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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
Zimmerman Sign Company
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(NAME OF ISSUER)
Common Stock, par value $0.01 per share
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(TITLE OF CLASS OF SECURITIES)
989580-10-5
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(CUSIP NUMBER)
David E. Anderson
8150 North Central Expressway Suite 1801
Dallas, Texas 75206
(214) 691-3937
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
September 30, 1998
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(DATE OF EVENT WHICH REQUIRES FILING
OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box / /.
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Section
240.13d-7(b) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
Page 1 of 6 Pages
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CUSIP NO. 989580-10-5 13D Page 2 of 6 Pages
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1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS (entities only)
Tom E. Boner
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS
2(d) or 2(a) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
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7 SOLE VOTING POWER
163,326
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8 SHARED VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY ----------------------------------------------------------------
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 163,326
PERSON
WITH ----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
163,326
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.3%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP NO. 989580-10-5 13D Page 3 of 6 Pages
ITEM 1. SECURITY AND ISSUER. The title and class of equity securities to
which this statement relates is the common stock, par value $0.01 per share,
(the "Common Stock") of Zimmerman Sign Company, a Texas corporation (the
"Company"). The address of the principal executive offices of the Company is
9846 Highway 31 East, Tyler, Texas 75705.
ITEM 2. IDENTITY AND BACKGROUND. The name of the person filing this
statement is Tom E. Boner. The principal business address for Mr. Boner is
9846 Highway 31 East, Tyler, Texas 75705. Mr. Boner is presently principally
employed as President of the Company.
Mr. Boner has not been convicted in a criminal proceeding or been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction that subjected him to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violations with
respect to such laws.
Mr. Boner is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS. Mr. Boner paid for the shares of
Common Stock owned by him out of his personal funds.
ITEM 4. PURPOSE OF TRANSACTION. Mr. Boner acquired 61,823 of the shares of
Common Stock owned by him as an investment prior to the Company's spin-off
from its parent, Independence Holding Company, a Delaware corporation, in
December 1996 and 52,864 of the shares of Common Stock owned by him in
connection with the Securities Purchase Agreement entered into by the Company
in September 1998, which is further described in Item 5, below. Mr. Boner
also owns options to purchase 48,639 shares of Common Stock, all of which
were granted at no cost pursuant to the Company's 1996 Stock Option Plan.
On September 30, 1998, the Company, CIVC, MIG, the Geneve Affiliates and
the Management Purchasers (all as defined below), including Mr. Boner,
entered into a letter agreement pursuant to which CIVC, MIG and the
Management Purchasers agreed to surrender to the Company a portion of the
warrants issued under the Securities Purchase Agreement upon consummation of
the transactions contemplated by: (i) a Share Option Purchase Agreement dated
as of September 30, 1998 pursuant to which the Geneve Affiliates granted to
the Company an option to purchase an aggregate of 357,143 shares of Common
Stock and to David E. Anderson an option to purchase an aggregate of 428,000
shares of Common Stock, both options being exercisable only between the open
of business on January 4, 1999 and the close of business on January 8, 1999;
and (ii) a Purchase Agreement dated as of September 30, 1998 pursuant to
which, promptly upon consummation of the transactions contemplated by the
Share Option Purchase Agreement, Mr. Anderson agreed to sell and the Company
agreed to buy 228,000 shares of Common Stock. Under the terms of the letter
agreement, Mr. Boner would surrender to the Company without consideration
warrants for 15,165 shares of Common Stock.
Depending on market conditions and other factors that he may deem
material to his investment decisions, Mr. Boner may purchase additional
shares of Common Stock from time to time or may dispose of all or a portion
of the shares of Common Stock he now owns or may hereafter acquire.
Except as set forth herein, Mr. Boner does not have any present plans or
proposals that relate to or would result in any of the actions specified in
clauses (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. Mr. Boner beneficially owns
163,326 shares, or 8.3%, of the outstanding Common Stock of the Company. Mr.
Boner beneficially owns all of
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CUSIP NO. 989580-10-5 13D Page 4 of 6 Pages
such shares by direct ownership and possesses sole voting power and sole
dispositive power with respect to all of such shares.
On September 30, 1998, the Company, Continental Illinois Venture
Corporation, a Delaware corporation ("CIVC"), MIG Partners VIII, a Delaware
partnership ("MIG"), and certain members of the Company's management (the
"Management Purchasers"), including Mr. Boner, entered into that certain
Senior Subordinated Note, Preferred Securities Stock and Warrant Purchase
Agreement (the "Securities Purchase Agreement"). Under the Securities Purchase
Agreement, the Company issued to CIVC, MIG and the Management Purchasers 12%
Senior Subordinated Notes in the aggregate principal amount of $4 million and
warrants to purchase an aggregate of 1,197,914 shares of the Company's Common
Stock. The Company also issued an aggregate of 52,500 shares of the
Company's Series A Preferred Stock, par value $0.01 per share, to CIVC, MIG
and certain of the Management Purchasers, including Mr. Boner. Under the
Securities Purchase Agreement, the Company issued to Mr. Boner (i) a 12%
Senior Subordinated Note (the "Note") in the principal amount of $166,200;
(ii) immediately exercisable warrants to purchase 52,864 shares of the
Company's Common Stock (the "Warrants"); and (iii) 2,338 shares of the
Company's Series A Preferred Stock. Mr. Boner paid $400,000 in total
consideration for the Note, Warrants and shares of Series A Preferred Stock.
On September 30, 1998, the Company, CIVC, MIG, the Geneve Affiliates and
the Management Purchasers entered into a letter agreement pursuant to which
CIVC, MIG and the Management Purchasers agreed to surrender to the Company a
portion of the warrants issued under the Purchase Agreement upon consummation
of the transactions contemplated by: (i) a Share Option Purchase Agreement
dated as of September 30, 1998 pursuant to which the Geneve Affiliates
granted to the Company an option to purchase an aggregate of 357,143 shares
of Common Stock and to David E. Anderson an option to purchase an aggregate
of 428,000 shares of Common Stock, both options being exercisable only
between the open of business on January 4, 1999 and the close of business on
January 8, 1999; and (ii) a Purchase Agreement dated as of September 30, 1998
pursuant to which, promptly upon consummation of the transactions
contemplated by the Share Option Purchase Agreement, Mr. Anderson agreed to
sell and the Company agreed to buy 228,000 shares of Common Stock. Under the
terms of the letter agreement, Mr. Boner would surrender to the Company
without consideration warrants for 15,165 shares of Common Stock.
On September 30, 1998 the Company issued options to Mr. Boner at no cost
under the Company's 1996 Stock Option Plan to purchase 10,000 shares of
Common Stock at the exercise price of $3.79 per share. Options to purchase
2,000 shares of Common Stock vest on September 30, 1999 and on each September
30 thereafter. The options expire on September 30, 2005.
Except as set forth herein, no transactions in the Common Stock were
effected by Mr. Boner during the past 60 days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER. In connection with the Securities
Purchase Agreement, the Company, CIVC, MIG, Mr. Anderson and Mr. Boner
entered into that certain Stockholders Agreement dated as of September 30,
1998 (the "Stockholders Agreement"). Under the Stockholders Agreement, Mr.
Boner made various agreements related to the voting and transfer of his
shares of Common Stock, including voting for two directors designated by CIVC
and MIG and granting CIVC and MIG the right of first refusal to purchase Mr.
Anderson's shares of Common Stock.
In connection with the Securities Purchase Agreement, the Company, CIVC,
MIG, Mr. Anderson and Mr. Boner entered into that certain Registration Rights
Agreement, dated as of September 30, 1998, the terms of which generally
provide that, under certain circumstances, CIVC, MIG, Mr. Anderson and Mr.
Boner will be entitled (i) at any time, but not more than twice during any
twelve month period, to request that the Company register their shares of
Common Stock under the Securities Act, and (ii) to request that their shares
of Common Stock be included in any underwritten offering by the Company,
subject to certain customary limitations.
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CUSIP NO. 989580-10-5 13D Page 5 of 6 Pages
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
A. Stockholders Agreement dated as of September 30, 1998 by and
among Zimmerman Sign Company, Continental Illinois Venture
Corporation, MIG Partners VIII, David E. Anderson and Tom E.
Boner.
B. Registration Rights Agreement dated as of September 30, 1998 by
and among Zimmerman Sign Company, Continental Illinois Venture
Corporation, MIG Partners VIII, David E. Anderson and Tom E.
Boner.
C. Share Option Purchase Agreement dated as of September 30, 1998
by and among the Company, the Geneve Affiliates and Mr. Anderson.
D. Purchase Agreement dated as of September 30, 1998 by and among
the Company, and Mr. Anderson.
E. Letter Agreement dated as of September 30, 1998 by and among the
Company, the Geneve Affiliates, CIVC, MIG and the Management
Purchasers.
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CUSIP NO. 989580-10-5 13D Page 6 of 6 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Date: October 12, 1998 /s/ Tom E. Boner
-------------------------
Tom E. Boner
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EXECUTION
ZIMMERMAN SIGN COMPANY
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made as of September
30, 1998 between Zimmerman Sign Company, a Texas corporation (the "COMPANY"),
each of the investors listed on the SCHEDULE OF INVESTORS attached hereto (the
"INVESTORS"), each of the executives listed on the SCHEDULE OF EXECUTIVES
attached hereto (the "EXECUTIVES") and each of the other stockholders listed on
the SCHEDULE OF OTHER STOCKHOLDERS attached hereto (the "OTHER STOCKHOLDERS" and
collectively, with the Investors and the Executives, the "STOCKHOLDERS"; each, a
"STOCKHOLDER".) Capitalized terms used and not otherwise defined herein are
defined in Section 9 hereof.
