<PAGE>
As filed with the Securities and Exchange Commission on July 1, 1999
Registration No. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------
AOA HOLDING LLC
(Exact name of registrant as specified in its charter)
Minnesota 7312 36-4298658
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Classification Industrial Identification Number)
incorporation or Code)
organization)
----------------
AOA CAPITAL CORP
(Exact name of registrant as specified in its charter)
Minnesota 7312 36-4298659
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Classification Industrial Identification Number)
incorporation or Code)
organization)
----------------
1380 West Paces Ferry Road, N.W.
Suite 170, South Wing
Atlanta, Georgia 30327
Telephone: (404) 233-1366
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
J. Kevin Gleason
President
AOA Holding LLC
AOA Capital Corp
1380 West Paces Ferry Road, N.W.
Suite 170, South Wing
Atlanta, Georgia 30327
Telephone: (404) 233-1366
(Name, address, including zip code and telephone number,
including area code, of agent for service)
----------------
Copies of communications to:
James C. Melville, Esq.
Kaplan, Strangis and Kaplan, P.A.
90 South Seventh Street, Suite 5500
Minneapolis, Minnesota 55402
Telephone: (612) 375-1138
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Approximate date of commencement of proposed sale of the securities to the
public:
As soon as practicable after the Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earliest
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earliest effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Proposed
Amount maximum maximum Amount of
Title of Each Class of to be offering price aggregate Registration
Securities to be Registered Registered per Unit(1) offering price(1) Fee
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<S> <C> <C> <C> <C>
10-3/8% Senior Notes due 2006.... $50,000,000 100% $50,000,000 $13,900
</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(f).
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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<PAGE>
The information in this prospectus is not complete and may be changed. We
may not sell these notes until the Registration Statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and we are not soliciting an offer to buy these
notes in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE , 1999
PROSPECTUS
$50,000,000
AOA HOLDING LLC
AOA CAPITAL CORP
OFFER TO EXCHANGE
ALL OUTSTANDING 10-3/8% SENIOR NOTES DUE 2006
FOR 10-3/8% SENIOR NOTES DUE 2006
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999
----------------
The Registered Notes --
. The terms of the exchange notes to be issued are substantially identical
to the outstanding notes that we issued on May 26, 1999, except for
transfer restrictions and registration rights relating to the
outstanding notes that will not apply to the exchange notes.
. Interest on the notes accrues at the rate of 10-3/8% per year, payable
in cash every six months on March 15 and September 15, with the first
payment on September 15, 1999.
. The notes are not secured by any collateral.
. The notes are not guaranteed by any of our subsidiaries.
Material Terms of the Exchange Offer --
. Expires at 5:00 p.m., New York City time, on , 1999, unless
extended.
. The exchange offer is subject to customary conditions, which we may
waive.
. All outstanding notes that are validly tendered and not validly
withdrawn will be exchanged for equal principal amount of exchange notes
which are registered under the Securities Act of 1933.
. Tenders of outstanding notes may be withdrawn at any time prior to the
expiration of the exchange offer.
. We will not receive any cash proceeds from the exchange offer.
----------------
Please consider carefully the "Risk Factors" beginning on page of this
prospectus.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved the notes to be distributed in the exchange offer, nor
have any of these organizations determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
----------------
The date of this prospectus is June , 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 1
Summary of the Exchange Offer........................................... 3
Summary of the Exchange Notes........................................... 6
Summary Historical and Pro Forma Financial Data......................... 9
Risk Factors.............................................................. 12
Holders of outstanding notes that fail to exchange their notes may be
unable to resell their notes........................................... 12
The Issuers must rely entirely upon distributions from AOALP to generate
the funds necessary to make principal and interest payments on the
exchange notes, and the ability of AOALP to make distributions to AOA
Holding may be limited by its own financing documents.................. 12
AOA Holding is a holding company with no significant assets other than
its investment in AOALP, and your right to receive payments on the
exchange notes effectively ranks junior to claims of creditors of AOALP
and AOAI............................................................... 13
Our substantial indebtedness could adversely affect our financial
condition and prevent us from fulfilling our obligations under the
exchange notes......................................................... 13
Despite current indebtedness levels, we may still be able to incur
substantially more debt, which could further increase the risks
described above........................................................ 14
Our ability to generate the significant amount of cash required to
service our indebtedness depends on many factors beyond our control.... 14
The restrictions imposed by the indenture, the AOALP Indenture and our
credit facilities may limit our management's discretion................ 14
AOA Capital has no ability to make payments on the exchange notes....... 15
The exchange notes are issued solely by the Issuers, and none of the
Issuers' respective directors, officers, members, stockholders (other
than AOA Holding), employees, subsidiaries or affiliates will be an
obligor under the exchange notes....................................... 15
The reduction of tobacco advertising may have an adverse effect on our
operations............................................................. 15
We are subject to significant government regulation..................... 15
Our acquisition strategy may not be successful.......................... 16
We could be adversely affected if we lose our key executives............ 16
We may be adversely affected by general economic conditions............. 16
Our failure, or the failure of our third party suppliers or customers,
to address information technology issues related to the year 2000 could
adversely affect our operations........................................ 16
The controlling equity holder of our company may have interests in
conflict with the interests of our noteholders......................... 16
The governors and directors of the Issuers are also directors of our
subsidiaries and may develop a conflict of interest.................... 16
The sale of the outstanding notes had substantial benefit to Stephen
Adams and family members............................................... 17
We may not have the ability to raise the funds necessary to finance the
change of control offer required by the indenture...................... 17
The law regarding limited liability companies is not well developed..... 17
If a bankruptcy case or lawsuit is initiated by unpaid creditors of
either Issuer, the debt represented by the exchange notes may be
reviewed under the federal bankruptcy laws and comparable provisions of
state fraudulent transfer laws......................................... 17
You cannot be sure that an active trading market will develop for the
Exchange Notes......................................................... 18
</TABLE>
i
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<TABLE>
<CAPTION>
Page
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<S> <C>
The Issuers.............................................................. 19
Exchange Offer........................................................... 20
Purpose and Effect of the Exchange Offer............................... 20
Terms of the Exchange Offer............................................ 22
Expiration Date; Extensions; Amendments................................ 23
Interest on the Exchange Notes......................................... 23
Procedures for Tendering............................................... 23
Guaranteed Delivery Procedures......................................... 25
Withdrawal of Tenders.................................................. 26
Conditions............................................................. 26
Exchange Agent......................................................... 27
Fees and Expenses...................................................... 27
Accounting Treatment................................................... 27
Consequences of Failure to Exchange.................................... 28
Resale of the Exchange Notes........................................... 28
Use of Proceeds.......................................................... 29
Capitalization........................................................... 30
Selected Historical and Pro Forma Financial Data......................... 31
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 34
Business................................................................. 40
Management............................................................... 48
Principal Security Holders............................................... 53
Certain Transactions..................................................... 54
Limited Liability Company Agreement...................................... 54
Description of Certain Indebtedness...................................... 55
Description of the Notes................................................. 57
Plan of Distribution..................................................... 89
Legal Matters............................................................ 89
Experts.................................................................. 89
Additional Information................................................... 90
Index to Financial Statements............................................ F-1
</TABLE>
ii
<PAGE>
PROSPECTUS SUMMARY
The following summary contains basic information about us and the exchange
offer. It likely does not contain all the information that is important to you.
We encourage you to read this entire document and the documents we have
referred you to. Unless the context otherwise requires (i) the terms "Adams
Outdoor," "we," "ours" and "us" collectively refer to AOA Holding LLC ("AOA
Holding") and its direct and indirect subsidiaries including AOA Capital Corp
("AOA Capital"), Adams Outdoor Advertising Limited Partnership ("AOALP") and
Adams Outdoor Advertising, Inc. ("AOAI") after giving effect to the transfers
into the holding company structure which were effected immediately prior to the
issuance of our outstanding notes which are the subject of this exchange offer
(see "The Issuers"), and (ii) the term "Issuers" refers to AOA Holding and AOA
Capital. Unless otherwise indicated, the information contained in this offering
memorandum describes Adams Outdoor as if the transfers had been completed and
the outstanding notes issued prior to the period described. Substantially all
of our operations are conducted by AOALP.
Adams Outdoor
Adams Outdoor is the seventh largest owner and operator of outdoor
advertising structures in the United States. We currently provide outdoor
advertising services in fourteen markets and surrounding areas in the Midwest,
Southeast and mid-Atlantic states: Peoria, IL; Jackson, MI; Kalamazoo, MI;
Lansing, MI; Minneapolis, MN; Charlotte, NC; Lehigh Valley, PA; Northeast PA;
Charleston, SC; Florence, SC; Laurens, SC; Orangeburg, SC; Norfolk, VA; and
Madison, WI. As of December 31, 1998, we operated, in the aggregate,
approximately 9,600 advertising displays, including 2,891 painted bulletins,
6,541 30-sheet posters and 222 junior (8-sheet) posters.
Our strategy is to focus our outdoor advertising operations in medium-sized
markets in which we are or could be the leading provider of such services. We
offer our customers comprehensive outdoor advertising services, including local
creative professionals, account executives, production facilities and business
development staffs. These resources allow us to educate current customers and
potential customers on the effectiveness of the outdoor advertising medium and
to demonstrate to customers how to integrate outdoor advertising into their
marketing plans. We also develop creative ideas and displays to advertise
customers' products or services and provide them with detailed local market
research and information about potential advertising opportunities.
From 1994 through the latest twelve months ended March 31, 1999, our net
revenues increased from $37.7 million to $65.4 million and our Operating Cash
Flow, as defined below, grew from $16.9 million to $29.3 million. We have
improved our financial performance primarily through a strategy of increasing
revenues from existing display faces in each market by developing programs that
maximize advertising rates and optimize occupancy levels and through lowering
operating expenses by reducing accounting, administrative and operations staff.
In recent years, this strategy has resulted in high operating leverage. We
define Operating Cash Flow as operating income (loss) before depreciation and
amortization expense and deferred compensation expense. Operating Cash Flow is
not intended to represent net cash provided by operating activities as defined
by generally accepted accounting principles and should not be considered as an
alternative to net income or loss as an indicator of our operating performance
or to net cash provided by operating, investing and financing activities as a
measure of our liquidity or ability to meet cash needs. We are providing
information regarding Operating Cash Flow to permit a more complete comparative
analysis of our performance relative to other companies in the media industry
that publicly report Operating Cash Flow or similarly defined measures.
However, other companies may use different definitions of these measures.
We believe that our strong position in our markets, our emphasis on local and
regional advertisers and the geographical diversity of our operations provide
stability to our revenue base, reduce our reliance upon any single local
economy or advertiser, and mitigate the effect of fluctuations in national
advertising expenditures. Net revenues attributable to local and regional
advertising represented 89.7% of our total net revenues in 1998.
1
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We have been able to maintain our position as a leading provider of outdoor
advertising services in our primary markets due to the barriers to entry
created by the combination of our existing site locations and government
regulations limiting the erection of new displays. We intend to build upon our
position as the dominant provider of outdoor advertising in our markets and the
competitive advantage provided by our sales, creative and business development
staffs. We plan to accomplish this by continuing to develop our customer base
among local and regional advertisers, improving the utilization and rate
structure of our display faces and expanding the number of our displays through
building in our existing markets and, when appropriate, through making
acquisitions.
The Adams Outdoor business was founded in 1983 with the acquisition of
Central Outdoor Advertising, which had offices in Lansing, Jackson and
Kalamazoo, MI. Over the next five years, we pursued a strategy of geographic
expansion into additional medium-sized markets, primarily through the
acquisition of existing outdoor advertising businesses in selected Midwest,
Southeast and mid-Atlantic markets. This geographic expansion strategy has
enabled us to capitalize on the efficiencies, economies of scale and marketing
opportunities associated with operating outdoor advertising businesses located
in proximate or contiguous geographic markets to our primary markets. Since
1988, our sales and Operating Cash Flow growth has resulted from increased
display inventory, primarily through new construction and, to a lesser extent,
from acquisitions of displays in existing markets and the significant upgrading
of our existing display inventory. We have also been able to reduce operating
expenses while achieving higher rate and occupancy levels.
We are privately held by Mr. Stephen Adams and members of his family. AOA
Holding is a single member Minnesota limited liability company of which Stephen
Adams is the sole member. AOA Capital is a wholly owned subsidiary of AOA
Holding with no assets, no liabilities (other than the notes) and no
operations. AOA Holding directly, or indirectly through its ownership of AOAI,
owns a 0.71% general partnership interest and a 69.29% priority limited
partnership interest in AOALP, through which we conduct substantially all of
our operations. The remaining limited partnership interests are held by a
partnership consisting of Stephen Adams and other family members. See "The
Issuers" and "Principal Security Holders." The partnership agreement of AOALP
provides that the limited partner interest of AOA Holding is a "priority"
interest by virtue of which all limited partner distributions (other than
Permitted Tax Distributions) will be made only to AOA Holding until the notes
are paid in full. See "The Issuers."
2
<PAGE>
Summary of the Exchange Offer
The Exchange Offer.................... AOA Holding and AOA Capital offer to
exchange $50,000,000 in principal
amount of their 10-3/8% Senior Notes
due 2006, which have been registered
under the federal securities laws, for
$50,000,000 in principal amount of
their outstanding unregistered 10-3/8%
Senior Notes due 2006, which they
issued on May 26, 1999 in a private
offering. You have the right to
exchange your outstanding notes for
exchange notes with substantially
identical terms.
Registration Rights Agreement......... AOA Holding and AOA Capital issued the
outstanding notes on May 26, 1999 to
CIBC World Markets Corp. At that time,
they signed a registration rights
agreement with CIBC, which requires
them to conduct this exchange offer.
This exchange offer is intended to
satisfy those rights set forth in the
registration rights agreement. After
the exchange offer is complete, you
will no longer be entitled to
registration rights with respect to
outstanding notes that you do not
exchange.
If You Fail to Exchange Your If you do not exchange your outstanding
Outstanding Notes..................... notes for exchange notes in the
exchange offer, you will continue to be
subject to the restrictions on transfer
provided in the outstanding notes and
the indenture governing those notes. In
general, you may not offer or sell your
outstanding notes unless they are
registered under the federal securities
laws or are sold in a transaction
exempt from or not subject to the
registration requirements of the
federal securities laws and applicable
state securities laws.
Expiration Date....................... The exchange offer will expire at 5:00
p.m., New York City time, on ,
1999, unless we decide to extend the
expiration date. See "The Exchange
Offer--Expiration Date; Extensions;
Amendments."
Conditions to the Exchange Offer...... The exchange offer is subject to
conditions that we may waive. The
exchange offer is not conditioned upon
any minimum amount of outstanding notes
being tendered for exchange. See "The
Exchange Offer--Conditions."
We reserve the right, subject to
applicable law, at any time and from
time to time:
. to extend the exchange offer or
to terminate the exchange offer
if specified conditions have not
been satisfied; and
. to amend the terms of the
exchange offer in any manner
consistent with the registration
rights agreement.
3
<PAGE>
See "The Exchange Offer--Expiration
Date; Extensions; Amendments."
Procedures for Tendering Outstanding If you wish to tender your outstanding
Notes................................. notes for exchange, you must:
. complete and sign the enclosed
Letter of Transmittal by
following the related
instructions; and
. send the Letter of Transmittal,
as directed in the instructions,
together with any other required
documents, to the exchange
agent, either:
(1) with the outstanding notes
to be tendered, or
(2) in compliance with the
specified procedures for
guaranteed delivery of the
outstanding notes.
Brokers, dealers, commercial banks,
trust companies and other nominees may
also effect tenders by book-entry
transfer.
Please do not send your Letter of
Transmittal or certificates
representing your outstanding notes to
us. Those documents should only be sent
to the exchange agent. Questions
regarding how to tender and requests
for information should be directed to
the exchange agent. See "The Exchange
Offer--Exchange Agent."
Special Procedures for Beneficial If your outstanding notes are
Owners................................ registered in the name of a broker,
dealer, commercial bank, trust company
or other nominee, we urge you to
contact that person promptly if you
wish to tender your outstanding notes
in accordance with the exchange offer.
See "The Exchange Offer--Procedures for
Tendering."
Withdrawal Rights..................... You may withdraw the tender of your
outstanding notes at any time prior to
the expiration date of the exchange
offer by delivering a written notice of
your withdrawal to the exchange agent.
You must also follow the withdrawal
procedures as described under the
heading "The Exchange Offer--Withdrawal
of Tenders."
Resale of Exchange Notes.............. We believe that you will be able to
offer for resale, resell or otherwise
transfer exchange notes issued in the
exchange offer without compliance with
the registration and prospectus
delivery provisions of the federal
securities laws, provided that:
. you are acquiring the exchange
notes in the ordinary course of
business;
4
<PAGE>
.you are not participating, and
have no arrangement or
understanding with any person to
participate, in the distribution
of the exchange notes; and
.you are not an affiliate of AOA
Holding or AOA Capital, or if
you are an affiliate, you will
comply with the registration and
prospectus delivery requirements
of the Securities Act to the
extent applicable. As defined in
Rule 405 of the Securities Act,
an affiliate of AOA Holding or
AOA Capital is a person that
"controls or is controlled by or
is under common control with"
AOA Holding or AOA Capital.
Our belief is based on interpretations
by the Commission, as set forth in no-
action letters issued to third parties
unrelated to us. The Staff has not
considered this exchange offer in the
context of a no-action letter, and we
cannot assure you that the Staff would
make a similar determination with
respect to this exchange offer.
If our belief is not accurate and you
transfer an exchange note without
delivering a prospectus meeting the
requirements of the federal securities
laws or without an exemption from these
laws, you may incur liability under the
federal securities laws. We do not and
will not assume or indemnify you
against this liability.
Each broker-dealer that receives
exchange notes for its own account in
exchange for outstanding notes which
were acquired by that broker-dealer as
a result of market-making or other
trading activities must agree to
deliver a prospectus meeting the
requirements of the federal securities
laws in connection with any resale of
the exchange notes. See "The Exchange
Offer--Resale of the Exchange Notes."
Exchange Agent........................ The exchange agent for the exchange
offer is United States Trust Company of
New York. The address, telephone number
and facsimile number of the exchange
agent are set forth in "The Exchange
Offer--Exchange Agent" and in the
Letter of Transmittal.
See "The Exchange Offer" for more detailed information concerning the exchange
offer.
5
<PAGE>
Summary of the Exchange Notes
Issuers............................... AOA Holding LLC and AOA Capital Corp,
as joint and several obligors
(collectively, the "Issuers").
Exchange Notes........................ $50,000,000 principal amount of 10 3/8%
senior notes due 2006 (the "exchange
notes").
Maturity Date......................... June 1, 2006.
Interest Rate......................... 10 3/8% per year.
Interest Payment Dates................ Every March 15 and September 15,
beginning September 15, 1999.
Ranking............................... The exchange notes will not be secured
by any collateral.
The exchange notes will be our joint
and several obligations.
The exchange notes will be our general
unsecured obligations and will rank
equal in right of payment to all of our
unsubordinated debt.
Our subsidiaries will not guarantee the
exchange notes. Because we are a
holding company and we conduct our
business through subsidiaries, the
exchange notes will be effectively
subordinated to all debt and other
liabilities (including trade payables)
of our subsidiaries. Therefore, if we
default, your right to payment under
the exchange notes will be junior to
the rights of holders of the debt of
our subsidiaries.
As of March 31, 1999, on a pro forma
basis, we would have had approximately
$176.2 million of debt and our
subsidiaries would have had
approximately $126.2 million of debt.
Distributions to the Issuers from
subsidiaries constitute the only source
of funds for the payment of the
exchange notes. As of March 31, 1999,
on a pro forma basis, the Issuers'
subsidiaries would have been permitted
to make distributions of $13.25
million.
Optional Redemption after Four Except in connection with a special
Years................................. optional redemption, we cannot choose
to redeem the exchange notes until June
1, 2003. At any time after that date
(which may be more than once), we can
choose to redeem some or all of the
exchange notes at certain specified
prices, plus accrued interest.
6
<PAGE>
Special Optional Redemption........... From April 15, 2001 through January 15,
2002, we can choose to buy back the
exchange notes, in whole but not in
part, at their face amount plus accrued
interest, in the event of a concurrent
optional redemption of the 10 3/4%
senior notes due 2006 of our
subsidiaries, AOALP and AOAI.
Change of Control Offer............... If we experience a change of control,
we must give holders of the exchange
notes the opportunity to sell us their
exchange notes at 101% of their face
amount, plus accrued interest.
We might not be able to pay you the
required price for exchange notes you
present to us at the time of a change
of control, because we might not have
enough funds at that time or the terms
of our other debt, including the debt
of our subsidiaries, may prevent us
from paying such amount.
Asset Sale Proceeds................... We may have to use the cash proceeds
from selling assets to offer to buy
back exchange notes at their face
amount, plus accrued interest.
Certain Indenture Provisions.......... The indenture governing the exchange
notes will limit what we (and most or
all of our subsidiaries) may do. The
provisions of the indenture will limit
our ability to:
. incur more debt;
. pay dividends and make
distributions;
. issue stock of subsidiaries;
. make certain investments;
. repurchase stock;
. create subsidiaries;
. create liens;
. enter into transactions with
affiliates;
. enter into sale-leaseback
transactions;
. create dividend or other payment
restrictions affecting
subsidiaries;
. merge or consolidate; and
. transfer or sell assets.
These covenants are subject to a number
of important exceptions, including the
allowance of Permitted Tax
Distributions (as defined in the
indenture).
7
<PAGE>
Use of Proceeds....................... We will not receive any cash proceeds
from the issuance of the exchange
notes.
For more complete information about the exchange notes, see the "Description
of the Exchange Notes" section of this prospectus.
Industry Data
Unless otherwise indicated, all outdoor advertising data and statistics
contained herein are estimates by the Outdoor Advertising Association of
America which we generally believe to be reliable. However, we have not
independently verified this industry data and the accuracy and completeness of
such information is not guaranteed.
Forward-Looking Statements
We make forward-looking statements throughout this prospectus. Whenever you
read a statement that is not simply a statement of historical fact (such as
when we describe what we believe, expect or anticipate will occur, and other
similar statements), you must remember that our expectations may not be
correct, even though we believe they are reasonable. We do not guarantee that
the transactions and events described in this prospectus will happen as
described (or that they will happen at all). The forward-looking information
contained in this prospectus is generally located in the material set forth
under the headings "Prospectus Summary," "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
"Business" but may be found in other locations as well. You should read this
prospectus completely and with the understanding that actual future results may
be materially different from what we expect. We will not update these forward-
looking statements, even though our situation will change in the future.
Whether actual results will conform with our expectations and predictions is
subject to a number of risks and uncertainties, including the significant
considerations discussed in this prospectus.
Risk Factors
You should consider carefully the information included in the "Risk Factors"
section, as well as other information contained in this offering memorandum.
Principal Executive Office
Our principal executive office is located at 1380 West Paces Ferry Road,
N.W., Suite 170, South Wing, Atlanta, Georgia, 30327 and our telephone number
is (404) 233-1366.
8
<PAGE>
Summary Historical and Pro Forma Financial Data
AOA Holding and AOA Capital, the co-issuers of the exchange notes, were
formed in 1999. As such, these entities were not in existence for the
historical periods presented in the following tables. The historical
information of AOALP is presented as it represents the predecessor entity.
The following summary historical and pro forma financial data, insofar as it
relates to each of the five years ended December 31, 1998, has been prepared by
us and is based upon the financial statements of AOALP and should be read in
conjunction with the audited financial statements, including the balance sheets
of AOALP and AOAI as of December 31, 1997 and 1998 and the related statements
of operations for each of the years in the three-year period ended December 31,
1998, and the notes thereto appearing elsewhere in this prospectus. The summary
historical and pro forma financial data as of March 31, 1999 and for the three
months ended March 31, 1998 and 1999 has been derived from unaudited financial
statements appearing elsewhere in this prospectus which, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the unaudited
interim periods. Results for the three months ended March 31, 1999 are not
necessarily indicative of results that may be expected for the entire year. The
summary historical and pro forma financial data should be read in conjunction
with the information contained in the financial statements of AOALP and AOAI
and the notes thereto, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Selected Historical Financial Data"
included elsewhere herein.
The following unaudited summary pro forma statement of operations data and
other data for the year ended December 31, 1998 and for the three months ended
March 31, 1999 give effect to the transfers into the holding company structure
and the sale of the outstanding notes as if they had been completed at the
beginning of the respective periods. Certain management assumptions and
adjustments are described in the accompanying notes hereto. The pro forma
financial data should be read in conjunction with the financial statements of
AOALP and AOAI and the notes thereto appearing elsewhere in this prospectus.
This pro forma financial data is not necessarily indicative of the results that
would have occurred had the transfers into the holding company structure and
the sale of the outstanding notes been completed on the dates indicated or our
actual or future operating results or financial position.
