders of BOWLIN.
"Tax" means (i) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, franchise, capital, paid-up
capital, profits, greenmail, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty, or other tax, governmental fee, or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax, or additional amount imposed by any governmental
authority responsible for the imposition of any such tax (domestic or foreign),
and (ii) liability for the payment of any amounts of the type described in (i)
as a result of any express obligations to indemnify any other person.
"Tax Return" i.e. means any return, declaration, report, claim for refund,
or information return or statement relating to any Tax, including any schedule
or attachment thereto, and including any amendment thereof.
"Travel Centers Business Employees" means each employee engaged primarily
in the operation of the Bowlin Travel Centers Business and set forth on Schedule
4.2.
"Transferred Employees" means all Travel Centers Business Employees who are
offered employment by the Company and who accept such employment.
<PAGE> 127
EXHIBIT A
TAX SHARING AND DISAFFILIATION AGREEMENT
TAX SHARING AND DISAFFILIATION AGREEMENT dated as of November 1, 2000, by
and between BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS, INC., a Nevada
corporation ("Bowlin"), and BOWLIN TRAVEL CENTERS, INC., a Nevada corporation
("Travel Centers").
RECITALS
A. Pursuant to the Contribution Agreement dated as of the date hereof, by
and between Bowlin and Travel Centers (the "Contribution Agreement"), Bowlin has
contributed to Travel Centers the assets used in the Travel Centers Business and
Travel Centers has assumed the Assumed Liabilities (as more fully described in
the Contribution Agreement, the "Contribution"), and Bowlin plans to distribute
to the holders of Bowlin Common Stock all of the outstanding shares of Travel
Centers Common Stock owned by Bowlin (the "Distribution").
B. Bowlin and Travel Centers intend that the Contribution will qualify as a
transfer to a controlled corporation within the meaning of Section 351 of the
Code and/or a reorganization within the meaning of Section 368(a)(1)(D) of the
Code, and the Distribution will qualify as a distribution described in Section
355 of the Code and will not result in the recognition of any taxable gain or
income to any shareholder of Bowlin.
C. Prior to the Distribution Date, Travel Centers will be a member of the
Bowlin Affiliated Group and after the Distribution Date Travel Centers will
cease to be a member of the Bowlin Affiliated Group for federal income tax
purposes.
D. Travel Centers and Bowlin desire on behalf of themselves and their
successors to set forth their rights and obligations with respect to Taxes due
for periods before, on and after the Distribution Date.
E. Capitalized terms used but not defined herein have the meanings set
forth in the Contribution Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.01 For the Purposes of this Agreement:
"Acquirer" shall have the meaning set forth in Section 2.01(f) of this
Agreement.
"Acquisition" shall have the meaning set forth in Section 2.01(f) of this
Agreement.
"Agreement" shall mean this Tax Sharing and Disaffiliation Agreement as the
same may be amended from time to time.
"Applicable Federal Rate" shall have the meaning set forth in Section
1274(d) of the Code, compounded quarterly.
"Bowlin" shall have the meaning set forth in the preamble to this
Agreement.
"Bowlin Affiliated Group" shall mean the corporations included in the
affiliated group, as defined in Section 1504 of the Code, of which Bowlin is the
common parent, and any successor group.
<PAGE> 128
"Bowlin Taxes" shall mean any Taxes (excluding Restructuring Taxes [except
as noted in the definition of Travel Center Taxes] and Transaction Taxes) that
are attributable to the Outdoor Advertising Business. For purposes of the
foregoing, Taxes shall be deemed attributable to the Outdoor Advertising
Business to the extent such Taxes are imposed as a result of Tax Items of Bowlin
or Travel Centers directly related to the Outdoor Advertising Business;
provided, however, that net losses (if any) incurred with respect to the Travel
Centers Business on or before the Distribution Date shall be used to offset the
income of Bowlin for purposes of determining Bowlin Taxes. To the extent that a
Tax Item is not directly related to either the Outdoor Advertising Business or
the Travel Center Business but is indirectly related to both businesses (such as
an item relating to overhead), it shall be deemed attributable to the Outdoor
Advertising Business in the proportion that the revenues of the Outdoor
Advertising Business bears to the sum of (i) the revenues of the Outdoor
Advertising Business plus (ii) the revenues from the Travel Center Business.
"Claim" shall have the meaning set forth in Section 5.03(a) of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contribution" shall have the same meaning set forth in the first recital.
"Contribution Agreement" shall have the meaning set forth in the first
recital.
"Controlling Party" shall have the meaning set forth in Section 5.01 of
this Agreement.
"Distribution" shall have the meaning set forth in the first recital.
"Distribution Date" means the date on which the Distribution takes place.
"Filing Party" shall have the meaning set forth in Section 4.01 of this
Agreement.