The Investors are entering into a Senior Subordinated Note, Preferred
Stock and Warrant Purchase Agreement, dated as of the date hereof (the "PURCHASE
AGREEMENT"), pursuant to which the Investors are purchasing 12.0% Senior
Subordinated Notes (the "NOTES"), shares of Series A Preferred Stock and the
Investor Warrants. As of the date hereof, each of the Executives and each of
the Other Stockholders owns shares of Common Stock in the amounts set forth
opposite such Executive's name and such Other Stockholder's name, respectively,
on the SCHEDULE OF EXECUTIVES and the SCHEDULE OF OTHER STOCKHOLDERS.
The Company and the Stockholders desire to enter into this Agreement
for the purposes, among others, of (i) establishing the composition of the
Company's board of directors (the "BOARD"), (ii) assuring continuity in the
management of the Company and (iii) limiting the manner and terms by which the
Common Stock may be transferred. The execution and delivery of this Agreement
is a condition to the Investors' obligations under the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. BOARD OF DIRECTORS.
(a) From and after the Closing (as defined in the Purchase
Agreement) and until the provisions of this Section 1 cease to be effective,
each Stockholder shall vote all of his or its Stockholder Shares which are
voting shares and any other voting securities of the Company over which such
Stockholder has voting control and shall take all other necessary or desirable
actions within his or its control (whether in his or its capacity as a
stockholder, director, member of a Board committee or officer of the Company or
otherwise, and including, without limitation, attendance at meetings in person
or by proxy for purposes of obtaining a quorum and execution of written consents
in lieu of meetings), and the Company shall take all necessary or desirable
actions within its control (including, without limitation, calling special board
and stockholder meetings), so that:
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(i) subject to Section 1(e) below, the authorized number of
directors on the Board shall be established at five (5) directors,
(ii) the following individuals shall be elected to the Board:
(A) two (2) representatives (the "INVESTOR DIRECTORS")
designated by holders of a majority of the Investor Shares (the
"MAJORITY INVESTOR HOLDERS"); provided that the designation of the
Investor Directors pursuant to this subparagraph (ii) (A) shall be in
lieu of, and operative only to the extent that, (i) the holders of the
Series A Preferred have failed to designate (or for any reason, have
been prevented from designating) in accordance with Section 6 of the
Certificate of Designation, Series A, two (2) representatives to serve
on the Board, or (ii) the Investors do not hold a majority of the
Series A Preferred;
(B) two (2) members of the Company's management
designated by the Executives, determined by a vote of the Executives
owning a majority of the Stockholder Shares held by all Executives
(the "EXECUTIVE DIRECTORS"), provided that the initial Executive
Directors shall be David E. Anderson and Tom E. Boner; and
(C) one (1) representative designated by the Executives
(determined on the basis of a vote of a majority of the Stockholder
Shares held by all Executives) and acceptable to the Majority Investor
Holders, provided that the person so designated is not a member of the
Company's management or an employee or officer of the Company or its
subsidiaries of an Affiliate, or related by blood or marriage to any
affiliate, of any of the Executives or any other member of the
Company's management (the "OUTSIDE DIRECTOR"); provided, further, that
the Outside Director initially shall be Carl A. Goldman;
(iii) the composition of the board of directors of each of the
Company's Subsidiaries, if any (a "SUB BOARD"), shall be the same as that
of the Board;
(iv) the removal from the Board or a Sub Board (with or
without cause) of any representative designated (x) under subparagraph
(ii)(A), shall be at the written request of the Majority Investor Holders,
(y) under subparagraph (ii)(B), shall be at the written request of the
Executives or (z) under subparagraph (ii)(C), shall be at the written
request of the Majority Investor Holders, the Executives or the Majority
Investor Holders and the Executives, collectively, but only upon such
written request and under no other circumstances (in each case, determined
on the basis of a vote of the holders of a majority of the Stockholder
Shares held by such Persons), provided that if any director elected
pursuant to subparagraph (ii)(B) above ceases to be an employee of the
Company and its Subsidiaries, he shall be removed as a director promptly
after his employment ceases and
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shall have no right to designate any representative pursuant to this
Section 1(a), except that, the foregoing not withstanding, David Anderson
shall be permitted to serve as an Executive Director designated pursuant to
Section 1(a)(ii)(B) for so long as he continue to hold not less than 5% of
the aggregate outstanding shares of the Company's Common Stock, whether or
not he is employed by the Company; and
(v) in the event that any representative designated hereunder
by the Majority Investor Holders or by the Executives, or by the Executives
with the approval of the Majority Investor Holders, ceases to serve as a
member of the Board or a Sub Board during his term of office, the resulting
vacancy on the Board or the Sub Board shall be filled by a representative
designated and/or approved by the Majority Investor Holders or the
Executives, or by a representative designated and/or approved by the
Majority Investor Holders or the Executives, as the case may be, as
provided hereunder.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the
Board, any Sub Board and any committee thereof. So long as any Investor
Director serves on the Board and for 4 years thereafter, the Company shall, at
the request of such Investor Director, maintain directors and officers
indemnity insurance coverage satisfactory to the Investors.
(c) The rights of each Executive under this Section 1 shall terminate
upon such Executive ceasing to be employed by the Company or, if earlier, at
such time as the Executives and their Permitted Transferees (as defined in
Section 4(c) hereof), for any reason, hold in the aggregate less than 75% of
the Stockholder Shares held by the Executives on the date hereof; provided that,
the foregoing not withstanding, David Anderson shall be permitted to serve as an
Executive Director designated pursuant to Section 1(a)(ii)(B) for so long as he
continue to hold not less than 5% of the aggregate outstanding shares of the
Company's Common Stock, whether or not he is employed by the Company.
(d) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this Section 1, the individual previously
holding such directorship shall be elected to such position, or if such
individual fails or declines to serve, the election of an individual to such
directorship shall be accomplished in accordance with the Company's Bylaws and
applicable law; provided that the Stockholders shall vote to remove such
individual if the party which failed to designate such directorship so directs.
(e) Notwithstanding anything to the contrary contained in this
Section 1, upon the occurrence of an Event of Noncompliance of the type
described in Section 7 of the Certificate of Designation and so long as any such
Event of Noncompliance continues uncured and unwaived, each holder of
Stockholder Shares shall vote all of his or its Stockholder Shares and any other
voting securities of the Company over which it has voting control and take all
other necessary or desirable actions within his or its control, and the Company
shall take all necessary and desirable actions within its control, in order to
cause, at the option of and as directed by
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Majority Investor Holders, the removal from the Board of one of the
representatives designated pursuant to paragraph 1(a)(ii)(B) and the election to
the Board of a replacement representative designated by the Majority Investor
Holders; provided that, the foregoing notwithstanding, upon the occurrence of an
Event of Noncompliance, the Stockholders shall not be required to vote their
Stockholder Shares to effect the removal and replacement of a representative in
accordance with this Section 1(e) so long as (i) each of two directors
designated to the Board by holders of the Series A Preferred is entitled, in
accordance with Section 7(b)(iii) of the Certificate of Designation, to cast
with respect to each resolution or other matter presented to the Board for
approval, two times the number of votes that each other director is entitled to
cast in with respect to approval of such resolution or other matter, and (ii)
the Investors hold a majority of the Series A Preferred.
(f) Notwithstanding any other provision of this Section 1, the
holders of Series A Preferred shall not be obligated to vote such shares to
elect any person to the Board other than the Investor Directors.
(g) The provisions set forth in Section 1 shall terminate at such
time when the Investors no longer own at least 20% of the Investor Shares
acquired by the Investors under the Purchase Agreement.
2. REPRESENTATIONS AND WARRANTIES. Each Stockholder represents and
warrants that (i) such Stockholder is the record owner of the number of
Stockholder Shares set forth opposite its name on the schedule attached hereto,
(ii) this Agreement has been duly authorized, executed and delivered by such
Stockholder and constitutes the valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, and (iii) such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement other than this Agreement. No holder of Stockholder Shares
shall grant any proxy or become party to any voting trust or other agreement
which is inconsistent with, conflicts with or violates any provision of this
Agreement.
3. [Intentionally deleted.]
4. RESTRICTIONS ON TRANSFER OF STOCKHOLDER SHARES.
(a) TRANSFER OF STOCKHOLDER SHARES. No Executive or Other
Stockholder shall sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law) any interest in his or its Stockholder Shares (a
"TRANSFER"), except pursuant to the provisions of Section 6, in connection with
a Public Sale, pursuant to the Stock Purchase Option Agreements (as defined in
the Purchase Agreement) or with the prior written approval of the Majority
Investor Holders or, in the case of the Executives, pursuant to the provisions
of this Section 4.