9
<PAGE>
Summary Historical and Pro Forma Financial Data (dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
----------------------------------------------------- -------------------------
Pro Pro
Forma Forma
1994 1995 1996 1997 1998 1998(a) 1998 1999 1999(a)
------- ------- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Gross revenues......... $41,748 $47,589 $ 52,421 $63,302 $71,592 $71,592 $15,742 $16,552 $16,552
Agency commissions..... 4,097 4,698 5,161 6,017 7,023 7,023 1,527 1,503 1,503
------- ------- -------- ------- ------- ------- ------- ------- -------
Net revenues........... 37,651 42,891 47,260 57,285 64,569 64,569 14,215 15,049 15,049
Direct advertising
expenses.............. 19,561 20,848 22,412 29,089 32,097 32,097 7,468 7,967 7,967
Corporate, general and
administrative
expense............... 1,183 1,114 2,405 3,589 3,903 3,903 1,004 594 594
Depreciation and
amortization.......... 5,684 5,568 6,105 8,149 7,875 7,875 2,063 1,857 1,857
Deferred compensation
expense(b)............ 1,530 2,427 1,451 901 4,316 4,316 128 360 360
------- ------- -------- ------- ------- ------- ------- ------- -------
Operating income....... 9,693 12,934 14,887 15,557 16,378 16,378 3,552 4,271 4,271
Interest expense....... 9,877 11,263 12,523 14,601 14,408 18,919 3,652 3,445 4,573
Other expenses
(income), net......... 38 16 (32) 43 78 78 (5) 12 12
(Gain) loss on
disposals of assets,
net................... 388 93 861 122 378 378 4 (1) (1)
Extraordinary loss on
early extinguishment
of debt............... -- -- -- -- 330 330 -- -- --
------- ------- -------- ------- ------- ------- ------- ------- -------
Net income (loss).... $ (610) $ 1,562 $ 1,535 $ 791 $ 1,184 $(3,327) $ (99) $ 815 $ (313)
======= ======= ======== ======= ======= ======= ======= ======= =======
Other Data:
Operating Cash
Flow(c)............... $16,907 $20,929 $ 22,443 $24,607 $28,569 $28,569 $ 5,743 $ 6,488 $ 6,488
Capital expenditures... 1,895 2,042 4,419 7,646 10,144 10,144 1,481 1,711 1,711
Ratio of earnings to
fixed charges (d)..... -- 1.07x 1.11x 1.05x 1.09x -- -- 1.20x --
Ratio of debt to net
income (e)............ -- 68.79 86.92 170.71 112.13 -- -- 171.1 --
Cash flow provided by
(used in):
Operating
activities.......... $ 7,092 $ 9,151 $ 12,537 $ 7,150 $11,873 $8,676 $ 2,339 $(3,807) $(5,624)
Investing
activities.......... (1,791) (1,979) (28,675) (7,462) (9,659) (9,659) 1,481 (1,703) (1,703)
Financing
activities.......... (5,569) (6,763) 17,540 (100) (3,647) (2,139) 4,213 6,212 6,212
</TABLE>
see notes on the following page
10
<PAGE>
- --------
(a) Gives effect to the transfers into the holding company structure and the
issuance of the outstanding notes as if they had occurred at the beginning
of such periods for Statement of Operations Data. Pro forma interest
expense is computed as follows:
<TABLE>
<CAPTION>
Three
Months
Year Ended Ended
December 31, March 31,
1998 1999
------------ ---------
<S> <C> <C>
$50,000,000 10 3/8% Senior Notes...................... $5,189 $1,297
AOALP Credit Facility
$13,250,000 at 7.00%................................. (928) (232)
Amortization of deferred financing costs.............. 250 63
------ ------
Interest expense...................................... $4,511 $1,128
====== ======
</TABLE>
(b) Deferred compensation expense represents accrued expenses under certain
deferred compensation arrangements, including phantom stock agreements with
certain key management personnel. The phantom stock agreements in effect
provide for the repurchase of "phantom stock" in three equal annual payments
after a covered executive's termination, death or disability, the sale of
Adams Outdoor, or the fifth anniversary of the agreement's execution. See
"Management--Agreements with Management--Incentive Compensation under
Phantom Stock Agreements."
(c) The following table sets forth the calculation of "Operating Cash Flow."
<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
----------------------------------------------- --------------------
Pro Pro
Forma Forma
1994 1995 1996 1997 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income........ $ 9,693 $12,934 $14,887 $15,557 $16,378 $16,378 $3,552 $4,271 $4,271
Depreciation and
amortization........... 5,684 5,568 6,105 8,149 7,875 7,875 2,063 1,857 1,857
Deferred compensation
expense................ 1,530 2,427 1,451 901 4,316 4,316 128 360 360
------- ------- ------- ------- ------- ------- ------ ------ ------
Operating Cash Flow.... $16,907 $20,929 $22,443 $24,607 $28,569 $28,569 $5,743 $6,488 $6,488
</TABLE>
As a limited liability company, we are not subject to federal corporate
income tax. Operating Cash Flow is not a measure of performance under
generally accepted accounting principles ("GAAP"). Operating Cash Flow is
not intended to represent net cash flow provided by operating activities as
defined by GAAP and should not be considered as an alternative to net income
or loss as an indicator of our operating performance or to net cash provided
by operating, investing and financing activities as a measure of our
liquidity or ability to meet cash needs. We are providing information
regarding Operating Cash Flow to permit a more complete comparative analysis
of our performance relative to other companies in the media industry that
publicly report Operating Cash Flow or similarly defined measures. However,
other companies may use different definitions of these measures. See
"Management's Discussion and Analysis of Results of Financial Condition and
Operations."
(d) Earnings consist of operating income plus fixed charges adjusted to exclude
capitalized interest. Our fixed charges consist of interest expense plus
amortization of deferred financing costs and the estimated portion of
rents. Earnings were inadequate to cover fixed charges by approximately
$1.3 million for the year ended December 31, 1994, $99,000 for the three
months ended March 31, 1998, $3 million for the pro forma year ended
December 31, 1998 and $313,000 for the pro forma three months ended March
31, 1999.
(e) The ratio of total debt to net income for the periods ended December 31,
1994, March 31, 1998 and for the pro forma periods ended December 31, 1998
and March 31, 1999 are not meaningful due to the net loss for those
periods.
11
<PAGE>
RISK FACTORS
You should carefully consider the following factors when you evaluate
tendering your notes in the exchange offer.
Holders of outstanding notes that fail to exchange their notes may be unable
to resell their notes. We did not register the outstanding notes under the
federal or any state securities laws, nor do we intend to following the
exchange offer. As a result, the outstanding notes may only be transferred in
limited circumstances under the securities laws. If the holders of outstanding
notes do not exchange their notes in the exchange offer, they lose their right
to have the outstanding notes registered under the federal securities laws. As
a result, a holder of outstanding notes after the exchange offer may be unable
to sell its notes.
Your notes will not be accepted for exchange if you fail to follow the
exchange offer procedures. The exchange notes will be issued in exchange for
your outstanding notes only after timely receipt by the exchange agent of:
. your old notes; and
.a properly completed and executed Letter of Transmittal and all other
required documentation; or
.a book-entry delivery by transmittal of an agent's message through the
Depository Trust Company.
If you want to tender your outstanding notes in exchange for exchange notes,
you should allow sufficient time to ensure timely delivery.
Neither the exchange agent nor either of the Issuers is under any duty to
give you notification of defects or irregularities with respect to tenders of
outstanding notes for exchange. Outstanding notes that are not tendered or are
tendered but not accepted will, following the exchange offer, continue to be
subject to the existing transfer restrictions on the outstanding notes. In
addition, if you tender your outstanding notes in the exchange offer to
participate in a distribution of the exchange notes, you will be required to
comply with the registration and prospectus delivery requirements of the
federal securities laws in connection with any resale transaction. For
additional information, please refer to "The Exchange Offer" and "Plan of
Distribution" sections of this prospectus.
The Issuers must rely entirely upon distributions from AOALP to generate the
funds necessary to make principal and interest payments on the exchange notes,
and the ability of AOALP to make distributions to AOA Holding may be limited
by its own financing documents. The terms of the indenture (the "AOALP
Indenture") governing the $101 million of outstanding 10 3/4% Senior Notes due
2006 of AOALP and AOAI (the "AOALP Notes") preclude AOALP and AOAI from
declaring or paying any dividend or making any distributions on their equity
interests unless they can incur at least $1.00 of indebtedness in accordance
with the covenants in the AOALP Indenture that restrict the ability of AOALP
and AOAI to incur indebtedness. The AOALP Indenture provides that the
aggregate amount of such dividends, distributions and payments may not exceed
the sum of (1) 50% of the consolidated net income of AOALP and AOAI (or in the
event such consolidated net income is a deficit, minus 100% of such deficit)
after March 12, 1996, and (2) 100% of the aggregate net proceeds received
after March 12, 1996 by AOALP or AOAI from (x) the issue or sale of certain
equity interests of AOALP or AOAI, and (y) dividends or other distributions
received by AOALP or AOAI from certain subsidiaries. After giving pro forma
effect to the sale of the outstanding notes and the application of the net
proceeds, the aggregate amount available for distribution from AOALP and AOAI
to the Issuers would have been $13.25 million as of March 31, 1999. The AOALP
secured credit facility and the AOALP unsecured credit facility contain
restrictions on the payment of dividends by AOALP to AOA Holding. The AOALP
credit facilities permit distributions to AOALP and AOAI in an amount equal to
the amount of interest due and payable on the Notes; provided that, AOALP is
in compliance with the financial covenants contained therein and no default or
event of default shall be continuing or shall occur as a result of the
distributions. The AOALP credit facilities contain covenants that are more
numerous than those in the AOALP Indenture which if breached could
12
<PAGE>
result in further restrictions on the ability of AOALP to pay dividends. See
"Description of Certain Indebtedness."
AOA Holding is a holding company with no significant assets other than its
investment in AOALP, and your right to receive payments on the exchange notes
effectively ranks junior to claims of creditors of AOALP and AOAI. The
exchange notes will be general unsecured obligations of the Issuers and will
rank equal with their other unsubordinated debt. The exchange notes will be
effectively subordinated to claims of creditors of AOALP and AOAI, including
the lenders under the AOALP credit facilities, the holders of the AOALP Notes
and trade creditors. As a result, the rights of the Issuers and their
creditors, including the holders of the exchange notes, to realize upon the
assets of AOALP or AOAI upon a liquidation or reorganization of AOALP or AOAI
(and the consequent rights of the holders of the exchange notes to participate
in the realization of those assets) will be subject to the prior claims of the
creditors of AOALP and AOAI, including the lenders under the AOALP credit
facilities and the holders of the AOALP Notes. In such event, there may not be
sufficient assets remaining to pay amounts due on any or all of the exchange
notes then outstanding. As of March 31, 1999, there were $101 million of AOALP
Notes outstanding. If the sale of the outstanding notes had been consummated
at March 31, 1999 and the proceeds applied as described herein, AOALP would
have had $25.2 million of indebtedness outstanding and $9.8 million available
under the AOALP secured credit facility and $8.0 million available under the
AOALP unsecured credit facility. All such available amounts could have been
borrowed under the limitations on additional indebtedness in the AOALP
Indenture and the AOALP secured and unsecured credit facilities. Currently,
the AOALP secured credit facility matures on March 31, 2001 and the AOALP
unsecured credit facility matures on June 30, 2000. See "Description of
Certain Indebtedness."
Our substantial indebtedness could adversely affect our financial condition
and prevent us from fulfilling our obligations under the exchange notes. We
now have and will continue to have a significant amount of debt. The following
chart shows important information and is presented assuming we had completed
the transfers into the holding company structure and the offering as of the
date specified below and applied the proceeds as intended:
<TABLE>
<CAPTION>
Pro Forma
as of March 31, 1999
--------------------
(dollars in
millions)
<S> <C>
Total subsidiary debt.................................. $126.2
Total debt............................................. 176.2
</TABLE>
On a pro forma basis for the twelve months ended March 31, 1999, our
earnings would have been insufficient to cover fixed charges by approximately
$2.1 million.
Our substantial debt could have important consequences to you. For example,
it could:
. make it more difficult for us to satisfy our obligations with respect to
the exchange notes;
. require us to dedicate a substantial portion of our cash flow from
operations to payments on our debt, thereby reducing the availability of
our cash flow to fund working capital, capital expenditures,
acquisitions and other general corporate purposes;
. limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
. place us at a competitive disadvantage compared to our competitors that
have less debt;
. increase our vulnerability to general adverse economic and industry
conditions; and
. limit, along with the financial and other restrictive covenants in our
debt, among other things, our ability to borrow additional funds.
Failing to comply with these covenants could result in an event of
default which, if not cured or waived, could have a material adverse
effect on us.
A portion of our debt bears interest at variable rates. An increase in the
interest rates on our debt will reduce the funds available to repay the
exchange notes and our other debt and for operations and future business
13
<PAGE>
opportunities and will intensify the consequences of our leveraged capital
structure. See "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Description of the Exchange
Notes" and "Description of Certain Indebtedness."
Despite current indebtedness levels, we may still be able to incur
substantially more debt, which could further increase the risks described
above. We may be able to incur substantial additional debt in the future. The
terms of the indenture for the exchange notes do not prohibit us or our
subsidiaries from incurring additional debt. The AOALP credit facilities would
have permitted additional borrowings of approximately $17.8 million at March
31, 1999 after completion of the offering and application of the net proceeds
as described herein, and all of those borrowings would be effectively senior
to the exchange notes. The addition of further debt to our current debt levels
could intensify the leverage related risks that we now face. See
"Capitalization," "Selected Historical and Pro Forma Financial Data,"
"Description of the Notes" and "Description of Certain Indebtedness."
Our ability to generate the significant amount of cash required to service
our indebtedness depends on many factors beyond our control. Our ability to
make payments on and to repay or refinance our debt, including the exchange
notes, and to fund planned capital expenditures will depend on our ability to
generate cash in the future. This, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors
that are beyond our control.
Based on our current level of operations, we believe our cash flow from
operations, available cash and available borrowings under the AOALP credit
facilities will be adequate to meet our future liquidity needs for at least
the next few years. We cannot assure you, however, that our business will
generate sufficient cash flow from operations, or that future borrowings will
be available to us under our credit facilities in an amount sufficient to
enable us to pay interest and principal amounts on our debt, including the
exchange notes, or to fund our other liquidity needs. If our future cash flow
from operations and other capital resources are insufficient to pay our
obligations as they mature or to fund our liquidity needs, we may be forced to
reduce or delay our business activities and capital expenditures, sell assets,
obtain additional equity capital or restructure or refinance all or a portion
of our debt, including the exchange notes and certain debt of AOALP and AOAI,
on or before maturity. We cannot assure you that we can accomplish any of
these alternatives on a timely basis or on satisfactory terms, if at all. In
addition, the terms of certain existing indebtedness such as the exchange
notes and the AOALP Notes and other future indebtedness may limit our ability
to pursue any of these alternatives.
The restrictions imposed by the indenture, the AOALP Indenture and our
credit facilities may limit our management's discretion. The indenture for the
exchange notes will contain various provisions that limit our management's
discretion by restricting our ability to:
. incur more debt;
. pay dividends and make distributions;
. issue stock of subsidiaries;
. make certain investments;
. repurchase stock;
. create subsidiaries;
. create liens;
. enter into transactions with affiliates;
. enter into sale-leaseback transactions;
. create dividend or other payment restrictions affecting subsidiaries;
. merge or consolidate; and
. transfer or sell assets.
14
<PAGE>
The AOALP Indenture contains similar restrictions. The AOALP credit
facilities also require us to meet certain financial ratios. If we do not
comply with the restrictions in our credit facilities, the indentures, or any
other financing agreement, a default may occur. This default may allow our
creditors to accelerate the related debt as well as any other debt to which a
cross-acceleration or cross-default provision applies. In addition, our
lenders may be able to terminate any commitments they had made to provide us
with further funds. See "Description of the Certain Indebtedness."
AOA Capital has no ability to make payments on the exchange notes. AOA
Capital is a wholly-owned subsidiary of AOA Holding that was incorporated for
the sole purpose of serving as co-issuer of the exchange notes. AOA Capital
will not have any operations or assets of any kind and will not have any
revenues. You should not expect AOA Capital to participate in servicing the
interest or principal obligations or additional interest, if any, on the
exchange notes. See "Description of the Exchange Notes."
The exchange notes are issued solely by the Issuers, and none of the
Issuers' respective directors, officers, members, stockholders (other than AOA
Holding), employees, subsidiaries or affiliates will be an obligor under the
exchange notes. The indenture expressly provides that such persons shall not
have any liability for any obligations of the Issuers under the exchange
notes. By accepting the exchange notes, each holder of exchange notes waives
and releases all such liability, which waiver and release are part of the
consideration for the Notes. See "Description of the Exchange Notes--Release
from Liability." Although Stephen Adams has entered into a deficit capital
contribution agreement with AOA Holding, payments thereunder are intended to
benefit only holders of certain liabilities of AOALP and would not be
available to holders of the exchange notes. See "Certain Transactions."
The reduction of tobacco advertising may have an adverse effect on our
operations. In November 1998, the major U.S. tobacco companies reached an out
of court settlement with 46 states, the District of Columbia, the Commonwealth
of Puerto Rico and four other U.S. territories. The remaining four states had
already reached similar settlements with the tobacco companies. The agreement
requires the removal of tobacco advertising from out-of-home media, including
billboards, along with signs and placards in arenas, stadiums, shopping malls
and video game arcades by April 23, 1999. Additionally, the agreement provides
that, at the settling states' option, the tobacco companies must, at their
expense, substitute for tobacco advertising alternative advertising which
discourages youth smoking. That alternative advertising must remain in place
for the duration of the tobacco companies' out-of-home media advertising
contracts which existed as of the date of the agreement.
The elimination of tobacco advertising as called for by the agreement will
cause a reduction in direct revenues from tobacco companies and may
simultaneously increase the available space on the existing inventory of
billboards in the outdoor advertising industry. Revenues attributable to
tobacco products represented 10.3% of our net revenues in 1998. We can give no
assurance that the further cutbacks in tobacco advertising during 1999 will
not have an adverse effect on operations for 1999 and beyond. See "Business--
Government Regulation."
We are subject to significant government regulation. The outdoor advertising
business is subject to regulation by federal, state and local governments.
Federal law requires states to restrict billboards on federally-aided roads to
commercial and industrial areas and imposes certain additional size, spacing
and other limitations on billboards. Some states have adopted standards more
restrictive than federal requirements. Local governments generally control
billboards as part of their zoning regulations, and some local governments
prohibit construction of new billboards or allow new construction only to
replace existing structures. In addition, some jurisdictions have adopted
amortization ordinances under which owners and operators of outdoor
advertising displays are required to remove existing structures at some future
date, often without receipt of condemnation proceeds. Although we have been
successful in the past in negotiating acceptable compensation arrangements in
circumstances in which our displays have been removed, there can be no
assurance we will be successful in the future, and the extent of the possible
adverse effect on such legislation cannot be reliably determined at this time.
In addition, we are unable to predict what additional regulation may be
imposed on outdoor advertising in the future. Legislation regulating the
content of billboard advertisements has been introduced in Congress from time
to time in the past, although no laws which, in the opinion of our management,
would materially adversely affect
15
<PAGE>
our business have been enacted to date. Changes in laws and regulations
affecting outdoor advertising at any level of government may have a material
adverse affect on our results of operations. See "Business--Government
Regulation."
Our acquisition strategy may not be successful. As part of our long-term
strategy, we will seek to acquire other outdoor advertising companies at
attractive prices. We cannot assure you that we will have sufficient capital
resources to continue to pursue acquisitions. We also cannot assure you that
we will successfully identify, complete or integrate additional acquisitions,
or that the acquired businesses will perform as expected or contribute
significant revenues or profits to us. We may face increased competition for
acquisition opportunities, which may inhibit our ability to consummate
suitable acquisitions on terms favorable to us.
We could be adversely affected if we lose our key executives. Our Chief
Executive Officer has been with Adams Outdoor for twelve years and has
fourteen years of experience in the outdoor advertising business during which
he has held a number of positions and been active in various industry
activities. Our Chief Financial Officer has been with Adams Outdoor for eleven
years, serving in a number of increasingly responsible financial positions.
Both executives have a strong understanding of our business, our competitors
and the markets in which we compete as well as a broad range of relationships
in the advertising industry from which we benefit. Although we believe we
could replace either our Chief Executive Officer and our Chief Financial
Officer in an orderly fashion should the need arise, the loss of one or both
of them could have a material adverse effect on our business, operating
results or financial condition.
We may be adversely affected by general economic conditions. We derive our
net revenues from the sale of advertising on our displays. Our advertising
revenues, as well as those of outdoor advertising companies in general, could
fluctuate with economic cycles. A prolonged national or regional economic
recession could have a material adverse effect on our business, operating
results or financial condition.
Our failure, or the failure of our third party suppliers or customers, to
address information technology issues related to the year 2000 could adversely
affect our operations. Like other business entities, we must address the
ability of our computer software applications and other business systems
(e.g., embedded microchips) to properly identify the year 2000 due to a
commonly used programming convention of using only two digits to identify a
year. Unless modified or replaced, these systems could fail or create
erroneous results when referencing the year 2000. We believe we have assessed
the relevant issues related to the year 2000 problem. Accordingly, we do not
believe that a contingency plan to handle year 2000 problems is necessary at
this time and we do not have such a plan. However, we cannot be sure that we
will have adequately addressed the issue and, if we have not done so, our
operations could be adversely affected. Moreover, we rely on third party
suppliers for certain finished goods, raw materials, water, other utilities,
transportation and a variety of other key services. If one or more of these
suppliers fail to address the year 2000 problem adequately, these suppliers'
operations could be interrupted. Such interruptions, in turn, could adversely
affect our operations. In addition, the failure of our customers to address
the year 2000 problem adequately could adversely affect our financial results.
The controlling equity holder of our company may have interests in conflict
with the interests of our noteholders. Stephen Adams is the sole member of AOA
Holding. See "The Issuers," "Principal Security Holders" and "Management." As
a result, Mr. Adams can effectively control the policies and operations of
Adams Outdoor, including the payment of distributions and transactions with
affiliates. Circumstances could occur where the interests of Mr. Adams, as the
principal equity holder of Adams Outdoor, could conflict with your interests
as a holder of the Notes.
The governors and directors of the Issuers are also directors of our
subsidiaries and may develop a conflict of interest. Each of the governors of
AOA Holding is also a director of AOA Capital and AOAI, the managing general
partner of AOALP. Under some circumstances, including an insolvency of AOALP
and AOAI, there may be conflicts between their duties as directors of AOAI and
as governors of AOA Holding.
16
<PAGE>
The sale of the outstanding notes had substantial benefit to Stephen Adams
and family members. Approximately $35.0 million of the net proceeds of the
offering was directly or indirectly distributed to Stephen Adams and members
of his family rather than being invested in our business. See "Use of
Proceeds."
We may not have the ability to raise the funds necessary to finance the
change of control offer required by the indenture. If we undergo a Change of
Control (as defined later in this prospectus under the heading "Description of
the Exchange Notes--Change of Control Offer"), we may need to refinance large
amounts of our debt, including the exchange notes, the AOALP Notes and our
credit facilities. If a Change of Control occurs, we must offer to buy back
your exchange notes for a price equal to 101% of the principal amount, plus
accrued and unpaid interest. We cannot assure you that in such an event we
will have sufficient funds to pay our debts. In addition, our credit
facilities will prohibit us from repurchasing the exchange notes after a
Change of Control until we have repaid in full our debt under the credit
facilities. If we fail to repurchase the exchange notes upon a Change of
Control, we will be in default under both the exchange notes and our credit
facilities. Any future debt that we incur may also contain restrictions on
repurchases in the event of a Change of Control or similar event. See
"Description of the Exchange Notes--Change of Control Offer" and "Description
of Certain Indebtedness."
The law regarding limited liability companies is not well developed. AOA
Holding is a limited liability company organized under the laws of the State
of Minnesota. Limited liability companies ("LLCs") are relatively recent
creations not only under the laws of the State of Minnesota but also under the
laws of other jurisdictions. Generally stated, LLCs are intended to provide
both the limited liability of the corporate form for their members and certain
advantages of partnerships, including "pass-through" income tax treatment for
members, and thus have attributes of both corporations and partnerships. Given
their recent creation, LLCs and their members have been involved in relatively
few bankruptcy cases as debtors, and there has been little reported judicial
authority addressing bankruptcy issues as they pertain to LLCs. Moreover, the
existing judicial authority on such issues in bankruptcies of analogous
entities (e.g., partnerships) is not well settled. Consequently, a bankruptcy
of AOA Holding, its members or any of its affiliates may be litigated and
decided in the absence of dispositive judicial precedent, and thus, no
assurance can be made as to any particular outcome.