"Final Determination" shall mean with respect to any issue (a) a decision,
judgment, decree or other order by any court of competent jurisdiction, which
decision, judgment, decree or other order has become final and not subject to
further appeal, (b) a closing agreement (whether or not entered into under
Section 7121 of the Code) or any other binding settlement agreement (whether or
not with the IRS) entered into in connection with or in contemplation of an
administrative or judicial proceeding, or (c) the completion of the highest
level of administrative proceedings if a judicial contest is not or is no longer
available.
"Indemnitor" shall have the meaning set forth in Section 5.02 of this
Agreement.
"IRS" means the Internal Revenue Service.
"Liable Party" shall have the meaning set forth in Section 4.01 of this
Agreement.
"Outdoor Advertising Business" means those portions of the business of
Bowlin that are not part of the Travel Centers Business.
"Restructuring Taxes" shall mean any Taxes imposed as a result of the
Contribution or Distribution. For purposes of filing Bowlin's Tax Return only,
Restructuring Taxes shall mean any Tax imposed as a result of any stock or
securities of Travel Centers failing to qualify as "qualified property" within
the meaning of Section 355(c)(2) of the Code because of the application of
Section 355(e) of the Code (or similar state statute) to the Distribution;
provided, however, that Restructuring Taxes shall be calculated by assuming that
the aggregate fair market value of the Travel Centers' stock distributed by
Bowlin in the Distribution is equal to (a) the product of (i) the mean between
the high bid and low asked prices for Travel Centers' stock on its first trading
day (as reported in The Wall Street Journal or such other source as Travel
Centers deems reliable) and (ii) the total number of outstanding shares of
Travel Centers stock immediately after the Distribution, or (b) such other
amount as determined by Travel Centers in its reasonable discretion. Travel
Centers shall provide Bowlin with written notification of this valuation within
five (5) days after the Distribution Date. Notwithstanding any provision of this
Agreement to the contrary, if a Claim is successfully asserted by the IRS with
respect to Restructuring Taxes, Restructuring Taxes shall be determined in
accordance with the Final Determination in connection with such Claim.
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<PAGE> 129
"Tax" (and with correlative meaning, "Taxes" and "Taxable") means any
federal, state, local or foreign net income, gross income, gross receipts,
windfall profit, severance, property, production, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorem, value-added, transfer, stamp, or environmental tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, addition to tax or additional
amount imposed by any governmental or regulatory authority.
"Tax Item" means any item of income, gain, loss, deduction, credit,
provisions for reserves, recapture of credit, receipt, proceeds or any other
item or event that increases or decreases Taxes paid or payable, including an
adjustment under Section 481 of the Code resulting from a change in accounting
method.
"Tax Return" shall mean any return, report or similar statement required to
be filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
"Transaction Taxes" shall have the meaning set forth in Section 3.03(c) of
this Agreement.
"Travel Centers" shall have the meaning set forth in the preamble to this
Agreement.
"Travel Centers Taxes" shall mean any Taxes that are attributable or
allocable to the Travel Centers Business, Transaction Taxes and Restructuring
Taxes; provided, however, that notwithstanding any provision of this Agreement
to the contrary, any Restructuring Taxes that are primarily attributable to
Bowlin's breach of its representations and warranties under Sections 2.01(a)-(c)
shall be regarded as Bowlin Taxes. For purposes of the foregoing, Taxes shall be
deemed attributable to the Travel Centers Business to the extent such Taxes are
imposed as a result of Tax Items of Bowlin or Travel Centers directly related to
the Travel Centers Business; provided, however, that net losses (if any)
incurred with respect to the Outdoor Advertising Business on or before the
Distribution Date shall be used to offset the income of Travel Centers for
purposes of determining Travel Centers Taxes and (to the extent available) shall
be used to offset gain in determining the amount of Restructuring Taxes. To the
extent that a Tax Item is not directly related to either the Travel Center
Business or the Outdoor Advertising Business but is indirectly related to both
businesses (such as an item relating to overhead), it shall be deemed
attributable to the Travel Center Business in the proportion that the revenues
of the Travel Center Business bears to the sum of (i) the revenues of the Travel
Center Business plus (ii) the revenues of the Outdoor Advertising Business.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01 Bowlin. Bowlin hereby represents and warrants as follows:
(a) Following the acquisition (the "Acquisition") of Bowlin by Lamar
Advertising Company, a Delaware Corporation ("Lamar") pursuant to the
Agreement and Plan of Merger dated October 3, 2000, between Lamar, Lamar
Southwest Acquisition Corporation and Bowlin, Bowlin will continue the
active conduct of its business, independently and with its separate
employees.
(b) There is no plan or intention by Bowlin, directly or through any
subsidiary corporation, to purchase any of its outstanding stock after the
Acquisition.
(c) There is no plan or intention to liquidate Bowlin or to sell or
otherwise dispose of the assets of Bowlin after the Acquisition, except in
the ordinary course of business.