(b) TAG-ALONG RIGHTS. At least thirty 30 days prior to any Transfer
of
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Stockholder Shares (other than a Public Sale), the Executive making such
Transfer (the "TRANSFERRING STOCKHOLDER") shall deliver a written notice (the
"SALE NOTICE") to the holders of Investor Shares, specifying in reasonable
detail the identity of the prospective transferee(s), the number of shares to be
transferred and the terms and conditions of the contemplated Transfer. Each
holder of Investor Shares may elect to participate in the contemplated Transfer
at the same price per share (whether voting or non-voting stock) and on the same
terms by delivering written notice to the Transferring Stockholder within 30
days after delivery of the Sale Notice. If any holder of Investor Shares has
elected to participate in such contemplated Transfer, the Transferring
Stockholder and each such electing holder shall be entitled to sell in the
contemplated Transfer, at the same price and on the same terms, a number of
Stockholder Shares equal to the product of (i) the quotient determined by
dividing the percentage of Stockholder Shares owned by such Person by the
aggregate percentage of Stockholder Shares owned by the Transferring Stockholder
and the holders of Investor Shares participating in such sale and (ii) the
number of Stockholder Shares to be sold in the contemplated Transfer.
Each Executive shall use its best efforts to obtain the agreement of
the prospective transferee(s) to the participation of the holders of Investor
Shares in any contemplated Transfer and to the inclusion of the Investor
Warrants and Series A Preferred in the contemplated Transfer, and no Executive
shall transfer any of its Stockholder Shares to any prospective transferee if
such prospective transferee(s) declines to allow the participation of the
holders of Investor Shares or the inclusion of the Warrants or Series A
Preferred. If any portion of the Investor Warrants is included in any Transfer
of Stockholder Shares under this Section 4(b), the purchase price for the
Investor Warrants shall be equal to the full purchase price determined hereunder
for the Stockholder Shares covered by the portion of the Investor Warrants to be
transferred, reduced by the aggregate exercise price for such shares.
(c) PERMITTED TRANSFERS. The restrictions set forth in this Section
4 shall not apply with respect to any Transfer of Stockholder Shares by any
Executive pursuant to applicable laws of descent and distribution or among such
Executive's Family Group (collectively referred to herein as "PERMITTED
TRANSFEREES"); provided that the restrictions contained in this Section 4 shall
continue to be applicable to the Stockholder Shares after any such Transfer and
provided further that such transferees of such Stockholder Shares shall have
agreed in writing to be bound by the provisions of this Agreement affecting the
Stockholder Shares so transferred to the same extent and in the same manner as
the transferor thereof was so bound (e.g., any transferee of Stockholder Shares
in a Transfer from an Executive shall be subject to the obligations of an
Executive hereunder).
(d) TERMINATION OF RESTRICTIONS. The restrictions on the Transfer of
Stockholder Shares set forth in this Section 4 shall continue with respect to
each Stockholder Share until the date on which such Stockholder Share has been
transferred in a Public Sale or a Sale of the Company in accordance with
Section 6.
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<PAGE>
5. LEGEND. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented by this certificate are subject to a
Stockholders Agreement dated as of September 30, 1998 among the issuer
of such securities (the "Company") and certain of the Company's
stockholders, as amended and modified from time to time. A copy of
such Stockholders Agreement shall be furnished without charge by the
Company to the holder hereof upon written request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding as of the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with paragraph 9 hereof.
6. DRAG-ALONG RIGHTS.
(a) Simultaneous with or at any time following exercise of the
Investor Warrants, the Majority Investor Holders shall have the right to seek a
Sale of the Company and identify a third party or parties to acquire (i) all of
the issued and outstanding capital stock of the Company (whether by merger,
consolidation or sale or transfer of stock) or (ii) all or substantially all of
the Company's assets on a consolidated basis. The holder or holders proposing a
Sale of the Company (the "PROPOSING STOCKHOLDERS") shall notify the Company and
the other Stockholders (the "NON-PROPOSING STOCKHOLDERS") prior to initiating
contact with any prospective third party purchaser in connection with such
transaction.
(b) ELECTION. The Proposing Stockholders shall deliver written
notice to the Company and the Non-Proposing Stockholders setting forth in
reasonable detail the terms of the proposed Sale of the Company (the "SALE
NOTICE"). Within 20 days following receipt of the Sale Notice (the "ELECTION
PERIOD"), the Non-Proposing Stockholders shall deliver to the Company and the
Proposing Stockholders written notice setting forth such holders' election
(i) to consent to and raise no objections against proposed Sale of the Company,
and if the Sale of the Company is structured as a sale of stock, to sell their
Stockholder Shares on the terms and conditions set forth in the Sale Notice, or
(ii) if such Non-Proposing Stockholders hold more than 20% of the Stockholder
Shares, to deliver a written offer (a "STOCKHOLDER OFFER"), upon substantially
the same terms as described in the Sale Notice, to acquire the Company
(a "STOCKHOLDER TRANSACTION"). If the Non-Proposing Stockholders have not
delivered a Stockholder Offer within such 20-day period, the Proposing
Stockholders shall have 180 days after the expiration of the Election Period to
consummate the Sale of the Company, or during which the Company may enter into
an agreement providing for such a sale, on the terms specified in the Sale
Notice. If the Sale of the Company is not consummated or the Company fails to
enter into such an
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agreement within such 180-day period, the Proposing Stockholders shall again
comply with the provisions of this Section 6. If the Non-Proposing Stockholders
have delivered a Stockholder Offer within the Election Period, the Non-Proposing
Stockholders must (A) obtain an executed definitive and binding agreement to
consummate the Stockholder Transaction and obtain binding commitments regarding
the financing thereof satisfactory in all respects to the Proposing Stockholders
both within 30 days after receipt by the Proposing Stockholders of the
Stockholder Offer and (B) must consummate the Stockholder Transaction within
120 days after receipt by the Proposing Stockholders of the Stockholder Offer.
If any of the conditions set forth in (A) or (B) of the preceding sentence is
not fulfilled, the Other Stockholders must again comply with the provisions of
this Section 6. The consummation of a Sale of the Company or a Stockholder
Transaction pursuant to this Section 6(b) shall be in accordance with the
provisions of the Texas Business Corporation Act.
(c) Upon consummation of the Sale of the Company hereunder, all
holders of Common Stock shall receive the same form and amount of consideration
per share of Common Stock, or if any holders of Common Stock as such holders are
given an option as to the form and consideration to be received, all holders
shall be given the same option.
7. PUT ARRANGEMENTS.
(a) At any time following the fifth anniversary of the date hereof
each holder of Investor Shares shall have the right to require the Company to
repurchase all or any portion of the such holder's Investor Shares at the Put
Price (the "PUT") by delivering a written notice to the Company and each other
holder of Investor Shares specifying the amount thereof to be purchased (the
"PUT NOTICE"). The right to exercise the Put shall inure to the benefit of all
transferees of the Investor Shares (other than transferees in a Public Sale).
(b) Upon the delivery of the Put Notice, the Company and the holder
or holders of Investor Shares delivering the Put Notice (including those
specified in the last sentence of this Section 7(b), the "REQUESTING HOLDERS")
shall in good faith promptly determine the Put Price as provided hereunder, and
subject to the provisions hereof, within twenty (20) days after the
determination of the Put Price, the Company shall purchase and the Requesting
Holders shall sell the amount of such Requesting Holder's Investor Shares
specified in the Put Notice at a mutually agreeable time and place (the "PUT
CLOSING"). Upon receipt of any Put Notice, any other holder of Investor Shares
may, by written notice delivered to the Company within five (5) business days
after receiving such Put Notice specifying the number of Investor Shares that
such holder elects to include in such Put, elect to participate in such Put, and
upon delivery of such written notice each such other holder shall be deemed to
be a Requesting Holder.
(c) At the Put Closing, the Requesting Holders shall deliver to the
Company certificates and other instruments (if any) representing the Investor
Shares to be repurchased by the Company, and the Company shall deliver to the
Requesting Holders the Put Price by cashier's
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<PAGE>
or certified check payable to the Requesting Holders or by wire transfer of
immediately available funds to an account designated by the Requesting Holders;
provided that if, as the result of the payment in cash of the Put Price in
accordance with this Section 7(c), there will exist an Event of Default (as
defined in each of the Purchase Agreement and the Loan Agreement) and the
Company shall have used its best efforts to obtain financing from an outside
source for payment of the Put Price, then the Company may pay the Put Price by
delivery (i) of cash (as provided above) up to the maximum portion of the Put
Price, the payment of which will not result in the occurrence or existence of
an Event of Default and (ii) a promissory note in a principal amount equal to
that portion of the Put Price not being paid pursuant to the foregoing clause
(i), payable in three successive annual installments, with the first
installment due on the first anniversary of the delivery of the Put Notice, and
otherwise containing terms substantially similar to the terms set forth in the
Company's 12% Senior Subordinated Notes. If the Requesting Holder deliver to
the Company all or any portion of the Investor Warrants in satisfaction of the
sale of the Investor's Stockholder Shares hereunder, the Put Price shall be
reduced by the aggregate exercise price of such portion of the Warrants.
(d) The "PUT PRICE", as of any date, of any Requesting Holder's
Investor Shares to be repurchased hereunder shall be determined based on a value
of the Company's common stock equal to THE GREATER OF (i) the product of 6.25,
MULTIPLIED BY the Company's EBITDA for the trailing 12-month period (as defined
in the Purchase Agreement) for its most recently completed fiscal year as
reflected on the Company's audited consolidated income statement for such fiscal
year, MINUS the Company's aggregate principal amount of, plus accrued and unpaid
interest on, outstanding indebtedness as of such date MINUS the liquidation
value of, plus accrued and unpaid dividends, if any, on, the then outstanding
preferred stock of the Company, and (ii) the Market Value as of such date. The
aggregate Put Price payable to each Requesting Holder shall be equal to the
amount which such holder would receive with respect to the Investor Shares
specified by such holder in such holder's Put Notice in the event of a Sale of
the Company for an aggregate purchase price equal to the value attributable to
the Company in accordance with the foregoing sentence.