If a bankruptcy case or lawsuit is initiated by unpaid creditors of either
Issuer, the debt represented by the exchange notes may be reviewed under the
federal bankruptcy laws and comparable provisions of state fraudulent transfer
laws. Under these laws, the debt could be voided, or claims in respect of the
exchange notes could be subordinated to all other debts of either Issuer if,
among other things, the court found that, at the time we incurred the debt
represented by the exchange notes, we:
. intended to hinder, delay or defraud creditors; or
. received less than reasonable equivalent value or fair consideration for
the incurrence of such debt and
. were insolvent or rendered insolvent by reason of such incurrence;
or
. were engaged in a business or transaction for which our remaining
assets constituted unreasonably small capital; or
. intended to incur, or believed that we would incur, debts beyond our
ability to pay such debts as they matured.
The measure of insolvency for purposes of fraudulent transfer laws varies
depending on the law applied. Generally, however, a debtor would be considered
insolvent if:
. the sum of its debts, including contingent liabilities, were greater
than the fair saleable value of all of its assets; or
. the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
17
<PAGE>
. it could not pay its debts as they become due.
We believe that we will receive fair value for the exchange notes. On the
basis of historical financial information, recent operating history and other
factors, we believe that after giving effect to the transfers into the holding
company structure and to the offering, we will not be insolvent, will not have
unreasonably small capital for the business in which we are engaged, and will
not have incurred debts beyond our ability to pay such debts as they mature.
We can give no assurance, however, what standard a court would apply in
reviewing the transactions or that a court would agree with our conclusions in
this regard.
You cannot be sure that an active trading market will develop for the
Exchange Notes. We have been informed by the initial purchaser of the
outstanding notes that it intends to make a market, after the exchange offer
is completed, in the exchange notes. However, the initial purchaser has no
obligation to make a market and may cease its market-making at any time.
We have applied to have the exchange notes designated as eligible for
trading in the PORTAL Market. However, we do not intend to apply for listing
of the exchange notes on any securities exchange or for quotation through the
Nasdaq National Market.
The liquidity of any market for the exchange notes and the market price
quoted for the exchange notes will depend on the number of holders of the
exchange notes, our performance, the market for similar securities, the
interest of securities dealers in making a market in the exchange notes and
other factors. A liquid trading market may not develop for the exchange notes.
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THE ISSUERS
Immediately prior to the sale of the outstanding notes, Mr. Stephen Adams
contributed his direct and indirect interests, other than his interest in AOALP
as a partner in ASSKM, L.P. (the "Adams Family Partnership"), in AOALP and AOAI
to AOA Holding. In connection therewith, the partnership agreement of AOALP was
amended to provide that the limited partner interest of AOA Holding is a
"priority" interest by virtue of which all limited partner distributions, other
than Permitted Tax Distributions, will be made only to AOA Holding until the
exchange notes are paid in full.
Our structure is as follows:
AOA Holding was formed in 1999 to acquire Mr. Stephen Adams' direct interests
in AOAI and AOALP and to serve as a co-issuer of the outstanding notes and the
exchange notes. AOA Holding's only assets are 100% of the outstanding capital
stock of AOAI and AOA Capital and a 0.70% general partnership interest and a
68.30% limited partnership interest in AOALP. All of our operations are
conducted through AOALP. Mr. Adams is the sole member of AOA Holding and
effectively controls the affairs of Adams Outdoor.
AOA Capital, a wholly-owned subsidiary of AOA Holding, was incorporated in
1999 for the purpose of serving as a co-issuer of the outstanding notes and the
exchange notes. AOA Capital does not and will not have substantial operations
or assets of any kind and will not have any revenues. As a result, prospective
purchasers of the exchange notes should not expect AOA Capital to participate
in servicing the interest or principal obligations of the exchange notes.
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EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The Issuers originally issued the outstanding notes on May 26, 1999 to CIBC
World Markets Corp. (the "Initial Purchaser") pursuant to a Securities
Purchase Agreement dated May 21, 1999. The Initial Purchaser subsequently
resold the notes to qualified institutional buyers in reliance on Rule 144A
under the Securities Act. As a condition of the Securities Purchase Agreement,
the Issuers entered into a Registration Rights Agreement (the "Exchange Offer
Registration Rights Agreement") with the Initial Purchaser pursuant to which
the Issuers agreed, for the benefit of the holders of the outstanding notes,
at their cost, to:
. file an exchange offer registration statement (the "Exchange Offer
Registration Statement") within 45 days after the date of the original
issuance of the outstanding notes with the SEC with respect to the
exchange offer for the exchange notes;
. use their best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act within 150
days after the date of the original issuance of the outstanding notes;
. keep the exchange offer open for not less than 30 days (or longer if
required by applicable law) after the date that notice of the exchange
offer is mailed to holders of the outstanding notes; and
. use their best efforts to consummate the exchange offer on or prior to
the 30th day following the date upon which the Exchange Offer
Registration Statement is declared effective.
Upon the Exchange Offer Registration Statement being declared effective, we
will offer the exchange notes in exchange for surrender of the outstanding
notes. For each outstanding note surrendered to the Issuers pursuant to the
exchange offer, the holder of such outstanding note will receive an exchange
note having a principal amount equal to that of the surrendered outstanding
note.
Under existing interpretations of the staff of the SEC contained in several
no-action letters to third parties, we believe that the exchange notes will in
general be freely tradeable after the exchange offer without further
registration under the Securities Act. However, any purchaser of outstanding
notes who is an "affiliate" of the Issuers or who intends to participate in
the exchange offer for the purpose of distributing the exchange notes:
. will not be able to rely on the interpretation of the staff of the SEC;
. will not be able to tender its outstanding notes in the exchange offer;
and
. must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any sale or transfer of the
outstanding notes, unless such sale or transfer is made pursuant to an
exemption from such requirements.
As contemplated by these no-action letters and the Exchange Offer
Registration Rights Agreement, each holder accepting the exchange offer is
required to represent to us in the Letter of Transmittal that:
. the exchange notes are to be acquired by the holder or the person
receiving such exchange notes, whether or not such person is the holder,
in the ordinary course of business;
. the holder or any such other person, other than a broker-dealer referred
to in the next sentence, is not engaging and does not intend to engage,
in distribution of the exchange notes;
. the holder or any such other person has no arrangement or understanding
with any person to participate in the distribution of the exchange
notes;
. neither the holder nor any such other person is an "affiliate" of ours
within the meaning of Rule 405 under the Securities Act; and
. the holder or any such other person acknowledges that if such holder or
any other person participates in the exchange offer for the purpose of
distributing the exchange notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection
with any resale of the exchange notes and cannot rely on those no-action
letters.
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Each broker-dealer (a "Participating Broker-Dealer") that receives exchange
notes for its own account in exchange for outstanding notes must acknowledge
that it:
. acquired the exchange notes for its own account as a result of market-
making activities or other trading activities;
. has not entered into any arrangement or understanding with us or any
"affiliate" (within the meaning of Rule 405 under the Securities Act) to
distribute the exchange notes to be received in the exchange offer; and
. will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such exchange notes.
For a description of the procedure for resales by Participating Broker-
Dealers, see "Plan of Distribution."
In the event that changes in the law or the applicable interpretations of
the staff of the SEC do not permit us to effect such an exchange offer, or if
for any other reason the exchange offer is not consummated within 180 days of
the date of the original issuance of the outstanding notes, we will, at our
own cost:
. file a shelf registration statement covering the resale of the
outstanding notes;
. use our best efforts to cause the shelf registration statement to be
declared effective under the Securities Act; and
. use our best efforts to keep effective the shelf registration statement
until the earlier of the disposition of the outstanding notes or two
years after its effective date.
We will, in the event of the filing of the shelf registration statement,
provide to each applicable holder of the outstanding notes copies of the
prospectus which is a part of the shelf registration statement, notify each
such holder when the shelf registration statement has been effective, and take
certain other actions as are required to permit unrestricted resale of the
outstanding notes. A holder of the outstanding notes that sells such
outstanding notes pursuant to the shelf registration statement generally will
be required to be named as a selling security holder in the related prospectus
and to deliver a prospectus to purchasers, will be subject to certain of the
civil liability provisions under the Securities Act in connection with such
sales, and will be bound by the provisions of the Exchange Offer Registration
Rights Agreement which are applicable to such a holder, including certain
indemnification obligations. In addition, each holder of the outstanding notes
will be required to deliver information to be used in connection with the
shelf registration statement and to provide comments on the shelf registration
statement within the time periods set forth in the Exchange Offer Registration
Rights Agreement in order to have their outstanding notes included in the
shelf registration statement and to benefit from the provisions set forth in
the following paragraph.
If:
(a) we fail to file any of the registration statements required by the
Exchange Offer Registration Rights Agreement on or before the date
specified for such filing;
(b) any of such registration statements is not declared effective by the
SEC on or prior to the date specified for such effectiveness;
(c) we fail to consummate the exchange offer within 180 days of the date of
the original issuance of the outstanding notes; or
(d) the shelf registration statement or the Exchange Offer Registration
Statement is declared effective but thereafter ceases to be effective
during the period specified in the Exchange Offer Registration Rights
Agreement (each such event referred to in clauses (a) through (d) above
a "registration default"),
the sole remedy available to holders of the outstanding notes will be the
immediate assessment of additional interest as follows: the per annum interest
rate on the outstanding notes will increase by .50% for each 90-day
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<PAGE>
period during which the registration default continues, up to a maximum
additional interest rate of 2% per annum in excess of 10-3/8% per annum.
All additional interest will be payable to holders of the outstanding notes
in cash on March 15 and September 15, commencing with the first such date
occurring after any such additional interest commences to accrue, until such
registration default is cured. After the date on which such registration
default is cured, the interest rate on the outstanding notes will revert to
10-3/8% per annum. Holders of the outstanding notes have no right to receive
such additional interest, if any.
The summary herein of certain provisions of the Exchange Offer Registration
Rights agreement is subject to, and is qualified in its entirety by, all the
provisions of the Exchange Offer Registration Rights Agreement, a copy of
which is filed as an exhibit to the Exchange Offer Registration Statement of
which this prospectus is a part.
Following the consummation of the exchange offer, holders of the outstanding
notes who are eligible to participate in the exchange offer, but who did not
tender their outstanding notes will not have any further registration rights
and such outstanding notes will continue to be subject to certain restrictions
on transfer. Accordingly, the liquidity of the market for such outstanding
notes could be adversely affected.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and in the Letter of Transmittal, we will accept any and all outstanding notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
, 1999, or such later date and time as to which the exchange offer
has been extended. We will issue $1,000 principal amount of exchange notes in
exchange for each $1,000 principal amount of outstanding notes accepted in the
exchange offer. Holders may tender some or all of their outstanding notes
pursuant to the exchange offer. However, outstanding notes may be tendered
only in integral multiples of $1,000.
The form and terms of the exchange notes are substantially the same as the
form and terms of the outstanding notes except that:
. the exchange notes bear an exchange note designation and a different
CUSIP number from the outstanding notes;
. the exchange notes have been registered under the federal securities
laws and hence will not bear legends restricting the transfer thereof as
the outstanding notes do; and
. the holders of the exchange notes will generally not be entitled to
rights under the Registration Rights Agreement, which rights generally
will be satisfied when the exchange offer is consummated.
The exchange notes will evidence the same debt as the tendered outstanding
notes and will be entitled to the benefits of the indenture under which the
outstanding notes were issued. As of the date of this prospectus, $50,000,000
aggregate principal amount of outstanding notes were outstanding.
Holder of outstanding notes do not have any appraisal or dissenters' rights
under the Minnesota Business Corporations Act, the Minnesota Liability
Companies Act or the indentures relating to such notes in connection with the
exchange offer. We intend to conduct the exchange offer in accordance with the
applicable requirements of the Securities Exchange Act of 1934, and the rules
and regulations of the SEC thereunder.
We shall be deemed to have accepted validly tendered outstanding notes when,
as and if we have given oral or written notice thereof, such notice if given
orally, to be confirmed in writing, to the exchange agent. The exchange agent
will act as agent for the tendering holders for the purpose of receiving the
exchange notes from our company.
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<PAGE>
If any tendered outstanding notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted outstanding notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the expiration date.
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
outstanding notes pursuant to the exchange offer. We will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection
with the exchange offer. For additional information, please refer to the "--
Fees and Expenses" section of this prospectus.
Expiration Date; Extensions; Amendments
The expiration date is 5:00 p.m., New York City time, on , 1999,
unless we extend the exchange offer, in which case the expiration date will be
the latest date and time to which the exchange offer is extended.
In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral or written notice, such notice if given orally, to be
confirmed in writing, and will issue a press release or other public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
We reserve the right:
. to delay accepting any outstanding notes, to extend the exchange offer
or to terminate the exchange offer if any of the conditions set forth
below under "conditions" shall not have been satisfied, by giving oral
or written notice, such notice if given orally, to be confirmed in
writing, of such delay, extension or termination to the exchange agent,
or
. to amend the terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders.
Interest on the Exchange Notes
The exchange notes will bear interest from their date of issuance. Holders
of outstanding notes that are accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the date of issuance of the
exchange notes. Such interest will be paid with the first interest payment on
the exchange notes on September 15, 1999 to persons who are registered holders
of the exchange notes on September 1, 1999. Interest on the outstanding notes
accepted for exchange will cease to accrue upon issuance of the exchange
notes.
Interest on the exchange notes is payable semi-annually on each March 15 and
September 15, commencing on September 15, 1999.
Procedures for Tendering
Only a registered holder of outstanding notes may tender such notes in the
exchange offer. To tender in the exchange offer, a holder must complete, sign
and date the Letter of Transmittal, or a facsimile thereof, have the
signatures thereon guaranteed if required by the Letter of Transmittal, and
mail or otherwise deliver such Letter of Transmittal or such facsimile,
together with the outstanding notes and any other required documents, or cause
The Depository Trust Company to transmit an agent's message as described below
in connection with a book-entry transfer, to the exchange agent prior to 5:00
p.m., New York City time, on the expiration date. To be tendered effectively,
the outstanding notes, the Letter of Transmittal or agent's message and other
required
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<PAGE>
documents must be completed and received by the exchange agent at the address
set forth below under "--Exchange Agent" prior to the expiration date.
Delivery of the outstanding notes may be made by book-entry transfer in
accordance with the procedures described below. Confirmation of such book-
entry transfer must be received by the exchange agent prior to the expiration
date.
The term "agent's message" means a message, transmitted by a book-entry
transfer facility to, and received by, the exchange agent forming a part of a
confirmation of a book-entry, which states that such book-entry transfer
facility has received an express acknowledgement from the participant in such
book-entry transfer facility tendering the outstanding notes that such
participant has received and agrees:
. to participate in the Automated Tender Option Program ("ATOP")
. to be bound by the terms of the Letter of Transmittal; and
. that we may enforce such agreement against such participant.
By executing the Letter of Transmittal or agent's message, each holder will
make to us the representations set forth above in the fourth paragraph under
the heading "--Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by us will constitute
agreement between such holder and the Issuers in accordance with the terms and
subject to the conditions set forth herein and in the Letter of Transmittal or
agent's message.
The method of delivery of outstanding notes and the Letter of Transmittal or
agent's message and all other required documents to the exchange agent is at
the election and sole risk of the holder. As an alternative to delivery by
mail, holders may wish to consider overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure delivery to the exchange
agent before the expiration date. No Letter of Transmittal for outstanding
notes should be sent to any of the Issuers or any of their affiliates. Holders
may request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect the above transactions for such holders.
Any beneficial owner whose outstanding notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered hold to tender on such beneficial owner's behalf. For additional
information, please refer to the "Instructions to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" included with
the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an eligible institution (as defined below)
unless the outstanding notes tendered pursuant thereto are tendered by a
registered holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal,
or for the account of an eligible institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "eligible institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any outstanding notes listed therein, such notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on which notes with the
signature thereon guaranteed by an eligible institution.
If the Letter of Transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or other acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence to our
satisfaction of their authority to so act must be submitted with the Letter of
Transmittal.
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<PAGE>
We understand that the exchange agent will make a request promptly after the
date of this prospectus to establish accounts with respect to the outstanding
notes at the book-entry transfer facility, The Depository Trust Company (the
"book-entry transfer facility"), for the purpose of facilitating the exchange
offer, and subject to the establishment thereof, any financial institution
that is a participant in the book-entry transfer facility's system may make
book-entry delivery of outstanding notes by causing such book-entry transfer
facility to transfer such outstanding notes into the exchange agent's account
with respect to the outstanding notes in accordance with the book-entry
transfer facility's procedures for such transfer. Although delivery of the
outstanding notes may be effected through book-entry transfer into the
exchange agent's account at the book-entry transfer facility, unless an
agent's message is transmitted to and received by the exchange agent in
compliance with ATOP on or prior to the expiration date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures, the tender of such notes will not be valid.
Delivery of documents to the book-entry transfer facility does not constitute
delivery to the exchange agent.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance of tendered outstanding notes and withdrawal of tendered
outstanding notes will be determined by the Issuers, in their sole discretion,
which determination will be final and binding. The Issuers reserve the
absolute right to reject any and all outstanding notes not properly tendered
or any outstanding notes our acceptance of which would, in the opinion of the
Issuers' counsel, be unlawful. The Issuers also reserve the right to waive any
defects, irregularities or conditions of tender as to particular outstanding
notes. The Issuers may not waive any condition to the exchange offer unless
such condition is legally waiveable. In the event such a waiver by the Issuers
gives rise to the legal requirements to do so, the Issuers will hold the
exchange offer open for at least five business days thereafter. The Issuers'
interpretation of the terms and conditions of the exchange offer, including
the instructions in the Letter of Transmittal, will be final and binding on
all parties. Unless waived, any defects or irregularities in connection with
tenders of outstanding notes must be cured within such time as the Issuers
shall determine. Although the Issuers intend to notify holders of defects or
irregularities with respect to tenders of outstanding notes, neither the
Issuers, the exchange agent nor any other person shall incur any liability for
failure to give such notification. Tender of outstanding notes will not be
deemed to have been made until such defects or irregularities have been cured
or waived. Any outstanding notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the exchange agent to the tendering
holders, unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the expiration date.
Guaranteed Delivery Procedures
Holders who wish to tender their outstanding notes and whose outstanding
notes are not immediately available, who cannot deliver their outstanding
notes, the Letter of Transmittal or any other required documents to the
exchange agent, or who cannot complete the procedures for book-entry transfer,
prior to the expiration date, may effect a tender if:
(a) the tender is made through an eligible institution;
(b) prior to the expiration date, the exchange agent receives by facsimile
transmission, mail or hand delivery from such eligible institution, a
properly completed and duly executed Notice of Guaranteed Delivery,
setting forth the name and address of the holder, the certificate
number(s) of such outstanding notes and the principal amount of
outstanding notes tendered, stating that the tender is being made
thereby and guaranteeing that, within three New York Stock Exchange
trading days after the expiration date, the Letter of Transmittal, or
facsimile thereof, or, in the case of a book-entry transfer, an agent's
message, together with the certificate(s) representing the outstanding
notes, or a confirmation of book-entry transfer of such notes into the
exchange agent's account at the Book-Entry Transfer Facility, and any
other documents required by the Letter of Transmittal will be deposited
by the eligible institution with the exchange agent; and
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<PAGE>
(c) the certificate(s) representing all tendered outstanding notes in
proper form for transfer, or a confirmation of a book-entry transfer of
such outstanding notes into the exchange agent's account at the book-
entry transfer facility, together with a Letter of Transmittal, or
facsimile thereof, properly completed and duly executed, with any
required signature guarantees, or, in the case of a book-entry
transfer, an agent's message, are received by the exchange agent within
three New York Stock Exchange trading days after the expiration date of
the exchange offer.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of outstanding notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
expiration date of the exchange offer.
To withdraw a tender of outstanding notes in the exchange offer, a telegram,
telex, letter or facsimile transmission notice of withdrawal must be received
by the exchange agent at its address set forth herein prior to 5:00 p.m., New
York City time, on the expiration date of the exchange offer. Any such notice
of withdrawal must:
. specify the name of the person having deposited notes to be withdrawn
(the "Depositor");
. identify the notes to be withdrawn, including the certificate number(s)
and principal amount of such notes, or, in the case of outstanding notes
transferred by book-entry transfer, the name and number of the account
at the book-entry transfer facility to be credited;
. be signed by the holder in the same manner as the original signature on
the Letter of Transmittal by which such notes were tendered, including
any required signature guarantees, or be accompanied by documents of
transfer sufficient to have the trustee with respect to the outstanding
notes register the transfer of such notes into the name of the person
withdrawing the tender; and
. specify the name in which any such outstanding notes are to be
registered, if different from that of the Depositor.
All questions as to the validity, form and eligibility, including time of
receipt, of such notices will be determined by us and shall be final and
binding on all parties. Any outstanding notes so withdrawn will be deemed not
to have been validly tendered for purposes of the exchange offer and no
exchange notes will be issued with respect thereto unless the outstanding
notes so withdrawn are validly retendered. Any outstanding notes which have
been tendered but which are not accepted for exchange will be returned to the
holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. Properly
withdrawn outstanding notes may be retendered by following one of the
procedures described above under "--Procedures for Tendering" at any time
prior to the expiration date.
Conditions
Notwithstanding any other terms of the exchange offer, the Issuers shall not
be required to accept for exchange, or exchange notes for, any outstanding
notes, and may terminate or amend the exchange offer as provided herein before
the acceptance of such outstanding notes, if:
. any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer
which, in the Issuers' sole judgment, might materially impair the
Issuers' ability to proceed with the exchange offer, or any material
adverse development has occurred in any existing action or proceeding
with respect to the Issuers or any of their subsidiaries; or
. any law, statute, rule, regulation or interpretation by the staff of the
SEC is proposed, adopted or enacted, which, in the Issuers' sole
judgment, might materially impair the Issuers' ability to proceed with
the exchange offer or materially impair the contemplated benefits of the
exchange offer; or
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<PAGE>
. any governmental approval has not been obtained, which approval the
Issuers shall, in their sole discretion, deem necessary for the
consummation of the exchange offer as contemplated hereby.
If the Issuers determine, in their sole discretion, that any of the
conditions are not satisfied, the Issuers may:
. refuse to accept any outstanding notes and return all tendered
outstanding notes to the tendering holders;
. extend the exchange offer and retain all outstanding notes tendered
prior to the expiration of the exchange offer, subject, however, to the
rights of holders to withdraw such outstanding notes as described in "--
Withdrawal of Tenders" above;
. waive such unsatisfied conditions with respect to the exchange offer and
accept all properly tendered outstanding notes which have not been
withdrawn.
Exchange Agent
United States Trust Company of New York has been appointed as exchange agent
for the exchange offer. Questions and requests for assistance, requests for
additional copies of this prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the exchange
agent addressed as follows:
By Hand:
By Registered or Certified Mail [ ]
or Overnight Courier
[ ]
By Facsimile
(For Eligible Institutions Only):
( ) -
Confirm by Telephone
( ) -
[ ]
Delivery to an address other than set forth above will not constitute a
valid delivery.
Fees and Expenses
The expenses of soliciting tenders will be borne by the Issuers. The
principal solicitation is being made by mail, however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Issuers and their affiliates.
The Issuers have not retained any dealer-manager in connection with the
exchange offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the exchange offer. The Issuers, however, will pay
the exchange agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The Issuers will pay the cash expenses to be incurred in connection with the
exchange offer. Such expenses include fees and expenses of the exchange agent
and trustee, accounting and legal fees and printing costs, among others.
Accounting Treatment
The exchange notes will be recorded at the same carrying value as the
outstanding notes, which is face value, as reflected in the Issuers'
accounting records on the date of exchange. Accordingly, the Issuers will
recognize no gain or loss for accounting purposes. The expenses of the
exchange offer will be expensed over the term of the exchange notes.
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Consequences of Failure to Exchange
The outstanding notes that are not exchanged for exchange notes pursuant to
the exchange offer will remain restricted securities. Accordingly, such
outstanding notes may be resold only:
. to the Issuers, upon redemption thereof or otherwise;
. so long as the outstanding notes are eligible for resale pursuant to
Rule 144A under the Securities Act, to a person inside the United States
whom the seller reasonably believes is a qualified institutional buyer
within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A;
. in accordance with Rule 144 under the Securities Act;
. outside the United States to a foreign person in a transaction meeting
the requirements of Rule 904 under the Securities Act;
. pursuant to another exemption from the registration requirements of the
Securities Act, and based upon an opinion of counsel reasonably
acceptable to the Issuers; or
. pursuant to an effective registration statement under the Securities
Act, in each case in accordance with any applicable securities laws of
any state of the United States.
Resale of the Exchange Notes
With respect to resales of exchange notes, based on interpretations by the
staff of the SEC set forth in no-action letters issued to third parties, we
believe that a holder or other person who receives exchange notes, whether or
not such person is the holder, other than a person that is an "affiliate" of
the Issuers within the meaning of Rule 405 under the Securities Act, in
exchange for outstanding notes in the ordinary course of business and who is
not participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the
exchange notes, will be allowed to resell the exchange notes to the public
without further registration under the Securities Act and without delivering
to the purchasers of the exchange notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act. However, if the holder
acquires exchange notes in the exchange offer for the purpose of distributing
or participating in a distribution of the exchange notes, such holder cannot
rely on the position of the staff of the SEC enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration
is otherwise available. Further, each Participating Broker-Dealer that
receives exchange notes for its own account in exchange for outstanding notes,
where such outstanding notes were acquired by such Participating Broker-Dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such exchange notes.
