UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: November 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file Number: 000-21623
OBIE MEDIA CORPORATION
(Name of small business issuer in its charter)
Oregon 93-0966515
(State of incorporation) (I.R.S. Employer
Identification No.)
4211 West 11th Avenue
Eugene, Oregon 97402
(Address of principal executive offices)
Issuer's telephone number: (541) 686-8400
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the
Exchange Act:
Common Stock, without par value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
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Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this Form 10-KSB, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $14,624,955
State the aggregate market value of the voting stock held by
nonaffiliates computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within 60
days prior to the date of filing: $12,051,600 aggregate market value as of
December 31, 1997 based on the price at which the stock was sold.
Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 3,855,486 shares of
Common Stock, without par value, on February 12, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-KSB incorporates information from the issuer's
definitive proxy statement for the annual meeting of shareholders to be held on
April 3, 1998.
Transitional Small Business Disclosure Format (Check One): Yes ; No X
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TABLE OF CONTENTS
Page
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Part I
Item 1. Description of Business......................................... 2
Item 2. Description of Properties....................................... 9
Item 3 Legal Proceedings............................................... 10
Item 4. Submission of Matters to a Vote of Security Holders............. 10
Part II
Item 5. Market for Common Stock and Related
Shareholder Matters.................................... 11
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................. 11
Item 7. Financial Statements............................................ 16
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................. 17
Part III
(Items 9, 10, 11 and 12 are incorporated herein by reference from the Company's
definitive Proxy Statement for its 1998 annual meeting of shareholders.)
Item 9. Directors, Executive Offices, Promoters
and Control Persons; Compliance with Section 16(a)
of the Exchange Act.................................... 18
Item 10. Executive Compensation.......................................... 18
Item 11. Security Ownership of Certain Beneficial
Owners and Management.................................. 18
Item 12. Certain Relationships and Related Transactions.................. 18
Part IV
Item 13. Exhibits and Reports on Form 8-K................................ 19
Signatures...................................................... 22
Financial Statements............................................ F-1
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FORM 10-KSB
This Annual Report includes certain forward-looking information that
involves a number of risks and uncertainties. The Company's actual results could
differ materially from the forward-looking statements. Factors that could cause
or contribute to such differences include the following: a decline in the demand
for advertising in the areas where the Company conducts its business; a
deterioration of business conditions generally in such areas; slower than
expected acceptance of the Company's unique display products; competitive
factors, including increased competition and price pressures; changes in
regulatory or other external factors; and other factors listed from time to time
in the Company's SEC reports, including but not limited to, its "Risk Factors"
discussion in the Registration Statement it filed in connection with its initial
public offering (the "IPO").
Note: All share and per share information in this Annual Report has been
restated to give retroactive effect to an 11-for-10 stock split declared in
October 1997 and a 10-for-1 stock split effected prior to the IPO in 1996.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Company Overview
Obie Media Corporation ("Obie Media" or the "Company")is an out-of-home
media company which markets advertising space on outdoor advertising displays
("billboards") and transit vehicles (primarily passenger buses). The Company
owns and operates approximately 660 advertising faces on outdoor advertising
structures located in Washington, Oregon, California and Idaho. The Company also
has agreements with 12 local government transit districts pursuant to which the
Company has the exclusive right, for a number of years, to sell advertising on
approximately 2,300 district-owned transit vehicles. The Company also leases
building walls in urban areas for wallscape displays, and the Company owns
approximately 700 transit benches on which it sells advertising.
The Company, formed in 1987, traces its origins to Obie Industries
Incorporated ("Obie Industries"), a family-owned outdoor advertising business,
founded in 1960. In 1979, all the outdoor advertising assets of Obie Industries,
consisting of over 1,700 advertising display faces, were sold to 3M Media
Corporation. Brian B. Obie, the Company's President and Chief Executive Officer,
has worked for Obie Industries since 1962, serving as its President since 1968.
In November 1996, to facilitate the IPO, the Company separated from its parent
corporation (Obie Industries), with the Company then being owned directly by the
shareholders of Obie Industries (the "Spin-Off").
Company Growth Strategy
The Company intends to expand its presence in other geographic areas in
both transit and outdoor advertising.
The Company intends to expand by obtaining agreements with transit
districts in new markets and by acquiring or building additional outdoor
displays in new and existing markets. The Company intends to establish
additional geographic "hubs" in which sales, design, production and
administrative capabilities are positioned to serve both transit and outdoor
advertising displays in a geographic region, in the same manner as the Company's
operations in Eugene, Oregon serve its current markets. Management believes this
strategy will result in increased operating efficiencies, greater geographic
diversification and increased market penetration.
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Management believes the Company has a competitive advantage in
obtaining agreements with transit districts due to the Company's unique
advertising products and sales strategy, which create a greater revenue
potential per vehicle. Expansion of billboards, urban wallscapes and other
out-of-home media products will be concentrated in markets being served by the
company at that time, or through acquisitions.
Industry Background
The out-of-home media industry includes outdoor advertising displays,
displays on buses, trains, taxis, subways, transit benches and shelters, and
wallscapes on urban buildings, as well as displays in shopping centers, malls,
airports, stadiums, movie theaters and supermarkets. The out-of-home media
industry generates annual revenues in excess of $3.0 billion in the United
States and has experienced increased advertiser interest and revenue growth in
recent years.
Advertisers purchase out-of-home advertising for a number of reasons.
Out-of-home advertising offers repetitive impact at a relatively low
cost-per-thousand-impressions, a commonly used media measurement, as compared to
television, radio, newspapers, magazines and direct mail marketing. Because of
its cost-effective nature, out-of-home advertising is a good vehicle to build
"mass market" support. In addition, out-of-home advertising can be used to
target a defined audience in a specific location and, therefore, can be relied
upon by local businesses concentrating on a particular geographic area or where
customers have specific demographic characteristics.
The out-of-home media industry has enjoyed increased consumer exposure
at a time when the audiences of broadcast media have been fragmenting as the
number of radio and television networks and other narrowly targeted formats has
increased. Out-of-home media has experienced significant changes in recent
years. First, out-of-home advertising has expanded to include many media, such
as those listed above. Second, the industry has benefited significantly from
improvements in production technology, including the use of computer printing,
vinyl advertising copy and improved lighting techniques, which have facilitated
a more dynamic, colorful and creative use of the medium. Lastly, the growth in
automobile travel time for business and leisure due to increased highway
congestion and continued demographic shifts of residences and businesses from
the cities to outlying suburbs has increased the exposure for out-of-home
advertising.
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Products and Markets
Obie Media offers advertisers a wide range of out-of-home media
products, including transit advertising displays, outdoor advertising displays,
building wallscapes, and transit bench displays. This not only provides
advertisers with significant flexibility in their advertising programs, but it
also allows the Company to cross-sell multiple products and to leverage its
design and production capabilities.
Transit Advertising. The Company has agreements with 12 transit
districts in Oregon (4), California (6), Texas (1) and Washington (1). Of these
12 agreements, five were entered into during fiscal 1997. Pursuant to its
agreements with transit districts, the Company is the exclusive seller of
advertising on the transit vehicles operated by those transit districts. The
Company is in the final stages of completing negotiations to provide advertising
services for the Austin, Texas transit district.
Agreements with transit districts are awarded through a competitive
process. Each transit district evaluates proposals based on a number of
criteria, primarily on the basis of minimum revenues which the bidder guarantees
to pay to the district. The Company's agreements typically have terms of from
three to five years, with renewals or extensions either unilaterally at the
discretion of the transit district or upon the mutual agreement of the district
and the Company.
Approximately 29% and 37% of the Company's gross revenues for fiscal
1997 and 1996, respectively, were derived from customers purchasing transit
advertising on vehicles owned by Tri-County Metropolitan Transportation District
of Oregon ("Tri-Met") in Portland, Oregon. The Company's agreement with Tri-Met
has a scheduled expiration date in 2001. Tri-Met has the right to unilaterally
renew the agreement for an additional three-year period, or may terminate the
agreement earlier if it determines that termination is in the public interest.
The Company expects its agreement with Tri-Met to continue to account for a
substantial portion of the Company's revenues for the foreseeable future.
On July 1, 1997, the Company began serving the Dallas Area Rapid
Transit system (DART) in Dallas, Texas. The contract has a term of four years
and nine months, with a scheduled expiration at the end of March 2002. Dallas is
the eighth largest advertising market in the United States. Gross revenue from
sales of advertising in Dallas in fiscal 1997 exceeded $2 million. The Company
expects its agreement with DART to continue to account for a substantial portion
of the Company's revenues for the foreseeable future.
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Outdoor Advertising Structures. The Company has approximately 660
advertising faces on outdoor advertising structures in Washington, Oregon,
California and Idaho. The Company leases the property underlying its outdoor
advertising structures, generally pursuant to 10-year leases that give the
Company the right to renew for two additional five-year periods. More than
two-thirds of the Company's structures are illuminated.
Wallscapes and Other Advertising Displays. In addition to transit and
outdoor displays, the Company also leases building walls in urban areas for
wallscape displays. The Company currently leases 8 building walls in
Seattle/Tacoma, and owns a 50% interest in a corporation that leases 17 building
walls in Portland. The Company also owns approximately 700 transit benches in
the Portland area on which the Company sells advertising.
Sales and Service
Obie Media maintains an active sales force in each of its markets. The
Company's intensive sales and service efforts are a key component in achieving
occupancy levels that management believes are higher than industry averages for
both transit and outdoor advertising.
The Company views its aggressive sales and service efforts as an
important part of its culture. In hiring its sales force, the Company vigorously
screens applicants and typically hires college graduates who have demonstrated
their suitability and aptitude to excel in the Company's unique sales culture.
New sales employees undergo extensive training and are supervised by regional
sales managers with substantial advertising sales experience. Each sales
representative and the Company jointly establish sales targets for that sales
representative, and the Company has monthly sales meetings with all its
salespeople to acknowledge and reward individuals who are meeting or exceeding
their targets.
The Company works directly with companies and with advertising agencies
in coordinating the marketing, production and installation of advertising
displays. The Company's sales personnel also serve as customer service
representatives, maintaining frequent and regular contact with the Company's
advertising customers to resolve customer concerns in the field.
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Design, Production and Installation
The Company has a fully staffed and equipped design and production
department located in Eugene, Oregon. These services are used primarily by
direct sales customers that are not represented by advertising agencies. The
design department works with these advertisers and the sales representatives to
create advertising copy, design and layout. The staff of the design department
uses technologically advanced computer hardware and software to create original
design copy and, increasingly, to exchange work product with customers or their
advertising agencies via modem or the Internet. Advertisers that are represented
by advertising agencies generally arrange for the production of their ads,
leaving the Company to provide only installation services. The Company is
increasingly acting as a broker with respect to this production.
A local advertiser can purchase customized design and production
services from the Company, in addition to display space, and typically pays for
all of the services as part of a single monthly rate. For the convenience of
customers, the charge to clients for design and production is typically added to
the cost of the space and billed over the life of the advertising contract. The
Company believes that the skills of its design department, combined with its
technological capabilities, provide a significant competitive advantage in its
direct sales to local advertisers.
The Company views transit advertising design and production as a
distinct activity and attempts to achieve independent profitability in this
operation. The Company uses computer-aided vinyl lettering or hand paints almost
all of its transit and outdoor advertising displays. The Company outsources its
high-pictorial, computer-generated production.
The Company uses self-adhesive vinyl for its transit displays and soft
roll-up vinyl for substantially all its outdoor advertising displays. Due to its
nearly exclusive use of vinyl, the Company can maintain centralized production
facilities, can easily ship the displays to its trained installers, and has
greatly simplified the installation process. The Company continues to have a few
outdoor advertising structures that have not yet been converted to vinyl
installation. Displays on these structures require more expensive shipping and
more labor-intensive installation.
Customers
The Company maintains a broad base of regional and national advertising
customers, most of which are represented by advertising agencies. Customers
represented by advertising agencies account for approximately 60% of the
Company's gross revenues. Advertising agencies working with the Company
typically retain 15% of
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the gross advertising revenues from their accounts, consistent with standard
industry practice. Advertising agencies generally are responsible for the
artistic design and written content of their customers' advertising and will
plan and implement the overall advertising campaign for their customers,
including the selection of advertising media. The Company's sales personnel are
trained to work closely with the advertising agencies in the Company's markets
to service these customers. During November 1997 the Company opened a national
sales office in Los Angeles, California, and hired a national sales manager. The
national sales team is responsible for calling on customers located in cities
where the Company does not have sales offices, such as New York, Chicago, St.
Louis and Atlanta.
Another key component of the Company's sales and marketing strategy is
to aggressively market its services to local advertisers. Accordingly, the
Company focuses its direct sales efforts primarily on local companies. Local
advertisers tend to have smaller advertising budgets and rely on the Company's
design and production department for their advertising copy. Local advertisers
also require the Company to expend more effort on educating customers regarding
the benefits of transit and outdoor advertising and helping potential customers
develop their advertising strategy. Although the Company's direct sales are more
labor-intensive than its sales through advertising agencies, the Company
believes its direct sales focus is largely responsible for its high occupancy
and renewal rates.
Historically, manufacturers of cigarettes have been major outdoor
advertisers. In the early 1990s, due to increased regulation, tobacco
manufacturers began substantially reducing their advertising expenditures.
However, the Company's revenues have not been materially affected, as tobacco
revenues represent less than 1% of sales.
Competition
The Company competes in each of its markets with other outdoor
advertising companies and with other transit advertising companies that submit
proposals for the exclusive agreements with transit districts. The Company also
competes for revenues with other advertising media, including broadcast and
cable television, radio, print media, direct mail marketers, displays in
shopping centers and malls, airports, stadiums, movie theaters and supermarkets,
as well as on taxis, trains and subways.
Transit. Transit advertising is fragmented, consisting of a few
national transit advertising companies with operations in multiple markets and
numerous small companies operating under one or a few regional agreements.
Competition among transit advertising companies is primarily in obtaining and
retaining agreements with
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transit districts. Agreements with transit districts are awarded primarily on
the basis of the minimum revenues the bidder guarantees to the district. Once an
agreement is secured, the company awarded the agreement generally becomes the
exclusive provider of transit advertising within that transit district. The
number of competitors for each agreement depends primarily on the number of
vehicles operated by that transit district. In several of its markets, the
Company has competed for transit agreements with companies having substantially
greater total resources than the Company. The Company believes that its unique
products and sales strategy, which create a greater revenue potential per
vehicle, give the Company a competitive advantage in obtaining agreements with
transit districts. Thus, the Company is able to successfully compete for transit
agreements against larger companies.
Outdoor Advertising. Outdoor advertising also is fragmented. There are
several large outdoor advertising companies with operations in multiple markets
and many more smaller companies operating a limited number of structures in a
single or a few local markets. Although some consolidation has occurred in the
industry over the past few years, the Outdoor Advertising Association of America
recently estimated that there are approximately 396,000 outdoor displays
operated by more than 600 companies. In several of its markets, the Company
encounters direct competition from major outdoor media companies, which have
larger national networks and greater total resources than the Company. The
Company believes its strong emphasis on sales and customer service and its
position as a major provider of advertising services in each of its primary
markets enables it to compete effectively with the other outdoor advertising
companies, as well as other media, within those markets.
Government Regulation
The outdoor advertising industry is subject to extensive governmental
regulation. These laws and regulations limit the growth of outdoor advertising
companies and operate as a substantial barrier to entry in the industry.
Construction of outdoor advertising structures has virtually been
eliminated except in commercial and industrial areas. Many jurisdictions also
have restricted the relocation, location, height and size of outdoor advertising
structures. Some jurisdictions also restrict the ability to enlarge or upgrade
existing structures, such as converting from wood to steel or from
non-illuminated to illuminated structures, and/or restrict the reconstruction of
structures that are substantially destroyed as a result of storms or other
causes. Most of these laws require the payment of just compensation whenever
legally erected and maintained structures are required to be removed.
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Because most of the Company's outdoor advertising structures have been
designed and installed within the last nine years, management believes its
structures conform to current laws and regulations. When leasing property for
the installation of new outdoor advertising structures, the Company carefully
reviews applicable laws, including building, sign and zoning ordinances. While
these laws and ordinances may restrict the location and size of the structures,
the Company has been successful in strategically locating its structures beside
major highways and arterials.
To date, the Company's experience is that the regulatory environment
can be effectively managed and that the regulations in its markets have not
materially adversely affected its operations. However, the outdoor advertising
industry is heavily regulated, and no assurance can be given that existing or
future laws or regulations will not have a material adverse effect on the
Company.
Employees
At November 30, 1997, the Company had 96 full-time and 5 part-time
employees. None of the Company's employees is covered by collective bargaining
agreements, except for four installers in Portland, Oregon. The Company believes
it maintains good employee relations.