In calculating the Put Price, all accounting determinations shall be
made in accordance with generally accepted accounting principles consistently
applied.
(e) The Investors' right to exercise the Put hereunder shall
terminate upon the first to occur of (i) the 10th anniversary of the date of
this Agreement and (ii) a Sale of the Company.
8. TRANSFER. Prior to transferring any Stockholder Shares (other
than in a Public Sale or a Sale of the Company) to any Person, the transferring
Stockholder shall cause the prospective transferee to be bound by this Agreement
and to execute and deliver to the Company and the other Stockholders a
counterpart of this Agreement.
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<PAGE>
9. DEFINITIONS.
"CERTIFICATE OF DESIGNATION, SERIES A" means the Certification of
Designation, Series A, as approved by the Company's Board of Directors and filed
with the Secretary of the State of Texas as of September 30, 1998.
"COMMON STOCK" means the Company's Common Stock, par value $.01 per
share.
"FAMILY GROUP" means an Executive's spouse and descendants (whether
natural or adopted) and any trust solely for the benefit of the Executive and/or
the Executive's spouse and/or descendants.
"INDEPENDENT THIRD PARTY" means any Person who, immediately prior to
the contemplated transaction, does not own in excess of 5% of the Common Stock
on a fully-diluted basis (a "5% OWNER)", who is not controlling, controlled by
or under common control with any such 5% Owner and who is not the spouse or
descendent (by birth or adoption) of any such 5% Owner or a trust for the
benefit of such 5% Owner and/or such other Persons.
"INVESTOR SHARES" means the Stockholder Shares issued to, or issuable
in respect of securities issued to, Continental Illinois Venture Corporation or
MIG Partners VIII at the Closing or thereafter.
"INVESTOR WARRANTS" means the stock purchase warrants issued to the
Investors under the Purchase Agreement exercisable into shares of Common Stock.
"LOAN AGREEMENT" means the Second Amended and Restated Revolving
Credit and Loan Agreement, dated as of the date hereof, by and between the
Company and Comerica Bank-Texas, a Texas banking association.
"MARKET VALUE" means the fair market value of the Company's entire
common equity determined on a going concern basis as between a willing buyer and
a willing seller and taking into account all relevant factors determinative of
value. In determining the Market Value as of any date, the Company and the
Investors first shall use their respective reasonable best efforts to agree on
such Market Value. In the event that the Company and the Investors are unable
to agree on the Market Value as of such date within 15 days after delivery of
the Put Notice, such Market Value shall be determined by an investment banking
firm selected by the Company and acceptable to the Majority Investor Holders,
which firm shall submit to the Company and the Majority Investor Holders a
written report setting forth such determination. If the parties are unable to
agree on an investment banking firm within 20 days after delivery of a Put
Notice, a firm shall be selected by lot, after the Company and the Majority
Investor Holders have each eliminated one such firm. The expenses of such firm
shall be borne by the Company, and the determination of such firm shall be final
and binding upon all parties, except that after the determination of Market
Value following the exercise of the Put, any Requesting Holder may rescind its
exercise of such Put.
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<PAGE>
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PUBLIC SALE" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
"SALE OF THE COMPANY" means the sale of the Company to an Independent
Third Party or group of Independent Third Parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's board of
directors (whether by merger, consolidation or sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"STOCKHOLDER SHARES" means (i) any Common Stock purchased or otherwise
acquired by any Stockholder, (ii) any Common Stock issued or issuable directly
or indirectly upon exercise of the Investor Warrants, (iii) any Common Stock
issued or issuable with respect to the securities referred to in clauses (i) and
(ii) above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization and (iv) any other shares of any class or series of capital stock
of the Company held by a Stockholder. For purposes of this Agreement, any
Person who holds Investor Warrants shall be deemed to be the holder of the
Stockholder Shares issuable directly or indirectly upon exercise of the Investor
Warrants in connection with the transfer thereof or otherwise and regardless of
any restriction or limitation on the exercise thereof. As to any particular
Stockholder Shares, such shares shall cease to be Stockholder Shares when they
have been (a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them or (b) distributed to
the public through a broker, dealer or market maker pursuant to Rule 144 under
the Securities Act (or any similar provision then in force).
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity
of which (i) if a corporation, a majority of the total voting power of shares
of stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person or a combination thereof, or
(ii) if a limited liability company, partnership, association or other
business entity, a majority of the limited liability company, partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly
-10-
<PAGE>
or indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control
the managing director or general partner of such limited liability company,
partnership, association or other business entity.
10. CERTAIN PARTICIPATION RIGHTS. At least 10 days prior to any
repurchase by the Company of any Investor Shares, the Company will deliver a
written notice to the Executives holding Stockholder Shares specifying in
reasonable detail the terms and conditions of the contemplated repurchase
transaction (a "Company Repurchase Notice"). Any Executive may elect to
participate in the contemplated repurchase transaction with respect to his or
her Stockholder Shares by delivering written notice to the Company within 10
days after delivery of the Company Repurchase Notice. If any Executive elects
to participate in the repurchase transaction, the Company will repurchase from
the holders of the Investor Shares and each electing Executive, at the same
price and on the same terms, a number of Stockholder Shares equal to the product
of (i) the quotient determined by dividing the number of Stockholders Shares
owned by the electing Executive(s) or the holder of Investor Shares, as the case
may be, by the aggregate number of outstanding Stockholder Shares then owned,
collectively, by the Investors and the Executives, multiplied by (ii) the
aggregate number of Stockholder Shares to be repurchased by the Company in the
proposed transaction.
11. TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Stockholder Shares as the owner
of such shares for any purpose.
12. AMENDMENT AND WAIVER. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company or the holders of at
least a majority of the Stockholder Shares, respectively. The failure of any
party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
13. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
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<PAGE>
14. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
15. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares; provided that the rights of
the Investors under paragraph 1 hereof may not be assigned without the prior
written approval of any Executive or Other Stockholder.
16. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
17. REMEDIES. The Company and the Stockholders shall be entitled to
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company and any Stockholder may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
18. NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices shall be deemed to have been given hereunder when
delivered personally, three business days after deposit in the U.S. mail and one
business day after deposit with a reputable overnight courier service prepaid
for next-business day delivery. The Company's address is:
Zimmerman Sign Company
9846 Hwy 31 East
Tyler, Texas 75705
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<PAGE>
19. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF TEXAS SHALL
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY
AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEABILITY OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
20. BUSINESS DAYS. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the state in which the Company's chief-executive office is located, the time
period shall automatically be extended to the business day immediately following
such Saturday, Sunday or legal holiday.
21. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
ZIMMERMAN SIGN COMPANY
By /s/ David E. Anderson
Its Chairman
CONTINENTAL ILLINOIS VENTURE
CORPORATION
By /s/ Robert Perille
Its Managing Director
MIG PARTNERS VIII
By /s/ Robert Perille
Its General Partner
/s/ David E. Anderson
David E. Anderson
/s/ Tom E. Boner
Tom E. Boner
/s/ John Griggs
John Griggs
/s/ Mike Coppinger
Mike Coppinger
/s/ Jeffrey Johnson
Jeffrey Johnson
/s/ Michael St. Onge
Michael St. Onge
<PAGE>
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
Name and Address Number of Stockholder Shares
- ---------------- ----------------------------
<S> <C>
Continental Illinois Venture Corporation
231 South LaSalle Street
Chicago, IL 60697
MIG PARTNERS VIII
231 South LaSalle Street
Chicago, IL 60697
</TABLE>
<PAGE>
SCHEDULE OF EXECUTIVES
<TABLE>
<CAPTION>
Name and Address Number of Stockholder Shares
- ---------------- ----------------------------
<S> <C>
David E. Andersen 252,243 shares of Common Stock
8350 N. Central Expressway
Suite 600
Dallas, TX 75206
Tom E. Boner 61,823 shares of Common Stock
9846 Highway 31 East
Tyler, TX 75705
</TABLE>
<PAGE>
EXECUTION
ZIMMERMAN SIGN COMPANY
REGISTRATION AGREEMENT
THIS AGREEMENT is made as of September 30, 1998, between Zimmerman
Sign Company, a Texas corporation (the "COMPANY"), Continental Illinois Venture
Corporation, a Delaware corporation ("CIVC"), MIG Partners VIII, a Delaware
partnership ("MIG"), and each of the other persons identified on the signature
pages hereto (collectively, the "OTHER STOCKHOLDERS" and each, an "OTHER
STOCKHOLDER"). CIVC and MIG are referred to herein collectively as the
"INVESTORS" and each is referred to herein individually as an "INVESTOR." The
Investors and the Other Stockholders are referred to herein collectively as the
"STOCKHOLDERS" and individually as a "STOCKHOLDER".