As contemplated by these no-action letters and the Exchange Offer
Registration Rights Agreement, each holder who participates in the exchange
offer will be required to represent to the Issuers in the Letter of
Transmittal that:
. the exchange notes are to be acquired by the holder or the person
receiving such outstanding notes, whether or not such person is the
holder, in the ordinary course of business;
. the holder or any such other person, other than a broker-dealer referred
to in the next sentence, is not engaging and does not intend to engage,
in the distribution of the outstanding notes;
. the holder, or any such other person has no arrangement or understanding
with any person to participate in the distribution of the outstanding
notes;
. neither the holder nor any such other person is an "affiliate" of either
Issuer within the meaning of Rule 405 under the Securities Act;
28
<PAGE>
. the holder or any such other person acknowledges that if such holder or
other person participates in the exchange offer for the purpose of
distributing the exchange notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection
with any resale of the outstanding notes and cannot rely on those no-
action letters; and
. any additional representation that in the written opinion of counsel to
the Issuers are necessary under then-existing interpretations of the SEC
in order for the exchange registration statement to be declared
effective.
As indicated above, each Participating Broker-Dealer that receives exchange
notes for its own account in exchange for outstanding notes must acknowledge
that it will deliver a prospectus in connection with any resale of such
exchange notes. For a description of the procedures for such resales by
Participating Broker-Dealers, see "Plan of Distribution."
USE OF PROCEEDS
The Issuers will not receive any cash proceeds from the issuance of the
exchange notes in the exchange offer. In consideration for issuing these notes
as contemplated in this prospectus, they will receive outstanding notes in
like principal amount, the terms of which are the same in all material
respects to the exchange notes. The outstanding notes surrendered in exchange
for the exchange notes will be retired and cancelled and not reissued.
Accordingly, the issuance of the exchange notes will not result in any
increase or decrease in our debt.
The net proceeds to the Issuers from the issuance of the outstanding notes
was approximately $48.25 million after deducting discounts and expenses. AOA
Holding received 100% of the net proceeds, of which an aggregate of $35.0
million was paid to equity holders and $13.25 million was used to reduce
indebtedness.
More specifically, contemporaneous with the closing of the sale of the
outstanding notes, AOA Holding made a distribution of $32.5 million to its
sole member, Mr. Stephen Adams, and contributed approximately $15.75 million
to AOALP. AOALP made an allocation of $2.5 million to its limited partner, the
Adams Family Partnership, and repaid approximately $13.25 million of
indebtedness outstanding under the AOALP credit facilities without reducing
the commitments of the lenders thereunder. The credit facility indebtedness
repaid bears interest at rates varying from 6.42% to 8.25%. Currently, the
AOALP unsecured credit facility matures on December 31, 2001 and the AOALP
secured credit facility matures on March 31, 2001.
29
<PAGE>
CAPITALIZATION
The following table sets forth our actual capitalization as of May 31, 1999.
<TABLE>
<CAPTION>
May 31,
1999
----------
(dollars
in
thousands)
<S> <C>
Total debt:
AOALP credit facilities............................................ $ 24,000
AOALP Notes........................................................ 101,000
Outstanding notes.................................................. 50,000
---------
Total debt......................................................... 175,000
Member's deficit.................................................... (102,866)
---------
Total capitalization............................................... $ 72,134
=========
</TABLE>
30
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
AOA Holding and AOA Capital, the co-issuers of the exchange notes, were
formed in 1999. As such, these entities were not in existence for the
historical periods presented in the following tables. The historical
information of AOALP is presented as it represents the predecessor entity.
The following selected historical and pro forma financial data, insofar as
it relates to each of the five years ended December 31, 1998, has been
prepared by us and is based upon the financial statements of AOALP and AOAI
and should be read in conjunction with the audited financial statements. The
selected historical and pro forma financial data as of and for the three
months ended March 31, 1998 and 1999 has been derived from unaudited financial
statements appearing elsewhere in this prospectus which, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the
unaudited interim periods. Results for the three months ended March 31, 1999
are not necessarily indicative of results that may be expected for the entire
year. The selected historical and pro forma financial data should be read in
conjunction with the information contained in the financial statements of
AOALP and AOAI and the notes thereto, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Summary Historical and Pro
Forma Financial Data" included elsewhere herein.
The following unaudited selected pro forma statement of operations data and
other data for the year ended December 31, 1998 and for the three months ended
March 31, 1999 give effect to the transfers into the holding company structure
and the sale of the outstanding notes as if they had been completed at the
beginning of the respective periods. Certain management assumptions and
adjustments are described in the accompanying notes hereto. The pro forma
financial data should be read in conjunction with the financial statements of
AOALP and AOAI and the notes thereto appearing elsewhere in this prospectus.
This pro forma financial data is not necessarily indicative of the results
that would have occurred had the transfers into the holding company structure
and the sale of the outstanding notes been completed on the dates indicated or
our actual or future operating results or financial position.
31
<PAGE>
Selected Historical and Pro Forma Financial Data (dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
----------------------------------------------------- -------------------------
Pro Pro
Forma Forma
1994 1995 1996 1997 1998 1998(a) 1998 1999 1999(a)
------- ------- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Gross revenues......... $41,748 $47,589 $ 52,421 $63,302 $71,592 $71,592 $15,742 $16,552 $16,552
Agency commissions..... 4,097 4,698 5,161 6,017 7,023 7,023 1,527 1,503 1,503
------- ------- -------- ------- ------- ------- ------- ------- -------
Net revenues........... 37,651 42,891 47,260 57,285 64,569 64,569 14,215 15,049 15,049
Direct advertising
expenses.............. 19,561 20,848 22,412 29,089 32,097 32,097 7,468 7,967 7,967
Corporate, general and
administrative
expense............... 1,183 1,114 2,405 3,589 3,903 3,903 1,004 594 594
Depreciation and
amortization.......... 5,684 5,568 6,105 8,149 7,875 7,875 2,063 1,857 1,857
Deferred compensation
expense(b)............ 1,530 2,427 1,451 901 4,316 4,316 128 360 360
------- ------- -------- ------- ------- ------- ------- ------- -------
Operating income....... 9,693 12,934 14,887 15,557 16,378 16,378 3,552 4,271 4,271
Interest expense....... 9,877 11,263 12,523 14,601 14,408 18,919 3,652 3,445 4,573
Other expenses
(income), net......... 38 16 (32) 43 78 78 (5) 12 12
(Gain) loss on
disposals of assets,
net................... 388 93 861 122 378 378 4 (1) (1)
Extraordinary loss on
early extinguishment
of debt............... -- -- -- -- 330 330 -- -- --
------- ------- -------- ------- ------- ------- ------- ------- -------
Net income (loss).... $ (610) $ 1,562 $ 1,535 $ 791 $ 1,184 $(3,327) $ (99) $ 815 $ (313)
======= ======= ======== ======= ======= ======= ======= ======= =======
Other Data:
Operating Cash
Flow(c)............... $16,907 $20,929 $ 22,443 $24,607 $28,569 $28,569 $ 5,743 $ 6,488 $ 6,488
Capital expenditures... 1,895 2,042 4,419 7,646 10,144 10,144 1,481 1,711 1,711
Ratio of earnings to
fixed charges (d)..... -- 1.07x 1.11x 1.05x 1.09x -- -- 1.20x --
Ratio of debt to net
income (e)............ -- 68.79 86.92 170.71 112.13 -- -- 171.1 --
Cash flow provided by
(used in):
Operating
activities.......... $ 7,092 $ 9,151 $ 12,537 $ 7,150 $11,873 $8,676 $ 2,339 $(3,807) $(5,624)
Investing
activities.......... (1,791) (1,979) (28,675) (7,462) (9,659) (9,659) 1,481 (1,703) (1,703)
Financing
activities.......... (5,569) (6,763) 17,540 (100) (3,647) (2,139) 4,213 6,212 6,212
</TABLE>
<TABLE>
<CAPTION>
As of December 31, As of March 31,
------------------------------------------------ ------------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents........... $ 1,722 $ 2,131 $ 3,533 $ 3,121 $ 1,687 $ 3,514 $ 2,389
Working capital(f)..... 4,646 5,944 4,969 3,096 4,805 7,988 11,886
Total assets........... 50,650 48,211 77,114 77,474 78,193 78,532 79,689
Total debt............. 113,261 107,443 133,421 135,034 132,728 139,284 139,440
Total partners'
deficit............... (68,391) (66,829) (68,444) (69,586) (69,447) (69,685) (69,132)
</TABLE>
see notes on the following page
32
<PAGE>
- --------
(a) Gives effect to the transfers to the holding company structure and the
issuance of the outstanding notes as if they had occurred at the beginning
of such periods for Statement of Operations Data. Pro forma interest
expense is computed as follows:
<TABLE>
<CAPTION>
Three
Months
Year Ended Ended
December 31, March 31,
1998 1999
------------ ---------
<S> <C> <C>
$50,000,000 10 3/8% Senior Notes...................... $5,189 $1,297
AOALP Credit Facility
$13,250,000 at 7.00%................................. (928) (232)
Amortization of deferred financing costs.............. 250 63
------ ------
Interest expense...................................... $4,511 $1,128
====== ======
</TABLE>
(b) Deferred compensation expense represents accrued expenses under certain
deferred compensation arrangements, including phantom stock agreements
with certain key management personnel. The phantom stock agreements in
effect provide for the repurchase of "phantom stock" in three equal annual
payments after a covered executive's termination, death or disability, the
sale of Adams Outdoor, or the fifth anniversary of the agreement's
execution. See "Management--Agreements with Management--Incentive
Compensation under Phantom Stock Agreements."
(c) The following table sets forth the calculation of "Operating Cash Flow."
<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
----------------------------------------------- --------------------
Pro Pro
Forma Forma
1994 1995 1996 1997 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income........ $ 9,693 $12,934 $14,887 $15,557 $16,378 $16,378 $3,552 $4,271 $4,271
Depreciation and
amortization........... 5,684 5,568 6,105 8,149 7,875 7,875 2,063 1,857 1,857
Deferred compensation
expense................ 1,530 2,427 1,451 901 4,316 4,316 128 360 360
------- ------- ------- ------- ------- ------- ------ ------ ------
Operating Cash Flow..... $16,907 $20,929 $22,443 $24,607 $28,569 $28,569 $5,743 $6,488 $6,488
</TABLE>
Operating Cash Flow is defined as operating income (loss) before
depreciation and amortization expense and deferred compensation expense. As
a limited liability company, we are not subject to federal corporate income
tax. Operating Cash Flow is not a measure of performance under GAAP.
Operating Cash Flow is not intended to represent net cash flow provided by
operating activities as defined by GAAP and should not be considered as an
alternative to net income or loss as an indicator of our operating
performance or to net cash provided by operating, investing and financing
activities as a measure of our liquidity or ability to meet cash needs. We
are providing information regarding Operating Cash Flow to permit a more
complete comparative analysis of our performance relative to other
companies in the media industry that publicly report Operating Cash Flow or
similarly defined measures. However, other companies may use different
definitions of these measures.
(d) Earnings consist of pre-tax income plus fixed charges adjusted to exclude
capitalized interest. Fixed charges consist of interest expense plus
amortization of deferred financing cost and the estimated interest portion
of rent expense. Earnings were insufficient to cover fixed charges by
approximately $1.3 million for the year ended December 31, 1994, $99,000
for the three months ended March 31, 1998, $3 million for the pro forma
year ended December 31, 1998 and $313,000 for the pro forma three months
ended March 31, 1999.
(e) The ratio of total debt to net income for the periods ended December 31,
1994, March 31, 1998 and for the pro forma periods ended December 31, 1998
and March 31, 1999 are not meaningful due to the net loss for those
periods.
(f) Working capital is defined as current assets less current liabilities.
33
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with "Selected
Historical Financial Data" and the related notes thereto and the financial
statements of AOALP and AOAI and the related notes thereto appearing elsewhere
in this prospectus. This prospectus contains certain forward-looking
statements that involve risks and uncertainties. Future results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include, but are not limited to, those set forth under
"Risk Factors" and elsewhere in this offering memorandum.
General
Adams Outdoor is the seventh largest owner and operator of outdoor
advertising structures in the United States. We currently provide outdoor
advertising services in fourteen markets and surrounding areas in the Midwest,
Southeast and mid-Atlantic states: Peoria, IL; Jackson, MI; Kalamazoo, MI;
Lansing, MI; Minneapolis, MN; Charlotte, NC; Lehigh Valley, PA; Northeast PA;
Charleston, SC; Florence, SC; Laurens, SC; Orangeburg, SC; Norfolk, VA; and
Madison, WI. As of December 31, 1998, we operated, in the aggregate,
approximately 9,600 advertising displays, including 2,891 painted bulletins,
6,541 30-sheet posters and 222 junior (8-sheet) posters.
The Adams Outdoor business was founded in 1983 with the acquisition of
Central Outdoor Advertising, which had offices in Jackson, Kalamazoo and
Lansing, MI. Over the next five years, we pursued a strategy of geographic
expansion into additional medium-sized markets, primarily through the
acquisition of existing outdoor advertising businesses in selected Midwest,
Southeast and mid-Atlantic markets. This geographic expansion strategy has
enabled us to capitalize on the efficiencies, economies of scale and marketing
opportunities associated with operating outdoor advertising businesses located
in proximate or contiguous geographic markets.
Since 1991, we have continued to strengthen our market share through the
construction and acquisition of displays in our existing markets and
acquisitions, in the last quarter of 1996, of operations in South Carolina and
Pennsylvania. This expansion has been financed through our internally
generated cash flow and borrowings under our credit facilities.
The following table presents certain information from the Statements of
Operations as a percentage of net revenues for each of the years in the three-
year period ended December 31, 1998 and the three months ended March 31, 1998
and 1999.
<TABLE>
<CAPTION>
Year Ended Three Months
December 31, Ended March 31,
------------------- -----------------
1996 1997 1998 1998 1999
----- ----- ----- ------- -------
<S> <C> <C> <C> <C> <C>
Net revenues.......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Direct advertising expenses........... 47.4 50.8 49.7 52.5 52.9
Corporate, general and administrative
expenses............................. 5.1 6.2 6.0 7.1 3.9
----- ----- ----- ------- -------
Operating Cash Flow................... 47.5 43.0 44.3 40.4 43.2
Depreciation and amortization......... 12.9 14.2 12.2 14.5 12.3
Deferred compensation expense......... 3.1 1.6 6.7 0.9 2.4
----- ----- ----- ------- -------
Operating income...................... 31.5 27.2 25.4 25.0 28.5
Interest expense...................... 26.5 25.5 22.3 25.7 22.9
Other expenses (income), net.......... (0.1) 0.1 0.2 -- 0.1
Loss on disposals of property and
equipment, net....................... 1.8 0.2 0.6 -- --
Extraordinary loss on early
extinguishment of debt............... -- -- 0.5 -- --
----- ----- ----- ------- -------
Net income (loss)..................... 3.3% 1.4% 1.8% (0.7%) 5.5%
===== ===== ===== ======= =======
</TABLE>
34
<PAGE>
Our revenues are a function of both the occupancy rate of our outdoor
advertising display inventory (the percentage of time that our displays
contain paid-for advertisements) and the rates that we charge for use of our
displays. Our business strategy includes the optimization of the mix of rate
and occupancy of our display inventory in order to maximize revenues.
Advertising rates for our displays are based upon a variety of factors,
including historical base rates, the time of year, and the occupancy rate of a
particular market's display inventory.
The following table presents the average number of painted bulletins and 30-
sheet poster displays operated by us and the average rates and occupancy
levels with respect to such displays for the three years ended December 31,
1998 and the three months ended March 31, 1999. These figures do not include
junior-posters and route town paints.
<TABLE>
<CAPTION>
Year Ended December
31, Three Months
----------------------- Ended
1996(a) 1997 1998 March 31, 1999
------- ------ ------ --------------
<S> <C> <C> <C> <C>
Number of Displays:
Painted Bulletins....................... 1,750 2,446 2,891 2,891
30-Sheet Posters........................ 4,418 6,387 6,541 6,541
Average Rates:(b)(c)
Painted Bulletin........................ $1,610 $1,624 $1,933 $1,971
30-Sheet Posters........................ 523 529 536 549
Average Occupancy:(c)
Painted Bulletins....................... 78% 73% 78% 76%
30-Sheet Posters........................ 71% 69% 74% 57%
</TABLE>
- --------
(a) The above figures for 1996 do not include our operations in Northeast PA
or South Carolina acquired during the fourth quarter of 1996.
(b) Represents average rate per display per month.
(c) Excludes results from our South Carolina market.
Our primary operating expenses are advertising agency commissions, lease
payments to property owners for use of the land on which our displays are
located, operational and administrative costs and sales expenses (primarily
commissions). Of these expenses, advertising agency commissions, sales
expenses, and certain operational and administrative costs are considered
direct costs. Commissions are paid to advertising agencies that contract for
the use of our advertising displays on behalf of advertisers. These agency
commissions are deducted from gross revenues to calculate net revenues.
We currently maintain a phantom stock program under which certain executive
management personnel and general managers have the ability to earn deferred
compensation based upon our operating performance or, in the case of the
general managers, the operating performance of their respective divisions.
Annual accruals under the program are based upon exceeding a base level of
operating profit. We believe that our phantom stock program provides our
senior employees incentives to continue improving our operating performance.
Our marketing strategy of servicing local and regional advertisers and
reducing our dependence on national and tobacco advertising resulted in
moderate increases in overall revenues during a time when tobacco advertising
was declining. We concentrate our marketing efforts on generating sales from
local and regional advertisers in each of our markets, including those
advertisers within industries and product categories that have not
historically been traditional users of outdoor media. These potential
advertisers include fast food restaurants, retailers, food stores, casinos,
cellular and telecommunications companies, building supply retailers, radio
stations, travel-related industries and medical care providers. This focus on
local and regional advertisers has been critical to our ability to control
revenue fluctuations resulting from the variability and potential long-term
decline of revenues attributable to the decline in revenue from tobacco
advertising, the latter of which represented 10.3% of our net revenues in
1998, 10.5% in 1997, 12.5% in 1996, 12.6% in 1995, and 10.3% in 1994. Sales to
local and regional advertisers accounted for 89.7% of our net revenues in
1998.
35
<PAGE>
Our sales and marketing strategy has been successful largely due to our team
of general managers in our markets. These key managers have an average of 15
years of industry experience. We also have an integrated business development
department in each market, making available to each region's sales force
comprehensive information about local market research, customer needs and
advertising opportunities. The business development departments have given our
sales departments significantly improved information and tools to develop
additional local and regional advertising customers, especially those
customers that have not historically advertised through the outdoor medium.
Sales representatives have been able to use these additional resources to
develop creative ideas for new customers and educate them about the cost
effectiveness of outdoor advertising in attempting to reach their customers.
We consider our emphasis on local and regional sales, the expertise and tenure
of our managers and our marketing and customer service capabilities to be
factors which enhance the productivity of our inventory of advertising
displays.
Results of Operations
Three Months Ended March 31, 1999 Compared With Three Months Ended March 31,
1998
Net revenues for the quarter ended March 31, 1999 of $15.0 million increased
by 5.9% from $14.2 million for the comparable period in 1998. This increase
resulted from higher advertising rates and an increase in the number of
displays sold.
Direct advertising expenses for the quarter ended March 31, 1999 of $8.0
million increased by 6.7% from $7.5 million for the comparable period in 1998.
This increase was attributable to direct costs associated with increased sales
from new displays and an increase in sales commissions due to higher average
rates.
Corporate, general and administrative expenses for the quarter ended March
31, 1999 of $594,000 decreased by 40.8% from $1.0 million for the comparable
period in 1998. This decrease was attributable to a decrease in professional
fees, travel expenses and costs associated with our new logo and
identification project, which was completed in 1998.
Depreciation and amortization for the quarter ended March 31, 1999 of $1.9
million decreased by 10.0% from $2.1 million for the comparable period in
1998. Depreciation expense decreased as a result of the expiration of the
depreciable life of certain assets during 1998.
Deferred compensation expenses for the quarter ended March 31, 1999 of
$360,000 increased significantly from $128,000 for the comparable period in
1998 primarily due to increased operating profit and vesting and the
reinstatement of our Chief Executive Officer into our phantom stock plan.
Interest expense for the quarter ended March 31, 1999 of $3.4 million
decreased by 5.7% from $3.7 million for the first quarter of 1998. For the
quarters ended March 31, 1999 and March 31, 1998, the effective interest rates
were 9.8% and 10.3%, respectively, on average outstanding balances of $135.8
million and $136.7 million, respectively.
Net income for the quarter ended March 31, 1999 increased to $815,000 from a
net loss of $99,000 for the comparable period in 1998 as a result of the items
discussed above.
Operating Cash Flow for the quarter ended March 31, 1999 of $6.5 million
increased by 13.0% from $5.7 million for the comparable period in 1998.
Year Ended December 31, 1998 Compared With Year Ended December 31, 1997
Net revenues for 1998 of $64.6 million increased by 12.7% from $57.3 million
for 1997. This increase resulted from higher advertising rates in certain
markets and an increase in the number of displays sold.
36
<PAGE>
Direct advertising expenses for 1998 of $32.1 million increased by 10.3%
from $29.1 million in 1997. This increase was attributable to direct costs
associated with increased sales from new displays and an increase in sales
commissions due to higher average rates.
Corporate, general and administrative expenses for 1998 of $3.9 million
increased by 8.8% from $3.6 million in 1997. This increase was attributable to
increased travel expenses and costs associated with our new logo and
identification project.
Depreciation and amortization for 1998 of $7.9 million decreased by 3.4%
from $8.1 million in 1997. Depreciation expense decreased as a result of the
expiration of the depreciable life of certain assets during 1998.
Deferred compensation expense for 1998 of $4.3 million increased
significantly from $901,000 in 1997 primarily due to the inclusion of the
Chief Executive Officer in the phantom stock plan to acquire his 3% interest
in Adams Outdoor and the additional vesting of General Managers under the
phantom stock plan.
Interest expense for 1998 of $14.4 million decreased by 1.2% from $14.6
million in 1997. This decrease was attributable to a lower interest rate in
1998. Our effective interest rate decreased to 10.2% for 1998 from 10.4% for
1997.
Net income for 1998 increased to $1.2 million from $791,000 in 1997 as a
result of the items discussed above.
Operating Cash Flow for 1998 of $28.6 million increased by 16.1% from $24.6
million in 1997. This increase was attributable to the aforementioned increase
in net revenues coupled with only a modest increase in total operating
expenses.
Year Ended December 31, 1997 Compared With Year Ended December 31, 1996
Net revenues for 1997 of $57.3 million increased by 21.2% from $47.3 million
for 1996. This increase resulted from higher advertising rates in certain
markets and an increase in the number of displays sold as well as the
increased net revenues of $6.4 million from operations in South Carolina and
Northeast Pennsylvania which were acquired in the fourth quarter of 1996.
Direct advertising expenses for 1997 of $29.1 million increased by 29.8%
from $22.4 million in 1996. This increase was attributable to direct costs
associated with increased sales from new displays, an increase in sales
commissions due to higher average rates, and $5.0 million in additional direct
costs associated with the first full year of operations for the South Carolina
and Northeast Pennsylvania branches acquired in 1996.
Corporate, general and administrative expenses for 1997 of $3.6 million
increased by 49.2% from $2.4 million in 1996. This increase was attributable
to increased professional fees, travel expenses, relocation expenses, and
single use business taxes.
Depreciation and amortization for 1997 of $8.1 million increased by 33.5%
from $6.1 million in 1996. Depreciation expense increased as a result of
additions to property, plant and equipment during 1996 and early 1997 from
acquisitions and building of new structures.
Deferred compensation expense for 1997 of $901,000 decreased by 37.9% from
$1.5 million in 1996 primarily due to the removal of the Chief Financial
Officer from the phantom stock plan and management changes in the Michigan
market.
Interest expense for 1997 of $14.6 million increased 16.6% from $12.5
million in 1996. This increase was attributable to a higher outstanding
balance in 1997. Our effective interest rate was 10.4% for 1997 and 1996.
37
<PAGE>
Net income for 1997 decreased to $791,000 from $1.5 million in 1996 as a
result of the items discussed above.
Operating Cash Flow for 1997 of $24.6 million increased by 9.6% from $22.4
million in 1996. This increase was attributable to the aforementioned increase
in net revenues coupled with only a modest increase in total operating
expenses.
Liquidity and Capital Resources
Historically, our cash needs have arisen from operating expenses (primarily
direct advertising expenses and corporate general and administrative
expenses), debt service, capital expenditures and deferred compensation
payments under phantom stock agreements. Our interest expense was $14.4
million in 1998, $14.6 million in 1997, and $12.5 million in 1996. We also
made capital expenditures, primarily for new billboard construction in
existing markets, of $10.1 million in 1998, $7.6 million in 1997, and $4.4
million in 1996. We expect that our capital expenditures during 1999 will be
approximately $6.0 million and will be primarily for new billboard
construction and the upgrading of existing displays. We expect to finance
these capital expenditures with cash flow provided by operating activities or
borrowings under the AOALP credit facilities. We made payments under our
phantom stock agreements of approximately $1.3 million in 1998, $1.1 million
in 1997 and $1.2 million in 1996.