ITEM 2. DESCRIPTION OF PROPERTIES
Until April 1997, the Company was located in three separate facilities
in Eugene, Oregon, all of which were rented from affiliated companies. After
April 1997, the Company consolidated its operations in Eugene in a headquarters
building at one of these locations. The 20,000 square foot facility includes
space for the Company's centralized design and production departments, as well
as its accounting, credit, marketing and management personnel. The headquarters
building is leased from Obie Industries at market rates. The Company's rent or
lease payments on these properties were $123,000 and $79,000 during fiscal 1997
and 1996, respectively.
The Company leases local operating offices for sales, service and
installation in Spokane, Yakima, and Bremerton, Washington; Portland and Salem,
Oregon; Dallas, Texas; and Sacramento, Monterey and Lodi, California, and a
national sales office in Los Angeles, California. The Company also leases
approximately 385 parcels of property beneath outdoor advertising structures.
Total lease expenses for these leases in fiscal 1997 and 1996 were approximately
$755,000 and $608,000, respectively. The Company's site leases are generally for
a term of 10 years, with two five-year renewal options at the Company's
discretion.
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ITEM 3. LEGAL PROCEEDINGS
The Company is not currently subject to any material litigation nor, to
the Company's knowledge, is any material litigation threatened against the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders
during the fourth quarter of fiscal 1997.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Price Range of Common Stock
The Common Stock began trading on the Nasdaq SmallCap Market on
November 21, 1996 under the symbol "OBIE." The following table sets forth for
the period indicated the high and low bid prices of the Common Stock as reported
by The Nasdaq Stock Market, Inc.
Year ended November 30
High Low
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Fourth Quarter 1996(from 11/21/96) 7 1/4 6 3/8
First Quarter 1997 7 1/2 6
Second Quarter 1997 7 5 3/8
Third Quarter 1997 7 5 7/8
Fourth Quarter 1997 9 1/2 5 7/8
As of February 12, 1998, there were approximately 61 holders of record
of the Company's Common Stock. The Company believes the number of beneficial
owners is substantially greater than the number of record holders because a
large portion of the Company's outstanding Common Stock is held of record in
"street name." The Company has not paid cash dividends on its Common Stock since
the IPO and does not anticipate doing so in the foreseeable future. The Company
plans to retain any future earnings to finance operations.
In October 1997, the Company declared an 11-for-10 stock split for shareholders
of record on November 21, 1997. Cash was paid in lieu of fractional shares.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company has grown significantly through the acquisition of
additional agreements with transit districts, particularly the agreement with
Tri-Met, which began on January 1, 1994, and DART, which began on July 1, 1997,
as well as the addition of outdoor advertising displays in and around existing
markets and the improvement of occupancy and advertising rates.
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The Company is seeking agreements with additional transit districts to
expand its operations. The Company believes it is also important to its overall
sales effort to build or acquire additional displays in existing markets and
develop or acquire new products, with respect to both transit and outdoor
advertising, in order to increase revenues.
Net revenues represent gross revenues derived from outdoor and transit
advertising displays less commissions retained by advertising agencies that
contract for the use of advertising displays on behalf of advertisers. Agency
commissions on revenues that are contracted through agencies are typically 15%
of gross revenues. The Company considers agency commissions as a reduction in
gross revenues and measures its operating performance based on a percentage of
net revenues rather than gross revenues. Approximately 60% of the Company's
gross revenues are attributable to advertising sold through advertising
agencies.
Direct advertising expenses consist primarily of occupancy, production
and installation, and sales costs. Occupancy expense is primarily comprised of
payments to transit districts for the use of space on their vehicles and lease
payments to owners of property underlying outdoor advertising structures.
Occupancy expense also includes the cost of illuminating outdoor displays and
property taxes on the outdoor advertising structures.
Production and installation expenses consist primarily of the costs of
producing, shipping and installing the advertising displays. Sales expenses
consist primarily of the cost of staffing the Company's sales force.
General and administrative expenses include costs related to the
individual market territories, as well as corporate expenses. Expenses related
to the individual market territories include the personnel and facility required
to administer that market. Corporate general and administrative expenses
represent staff and facility costs for the executive offices and other
centralized functions such as accounting and marketing.
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Results of Operations-Comparison of Years Ended November 30, 1997 and 1996
The following table sets forth certain statement of operations
information for the Company for the periods indicated as a percentage of net
revenues:
Year Ended November 30,
1997 1996
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Net revenues................................. 100.0% 100.0%
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Operating expenses:
Direct advertising expenses............... 60.2 58.7
General and administrative expenses....... 16.9 16.7
Start up costs............................ 1.8 -
Depreciation and amortization............. 5.0 5.1
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Total operating expenses................ 83.8 80.5
Operating income.......................... 16.2 19.5
Interest expense.......................... (4.4) (14.7)
Other income.............................. .3 1.8
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Income before income taxes................ 12.1 6.6
Provision for income taxes................ (4.6) (.3)
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Income before extra ordinary item......... 7.5 6.3
Extraordinary item........................ - (5.4)
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Net income 7.5% .9%
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Gross revenue increased 34.2% to $14,624,955 in fiscal 1997 from
$10,070,258 in fiscal 1996. Outdoor revenues increased 13.2% in line with
expectations, from $4,747,634 in fiscal 1996 to $5,373,609 in fiscal 1997.
Transit revenue grew 50.4% from $6,150,256 in fiscal 1996 to $9,251,346 in the
current fiscal year. The new transit agreements with DART(Dallas) and
RT(Sacramento) provided $2,387,662 of that growth. Agency discounts increased
59.7% from $827,632 to $1,322,129 in fiscal 1997, primarily due to the addition
of the Dallas market. Net revenues
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increased 32.1% from $10,070,258 in fiscal 1996 to $13,302,826 in fiscal 1997.
Direct advertising expenses increased 35.5% from $5,907,038 in fiscal
1996 to $8,004,869 in fiscal 1997, primarily due to increased revenues. Direct
advertising expense as a percentage of net revenues rose to 60.2% for fiscal
1997 from 58.7% in fiscal 1996, primarily due to the faster growth of transit
advertising, which has higher occupancy costs as a percentage of net sales than
outdoor advertising.
General and administrative costs as a percentage of net sales rose
slightly from 16.7% in fiscal 1996 to 16.9% in fiscal 1997. General and
administrative costs increased 33.0% to $2,241,849 in fiscal 1997 from
$1,685,135 in fiscal 1996. Fiscal 1997 was the first full year with the
additional expense of being a public company. This increase was also
attributable to the expenses incurred in consolidating its Eugene operations
from three locations to one in fiscal 1997. General and administrative costs are
expected to decrease as a percentage of sales as the Company grows.
During fiscal 1997, the Company incurred costs of $236,743 associated
with attempting to obtain new transit agreements and pre-opening costs in
locations where the Company has established transit district agreements. Most of
the fiscal 1997 costs resulted from participating in the appeal process related
to the DART proposal. The Company will incur start-up costs in the future. The
amount will vary, both in total cost and as a percentage of sales, depending on
the complexity and number of proposals for new districts and the success of the
Company in obtaining contracts for new districts.
Depreciation and amortization expense increased 29.3%, from $513,775
for fiscal 1996 to $664,207 in fiscal 1997, primarily due to capital spending on
outdoor advertising structures and increased capital spending for office
furniture, fixtures and computer equipment associated with new offices in Dallas
and Sacramento and the consolidation of the three Eugene locations into the new
headquarters building.
Interest expense decreased 60.5%, to $584,258 for fiscal 1997 from
$1,480,237 in fiscal 1996, primarily due to the refinancing of the Company's
term debt in October 1996 which reduced the interest rate on the term debt, and
the reduction of debt pursuant to the Company's IPO in November 1996.
Income before income taxes increased 140.8% to $1,614,375 in fiscal
1997 from $670,300 in fiscal 1996, primarily for the reasons outlined above.
Income tax expense increased to $614,311 for fiscal 1997 from $31,000
in fiscal 1996. The income tax expense for fiscal 1996 was reduced by the
benefit from net operating loss carryforwards from prior years.
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During 1996, the Company incurred an extraordinary expense as a result
of prepayment penalties related to the early payment of debt and for previously
capitalized loan costs that were written off. The extraordinary expense totaled
$543,355, net of the related income tax benefit of $342,000.
Net income for fiscal 1997 rose to $1,000,064 from $95,945 in fiscal
1996 primarily due to the reasons explained above.
Liquidity and Capital Resources
The Company's working capital was $646,500 and $379,848 at November 30,
1997 and 1996, respectively. The increase in working capital resulted primarily
from an increase in accounts receivable partially offset by borrowings on the
line of credit. Traditionally, the Company satisfies its working capital
requirements with cash from operations and revolving credit borrowings.
Net cash provided by operating activities decreased to $817,120 in
fiscal 1997 from $1,295,896 in fiscal 1996. This decrease was primarily due to
the increase in accounts receivable. The increase in accounts receivable
resulted primarily from increased business, particularly with advertising
agencies.
The net cash used in investing activities increased from $1,127,431 in
fiscal 1996, to $1,439,617 in fiscal 1997, primarily due to increased capital
expenditures relating to the new Eugene headquarters facility and opening new
offices in Dallas and Sacramento. Fiscal 1996 capital expenditures were
partially offset by proceeds from the disposition of a billboard under threat of
condemnation. The Company intends to continue to develop new outdoor advertising
structures. The Company intends to finance future capital expenditures with a
combination of earnings and borrowed funds.
The Company's net cash provided by financing activities was $147,557 in
fiscal 1997 and $251,907 in fiscal 1996. The cash provided by financing
activities in fiscal 1996 was primarily from the IPO (net of debt repayments).
The net cash provided by financing activities in fiscal 1997 resulted primarily
from increased float on the Company's payments.
At November 30, 1997, the Company had an operating line of credit with
a commercial bank, which bears interest at the bank's prime rate. The line is
secured by qualified accounts receivable and limited to a maximum of $2,000,000.
Of that amount,$742,864 had been borrowed at November 30, 1997. This line of
credit is to be reviewed on April 30, 1998.
15
<PAGE>
At November 30, 1997, the Company also had long-term debt of $6.34
million with its commercial bank, with interest based partially on the bank's
prime rate plus .5% (9.0%) and partially on IBOR plus 2% (7.9375%). (See Note 6
to the consolidated financial statements.)
The company anticipates capital expenditures of approximately
$2,200,000 of which approximately $1,050,000 will be used to develop outdoor
advertising structures and $698,000 will be used to pay for the outdoor
advertising structures of a related partnership(MO Partners) that the Company
acquired in December 1997, pursuant to an option granted to the Company in 1996.
The Company intends to finance these expenditures with earnings and the proceeds
of borrowings under a billboard construction line currently being negotiated
with the bank.
The Company believes that cash generated from operations and bank
borrowings under its credit agreements will be sufficient to finance the
Company's operations, including anticipated capital expenditures, through fiscal
1998.
The Company is in the process of assessing the subject of year 2000
related issues on its business. The Company believes that costs to upgrade its
information and operating systems will not be material.
Seasonality
The Company's transit advertising revenues have exhibited some degree
of seasonality. Typically, the Company experiences its highest revenues in the
fourth fiscal quarter and its lowest revenues in the first fiscal quarter. The
Company expects this trend to continue. A reduction in revenues in any quarter
is likely to result in a period-to-period decline in operating performance and
net income.
New Accounting Pronouncements
New accounting pronouncements are discussed in Note 1 of Notes to
Consolidated Financial Statements.
ITEM 7. FINANCIAL STATEMENTS
The financial statements and supplementary data required by this Item
are included on pages F-1 to F-15 of this Annual Report.
16
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
In September 1997, the Company filed Form 8-K announcing a change in
auditors from Coopers & Lybrand LLP to Arthur Andersen LLP.
17
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Information with respect to directors and executive officers is
included under "Election of Directors" and "Executive Officers" in the Company's
definitive proxy statement for its 1998 Annual Meeting of Shareholders to be
filed not later than 120 days after the end of the fiscal year covered by this
Annual Report, and such information is incorporated herein by reference.
Information with respect to Section 16(a) of the Securities Exchange
Act is included under "Compliance with Section 16(a)of the Securities Exchange
Act" in the Company's definitive proxy statement for its 1998 Annual Meeting of
Shareholders to be filed not later than 120 days after the end of the fiscal
year covered by this Annual Report, and such information is incorporated herein
by reference.
ITEM 10. EXECUTIVE COMPENSATION
Information with respect to executive compensation is included under
"Executive Compensation" in the Company's definitive proxy statement for its
1998 Annual Meeting of Shareholders to be filed not later than 120 days after
the end of the fiscal year covered by this Annual Report, and such information
is incorporated herein by reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to security ownership of certain beneficial
owners and management is included under "Principal Shareholders and Management
Ownership" in the Company's definitive proxy statement for its 1998 Annual
Meeting of Shareholders to be filed not later than 120 days after the end of the
fiscal year covered by this Annual Report, and such information is incorporated
herein by reference.
18
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain relationships and related
transactions with management is included under "Certain Transactions" in the
Company's definitive proxy statement for its 1998 Annual Meeting of Shareholders
to be filed not later than 120 days after the end of the fiscal year covered by
this Annual Report, and such information is incorporated herein by reference.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1) Financial Statements. The Financial Statements are listed in the Index
to Consolidated Financial Statements on page F-1 of this Annual Report.
(a)(2) Exhibits:
Exhibit Description
3.1 Restated Articles of Incorporation(1)
3.2 Amendment to Restated Articles of Incorporation(2)
3.3 Restated Bylaws(1)
3.4 Amendment to Restated Bylaws(2)
4.1 See Articles 3, 4 and 8 of Exhibit 3.1 and Articles 1, 2, 5, 6 and 7 of
Exhibit 3.3(1)
10.1* Restated 1996 Stock Incentive Plan(2)
10.2* Form of Nonqualified Stock Option Agreement for use with Restated 1996
Stock Incentive Plan(2)
10.3* Form of Incentive Stock Option Agreement for use with Restated 1996
Stock Incentive Plan(2)
10.4 Form of Indemnification Agreement between the Company and its
directors(1)
10.5 Form of Indemnification Agreement between the Company and its
officers(1)
10.6 Tri-County Metropolitan Transportation District of Oregon Professional
Services Contract for Transit Advertising Services between Tri-Met and
the Company, dated July 1, 1996, and related documents(1)
19
<PAGE>
10.7 Lease between Obie Industries Incorporated and the Company, dated
November 12, 1996(2)
10.8 Loan Agreement, dated October 31, 1996, among the Company, United
States National Bank of Oregon, Obie Industries Incorporated and Brian
Obie, and related documents(2)
10.9 Amendments, dated December 31, 1996 and February 12, 1997, to Loan
Agreement dated October 31, 1996, among the Company, United States
National Bank of Oregon, Obie Industries Incorporated and Brian Obie,
and related documents(2)
10.10 Option Agreement between MO Partners and the Company, dated effective
October 1, 1996(2)
10.11 Dallas Area Rapid Transit contract C-97000039 between DART and the
Company, dated July 1, 1997, and related documents
10.12 Amendment, dated June 20, 1997, to Loan Agreement dated October 31,
1996, among the Company, United States National Bank of Oregon, Obie
Industries Incorporated and Brian Obie.
10.13 Agreement between MO Partners and the Company, dated effective December
31, 1997
10.14 Amendment dated July 15, 1997 to lease agreement between Obie Media
Corporation and Obie Industries dated November 12, 1996.
20.1 Portions of Definitive Proxy Statement for 1998 Annual Shareholder
Meeting(3)
21.1 List of Subsidiaries(1)
27.1 Financial Data Schedule
- --------------------
* Management Contract or Compensatory Plan or Arrangement.
(1) Incorporated herein by reference from the Company's Registration Statement
on Form SB-2 (Registration No. 333-5728-LA) filed with the Securities and
Exchange Commission on October 3,
20
<PAGE>
1996.
(2) Incorporated herein by reference from the Company's Amendment No. 1 to the
Registration Statement on Form SB-2 (Registration No. 333-5728-LA) filed with
the Securities and Exchange Commission on November 15, 1996.
(3) To be filed with the Securities and Exchange Commission within 120 days
after the end of the fiscal year covered by this Annual Report.
Upon written request to James W. Callahan, Chief Financial Officer of
Obie Media Corporation, 4211 West 11th Avenue, Eugene, OR 97402, shareholders
will be furnished a copy of any exhibit, upon payment of $ .25 per page, which
represents the Company's reasonable expense in furnishing the exhibit requested.
(b) Reports on Form 8-K.