The Company, the Investors and certain of the Other Stockholders are
parties to a Senior Subordinated Note, Preferred Stock and Warrant Purchase
Agreement of even date herewith (the "PURCHASE AGREEMENT"). In order to induce
the Investors to enter into the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the Closing under the Purchase
Agreement. Unless otherwise provided in this Agreement, capitalized terms used
herein shall have the meanings set forth in SECTION 9 hereof.
The parties hereto agree as follows:
1. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. At any time after the date hereof the
holders of a majority of the Investor Registrable Securities (the "MAJORITY
INVESTOR HOLDERS") may request registration under the Securities Act of 1933,
as amended (the "SECURITIES ACT") of all or any portion of their Registrable
Securities on Form S-1 or any similar long-form registration ("LONG-FORM
REGISTRATIONS") or on Form S-2 or S-3 or any similar short-form registration
("SHORT-FORM REGISTRATIONS") if available. All registrations requested pursuant
to this paragraph l(a) are referred to herein as "DEMAND REGISTRATIONS." Each
request for a Demand Registration shall specify the approximate number of
Registrable Securities requested to be registered, the anticipated per share
price range for such offering and the intended method of disposition. Within
ten (10) days after receipt of any such request, the Company shall give written
notice of such requested registration to all other holders of Registrable
Securities and shall include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within 15 days after the receipt of the
<PAGE>
Company's notice.
(b) LONG-FORM REGISTRATIONS. The Majority Investor Holders shall be
entitled to request two (2) Long-Form Registrations in which the Company shall
pay all Registration Expenses (as defined in SECTION 6(a)) associated with the
public offering of the Company's equity securities Investor Holders. A
registration shall not count as one of the permitted Long-Form Registrations
until it has become effective and neither the last nor any subsequent Long-Form
Registration shall count as one of the permitted Long-Form Registrations unless
the holders of Registrable Securities are able to register and sell all of the
Registrable Securities requested to be included in such registration; provided
that in any event the Company shall pay all Registration Expenses in connection
with any registration initiated as a Long-Form Registration whether or not it
has become effective and whether or not such registration has counted as one of
the Long-Form Registrations.
(c) SHORT-FORM REGISTRATIONS. In addition to the Long-Form
Registrations provided pursuant to SECTION 1(b), the Majority Investor Holders
shall be entitled to request five (5) Short-Form Registrations in which the
Company shall pay all Registration Expenses; provided that in each such
Short-Form Registration the holders of Registrable Securities shall request to
include in such registration at least 25% of the Registrable Securities held by
them in the aggregate as of the date hereof (or such lesser amount if less than
25% are unregistered as of such demand). Demand Registrations shall be
Short-Form Registrations whenever the Company is permitted to use any applicable
short form.
(d) RESTRICTIONS ON DEMAND REGISTRATIONS. The Company shall not be
obligated to effect any Demand Registration within 180 days after the effective
date of a previous Demand Registration or a previous registration in which the
holders of Registrable Securities were given piggyback rights pursuant to
SECTION 2 and in which there was no reduction in the number of Registrable
Securities requested to be included. The Company may postpone for up to
180 days (from the date of the request) the filing or the effectiveness of a
registration statement for a Demand Registration if the Company's board of
directors determines in its reasonable good faith judgment that such Demand
Registration would reasonably be expected to have a material adverse effect on
any proposal or plan by the Company or any of its Subsidiaries to engage in any
acquisition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer, reorganization or similar transaction;
provided that in such event, the holders of Registrable Securities initially
requesting such Demand Registration shall be entitled to withdraw such request
and, if such request is withdrawn, such Demand Registration shall not count as
one of the permitted Demand Registrations hereunder and the Company shall pay
all Registration
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<PAGE>
Expenses in connection with such registration. The Company may delay a Demand
Registration hereunder only once in any twelve-month period.
(e) SELECTION OF UNDERWRITERS. In any Demand Registration, the
Company shall have the right to select the investment banker(s) and manager(s)
to administer the offering, provided that the investment banker(s) and
manager(s) so selected are reasonably satisfactory to the Majority Investor
Holders.
2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register
any of its securities under the Securities Act (other than pursuant to (i) a
Demand Registration or (ii) pursuant to a registration on Form S-4 or S-8 or any
successor or similar forms) and the registration form to be used may be used for
the registration of Registrable Securities (a "PIGGYBACK REGISTRATION"), the
Company shall give prompt written notice (in any event within ten (10) days
after its receipt of notice of any exercise of demand registration rights other
than under this Agreement) to all holders of Registrable Securities of its
intention to effect such a registration and shall include in such registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within 15 days after the receipt of the
Company's notice.
(b) PIGGYBACK EXPENSES. The Registration Expenses of the holders of
Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
(c) PRIORITY ON PIGGYBACK REGISTRATIONS. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such
registration (i) FIRST, the securities the Company proposes to sell,
and (ii) SECOND, the Registrable Securities requested to be included in such
registration pro rata among the holders thereof on the basis of the number of
shares of Registrable Securities owned by each such holder, and (iii) THIRD,
other securities requested to be included in such registration pro rata among
the holders of such securities and any other securities held by others requested
to be included in such registration, pro rata among the holders thereof on the
basis of the number of shares requested to be included in such registration.
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<PAGE>
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities (other than the parties hereto) who have been granted contractual
demand registration rights, and the managing underwriters advise the company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company will
include in such registration (i) FIRST, the securities requested to be included
therein by the holders requesting such registration, pro rata among the holders
of such securities on the basis of the number of shares owned by each such
holder, (ii) SECOND, the Registrable Securities requested to be included in such
registration, pro rata among the holders thereof on the basis of the number of
shares of Registrable Securities owned by each such holder, and (iii) THIRD,
other securities requested to be included in such registration pro rata among
the holders of such securities.
(e) SELECTION OF UNDERWRITERS. In any Piggyback Registration, the
Company shall have the right to select the investment banker(s) and manager(s)
to administer the offering.
3. HOLDBACK AGREEMENTS.
(a) The Company shall not effect any public sale or other
distribution (including sales pursuant to Rule 144) of its equity securities, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven (7) days prior to and during the 180-day period
beginning on the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or any successor form),
unless the underwriters managing the registered public offering otherwise agree.
(b) Each holder of Registrable Securities shall not effect any public
sale or other distribution (including sales pursuant to Rule 144) of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities during the seven days prior to and during the
180-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are eligible for inclusion (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or any successor form),
unless the underwriters managing the registered public offering otherwise agree.
4. REGISTRATION PROCEDURES. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this
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<PAGE>
Agreement, the Company shall use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof (including the registration of the Warrants held by a
holder of Registrable Securities requesting registration as to which the Company
has received reasonable assurances that only Common Stock shall be distributed
to the public), and pursuant thereto the Company shall as expeditiously as
possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to the counsel selected by the
holders of a majority of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed, which documents
shall be subject to the review and comment of such counsel);
(b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 180 days and comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of
requested copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to
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general service of process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading; provided that upon
such notification by the Company, each seller of such Registrable Securities
will not offer or sell such Registrable Securities until the Company has
notified such seller that it has prepared a supplement or amendment to such
prospectus and delivered copies of such supplement or amendment to such seller;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing
that, to secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Securities
with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including effecting a stock split or a combination of
shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter (in each case after reasonable prior notice), all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the
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Company's officers, directors, employees and independent accountants to supply,
on a confidential basis, all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order; and
(m) obtain a comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by comfort letters as the holders of a majority of the Registrable
Securities being sold reasonably request (provided that such Registrable
Securities constitute at least 10% of the securities covered by such
registration statement).
Each seller of Registrable Securities, upon receipt of any notice from the
Company of the happening of any event of the kind described in subsection (e)
of this Section 4, will forthwith discontinue disposition of the Registrable
Securities until receipt by the seller of Registrable Securities of the
copies of the supplemented or amended prospectus contemplated by subsection
(e) of this Section 4 or until it is advised in writing (the "Advice") by the
Company that the use of the prospectus may be resumed and has received
copies of any additional or supplemental filings which are incorporated by
reference in the prospectus, and if so directed by the Company, such seller
of Registrable Securities will, or will request the managing underwriter or
underwriters, if any, to deliver to the Company (at the Company's expense)
all copies (other than
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permanent file copies) then in the possession of such seller of Registrable
Securities and of any underwriter or underwriters, of he prospectus covering
such Registrable Securities current at the time of receipt of such notice. In
the event the Company shall give any such notice, the time periods mentioned in
subsection (b) of this Section 4 shall be extended by the number of days during
the period from and including the date of the giving of such notice to and
including the date when each seller of Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by subsection (e) of this Section 4 hereof or
the Advice.
5. COOPERATION BY HOLDERS OF REGISTRABLE SECURITIES
(a) Each seller of Registrable Securities will furnish to the Company
in writing such information as the Company may reasonably require from time to
time from such seller, and otherwise reasonably cooperate with the Company in
connection with any registration with respect to such holder's Registrable
Securities.
(b) The failure of any prospective seller of Registrable Securities
to furnish any information or documents in accordance with any provision
contained in this Agreement shall not affect the obligations of the Company
hereunder to any remaining sellers who furnish such information and documents
unless, in the reasonable opinion of counsel to the Company or the underwriters,
such failure impairs or may impair the viability of the or the legality of any
registration statement in connection therewith.