Our primary sources of cash are net cash generated from operating activities
and borrowings under AOALP's credit facilities. Our net cash provided from
operations increased by 66.1% to $11.9 million for 1998, decreased by 43.0% to
$7.1 million for 1997 and increased by 36.6% to $12.5 million for 1996.
In 1996 AOALP and AOAI issued $105 million in aggregate principal amount of
the AOALP Notes and AOALP entered into a secured revolving credit facility,
which was increased to $35 million in December 1996. See "Description of
Certain Indebtedness."
On March 31, 1998, AOALP entered into an additional $3 million unsecured
credit facility. In September 1998, the proceeds from the AOALP unsecured
facility, together with borrowings under the AOALP secured credit facility,
were used to purchase on the open market and cancel $4 million of the AOALP
Notes at 105% of their principal amount plus accrued interest. As a result of
the purchase, we recognized an extraordinary loss of $330,000, which
represented the purchase premium plus recognition of a proportionate share of
the associated deferred financing fees. In November 1998, the AOALP unsecured
credit facility was increased to $8 million. At March 31, 1999, there was
$38.4 million outstanding under the AOALP credit facilities. If this offering
had been completed on March 31, 1999, and the proceeds used as described in
this offering memorandum, AOALP would have had $25.2 million outstanding and
$9.8 million available under the AOALP secured credit facility and $8 million
available under the AOALP unsecured credit facility. During 1998 we had
interest expense of $14.4 million on average outstanding indebtedness of
$136.7 million, resulting in an effective annual interest rate of 10.2%.
We believe that net cash provided from operations and available credit under
the AOALP credit facilities will be sufficient to meet our cash needs for our
current operations, required debt payments, anticipated capital expenditures
and the deferred compensation payments for the next few years.
Impact of Inflation
Though increases in operating costs could adversely affect our operations,
our management does not believe that inflation has had a material effect on
operating profit during the past several years.
Seasonality
Although revenues during the first and fourth quarters are slightly lower
than the other quarters, management does not believe that seasonality has a
significant impact on our operations or cash flow.
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<PAGE>
Year 2000 Compliance
Overview
The "Year 2000 issue" is a general term used to describe the various
problems that may result from the improper processing of dates and date-
sensitive calculations by computers and other machinery as the year 2000
approaches. The Year 2000 issue exists because many existing computer systems
and software products have been written using two digits, rather than four, to
define the applicable year, thus not properly recognizing dates after December
31, 1999.
Our State of Readiness
We recognize the need to ensure that our operations will not be adversely
impacted by Year 2000 software failures and have therefore undertaken the
project of identifying and resolving our Year 2000 issues. Our assessment
included both our software and hardware. We have identified all significant
applications that require modification to ensure Year 2000 compliance and
during the second quarter of 1998, Year 2000 compliant versions of these
programs (primarily financial applications) were installed. The vendor
upgrades have been tested and certified as Year 2000 compliant by an
independent third party.
In addition, we have communicated with others with whom we do significant
business to determine their Year 2000 compliance readiness and the extent to
which we are vulnerable to any third party Year 2000 issues. However, there
can be no assurance that the systems of other companies on which our systems
rely will be timely converted, or that a failure to convert by another
company, or a conversion that is incompatible with our systems, would not have
a material adverse effect on us.
Costs to Address Our Year 2000 Issues
During 1997 and 1998, we incurred approximately $100,000 and $150,000,
respectively in Year 2000 compliance efforts. Estimates of additional costs to
complete our Year 2000 compliance plan are not anticipated to be material to
our financial condition or results of operations.
Risks of Our Year 2000 Issues and Our Contingency Plans
Based on the results of our review of Year 2000 issues to date and
compliance efforts completed, we do not believe that the Year 2000 issue
presents a significant risk of disruption of our ability to transact business
with our major customers and suppliers. Therefore, we do not believe that a
contingency plan to handle Year 2000 problems is necessary at this time, and
we have not developed such a plan. We will, however, continue to monitor the
Year 2000 issues and evaluate the need for a contingency plan to handle the
most reasonably likely worst case Year 2000 scenario.
New Accounting Standards
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
statement, which will be effective for us beginning January 1, 2001,
establishes accounting and reporting standards requiring that every derivative
instrument (including certain embedded in other contracts) be recorded in the
balance sheet as either assets or liabilities measured at its fair value. The
statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. We
have not yet quantified the impact of adopting SFAS No. 133 and have not
determined the timing or method of its adoption; however it is not expected
that adoption will have a material impact on earnings.
39
<PAGE>
BUSINESS
General
Adams Outdoor is the seventh largest owner and operator of outdoor
advertising structures in the United States. We currently provide outdoor
advertising services in fourteen markets and surrounding areas in the Midwest,
Southeast and mid-Atlantic states: Peoria, IL; Jackson, MI; Kalamazoo, MI;
Lansing, MI; Minneapolis, MN; Charlotte, NC; Lehigh Valley, PA; Northeast PA;
Charleston, SC; Florence, SC; Laurens, SC; Orangeburg, SC; Norfolk, VA; and
Madison, WI. As of December 31, 1998, we operated, in the aggregate,
approximately 9,600 advertising displays, including 2,891 painted bulletins,
6,541 30-sheet posters and 222 junior (8-sheet) posters.
History
The Adams Outdoor business was founded in 1983 with the acquisition of
Central Outdoor Advertising, which had offices in Lansing, Jackson and
Kalamazoo, MI. Over the next five years, we pursued a strategy of geographic
expansion into additional medium-sized markets, primarily through the
acquisition of existing outdoor advertising businesses in selected Midwest,
Southeast and mid-Atlantic markets. This geographic expansion strategy has
enabled us to capitalize on the efficiencies, economies of scale and marketing
opportunities associated with operating outdoor advertising businesses located
in proximate or contiguous geographic markets to our primary markets. Since
1988, our growth in sales and Operating Cash Flow has resulted from a
concentration on maximizing rate and occupancy levels of existing inventory,
construction of new displays, upgrading of displays in existing markets,
acquisition of displays in existing markets, and new market acquisitions in
South Carolina and Pennsylvania.
Industry Overview
Outdoor advertising is one of several major advertising media that includes
television, radio, newspapers and magazines, among others. According to the
Outdoor Advertising Association of America, Inc. ("OAAA"), an industry trade
association, outdoor advertising in the United States generated total revenues
of approximately $2.3 billion in 1998, a record for the industry and a 9.1%
increase over 1997. Because of its repetitive impact and relatively low cost-
per-thousand impressions (a commonly used media standard), outdoor advertising
is attractive to both large national advertisers and smaller local and
regional businesses.
The principal outdoor advertising display is the billboard, of which there
are three standardized formats:
. Painted bulletins are generally 14 feet high and 48 feet wide (672
square feet) and consist of panels or a single sheet of vinyl that are
hand painted at the facilities of the outdoor advertising company or
computer painted in accordance with design specifications supplied by
the advertiser. The panels or vinyl are then transported to the
billboard site and mounted to the face of the display. On occasion, to
attract more attention, some of the displays are designed to extend
beyond the linear edges of the display face and may include three-
dimensional embellishments for which the outdoor advertising company
often receives additional revenue. Because of painted bulletins' greater
impact and higher cost relative to other types of billboards, they are
usually located near major highways, and space is usually sold to
advertisers for periods of four to twelve months.
. 30-sheet posters are generally 12 feet high by 25 feet wide (300 square
feet) and are the most common type of billboard. Lithographed or silk-
screened paper sheets that are supplied by the advertiser are pre-pasted
and packaged in airtight bags by the outdoor advertising company and
applied, like wallpaper, to the face of the display. The 30-sheet
posters are concentrated on major traffic arteries, and space is usually
sold to advertisers for periods of one to twelve months.
. Junior (8-sheet) posters are usually 6 feet high by 12 feet wide (72
square feet). The displays are prepared and mounted in the same manner
as 30-sheet posters. Most junior posters, because of their
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<PAGE>
smaller size, are generally concentrated on city streets and are
targeted at pedestrian traffic. Space on junior posters is usually sold
to advertisers for periods of one to twelve months.
Typically, billboards are mounted on structures that are owned by the
outdoor advertising company and located on sites that are owned or leased by
it or on which it has an easement. Leases of structure sites usually provide
for a term of three to ten years depending on locale. A structure may contain
one or more displays (generally two), each of which is referred to as a
"face."
Advertisers usually contract for outdoor displays (and other media exposure)
through advertising agencies, which are responsible for the artistic design
and written content of the advertising as well as the choice of media and the
planning and implementation of the overall campaign. Outdoor advertising
companies pay commissions to the agencies for advertising contracts secured
through such agencies. Advertising contracts are negotiated on the basis of
the monthly rates that are published in the outdoor advertising company's
"rate card." These rates, which are typically set annually during the first
quarter of each year, are based on a particular display's exposure (or number
of "impressions" delivered) in relation to the demographics of the particular
market and its location within that market. The number of "impressions"
delivered by a display (measured by the number of vehicles passing the site
during a defined period and weighted to give effect to such factors as its
proximity to other displays and the speed and viewing angle of approaching
traffic) are determined by surveys that are verified by the Traffic Audit
Bureau, an independent agency which is the outdoor advertising industry's
equivalent of radio's Arbitron ratings and which audits approximately 175,000
outdoor advertising sites annually.
Advertisers purchase outdoor advertising for a variety of reasons. In the
case of restaurants, motels, service stations and similar roadside businesses,
the message reaches potential customers close to the point of sale and
provides ready directional information. For advertisers seeking to build
product brand name awareness, outdoor advertising is attractive because of its
constant repetition and comparatively low cost per thousand impressions.
According to Competitive Media Reporting, an independent revenue reporting
firm, the top ten categories of businesses ranked by outdoor advertising
expenditures for 1998 were local services and amusements, hotels and resorts,
retail establishments, miscellaneous merchandise (as of 1998 includes
tobacco), restaurants, media and advertising, automotive: dealers and
services, insurance and real estate, automotive: auto access and equipment,
and financial.
Business Strategy
Our strategy is to focus our operations on providing value-added outdoor
advertising services to advertisers in medium-sized markets in which we are or
could be the leading provider of such services. We believe that our focus on
medium-sized markets allows us to achieve a dominant share of outdoor
advertising revenues and display faces within those markets. We also believe
that by educating current and potential customers on the effectiveness of the
outdoor medium, we have a significant opportunity to gain a larger share of
overall advertising expenditures. Our business strategy comprises the
following elements:
. Focus marketing efforts on local and regional advertisers in order to
develop and maintain a diverse client base and to limit reliance on
national advertising accounts. We believe that focusing on local and
regional advertisers helps generate stable revenue growth and reduce our
reliance on any single local economy or industry segment. In 1998, net
revenues attributable to local and regional advertising accounted for
89.7% of total net revenues.
. Take advantage of recent technological advances in computer and printing
technology, which allow us to provide higher quality reproduction to our
customers, thereby attracting new advertisers to the outdoor medium.
. Raise potential customers' awareness of the reach, impact and value of
outdoor advertising and convince customers to use outdoor advertising as
an integral part of their advertising plan.
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<PAGE>
. Continue to enhance sales, marketing and customer service capabilities.
Our salespersons are paid pursuant to a performance-based compensation
system and supervised by a local sales manager executing a coordinated
marketing plan.
. Increase revenues from existing display faces by developing programs
that maximize advertising rates and optimize occupancy levels in each
market. We also plan to continue to pursue new advertising categories,
such as transit buses and passenger shelters, to further diversify our
revenue base.
. Expand operations within our markets through construction of new display
faces and the upgrading of existing displays, placing an emphasis on
painted bulletins, which generally command higher rates and longer
contracts from advertisers.
. Pursue strategic acquisitions of outdoor displays in existing and
contiguous markets and capitalize on the efficiencies, economies of
scale and significant opportunities for inter-market cross-selling that
are associated with operating in proximate or contiguous geographic
markets.
We recognize, and closely monitor, the needs of our customers and seek to
provide them with a quality advertising product at a lower cost than
competitive media. We believe we have a reputation of providing excellent
customer service and quality outdoor advertising space. As such, Adams Outdoor
is nationally recognized as a five star member (the highest ranking) of the
OAAA, a distinction currently held by only 35 of the approximately 800 members
of the OAAA.
Markets
Adams Outdoor operates in fourteen geographically diverse medium-sized
markets that offer to local, regional and national advertisers significant
areas of population to whom advertising may be targeted. In addition, we offer
comprehensive outdoor advertising services, including local production
facilities and local representation, in all of our markets except in
Minneapolis.
The following table sets forth information as of December 31, 1998 with
respect to each of our markets, including the DMA (as defined herein) rank of
that market and the number of each display type operated by us in that market:
<TABLE>
<CAPTION>
DMA Painted
Market Ranking(a) Bulletins 30-Sheet Posters 8-Sheet Posters Total
- ------ ---------- --------- ---------------- --------------- -----
<S> <C> <C> <C> <C> <C>
Peoria, IL.............. 116 74 319 32 425
Jackson, MI(b).......... -- 128 433 -- 561
Kalamazoo, MI........... 38 289 749 -- 1,038
Lansing, MI(b).......... 107 312 482 -- 794
Minneapolis, MN......... 13 112 -- -- 112
Charlotte, NC........... 29 663 841 56 1,560
Lehigh Valley, PA(c).... -- 207 734 -- 941
Northeast PA............ 46 193 543 -- 736
South Carolina(d)....... 114 672 1,597 105 2,374
Norfolk, VA............. 39 160 583 29 772
Madison, WI............. 88 81 260 -- 341
----- ----- --- -----
Total................ 2,891 6,541 222 9,654
===== ===== === =====
</TABLE>
- --------
(a) Indicates the 1998 market rank of the designated market area ("DMA"), as
determined by Nielson Media Research, within which the office is located.
DMAs are ranked based on population, with the market having the largest
population ranked first. DMA rank is the standard measure of market size
used by the media industry.
(b) The Jackson, MI market is included in the Lansing, MI DMA ranking.
42
<PAGE>
(c) The Lehigh Valley market is included in the Philadelphia DMA ranking.
According to the U.S. Census Bureau, the Lehigh Valley market was the 86th
largest metropolitan statistical area in the United States at December 31,
1990, the latest date for which such information is available.
(d)Consists of four markets: Charleston, Florence, Laurens and Orangeburg.
The following tables set forth information with respect to the net revenues,
operating income and operating margins for our displays in each of our markets
for each of the past five years. Amounts presented for Northeast PA and South
Carolina include results from their acquisition dates of November 8, 1996 and
December 2, 1996, respectively, through December 31, 1998.
Net Revenues
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
Market 1994 1995 1996 1997 1998
- ------ ------- ------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Charlotte, NC............ $ 8,646 $ 9,680 $10,499 $11,882 $12,932
Lansing/Jackson, MI(a)... 7,541 8,227 8,683 9,296 10,719
Lehigh Valley, PA........ 5,045 5,909 6,293 6,461 7,113
Kalamazoo, MI............ 4,976 5,535 5,628 6,460 7,094
Norfolk, VA.............. 4,827 5,672 6,359 6,065 6,980
South Carolina(b)........ -- -- 329 4,837 6,119
Madison, WI.............. 2,545 3,070 3,430 3,782 3,951
Minneapolis, MN.......... 1,674 2,236 2,930 3,274 3,710
Peoria, IL............... 2,397 2,562 2,836 3,016 3,266
Northeast PA............. -- -- 273 2,212 2,685
------- ------- ------- ------- -------
Total................. $37,651 $42,891 $47,260 $57,285 $64,569
======= ======= ======= ======= =======
Operating Income
<CAPTION>
Year Ended December 31,
-------------------------------------------
Market 1994 1995 1996 1997 1998
- ------ ------- ------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Charlotte, NC............ $ 2,701 $ 3,602 $ 4,251 $ 5,425 $ 6,322
Lansing/Jackson, MI(a)... 3,044 3,570 3,738 3,636 4,049
Lehigh Valley, PA........ 1,466 2,161 2,495 2,500 3,107
Kalamazoo, MI............ 1,967 2,440 2,409 2,646 3,141
Norfolk, VA.............. 1,387 2,279 2,798 2,479 3,424
South Carolina(b)........ -- -- (50) (735) (131)
Madison, WI.............. 915 1,232 1,597 1,799 1,844
Minneapolis, MN.......... 233 631 889 1,036 1,188
Peoria, IL............... 851 863 1,110 1,329 1,494
Northeast PA............. -- -- (8) 166 379
Corporate................ (2,871) (3,844) (4,342) (4,724) (8,439)
------- ------- ------- ------- -------
Total................. $ 9,693 $12,934 $14,887 $15,557 $16,378
======= ======= ======= ======= =======
Operating Margin
<CAPTION>
Year Ended December 31,
-------------------------------------------
Market 1994 1995 1996 1997 1998
- ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Charlotte, NC............ 31.2% 37.2% 40.5% 45.7% 48.9%
Lansing/Jackson, MI(a)... 40.4 43.4 43.1 39.1 37.8
Lehigh Valley, PA........ 29.1 36.6 39.6 38.7 43.7
Kalamazoo, MI............ 39.5 44.1 42.8 41.0 44.3
Norfolk, VA.............. 28.7 40.2 44.0 40.9 49.1
South Carolina(b)........ -- -- (15.2) (15.2) (2.1)
Madison, WI.............. 36.0 40.1 46.6 47.6 46.7
Minneapolis, MN.......... 13.9 28.2 30.3 31.6 32.0
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
Market 1994 1995 1996 1997 1998
- ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Peoria, IL............................... 35.3 33.7 39.1 44.1 45.7
Northeast PA............................. -- -- (2.9) 7.5 14.1
---- ---- ---- ---- ----
Total................................. 25.7% 30.2% 31.5% 27.2% 25.4%
==== ==== ==== ==== ====
</TABLE>
- --------
(a) Prior to 1997, Jackson and Lansing were consolidated as one market.
(b)Consists of four markets: Charleston, Florence, Laurens and Orangeburg.
Sales and Marketing
The growth in our revenues and Operating Cash Flow is primarily a result of
our focus on the use of sales and marketing staff to increase the productivity
of our inventory of displays while maintaining strict controls on our
expenses.
Historically, outdoor advertising companies have derived a significant
portion of their revenues from large national advertisers, such as tobacco
companies, auto manufacturers and distributors of alcoholic beverages. As
tobacco industry advertising purchases have declined in recent years, some
outdoor advertising companies have recently shifted their marketing focus to
local and regional advertisers to replace these lost revenues. Nonetheless,
large national advertisers continue to account for a significant percentage of
outdoor advertising industry revenues. Despite this fact, we believe that
sales to local and regional advertisers lend stability to our revenue stream
by diversifying our customer base. We emphasize sales to local and regional
customers. In 1998, we generated approximately 89.7% of our net revenues from
local and regional sales. We believe that our local and regional focus enables
us to capitalize on the growing use of outdoor media by advertisers that
historically have relied on other media in marketing their products and
services, such as consumer product companies, professional service firms,
health care providers and financial institutions.
Our sales and marketing strategy has been successful largely due to the
efforts of our team of general managers in our markets. These general managers
have an average of over 15 years of experience in the outdoor advertising
industry and are responsible for implementing our sales and marketing
strategy. Each of our markets has a team of account executives that is
supported locally by a creative department, which provides innovative
marketing ideas, generates art work and designs billboard advertising for
potential customers' advertising campaigns. In addition, each market has a
business development staff, which makes available comprehensive information
about local market research, customer needs and advertising opportunities.
This allows us to assess the impact and potential reach for a potential target
customer's display in a given market. The sales and marketing departments
focus on increasing revenues through developing new marketing programs for
customers, educating both current and potential customers on the effectiveness
of the outdoor advertising product relative to other advertising media and
integrating this medium into a customer's marketing plan. Our sales personnel
are compensated primarily on a commission basis which maximizes their
incentive to perform.
The following table illustrates the diversity of our customers by setting
forth the percentage of our gross revenues for 1998 attributable to each of
the top ten advertising categories:
1998 Revenues by Category
(Percent of Gross Revenues)
<TABLE>
<CAPTION>
Total
-----
<S> <C>
Tobacco............................................................. 12.0%*
Restaurants......................................................... 9.1
Automotive.......................................................... 8.2
Entertainment....................................................... 5.5
Hotel/Motel......................................................... 4.5
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Total
-----
<S> <C>
Grocery/Convenience Stores.......................................... 4.1
Telecommunications.................................................. 3.5
Financial institutions.............................................. 3.3
Radio/Television.................................................... 2.9
Hospital/Nursing.................................................... 2.8
All Others.......................................................... 44.1
-----
Total............................................................ 100.0%
=====
</TABLE>
--------
*Tobacco products represented 10.3% of net revenues (gross revenues net of
agency commissions).
Local Market Operations
In each of our primary markets, we maintain a complete outdoor advertising
operation including a sales office, a construction and maintenance facility,
an art department equipped with state-of-the-art computer technology, a real
estate unit and support staff. We conduct our outdoor advertising operations
through these local offices, which is consistent with senior management's
belief that an organization with decentralized sales and operations is more
responsive to local market demand and provides greater incentives to
employees. At the same time, we maintain consolidated accounting and financial
controls, which allow us to monitor closely the operating and financial
performance of each market. Our general managers, who report directly to our
chief executive officer, are responsible for the day-to-day operations of
their offices and are compensated based on the financial performance of their
respective markets. In general, these local managers oversee market
development, production and local sales.
Each local office is responsible for locating and ultimately obtaining sites
for the displays in its market. Each office has a leasing department, which
maintains an extensive data base containing information on local property
ownership, lease contract terms, zoning ordinances and permit requirements. We
own certain of the sites on which our displays are located and lease others.
Site lease contracts vary in term but typically range from three to ten years
with various termination and renewal provisions. As of and for the twelve
months ended December 31, 1998, we had approximately 4,561 active site leases
accounting for a total land lease expense of approximately $7.3 million,
representing approximately 11.0% of net revenues.
In each of our primary markets, we have construction and maintenance
facilities, which facilitate the expeditious and economical construction and
maintenance of displays and the painting and mounting of customers'
advertisements. Typically, we use vinyl skins for bulletins. The vinyl skins
are reusable, thereby reducing our production costs, and are easily
transportable. Due to the geographic proximity of our markets and the
transportability of vinyl skins, we can shift production among markets to use
our available capacity more effectively. The local offices also maintain fully
equipped art departments to assist local customers in the development and
production of creative, effective advertisements.
Competition
We compete in each of our markets with other outdoor advertisers as well as
other media, including broadcast and cable television, radio, newspaper and
direct mail marketers. In competing with other media, outdoor advertising
relies on its low cost-per-thousand impressions and its ability to
repetitively reach a broad segment of the population in a specific market or
geographic area within that market. In most of our markets, we encounter
direct competition from other major outdoor media companies, including Outdoor
Systems, Inc. and Whiteco, among others, each of which has a large national
network and resources significantly greater than ours. We believe that our
focus on local and regional advertisers and our position as the leading
provider of full service outdoor advertising in each of our primary markets
enable us to compete effectively with other outdoor media operators, as well
as other media, both within those markets and in each respective region. We
also compete with other outdoor advertising companies for sites on which to
build new structures.
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<PAGE>
Government Regulation
The outdoor advertising industry is subject to governmental regulation at
the federal, state and local level. Federal law, principally the Highway
Beautification Act of 1965, encourages states, by the threat of withholding
federal appropriations for the construction and improvement of highways within
such states, to implement legislation to control outdoor advertising
structures located within 660 feet of or visible from interstates and primary
highways, except in commercial or industrial areas, and to force the removal
at the owner's expense and without any compensation of any nonconforming
structures on such highways. The Highway Beautification Act and the various
state statutes implementing it require the payment of just compensation
whenever governmental authorities require legally erected and maintained
structures to be removed from federally-aided highways.
States and local jurisdictions have, in some cases, passed additional
regulation on the construction, repair, upgrading, height, size and location
of outdoor advertising structures adjacent to federally-aided highways and
other thoroughfares. Such regulations, often in the form of municipal
building, sign or zoning ordinances, specify standards for the height, size
and location of outdoor advertising structures. In the event non-conforming
advertising structures are damaged, including damage caused by natural events,
such as windstorms and hurricanes, we may not be able to repair the
structures. In some cases, the construction of new or relocation of existing
structures is prohibited. Some jurisdictions also have restricted the ability
to enlarge or upgrade existing structures, such as converting from wood to
steel or from non-illuminated to illuminated structures. From time to time,
governmental authorities order the removal of structures by the exercise of
eminent domain or through various regulatory actions or other litigation. In
such cases, we seek compensation under appropriate procedures and thus far, we
have been able to obtain satisfactory compensation for any of our structures
removed at the direction of governmental authorities. However, compensation
may not always be available in such circumstances. Some municipalities have
attempted to regulate outdoor advertising by taxing revenues attributable to
advertising structures, or by requiring the payment of annual permit fees
based on factors such as the square footage of an outdoor advertising
company's display faces, located in those municipalities. Other municipalities
take into account lease payments received by lessors of property on which
advertising structures are located in making property tax assessments. These
taxes and fees can increase an outdoor advertising company's direct operating
costs.