2.02 Travel Centers. Travel Centers hereby represents and warrants as
follows:
(a) Following the Distribution, Travel Centers will continue the
active conduct of its business, independently and with its separate
employees.
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<PAGE> 130
(b) There is no plan or intention by Travel Centers, directly or
through any subsidiary corporation, to purchase any of its outstanding
stock after the Distribution.
(c) There is no plan or intention to liquidate Travel Centers, to
merge Travel Centers with any other corporation, or to sell or otherwise
dispose of the assets of Travel Centers after the Distribution, except in
the ordinary course of business.
(d) Payments made in connection with all continuing transactions, if
any, between Bowlin and Travel Centers, will be for fair market value based
on terms and conditions arrived at by the parties bargaining at arms'
length.
ARTICLE III
TAX RETURNS, TAX PAYMENTS AND TAX SHARING OBLIGATIONS
3.01 Obligations to File Tax Returns
(a) Bowlin shall timely file or cause to be filed all Tax Returns with
respect to the Bowlin Affiliated Group, which shall include Travel Centers, for
any period beginning prior to the Distribution and ending on the Distribution
Date; provided, however, that Travel Centers shall prepare and forward to Bowlin
all federal and state income Tax Returns with respect to the Bowlin Affiliated
Group for such periods. Bowlin shall be considered the party required to file
and the party filing the Tax Return with respect to any Tax Return prepared by
Travel Centers pursuant to the preceding sentence.
(b) Travel Centers shall timely file or cause to be timely filed all Tax
Returns with respect to the Travel Centers for all periods beginning after the
Distribution Date.
3.02 Obligation to Remit Taxes. Bowlin and Travel Centers shall each
remit or cause to be remitted any Taxes due in respect of any Tax Return it is
required to file or cause to be filed pursuant to Section 3.01, and shall be
entitled to reimbursement for such payments to the extent provided in Section
3.03.
3.03 Tax Sharing Obligations and Prior Agreements
(a) Travel Centers shall be liable for and pay, and shall defend and hold
harmless Bowlin and any other Bowlin Indemnitee for, from and against, any and
all Losses incurred or suffered by Bowlin or one or more of the Bowlin
Indemnitees in connection with (i) any Travel Centers Taxes, (ii) any inaccuracy
or breach of any warranty, representation or covenant that is made by Travel
Centers pursuant to this Agreement, and (iii) any amount determined to be Travel
Centers' liability under Section 3.03(c). In the event that Bowlin receives any
refund of or credit for Taxes for which Travel Centers is responsible under this
Section 3.03(a), Bowlin shall pay Travel Centers an amount equal to such refund
or credit within five business days of Bowlin's receipt of such refund or
credit.
(b) Bowlin shall be liable for and pay, and shall indemnify, defend, and
hold harmless Travel Centers and any other Travel Centers Indemnitee for, from
and against, any and all Losses incurred or suffered by Travel Centers or one or
more of the Travel Centers Indemnitees in connection with (i) any Bowlin Taxes
and (ii) any inaccuracy or breach of any warranty, representation or covenant
that is made by Bowlin pursuant to this Agreement. In the event that Travel
Centers receives any refund of or credit for Taxes for which Bowlin is
responsible under this Section 3.03(b), Travel Centers shall pay Bowlin an
amount equal to such refund or credit within five business days of Travel
Centers' receipt of such refund or credit.
(c) Bowlin and Travel Centers will determine the amount of sales, transfer
or other similar taxes or fees (including, without limitation, all real estate,
patent, copyright and trademark transfer taxes and real estate recording fees,
but excluding Restructuring Taxes) payable in connection with the transactions
contemplated by the Contribution Agreement (the "Transaction Taxes"). Bowlin and
Travel Centers shall each file promptly and timely the Tax Returns for such
Transaction Taxes with the appropriate taxing
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authorities and remit payment of the Transaction Taxes. Travel Centers shall be
liable for Transaction Taxes.
(d) Except as set forth in this Agreement and in consideration of the
mutual indemnities and other obligations of this Agreement, any and all prior
Tax sharing agreements or practices between any member of the Bowlin Affiliated
Group (other than Travel Centers) and Travel Centers shall be terminated with
respect to the Travel Centers as of the Distribution Date.
3.04 Period that Includes the Date of Distribution. To the extent
permitted by law or administrative practice, the taxable year of Travel Centers
shall be treated as closing at the close of the Distribution Date. If it is
necessary for purposes of this Agreement to determine Travel Centers Taxes or
Bowlin Taxes for a taxable year that begins on or before and ends after the
Distribution Date and is not treated under this Section 3.04 as closing at the
close of the Distribution Date, the determination shall be made by assuming that
such taxable year ended on a "closing of the books" basis at the close of the
Distribution Date, except that exemptions, allowances or deductions that are
calculated on an annual basis shall be apportioned on a time basis.