(c) At the end of any period during which the Company is obligated to
keep any registration statement current and effective as provided in SECTION 4,
the holders of Registrable Securities included in such registration statement
shall discontinue sales of shares pursuant to such registration statement upon
receipt of notice from the Company of its intention to remove from registration
the shares covered by such registration statement which remain unsold and such
holders shall notify the Company of the number of shares registered which remain
unsold promptly after receipt of such notice from the Company.
6. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts,
commissions, and
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undocumented expense allowances) and other Persons (as defined in the Purchase
Agreement) retained by the Company (all such expenses being herein called
"REGISTRATION EXPENSES"), shall be borne as provided in this Agreement, except
that the Company shall, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed or on the NASD
automated quotation system.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Investor Registrable
Securities included in such registration for the reasonable fees and
disbursements of one counsel chosen by the holders of a majority of the Investor
Registrable Securities initially requesting such registration. The Company
shall not be required to pay or obtain reimbursement for excessive discounted
fees and commissions attributable to a sale of the Company and fees and/or
expenses of other experts retained by the holders of Registrable Securities.
(c) To the extent Registration Expenses are not required to be paid
by the Company, each holder of securities included in any registration hereunder
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
shall be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
(d) The Company will not bear the cost of or pay for any stock
transfer tax imposed in respect of the transfer of any Registrable Securities to
any purchaser thereof by any holder of Registrable Securities in connection with
any registration of Registrable Securities pursuant to this Agreement.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities (requesting or joining in a registration
hereunder), its officers and directors and each Person who controls (within the
meaning of the Securities Act) such holder against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing
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<PAGE>
to the Company by such holder expressly for use therein or by such holder's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished such holder
with a sufficient number of copies of the same. In connection with an
underwritten offering the Company shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder shall furnish to
the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls (within the meaning of the
Securities Act) the Company against any losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement of material fact
contained in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so furnished
in writing by such holder; provided that the obligation to indemnify shall be
limited to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement. In connection
with an underwritten offering in which a holder of Registrable Securities is
participating, each such holder shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Company.
(c) Any Person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall not impair any Person's right to indemnification
hereunder to the extent such failure has not prejudiced the indemnifying
party) and (ii) unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party shall
not be subject to any liability for any settlement made by the indemnified
party without its consent (but such consent shall not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim shall not be obligated to pay the fees and
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expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and shall survive the transfer of securities. The
parties hereto also agree to make such provisions, as are reasonably requested
by any indemnified party, for contribution to such party in the event such
party's indemnification is unavailable for any reason.
8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that no
holder of Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding such holder
and such holder's intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in SECTION 7 hereof.
9. DEFINITIONS.
(a) "INVESTOR REGISTRABLE SECURITIES" means (i) any Common Stock
issued to CIVC or MIG, (ii) any Common Stock issued or issuable upon the
exercise or otherwise in respect of the Warrants issued pursuant to the Purchase
Agreement, (iii) any Common Stock issued or issuable with respect to the
securities referred to in clauses (i) and (ii) above by way of a stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization, and (iv) any other shares of
Common Stock held by the Investors holding securities described in clauses (i),
(ii) and (iii), inclusive, above. As to any particular Investor Registrable
Securities, such securities shall cease to be Investor Registrable Securities
when they have been distributed to the public pursuant to a offering registered
under the Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act (or any
similar rule then in force) or repurchased by the Company or any Subsidiary.
For purposes of this Agreement, a Person shall be deemed to be a holder of
Investor Registrable Securities, and the
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Registrable Securities shall be deemed to be in existence, whenever such Person
has the right to acquire directly or indirectly such Registrable Securities
(upon conversion or exercise in connection with a transfer of securities or
otherwise, but disregarding any restrictions or limitations upon the exercise of
such night), whether or not such acquisition has actually been effected, and
such Person shall be entitled to exercise the rights of a holder of Investor
Registrable Securities hereunder.
(b) "OTHER REGISTRABLE SECURITIES" means (i) any Common Stock held by
or issued to any Other Stockholder, (ii) any Common Stock issued or issuable
with respect to the securities referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Other Registrable Securities, such securities shall cease to be Other
Registrable Securities when they have been distributed to the public pursuant to
a offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the Securities
Act (or any similar rule then in force) or repurchased by the Company or any
Subsidiary. For purposes of this Agreement, a Person shall be deemed to be a
holder of Other Registrable Securities, and the Other Registrable Securities
shall be deemed to be in existence, whenever such Person has the right to
acquire directly or indirectly such Other Registrable Securities (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
night), whether or not such acquisition has actually been effected, and such
Person shall be entitled to exercise the rights of a holder of Other Registrable
Securities hereunder.
(c) "REGISTRABLE SECURITIES" means, collectively, the Investor
Registrable Securities and the Other Registrable Securities.
(d) Unless otherwise stated, other capitalized terms contained herein
have the meanings set forth in the Purchase Agreement.
10. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company shall not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Securities in
this Agreement.
(b) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of a majority of the Registrable
Securities.
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<PAGE>
(c) SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
(d) SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not; in addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(e) ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(f) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement.
(g) REMEDIES. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(h) GOVERNING LAW. The corporate law of the State of Texas shall
govern all issues and questions concerning the relative rights of the Company
and its stockholders and other issues and questions concerning the construction,
validity,
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interpretation and enforcement of this Agreement and the exhibits and schedules
hereto without giving effect to any choice of law or conflict of law rules or
provisions.
(i) NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, sent by telecopy, mailed first
class mail (postage prepaid) or sent by reputable overnight courier service
(charges prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Underlying Stock subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices shall be deemed to have been given hereunder upon
receipt when delivered personally or by telecopy, three business days after
deposit in the U.S. mail and on the first business day after deposit with a
reputable overnight courier service (postage provided for and with instructions
for overnight delivery). The Company's address is:
Zimmerman Sign Company
9846 Hwy 31 East
Tyler, Texas 75705
(j) DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ZIMMERMAN SIGN COMPANY
By: /s/ David E. Anderson
Name: David E. Anderson
Its: Chairman
INVESTORS:
CONTINENTAL ILLINOIS VENTURE
CORPORATION
By: /s/ Robert Perille
Name: Robert Perille
Its: Managing Director
MIG PARTNERS VIII
By: /s/ Robert Perille
Name: Robert Perille
Its: General Partner
OTHER STOCKHOLDERS:
/s/ David E. Anderson
David E. Anderson
/s/ Tom Boner
Tom Boner
<PAGE>
SOUTHERN INVESTORS CORP.
By /s/ Steven B. Lapin
Its
SOUTHERN MORTGAGE HOLDING
CORPORATION
By /s/ Steven B. Lapin
Its
GENEVE SECURITIES PORTFOLIO CORP.
By /s/ Steven B. Lapin
Its
GENEVE SECURITIES HOLDING CORP.
By /s/ Steven B. Lapin
Its
CHAPARRAL INTERNATIONAL RE.
By /s/ Steven B. Lapin
Its
<PAGE>
EXECUTION
SHARE OPTION PURCHASE AGREEMENT
THIS SHARE OPTION PURCHASE AGREEMENT (this "AGREEMENT") is made as of
September 30, 1998, among Geneve Securities Holding Corp., Geneve Securities
Portfolio Corp., Chaparral International Re., Southern Mortgage Holding
Corporation and Southern Investors Corp. (collectively, "GHI"), Zimmerman Sign
Company, a Texas corporation (the "COMPANY"), and David Anderson ("ANDERSON,"
and together with the Company, the "OPTIONEES"). Except as otherwise indicated
herein, capitalized terms used and not otherwise defined herein have the
meanings ascribed to such terms in the Senior Subordinated Note, Preferred Stock
and Warrant Purchase Agreement, dated as of the date hereof (the "PURCHASE
AGREEMENT"), among the Company and certain investors listed therein.
GHI desires to grant to each Optionee and each Optionee desires to
acquire an option (each an "OPTION" and collectively the "Options") to purchase
the number of shares of the Company's Common Stock indicated on Schedule I
hereto which aggregate 785,143 shares (the "OPTION SHARES") at the exercise
prices and on the terms and subject to the conditions set forth herein.
As of the date hereof, the Company has entered into a Senior
Subordinated Note, Preferred Stock and Warrant Purchase Agreement (the
"RECAPITALIZATION AGREEMENT") pursuant to which the Company is initiating a plan
to recapitalize its existing debt and equity structure through a series of
transactions which include the issuance to certain investors of capital stock
and subordinate notes thereunder. Execution and delivery of this Share Option
Purchase Agreement is a condition to the obligations of such Investors
thereunder.
In consideration of the mutual covenants and promises contained herein
and for the good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
Section 1. OPTION.
1A. COMPANY OPTION. GHI hereby grants to the Company an Option for
the purchase of up to 357,143 Option Shares at a price per share equal to $1.50
per share in cash and the delivery of .0175 shares of Series C Preferred Stock,
par value $0.01 per share (the "SERIES C PREFERRED STOCK"), payable upon
exercise as set forth in SECTION 2. The Option granted pursuant to this SECTION
1A may be exercised only during the period (the "EXERCISE PERIOD") commencing
with the open of business on January 4, 1999 through the close of business on
January 8, 1999.
1B. ANDERSON OPTION. GHI hereby grants to Anderson an Option (the
"ANDERSON OPTION") for the purchase of up to 428,000 Option Shares at a price
per share equal to $3.25 per share, payable in cash only upon exercise as set
forth in SECTION 2. The Anderson Option may be exercised only during the
Exercise Period.