Amortization legislation has also been adopted in some areas across the
country, including Charlotte, NC, one of our markets. Amortization only
permits the owner of an outdoor advertising structure to operate its structure
as a non-conforming use for a specified period of time, after which it must
remove or otherwise conform its structure to the applicable regulations at its
own cost without any compensation. Some jurisdictions require the removal of
certain structures without any compensation if there is a change in use of the
premises (e.g., construction on previously unimproved land). Amortization and
such other regulations requiring the removal of structures without
compensation currently are subject to vigorous litigation in the state and
federal courts, which have reached differing conclusions as to their
constitutionality.
On February 1, 1988, the city of Charlotte, NC, adopted a comprehensive sign
ordinance prohibiting the construction of all new off-premises outdoor
advertising signs except those built adjacent to interstate highways. The
ordinance also mandated that all nonconforming signs either be brought into
compliance or be removed by February 1, 1996 at the owner's expense without
compensation. Assuming failure by the city to grant any variances, we could
have been forced to remove approximately 135 structures at our expense without
payment of compensation. In 1988, we filed a lawsuit in the Superior Court of
Mecklenburg County, NC, challenging the constitutionality of the Charlotte
sign ordinance. In 1998, we reached an agreement with the city of Charlotte,
NC which provides that none of our boards will have to be removed until at
least 2003.
In other localities in which we operate, outdoor advertising is subject to
restrictive and, in some cases, prohibitive zoning regulations. Management
expects federal, state, and local regulations to continue to be a significant
factor in the operation of our business.
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In recent years, there have been efforts to restrict billboard advertising
of certain products, including tobacco and alcohol. Congress has passed no
legislation at the federal level except legislation requiring health hazard
warnings similar to those on cigarette packages and print advertisements.
In November 1998, the major U.S. tobacco companies reached an out of court
settlement with 46 states, the District of Columbia, the Commonwealth of
Puerto Rico and four other U.S. territories. The remaining four states had
already reached similar settlements with the tobacco companies. The agreement
calls for the removal of tobacco advertising from out-of-home media, including
billboards, along with signs and placards in arenas, stadiums, shopping malls
and video game arcades by April 23, 1999. Additionally, the agreement provides
that, at the settling states' option, the tobacco companies must, at their
expense, substitute for tobacco advertising alternative advertising which
discourages youth smoking. That alternative advertising must remain in place
for the duration of the tobacco companies' out-of-home media advertising
contracts which existed as of the date of the agreement.
The elimination of tobacco advertising as called for by the agreement will
cause a reduction in direct revenues from tobacco companies and may increase
the available space on the existing inventory of billboards in the outdoor
advertising industry. Although the extent of the future impact on operations
is not known, we have been successful thus far in replacing tobacco
advertising in our Minneapolis market, where all of our displays are painted
bulletins, as part of a settlement reached prior to the agreement. However, we
can give no assurance that the further cutbacks in tobacco advertising during
1999 will not have an adverse effect on operations for 1999 or beyond.
To date regulations applicable in our markets have not materially affected
our operations, and compliance with those regulations has not had a material
impact on our costs. No assurance can be given, however, as to the effect of
changes in those regulations or of new regulations that may be adopted in the
future.
Legal Proceedings
From time to time, we are involved in litigation in the ordinary course of
business, including disputes involving advertising contracts, site leases,
employment claims, construction matters, condemnation and amortization. We are
also involved in routine administrative and judicial proceedings regarding
permits and fees relating to outdoor advertising structures and compensation
for condemnations. We are not a party to any lawsuit or proceeding which, in
the opinion of management, is likely to have a material adverse effect on us.
See "Business--Government Regulation."
Employees
As of December 31, 1998, we employed 334 persons, of whom approximately 117
were primarily engaged in sales and marketing, 157 were engaged in painting,
posting, construction and maintenance of displays, and the balance were
employed in financial, administrative and similar capacities. No employees are
covered by a collective bargaining agreement except for five production shop
workers in Peoria, IL covered by a collective bargaining agreement with the
Brotherhood and Painters and Allied Trades that expires on December 31, 1999.
Management considers its employee relations to be good.
Facilities
Our corporate office is located in Atlanta, GA. In addition, we have an
office and complete production and maintenance facilities in each of
Charlotte, NC; Charleston, SC; Orangeburg, SC; Florence, SC; Laurens, SC;
Kalamazoo, MI; Lansing, MI; Jackson, MI; Lehigh Valley, PA; Northeast PA;
Madison, WI; Norfolk, VA; and Peoria, IL. Additionally, we have a sales office
in Minneapolis, MN. The Peoria and Minneapolis facilities are leased, and all
other facilities are owned. We consider our facilities to be well maintained
and adequate for our current and reasonably anticipated future needs.
We own approximately 146 parcels of real property that serve as the sites
for our outdoor displays. We also have easements on approximately 48 parcels
of real property on which we have outdoor displays. Additionally, our displays
are located on sites leased or licensed by us, typically for three to ten
years with renewal options.
47
<PAGE>
MANAGEMENT
AOA Holding is a limited liability company whose affairs are governed by a
Board of Governors. AOA Capital and AOAI are wholly-owned subsidiaries of AOA
Holding. AOAI is the managing general partner of AOALP. The governors of AOA
Holding, who are also directors of AOA Capital and of AOAI, and the executive
officers of AOA Holding, AOA Capital and AOAI are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Stephen Adams.................... 61 Governor and Chairman
J. Kevin Gleason................. 47 Chief Executive Officer, President,
Director and Governor
Abe Levine....................... 45 Chief Financial Officer, Vice
President, Secretary and Treasurer
George Pransky................... 58 Director and Governor
David Frith-Smith................ 53 Director and Governor
Andris A. Baltins................ 53 Director and Governor
</TABLE>
Stephen Adams has been Chairman of Adams Outdoor Advertising, Inc. since its
founding in 1983 and of AOA Capital Corp. since 1999. Since the 1970's, Mr.
Adams has served as chairman of privately owned banking, bottling, publishing,
outdoor advertising, television and radio companies in which he held a
controlling ownership interest. Mr. Adams is Chairman of the Board of
Directors of Affinity Group, Inc., a membership-based marketing company.
J. Kevin Gleason has served as the Chief Executive Officer of Adams Outdoor
Advertising Limited Partnership and President of Adams Outdoor Advertising,
Inc. since 1991 and as President of AOA Holding LLC and AOA Capital Corp.
since 1999. Mr. Gleason has twenty years of experience in advertising,
fourteen of which have been dedicated to the outdoor advertising industry. Mr.
Gleason has been with Adams Outdoor Advertising, Inc. since 1987, serving as
General Manager of various local markets and then as Executive Vice President
at the corporate level. Prior to joining Adams Outdoor Advertising, Inc., Mr.
Gleason served as General Manager of Naegele Outdoor Advertising ("Naegele")
of Southern California from 1985 to 1987. Mr. Gleason also currently serves as
a Vice-Chairman of the Outdoor Advertising Association of America.
Abe Levine has served as Chief Financial Officer of Adams Outdoor
Advertising Limited Partnership and as Vice President of Adams Outdoor
Advertising, Inc. since 1991 and as Vice President and Treasurer of AOA
Holding LLC and AOA Capital Corp. since 1999. From 1988 to 1991, Mr. Levine
worked as Controller of Adams Outdoor Advertising of Atlanta, Inc. Mr. Levine
was employed by Gulf + Western Industries, Inc. from 1979 through 1987 in
various senior accounting and financial positions, and by KPMG Peat Marwick
from 1975 through 1979 in various auditing positions.
George Pransky, Ph.D. has been in private practice as co-director of Pransky
and Associates in La Conner, Washington since 1988. He is a frequent
consultant for government and private agencies and has been a contract faculty
member for a number of educational institutions, including the University of
Washington, the University of Oregon and Antioch College. Dr. Pransky has
trained management groups in team building, stress elimination and management
development for fifteen years.
David Frith-Smith has served as managing partner of Biller, Frith-Smith &
Archibald, Certified Public Accountants, since 1988. Mr. Frith-Smith was a
principal in Maidy and Lederman, Certified Public Accountants, from 1980 to
1984, and with Maidy Biller Frith-Smith & Brenner, Certified Public
Accountants, from 1984 to 1988. Mr. Frith-Smith is a director of various
private and non-profit corporations.
48
<PAGE>
Andris A. Baltins has been a member of the law firm of Kaplan, Strangis and
Kaplan, P.A. since 1979. He is a director of Polaris Industries Inc., a
manufacturer of snowmobiles, all-terrain vehicles, personal watercraft and
related products. Mr. Baltins is also a director of various private and non-
profit corporations.
Other Significant Management Personnel
The following table sets forth certain information with respect to other
significant management personnel:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Jon Kane.............................. 33 General Manager--Lansing, MI
Jim Balestino......................... 35 General Manager--Jackson, MI
Mike Peters........................... 36 General Manager--Kalamazoo, MI
John Hayes............................ 44 General Manager--Lehigh Valley
and Northeast PA
Michelle Kullmann..................... 31 General Manager--Madison, WI
Gardner King.......................... 47 General Manager--Norfolk, VA
Barry Asmann.......................... 41 General Manager--Charlotte, NC
Robert Lord........................... 40 General Manager--Peoria, IL
Robert Graiziger...................... 45 General Manager--Minneapolis,
MN
Jerry Heinz........................... 57 General Manager--South Carolina
</TABLE>
Jon Kane has been general manager of our Lansing, MI division since July
1997. Prior thereto, he was general manager of our Madison, WI division. He
joined us in 1989 as an account executive in our Lehigh Valley, PA division.
He also served as regional sales manager and poster sales manager for our
Lehigh Valley division until his promotion to general manager of Madison.
Jim Balestino has served as general manager of our Jackson, MI division
since January 1999. He joined us in 1997 as the sales manager in our Florence,
SC division. Mr. Balestino previously held the position of General Sales
Manager with FKM Advertising in Youngstown, OH. In addition he served as the
Regional Account Manager and Market Development Manager from 1992 until 1995.
He began his career in 1988 as a Real Estate/Account Executive for Penn
Advertising in Altoona, PA.
Mike Peters has been general manager of our Kalamazoo, MI division since
October 1996. He began his outdoor advertising career in 1985 as an account
executive with Creative Displays in Lehigh Valley, PA. Mr. Peters stayed on as
an account executive when Adams purchased Creative Displays and in 1989 was
promoted to sales manager. He has 13 years of experience in the outdoor
advertising industry.
John Hayes has served as general manager of our Lehigh Valley, PA division
from 1985 to 1991 and from 1994 to the present and has served as general
manager of our Northeast PA market since its acquisition in 1996. He began his
career in outdoor advertising in 1976 as an account executive with Creative
Displays in the Lehigh Valley market, later becoming sales manager in 1979 and
assistant manager in 1981. From 1991 to 1994, Mr. Hayes managed a paging
business in the Lehigh Valley area.
Michelle Kullmann has been general manager of our Madison, WI division since
June 1997. Michelle first started with Adams in 1991 as an account executive.
In 1993, she was promoted to sales manager of Madison and held that position
until her most recent promotion to general manager.
Gardner King has served as general manager of our Norfolk, VA division since
January 1988. From 1980 through 1985, Mr. King was the founder and sole
proprietor of an outdoor advertising company in Norfolk, VA, which he sold to
Whiteco. After the expiration of his non-compete agreement with Whiteco, Mr.
King joined us in 1988. Mr. King has 16 years of experience in the outdoor
advertising industry.
Barry Asmann has served as general manager of our Charlotte, NC division
since January 1993 and prior thereto was sales manager in both our Charlotte,
NC and Lehigh Valley, PA divisions. Mr. Asmann has 13 years
49
<PAGE>
of experience in the outdoor advertising industry, working in various markets
throughout the country with us and Naegele.
Robert Lord has served as general manager of our Peoria, IL division since
December 1993. From February 1993 to December 1993, he served as the sales
manager of our Charlotte division and from 1989 to January 1993 as the sales
manager of our Peoria, IL division. Mr. Lord served as an account executive in
our Peoria division from 1986 to 1989.
Robert Graiziger has served as general manager of our Minneapolis, MN
division since 1988, when he sold an outdoor advertising company that he
founded and operated in Minneapolis to us. Mr. Graiziger has been involved in
the outdoor advertising business in various capacities since 1978.
Jerry Heinz has served as general manager of our South Carolina division
since December 1996. He joined us from Burkhart Advertising, Inc. Mr. Heinz
joined Burkhart Advertising, Inc. in 1969 as an account executive. During the
next 27 years Mr. Heinz held the positions of sales manager, general manager
and finally as President and CEO.
Executive Compensation
The following table provides certain summary information concerning the
compensation paid by us to our Chief Executive Officer and each of the two
other executive officers for the years ended December 31, 1998, 1997, and
1996. All of the compensation was paid by AOALP during these periods.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------------------
Other All
Name and Principal Annual Other
Position Year Salary Bonus(a) Compensation(b) Compensation(c)
------------------ ---- -------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Stephen Adams........... 1998 $200,000(e)
Chairman(d) 1997 200,000(e)
1996 150,000(e)
J. Kevin Gleason........ 1998 443,000 $3,621,000(f) $35,000
Chief Executive Officer 1997 436,000 34,750
1996 384,000 34,750
Abe Levine.............. 1998 180,000 18,923
Chief Financial Officer 1997 186,000 19,750
1996 181,000 400,000 19,154
</TABLE>
- --------
(a) All amounts represent accruals under deferred phantom stock agreements.
(b) Less than the lesser of (i) 10% of total annual salary and bonus and (ii)
$50,000.
(c) Amounts for 1998, 1997, and 1996 include contributions to the accounts of
Messrs. Gleason and Levine under our nonqualified retirement plan of
$30,000 and $15,000, respectively. All other amounts represent our
contributions to our 401(k) plan.
(d) We have an employment agreement with Mr. Adams providing for a salary of
$220,000 per year (plus an annual cost of living increase) and the
reimbursement of business expenses.
(e) Does not include reimbursement of company travel and entertainment expense
advanced by Mr. Adams aggregating $105,298 in 1997 and $200,000 in 1996.
Nothing was reimbursed to Mr. Adams in 1998.
(f) Mr. Gleason, our Chief Executive Officer, entered into a phantom stock
agreement with us in 1998. Our prior phantom stock agreement with Mr.
Gleason was terminated by mutual agreement in 1996 and we last incurred
compensation expense with respect to that agreement in 1995. The $3.6
million accrual under
50
<PAGE>
Mr. Gleason's phantom stock agreement in 1998 ($2.7 million of which was
paid in 1999) reflects, in addition to his 1998 performance, his
performance in 1996 and 1997, when he was not a party to a phantom stock
agreement. We do not expect the amounts accrued in 1998 to be indicative of
future annual compensation expense incurred with respect to the phantom
stock agreements.
Employment Agreement
We entered into an employment agreement with Mr. Stephen Adams effective
January 1, 1996. Under the employment agreement, Mr. Adams is employed as
Chairman of AOAI until December 31, 2001 at an initial base salary of $200,000
plus an annual cost of living increase. Mr. Adams' base salary in 1999 is
$220,000, reflecting the cost of living increase from January 1, 1996.
Agreements with Management--Incentive Compensation under Phantom Stock
Agreements
We have deferred phantom stock agreements with certain managers, including
each general manager with respect to the performance of his or her respective
division. The compensation is calculated using a multiple of the operating
profit of the general manager's respective division for the fiscal year ending
immediately prior to the determination date over the value of the division at
the time of agreement. The agreements provide for three equal annual payments
to the participants upon the determination date, which is defined as
termination of employment, death, disability, sale of Adams Outdoor or the
fifth anniversary of the execution of the agreement. We incurred deferred
compensation expense related to the phantom stock agreements of $4.3 million,
$901,000, and $1.5 million, for the years ended December 31, 1998, 1997, and
1996 respectively.
As of December 31, 1998, we had accrued the following amounts of deferred
compensation expense payable related to the phantom stock agreements:
<TABLE>
<CAPTION>
Name Amount
---- ----------
(dollars
in
thousands)
<S> <C>
J. Kevin Gleason.................................................. $3,620
Abe Levine........................................................ 667
Others............................................................ 1,999
------
Total........................................................... $6,286
</TABLE>
If amounts accrued as of December 31, 1998 as deferred compensation payable
related to the phantom stock agreements are paid as currently scheduled
(assuming no executive terminations, deaths or disabilities), such payments
will occur as follows:
<TABLE>
<CAPTION>
Name 1999(a) 2000 2001 2002 2003 2004 2005 Total
---- ------- ---- ---- ---- ---- ---- ---- ------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Kevin Gleason................ $2,696 $-- $-- $308 $308 $308 $-- $3,620
Abe Levine...................... 667 -- -- -- -- -- -- 667
Others.......................... 745 695 170 169 107 83 30 1,999
------ ---- ---- ---- ---- ---- ---- ------
Total......................... $4,108 $695 $170 $477 $415 $391 $ 30 $6,286
====== ==== ==== ==== ==== ==== ==== ======
</TABLE>
--------
(a) Paid in 1999.
Agreements with Management--Incentive Compensation under Nonqualified
Retirement Plan
We also maintain a deferred compensation plan for each of Messrs. Gleason,
Levine and each of the area general managers. Under such plan, we contribute
$30,000 per year to the retirement account of Mr. Gleason and $15,000 per year
to the account of each of the other participants. In addition, Messrs. Gleason
and Levine
51
<PAGE>
deferred a substantial portion of their 1999, 1998 and 1997 compensation into
a similar plan. As of December 31, 1998 the aggregate amount of deferred
compensation payable under those nonqualified retirement plans was
approximately $1.9 million.
401(k) Savings Plan
Our employees also participate in a deferred savings and profit sharing plan
qualified under Section 401(a) and 401(k) of the Internal Revenue Code. All
employees over age 21 who have completed one year of service are eligible to
participate in the 401(k) Plan. Eligible employees may contribute to the
401(k) Plan up to 10% of their salary subject to an annual maximum established
under the Code, and we match these employee contributions at a rate of 50% up
to the first 6% of the employee's salary. Employees may make additional
voluntary contributions.
Governor and Director Compensation
We pay each of our governors and directors who are not also our employees
(Messrs. Pransky, Frith-Smith and Baltins) a fee of $4,500 per quarter. Each
of these individuals also serves as a director of certain of our subsidiaries
for which they are paid no additional compensation.
52
<PAGE>
PRINCIPAL SECURITY HOLDERS
All of the membership interests of AOA Holding are owned by Stephen Adams.
AOA Holding owns all of the outstanding capital stock of AOA Capital and of
AOAI. See "The Issuers." The table below sets forth the beneficial ownership
of AOALP as of March 31, 1999.
<TABLE>
<CAPTION>
General Limited Aggregate
Partnership Partnership Partnership
Name Interest Interest Interests
- ---- ----------- ----------- -----------
<S> <C> <C> <C>
Adams Outdoor Advertising, Inc.(a).......... 0.01% 0.99% 1.00%
1380 W. Paces Ferry Road, NW
Suite 170, South Wing
Atlanta, GA 30327
AOA Holding LLC............................. 0.70 68.30 69.00
1380 W. Paces Ferry Road, NW
Suite 170, South Wing
Atlanta, GA 30327
ASSKM, L.P.(b).............................. -- 30.00 30.00
---- ----- ------
2575 Vista Del Mar Drive
Ventura, CA 93001
Total..................................... 0.71% 99.29% 100.00%
==== ===== ======
</TABLE>
- --------
(a) Stephen Adams is the sole member of AOA Holding which holds 100% of the
issued and outstanding shares of AOA Capital and of AOAI, the managing
general partner of AOALP, and, accordingly, may control the affairs of
Adams Outdoor.
(b) The partnership interests in the Adams Family Partnership are beneficially
owned by Stephen Adams and his four sons. The AOALP partnership agreement
provides that distributions (other than Permitted Tax Distributions) may
not be made in respect of the limited partnership interest of the Adams
Family Partnership until such time as the Notes have been paid in full.
53
<PAGE>
CERTAIN TRANSACTIONS
Stephen Adams, J. Kevin Gleason and Abe Levine own 46%, 12% and 12%,
respectively, of HSP Graphics ("HSP"), a printing company headquartered in
Canada. We pay the salary and expenses of the HSP salesmen who operate in the
Atlanta, GA area and HSP reimburses us for those expenses in cash and
services. At December 31, 1998, 1997 and 1996, we had accounts receivable of
$114, $227,991 and $208,669, respectively, outstanding from HSP. We expensed
$11,000, $84,000, and $54,000 for printing services provided during 1998,
1997, and 1996, respectively.
Andris A. Baltins is a member of the law firm of Kaplan, Strangis and
Kaplan, P.A., which provides legal services to us.
During 1998, AOALP loaned $100,000 to J. Kevin Gleason, our Chief Executive
Officer. These funds were used as a down payment on a building leased to us.
The loan, which accrued interest at 7.0% per annum, has subsequently been
repaid.
During 1998, AOALP entered into a building lease with J. Kevin Gleason, our
Chief Executive Officer. The lease term is for 10 years and has been
classified as an operating lease. Rent expense of approximately $52,000
related to this transaction has been included in direct advertising expense
during the year ended December 31, 1998. We have an option to purchase the
building from Mr. Gleason at any time.
Mr. Stephen Adams and AOA Holding are parties to a deficit capital
contribution agreement under which Mr. Adams has agreed, in his capacity as a
member of AOA Holding, to make a limited contribution to the capital of AOA
Holding in an amount equal to amounts payable by AOA Holding to certain third
parties, including holders of the AOALP Notes, as the result of its being a
general partner of AOALP. Payments under the agreement are intended to benefit
only certain creditors of AOALP and would not be available to holders of the
Notes.
AOA Holding and AOA Capital are parties to a proceeds allocation and
indemnity agreement by virtue of which the parties thereto acknowledge that
all of the proceeds of the sale of the Notes will be paid to AOA Holding, that
AOA Holding will bear all costs and expenses attendant to the issuance of the
Notes and AOA Holding will indemnify AOA Capital against any claims or
liabilities in respect thereof.
LIMITED LIABILITY COMPANY AGREEMENT
AOA Holding is a limited liability company organized under the Minnesota
Limited Liability Company Act and is governed by the Articles of Organization
of AOA Holding LLC and the Operating Agreement of AOA Holding LLC
(collectively the "LLC Agreements") that govern the rights and duties of its
members. The LLC Agreements provide that the business and affairs of AOA
Holding are to be managed by or under the direction of a Board of Governors
(the "Board"). The governors are to be elected by the members, although the
Board may fill a vacancy. Governors serve for an indefinite term until their
successors are elected or qualified or until their death, resignation,
disqualification or removal. The number of governors may be increased or
decreased by the governors. Each governor is entitled to one vote. Any
decisions to be made by the Board requires the approval of a majority of the
governors voting. Stephen Adams owns 100% of the membership interests of AOA
Holding, and controls the policies and operations of AOA Holding and of AOA
Capital, AOAI and AOALP through AOA Holding. The LLC Agreements provide that
AOA Holding shall have perpetual existence.
54
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
AOALP Secured Credit Facility
The AOALP secured credit facility is a senior secured facility consisting of
a revolving line of credit, in the aggregate principal amount of $35 million.
The aggregate available commitment under the AOALP secured credit facility is
reduced incrementally on a quarterly basis. The AOALP secured credit facility
matures on March 31, 2001 unless previously terminated.
Borrowings under the AOALP secured credit facility bear interest at a rate
equal to, at the option of AOALP, either (i) the ABR (which is defined as the
prime rate most recently announced by the agent under the AOALP secured credit
facility), or (ii) the Eurodollar Base Rate, in each case plus an applicable
margin determined by reference to the ratio of total debt to cash flow of
AOALP. AOALP is required to pay a commitment fee of 0.5% per annum on the
unused amount of this facility, payable quarterly.
The obligations of AOALP under the AOALP secured credit facility are secured
by a first priority pledge of the stock of AOAI, a first priority pledge of
the partnership interests in AOALP and a first priority lien on all the assets
of AOALP, with the exception of certain real estate assets, which are subject
to a negative pledge.
The AOALP secured credit facility contains, among other things, covenants
restricting the ability of AOALP to dispose of assets, make distributions to
its partners, create liens, make capital expenditures, make certain
investments or acquisitions, enter into transactions with affiliates and
otherwise restrict certain activities. The AOALP secured credit facility also
contains the following financial covenants: maximum ratio of total debt to
operating cash flow, minimum permitted interest coverage ratio and minimum
permitted fixed charge coverage ratio.