ARTICLE IV
PAYMENTS
4.01 General Tax Payments. With respect to any Taxes for which one party
(the "Liable Party") is liable under Section 3.03 and that are to be remitted in
connection with Tax Returns to be filed by the other party (the "Filing Party")
after the Distribution Date pursuant to Sections 3.01 and 3.02, (a) upon the
request of the Filing Party, the Liable Party shall promptly provide to the
Filing Party all information necessary to enable the Filing Party to file such
Tax Returns and (b) assuming compliance by the Liable Party with the Liable
Party's obligations under clause (a) (or written waiver by the Filing Party of
such compliance), the Filing Party shall, not later than ten (10) days prior to
the due date for remitting such Taxes (or, if the due date is within forty-five
(45) days after the Distribution Date, as promptly following the Distribution
Date as possible) provide the Liable Party with a written request showing in
reasonable detail the calculation of the amount of such Liable Party's Taxes
(and any other amounts) owing by the Liable Party to the Filing Party pursuant
to this Agreement. The Liable Party shall have the right to object in writing to
such calculation on or before thirty (30) days after the date on which such
request is provided to the Liable Party, on the grounds that there is
substantial authority that such calculation is incorrect; provided that if the
Liable Party so objects, (i) the Filing Party and the Liable Party shall
promptly submit the dispute to an independent accounting or law firm acceptable
to both the Filing Party and the Liable Party for prompt resolution, whose
decision shall be final and binding on the Filing Party and the Liable Party,
and (ii) the party that such accounting or law firm determines has lost the
dispute shall pay all of the fees and expenses incurred in connection with
submitting such dispute. The Liable Party shall pay to the Filing Party any
amount not in dispute on or before the tenth (10th) day following the receipt of
such request by the Liable Party, with additional amounts to be paid by the
Liable Party (together with interest at the Applicable Federal Rate accruing
from the date on which the Tax in issue is due) promptly upon resolution of any
objection. Payment under this Section 4.01 of an amount determined by an
independent accounting or law firm will not negate any liability of a Liable
Party pursuant to this Agreement by reason of a Final Determination.
4.02 Other Payments. Other payments due to a party under Section 3.03
shall be due not later than twenty (20) days after the receipt of notice of a
Final Determination to the effect that the indemnified party is liable for an
indemnified cost, together with interest at a rate equal to the Applicable
Federal Rate from the date on which the indemnifying party receives such
receipt, credit or notice.
4.03 Notice. Bowlin and Travel Centers shall give each other prompt
written notice of any payment that may be due under this Agreement.
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ARTICLE V
TAX AUDITS
5.01 General. Except as otherwise provided in this Agreement, each of
Travel Centers and Bowlin (as the case may be, the "Controlling Party") shall
have sole responsibility for all audits or other proceedings with respect to Tax
Returns that it is required to file under Section 3.01. Except as provided in
Section 5.03, the Controlling Party shall have the sole right to contest the
audit or proceeding and to employ advisors of its choice.
5.02 Indemnified Claims in General. Bowlin or Travel Centers shall
promptly notify the other in writing upon the receipt of an actual notice of
assessment by the relevant Taxing authority of any proposed adjustment to a Tax
Return that may result in liability of the other party (the "Indemnitor") under
this Agreement. If the Indemnitor is not also the Controlling Party, the
Controlling Party shall provide the Indemnitor with information about the nature
and amounts of the proposed adjustments and, subject to additional rights of the
Indemnitor in certain circumstances under Section 5.03 of this Agreement, shall
permit the Indemnitor to participate in the proceeding at the Indemnitor's own
expense. The Indemnitor shall pay all reasonable expenses (including, but not
limited to, legal and accounting fees) incurred by the Controlling Party in
connection with the assessment or adjustment within seven (7) days after a
written request by the Controlling Party.