--------------------
In September 1997, the Company filed Form 8-K announcing a change in auditors
from Coopers & Lybrand LLP to Arthur Andersen LLP.
21
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
OBIE MEDIA CORPORATION
Dated: February 27, 1998 By/s/ Brian B. Obie
-----------------
Brian B. Obie
President
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR:
Dated: February 27, 1998 By/s/ Brian B. Obie
-----------------
Brian B. Obie, President,
Chief Executive Officer and Director
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
Dated: February 27, 1998 By/s/ James W. Callahan
---------------------
James W. Callahan,
Chief Financial Officer and Treasurer
22
<PAGE>
DIRECTORS:
Dated: February 24, 1998 By/s/ Delores M. Mord
-------------------
Delores M. Mord, Director
Dated: By
-------------------
Randall C. Pape, Director
Dated: February 27, 1998 By/s/ Stephen A. Wendell
----------------------
Stephen A. Wendell, Director
Dated: February 24, 1998 By/s/ Richard C. Williams
-----------------------
Richard C. Williams,Director
23
<PAGE>
EXHIBIT INDEX
Exhibit*
10.11 Dallas Area Rapid Transit contract C-7000039 between DART and the
Company, dated July 1, 1997, and related documents
10.12 Amendment, dated June 20, 1997, to Loan Agreement dated October 31,
1996, among the Company, United States National Bank of Oregon, Obie
Industries Incorporated and Brian Obie.
10.13 Agreement between MO Partners and the Company, dated effective December
31, 1997
10.14 Amendment dated July 15, 1997 to lease agreement between Obie Media
Corporation and Obie Industries dated November 12, 1996.
27.1 Financial Data Schedule
- -----------
* See Item 13(a)(2) of this Annual Report for a list of all exhibits, including
those incorporated by reference.
24
<PAGE>
OBIE MEDIA CORPORATION
FINANCIAL STATEMENTS
AS OF NOVEMBER 30, 1997 AND 1996
TOGETHER WITH AUDITORS' REPORT
F-1
<PAGE>
[Coopers & Lybrand L.L.P. Letterhead]
Report of Independent Accountants
Board of Directors
Obie Media Corporation:
We have audited the accompanying consolidated balance sheet of Obie Media
Corporation as of November 30, 1996, and the related consolidated statements of
income, changes in shareholders' equity (deficit) and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Obie Media
Corporation as of November 30, 1996, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
/S/Coopers & Lybrand L.L.P.
Eugene, Oregon
January 22, 1997, except for Note 6, as
to which the date is February 12, 1997
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Obie Media Corporation:
We have audited the accompanying consolidated balance sheet of Obie Media
Corporation (an Oregon corporation) and subsidiary as of November 30, 1997, and
the related consolidated statements of income, changes in shareholders' equity
(deficit) and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Obie Media Corporation and
subsidiary as of November 30, 1997, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
/s/Arthur Andersen LLP
Portland, Oregon,
January 30, 1998
F-2a
<PAGE>
OBIE MEDIA CORPORATION
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
AS OF NOVEMBER 30, 1997 AND 1996
ASSETS
1997 1996
----------- -----------
CURRENT ASSETS:
<S> <C> <C>
Cash $ - $ 474,940
Accounts receivable, net of allowance for doubtful
accounts of $146,692 and $90,000, respectively 2,878,360 1,550,193
Prepaid expenses and other current assets 790,234 812,450
Deferred tax assets 1,105,240 709,000
----------- -----------
Total current assets 4,773,834 3,546,583
PROPERTY AND EQUIPMENT, net 9,264,855 8,458,014
OTHER ASSETS 245,733 147,987
DEFERRED TAX ASSETS - 380,000
----------- -----------
$14,284,422 $12,532,584
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Checks outstanding in excess of cash deposits $ 173,611 $ -
Current portion of long-term debt 859,323 743,973
Line of credit 742,864 -
Accounts payable 403,449 757,020
Accrued expenses 1,166,883 1,070,440
Deferred revenue 781,204 595,302
----------- -----------
Total current liabilities 4,127,334 3,166,735
----------- -----------
DEFERRED TAX LIABILITIES 630,551 -
LONG-TERM DEBT, less current portion 5,695,219 6,554,587
----------- -----------
Total liabilities 10,453,104 9,721,322
MINORITY INTEREST IN SUBSIDIARY 35,424 27,407
COMMITMENTS (Note 9)
SHAREHOLDERS' EQUITY:
Preferred stock, without par value, 10,000,000 shares
authorized, no shares issues and outstanding - -
Common stock, without par value; 20,000,000 shares
authorized, 3,855,486 and 3,850,000 shares issued and
outstanding, respectively 6,173,967 6,161,992
Accumulated deficit (2,378,073) (3,378,137)
----------- -----------
Total shareholders' equity 3,795,894 2,783,855
----------- -----------
Total liabilities and shareholders' equity $14,284,422 $12,532,584
=========== ===========
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
F-3
<PAGE>
OBIE MEDIA CORPORATION
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996
1997 1996
----------- -----------
REVENUES:
<S> <C> <C>
Outdoor advertising $ 5,373,609 $ 4,747,634
Transit advertising 9,251,346 6,150,256
Less- Agency commissions (1,322,129) (827,632)
----------- -----------
Net revenues 13,302,826 10,070,258
OPERATING EXPENSES:
Direct advertising expenses 8,004,869 5,907,038
General and administrative 2,241,849 1,685,135
Start up costs 236,743 -
Depreciation and amortization 664,207 513,775
----------- -----------
Operating income 2,155,158 1,964,310
OTHER (INCOME) EXPENSE:
Interest expense 584,258 1,480,237
Minority interest in subsidiary 8,017 2,138
Other (51,492) (188,365)
----------- -----------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 1,614,375 670,300
PROVISION FOR INCOME TAXES 614,311 31,000
----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM 1,000,064 639,300
EXTRAORDINARY ITEM, early debt payoff penalty and write-
off of loan fees, net of income tax benefit - (543,355)
----------- -----------
NET INCOME $ 1,000,064 $ 95,945
=========== ===========
NET INCOME PER SHARE BEFORE EXTRAORDINARY ITEM $ .26 $ .23
EXTRAORDINARY ITEM, net of tax - (.20)
----------- -----------
NET INCOME PER SHARE $ .26 $ .03
=========== ===========
SHARES USED IN PER SHARE CALCULATIONS 3,900,230 2,778,946
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
OBIE MEDIA CORPORATION
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996
Receivable
From
Affiliates, Accumulated
Shares Amount Net Deficit Total
--------- ---------- ----------- ----------- -----------
BALANCE,
<S> <C> <C> <C> <C> <C>
November 30, 1995 2,750,000 $ 250,000 $(1,179,922) $(1,721,602) $(2,651,524)
Issuance of
common stock 1,100,000 5,911,992 - - 5,911,992
Net income - - - 95,945 95,945
Net withdrawals - - (572,558) - (572,558)
Distributions - - 1,752,480 (1,752,480) -
--------- ---------- ----------- ----------- -----------
BALANCE,
November 30, 1996 3,850,000 6,161,992 - (3,378,137) 2,783,855
Additional
initial public
offering
expenses - (24,788) - - (24,788)
Issuance of
common stock 5,500 36,875 - - 36,875
Purchase of
Fractional
shares of
common stock (14) (112) - - (112)
Net income - - - 1,000,064 1,000,064
--------- ---------- ----------- ----------- -----------
BALANCE,
November 30, 1997 3,855,486 $6,173,967 $ - $(2,378,073) $ 3,795,894
========= ========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
OBIE MEDIA CORPORATION
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996
1997 1996
----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 1,000,064 $ 95,945
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization 664,207 513,775
Extraordinary item - 885,355
Gain on disposition of property and equipment - (183,175)
Deferred income taxes 614,311 (311,000)
Minority interest in subsidiary 8,017 2,138
Change in assets and liabilities:
(Increase) decrease in-
Accounts receivable (1,328,167) (208,940)
Prepaid expenses and other assets (106,961) (321,451)
Increase (decrease) in-
Accounts payable (316,696) 262,529
Accrued expenses 96,443 524,416
Deferred revenue 185,902 36,304
----------- ------------
Net cash provided by operating activities 817,120 1,295,896
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,439,617) (1,363,131)
Proceeds from disposition of property and equipment - 235,700
----------- ------------
Net cash used in investing activities (1,439,617) (1,127,431)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - 7,000,000
Cost to issue common stock (24,788) (1,088,008)
Purchase of fractional shares of common stock (112) -
Net borrowings (payments) on lines of credit 742,864 (88,429)
Checks outstanding in excess of cash deposits 173,611 (378,043)
Proceeds from long-term debt - 12,000,000
Payments on long-term debt (744,018) (15,917,001)
Net advances to affiliates - (572,558)
Early debt payoff penalty - (704,054)
----------- ------------
Net cash provided by financing activities 147,557 251,907
----------- ------------
NET INCREASE (DECREASE) IN CASH (474,940) 420,372
CASH, beginning of year 474,940 54,568
----------- ------------
CASH, end of year $ - $ 474,940
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest capitalized $ 10,637 $ 45,439
Accrued loan fees capitalized - 90,938
Acquisition of vehicle with capital lease obligation - 28,901
Distribution of receivable to affiliates - 1,752,480
Issuance of stock to employee benefit plan 36,875 -
CASH PAID FOR INTEREST $ 571,445 $ 1,470,967
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
F-7
<PAGE>
OBIE MEDIA CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Company
Obie Media Corporation (the Company), formerly Obie Outdoor Advertising, Inc. is
a full service out-of-home advertising company with agreements with transit
districts in Oregon, Washington, California and Texas, and outdoor advertising
structures in Washington, Oregon, California and Idaho.
On November 21, 1996, the company completed an initial public offering (the
Offering) of 1,100,000 shares of its common stock, raising $5,887,204, net of
expenses of $1,112,796. The net proceeds were used to reduce previously
outstanding debt (see Note 6).
Spin-Off
Prior to November 20, 1996, the Company was a subsidiary of Obie Industries
Incorporated. To facilitate the Offering, the Company was spun-off as a separate
entity.
Prior to the spin-off, the Company engaged in various transactions with
affiliates under common control. These transactions primarily included advances
of working capital needs for a discontinued business and capital expenditures.
Such transactions resulted in a net receivable consisting of amounts receivable
from and payable to affiliated companies. As part of the spin-off, the net
receivable from affiliates totaling $1,752,480 was distributed by the
declaration of a dividend and, accordingly, increased the Company's accumulated
deficit.
Basis of Presentation
The consolidated financial statements include the Company and its 50% owned
subsidiary. All significant intercompany accounts and transactions between the
Company and its subsidiary have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company has contracts to provide future advertising to its customers.
Advertising revenue is recognized ratably over the period the advertising is
displayed. Payments received for advertising revenue in advance of display are
deferred. Costs incurred for the production and installation of outdoor
advertising displays, which are not specifically recoverable in the event the
related contract is canceled, are expensed as incurred. Costs incurred for the
production and installation of displays for transit advertising, which are paid
for by the customer ratably over the term of the advertising contract and are
specifically recoverable in the event the related contract is canceled, are
deferred and recognized as expense as the related revenue is recognized over the
life of respective contracts.
<PAGE>
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash and accounts receivable. The Company
places its cash with high credit quality financial institutions. Concentrations
of credit risk with respect to accounts receivable are not significant due to
the large number of customers, and their dispersion across different industries
and geographic areas.
At November 30, 1997, the Company had agreements with twelve transit districts.
Customers advertising on transit vehicles owned by two and one of these
districts represented 42% and 37% of the Company's total revenues for the years
ended November 30, 1997 and 1996, respectively. Transit agreements range from
one to five years and are subject to renewal either at the discretion of the
transit district or upon the mutual agreement of the Company and the transit
district. Generally, these agreements require the Company to pay the transit
district the greater of a percentage of the related advertising revenues, net of
the advertising production charges, or a guaranteed minimum amount.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash, accounts receivable,
accounts payable, accrued expenses and debt instruments. At November 30, 1997
and 1996, the fair value of the Company's financial instruments are estimated to
be equal to their reported carrying value. The carrying value of long-term debt
approximates fair value. The resulting estimates of fair value require
subjective judgments and are approximates. Changes in the methodologies and
assumptions could significantly affect the estimates.
Cash
Cash consists of demand deposits with two federally insured banks. At times,
balances may exceed amounts insured.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided on the
straight-line method over the estimated useful lives. Normal repairs and
maintenance are expensed as incurred. The cost and accumulated depreciation of
assets sold or otherwise retired are removed from the accounts and the resulting
gain or loss is recognized. Interest is capitalized in connection with the
construction of properties and equipment.
Other Assets
Other assets include loan costs, which are stated at cost and amortized over the
life of the loan.
Income Taxes
The Company uses the liability method to record deferred tax assets and
liabilities that are based on the difference between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. These
temporary differences result from the use of different accounting methods for
financial statement and tax reporting purposes.
Earnings Per Share
Earnings per common share is computed on the weighted average number of common
shares outstanding during the period after consideration of the dilutive effect
of stock options. Such amounts have been retroactively adjusted to reflect the
10-for-1 stock split which occurred in 1996 and the 11-for-10 stock split which
occurred in 1997 (see Note 8). Fully diluted earnings per share is not
significantly different from primary earnings per share for the periods
presented.
<PAGE>
New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." This
standard revises the disclosure requirements of earnings per share, simplifies
the computation of earnings per share and increases the comparability of
earnings per share on an international basis. SFAS No. 128 will be effective for
the Company for the year ending November 30, 1998. The earnings per share under
the new standard do not differ from those calculated under the existing
standard.
2. PREPAID EXPENSES AND OTHER CURRENT ASSETS:
Prepaid expenses and other current assets consist of the following:
November 30,
-----------------------
1997 1996
-------- --------
Prepaid leases $322,811 $291,149
Transit advertising production costs 294,991 394,290
Other 172,432 127,011
-------- --------
$790,234 $812,450
======== ========
3. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
November 30,
------------------------------
1997 1996 Asset Lives
----------- ----------- -----------
Outdoor advertising structures $10,577,588 $ 9,860,227 20 years
Other equipment and leaseholds 2,139,119 1,431,589 5-20 years
----------- -----------
12,716,707 11,291,816
Less- Accumulated depreciation 3,451,852 2,833,802
----------- -----------
$ 9,264,855 $ 8,458,014
=========== ===========
4. OTHER ASSETS:
Other assets consist of the following:
November 30,
-----------------------
1997 1996
-------- --------
Loan costs $133,220 $ 90,938
Other 112,513 57,049
-------- --------
$245,733 $147,987
======== ========
<PAGE>
5. ACCRUED EXPENSES:
Accrued expenses consist of the following:
November 30,
----------------------------
1997 1996
---------- ----------
Transit district fees $ 753,571 $ 552,538
Payroll and related items 307,365 425,044
Other 105,947 92,858
---------- ----------
$1,166,883 $1,070,440
========== ==========
6. FINANCING ARRANGEMENTS:
<TABLE>
<CAPTION>
Long-term debt consists of the following:
November 30,
----------------------------
1997 1996
---------- ----------
<S> <C> <C>
Term loan with United States National Bank (USNB), as
described below $6,340,000 $7,000,000
Note payable in annual payments of $12,000 plus interest at
10%, with collateral of outdoor advertising structures,
due October 1999 24,000 36,000
Note payable in monthly payments of $5,900 including
interest at 10%, guaranteed by Brian B. Obie, due April
2000 149,786 202,698
Notes payable in monthly payments of $2,219 including
interest ranging from 9% to 9.98%, with collateral of
several vehicles, maturing through November 2002 40,756 59,862
---------- ----------
6,554,542 7,298,560
Less- Current portion 859,323 743,973
---------- ----------
$5,695,219 $6,554,587
========== ==========
</TABLE>
The aggregate principal payments due on the above debt subsequent to November
30, 1997 are:
1998 $ 859,323
1999 1,161,199
2000 1,131,732
2001 1,105,464
2002 1,105,173
Thereafter 1,191,651
----------
$6,554,542
==========
In October 1996, the Company received a $12,000,000 bridge loan from USNB, which
was used to refinance substantially all of the Company's then existing debt. In
connection with the refinancing of the long-term debt, the Company incurred an
extraordinary expense of $885,355 for prepayment penalties related to the early
extinguishment of debt and for previously capitalized loan costs that were
written off.
<PAGE>
Upon the completion of the Offering, the outstanding balance on this loan was
reduced to $7,000,000. Effective February 12, 1997, the outstanding loan balance
was converted to a seven-year term loan, payable in monthly installments, due
April 30, 2004, with interest to be based, at the Company's option, partially at
the Inter-Bank Offering Rate (IBOR) plus 2% (7.9375% at November 30, 1997) and
the remainder at USNB's prime rate plus .5% (9.0% at November 30, 1997). The
loan is collateralized by substantially all of the Company's assets. The
weighted average interest rate on this loan was approximately 8% at November 30,
1997.