<PAGE>
1C. CONSIDERATION. The consideration for an Option being granted
hereunder is $.25 per Option Share. As of the date hereof, the Company and
Anderson shall deliver $89,285.75 and $107,000.00, respectively, to GHI, by
cashier's check or wire transfer of immediately available funds.
Section 2. EXERCISE OF THE OPTION. Each Optionee may exercise its
Option, in whole or in part, upon payment of the product of (i) the exercise
price set forth in SECTION 1A or 1B, as the case may be, multiplied by (ii) the
number of Option Shares to be acquired. Payment of the applicable option price
by Anderson shall be made in cash, by wire transfer of immediately available
funds to an account designated by GHI. Payment of the applicable option price
by the Company shall be made by delivery of the applicable option price in cash,
by wire transfer of immediately and available funds, and by delivery of stock
certificates representing Series C Preferred Stock. Upon payment of the option
price by an Optionee, GHI shall deliver to such Optionee the stock certificates
evidencing the Option Shares to be acquired by such Optionee duly endorsed in
blank or accompanied by duly executed stock powers.
Section 3. REPRESENTATIONS AND WARRANTIES.
(a) GHI hereby represents and warrants to the Optionees as
follows:
(i) GHI is the record and beneficial owner of the
Option Shares free and clear of all Liens and no
other third party has any right or interest in the
Option Shares, and at the time of the exercise of
the Option by either Optionee, such Optionee will
acquire good and marketable title to the Option
Shares so acquired free and clear of any Liens;
(ii) the Option Shares are not subject to any statutory
or contractual stockholders' preemptive rights or
rights of first offer or refusal with respect to the
transfers of the Option Shares contemplated hereby;
(iii) Geneve Securities Portfolio Corp. is a corporation
duly organized, validly existing and in good
standing under the laws of the State of Delaware and
has the requisite corporate power and authority to
enter into this Agreement and consummate the
transactions contemplated hereby;
(iv) Chaparral International Re. is a corporation duly
organized, validly existing and in good standing
under the laws of the jurisdiction of its
organization and has the requisite
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corporate power and authority to enter into this
Agreement and consummate the transactions
contemplated hereby;
(v) Geneve Securities Holding Corp. is a corporation
duly organized, validly existing and in good
standing under the laws of the State of Delaware and
has the requisite corporate power and authority to
enter into this Agreement and consummate the
transactions contemplated hereby;
(vi) Southern Investors Corp. is a corporation duly
organized, validly existing and in good standing
under the laws of the State of Delaware and has the
requisite corporate power and authority to enter
into this Agreement and consummate the transactions
contemplated hereby; and
(vii) Southern Mortgage Holding Corp. is a corporation
duly organized, validly existing and in good
standing under the laws of the State of Delaware and
has the requisite corporate power and authority to
enter into this Agreement and consummate the
transactions contemplated hereby.
(b) Each of the Company and Anderson hereby represent and
warrant to GHI that such person has the requisite power and authority to
enter into this Agreement and consummate the transactions contemplated
thereby and that if the Options are exercised each is acquiring the Option
Shares for investment purposes and not with any present intention to resell
or distribute such shares except for the contemplated sale by Anderson of a
portion of the Option Shares to the Company.
Section 4. CERTAIN COVENANTS. Until exercise of the Options
contemplated hereby, GHI shall not and shall not permit any of its
representatives to take any action (whether as a shareholder, director, officer,
employee or otherwise) which would reasonably be anticipated to have an adverse
effect on the Company or the transactions contemplated hereby or in the
Recapitalization Agreement or the other agreements contemplated hereby. Without
limiting the foregoing in any way, prior to exercise of the Options hereunder,
GHI shall not, directly or indirectly, enter into any contract, agreement or
understanding with respect to the transfer or voting of the Option Shares or the
placing of a Lien on any of the Option Shares.
Section 5. MISCELLANEOUS.
5A. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made in writing by any party
in connection herewith shall survive the execution and delivery of this
Agreement and the consummation of the transactions
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contemplated hereby. The covenants contained herein shall terminate upon the
earlier of consummation of the transactions contemplated hereby or the
expiration of the Exercise Period.
5B. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
5C. OTHER AGREEMENTS. Upon exercise of the Anderson Option, the
Option Shares not subsequently conveyed to the Company shall be deemed
Stockholder Shares (as defined in the Stockholders Agreement) and Other
Registrable Securities (as defined in the Registration Agreement).
5D. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
5E. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF TEXAS SHALL
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS AND OBLIGATIONS
OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.
5F. NOTICES. All notices, demands and other communications given
or delivered under this Agreement shall be in writing and shall be deemed to
have been given upon receipt when delivered personally or by telecopy, one
Business Day after being deposited with a reputable overnight courier service or
three Business Days after being deposited in the U.S. Mail. Notices, demands
and communications to the Purchasers and the Company, unless another address is
specified in writing, shall be sent to the address or telecopy number indicated
below and to the attention of such other persons indicated below or to such
other address or to the attention of such other person as the recipient party
has specified by prior written notice to the sending party:
IF TO GHI:
Geneve Holdings, Inc.
96 Cummings Pt. Rd.
Stamford, Connecticut 06902
Attn: Steve Lapin
Telecopier: (203) 348-3103
-4-
<PAGE>
IF TO THE COMPANY:
Zimmerman Sign Company
9846 Hwy 31 East
Tyler, Texas 75705
Attn: Chief Executive Officer
Telecopier: (903) 535-7401
WITH COPIES TO:
Jackson Walker L.L.P.
901 Main Street
Suite 6000
Dallas, Texas 75705
Attn: Bryan C. Birkeland
Telecopier: 214/953-5822
Bank of America National Trust and
Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Robert F. Perille
Andrea P. Joselit
Telecopier: 312/828-6298
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: John A. Weissenbach
Wendy L. Chronister
Telecopier: 312/861-2200
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
5G. SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges
and agrees that the other parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or are otherwise breached. Accordingly, each of the parties
hereto agrees that the other parties shall be entitled to an injunction or
injunctions (without the posting of bond or any other security) to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court in the United States or in any state having jurisdiction over the parties
and the matter in addition to any other remedy to which it may be entitled
pursuant hereto.
* * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
SOUTHERN INVESTORS CORP.
By /s/ Steven B Lapin
Its
SOUTHERN MORTGAGE HOLDING
CORPORATION
By /s/ Steven B Lapin
Its
GENEVE SECURITIES PORTFOLIO CORP.
By /s/ Steven B Lapin
Its
GENEVE SECURITIES HOLDING CORP.
By /s/ Steven B Lapin
Its
CHAPARRAL INTERNATIONAL RE.
By /s/ Steven B Lapin
Its
ZIMMERMAN SIGN COMPANY
By /s/ David E. Anderson
Its Chairman
David Anderson
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
- ---------------------------------------------------------------------------
SHARES TRANSFERRED
SHARES SUBJECT UPON EXERCISE
SELLER TO OPTIONS OPTION HOLDER OF OPTION
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Geneve Securities 173,771 Company 173,771
Portfolio Corp. Anderson -0-
- ---------------------------------------------------------------------------
Geneve Securities 156,578 Company 156,578
Holding Corp. Anderson -0-
- ---------------------------------------------------------------------------
Chaparral 17,500 Company 17,500
International Re. Anderson -0-
- ---------------------------------------------------------------------------
Southern Mortgage 36,956 Company 9,151
Holding Corp. Anderson 27,805
- ---------------------------------------------------------------------------
Southern Investors 400,338 Company 143
Corp. Anderson 400,195
- ---------------------------------------------------------------------------
</TABLE>
<PAGE>
EXECUTION
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "AGREEMENT") is made as of September 30,
1998, between Zimmerman Sign Company, a Texas corporation (the "COMPANY"), and
David E. Anderson ("ANDERSON").
The Company and Anderson have entered into a Share Option Purchase
Agreement, dated as of the date hereof (the "OPTION AGREEMENT"), with Geneve
Securities Holding Corp., Chaparral International Re., Southern Mortgage Holding
Corporation, Southern Investors Corp. and Geneve Securities Portfolio Corp.
(collectively referred to herein as "GHI"), pursuant to which GHI granted to the
Company an option to purchase 357,143 shares of the Company's Common Stock held
by GHI and granted to Anderson has an option to purchase 428,000 shares of the
Company's Common Stock held by GHI (collectively, the "OPTION SHARES").
Promptly upon consummation of the transactions contemplated by the Option
Agreement, the Company desires to purchase from Anderson, and Anderson desires
to sell to the Company, 228,000 shares of the Company's Common Stock, for the
consideration described herein.
The Company has entered into a Senior Subordinated Note, Preferred
Stock and Warrant Purchase Agreement, dated as of the date hereof (the "PURCHASE
AGREEMENT"), pursuant to which the Company is issuing to certain investors
equity securities and subordinated notes. Execution, delivery and performance
of this Agreement is a condition to such investors' obligations thereunder.
In consideration of the mutual covenants and promises contained herein
and for the good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Capitalized terms used and not defined
herein have the meanings assigned such terms in the Purchase Agreement.
SECTION 2. PURCHASE AND SALE OF THE SHARES. At the Closing (as
defined below), subject to the terms and conditions set forth herein, the
Company shall purchase from Anderson, and Anderson shall sell to the Company
228,000 shares of Common Stock owned by Anderson (the "SHARES"), free and clear
of any Liens, for the consideration described, and payable in the manner set
forth, in Section 2.