5.03 Certain Federal Income Tax Claims
(a) Any issues raised by the IRS in any Tax inquiry, audit, examination,
investigation, dispute, litigation or other proceeding that would result in
liability to the Indemnitor under this Agreement are defined as a Claim (a
"Claim"). Except as provided in Section 5.03(d) and notwithstanding any other
provision of this Agreement that may be construed to the contrary, the
Controlling Party agrees to contest any Claim and not to settle any Claim
without prior written consent of the Indemnitor, provided that (i) the
Controlling Party shall provide notice to Indemnitor pursuant to Section 5.02 of
any Claim, and (ii) within thirty (30) days after such notice is received by the
Indemnitor, the Indemnitor shall request in writing that such Claim be
contested. If the Indemnitor requests that the Claim be contested in accordance
with the preceding sentence and such Claim does not materially prejudice any
other IRS claim with respect to matters unrelated to the Claim, the Indemnitor
shall have the right, upon written notice to the Controlling Party and to the
extent permitted under applicable law (assuming cooperation of the Controlling
Party), to assume the defense of such Claim, including employment of counsel
reasonably satisfactory to the Controlling Party and the payment of the fees and
disbursements of such counsel. For this purpose, a Claim does not materially
prejudice any other IRS claim solely because the Tax Calculation with respect to
the Claim indirectly affects such other claim. In the event, however, that the
Indemnitor declines, fails or is otherwise unable to assume the defense of such
Claim, the Controlling Party may employ counsel to defend such Claim and the
Indemnitor shall agree to pay (and shall pay) on demand all out-of-pocket costs,
losses and expenses (including, but not limited to, legal and accounting fees)
paid or incurred by the Controlling Party in connection with contesting such
Claim. The party that has assumed defense of a Claim, after reasonable
consultation with the other party, shall determine the nature of all actions to
be taken to contest such Claim (assuming such determination does not negatively
impact any other claim that the IRS may have with respect to matters unrelated
to the Claim), including (A) whether any action to contest such Claim shall
initially be by way of judicial or administrative proceeding, or both, (B)
whether any such Claim shall be contested by resisting payment thereof or by
paying the same and seeking a refund thereof, and (C) the court or other
judicial body before which judicial action, if any, shall be commenced. To the
extent the Indemnitor is not participating, the Controlling Party shall keep the
Indemnitor (and, upon request by the Indemnitor, its counsel) informed as to the
progress of the contest.
(b) If the Indemnitor requests that the Controlling Party accept a
settlement of a Claim offered by the IRS and if such Claim may, in the
reasonable discretion of the Controlling Party, be settled without prejudicing
any claims the IRS may have with respect to matters unrelated to the Claim, the
Controlling Party shall either accept such settlement offer or agree with the
Indemnitor that the Indemnitor's liability
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with respect to such Claim shall be limited to the lesser of (i) an amount
calculated on the basis of such settlement offer plus interest owed to the IRS
on the date that is no more than 45 days after the date of the Indemnitor's
request that the Controlling Party accept such Settlement, or (ii) the amount
calculated on the basis of a Final Determination.
(c) If the Indemnitor elects to have the Controlling Party pay the Tax
claimed and seek a refund, the Indemnitor shall lend sufficient funds on an
interest-free basis to the Controlling Party (with no net after-tax cost to the
Controlling Party), to cover any applicable indemnity obligations of the
Indemnitor. To the extent such refund claim is ultimately disallowed, the loan
or portion thereof equal to the amount of the refund claim so disallowed shall
be applied against the Indemnitor's obligation to make indemnity payments
pursuant to this Agreement. To the extent such refund claim is allowed, the
Controlling Party shall pay to the Indemnitor all amounts advanced to the
Controlling Party with respect to the indemnity obligation within ten (10) days
of the receipt of such refund (or if the Controlling Party would have received
such refund but for the existence of a counterclaim or other claim not
indemnified by the Indemnitor under this Agreement, within ten (10) days of the
final resolution of the contest), plus an amount equal to any interest received
(or that would have been received) from the IRS that is properly attributable to
such amount.
(d) Except as provided below, the Controlling Party shall not settle a
Claim that the Indemnitor is entitled to require the Controlling Party to
contest under Section 5.03(a) without the prior written consent of the
Indemnitor. At any time, whether before or after commencing to take any action
pursuant to this Section 5.03 with respect to any Claim, the Controlling Party
may decline to take action with respect to such Claim and may settle such Claim
without the prior written consent of the Indemnitor by notifying the Indemnitor
in writing that the Indemnitor is released from its obligations to indemnify the
Controlling Party with respect to such Claim (which notification shall release
the Indemnitor from such obligations except to the extent the Indemnitor has
agreed in writing that it would be willing to have its liability calculated on
the basis of a settlement offer, as provided in Section 5.03(b), at that point
in the contest) and with respect to any Claim related to such Claim or based on
the outcome of such Claim. If the Controlling Party settles any Claim or
otherwise takes or declines to take any action pursuant to this paragraph, the
Controlling Party shall pay to the Indemnitor any amounts paid or advanced by
the Indemnitor with respect to such Claim (other than amounts payable by the
Indemnitor in connection with a settlement offer pursuant to Section 5.03(b)),
plus interest attributable to such amounts.
ARTICLE VI
COOPERATION
6.01 General. Bowlin and Travel Centers shall cooperate with each other
in the filing of any Tax Returns and the conduct of any audit or other
proceeding and each shall execute and deliver such powers of attorney and make
available such other documents as are reasonably necessary to carry out the
intent of this Agreement. Each party agrees to notify the other party in writing
of any audit adjustments that do not result in Tax liability but can be
reasonably expected to affect Tax Returns of the other party or any of its
subsidiaries. Each party agrees to treat the Contribution and Distribution for
all income Tax purposes as not causing the recognition of any income, gain or
loss (except for Restructuring Taxes).