The Company also has a $2,000,000 operating line of credit with USNB. The
interest rate is at USNB's prime rate (8.5% at November 30, 1997) and it is
collateralized by receivables. The operating line will be reviewed on April 30,
1998. The outstanding balance on this line of credit at November 30, 1997 and
1996 was $742,864 and $0, respectively.
The Company was in compliance with all loan covenants at November 30, 1997.
7. INCOME TAXES:
The provision for income taxes was a deferred provision of $614,311 and $31,000
for the years ended November 30, 1997 and 1996, respectively. A deferred income
tax benefit of $342,000 was recorded related to the extraordinary item for the
year ended November 30, 1996.
The tax effects of temporary differences that give rise to deferred tax assets
and liabilities are as follows:
Years Ended
November 30,
---------------------------
1997 1996
---------- ---------
Current deferred tax assets:
Deferred revenue $ 457,595 $ 417,000
Prepaid commissions 291,029 225,000
Allowance for doubtful accounts 56,652 35,000
Net operating loss carryforwards 442,565 176,000
Accrued expenses and other 6,001 37,000
---------- --------
Total current deferred tax assets 1,253,842 890,000
Current deferred tax liabilities:
Prepaid fees (148,602) (181,000)
---------- ---------
Net current deferred tax assets $1,105,240 $ 709,000
========== =========
Noncurrent deferred tax assets:
Property and equipment $ - $ 145,000
Net operating loss carryforwards - 235,000
---------- ---------
$ - $ 380,000
========== =========
Noncurrent deferred tax liabilities:
Property and equipment $ 630,551 $ -
========== =========
Based on management's assessment, it is more likely than not that the net
deferred tax assets will be realized through future taxable income. The company
has net operating loss carryforwards totaling approximately $1,146,000. These
carryforwards expire as follows: 2003 - $25,000; 2004 - $421,000; 2005 -
$130,000; 2006 - $6,000; 2007 - $27,000; 2008 - $15,000; and 2011 - $522,000.
<PAGE>
Income tax expense (benefit) for the years ended November 30, 1997 and 1996
differs from the amounts computed by applying the U.S. federal income tax rate
of 34% to pretax income, considering the effect of the extraordinary item as
follows:
<TABLE>
<CAPTION>
Years Ended
November 30,
-------------------------
1997 1996
-------- ---------
<S> <C> <C>
Computed "expected" tax expense (benefit) $548,888 $ (73,119)
Increase (reduction) in income taxes resulting from:
Increase in net operating losses available to the Company - (220,986)
State and local taxes, net of federal income tax benefit 65,423 (13,638)
Other differences, net - (3,257)
-------- ---------
Actual income tax expense (benefit) $614,311 $(311,000)
======== =========
</TABLE>
8. SHAREHOLDERS' EQUITY:
The Company's Restated Articles of Incorporation (the Articles) authorize the
issuance of up to 20,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock issuable in series (Preferred Stock).
In connection with the Company's Offering, the Company's Articles of
Incorporation were amended and restated on October 1, 1996 to authorize a
10-for-1 stock split. In October of 1997, the Company declared an 11-for-10
stock split for shareholders of record on November 21, 1997.
Preferred Stock
The Board of Directors is authorized, without further shareholder authorization,
to issue Preferred Stock in one or more series and to fix the terms and
provisions of each series, including dividend rights and preferences, conversion
rights, voting rights, redemption rights and rights on liquidation, including
preferences over Common Stock.
Common Stock
Holders of Common Stock are entitled to one vote per share on all matters on
which holders of Common Stock are entitled to vote. Holders of Common Stock are
entitled to receive dividends when and as declared by the Board of Directors out
of any funds lawfully available therefor, and, in the event of liquidation or
distribution of assets, are entitled to participate ratably in the distribution
of such assets remaining after payment of liabilities, in each case subject to
any preferential rights granted to any series of Preferred Stock that may then
be outstanding.
<PAGE>
1996 Stock Incentive Plan
On October 2, 1996, the Company's Board of Directors and shareholder adopted the
1996 Stock Incentive Plan, which provides for the issuance of 330,000 shares of
Common Stock pursuant to Incentive Stock Options (ISOs), Nonqualified Stock
Options (NSOs), stock bonuses and stock sales to key managers, employees,
directors and consultants of the Company. ISOs may be issued only to employees
of the Company and will have a maximum term of ten years from the date of grant.
The exercise price for ISOs may not be less than 100% of the fair market value
of the Common Stock at the time of the grant, and the aggregate fair market
value (as determined at the time of the grant) of shares issuable upon the
exercise of ISOs for the first time in any one calendar year may not exceed
$100,000. In the case of ISOs granted to holders of more than 10% of the voting
power of the Company, the exercise price may not be less than 110% of the fair
market value of the Common Stock at the time of the grant, and the term of the
option may not exceed five years. NQOs may be granted at not less than 85% of
the fair market value of the Common Stock at the date of grant. Options become
exercisable in whole or in part from time to time as determined by the
Compensation Committee, which will administer the 1996 Stock Incentive Plan.
Stock options totaling 18,700 were granted during the year ended November 30,
1997. In connection with the Offering, stock options totaling 128,150 were
granted at an exercise price of $6.05 per share. During 1997, 2,200 options
issued in Novembr 1996 were canceled.
The following table summarizes information about stock options outstanding at
November 30, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------------------- -------------------------------
Weighted Number of
Number Average Weighted Shares Weighted
Range of Outstanding at Remaining Average Exercisable at Average
Exercise November 30, Contractual Exercise November 30, Exercise
Prices 1997 Life - Years Price 1997 Price
---------- -------------- ------------ -------- -------------- -------
<S><C> <C> <C> <C> <C> <C>
$ 6.05 125,950 14.0 $6.05 25,190 $6.05
6.88 14,300 14.2 6.88 - -
6.70 4,400 14.6 6.70 - -
---------- ------- ---- ----- ------ -----
$6.05-6.88 144,650 14.0 $6.15 25,190 $6.05
========== ======= ==== ===== ====== =====
</TABLE>
As of November 30, 1996, no options were exercisable.
Statement of Financial Accounting Standards No. 123
During 1995, the Financial Accounting Standards Board issued SFAS 123 which
defines a fair value based method of accounting for employee stock options and
similar equity instruments and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However, it also
allows an entity to continue to measure compensation cost for those plans using
the method of accounting prescribed by APB 25. Entities electing to continue to
use the accounting treatment in APB 25 must make pro forma disclosures of net
income and, if presented, earnings per share, as if the fair value based method
of accounting defined in SFAS 123 had been adopted.
<PAGE>
The Company has elected to account for its stock-based compensation plans under
APB 25; however, the Company has computed, for pro forma disclosure purposes,
the value of all options granted during 1997 and 1996 using the Black-Scholes
option pricing model as prescribed by SFAS 123 using the following weighted
average assumptions for grants:
Years Ended
November 30,
--------------------
1997 1996
------- -------
Risk-free interest rate 6.25% 6.0%
Expected dividend yield 0% 0%
Expected lives 8 years 8 years
Expected volatility 55.84% 55.84%
Using the Black-Scholes methodology, the total value of options granted during
1997 and 1996 was $78,161 and $466,049, respectively, which would be amortized
on a pro forma basis over the vesting period of the options (typically five
years). The weighted average per share fair value of options granted during 1997
and 1996 was $4.60 and $4.07, respectively. If the Company had accounted for its
stock-based compensation plans in accordance with SFAS 123, the Company's net
income and net income per share would approximate the pro forma disclosures
below:
Years Ended November 30,
-------------------------------------------------
1997 1996
---------------------- ---------------------
As As
Reported Pro Forma Reported Pro Forma
Net income $1,000,064 $896,022 $95,945 $94,428
Net income per share $0.26 $0.23 $0.03 $0.03
The effects of applying SFAS 123 in this pro forma disclosure are not indicative
of future amounts. SFAS 123 does not apply to awards prior to January 1, 1995,
and additional awards are anticipated in future years.
9. COMMITMENTS:
Operating Leases
The Company leases outdoor advertising structures from an affiliated
partnership. The lease agreement requires monthly payments of a minimum base
rent plus additional rent equal to 5% of the gross revenues derived from
advertising displayed on the structures. Future minimum base rent payments are
$8,500 per month through December 1996, and increase to $9,000 per month for the
following calendar year. The lease expires December 31, 1997. In December 1997,
the Company exercised its option to purchase the property at a purchase price of
$698,000. Total lease expense pursuant to this lease was $108,397 and $107,945
for the years ended November 30, 1997 and 1996, respectively.
The Company also rents office and production space from affiliates. Such rents
totaled $123,180 and $78,897 for the years ended November 30, 1997 and 1996,
respectively.
The Company leases parcels of property beneath outdoor advertising structures.
These leases are generally for a term of up to ten years, with two five-year
renewal options at the Company's discretion. The Company also leases facilities
for sales, service and installation for its operating offices. Total rent
expense pursuant to these leases was $755,486 and $607,566 for the years ended
November 30, 1997 and 1996, respectively.
<PAGE>
Future minimum lease payments for all operating leases above are as follows for
the years ending November 30:
1998 $1,054,556
1999 966,394
2000 888,449
2001 802,170
2002 669,043
Thereafter 1,757,133
Debt Guarantees
The Company has guaranteed the debt of an affiliated partnership totaling
$414,729 at November 30, 1997.
10. EMPLOYEE BENEFIT PLAN:
Substantially all of the Company's employees who have met vesting requirements
participate in a defined contribution benefit plan that provides for
discretionary annual contributions by the Company. During 1997 and 1996, the
Company accrued $32,154 and $51,020, respectively, as a contribution to the
plan. In 1997, the Company paid the 1996 accrued contribution through a
contribution of 5,500 shares of its common stock to the plan and the balance in
cash.
Exhibit 10.11
AWARD/CONTRACT .
1. SOLICITATION NO: B-97030810
2. CONTRACT NO.: C-97000039
3. EFFECTIVE DATE: July 1, 1997
4. CONTRACTS ADMINISTRATOR:
NAME: Ken Patterson
PHONE: (214) 749-2648
5. SHIP TO ADDRESS: DALLAS AREA RAPID TRANSIT, 1401 Pacific Ave., Room 4102,
P.O. Box 50648, Dallas, Texas 75250 Mark for Attention of:
6. DELIVERY TERMS:
7. DISCOUNTS FOR PROMPT PAYMENT:
8. CONTRACTOR NAME & ADDRESS: OBIE Media
P.O. Box 1356
Eugene, OR 97440
PHONE: (541) 686-8400
FAX: (541) 345-4339
9. REMITTANCE ADDRESS: (If different from Item 8)
10. D/M/WBE GOALS:
The D/M/WBE combined goals for this contract, expressed as a percentage of the
total contract amount, are:
MBE: 20% WBE: 5% Of Controllable Expenses
CONTRACT EXECUTION
11 _X_ NEGOTIATED AGREEMENT: (Contractor is required to sign below and return
the original document and one (1) copy to the Contracting Officer within ten
(10) calendar days of receipt.)
Contractor agrees to furnish and deliver all items or perform all the services
set forth or otherwise identified below and on any continuation sheets for the
consideration stated herein. The rights and obligations of the parties to this
contract shall be subject to and governed by the following documents: (a) this
Award/Contract, (b) the solicitation, if any, and (c) such provisions,
representations, certifications, and specifications, as are attached or
incorporated by reference herein. (Attachments are listed herein.)
SIGNATURE OF CONTRACTOR:
Name/Title: Brian Obie, President
12 _ _ AWARD: (Contractor is not required to sign)
The Offer submitted in response to the Solicitation identified in Block 1,
above, including the additions or changes made by you which additions to or
changes are set forth in full below, is hereby accepted as to the items listed
below and on any continuation sheets. This award consummates the contract which
consists of the following documents: (a) the Authority's solicitation and your
offer, and (b) this Award/Contract. No further contractual document is
necessary.
13 ACCEPTED AS TO:
Lot 1 and Lots 3 through 5
Signature: Date:
14. TOTAL AMOUNT OF AWARD
Guaranteed Amount
$13,830,210
15. SIGNATURE OF CONTRACTING OFFICER:
Samuel L. Turner
Typed Name
<PAGE>
TABLE OF CONTENTS:
Award/Contract Form
Schedule
Representations & Certifications Special Solicitation Instructions & Conditions
Solicitation Instructions & Conditions Special Provisions General Provisions
DBE, or MBE & WBE Program Specifications Schedule of Current Transit Advertising
Contracts Schedule of Transit Advertising Space (Bus) Schedule of Transit
Advertising Space (Facilities)
<PAGE>
SCHEDULE
CAUTION: A false statement in any offer submitted to DART may be a criminal
offense in violation af Section 37.10 of the Texas Penal Code.
NOTE: For Invitations for Bids the terms "Offer" and "Offeror" shall mean "Bid"
and "Bidder," respectively; and for Request for Proposal the terms "Bid" and
"Bidder" shall mean "Offer" and "Offeror", respectively, in this solicitation
and any associated exhibits.
THE OFFEROR MUST SIGN AND DATE EACH PAGE OF THE SCHEDULE IN THE SPACE(S)
PROVIDED AND SUBMIT ALL PAGES WITH THE OFFER.
NAME & TITLE OF OFFEROR'S REPRESENTATIVE:
(print or type)
Brian Obie, President
(Name & Title)
OBIE Media
(Offeror's Name)
SIGNATURE & DATE:
(Signature of Offeror's Representative)
Starting July 1, 1997, the Contractor shall provide to the Authority, Guarantee
Annual Payment per bus, for each year the contact is in force. Payment shall be
paid quarterly, in advance, per the payment provisions of Exhibit D, for the
amounts due in Lot 1. Monthly payments will be made for amounts due in Lots 2,
3, 4, and 5.
Note (1): Annual guarantee amounts per bus offered that are less than the
amounts specified as minimum acceptable bid per year per bus or panel will not
be accepted.
Note (2): The offeror is to complete all blank areas in this form.
Note (3): The Number of Buses times the Annual Per Bus equal the Total Annual
Payment.
Note (4): The Total Annual Payment divided by four (4) equals the Quarterly
Payment.
<TABLE>
<CAPTION>
Lot 1 Buses Guaranteed Payment
Minimum
Number Annual
Contract of Annual Annual Quarterly Accept.
Item Year Buses Per Bus Payment Payment Bid/Bus
- ---- -------------------- ------ ------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
1 07/01/97 to 03/31/98 809 $ 2,000 $ 1,213,500* $404,500.00 $2,000
2 04/01/98 to 03/31/99 770 $ 3,000 $ 2,310,000 $577,500.00 $2,200
3 04/01/99 to 03/31/00 770 $ 3,600 $ 2,772,000 $693,000.00 $2,400
4 04/01/00 to 03/31/01 770 $ 4,207 $ 3,239,390 $809,847.50 $2,600
5 04/01/01 to 03/31/02 770 $ 4,811 $ 3,704,470 $926,117.50 $2,800
Total $13,239,360
* 9 Months/3 Quarters (Lot 1)
</TABLE>
SCHEDULE
(Continued)
THE OFFEROR MUST SIGN AND DATE EACH PAGE OF THE SCHEDULE IN THE SPACE(S)
PROVIDED AND SUBMIT ALL PAGES WITH THE OFFER.
SIGNATURE & DATE
(Signature of Offeror's Representative)
<TABLE>
<CAPTION>
Lot 2 Wrap-a-Bus (entire bus)
Maximum
Number of Per Bus * Minimum
Contract Buses/Per Month Estimated Accept Bid/
Item Year Month Payment Payment Bus/Month
- ---- -------------------- --------- ------- --------- ----------
<S> <C> <C> <C> <C> <C>
1 07/01/97 to 03/31/98 40 $ 1,000 $ 15,000 $1,000
2 04/01/98 to 03/31/99 40 $ 1,100 $ 22,000 $1,100
3 04/01/99toO3/31/00 40 $ 1,200 $ 30,000 $1,200
4 04/01/OOtoO3/31/01 40 $ 1,300 $ 39,000 $1,300
5 04/01/01 toO3/31/02 40 $ 1,400 $ 49,000 $1,400
Total $ l55,000
(Lot 2)
</TABLE>
<TABLE>
<CAPTION>
Lot 3 Wrap-a-Bus (per side of bus)
Maximum
Number of Per Bus * Minimum
Contract Sides / Per Month Estimated Accept Bid/
Item Year Month Payment Payment Bus/Month
- ---- -------------------- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1 07/01/97 to 03/31/98 150 $ 200 $ 20,000 $200
2 04/01/98 to 03/31/99 l5O $ 225 $ 33,750 $225
3 04/01/99 to 03/31/00 150 $ 250 $ 37,500 $250
4 04/01/OOtoO3/31/01 150 $ 275 $ 41,250 $275
5 04/01/01 to 03/31/02 150 $ 300 $ 45,000 $300
Total $ 117,500
(Lot 3)
</TABLE>
<TABLE>
<CAPTION>
Lot 4 Customization (rear of bus)
Maximum
Number of Per Bus * Minimum
Contract Buses / Per Month Estimated Accept Bid/
Item Year Month Payment Payment Bus/Month
- ---- -------------------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1 07/01/97 to 03/31/98 150 $ 100 $ 15,000 $100
2 04/01/98 to 03/31/99 150 $ 125 $ 18,750 $125
3 04/01/99 to 03/31/00 150 $ 150 $ 22,500 $150
4 04/01/00 to 03/31/01 150 $ 200 $ 30,000 $200
5 04/01/01 to 03/31/02 150 $ 250 $ 37,500 $250
Total $123,750
(Lot 4).