Events of default under the AOALP secured credit facility include those
usual and customary for facilities of this type, including, among other
things, default in the payment of principal or interest in respect of material
amounts of indebtedness of AOALP or its subsidiaries, any non-payment default
on such indebtedness, a Change of Control (as defined in the AOALP secured
credit facility), any material breach of the covenants or representations and
warranties included in the AOALP secured credit facility and related
documents, the institution of any bankruptcy proceedings, the failure of any
security agreement related to the AOALP secured credit facility or lien
granted thereunder to be valid and enforceable and the loss, without
replacement using insurance proceeds, of a material number of outdoor
advertising displays during any twelve month period. Upon the occurrence and
continuance of an event of default under the AOALP secured credit facility,
the lenders may terminate their commitments to lend and declare the then
outstanding loans due and payable.
AOALP Unsecured Credit Facility
The AOALP unsecured credit facility is an unsecured facility consisting of a
revolving line of credit, originally in the aggregate principal amount of $3
million but increased in November 1998 to $8 million. The aggregate available
commitment under the AOALP unsecured credit facility is reduced incrementally
on a quarterly basis. The AOALP unsecured credit facility matures on December
31, 2001 unless previously terminated.
Borrowings under the AOALP unsecured credit facility bear interest at a rate
equal to, at the option of AOALP, either (i) the ABR (which is defined as the
prime rate most recently announced by the agent under the AOALP unsecured
credit facility), or (ii) the Eurodollar Rate, in each case plus an applicable
margin. AOALP is required to pay a commitment fee of 0.75% per annum on the
unused amount of this facility, payable quarterly.
Other than the covenants and events of default relating to security
interests, the AOALP unsecured credit facility contains the same covenants and
events of default as are contained in the AOALP secured credit facility.
55
<PAGE>
AOALP Notes
In 1996, AOALP issued a total of $105 million in aggregate principal amount
of senior notes. In 1998, AOALP purchased and cancelled $4 million in
principal amount of these notes, leaving $101 million in principal amount
outstanding. The AOALP Notes bear interest at the rate of 10 3/4% per annum
and mature on March 15, 2006. No sinking fund payments are required. The AOALP
Notes are unsecured obligations of AOALP. The indenture governing the AOALP
Notes contains certain restrictive covenants including, but not limited to
restricting the ability of AOALP to incur additional indebtedness, pay
dividends and make distributions, issue equity interests in subsidiaries, make
certain investments, repurchase equity investments, create liens, enter into
transactions with affiliates, enter into sale and leaseback transactions,
merge or consolidate AOALP or AOAI, and transfer and sell assets. The AOALP
Indenture limits indebtedness that can be outstanding under the AOALP secured
credit facility to $35 million (plus interest, premium, fees and other
obligations associated therewith). The AOALP Notes may be redeemed by AOALP
beginning March 15, 2001 at a redemption price of 105.375% of principal plus
accrued interest which decreases annually until it reaches 100% on and after
March 15, 2004.
After giving pro forma effect to the application of the net aggregate
proceeds from this offering, AOALP would have had the ability to make
distributions to AOA Holding in the amount of $13.25 million as of March 31,
1999 under the terms of the AOALP Indenture.
56
<PAGE>
DESCRIPTION OF THE NOTES
The outstanding notes were, and the exchange notes (the "Notes") will be,
issued under an Indenture, dated as of May 26, 1999 (the "Indenture") among
the Issuers and United States Trust Company of New York, as trustee (the
"Trustee"). The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), as in effect from time to time.
The Notes are subject to all such terms, and holders of the Notes are referred
to the Indenture and the Trust Indenture Act for a statement of them. The
following is a summary of the material terms and provisions of the Notes. This
summary does not purport to be a complete description of the Notes and is
subject to the detailed provisions of, and qualified in its entirety by
reference to, the Notes and the Indenture (including the definitions contained
therein). A copy of the form of Indenture may be obtained from the Issuers by
any holder or prospective investor upon request. Definitions relating to
certain capitalized terms are set forth under "Certain Definitions" and
throughout this description. Capitalized terms that are used but not otherwise
defined herein have the meanings assigned to them in the Indenture and such
definitions are incorporated herein by reference.
General
The Notes will be limited in aggregate principal amount to $50.0 million.
The Notes will be general unsecured joint and several obligations of the
Issuers ranking equal in right of payment with all existing and future
unsubordinated indebtedness of the Issuers and senior in right of payment to
all existing and future indebtedness of the Issuers that by its terms is
subordinated in right of payment to the Notes.
The Notes will not be guaranteed by any Subsidiaries of the Issuers. Because
AOA Holding is a holding company and conducts its business through
Subsidiaries, the Notes will be effectively subordinated to all Indebtedness
and other liabilities (including trade payables) of its Subsidiaries (other
than AOA Capital), and in the event of a default on the Notes, the Notes will
rank junior in right of payment to all existing and future Indebtedness of
such Subsidiaries. In addition, the assets of such Subsidiaries will not be
available to satisfy the Notes except under limited circumstances. See "Risk
Factors."
Because the Notes will not be secured by any collateral, the Notes will be
effectively subordinated to any secured Indebtedness of the Issuers to the
extent of the value of the assets securing such Indebtedness.
Maturity, Interest and Principal
The Notes will mature on June 1, 2006. The Notes will bear interest at a
rate of 10 3/8% per year from the date of original issuance until maturity.
Interest is payable semi-annually in arrears on March 15 and September 15,
commencing September 15, 1999, to holders of record of the Notes at the close
of business on the immediately preceding March 1 and September 1, respectively
(whether or not a business day). The interest rate on the Notes is subject to
increase, and such additional interest will be payable on the payment dates
set forth above, in certain circumstances, if the Notes (or other securities
substantially similar to the Notes) are not registered with the Commission and
declared effective within certain prescribed time periods. See "Exchange
Offer; Registration Rights."
Optional Redemption
The Notes will be redeemable at the option of the Issuers, in whole or in
part, at any time on or after June 1, 2003 at the following redemption prices
(expressed as a percentage of principal amount), together, in each case, with
accrued and unpaid interest to the redemption date, if redeemed during the
twelve-month period beginning on June 1 of each year listed below:
57
<PAGE>
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003........................................ 105.188%
2004........................................ 102.594%
2005 and thereafter......................... 100.000%
</TABLE>
In the event of redemption of fewer than all of the Notes, the Trustee shall
select pro rata, by lot or in such other manner as it shall deem fair and
equitable, the Notes to be redeemed. The Notes will be redeemable upon not
less than 30 nor more than 60 days' prior written notice, mailed by first
class mail to a holder's last address as it shall appear on the register
maintained by the Registrar of the Notes. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note, in a
principal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon cancellation of the original Note. After any
redemption date, unless the Issuers shall default in the payment of the
redemption price, interest will cease to accrue on the Notes or portions
thereof called for redemption.
The Issuers may also redeem the Notes, in whole but not in part, at any time
during the nine-month period beginning on April 15, 2001 at a redemption price
equal to 100% of the aggregate principal amount so redeemed, plus accrued and
unpaid interest to the redemption date, in the event of a concurrent optional
redemption by the Subsidiary Issuers of the Existing Subsidiary Notes.
Certain Covenants
The Indenture will contain, among others, the following covenants.
Limitation on Additional Indebtedness
AOA Holding will not, and will not permit any of its Subsidiaries to,
directly or indirectly, incur (as defined) any Indebtedness (including
Acquired Indebtedness) other than Permitted Indebtedness; provided, however,
that AOA Holding and its Subsidiaries may incur Indebtedness (including
Acquired Indebtedness) and interest, premium, fees and other obligations
associated therewith if
(1) (a) in the case of Indebtedness of AOALP or any of its Subsidiaries,
after giving effect to the incurrence of such Indebtedness and the receipt
and application of the proceeds thereof, the ratio of the total
Indebtedness of AOALP and its Subsidiaries to AOALP's EBITDA (determined on
a pro forma basis for the most recently ended four full fiscal quarters of
AOALP for which financial statements are available at the date of
determination) is less than
(i) 5.25 to 1 if the Indebtedness is incurred prior to March 15, 2001
and
(ii) 5.0 to 1 if the Indebtedness is incurred on or after March 15,
2001; and
(b) in the case of Indebtedness of AOA Holding or any of its
Subsidiaries, after giving effect to the incurrence of such Indebtedness
and the receipt and application of the proceeds thereof, the ratio of the
total Indebtedness of AOA Holding and its Subsidiaries to AOA Holding's
EBITDA (determined as above) is less than
(i) 6.25 to 1 if the Indebtedness is incurred prior to March 15, 2001
and
(ii) 6.0 to 1 if the Indebtedness is incurred on or after March 15,
2001;
provided, however, that if the Indebtedness which is the subject of a
determination under this provision is Acquired Indebtedness, or Indebtedness
incurred in connection with the simultaneous acquisition of any Person,
business, property or assets, then such ratio shall be determined by giving
effect to (on a pro forma basis, as if the transaction had occurred at the
beginning of the four-quarter period) both the incurrence or assumption of
such Acquired Indebtedness or such other Indebtedness by AOA Holding or AOALP,
as the case may be, and
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the inclusion in AOA Holding's EBITDA or AOALP's EBITDA, as the case may be,
of the EBITDA of the acquired Person, business, property or assets and
(2) no Default or Event of Default shall have occurred and be continuing
at the time or as a consequence of the incurrence of such Indebtedness.
The Indenture will provide that AOA Holding will not, directly or
indirectly, incur any Indebtedness that is subordinated to any other
Indebtedness of AOA Holding unless such Indebtedness is also expressly
subordinated to the Notes; provided, however, that no Indebtedness of AOA
Holding shall be deemed to be subordinated to any other Indebtedness of AOA
Holding solely because such other Indebtedness is secured.
Limitation on Additional Indebtedness of the Issuers
The Issuers will not incur any Indebtedness which is senior to or pari passu
with the Notes other than Permitted Indebtedness.
Limitation on Indebtedness of Certain Subsidiaries
AOA Holding will not permit any Subsidiary of AOALP to incur any
Indebtedness except Permitted Indebtedness or Acquired Indebtedness; provided,
however, that such Acquired Indebtedness was not incurred in connection with,
or in anticipation of, such Person becoming a Subsidiary.
Limitation on Restricted Payments
AOA Holding will not make, and will not permit any of its Subsidiaries to,
directly or indirectly, make, any Restricted Payment prior to January 15,
2002, except cash payments in respect of Phantom Compensation so long as
subparagraphs (1), (2) and (3) below are satisfied. Thereafter, AOA Holding
will not make, and will not permit any of its Subsidiaries to, directly or
indirectly, make, any Restricted Payment unless:
(1) no Default or Event of Default shall have occurred and be continuing
at the time of or immediately after giving effect to such Restricted
Payment;
(2) immediately after giving pro forma effect to such Restricted Payment,
AOA Holding (or, in the case of Phantom Compensation, AOALP) could incur
$1.00 of additional Indebtedness (other than Permitted Indebtedness) under
the covenant set forth under "Limitation on Additional Indebtedness"; and
(3) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date
through and including the date of such Restricted Payment (the "Base
Period") does not exceed the sum of
(a) (i) in the case of Phantom Compensation, 50% of AOA Holding's
Consolidated Net Income before reduction for interest expense with
respect to the Notes (or in the event such Consolidated Net Income
before reduction for interest expense with respect to the Notes shall
be a deficit, minus 100% of such deficit) during the Base Period, or
(ii) in the case of other Restricted Payments, 50% of AOA Holding's
Consolidated Net Income (or in the event such Consolidated Net Income
shall be a deficit, minus 100% of such deficit) during the Base Period
and
(b) 100% of the aggregate Net Proceeds, including the fair market
value (as defined) of securities or other property received by AOA
Holding from the issue or sale, during the Base Period, of Equity
Interests (other than Disqualified Equity Interests or Equity Interests
of AOA Holding issued to any Subsidiary of AOA Holding) of AOA Holding
or any Indebtedness or other securities of AOA Holding convertible into
or exercisable or exchangeable for Equity Interests (other than
Disqualified Equity Interests) of AOA Holding which have been so
converted or exercised or exchanged, as the case may be. For purposes
of determining under this clause (c) the amount expended for Restricted
Payments,
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cash distributed shall be valued at the face amount thereof and
property other than cash shall be valued at its fair market value.
The provisions of this covenant shall not prohibit
(a) the agreement or commitment to make any payment or distribution
permitted under the Indenture or the payment or distribution so agreed or
committed to be made as long as such payment or distribution is made on the
date of such agreement or commitment or within 60 days thereof; provided,
however, that on the date of such agreement or commitment such payment
would comply with the foregoing provisions, it being understood that the
agreement or commitment to make such payment or distribution shall
constitute Permitted Indebtedness;
(b) the retirement of any Equity Interests of AOA Holding or subordinated
Indebtedness of AOA Holding by conversion into, or by or in exchange for,
Equity Interests (other than Disqualified Equity Interests), or out of, the
Net Proceeds of the substantially concurrent sale (other than to a
Subsidiary of AOA Holding) of other shares of Equity Interests of AOA
Holding (other than Disqualified Equity Interests);
(c) the redemption or retirement of Indebtedness of AOA Holding
subordinated to the Notes in exchange for, by conversion into, or out of
the Net Proceeds of, a substantially concurrent sale or incurrence of
Indebtedness (other than any Indebtedness owed to a Subsidiary) of AOA
Holding that is contractually subordinated in right of payment to the Notes
to at least the same extent as the subordinated Indebtedness being redeemed
or retired;
(d) the retirement of any shares of Disqualified Equity Interests by
conversion into, or by exchange for, shares of Disqualified Equity
Interests, or out of the Net Proceeds of the substantially concurrent sale
(other than to a Subsidiary of AOA Holding) of other shares of Disqualified
Equity Interests; or
(e) Prior Accrued Bonus Payments, provided, however, that the aggregate
amount of all such payments made after the Issue Date does not exceed
$500,000;
provided, however, that in the case of the immediately preceding clauses (b),
(c) and (e), no Default or Event of Default shall have occurred and be
continuing at the time of such Restricted Payment or would occur as a result
thereof.
The Indenture will provide that in determining the aggregate amount of
Restricted Payments made subsequent to the Issue Date for purposes of
subparagraph (3) above, amounts expended pursuant to clauses (a) and (b) of
the immediately preceding paragraph shall be included, but without
duplication, in such calculation.
The Indenture will provide that for purposes of calculating the net proceeds
received by AOA Holding from the issuance or sale of its Equity Interests
either upon the conversion of, or exchange for, Indebtedness of AOA Holding or
any Subsidiary, such amount will be deemed to be an amount equal to the
difference of
(1) the sum of
(a) the principal amount or accreted value (whichever is less) of such
Indebtedness on the date of such conversion or exchange and
(b) the additional cash consideration, if any, received by AOA Holding
upon such conversion or exchange, less any payment on account of fractional
shares, minus
(2) all expenses incurred in connection with such issuance or sale.
In addition, for purposes of calculating the net proceeds received by AOA
Holding from the issuance or sale of its Equity Interests upon the exercise of
any options or warrants of AOA Holding, such amount will be deemed to be an
amount equal to the difference of
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(1) the additional cash consideration, if any, received by AOA Holding
upon such exercise, minus
(2) all expenses incurred in connection with such issuance or sale.
Not later than the date of making any Restricted Payment, AOA Holding shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this covenant were computed, which calculations may be based upon
AOA Holding's latest available financial statements, and that no Default or
Event of Default exists and is continuing and no Default or Event of Default
will occur immediately after giving effect to such Restricted Payment.
Limitation on Subsidiaries and Unrestricted Subsidiaries
The Indenture will provide that AOALP or any of its Subsidiaries may
designate any Subsidiary of AOALP (including a newly acquired or a newly
formed Subsidiary of AOALP) to be an Unrestricted Subsidiary and that for
purposes of the covenant described under "Limitation on Restricted Payments"
above,
(1) an "Investment" shall be deemed to have been made at the time any
Subsidiary of AOALP is designated as an Unrestricted Subsidiary in an
amount (proportionate to AOA Holding's or AOALP's, as the case may be,
percentage Equity Interest in such Subsidiary) equal to the net worth of
such Subsidiary at the time that such Subsidiary is designated as an
Unrestricted Subsidiary;
(2) at any date the aggregate of all Restricted Payments made as
Investments since the Issue Date shall exclude and be reduced by an amount
(proportionate to AOA Holding's or AOALP's, as the case may be, percentage
Equity Interest in such Subsidiary) equal to the net worth of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Subsidiary of AOALP, not to exceed, in the case of any such
redesignation of an Unrestricted Subsidiary as a Subsidiary of AOALP, the
amount of Investments previously made by AOALP and its Subsidiaries in such
Unrestricted Subsidiary (in each case (1) and (2) "net worth" to be
calculated based upon the fair market value of the assets of such
Subsidiary as of any such date of designation); and
(3) any property transferred to or from an Unrestricted Subsidiary shall
be valued at its fair market value at the time of such transfer.
The Indenture will provide that notwithstanding the foregoing, the Board of
Directors of AOALP or any of its Subsidiaries may not designate any Subsidiary
of AOALP to be an Unrestricted Subsidiary if, after such designation,
(1) AOA Holding or any Subsidiary of AOA Holding
(a) provides credit support for, or a guarantee of, any Indebtedness
of such Subsidiary (including any undertaking, agreement or instrument
evidencing such Indebtedness) or
(b) is directly or indirectly liable for any Indebtedness of such
Subsidiary,
(2) a default with respect to any Indebtedness of such Subsidiary
(including any right which the holders thereof may have to take enforcement
action against such Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Indebtedness of AOA Holding or any Subsidiary
of AOA Holding to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its final scheduled
maturity or
(3) such Subsidiary owns any Equity Interests in, or owns or holds any
Lien on any property of, any Subsidiary which is not a Subsidiary of the
Subsidiary to be so designated.
Limitations on Investments
AOA Holding will not and will not permit any of its Subsidiaries to make any
Investment except:
(1) a Permitted Investment or
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(2) an Investment by AOALP or any of its Subsidiaries that is made in
compliance with the covenant described under "Limitation on Restricted
Payments."
Limitations on Liens
AOA Holding will not, and will not permit any of its Subsidiaries to,
create, incur or otherwise cause or suffer to exist or become effective any
Liens of any kind (other than Permitted Liens) upon any property or asset of
AOA Holding or any Subsidiary whether owned on the Issue Date or acquired
after the Issue Date or on any shares of stock or debt of any Subsidiary which
owns property or assets, now owned or hereafter acquired or on any income or
profits therefrom, or assign or otherwise convey any right to receive income
or profits thereon.
Limitation on Transactions with Affiliates
AOA Holding will not, and will not permit any of its Subsidiaries to,
directly or indirectly, enter into or suffer to exist any transaction or
series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any
Affiliate of AOA Holding (including entities in which AOA Holding or any
Subsidiary thereof owns a minority interest) or holder of 10% or more of an
Issuer's Equity Interests (each such transaction, an "Affiliate Transaction")
or extend, renew, waive or otherwise modify the terms of any Affiliate
Transaction entered into prior to the Issue Date unless
(1) such Affiliate Transaction is solely between or among AOA Holding and
its Wholly-Owned Subsidiaries;
(2) such Affiliate Transaction is solely between or among Wholly-Owned
Subsidiaries of AOA Holding;
(3) such Affiliate Transaction is for reasonable fees and compensation
paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of AOA Holding or any Subsidiary thereof as
determined in good faith by the Board of Directors or senior management of
AOA Holding or of such Subsidiary, as the case may be; or
(4) the terms of such Affiliate Transaction are fair and reasonable to
AOA Holding or such Subsidiary, as the case may be, and the terms of such
Affiliate Transaction are at least as favorable as the terms which could be
obtained by AOA Holding or such Subsidiary, as the case may be, in a
comparable transaction made on an arm's-length basis between unaffiliated
parties.
In any Affiliate Transaction involving an amount or having a value in excess
of $250,000 in any one year which is not permitted under clause (1) or (2)
above, AOA Holding or such Subsidiary, as the case may be, must obtain a
resolution of its Board of Directors certifying that such Affiliate
Transaction complies with clause (4) above. In transactions with a value in
excess of $2.5 million which are not permitted under clause (1) or (2) above,
AOA Holding or such Subsidiary, as the case may be, must obtain a written
opinion as to the fairness of such a transaction, from a financial point of
view, from an Independent Financial Advisor.
The foregoing provisions will not apply to
(1) the payment of reasonable annual compensation to directors or
executive officers of the Issuers;
(2) payments to Stephen Adams pursuant to the employment agreement by and
between AOAI and Stephen Adams as in effect on the Issue Date and
(3) Restricted Payments made in compliance with the covenant described
under "Limitation on Restricted Payments."
Limitation on Certain Asset Sales
AOA Holding will not, and will not permit any of its Subsidiaries to,
consummate an Asset Sale unless
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(1) AOA Holding or such Subsidiary, as the case may be, receives
consideration at the time of such sale or other disposition at least equal
to the fair market value thereof (as determined for Asset Sales other than
eminent domain, condemnation or similar governmental proceedings in good
faith by its Board of Directors); and
(2) either
(a) not less than 85% of the consideration received by AOA Holding or
the Subsidiary, as the case may be, from such Asset Sale is in the form
of cash or cash equivalents (those equivalents allowed under "Temporary
Cash Investments") or
(b) after giving effect to such Asset Sale, AOA Holding and its
Subsidiaries hold in the aggregate no more than $2.5 million of Asset
Sale Proceeds that are in a form other than cash or cash equivalents;
and
(3) the Asset Sale Proceeds received by AOA Holding or such Subsidiary
are applied, to the extent AOA Holding elects,
(a) to repay and permanently reduce outstanding Permitted Secured
Indebtedness, Existing Subsidiary Notes and/or Refinancing Indebtedness
incurred to refinance the Existing Subsidiary Notes and to permanently
reduce the commitments in respect thereof; provided, however, that such
repayment and commitment reduction occurs within 270 days following the
receipt of such Asset Sale Proceeds or
(b) to an investment in assets (including Equity Interests or other
securities purchased in connection with the acquisition of Equity
Interests or property of another person) used or useful in businesses
similar or ancillary to the business of AOA Holding or such Subsidiary
as conducted at the time of such Asset Sale; provided, however, that
such investment occurs or AOA Holding or such Subsidiary enters into
contractual commitments to make such investment, subject only to
customary conditions (other than the obtaining of financing), on or
prior to the 180th day following receipt of such Asset Sale Proceeds
(the "Reinvestment Date") and Asset Sale Proceeds contractually
committed are so applied within 270 days following the receipt of such
Asset Sale Proceeds.
Any Asset Sale Proceeds that are not applied as permitted by clause (3) of
the preceding sentence shall constitute "Excess Proceeds." If at any time the
aggregate amount of Excess Proceeds exceeds $3 million, the Issuers shall
offer (an "Excess Proceeds Offer") to purchase from all holders of Notes,
pursuant to procedures set forth in the Indenture, the maximum principal
amount of Notes that may be purchased with such Excess Proceeds at a purchase
price in cash equal to 100% of the principal amount thereof plus accrued
interest, if any, to the date of the purchase. To the extent that the
aggregate amount of Notes tendered pursuant to such Excess Proceeds Offer is
less than the amount of Excess Proceeds, AOA Holding may use such portion of
the Excess Proceeds that is not used to purchase Notes so tendered for general
corporate purposes. If the aggregate principal amount of Notes tendered
pursuant to such Excess Proceeds Offer is more than the amount of the Excess
Proceeds, the Notes tendered will be repurchased on a pro rata basis or by
such other method as the Trustee shall deem fair and appropriate. Upon the
closing of any repurchase of Notes tendered pursuant to such Excess Proceeds
Offer, the amount of Excess Proceeds shall be deemed to be zero.
If the Issuers are required to make an Excess Proceeds Offer, the Issuers
shall mail, within 30 days following the Reinvestment Date, a notice to the
holders of the Notes stating, among other things:
(1) that such holders have the right to require the Issuers to apply the
Excess Proceeds to repurchase such Notes at a purchase price in cash equal
to 100% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase;
(2) the purchase date, which shall be no earlier than 30 days and not
later than 60 days from the date such notice is mailed;
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(3) the instructions, determined by the Issuers, that each holder of
Notes must follow in order to have such Notes repurchased; and
(4) the calculations used in determining the amount of Excess Proceeds to
be applied to the repurchase of such Notes.
In the event of the transfer of substantially all (but not all) of the
assets of AOA Holding or any Subsidiary of AOA Holding or substantially all
(but not all) of the assets of any division or line of business of AOA Holding
or any Subsidiary of AOA Holding as an entirety to a Person in a transaction
permitted under "--Mergers, Consolidations and Sales of Assets," the successor
corporation shall be deemed to have sold the assets of AOA Holding, the
Subsidiary or the division or line of business, as the case may be, not so
transferred for purposes of this covenant, and shall comply with the
provisions of this covenant with respect to such deemed sale as if it were an
Asset Sale. In addition, the fair market value of such assets of AOA Holding,
the Subsidiary or the division or line of business, as the case may be, deemed
to be sold shall be deemed to be Asset Sale Proceeds for purposes of this
covenant.