6.02 Cooperation with Respect to Tax Return Filings, Examinations and Tax
Related Controversies. Each party shall fully cooperate with the other party and
its representatives, in a prompt and timely manner, in connection with the
preparation and filing of, and any inquiry, audit, examination, investigation,
dispute, or litigation involving, any Tax Return required to be filed by any
party pursuant to this Agreement. Such cooperation shall include, but not be
limited to, (a) the execution and delivery of any power of attorney required to
allow each party and its counsel to participate in or control any inquiry, audit
or other administrative proceeding and to assume the defense or prosecution, as
the case may be, of any suit, action or proceeding pursuant to the terms of and
subject to the conditions set forth in Article V of this Agreement, and (b)
making available to the other party, during normal business hours, and within
fifteen (15) days of any written request therefor, all books, records and
information, and the assistance of
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all officers and employees, necessary or useful in connection with any Tax
inquiry, audit, examination, investigation, dispute, litigation or any other
matter.
ARTICLE VII
RETENTION OF RECORDS; ACCESS
Bowlin and Travel Centers shall:
(a) retain (for a minimum of five (5) years) records, documents,
accounting data and other information (including computer data) necessary
for the preparation and filing of all Tax Returns in respect of Taxes of
the Bowlin Affiliated Group or Travel Centers or for the audit of such Tax
Returns; and
(b) give to the other reasonable access to such records, documents,
accounting data and other information (including computer data) and to its
personnel (insuring their cooperation) and premises, for the purpose of the
current or potential review or audit of such Tax Returns to the extent
relevant to an obligation or liability of a party under this Agreement or
applicable law. At any time after the Distribution Date that a party
proposes to destroy such records, documents, accounting data or other
information, such party shall first notify the other party in writing and
such other party shall be entitled to receive such records, documents,
accounting data or other information proposed to be destroyed.
ARTICLE VIII
DISPUTES
If Bowlin and Travel Centers cannot agree on any calculation of any
liabilities under this Agreement, such calculation shall be made by any
independent public accounting firm acceptable to both Bowlin and Travel Centers.
The decision of such firm shall be final and binding. The fees and expenses
incurred in connection with such calculation shall be borne by the party that
such independent public accounting firm determines has lost the dispute.
ARTICLE IX
TERMINATION OF LIABILITIES
Notwithstanding any other provision in this Agreement, any liabilities
determined under this Agreement shall survive indefinitely.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.01 Amendment and Modification. This Agreement may be amended, modified
or supplemented only by written agreement of the parties hereto.
10.02 Waiver of Compliance; Consents. Any failure of a party to comply
with any obligation, covenant, agreement or condition herein may be waived by
the other party; provided, however, that any such waiver may be made only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requests or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 10.02, with appropriate notice in
accordance with Section 10.06 of this Agreement.
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10.03 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Any party may assign any of its
rights hereunder but only with the consent of the other party hereto, which
consent shall not be unreasonably withheld, but no such assignment shall relieve
it of its obligations hereunder. Nothing in this Agreement, expressed or
implied, is intended or shall be construed to confer upon any person other than
the parties, any successors and permitted assigns, any rights, remedy, or claim
under or by reason of this Agreement or any provisions herein contained.
10.04 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of New Mexico (without regard to its
conflicts of law doctrines).
10.05 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
Agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
10.06 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed by registered or certified mail (return receipt requested) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
Prior to the Acquisition
If to Bowlin: Bowlin Outdoor Advertising & Travel Centers,
Incorporated
150 Louisiana NE
Albuquerque, NM 87108
Attention: President
with a copy to: Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attention: Christopher Johnson
After the Acquisition
If to Bowlin: Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attn: James R. McIlwain
Facsimile transmission no.: (225) 926-1005
With a copy to: Jones, Walker, Waechter, Poitevent Carrere &
Denegre, L.L.P.
Fifth Floor, Four United Plaza
8555 United Plaza Boulevard
Baton Rouge, Louisiana 70809-7000
Attn: Brad J. Axelrod
If to the Company: Bowlin Travel Centers, Inc.
150 Louisiana NE
Albuquerque, NM 87108
Attention: President
with a copy to: Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attention: Christopher Johnson
10.07 Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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10.08 Entire Agreement. This Agreement and the Contribution Agreement