* This amount is in addition to annual payment per bus
</TABLE>
Form 33.215 (03/96) Page 2 of 3 Revision 01, June 2,1997
970330810
SCHEDULE
(Continued)
THE OFFEROR MUST SIGN AND DATE EACH PAGE OF THE SCHEDULE IN THE SPACE(S)PROVIDED
AND SUBMIT ALL PAGES WITH THE OFFER.
SIGNATURE & DATE:
(Signature of Offeror's Representative)
<TABLE>
<CAPTION>
Lot 5 Facilities Advertising Panels
Minimum
Contract Number of Per Panel/ * Accept Bid/
Item Year Panels Month Payment ** Panel/Month
- ---- -------------------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1 07/01/97 to O3/31/98 101 $ 50 $ 3,787.50 $ 50
2 04/01/98 to O3/31/99 101 $ 75 $ 7,575.00 $ 75
3 04/01/99 to O3/31/00 101 $ 100 $ 10,100.00 $100
4 04/01/00 to 03/31/01 101 $ 125 $ 12,625.00 $125
5 04/01/01 to 03/31/02 101 $ 150 $ 15,150.00 $150
Total $ 49,237.50
(Lot 5)
* This amount is in addition to annual payment per bus
** 9 Months
</TABLE>
Summary
Evaluation Purposes Only
Evaluated
Weight Amount
Total Lot (1) $13,239,360.00 x 1.00 = $ 13,239,360.00
Total Lot (2) $ 155,000.00 x .06 = $ 9,300.00
Total Lot (3) $ 177,500.00 x .02 = $ 3,550.00
Total Lot (4) $ 123,750.00 x .01 = $ 1,237.50
Total Lot (5) $ 49,237.50 x .01 = $ 492.38
Grand Total $13,253,939.88
Dallas Area Rapid Transit Authority 1401 Pacific Avenue, Dallas, Texas
EXHIBIT A
97030810
REPRESENTATIONS AND CERTIFICATIONS
(LOCALLY FUNDED SUPPLY/SERVICE/CONSTRUCTION CONTRACTS)
NOTE: THIS FORM MUST BE COMPLETED AND RETURNED WITH THE BID/OFFER
TABLE OF CONTENTS
1. Type of Business 1
2. Minority and Woman Owned business
Enterprises (MBE/WBE) 1
3. Contingent Fee 2
4. Interest of Public Officials 2
5. Covenant Against Gratuities 2
6. Parent Company and Identifying Data2
7. Certification of Independent Price
Determination 2
8. Minority and Woman - Owned Business
Enterprise Goals 3
9. Conflict of Interest Certification 3
10. Certificate Concerning Board
Members, Officers and Employees of
the Authority 3
11. Drug-Free Workplace Program
Certification 4
12. Certification Regarding Debarment
Suspension, Ineligibility and Voluntary
Exclusion 4
13. Communication Policy and
Certification 5
REPRESENTATIONS
1. Type of Business (A-101. JAN 94)
(a) The offeror represents as part of its offer that it operates as (Mark one
with an "X"):
O an individual
O a partnership
O a sole proprietorship X a corporation O another entity
(b) If incorporated, under the laws of the State of:
Oregon l
2. Minority and Woman-Owned Business Enterprises (MBE/WBE) (A-121, Jan 94)
The offeror represents as part of its offer that it (Mark one with an "X"):
O is
X is not
a minority-owned business enterprise (MBE). An "MBE". is defined as "a small
business concern which is at least 51 percent owned by one or more minority
individuals, or in case of any publicly owned business, at least 51 percent of
the stock of which is owned by one or more minority individuals and whose
management and daily business operations are controlled by one or more of the
minority individuals who own it." For purposes of this definition, minority
individuals include Black Americans, Hispanic Americans, Asian-Pacific
Americans, Asian-lodian Americans, and Native Americans.
(b) The offeror represents as part of its offer that it (Mark one with an "X"):
O is
X is not
Brian Obie, President
<PAGE>
97030810
a woman-owned business enterprise (WBE). A "WBE" is defined as "a small business
concem which is at least 51 percent owned by women, or in case of any publicly
owned business, at least 51 percent of the stock of which is owned by women and
whose management and daily business operations are controlled by one or more of
the women who own it."
3. Contingent Fee (A-103. JAN 94)
(a) Except for full-time bona fide employees working solely for the offeror, the
offeror represents as part of its offer that it (Mark one with an "X"):
O has
X has not
employed or retained any company or persons to solicit or obtain this contract,
and (Mark one with an "X"):
O has
X has not
paid or agreed to pay any person Or company employed or retained to solicit or
obtain this contract any commission, percentage, brokerage, or other fee
contingent upon or resulting from the award of this contract.
(b) The offeror agrees to provide information relating to (a) above, as
requested by the Contracting Officer and, when any item in subparagraph (a) is
answered affirmatively, to promptly submit to the Contracting Officer a
completed Standard Form 119, "Statement of Contingent or Other Fees."
4. Interest of Public Officials (A-104. JAN 94)
The offeror represents and warrants that no employee, official, or member of the
Board (Executive Committee) of the Authority is or will be pecuniarily
interested or benefited directly or indirectly in this contract.
5. Covenant Against Gratuities (A-105. JAN 94)
The offeror represents as part of its offer that neither it nor any of its
employees, representatives or agents have offered or given gratuities (in the
form of entertainment, gifts or otherwise) to any director, officer or employee
of the Authority with the view toward securing favorable treatment in the
awarding, amending, or the making of any determination with respect to the
performing of the contract. See the General Provisions Clause entitled Interest
of Public Officials.
6. Parent Company and Identifying Data
(A-108, JAN 94)
(a) The offeror represents as part of its offer that it (Mark one with an "X")
O is
X is not
owned or controlled by a parent company. A parent company, for the purpose of
this provision, is one that owns or controls the activities and basic business
policies of the bidder. To own the bidding company means that the parent company
must own more than 50 percent of the voting rights in that company.
A company may control a bidder as a parent even though not meeting the
requirements for such ownership if the company is able to formulate, determine,
or veto basic policy decisions of the offeror through the use of dominant
minority voting rights, use of proxy voting, or otherwise.
(b) If the offeror is not owned or controlled by a parent company, it shall
insert its own Employer's Identification Number below:
93-0966515
(c) If the offeror is owned or controlled by a parent company, it shall enter in
the blocks below the name and main office address of the parent company, and the
parent company's Employer's Identification Number.
NAME OF PARENT COMPANY AND MAIN OFFICE ADDRESS (INCLUDE ZIP AND PHONE):
PARENT COMPANY'S EMPLOYER'S IDENTIFICATION #:
CERTIFICATIONS
7. Certification of Independent Price Deter
mination (A-109. JAN 94)
(a) By submission of this offer, the offeror certifies and in the case of a
joint offer, each party thereto certifies as to its own organization, that in
connection with this procurement:
(1) The prices in this offer have been arrived at independently, without
consultation, communication, or agreement, for the purpose of restricting
competition, as to any matter relating to such prices with any other offeror or
with any competitor.
<PAGE>
97030810
(2) Unless otherwise required by law, the prices which have been quoted in this
offer have not been knowingly disclosed by the offeror and will not knowingly be
disclosed by the offeror prior to the opening (in the case of an advertised
procurement) or prior to award (in the case of a negotiated procurement),
directly or indirectly to any other offeror or to any competitor; and
(3) No attempt has been made or will be made by the offeror to induce any other
person or firm to submit or not to submit an offer for the purpose of
restricting competition.
(b) Each person signing this offer certifies that:
(1) He is the person in the offeror's organization responsible within that
organization for the decision as to the prices being offered herein and that he
has not participated, and will not participate, in any action contrary to (a)(1)
through (a)(3) above; or
(2) He: (i) is not the person in the offeror's organization responsible within
that organization for the decision as to the prices being offered herein but
that he has been authorized in writing to act as an agent for the persons
responsible for such decision in certifying that such persons have not
participated, and will not participate, in any action contrary to (a)(1) through
(a)(3) above, and as their agent does hereby so certify; and (ii) has not
participated, and will not participate, in any action contrary to (a)(1) through
(a)(3) above.
8. Minority and Woman-Owned Business Enterprise Goals (a-123, JAN 94)
If goals have been established, by submission of this offer, the offeror
certifies that it will comply with the provisions of Exhibit G attached to this
solicitation entitled "Minority Business Enterprise and Woman-Owned Business
Enterprise Program," and will meet such goals as are established in any ensuing
contract.
9. Conflict of Interest Certification
(A-124. JAN 94)
This Certification is required to be completed if the solicitation is a Request
for Proposals (not required for Invitation for Bids).
By submission of this proposal, I certify that:
(a) I have read and understand the General Provisions clause entitled "lnterest
of Public Officials" that will be incorporated into any contract resulting from
this solicitation. I further understand that the pecuniary interest in that
clause includes employment relationships.
(b) I understand the Authority has an internal conflict of interest policy for
its employees which includes as an actual or possible conflict of interest
whether or not a member of the employee's immediate family works for a firm
doing, or seeking to do, business with the Authority.
(c) Mark one with an "X":
X To the best of my knowledge and belief, no employee of my firm is related to
an Authority employee; or
An employee of my firm is related to an Authority employee and a letter to
the Contracting Officer explaining that relationship is attached to this Exhibit
A.
(d) The requirement of this certification has been passed through to all
first-tier subcontractors or subconsultants anticipated to be used at the time
of the submission of my proposal.
10. Certificate Concerning Board Members. Officers and Employees of the
Authority A-116, JAN 94)
The Dallas Area Rapid Transit Authority has adopted a Code of Ethical Conduct
(Resolution No. 910154, approved August 27,1991) which prohibits DART Board
Members and DART employees from participating in any contract or employment
relationship for certain periods after their relationship with DART ends. In the
case of former Board Members, the prohibition is for a period of one year
following the end of the members two year term of office or eighteen months from
the date of the members resignation (whichever is the earlier date) and applies
to their participation as a principal in a DART contract or first-tier
subcontract, or an employment relationship with a DART contractor or first-tier
subcontractor. For former DART employees, the prohibition is for one year after
leaving DART, and relates to any assignment of the former employee to work on
any DART project on which he or she had significant responsibility as a DART
employee The time limits and other restrictions of the Code of Ethical Conduct
applies to spouses of former Board Members and former DART employees. The Code
establishes a formal waiver policy when the Board of Directors determines, by a
two-thirds vote, that it is in the best interest of DART to waive the
prohibitions as to either former Board Members or DART employees. A copy of the
Board Resolution No. 910154 may be obtained from the DART Contracting Officer.
(a) By submission of this bid/offer the offeror hereby certifies that, to the
best of his/her knowledge and belief, with the exception of any information
described in this certification or attached hereto, the offeror has no
information concerning a violation or possible violation of the DART Board
Policy on Code of Ethical Conduct as established in Resolution No. 910154,
approved
<PAGE>
August 27, 1991, which would result if DART awards a contract based upon this
bid/offer.
(b) This certification concerns a material representation of fact upon which
reliance will be placed in awarding a contract. if it is later determined that
the bidder/offeror knowingly rendered an erroneous certification, in addition to
any other remedies the Authority may have, the Contracting Officer may terminate
the contract resulting from this solicitation for default and/or recommend that
the bidder/offeror be debarred or suspended from doing business with DART in the
future in accordance with the procedures set forth in DART's Procurement
Regulations.
(c) Violations or possible violations. [Continue on plain bond paper and label
Certificate Concerning former Board Members, Officers and Employees of the
Dallas Area Rapid Transit Authority (Continuation Sheet).] ENTER "NONE" IF NONE
EXISTS.
(Please Make Entry on This page)
VIOLATIONS OR POSSIBLE VIOLATIONS:
None
(d) The bidder/offeror shall provide immediate written notice to the Contracting
Officer if, at any time prior to contract award, the he/she learns that its
certification was erroneous when submitted or has become erroneous by reason of
changed circumstances.
(e) The bidder/offeror further agrees by submitting this bid/offer that it will
include this Certificate, without modification, in all first-tier subcontracts.
The bidder/offeror shall be responsible for compliance by any first-tier
subcontractor with the provisions set forth in this Certificate.
11. Drug-Free-Work place Program Certifica tion (A 125. J.4N 94)
This certification applies to construction contracts only.
(a) By submission of a bid, the bidder certifies and agrees that, with-respect
to the bidder and all employees of the bidder to be utilized in the performance
of any contract resulting from this solicitation, it will establish a drug-free
workplace program that complies with the provisions of the Drug-Free Workplace
Program Clause of the General Provisions.
(b) Failure of the bidder to have the drug-free workplace program complying with
this certification and the Drug-Free Workplace Program Clause of the General
Provisions available for the Authority's review and approval as part of the
Authority's pre-award responsibility survey will be deemed a lack of
responsibility rendering the bidder unqualified and ineligible for award.
12. Certification Regarding Debarment Suspension, Ineligibility and Voluntary
Exclusion (A-126, Aug 94)
(a) Primary Covered Transactions. [This certification applies to the offer
submitted in response to this solicitation and will be a continuing requirement
throughout the term of the prime contract.
(1) The accordance with the provisions of Appendix A to 49 Code of Federal
Regulations (CFR) Part 29, the offeror certifies to the best of its knowledge
and belief, that it and its principals:
(i) are not presently debarred, suspended, proposed for debarment, declared
ineligible, or voluntarily excluded from covered transactions by any Federal
department or agency;
(ii) have not within a three-year period preceding this offer been convicted of
or had a civil judgment rendered against them for commission of fraud or a
criminal offense in connection with obtaining, attempting to obtain, or
performing a public (Federal, State, or local) transaction or contract under a
public transaction; violation of Federal or State antitrust statutes, or
commission of embezzlement, theft, forgery, bribery, falsification or
destruction of records, making false statements, or receiving stolen property;
(iii) are not presently indicted for or otherwise criminally or civilly charged
by a govemmental entity (Federal, State, or local) with commission of any of the
offenses enumerated in paragraph (1)(ii) of this Certification; and
(iv) have not within a three-year period preceding this offer had one or more
public transactions (Federal, State, or local) temminated for cause or default.
(2) Where the offeror is unable to certify to any of the statements in this
Certification, the offeror shall attach an explanation to this offer.
(b) Lower Tier Covered Transactions.
[This certification applies to a subcontract at any tier expected to
<PAGE>
equal or exceed $25,000 and will be a continuing requirement throughout the term
of the prime contract.]
(1) In accordance with the provisions of Appendix B to 49 Code of Federal
Regulations (CFR) Part 29, the prospective lower tier participant
(subcontractor) certifies, by submission of this offer, that neither it nor its
principals is presently debarred, suspended, proposed for debarment, declared
ineligible, or voluntarily excluded from participation in this transaction by
any Federal department or agency.
(2) Where the prospective lower tier participant is unable to certify to any of
the statements in this certification, such prospective participant shall attach
an explanation to this proposal.
(c) The Certification required by subparagraph (b), above, shall be included in
all applicable subcontracts and a copy kept on file by the prime contractor. The
prime contractor shall be required to fumish copies of certifications to the
Contracting Officer upon the Contracting Officer's request.
13 Communication Policy and
Certification (A 129. SEP 95)
(a) All oral and wntten communications with DART regarding this solicitation
should be exclusively with, or on subjects and with persons approved by, the
person identified in Block 3 of the solicitation cover sheet. Discussions or
communications with any other person could result in disclosure of proprietary
or other competitive sensitive information or otherwise create the appearance of
impropriety or unfair competition and, thereby, compromise the integrity of
DART's procurement system. If competition issues cannot be resolved through
normal communication channels, the DART Procurement Regulations contain protest
provisions for actual or prospective competitors claiming any impropriety in
connection with this procurement.