SECTION 3. THE CLOSING. The closing of the purchase and sale of
the Shares (the "CLOSING") shall take place at 10:00 a.m. on the date that is
one business day following exercise by Anderson of the Anderson Option (as
defined) or on such other date as may be mutually agreeable to the Company and
Anderson. At the Closing,
<PAGE>
(a) Anderson shall deliver to the Company the stock certificates
evidencing the Shares to be purchased by the Company duly endorsed in blank or
accompanied by duly executed stock powers upon payment of the purchase price
thereof; and
(b) as consideration for the sale of the shares hereunder the Company
shall deliver to Anderson i) $98,000 in cash, and ii) stock certificates
representing 7,000 shares of the Company's Series B Preferred Stock.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
(a) Anderson hereby represents and warrants to the Company as
follows:
(i) Immediately prior to the Closing, Anderson will be the
record and beneficial owner of the Shares, free and clear
of all Liens, and at the Closing, the Company will acquire
good and marketable title to the Shares free and clear of
any Liens.
(ii) Except as set forth in the Stockholders Agreement,
Anderson is not subject to any rights of first offer or
refusal with respect to the transfer of the Shares
contemplated hereby and has not violated any applicable
federal or state securities laws in connection with his
ownership or the sale any of the Shares pursuant hereto.
Anderson has not granted any proxies or entered into and
the shares are not subject to any agreements with respect
to the voting or transfer of the Shares, except this
Agreement, the Stockholders Agreement and the Registration
Agreement.
(iii) Anderson has all requisite power and authority to execute
and deliver this Agreement and consummate the transactions
contemplated hereby.
(iv) Anderson is acquiring the Series B Preferred Stock
acquired hereunder for his own account with the present
intention of holding such securities for investment
purposes and has no intention of selling the Series B
Preferred Stock in a public distribution in violation of
the federal securities laws or any applicable state
securities laws.
(b) The Company hereby represents and warrants to Anderson as
follows:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Texas and has the requisite corporate power and
authority to enter into this Agreement and consummate the
transactions contemplated hereby.
-2-
<PAGE>
SECTION 5. MISCELLANEOUS.
5A. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. All covenants shall
expire upon the Closing.
5B. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
5C. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
5D. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF TEXAS SHALL
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS AND OBLIGATIONS
OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.
5E. NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid:
IF TO ANDERSON:
David E. Anderson
3409 Caruth Boulevard
Dallas, Texas 75225
-3-
<PAGE>
IF TO THE COMPANY:
Zimmerman Sign Company
9846 Hwy 31 East
Tyler, Texas 75705
Attn: Chief Executive Officer
Telecopier: (903) 535-7401
WITH COPIES TO:
Jackson Walker L.L.P.
901 Main Street
Suite 6000
Dallas, Texas 75705
Attn: Bryan C. Birkeland
Telecopier: 214/953-5822
Bank of America National Trust and
Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Robert Perille
Andrea P. Joselit
Telecopier: 312/828-6298
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: John A. Weissenbach
Wendy L. Chronister
Telecopier: 312/861-2200
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
5F. THIRD PARTY BENEFICIARY. The provisions of this Agreement are
for the benefit of Continental Illinois Venture Corporation and MIG Partners
VIII and may be enforced by such persons against each of the parties hereunder.
5G. COUNTERPARTS. This Agreement may be executed in counterparts
which together constitute one and the same instrument.
5H. SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges
and agrees that the other parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or are otherwise breached.
-4-
<PAGE>
Accordingly, each of the parties hereto agrees that the other parties shall be
entitled to an injunction or injunctions (without the posting of bond or any
other security) to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court in the United States or in any state having
jurisdiction over the parties and the matter in addition to any other remedy to
which it may be entitled pursuant hereto.
5I. FURTHER ASSURANCES. Each of the parties hereto will act
diligently and cooperate with the other parties and take all actions necessary
(including securing any required consents) to consummate the actions
contemplated hereby.
* * * * *
-5-
<PAGE>
SIGNATURE PAGE TO PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
ZIMMERMAN SIGN COMPANY
By: /s/ Jeffrey P. Johnson
Its: Chief Financial Officer
/s/ David E. Anderson
David E. Anderson
<PAGE>
September 30, 1998
TO THE PURCHASERS UNDER THE
RECAPITALIZATION AGREEMENT
(as defined below)
Ladies and Gentlemen:
You are entering into a Senior Subordinated Note, Preferred Stock and Warrant
Purchase Agreement, dated as of the date hereof (the "Recapitalization
Agreement"), with Zimmerman Sign Company (the "Company") and certain other
investors identified on the signature pages thereto, pursuant to which the
Company is issuing and you are acquiring the Company's Series A Preferred Stock,
Warrants and 12.0% Senior Subordinated Notes. Capitalized terms used and not
otherwise defined herein have the meanings set forth in the Recapitalization
Agreement.
In connection with the transactions contemplated by the Recapitalization
Agreement, each of Southern Investors Corp., Southern Mortgage Holding
Corporation, Geneve Securities Portfolio Corp., Geneve Securities Holding Corp.
and Chaparral International Re. (collectively, the "Grantors") has entered into
the Share Option Purchase Agreement, dated as of the date hereof (the "Share
Option Purchase Agreement"), with the Company, pursuant to which the Grantors
have granted to (i) the Company an option to purchase shares of the Company's
Common Stock in exchange for cash and the Company's Series C Preferred Stock and
(ii) David E. Anderson ("DEA") an option to purchase shares of the Company's
Common Stock in exchange for cash. In addition, DEA has entered into a Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), with the
Company pursuant to which DEA has agreed to sell a portion of the Company's
Common Stock acquired by DEA from the Grantors under the Share Option Purchase
Agreement in exchange for cash and the Company's Series B Preferred Stock.
Each of the Company and DEA covenant to you to use their respective best efforts
to consummate the transactions contemplated by the Share Option Purchase
Agreement and the Purchase Agreement (together, the "Option Agreements"), in
accordance with the terms set forth therein, as promptly as possible after
January 3, 1999, but in any event no later than the close of business on January
8, 1999. In that regard, from time to time, until consummation of the
transactions contemplated in the Option Agreements (collectively, the "Option
Transactions"), each of the Company and DEA agree, from time to time, to take
all actions requested by you and to execute and deliver all such documents or
instruments as you may reasonably deem necessary or advisable to accomplish
closing on the Option Transactions.
Upon consummation of all of the Option Transactions (unless otherwise expressly
waived in writing by you), each of you agree to surrender to the Company a
portion of the Warrants issued to you on the Closing and indicated opposite your
respective names on the attached Exhibit I (collectively, the "Post Closing
Warrants"), and such Post Closing Warrants will be deemed canceled without
consideration. In the event that all or a portion of the Option Transactions
fail to be consummated within the time periods prescribed in Option Agreements,
(i) you shall be entitled to retain all or a portion of the Warrants (including
the Post Closing Warrants) issued to you as of the Closing based on the portion
of the Option Transactions consummated and (ii) you agree that, in consideration
of the agreement of the Grantors to terminate that certain Registration
<PAGE>
Rights Agreement dated December 1, 1996 by and among the Grantors and the
Company, the shares (if any) which continue to be held by the Grantors, but
which would have been transferred to the Company or DEA had the Option
Transactions been consummated, shall be treated on a PARI PASSU basis with the
Investor Registrable Securities under the Registration Agreement, dated as of
the date hereof.
THIS LETTER AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS.
Please acknowledge your agreement the foregoing by executing this letter in the
appropriate space below. This letter agreement may be executed in any number of
counterparts which, when taken together, constitute one and the same agreement.
Sincerely,
ZIMMERMAN SIGN COMPANY
/s/ David E. Anderson
-----------------------------------
By David E. Anderson
Its Chairman
SOUTHERN INVESTORS CORP.
/s/ Steven Lapin
-----------------------------------
By
Its
SOUTHERN MORTGAGE HOLDING
CORPORATION
/s/ Steven Lapin
-----------------------------------
By
Its
GENEVE SECURITIES PORTFOLIO CORP.
/s/ Steven Lapin
-----------------------------------
By
Its
<PAGE>
GENEVE SECURITIES HOLDING CORP.
/s/ Steven Lapin
-----------------------------------
By
Its
CHAPARRAL INTERNATIONAL RE.
/s/ Steven Lapin
-----------------------------------
By
Its
/s/ David E. Anderson
-----------------------------------
David E. Anderson
Acknowledged and agreed to this
30th day of September, 1998
CONTINENTAL ILLINOIS VENTURE CORPORATION
By: /s/ Robert F. Perille
-----------------------------------
Name: Robert F. Perille
Its: Managing Director
MIG PARTNERS VIII
By: /s/ Robert F. Perille
-----------------------------------
Name: Robert F. Perille
Its: General Partner
/s/ Tom Boner
- -----------------------------------
Tom Boner
/s/ Mike Coppinger
- -----------------------------------
Mike Coppinger
/s/ Mike St. Onge
- -----------------------------------
Mike St. Onge
/s/ Jeff Johnson
- -----------------------------------
Jeff Johnson
/s/ John Griggs
- -----------------------------------
John Griggs
/s/ David E. Anderson
- -----------------------------------
David E. Anderson