(including the exhibits, schedules and other documents and instruments referred
to therein) embody the entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
10.09 Severability. If any one or more provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.
10.10 Survival of Representations. Except as set forth in this Agreement,
Bowlin's tax-related representations with respect to the Acquisition and
Distribution shall not survive the Acquisition.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
BOWLIN OUTDOOR ADVERTISING &
TRAVEL CENTERS, INCORPORATED,
a Nevada corporation
------------------------------------
By: Michael L. Bowlin
Title: President and Chief Executive
Officer
BOWLIN TRAVEL CENTERS, INC.,
a Nevada corporation
------------------------------------
By: Michael L. Bowlin
Its: President and Chief Executive
Officer
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ANNEX C
PERSONAL AND CONFIDENTIAL
October 2, 2000
Board of Directors
BOWLIN Outdoor Advertising & Travel
Centers, Incorporated
c/o Rudy Miller
Miller Capital Corporation
4909 East McDowell Road
Phoenix, AZ 85008
Attention: Mr. Michael Bowlin
Chief Executive Officer
Gentlemen:
You have advised Sanders Morris Harris, Inc. ("SMH") that Lamar Advertising
Company ("Lamar") has proposed to acquire via a merger 100% of the outstanding
common stock of BOWLIN Outdoor Advertising & Travel Centers, Incorporated
("BOWLIN") pursuant to an Agreement and Plan of Merger (the "Agreement"). Under
the Agreement, Lamar proposes to pay a price in the range of approximately $6.30
to $8.00 per share in stock based on the average price of Lamar's common stock
for the 30 days prior to Closing (estimated to be in December, 2000). The
transaction is expected to involve Lamar issuing 725,000 shares of Lamar common
stock. Prior to Closing, certain assets, liabilities and operations of BOWLIN's
corporate offices and travel center business will be "spun off" into a new
public entity. The terms of the transaction are set forth in the September 20,
2000 draft of the Agreement.
You have requested that SMH act as financial advisor to the Board of
Directors of BOWLIN and issue an opinion ("Opinion") as to the fairness, from a
financial point of view, to the public shareholders of BOWLIN of the terms of
the proposed transaction.
SMH, as part of its investment banking business, is frequently engaged in
the valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes.
In arriving at our Opinion, we have, among other things:
1. Reviewed a draft of the Agreement and Plan of Merger dated
September 20, 2000 (from which we have assumed there will be no material
changes in the final Agreement);
2. Reviewed a Letter of Intent from Lamar dated June 15, 2000;
3. Reviewed BOWLIN audited financials and annual reports for the years
ended January 31, 2000 and January 31, 1999;
4. Reviewed BOWLIN unaudited financial statements for the quarters
ended July 31, 2000 and April 30, 2000;
5. Reviewed Lamar audited financial statements for the year ended
December 31, 1999;
6. Reviewed Lamar unaudited financial statements for the six months
ended June 30, 2000;
7. Reviewed Lamar Form S-3 (i.e., prospectus relating to the sale of
26.2 million shares of Lamar by Clear Channel Communications) dated
September 8, 2000;
8. Reviewed BOWLIN Form 10 (i.e., registration statement for the
travel centers spin-off) draft dated September 14, 2000;
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BOWLIN
October 2, 2000
Page 2
9. Reviewed BOWLIN management's outdoor advertising segment budget for
the year ending January 31, 2001;
10. Reviewed historical market prices and trading volume for common
stocks of both BOWLIN and Lamar;
11. Reviewed recent Lamar equity research reports provided by Lamar
management;
12. Reviewed a 1999 Confidential Memorandum prepared by Miller Capital
Corporation regarding the sale of BOWLIN's travel center segment;
13. Reviewed BOWLIN's December 17, 1996 Prospectus prepared by HD
Brous & Co., Inc.;
14. Discussed various assets, liabilities and operations of BOWLIN
involved in the Transaction; and
15. Reviewed such other financial studies and analyses and performed
such other investigations as we deemed appropriate.
With your permission, we have assumed and relied upon, without assuming any
responsibility for verification, the accuracy and completeness of all of the
financial and other information provided to, discussed with, or reviewed by or
for us, or publicly available, for purposes of this Opinion, and have further
relied upon the assurances of management of BOWLIN that it is not aware of any
facts that will make such information inaccurate or misleading in any respect
material to our analysis. We have neither made nor obtained any independent
evaluations or appraisals of the assets or liabilities of BOWLIN, nor have we
conducted a physical inspection of the properties and facilities of BOWLIN. We
have assumed that the financial forecasts provided to us by BOWLIN have been
reasonably determined on bases reflecting the best currently available estimates
and judgment of BOWLIN's management as to BOWLIN's future financial performance.
We have further assumed in our analyses that, in, all material respects, such
forecasts and projections will be realized in the amounts and times indicated
thereby. We express no view as to such forecasts or the assumptions on which
they were based. We have relied as to all legal, accounting and tax matters with
respect to the transaction (i.e., the merger and spin-off) on legal counsel,
accountants and other financial advisors of BOWLIN. We were not authorized to
negotiate the terms of the transaction, and we have based our opinion solely
upon the proposed Agreement as negotiated by others. We were not asked to, and
we did not, solicit third party offers to acquire all or part of BOWLIN.