(b) By submission of this bid or proposal, the bidder or offeror certifies that
it has not, and will not prior to contract award, communicate orally or in
writing with any DART employee or other representative (including DART Board
members, DART contractors, or DART consultants) other than the individual, or
person(s) and on subjects approved by the individual, named in Block 3 of the
solicitation, except as described below: {Enter "NONE" if none exists.}
Name of DART
Representative
None
Date and Subject of Communication
(c) This certification concems a material representation of fact upon which
reliance will be placed in awarding a contract. If it is later determined that
the bidder/offeror knowingly rendered an erroneous certification, in addition to
any other remedies the Authority may have, the Contracting Officer may terminate
the contract resulting from this solicitation for default and/or recommend that
the bidder/offeror be debarred or suspended from doing business with DART in the
future in accordance with the procedures set forth in DART's Procurement
Regulations. In addition, a false entry could be a violation of Texas Penal Code
paragraph 37.10.
(d) The bidder/offeror shall provide immediate written notice to the Contracting
Officer if, at any time prior to contract award, he/she learns that its
centfication was, or a subsequent communication makes, the certification
erroneous.
SIGNATURE BLOCK FOR ALL
REPRESENTATIONS & CERTIFICATIONS
NAME OF BIDDER & ADDRESS (INCLUDE ZIP & PHONE)
OBIE Media
Attn: Brian Obie
P.0. Box 1356
Eugene, OR 97440
(541 ) 686-8401
SIGNATURE:
TYPE NAME:
Brian Obie
DATE: 1-7-97
OFFERORS MUST SET FORTH FULL, ACCURATE AND COMPLETE INFORMATION AS REQUIRED BY
THIS SOLICITATION (INCLUDING THIS ATTACHMENT). FAILURE TO DO SO MAY RENDER THE
OFFER NONRESPONSIVE OR UNACCEPTABLE.
A FALSE STATEMENT IN ANY BID OR PROPOSAL SUBMITTED TO THE AUTHORITY MAY BE A
CRIMINAL OFFENSE IN VIOLATION OF SECTION 37.10 OF THE TEXAS PENAL CODE.
EXHIBIT B
SPECIAL SOLICITATION INSTRUCTIONS and CONDITIONS
1. Introduction and Purpose of Solicitation
(a) The Dallas Area Rapid Transit Authority (the "Authority" or "DART") is a
public transportation agency providing an assortment of transportation services
to 13 cities in the Dallas, Texas, Metroplex. Transportation services include
bus, a 20 mile electric light-rail system, a 10 mile commuter rail line, high
occupancy vehicle (HOV) lanes, ride-share programs, curb-side services for the
mobility impaired, and transit educational services.
(b) The Authority is seeking sealed offers from qualified firms or individuals
interested in an exterior bus and selected DART facilities advertising
concession contract, as described in Exhibit I, Specifications for revenue
producing advertising program from DART passenger carrying vehicles and selected
facilities under the control and operation of the Authority. The Contractor
shall have the advertising concession rights for the exterior of designated DART
vehicles and facilities with the exception of the current electric messaging
contract in effect, and interior bus cards (advertising), and future electronic
messaging signs which may be installed in DART vehicles and facilities.
2. Evaluation of Bids and Basis for Award
(a) One award is anticipated under this solicitation. Multiple contract awards
shall not be made. (I-100.03 A, AUG 90)
(b) Award will be made to the firm that submits the highest evaluated amount.
For evaluation purposes, the following weights will be assigned to the lots
based upon ratio's of anticipated revenues:
(1) Lot 1 100%
(2) Lot 2 6%
(3) Lot 3 2%
(4) Lot 4 1%
(5) Lot 5 1%
(c) Offerors must bid on all line items within each lot and bid all lots to be
eligible for award. Failure to bid all line items in all lots shall render the
bid as nonresponsive and not eligible for award.
3. Sales Contract Information
(a) The incumbent contractor has existing contracts for advertising as described
in Exhibit J. The successful offeror of this solicitation will be responsible
for paying the sales commission for those contracts to the incumbent.
DART Form 33B Page 1 of 3 12/23/96
30810B1.SAM Revision 01 Dec. 18, 1996
970308 1 0
(b) The successful offeror will be required to pay the incumbent Contractor a
15% commission on all advertising contracts assigned and transferred during
their unexpired term or for 12 months, whichever is earlier.
(c) Any sales commission due from above will be paid within 30 days after
completion of the month that the advertising runs.
4. Qualifications
(a) In addition to all other criteria, the Authority may evaluate to determine
responsibility, the high responsive bidder must demonstrate or provide
documentation, when requested, that they meet or exceed the following minimum
qualifications. The minimum qualifications are as follows: experienced in the
transit advertising business; must demonstrate the capability to operate within
the Dallas MetroPlex area, have or acquire a local office; be in the transit
advertising business for at least 3 years with last years billings of
approximately $4 million; currently provide similar bus advertising services to
at least one other market comparable in size to Dallas; provide references from
transit agencies or other appropriate sources; have experience or current
concession contracts with at least one government agency or equivalent; and
provide an irrevocable letter of credit, performance bond, or other method to
guarantee payment to DART, in an amount equal to the first year's annual amount
due DART for Lots I and 5.
(b) The successful offeror must also provide the following upon request:
evidence of any pending judgments, lawsuits, claims or liens in any
jurisdiction, any default on any agreement in the past 5 years, the reasons and
whether the default has been resolved, and any declaration of voluntary or
involuntary bankruptcy within the past 5 years.
5. Tie Bids
(a) High tie bids are high responsive bids from responsible bidders that are
identical in evaluated price and which meet all the requirements and criteria
set forth in the Invitation for Bids.
(b) Award of high tie bids shall not be made by drawing lots, except as set
forth below, or by dividing business among the tie bidders. At the discretion of
the Vice President of Contracts, award shall be made in any manner provided
below that will resolve a high tie bids situation. If no permissible method will
be effective in resolving the situation, and a written determination is made so
stating, award may be made by drawing lots.
(c) Procedures which shall be used to resolve a high tie bids situation is as
follows in the following priority:
(1) awarding to the firm that had submitted the highest bid for Lot 1,
(2) awarding the contract to a business providing property produced or
manufactured in Texas or to a business that otherwise maintains a place of
business in the Authority's service area;
DART Form 33B Page 2 of 3 12/23/96
3081 OB 1. SAM Revision 01 Dec. 18,1996
(3) awarding to the tie bidder which is a minority business enterprise as
defined by policies of the Authority,
(4) awarding the contract to the tie bidder who received the previous award; or
(5) rejecting all bids and negotiating a price with the tie bidders provided
that the contract shall be let for more than the original highest responsive bid
received.
7. Special Notices
(a) DART is currently in the process of awarding a contract for 40ft buses. The
results of that contract will not be known until approximately Jan. 4, 1997 DART
anticipates these buses to be placed into service as indicated by Items 8
through 14 as displayed on Exhibit K.
(b) DART plans to retire the various classes of buses as indicated on Exhibit K.
(c) DART plans to acquire 30ft buses. It is anticipated that this acquisition
will be completed in FY 97. See Item 7 on Exhibit K.
(d) The sizes of advertising space available for the new procurement 30 and 40ft
buses are estimates only.
(e) When the configuration of the 30ft and 40R buses is known and the
acquisition contracts executed, either party may request a change to the
contract to more accurately reflect the value of the advertising space on the
exterior of the buses.
(f) Questions concerning this solicitation must be submitted in writing prior to
the date and time specified for the pre-bid as listed in Block 6 of DART Form
33.201.
(g) An amendment will be issued to this solicitation when DART's minority
participation goals have been finalized.
(h) Reference Exhibit C, Paragraph 8, Minority Owned Business Enterprise (MBE)
and Woman Owned Business Enterprise (WBE), these goals shall not include any
direct payments to DART but are expressed as a percentage of controllable
expenses which are available subcontracting opportunities in the performance of
the contract
************* End of Exhibit B ********************
EXHIBIT D
SPECIAL PROVISIONS
1. Term of Contract (S-200.03A, AUG 90)
The term of this contract shall be 4 years 9 months from 07/01/97 to 03/31/02.
2. Contract Type
This is a fixed unit price per bus/panel concession contract for those amounts
specified in the Schedule.
3. MBE/WBE Payment Documentation
The Contractor and the Authority will mutually agree upon a report which
reflects a breakdown of the amounts paid to date to MBE/WBEs identified by the
Contractor to participate on this contract.
4. Assignment of Contracts for Advertising
In addition to the terms spelled out in the General Provisions, upon expiration
of the term of this Contract or the extensions thereof, or upon earlier
termination not attributable to default by the Contractor, upon DART's request
the Contractor shall immediately assign and transfer to DART, and DART may
accept, contracts for advertising on DART's vehicle`' or facilities which are in
effect, and such contracts shall there upon become the property of DART. All
advertising contracts written by the Contractor shall expressly permit such
assignments. Following such assignment and transfer, DART or its assignees shall
pay to the Contractor, when and as received, fifteen percent (15%) of the net
billings received from such contracts for the unexpired period of the contract.
The Contractor shall not enter into any contract with advertisers that extend
more than six (6) months beyond the expiration date of this Contract, except for
complete wrap-a-bus, which can extend to no more than twelve (12) months,
without written approval of the Contracting Officer.
5. Additional Definitions (S-200.11A, AUG 90)
As used throughout this contract, the following terms shall have the meaning set
forth below.
(a) The D/FW CMSA (Dallas/Fort Worth Consolidated Metropolitan Statistical
Areas) includes the following nine (9) Texas counties: Collin, Dallas, Denton,
Ellis, Johnson, Kaufman, Parker, Rockwall and Tarrant. (S-200. 11B, AUG 90)
(b) Work days is defined as any day Monday through Friday, except Authority
designated holidays. (S-200. 1 ID, AUG 90)
DART Form 33D - Page 1 of 6
06/03/97
3081OD2.SAM Revision 02 June 2, 1997
97030810
(c) Omitted
(d) The term "the Concessionaire or Contractor" means the individual,
corporation, company, partnership, firm, or combination thereof, who has entered
into this contract with the Authority in order to receive the rights and
privileges granted hereunder.
(e) The term "Concession or Contract" means the right and privilege granted to
the Contractor to solicit, sell, and display advertising in spaces provided for
that purpose on transit buses operated by or for the Authority.
(f) The term "Yearly Guarantee" means the minimum per bus amount, per year times
the number of vehicle or facility as describe in this section, per year, to be
paid by the Contractor to the Authority and it shall be the amount entered in
Schedule of the Offer Form which is attached to this contract and a part hereof.
"Year," as used in this contract shall mean a contract year lasting three
hundred sixty-five (365) days.
(g) The term "Contracting Officer's Representative" or "Authorized
Representative(s) of the Contracting Officer" means the individual(s) appointed
by the Contracting Officer to act on his behalf with such power and authority as
may be delegated in writing by the Contracting Officer.
(h) The term Contractor" means the party with whom the Authority has executed a
Contract.
(i) The term "Board of Directors:, "DART Board", or "Board" means the Board of
Directors of the Dallas Area Rapid Transit Authority.
(j) The term "Executive Director" means the President/Executive Director of
DART.
(k) The term "Operating Facilities" means equipment, trade fixtures, appliances,
signs, special lighting, fixtures, decorations, draperies or other special
finishing work installed or used by the Contractor in its operation in the
MetroPlex which are considered the property of the Contractor.
(1) The term "Vehicle" shall include DART operated and controlled buses, vans,
and rail cars.
(m) The term "Facilities" shall include DART facilities such as transit centers,
rail stations, transfer points, or real property operated by DART or DART's
Contractor.
6. Payments to the Authority
(a) In consideration of the rights and privileges granted under this contract,
the Contractor agrees to pay the Authority the annual amount on a monthly basis
I month in advance for Lots I and 5 to arrive as indicated below. The Contractor
shall pay on and a monthly basis for Lots 2, 3, and 4, as described in the
Schedule, payment due as indicated below.
(b) Upon award of this contract, within 5 working days the Contractor shall make
payment to DART for the guaranteed amounts indicated for Lots I and 5 for the
first month of the contract. On the twentieth (20th) day of the of the month the
Contractor shall pay the Authority the amounts due from
DART Form 33D Page 2 of 6 06/03/97 3081OD2.SAM Revision 02 June2, 1997
the preceding month for wrap-a-bus/side/rear, i.e., Lots 2, 3 and 4 and the
guaranteed amount for Lots I and 5.
(c) Funds are to be delivered by courier so they arrive prior to the date that
the funds are due. Funds are to be forwarded to the Contracts Administrator of
this contract.
(d) Payments received more than 3 days late will be assessed a late payment
charge at the current short term Treasury Bill rate.
7. Insurance Requirements for Services Contract (S-200.08B, NOV 92)
(a) Contractor's Insurance. The Contractor shall, at all times during the term
of this contract and extended terms thereof, provide and maintain the following
types of insurance protecting the interests of the Authority and the Contractor
with limits of liability not less than those specified below.
(1) Workers' Compensation insurance or its equivalent providing benefits
comparable to those provided under the Workers' Compensation Act of the State of
Texas and/or any other State or Federal law or laws applicable to the
Contractor's employees performing work under this contract. Employer's Liability
insurance with limits of liability of not less than $1,000,000 each accident,
$100,000 each employee for disease and S500.000 policy limit for disease. This
insurance must be endorsed with a Waiver of Subrogation Endorsement, waiving the
carrier's right of recovery under subrogation or otherwise from the Authority.
(2) Commercial General Liability insurance or its equivalent providing limits of
not less than $1,000,000 for bodily injury and property damage per occurrence
with a general aggregate of $1,000,000 and a products and completed operations
aggregate of $1,000,000. There shall not be any policy exclusions or limitations
for the following: Contractual liability covering the Contractor's obligations
herein; Personal injury/advertising liability; Medical payments; Fire damage
legal liability; Broad form property damage; and Liability for independent
contractors
(3) Comprehensive Automobile Liability insurance or its equivalent covering all
owned, hired and non-owned vehicles used in connection with the work performed
under this contract with limits of liability not less than $1,000,000.
(b) Certificates of Insurance. Before commencing with this contract, the
Contractor shall mail Certificates of Insurance satisfactory to the Authority
(or, as and when the Authority may direct, copies of the actual insurance
policies) to the following address:
Dallas Area Rapid Transit Authority
P. O. Box 660163
Dallas, TX 75266-7235
Attention: Contracts Section
evidencing that insurance as required by paragraph (a), and all subparagraphs to
(a) above, is in force, stating policy numbers, dates of expiration, and limits
of liability thereunder. All copies of policies and Certificates of Insurance
submitted to the Authority shall be in form and content acceptable to the
Authority.
DART Form 33D Page 3 of 6 06/03/97 30810D2.SAM Revision 02 June 2, 1997
(c) Approval of Forms and Companies. All insurance described in this contract
shall be in a form and content satisfactory to the Contracting Officer. No party
subject to the provisions of this contract shall violate or knowingly permit to
be violated any of the provisions of the policies of insurance described herein.
All insurance should be provided by insurance companies with a Best's rating of
B+ or better.
(d) Additional Insured Endorsement. The policy or policies providing commercial
general liability, automobile liability and as otherwise required above shall be
endorsed to name the Authority, its officers, directors, employees and assigns
as Additional Insured as respects operations performed by or on behalf of the
Contractor in performance of this contract.
(e) Notice of Cancellation or Material Change. Policies and certificates shall
specifically provide a thirty (30) day notice of cancellation, non-renewal, or
material change to be sent to the Authority.
(f) Subcontractors. If any part of the work is sublet, the Contractor shall
require any and all subcontractors performing work under this contract to carry
insurance of the types and with limits of liability as the Contractor shall deem
appropriate and adequate. In the event a subcontractor is unable to furnish
adequate insurance required under the contract, the Contractor shall endorse the
subcontractor as an Additional Insured. The Contractor shall obtain and furnish
the Authority Certificates of Insurance evidencing the subcontractors' insurance
coverage.
(g) Multiple Policies. The limits of liability as required above may be provided
by a single policy of insurance or a combination of primary, excess or umbrella
liability policies. In no event shall the total limit of liability for any one
occurrence or accident be less than the amount shown above.
(h) Deductibles. Companies issuing the insurance policies and the Contractor
shall have no recourse against the Authority for payment of any premiums or
assessments for any deductibles, as all such premiums and deductibles are the
sole responsibility and risk of the Contractor.
(i) No Release. The carrying of the above-described coverage shall in no way be
interpreted as relieving the Contractor of any other responsibility or liability
under this agreement or any applicable law, statute, regulation or order.