For purposes of rendering our Opinion, we have assumed, in all respects
material to our analysis, that the representations and warranties of each party
contained in the Agreement are true and correct, that each party will perform
all of the covenants and agreements required to be performed by it under the
Agreement and that all conditions to the consummation of the transaction will be
satisfied without waiver thereof. We have also assumed that all material
governmental, regulatory or other consents and approvals will be obtained and
that in the course of obtaining any necessary governmental, regulatory or other
consents and approvals, or any amendments, modifications or waivers to any
documents to which either BOWLIN or Lamar are party, as contemplated by the
Agreement, no restrictions will be imposed or amendments, modifications or
waivers made that would have any material adverse effect on the consideration to
be received by the public shareholders or the time of such receipt.
Our Opinion is limited to the fairness, from a financial point of view, of
the proposed transaction to BOWLIN's public shareholders, and we express no
opinion as to the merits of the underlying decision by BOWLIN to engage in the
transaction. We are not expressing an opinion herein as to the prices as which
the Lamar common stock or any other security will trade following the
announcement or consummation of the merger, which may vary depending on any
number of factors, many of which are beyond the control of
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BOWLIN
October 2, 2000
Page 3
Lamar. We also express no opinion with respect to the price per share or market
for the securities to be received by BOWLIN shareholders in the spin-off. This
Opinion does not constitute a recommendation to any shareholder of BOWLIN as to
how such shareholder should vote with respect to the transaction. Our Opinion
necessarily is based upon market, economic and other conditions as they exist
and can be evaluated on the date hereof, and we assume no responsibility to
update or revise our Opinion based upon circumstances or events occurring after
the date hereof.
We have acted as financial advisor to the Board of Directors of BOWLIN in
connection with the transaction and will receive a fee for our services,
including for rendering this Opinion. In addition, BOWLIN has agreed to
indemnify us for certain liabilities arising out of our engagement. As we have
previously advised you, in the ordinary course of business, we or our affiliates
may trade in BOWLIN's or Lamar's common stock for our own accounts and for the
accounts of our customers and, accordingly, may at any time hold a long or short
position in such securities.
Based upon and subject to the foregoing, it is our Opinion that, as of the
date hereof, the financial terms of the proposed transaction are fair to the
public shareholders of BOWLIN from a financial point of view.
SANDERS MORRIS HARRIS INC.
By: /s/ G. CLYDE BUCK
----------------------------------
G. Clyde Buck
Managing Director
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BOWLIN OUTDOOR ADVERTISING AND
TRAVEL CENTERS INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 19, 2001
BOWLIN OUTDOOR ADVERTISING AND TRAVEL CENTERS INCORPORATED PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BOWLIN OUTDOOR
ADVERTISING AND TRAVEL CENTERS INCORPORATED FOR THE SPECIAL MEETING OF
STOCKHOLDERS
The undersigned stockholder(s) of BOWLIN OUTDOOR ADVERTISING AND
TRAVEL CENTERS INCORPORATED, a Nevada corporation (the "Company"), hereby
acknowledges receipt of the Notice of Special Meeting of Stockholders and Proxy
Statement/Prospectus dated December 1, 2000, and hereby appoint(s) Michael L.
Bowlin proxy and attorney-in-fact, with full power of substitution, on behalf
and in the name of the undersigned at the Special Meeting of Stockholders of the
Company, to be held at the offices of Bowlin Outdoor Advertising and Travel
Centers Incorporated at 150 Louisiana NE, Albuquerque, New Mexico 87108, on
January 19, 2001 at 9:00 a.m., local time, and at any and all adjournments or
postponements thereof, and to vote all shares of Common Stock held by the
undersigned, with all powers that the undersigned would possess if personally
present, on each of the matters referred to below.
This proxy revokes any and all other proxies heretofore given by the
undersigned.
PLEASE MARK VOTES AS IN THIS EXAMPLE [X]
1. PROPOSAL NO. 1: To adopt the merger agreement among Bowlin Outdoor
Advertising and Travel Centers Incorporated, Lamar Advertising Company
and Lamar Southwest Acquisition Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1. IT WILL ALSO BE VOTED IN THE DISCRETION OF THE
PROXYHOLDERS ON ANY OTHER MATTER OF BUSINESS PROPERLY COMING BEFORE THE
MEETING.
Address Change? Mark Box [ ] Date , 200
Indicate Changes below: ------------------ --
-------------------------------------------
-------------------------------------------
Signature(s) in Box
Please print or type your name in the space
above as it appears on your stock
certificate. When shares are held in common
or in joint tenancy, both should sign. When
signing as an attorney, executor,
administrator, trustee, guardian or in a
fiduciary capacity, please give full title
as such. If a corporation, please sign in
full corporate name by President or other
authorized person. If a partnership, please
sign in partnership name by an authorized
person.
Please return by promptly marking, signing, dating and
returning proxy to the corporate offices of
BOWLIN OUTDOOR ADVERTISING AND TRAVEL CENTERS INCORPORATED
150 Louisiana NE
Albuquerque, NM 87108
Or by faxing the same to: (505) 266-1422; Attention: Secretary
I will _______ Will not __________ attend the Meeting.