8. Insurance - Work on Authority Installation (6-203.07. JUN 861
(a) The Contractor shall, at its own expense, provide and maintain during the
entire performance period of this contract at least the kinds and minimum
amounts of insurance required in the Schedule or elsewhere in the contract.
(b) Before commencing work under this contract, the Contractor shall certify to
the Contracting Officer in writing that the required insurance has been
obtained. The policies evidencing required insurance shall contain an
endorsement to the effect that any cancellation or any material change adversely
affecting the Authority's interest shall not be effective (1) for such period as
the laws of Texas prescribe or (2) until 30 days after the insurer or the
Contractor gives written notice to the Contracting Officer, whichever period is
longer.
DART Form 33D 30810D2.SAM Page 4 of 6 Revision 02 06/03/97 June 2, 1997
(c) The Contractor shall insert the substance of this clause, including this
paragraph (c), in subcontracts under this contract that require work on an
installation owned or operated by, or under the control of, the Authority and
shall require subcontractors to provide and maintain the insurance required in
the Schedule or elsewhere in the contract. At least five days before entry of
each such subcontractor's personnel on the installation, the Contractor shall
furnish (or ensure that there has been furnished) to the Contracting Officer a
current certificate of insurance, meeting the requirements of paragraph (b)
above. for each such subcontractor.
9. Other Contracts
The Contractor shall fully cooperate with other Contractors, and employees of
the Authority and shall carefully adapt scheduling of the prosecution of this
contract to accommodate others, heeding any direction that may be provided by
the Contracting Officer. The Contractor shall not commit or permit any act that
will interfere with the prosecution of work by any other contractors, or by
employees of the Authority.
10. Royalties and Patents (6-203.17. JUN 86)
The Contractor shall pay all royalties and license fees. The Contractor shall
defend all suits or claims for infringement of any patent rights and shall save
the Authority harmless from loss on account thereof, except when a particular
design, process, or product of a particular manufacturer is specified by the
Authority; provided, that, if the Contractor has reason to believe that the
design, process, or product specified infringes a patent, the Contractor shall
be responsible for such loss unless it promptly gives such information to the
Contracting Officer.
11. Protection of Authority Property (6-203.1 1. JUN 86)
The Contractor shall use reasonable care to avoid damaging existing buildings,
equipment, and vegetation on or about premises owned by, or under the control
of, the Authority. If the Contractor's failure to use reasonable care causes
damage to any of this property, the Contractor The Contracting Officer directs.
If the Contractor fails or refuses to make such repair or replacement, the
Contractor shall be liable for the cost, which may be deducted from the contract
price.
12. Daily Administration of Contract
The Contractor shall assume full responsibility for the daily administration of
the Concession and all duties which would normally constitute an integral part
thereof. This shall include, but not necessarily be limited to, accounting,
solicitation, sales, billing, posting, display, and promotion.
13. Employees of the Contractor
(a) The Contractor shall not employ or retain in its services, or permit to
remain on the premises, any person declared, or cause, to be unfit for such
employment or otherwise objectionable by the Contracting Officer.
(b) The Contractor shall require its employees in all circumstances to exercise
courtesy and consideration in all dealings with the public and DART employees or
DART Contractor employees.
DART Form 33D Page 5 of 6 06/03/97 30810D2.SAMRevision 02 June 2, 1997
14. Base Fleet Size
(a) The base fleet size (that is, the total number of buses in the Authority's
active fleet, including any undergoing maintenance or repairs on the effective
date of this contract or in the & sure, and excluding any that are
decommissioned or mothballed) is expected to be the total number of buses
identified in the Schedule of Transit Advertising Space, Exhibit K. The current
and projected fleet size is provided at Exhibit K. The DART operated buses are
located at 4 facilities within the city of Dallas. Contractor operated buses are
located at several facilities in the Dallas area. A current list of bus
locations will be provided after contact award:
(b) For purposes of calculating payments due the Authority pursuant to the
Payments to the Authority clause, hereof, and upon the effective date of this
contract, Exhibit K represents the actual number of buses available for
advertising purposes. Additionally, if at any time the actual base fleet size
varies more than five percent (5%) above or below the number of buses as
indicated in Exhibit K, and the Schedule, any change in the amount of payment
due the Authority, will be determined by a revision to Exhibit K and the
Schedule, to reflect actual number of buses. Not withstanding any variation in
the base fleet size, the Guaranteed Annual Amount shall remain unchanged.
(c) The Contracting Officer reserves the right to issue a revised Exhibit K to
reflect current or projected base fleet size absent a written request from the
Contractor at any time and from time to time during the initial term or any
extended terms of this contract.
********************* End of exhibit D ********************
Dallas Area Rapid Transit Authority
1401 Pacific Avenue, Dallas, Texas
EXHIBIT I
SPECIFICATIONS
1. General Services
The Contractor shall provide an attractive and profitable means to develop and
maintain a commercial advertising business for the display of qualified
advertiser's products and/or services, in sufficient volume, utilize as is
reasonably possible, a one hundred per cent (100%) use and occupancy rate of the
available advertising space. The Contractor shall do all things necessary and
reasonable to solicit sales and to sell advertising space and services in order
to secure advertising of the highest graphic quality and content and to employ
criteria and standards of integrity in design and advertising content
appropriate to the dignity of the Authority.
2. Concession
The Contractor shall have the concession to display advertising on the exterior
of DART buses and at selected DART facilities.
3. Size of Bus Fleet
The number of buses, size of advertising space and projected gains and losses
are as listed on Exhibit K.
4. Rates for Advertising
The Contractor shall establish all rates and charges for rental of advertising
space, conditions and manner of payment thereof. The Contractor shall furnish a
copy of the current rate card whenever it changes to the Contracting Officer.
5. Billings and Collections
The Contractor shall perform all billings and collections connected with
advertising sales. The Authority shall not be responsible, in any way, for any
uncollected billings.
6. Supplemental Cleaning of Advertising Displays
While the Authority continually makes good faith effort to keep the exteriors of
the vehicles and facilities in a reasonably clean condition, so that the ability
of the Contractor to sell and renew advertising accounts will not be impaired,
the Authority cannot guarantee the cleanliness of its vehicles or facilities or
the Contractors advertising installed thereon. The Contractor should take
DART Form 33I Page l of 6 12/06/96
308 101. SAM
whatever steps are necessary to supplement DART's efforts in the cleaning of
spaces and advertising display surfaces.
7. Protection of Authority Property
The Contractor shall be liable for damages to existing buildings, equipment, and
vegetation on or about premises owned by, or under the control of, the
Authority. If the Contractor causes damage to any of this property, the
Contractor shall replace or repair the damage at no expense to the Authority as
the Contracting Officer directs. If the Contractor fails or refuses to make such
repair or replacement, the Contractor shall be liable for the cost, which may be
added to the contract price.
8. Other Media Displays
The Authority retains the right to establish contractual relationships for the
placement of other media displays, other than printed material on DART vehicles
or at DART facilities. This includes, but not limited to Electronic Messaging
Sign technology which is installed in buses and rail vehicles.
9. Omitted
10. Panels
(a) Exhibit L provides the number of panels available for Facilities Advertising
Space.
(b) If at any time the actual number of panels varies more than five percent
(5%) above or below the number of panels in the initial or any subsequent
revision to Exhibit L and the Schedule, any change in the amount of payment due
the Authority, as determined by revised Exhibit L and the Schedule, shall be
effective as of the date of the contract modification incorporating the revised
Exhibit L and the Schedule. Notwithstanding any variation in the base panel size
that does not exceed the 5%, the Monthly Guarantee shall remain unchanged.
11. Shop and Storage Space
No shop or storage space on the Authority's facilities shall be guaranteed or
provided under the terms of this Contract. The Contractor shall be responsible
for providing any shop or storage space required to satisfy the terms of this
Contract. The contractor must be self contained to perform the service.
12. Changes in Authority's Operations
It is expressly understood and agreed that the Authority reserves the right to
make changes in methods or extent of operations, or of styles, kinds, or numbers
of vehicles and facilities or routes operated by the Authority and that the
Contractor shall have no claim because of any such changes.
DART Form 33I Page 2 of 6 12/06/96
308 10I.SAM
13. Schedule of Transit Advertising Space
The Contractor shall restrict the display of advertising material under this
contract to those buses and advertising spaces which are identified in the
Schedule of Transit Advertising Space, Exhibit K, as may be changed from time to
time by the Authority.
14. Public Service Advertising
The Contractor shall display on a space available basis, public service,
charitable, educational, or other not-for-profit advertising promoting good
will. The Contractor shall charge only for posting and administrative cost
associated with the posting. The charges are subject to approval of the
Contracting Officer and will be consistently applied. The Contractor has the
right to determine space cost for public service advertising.
15. Contractor-Furnished Equipment, Supplies and Materials
(a) The Contractor shall furnish at their expense all equipment (including
transportation), supplies, and materials necessary and incidental to the
solicitation, sale, and display of advertising material under this contract.
(b) The Contractor is required to keep advertising panel displays in repair at
all times. This includes repairing any pre-existing conditions that may be
present at any designated DART facility under the terms of this contract. Any
changes to the display panel must be approved in writing by the Contracting
Officer.
16. Display Materials
(a) The Contractor shall use only those display materials approved by the
Contracting Officer. Transit vehicle display materials must be for exterior use,
without frames, and must be a pressure sensitive, direct application type
Fasson, FASCAL, SX1340-F.
(b) Advertising at DART facilities must be placed only inside the panels/frames
provided for that purpose.
(c) All advertising shall be displayed in a neat and workmanlike manner. The
Contractor shall maintain all displayed advertising so as to ensure its neat
appearance, and promptly remove all advertising which is torn or otherwise
unsightly in appearance. The Authority reserves the right to require the
Contractor to promptly remove at the Contractors expense any advertising which,
in the opinion of the Authority, is unsightly in appearance.
(d) Any advertisement that has dated copy must be removed as soon as possible
when the advertisement is no longer applicable. DART reserves the right to
remove outdated material.
DART Form33I Page3 of 6 12/20/96
3081OII SAM Revision 01 December 18, 1996
new seal over the expired seal. Any advertising which does not contain the above
seal will be subject to removal by DART.
(e) The Contractor will remove all advertising before placing new material, i.e.
the Contractor will not post one advertisement over another.
17. Space Reserved for Authority's Use
(a) The Contractor agrees to display the Authority's advertising in any spaces
reserved hereby without charge to the Authority. Within the quantities listed
below, the Authority may promote or barter trade portions of allocated amounts
with any party at the discretion of the Authority.
(b) Any excess space available becomes the Authority's to use as the Authority
deems appropriate.
(c) The following space is reserved for use by DART (HxW):
(1) 100 Kings per month (30" x 144")
(2) 2 Facility Advertising panels per month per location (42" x 62")
(3) For the months of October, November, December and January, 50 ea. Super
Kings (24" x 288") for Cowboys Flyers or other events.
(4) For the months of October and November 40 ea. Super Impacts (42" x 66") for
the State Fair or other events.
(5) For the month of December 40 ea. Super Kings for the Cotton Bowl or other
events.
(6) Up to 5 ea. fully wrapped buses per year. (Not included in maximum numbers
of allowable wrapped buses).
18. Cleaning Up (6-403.15, JUN 86)
The Contractor shall at all times keep the work area, including any storage
areas, free from accumulations of waste materials.
19. Painting
This contract shall not be construed so as to permit the Contractor to paint
advertising directly upon the exterior or interior of any of the Authority's
buses, unless otherwise agreed upon expressly in writing by the Contracting
Officer in response to a written request of the Contractor.
DART Form 33I Page 4 of 6 12/06/96
308 10I.SAM
20. Repair of Damages
The Contractor shall immediately repair any damage which results from
implementation or operation of the Concession under this contract. All such
repair work shall be acceptable to the Authority.
21. Advertising Guidelines
The text and illustrations of all advertising must comply with all federal,
state, and local laws and regulations. The Contractor is expected to exercise
good taste in the content of any advertising within the range of local community
standards. Any advertising found to be unacceptable by the Authority or not
complying with an ordinance of-local jurisdiction serviced by the Authority,
shall be removed at the contractors expense after demand by the Authority.
22. Vehicle Paint Scheme
The Contractor shall not remove, alter or cover the DART logo paint scheme
and/or the vehicle numbers without the written approval of the Contracting
Officer.
23. Use of Unsold Space by Contractor
The Contractor may from time to time use any unsold advertising space on any
DART vehicle or at any DART facility for purposes which directly furthers the
sale of such space, subject to the prior written approval of space and message
by the Contracting Officer or Contracting Officers representative.
24. Wrap a Bus Program
(a) Advertising sales contracts will be offered to the advertiser for a minimum
of one year.
(b) Advertising sales contracts less than one year will require the approval of
the Contracting Officer.
(c) A mixture of national, regional and local advertisers will be employed in
the wrap a bus program.
(d) All advertising will be designed in such a way as to complement the unique
shape of the Neoplan bus, or bus that the advertising will be applied. All
advertising will be approved in advance by the Contracting Officer.
(e) The Contractor will not enter into any advertising sales contracts beyond
one year past the expiration of this concession contract.
25. Wrap a Bus (Entire Bus)
(a) A wrapped bus will meet the criteria indicted in paragraph 24 above.
DART Form 33I Page 5 of 6 12/06/96
30810I.SAM
(b) A wrapped bus will be a bus that is fully wrapped, included but not limited
to the sides, front, back, windows, and top.
(c) Riders view shall not be substantially blocked by the placement of any
material on the side windows of the bus.
(d) No material will be place on the front windows of the bus or any side window
the operator uses or door without approval of the Contracting Officer.
25. Wrap a Bus (Per side of Bus)
(a) A wrapped bus will meet the criteria indicted in paragraph 24 above.
(b) A wrapped bus (Per side) will be a bus that has applied a wrapping on the
side of the bus that extends beyond the space allocated for annual, easing of
bus advertising space.
(c) For a 40ft bus, the wrap shall extend approximately 6 inches ahead of the
front wheel to the end of the bus and from the bottom of the windows to the
bottom of the bus. The wrap may extend into the window area. If the wrap extends
more than 6 inches into the window area it must allow vision through the wrap.
Window coverage more that 50% will be considered to be a fully wrapped bus with
the appropriate rate.
(c) Riders view shall not be substantially blocked by the placement of any
material on the side windows of the bus.
(d) No material will be place on the front windows of the bus or any side window
the operator uses or door without approval of the Contracting Officer.
26. Location of DART Vehicles
(a) DART buses are located at either DART owned facilities or contractor owned
facilities who are providing service for DART
(b) DART as well as the DART contractor have several locations that buses are
parked while out of service. The location of these lots will be provided after
contract award.
End of Exhibit I
EXHIBIT 10-12
THIRD AMENDMENT OF LOAN AGREEMENT
PARTIES:
OBIE MEDIA CORPORATION, an Oregon corporation (Borrower) UNITED STATES NATIONAL
BANK OF OREGON (Bank)
RECITALS:
On October 31, 1996, Borrower, Bank and certain Guarantors entered into a
Loan Agreement (the Original Loan Agreement) The Original Loan Agreement was
subsequently modified by First Amendment of Loan Agreement and a Second
Amendment of Loan Agreement (the Second Amendment) The Original Loan Agreement,
as modified, is referred to in this amendment as the Loan Agreement. Except as
specifically set forth in this amendment, all capitalized terms have the
meanings assigned in the Loan Agreement.
AGREEMENTS:
THE REVOLVING LOAN.
a. MAXIMUM AMOUNT.
Subparagraph 3.a. of the Loan
Agreement is modified to read as follows:
"a. MAXIMUM AMOUNT. Subject to the terms and conditions of this Agreement,
Bank, at its option, may make Advances to Borrower from time to time on a
revolving credit basis in an aggregate principal amount not to exceed at any one
time outstanding an amount equal to the lesser of (i) Two Million Dollars
($2,000,000); and (ii) the Borrowing Base then in effect."
b. THE REVOLVING NOTE. The first sentence of Paragraph 3.d. of the
Loan Agreement is modified to read as follows:
"d. ADVANCES . Advances under the Re- volving Loan shall be evidenced by a
Revolving Note executeci by Borrower in the principal amount of Two Million
Dollars ($2,000,000)
Page 1-THIRD AMENDMENT OF LOAN AGREEMENT
c. FEE. Contemporaneously with the execution of this amendment, Borrower shall
pay to Bank a fee of Two Thousand Five Hundred Dollars ($2,500)
2. CURRENT RATIO COVENANT. Borrower's covenant to maintain a ratio of
Current Assets to Current Liabilities of not less 1:1 as of the end of each
calendar quarter of Borrower is terminated, effective May 1, 1997.
3. ADDITIONAL DOCUMENTS . Contemporaneously with the execution of this
amendment, Bo rrower shall deliver to Bank, in form and substance satisfactory
to Bank, the following:
A Revolving Note.
b. A written opinion of Gleaves, Swearingen, Larsen, Potter, Scott &
Smith and/or Tonkon, Torp, Galen, Marmaduke & Booth, the counsel for Borrower,
dated as of the date of this amendment and addressedto Bank, in form and
substance satisfactory to Bank.
c. Any other documents that Bank may reasonably request.
4. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this
amendment, Borrower represents and warrants to Bank that, except as previously
disclosed to Bank:
All representations and warranties of Borrower contained in the Loan
Agreement continue to be true and complete as of the date of this amendment.
b. No Event of Default has occurred or is continuing, and no event has
occurred and is contlnulng that, with the giving of notice or the passage of
time, or both, would be an Event of Default under the Loan Agreement.
No material adverse change has occurred in the financial condition
of Borrower since the date of the Second Amendment.
d. Borrower' s execution, delivery and performance of this amendment
and all documents executed pursuant to this amendment have been duly authorized
by all necessary action, do not contravene any Law binding on it or its
organizational documents, and do not contravene the provisions of or constitute
a default under any agreement or instrument to which it is a party or by which
it may be bound or affected.
Page 2-THIRD AMENDMENT OF LOAN AGREEMENT
e. This amendment and all documents executed pursuant to this amendment are, and
when delivered will be, valid, binding and enforceable in accordance with their
respective terms.
5. NOTICES. In modification of Paragraph 16.h. of the Loan
Agreement, and in modification of any notice provisions in the otherLoan
Documents, Borrower designates the following address for notices:
Borrower:
4211 W. llth Avenue Eugene, OR 97405
Attention:Mr. Brian Obie
6. COUNTERPARTS; EXECUTION BY FACSIMILE. This amendment may
be executed in several counterparts, each of which will be deemed to be an
original and all of which together constitute one and the same instrument.
Delivery of an executed copy of this amendment by telecopy, telex or other means
of electronic communication producing a printed copy will be deemed to be an
execution and delivery of this amendment on the date of such communication by
the parties so delivering such a copy. The party so delivering such a copy via
electronic communication shall deliver an executed original of this amendment to
the other party within one (1) week of the date of delivery of the copy sent via
electronic communication.
7. EFFECT. Except as specifically modified by this amendment, or any
document executed pursuant to this amendment, the Loan Documents remain in full
force and effect.
e. DISCLOSURE. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE
BY A BANK AFTER OCTOBER 3, 1989, CONCERNINGLOANS AND OTHER CREDIT EXTENSIONS
WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY
THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED
BY THE BANK TO BE ENFORCEABLE
Dated as of June 20, 1997.
OBIE MEDIA CORPORATION
Brian Obie, President
UNITED STATES NATIONAL BANK OF OREGON
Larry Johnson, Vice President
By:
Page 3-THIRD AMENDMENT OF LOAN AGREEMENT
EXHIBIT 10-13
BILL OF SALE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, MO PARTNERS, an Oregon general partnership
(Grantor), hereby assigns, transfers and delivers to OBIE MEDIA CORPORATION, an
Oregon corporation (Grantee), all of Grantor's right, title, and interest in and
to those outdoor advertising structures described on Exhibit A attached to this
Bill of Sale (the Signs).
Grantor warrants that it is the owner of the Signs; that the
Signs are free from all liens, encumbrances and other adverse claims of any
nature except for the lien of the Oregon Laborers Employers Pension Trust Fund,
which lien shall be satisfied on the date Grantee pays Grantor the unpaid
balance of the Promissory Note from Grantee to Grantor of even date herewith;
and that Grantor has the full and unrestricted right to convey the Signs.
DATED: December 31, 1997.
GRANTOR:
MO PARTNERS
Delores M.Mord, Partner
Brian B. Obie, Partner
<PAGE>
EXHIBIT A
All of Trustor's interest in the leasehold estates covering the
following real property located in Siskiyou and San Joaquin counties, including,
without limitation, any options or rights of extension or renewal:
Lease Number Market Location Size ill.
9907-0001 Yreka I-5 EL.2 mi. S/Yreka, NF 12 x 48 "I"
9907-0001 Yreka I-5 EL .2 mi. S/Yreka, SF 12 x 48 "I"
9908-0002 Stockton W. Lane EL 2000' S/Hammer NF 10 x 24 "I"
9908-0002 Stockton W. Lane EL 2000' S/Hammer SF 10 x 24 "I"
9908-0003 Stockton E. Harding SL 100' W/Waterloo EF 10 x 24 "I"
9908-0003 Stockton E. Harding SL 100' W/ Waterloo WF 10 x 24 "I"
9908-0004 Stockton E. Charter NL 20' W/San Joaquin WF 10 x 24 "I"
9908-0004 Stockton E. Charter NL 20' W/San Joaquin EF 10 x 24 "I"
9908-0006 Stockton E. Charter Way NL 50' W/Ctr WF 10 x 24 "I"
9908-0006 Stockton E. Charter Way NL 50' W/Ctr EF 10 x 24 "I"
9908-0007 Lodi 615 W. Cherokee WL N/Tokay NI; 10 x 24 "I"
9908-0007 Lodi 615 W. Cherokee WL N/Tokay SF 10 x 24 "I"
9908-0008 Stockton 2304 Waterloo Rd E@Belvedere EF 10 x 24 "I"
9908-0008 Stockton 2304 Waterloo Rd E@Belvedere WF 10 x 24 "I"
9908-0009 Stockton N. Calif. WL 100' N/Park St SF 10 x 24 "I"
9908-0009 Stockton N. Calif. WL 100' N/Park St NF 10 x 24 "I"
9908-0010 StocMon 801 N. Wilson WL @ Flora SF 10 x 24 "I"
9908-0010 Stockton 801 N. Wilson WL @ Flora NF 10 x 24 "I"
9908-0011 Stockton E. Charter SL 106' E/Grant EF 10 x 24 "I"
9908-0011 Stockton E. Charter SL 106' E/Grant WF 10 x 24 "I"
9908-0012 Stockton N. West Lane EL 600' S/Alpine SF 10 x 24 "I"
9908-0012 Stockton N. West Lane EL 600' S/Alpine NF 10 x 24 "I"
9908-0013 Lodi 201 East Kettleman EF 10 x 24 "I"
9908-0013 Lodi 201 East Kettleman WF 10 x 24 "I"
9908-0016 Stockton West Lane WL 20' N/Swain SF 12 x 48 "I"
9908-0016 Stockton West Lane WL 20' N/Swain NF 12 x 48 "I"
9908-0017 Stockton PcfAve WL 1SO'S/Rose Marie SF 12 x 48 "I"
9908-0017 Stockton Pcf Ave WL 1SO'S/Rose Marie NF 12 x 48 "I"
9908-0018 Stockton Rose Marie SL 100' W/Pcf Ave 8 x 16 "I"
9908-0019 Stockton Pacific Ave EL 20' N/Adams SF 14 x 48 "I"
9908-0019 Stockton Pacific Ave EL 20' N/Adams NF 14 x 48 "I"
9909-0013 Fresno US 99 E/L 1700' S/SIIAW NF 14 x 48 "I"
9909-0013 Fresno US 99 E/L 1700' S/SHAW SF 14 x 48 "I"
9202-0034 Eugene W. 11th NL 25' E. COMMERCE WF 8 x 24 "I"
9202-0034 Eugene W. 11th NL 25' E. COMMERCE EF 8 x 24 "I"
<PAGE>
ASSIGNMENT OF LEASES
For valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, MO PARTNERS, an Oregon general partnership
("Assignor"), hereby assigns, transfers, and conveys to OBIE MEDIA CORPORATION,
an Oregon corporation ("Assignee"), all of Assignor's right, title, and interest
as tenant under the leases listed on Exhibit A attached hereto (the "Leases").
Assignor hereby warrants to Assignee that (i) true copies of the Leases, and all
amendments thereto, have been delivered to Assignee, and Exhibit A accurately
lists all of the Leases, (ii) no event of default by any party currently exists
under any of the Leases, and (iii) Assignor own the tenant's interest in all of
the Leases, free from all liens, encumbrances, assignments, and security
interests except for the lien ofthe Oregon Laborers - Employers Pension Trust
Fund, which lien shall be satisfied on the date Assignee pays Assignor the
unpaid balance of the Promissory Note from Assignee to Assignor of even date
herewith.
DATED: December 31, 1997.
MO PARTNERS, an Oregon general partnership
Delores M. Mord, Partner
Brian Obie, Partner
<PAGE>
EXHIBIT A
All of Trustor's interest in the leasehold estates covering the
following real property located in Siskiyou and San Joaquin counties, including,
without limitation, any options or rights of extension or renewal:
Lease Number Market Location Size ill.
9907-0001 Yreka I-5 EL.2 mi. S/Yreka, NF 12 x 48 "I"
9907-0001 Yreka I-5 EL .2 mi. S/Yreka, SF 12 x 48 "I"
9908-0002 Stockton W. Lane EL 2000' S/Hammer NF 10 x 24 "I"
9908-0002 Stockton W. Lane EL 2000' S/Hammer SF 10 x 24 "I"
9908-0003 Stockton E. Harding SL 100' W/Waterloo EF 10 x 24 "I"
9908-0003 Stockton E. Harding SL 100' W/ Waterloo WF 10 x 24 "I"
9908-0004 Stockton E. Charter NL 20' W/San Joaquin WF 10 x 24 "I"
9908-0004 Stockton E. Charter NL 20' W/San Joaquin EF 10 x 24 "I"
9908-0006 Stockton E. Charter Way NL 50' W/Ctr WF 10 x 24 "I"
9908-0006 Stockton E. Charter Way NL 50' W/Ctr EF 10 x 24 "I"
9908-0007 Lodi 615 W. Cherokee WL N/Tokay NI; 10 x 24 "I"
9908-0007 Lodi 615 W. Cherokee WL N/Tokay SF 10 x 24 "I"
9908-0008 Stockton 2304 Waterloo Rd E@Belvedere EF 10 x 24 "I"
9908-0008 Stockton 2304 Waterloo Rd E@Belvedere WF 10 x 24 "I"
9908-0009 Stockton N. Calif. WL 100' N/Park St SF 10 x 24 "I"
9908-0009 Stockton N. Calif. WL 100' N/Park St NF 10 x 24 "I"
9908-0010 StocMon 801 N. Wilson WL @ Flora SF 10 x 24 "I"
9908-0010 Stockton 801 N. Wilson WL @ Flora NF 10 x 24 "I"
9908-0011 Stockton E. Charter SL 106' E/Grant EF 10 x 24 "I"
9908-0011 Stockton E. Charter SL 106' E/Grant WF 10 x 24 "I"
9908-0012 Stockton N. West Lane EL 600' S/Alpine SF 10 x 24 "I"
9908-0012 Stockton N. West Lane EL 600' S/Alpine NF 10 x 24 "I"
9908-0013 Lodi 201 East Kettleman EF 10 x 24 "I"
9908-0013 Lodi 201 East Kettleman WF 10 x 24 "I"
9908-0016 Stockton West Lane WL 20' N/Swain SF 12 x 48 "I"
9908-0016 Stockton West Lane WL 20' N/Swain NF 12 x 48 "I"
9908-0017 Stockton PcfAve WL 1SO'S/Rose Marie SF 12 x 48 "I"
9908-0017 Stockton Pcf Ave WL 1SO'S/Rose Marie NF 12 x 48 "I"
9908-0018 Stockton Rose Marie SL 100' W/Pcf Ave 8 x 16 "I"
9908-0019 Stockton Pacific Ave EL 20' N/Adams SF 14 x 48 "I"
9908-0019 Stockton Pacific Ave EL 20' N/Adams NF 14 x 48 "I"
9909-0013 Fresno US 99 E/L 1700' S/SIIAW NF 14 x 48 "I"
9909-0013 Fresno US 99 E/L 1700' S/SHAW SF 14 x 48 "I"
9202-0034 Eugene W. 11th NL 25' E. COMMERCE WF 8 x 24 "I"
9202-0034 Eugene W. 11th NL 25' E. COMMERCE EF 8 x 24 "I"
<PAGE>
PROMISSORY NOTE
$698,000 December 31, 1997
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, OBlE MEDlA CORPORATION, an Oregon corporation (Maker),
hereby promises to pay to the order of MO PARTNERS, an Oregon general
partnership (Payee) at 1O1O Obie Street, Eugene, Oregon 97402 or at such other
place as Payee may designate, the sum of Six Hundred Ninety-Eight Thousand
Dollars ($698,000) in lawful money ofthe United States of America, together with
interest at the rate of 9.00 percent per annum.
Time is of the essence ofthis Note and each provision hereof:
Maker shall pay monthly interest-only payments, with the first of such payments
to be paid on or before February 1, 1998 and each subsequent installment to be
paid on or before the first day of each month thereafter until this Note is paid
in full. Maker shall pay Payee the entire unpaid balance of this Note, plus any
accrued interest thereon, on or before April 15, 1998.
This Note is secured by a Deed of Trust and Assignment of Rents on
certain property located in Siskiyou and San Joaquin counties, California (the
Trust Deed), to which reference is hereby made for a description of the nature
and extent of the security thereby and the rights and limitation of nghts of
Payee and of Maker thereunder.
This Note may be prepaid without premium or penalty.
Maker shall be deemed to be in default hereunder if Payee does not
receive any payment required to be made hereby within 15 days of the due date
thereof or if an event of a default occurs under the Trust Deed.
If any legal proceeding is instituted by Payee to collect any sum
payable hereunder, or if Payee appears in any bankruptcy or similar proceeding
with respect to Maker, the prevailing party shall be entitled to have and
recover from the other party all costs, disbursements and reasonable attorney
fees in such proceeding and in any appeal therefrom or review thereof.
This Note shall be binding upon Maker and its successors and
assigns and shall enure to the benefit of Payee and its successors and assigns.
This Note shall be govemed, interpreted and enforced in all
respects in accordance with the substantive laws of the state of Oregon.
OBIE MEDIA CORPORATION, an Oregon corporation
By
Brian B. Obie, President and Chief Executive Officer
EXHIBIT 10-14
AMENDMENT NO. 1 TO
LEASE BY AND BETWEEN
OBIE INDUSTRIES INCORPORATED AND OBIE MEDIA CORPORATION
This Amendment No. 1 to Lease (this "Amendment No. 1" is made and
entered into as of July 15, 1997 by and between Obie Industries Incorporated, an
Oregon corporation ("Landlord", and Obie Media Corporation, an Oregon
corporation ("Tenant"), for the purpose of amending and modifying that certain
Lease dated November 12, 1996 by and between Landlord and Tenant (the "Lease7").
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:
1. The first sentence of Section 4.1 of the Lease is hereby amended to
read as follows:
"Tenant shall pay to Landlord as rent for the Premises equal monthly
installments of $14,258."
2. Section 4.4 of the Lease is hereby amended in its entirety to read
as follows:
"4.4 TENANT IMPROVEMENTS. Tenant shall be responsible for a total of $290,041 of
tenant improvements in connection with the renovation of the Premises."
3. As amended hereby, the Lease remains in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment
No. 1 as of the date first written above.
"LANDLORD" "TENANT"
OBIE INDUSTRIES INCORPORATED OBIE MEDIA CORPORATION
Brian B. Obie, President Brian B. Obie, President and CEO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Obie Media Corporation which are included in its annual
report, Form 10-KSB, for the year ended November 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Nov-30-1997
<PERIOD-END> Nov-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,025,052
<ALLOWANCES> 146,692
<INVENTORY> 0 <F1>
<CURRENT-ASSETS> 4,773,834
<PP&E> 12,716,707
<DEPRECIATION> 3,451,852
<TOTAL-ASSETS> 14,284,422
<CURRENT-LIABILITIES> 4,127,334
<BONDS> 6,554,542
0
0
<COMMON> 6,173,967
<OTHER-SE> (2,378,073)
<TOTAL-LIABILITY-AND-EQUITY> 14,284,422
<SALES> 0
<TOTAL-REVENUES> 13,302,826
<CGS> 0
<TOTAL-COSTS> 8,004,869
<OTHER-EXPENSES> 664,207
<LOSS-PROVISION> 0 <F1>
<INTEREST-EXPENSE> 584,258
<INCOME-PRETAX> 1,614,375
<INCOME-TAX> (614,311)
<INCOME-CONTINUING> 1,000,064
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,000,064
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
<FN>
<F1>
Information not included in Financial Statements
</FN>
</TABLE>