Any Excess Proceeds Offer will be made in substantially the same manner as a
Change of Control Offer. AOA Holding will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations to
the extent such laws and regulations are applicable to an Excess Proceeds
Offer.
Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries
AOA Holding will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any of its Subsidiaries to
(1) pay dividends or make any other distributions to AOA Holding or any
Subsidiary on its Equity Interests,
(2) pay any Indebtedness owed to AOA Holding or any Subsidiary,
(3) make loans or advances to AOA Holding or any Subsidiary thereof or
(4) transfer any of its properties or assets to AOA Holding or any
Subsidiary thereof,
except, in each case, for such encumbrances or restrictions existing under
or contemplated by or by reason of
(a) the Notes or the Indenture,
(b) any restrictions existing under or contemplated by agreements in
effect on the Issue Date, including, without limitation, restrictions
under the Credit Facility as in effect on the Issue Date and comparable
provisions in the agreements evidencing any other Permitted Secured
Indebtedness, the Existing Subsidiary Notes and the related indenture,
(c) any restrictions, with respect to a Subsidiary of AOA Holding
that is not a Subsidiary of AOA Holding on the Issue Date, in existence
at the time such Person becomes a Subsidiary of AOA Holding (but not
created in contemplation of such Person becoming a Subsidiary of AOA
Holding and which encumbrance or restriction is not applicable to any
Person or the property or assets of any Person other than such Person
or the property or assets of such Person so acquired) and
(d) any restrictions existing under any agreement that refinances or
replaces an agreement containing a restriction permitted by clause (a),
(b) or (c) above; provided, however, that the terms and conditions of
any such restrictions are not materially less favorable in the
aggregate to the holders of the Notes than those under or pursuant to
the agreement being replaced or the agreement evidencing the
Indebtedness refinanced or replaced.
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Limitation on Equity Interests of Subsidiaries
AOA Holding will at all times directly or indirectly own 100% of the Equity
Interests of its Subsidiaries other than limited partnership interests in
AOALP held by ASSKM, L.P., a California limited partnership, in an amount not
to exceed 30.0% of the total outstanding Equity Interest of AOALP. AOA Holding
will not
(1) sell, pledge, hypothecate or otherwise convey or dispose of any
Equity Interests of a Subsidiary (other than pursuant to an agreement
evidencing Permitted Secured Indebtedness, Refinancing Indebtedness
incurred to refinance the Existing Subsidiary Notes or a successor facility
or to AOA Holding or a Wholly-Owned Subsidiary of AOA Holding) or
(2) permit any of its Subsidiaries to issue any Equity Interests, other
than to AOA Holding or a Subsidiary of AOA Holding.
The foregoing restrictions shall not apply to an Asset Sale made in
compliance with the covenant described under "Limitation on Certain Asset
Sales" or the issuance of Preferred Equity Interests in compliance with the
covenant described under "Limitation on Additional Indebtedness."
Limitation on Creation of Subsidiaries
AOA Holding will not create or acquire, nor permit any of its Subsidiaries
to create or acquire, any Subsidiary other than
(1) a Wholly-Owned Subsidiary existing as of the Issue Date;
(2) a Wholly-Owned Subsidiary that is acquired or created after the date
hereof; or
(3) an Unrestricted Subsidiary.
Limitation on Sale and Lease-Back Transactions
AOA Holding will not, and will not permit any of its Subsidiaries to, enter
into any Sale and Lease-Back Transaction unless
(1) the consideration received in such Sale and Lease-Back Transaction is
at least equal to the fair market value of the property sold and
(2) immediately prior to and after giving effect to the Attributable
Indebtedness in respect of such Sale and Lease-Back Transaction, AOA
Holding could incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with the covenant described under
"Limitation on Additional Indebtedness."
Limitation of Guarantees by Subsidiaries
AOA Holding will not permit any of its Subsidiaries, directly or indirectly,
by way of the pledge of any intercompany note or otherwise, to assume,
guarantee or in any other manner become liable with respect to any
Indebtedness of AOA Holding, unless, in any such case
(1) such Subsidiary executes and delivers a supplemental indenture to the
Indenture, providing a guarantee of payment of the Notes by such Subsidiary
(the "Guarantee") and
(2) if any such assumption, guarantee or other liability of such
Subsidiary is provided in respect of Indebtedness that is expressly
subordinated to the Notes, the guarantee or other instrument provided by
such Subsidiary in respect of such subordinated Indebtedness shall be
subordinated to the Guarantee substantially to the same extent as such
Indebtedness is subordinated to the Notes.
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Notwithstanding the foregoing, any such Guarantee by a Subsidiary of the
Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged, without any further action required
on the part of the Trustee or any holder, upon
(1) the unconditional release of such Subsidiary from its liability in
respect of the Indebtedness in connection with which such Guarantee was
executed and delivered pursuant to the preceding paragraph or
(2) any sale or other disposition (by merger or otherwise) to any Person
which is not a Subsidiary of AOA Holding of all of AOA Holding's Equity
Interests in, or all or substantially all of the assets of, such
Subsidiary; provided that
(a) such sale or disposition of such Equity Interests or assets is
otherwise in compliance with the terms of the Indenture and
(b) such assumption, guarantee or other liability of such Subsidiary
has been released by the holders of the other Indebtedness so
guaranteed.
Payments for Consent
None of the Issuers or any of their Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or
agreed to be paid to all holders of the Notes which so consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
Line of Business
AOA Holding will not, and will not permit any of its Subsidiaries to, engage
in any business other than the owning, operating or managing of outdoor
advertising businesses or out-of-home media businesses and related or
ancillary activities.
Change of Control Offer
Within 30 days of the occurrence of a Change of Control, the Issuers shall
notify the Trustee in writing of such occurrence and shall make an offer to
purchase (the "Change of Control Offer") the outstanding Notes at a purchase
price equal to 101% of the principal amount thereof plus any accrued and
unpaid interest thereon to the Change of Control Payment Date (as hereinafter
defined) (such applicable purchase price being hereinafter referred to as the
"Change of Control Purchase Price") in accordance with the procedures set
forth in this covenant.
Within 30 days of the occurrence of a Change of Control, the Issuers also
shall
(1) cause a notice of the Change of Control Offer to be sent at least
once to the Dow Jones News Service or similar business news service in the
United States and
(2) send by first-class mail, postage prepaid, to the Trustee and to each
holder of the Notes, at the address appearing in the register maintained by
the Registrar of the Notes, a notice stating:
(a) that the Change of Control Offer is being made pursuant to this
covenant and that all Notes tendered will be accepted for payment, and
otherwise subject to the terms and conditions set forth herein;
(b) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 20 business days from the date
such notice is mailed (the "Change of Control Payment Date"));
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(c) that any Note not tendered will continue to accrue interest;
(d) that, unless the Issuers default in the payment of the Change of
Control Purchase Price, any Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change
of Control Payment Date;
(e) that holders accepting the offer to have their Notes purchased
pursuant to a Change of Control Offer will be required to surrender the
Notes to the Paying Agent at the address specified in the notice prior
to the close of business on the Business Day preceding the Change of
Control Payment Date;
(f) that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the
third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the holder, the principal amount of the Notes delivered for
purchase, and a statement that such holder is withdrawing his election
to have such Notes purchased;
(g) that holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered, provided that each Note purchased and each
such new Note issued shall be in an original principal amount in
denominations of $1,000 and integral multiples thereof;
(h) any other procedures that a holder must follow to accept a Change
of Control Offer or effect withdrawal of such acceptance; and
(i) the name and address of the Paying Agent.
On the Change of Control Payment Date, the Issuers shall, to the extent
lawful,
(1) accept for payment all Notes or portions thereof or beneficial
interests under a Global Note tendered pursuant to the Change of Control
Offer,
(2) deposit with the Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof or beneficial interests, so tendered
and
(3) deliver or cause to be delivered to the Trustee Notes so accepted
together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Issuers.
The Paying Agent shall promptly
(1) mail to each holder of Notes so accepted and
(2) cause to be credited to the respective accounts of the holders under
a Global Note of beneficial interests so accepted payment in an amount
equal to the Change of Control Purchase Price for such Notes, and the
Issuers shall execute and issue, and the Trustee shall promptly
authenticate and mail to such holder, a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered and shall issue a new
Global Note equal in principal amount to any unpurchased portion of
beneficial interest so surrendered; provided, however, that each such new
Note shall be issued in an original principal amount in denominations of
$1,000 and integral multiples thereof.
The Indenture requires that if the Credit Facility is in effect, or any
Existing Subsidiary Notes are outstanding, or any other Permitted Secured
Indebtedness or Refinancing Indebtedness incurred to refinance the Existing
Subsidiary Notes (to the extent such Refinancing Indebtedness contains
provisions requiring repayment or an offer to repay upon such Change of
Control or prohibiting or limiting the repurchase of the Notes as described
above) is outstanding, then at the time of the occurrence of a Change of
Control, prior to the mailing of the notice to holders described in the
preceding paragraphs, but in any event within 30 days following any Change of
Control, AOA Holding covenants to
(1) repay (or cause to be repaid) in full all obligations and terminate
(or cause to be terminated) all commitments under such Permitted Secured
Indebtedness, Existing Subsidiary Notes and/or Refinancing
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Indebtedness or offer to repay in full all obligations and terminate all
commitments under such Permitted Secured Indebtedness, Existing Subsidiary
Notes and/or Refinancing Indebtedness of each lender or holder who has
accepted such offer or
(2) obtain (or cause to be obtained) the requisite consent under such
Permitted Secured Indebtedness to permit the repurchase of the Notes as
described above.
AOA Holding must first comply with the covenant described in the preceding
sentence before it shall be required to purchase Notes in the event of a
Change of Control; provided, however, that AOA Holding's failure to comply
with the covenant described in the preceding sentence constitutes an Event of
Default described in clause (3) under "Events of Default" below. As a result
of the foregoing a holder of the Notes may not be able to compel the Issuers
to purchase the Notes unless AOA Holding is able at the time to refinance (or
cause to be refinanced) all of the Credit Facility or obtain (or cause to be
obtained) requisite consents under the Credit Facility. Failure by the Issuers
to make a Change of Control Offer when required by the Indenture constitutes
an Event of Default under the Indenture.
The Indenture will provide that,
(1) if AOA Holding or any Subsidiary thereof has issued any outstanding
(a) Indebtedness that is subordinated in right of payment to the
Notes or
(b) Preferred Equity Interests,
and AOA Holding or such Subsidiary is required to make a Change of
Control Offer or to make a distribution with respect to such
subordinated Indebtedness or Preferred Equity Interests in the event of
a change of control, AOA Holding and such Subsidiary shall not
consummate any such offer or distribution with respect to such
subordinated Indebtedness or Preferred Equity Interests until such time
as the Issuers shall have paid the Change of Control Purchase Price in
full to the holders of Notes that have accepted the Issuers' Change of
Control Offer and shall otherwise have consummated the Change of
Control Offer made to holders of the Notes and
(2) AOA Holding will not issue Indebtedness that is subordinated in
right of payment to the Notes or Preferred Equity Interests with change
of control provisions requiring the payment of such Indebtedness or
Preferred Equity Interests prior to the payment of the Notes in the
event of a Change in Control under the Indenture.
In the event that a Change of Control occurs and the holders of Notes
exercise their right to require the Issuers to purchase Notes, if such
purchase constitutes a "tender offer" for purposes of Rule l4e-1 under the
Exchange Act at that time, the Issuers will comply with the requirements of
Rule 14e-1 as then in effect with respect to such repurchase.
The Issuers' ability to purchase the Notes will be limited by AOA Holding's
then available financial resources and, if such financial resources are
insufficient, their ability to arrange financing to effect such purchases.
There can be no assurance that the Issuers will have sufficient funds to
repurchase the Notes upon a Change of Control or that the Issuers will be able
to arrange financing for such purpose.
Release from Liability
The Indenture will provide that the Notes are being issued solely by the
Issuers, and none of the Issuers' respective members, managers, directors,
officers, partners, stockholders (other than AOA Holding), employees or
affiliates will be an obligor under the Notes, and that such persons shall not
have any liability for any obligations of the Issuers under the Notes or the
Indenture or any claim based on, in respect of or by reason of such
obligations, and that by accepting the Notes, each holder of Notes waives and
releases all such liability, which waiver and release are part of the
consideration for the Notes. Such waiver may not be effective to waive
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liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
Merger, Consolidation or Sale of Assets
AOA Holding will not and will not permit any of its Subsidiaries to
consolidate with, merge with or into, or transfer all or substantially all of
its assets (as an entirety or substantially as an entirety in one transaction
or a series of related transactions), to any Person unless:
(1) AOA Holding or such Subsidiary, as the case may be, shall be the
continuing Person, or the Person (if other than AOA Holding or such
Subsidiary) formed by such consolidation or into which AOA Holding or such
Subsidiary, as the case may be, is merged or to which the properties and
assets of AOA Holding or such Subsidiary, as the case may be, are
transferred shall be a corporation, partnership or limited liability
company organized and existing under the laws of the United States or any
State thereof or the District of Columbia and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of AOA Holding or such
Subsidiary, as the case may be, under the Notes and the Indenture, and the
obligations under the Indenture shall remain in full force and effect;
provided, however, that at any time the Company or its successor is a
partnership or limited liability company, there shall be a co-issuer of the
Notes that is a corporation;
(2) immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing;
(3) immediately after giving effect to such transaction on a pro forma
basis AOA Holding or such Person could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the covenant set
forth under "Limitation on Additional Indebtedness"; and
(4) immediately thereafter, AOA Holding, such Subsidiary or the other
surviving entity, as the case may be, shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of AOA Holding or such
Subsidiary, as the case may be, immediately prior to such transaction.
In connection with any consolidation, merger or transfer of assets
contemplated by this provision, AOA Holding shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to
the Trustee, an Officers' Certificate and an opinion of counsel, each stating
that such consolidation, merger or transfer and the supplemental indenture in
respect thereto comply with this provision and that all conditions precedent
herein provided for relating to such transaction or transactions have been
complied with.
Events of Default
The following events are defined in the Indenture as "Events of Default":
(1) default in payment of any principal of, or premium, if any, on the
Notes when such principal becomes due and payable;
(2) default for 30 days in the payment of any interest on the Notes after
such interest becomes due and payable;
(3) the failure of the Issuers to comply with any of the terms or
provisions of "--Change of Control Offer" or "--Limitation on Certain Asset
Sales";
(4) default by the Issuers in the observance or performance of any other
provision in the Notes or the Indenture for 30 days after written notice
from the Trustee or the holders of not less than 25% in aggregate principal
amount of the Notes then outstanding;
(5) failure to pay when due principal, interest or premium in an
aggregate amount of $3 million or more with respect to any Indebtedness of
AOA Holding or any Subsidiary thereof, or the acceleration prior to its
express maturity of any such Indebtedness aggregating $3 million or more;
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(6) any final judgment or judgments which can no longer be appealed for
the payment of money in excess of $3 million (which are not paid or covered
by third party insurance by financially sound insurers that have not
disclaimed coverage) shall be rendered against AOA Holding or any
Subsidiary thereof, and shall not be discharged for any period of 60
consecutive days during which a stay of enforcement shall not be in effect;
and
(7) certain events involving bankruptcy, insolvency or reorganization of
either of the Issuers or any Subsidiary of AOA Holding.
The Indenture provides that the Trustee may withhold notice to the holders
of the Notes of any default (except in payment of principal or premium, if
any, or interest on the Notes or that resulted from the failure of the Issuers
to comply with the provisions of "--Change of Control Offer" or "--Limitation
on Certain Asset Sales") if the Trustee considers it to be in the best
interest of the holders of the Notes to do so.
The Indenture will provide that if an Event of Default (other than an Event
of Default resulting from certain events of bankruptcy, insolvency or
reorganization) shall have occurred and be continuing, then the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding may declare to be immediately due and payable the entire principal
amount of all the Notes then outstanding plus accrued interest to the date of
acceleration; provided, however, that after such acceleration but before a
judgment or decree based on acceleration is obtained by the Trustee, the
holders of a majority in aggregate principal amount of outstanding Notes may,
under certain circumstances, rescind and annul such acceleration if all Events
of Default, other than nonpayment of accelerated principal, premium or
interest, have been cured or waived as provided in the Indenture. In case an
Event of Default resulting from certain events of bankruptcy, insolvency or
reorganization shall occur, the principal, premium and interest amount with
respect to all of the Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or the
holders of the Notes.
The holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing default or compliance with any
provision of the Indenture or the Notes and to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee,
subject to certain limitations specified in the Indenture.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of a continuing
Event of Default and unless also the holders of at least 25% in aggregate
principal amount of the outstanding Notes shall have made written request and
offered reasonable indemnity to the Trustee to institute such proceeding as a
trustee, and unless the Trustee shall not have received from the holders of a
majority in aggregate principal amount of the outstanding Notes a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. However, such limitations do not apply to a suit
instituted on such Note on or after the respective due dates expressed in such
Note.
Defeasance and Covenant Defeasance
The Indenture provides that the Issuers may elect either
(1) to defease and be discharged from any and all obligations with
respect to the Notes (except for the obligations to register the transfer
or exchange of such Notes, to replace temporary or mutilated, destroyed,
lost or stolen Notes, to maintain an office or agency in respect of the
Notes and to hold monies for payment in trust) ("defeasance") or
(2) to be released from their obligations with respect to the Notes under
certain covenants contained in the Indenture and described above under
"Certain Covenants" ("covenant defeasance"), upon the deposit with the
Trustee (or other qualifying trustee), in trust for such purpose, of money
and/or U.S. Government Obligations which through the payment of principal
and interest in accordance with their terms
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will provide money, in an amount sufficient to pay the principal of,
premium, if any, and interest on the Notes, on the scheduled due dates
therefor or on a selected date of redemption in accordance with the terms
of the Indenture. Such a trust may only be established if, among other
things, the Issuers have delivered to the Trustee an Opinion of Counsel (as
specified in the Indenture)
(a) to the effect that neither the trust nor the Trustee will be
required to register as an investment company under the Investment
Company Act of 1940, as amended, and
(b) describing either a private ruling concerning the Notes or a
published ruling of the Internal Revenue Service, to the effect that
holders of the Notes or persons in their positions will not recognize
income, gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal
income tax on the same amount and in the same manner and at the same
times, as would have been the case if such deposit, defeasance and
discharge had not occurred.
Modification of Indenture
From time to time, the Issuers and the Trustee may, without the consent of
holders of the Notes, modify, amend, waive or supplement the provisions of the
Indenture or the Notes for certain specified purposes, including providing for
uncertificated Notes in addition to certificated Notes, and curing any
ambiguity, defect or inconsistency, or making any other change that does not
materially and adversely affect the rights of any holder. The Indenture
contains provisions permitting the Issuers and the Trustee, with the consent
of holders of at least a majority in principal amount of the outstanding
Notes, to modify, amend, waive or supplement the Indenture or the Notes,
except that no such modification shall, without the consent of each holder
affected thereby,
(1) reduce the amount of Notes whose holders must consent to an
amendment, supplement, or waiver to the Indenture or the Notes;
(2) reduce the rate of or change the time for payment of interest on any
Note;
(3) reduce the principal of or premium on or change the stated maturity
of any Note;
(4) make any Note payable in money other than that stated in the Note or
change the place of payment from New York, New York;
(5) change the amount or time of any payment required by the Notes or
reduce the premium payable upon any redemption of Notes, or change the time
before which no such redemption may be made;
(6) waive a default on the payment of the principal of, interest on, or
redemption payment with respect to any Note;
(7) subordinate in right of payment, or otherwise subordinate, the Notes
to any other Indebtedness or obligation of the Issuers;
(8) amend, alter, change or modify the obligation of the Issuers to make
and consummate a Change of Control Offer in the event of a Change of
Control or make and consummate an Excess Proceeds Offer or waive any
Default in the performance of any such offers or modify any of the
provisions or definitions with respect to any such offers or
(9) take any other action otherwise prohibited by the Indenture to be
taken without the consent of each holder affected thereby.
Reports to Holders
So long as any of the Notes are outstanding, whether or not the Issuers are
required to be subject to Section 13(a) or 15(d) of the Exchange Act, the
Issuers will furnish the information required thereby to the Commission, the
holders of the Notes and to the Trustee. The Indenture provides that even if
the Issuers are entitled under the
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Exchange Act not to furnish such information to the Commission or to the
holders of the Notes, they will nonetheless continue to furnish such
information to the Commission, the holders of the Notes and the Trustee.
Compliance Certificate
The Issuers will deliver to the Trustee on or before 120 days after the end
of the Issuers' fiscal year and on or before 50 days after the end of each of
the first, second and third fiscal quarters in each year an Officers'
Certificate stating whether or not the signers know of any Default or Event of
Default that has occurred. If they do, the certificate will describe the
Default or Event of Default and its status.
The Trustee
The Trustee under the Indenture will be the Registrar and Paying Agent with
regard to the Notes. The Indenture provides that, except during the
continuance of an Event of Default, the Trustee will perform only such duties
as are specifically set forth in the Indenture. During the existence of an
Event of Default, the Trustee will exercise such rights and powers vested in
it under the Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
Transfer and Exchange
Holders of the Notes may transfer or exchange Notes in accordance with the
Indenture. The Registrar under such Indenture may require a holder, among
other things, to furnish appropriate endorsements and transfer documents, and
to pay any taxes and fees required by law or permitted by the Indentures. The
Registrar is not required to transfer or exchange any Note selected for
redemption. Also, the Registrar is not required to transfer or exchange any
Note for a period of 15 days before selection of the Notes to be redeemed.
The Notes will be issued in a transaction exempt from registration under the
Act and will be subject to the restrictions on transfer described in "Notice
To Investors."
The registered holder of a Note may be treated as the owner of it for all
purposes.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
covenants contained in the Indenture.
"Acquired Indebtedness" means Indebtedness of a Person (including a
Subsidiary) existing at the time such Person becomes a Subsidiary or assumed
in connection with the acquisition of assets from such Person.
"Affiliate" of any specified Person means any other Person which directly or
indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. For the purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by," and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
"AOALP" means Adams Outdoor Advertising Limited Partnership, a Minnesota
limited partnership.
"Asset Sale" means the direct or indirect sale, transfer, issuance,
conveyance, lease (other than operating leases entered into in the ordinary
course of business pursuant to ordinary business terms), assignment or other
disposition for value (including, without limitation, by eminent domain,
condemnation or similar governmental proceeding) or any merger or
consolidation of any Subsidiary of AOA Holding with or into another Person
(other
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than AOA Holding or any Wholly-Owned Subsidiary of AOA Holding) whereby such
Subsidiary shall cease to be a Wholly-Owned Subsidiary in any single
transaction or series of related transactions (separate eminent domain,
condemnation or similar governmental proceedings to each be considered a
single transaction but not to be considered together as a series of related
transactions) involving property or assets with a fair market value in excess
of $250,000 of
(1) any Equity Interest in any Subsidiary;
(2) real property owned by AOA Holding or any Subsidiary thereof, or a
division, line of business or comparable business segment of AOA Holding or
any Subsidiary thereof or
(3) other property, assets or rights of AOA Holding, any Subsidiary
thereof or any division or line of business of AOA Holding or any
Subsidiary thereof;
provided, however, that Asset Sales shall not include
(a) sales, leases, conveyances, transfers or other dispositions to
AOA Holding or to a Subsidiary thereof or to any other Person if after
giving effect to such sale, lease, conveyance, transfer or other
disposition such other Person becomes a Wholly-Owned Subsidiary of AOA
Holding,
(b) transactions complying with "--Merger, Consolidation or Sale of
Assets" above (except as otherwise provided in the penultimate
paragraph set forth under "--Limitation on Certain Asset Sales" above),
(c) sales, transfers, issuances, conveyances, leases, assignments or
other dispositions for value to AOA Holding or any Wholly-Owned
Subsidiary of AOA Holding,
(d) transfers or other distributions of assets which constitute
(i) Permitted Investments or
(ii) Restricted Payments made in compliance with the covenant
described under "Limitation on Restricted Payments" and
(e) the exchange of property or assets of AOA Holding or a Subsidiary
of AOA Holding for similar assets constituting one or more outdoor
advertising properties owned by another Person.
"Asset Sale Proceeds" means, with respect to any Asset Sale,
(1) cash received by AOA Holding or any Subsidiary thereof from such
Asset Sale (including cash received as consideration for the assumption of
liabilities incurred in connection with or in anticipation of such Asset
Sale), after
(a) provision for all income or other taxes measured by or resulting
from such Asset Sale (calculated as provided in "Permitted Tax
Distributions"),
(b) payment of all brokerage commissions, underwriting and other fees
and expenses related to such Asset Sale,
(c) provision for minority interest holders in any Subsidiary as a
result of such Asset Sale,
(d) payments made to retire Indebtedness secured by the assets
subject to such Asset Sale and
(e) deduction of appropriate amounts to be provided by AOA Holding or
a Subsidiary thereof as a reserve, in accordance with GAAP, against any
liabilities associated with the assets sold or disposed of in such
Asset Sale and retained by AOA Holding or a Subsidiary thereof after
such Asset Sale, including, without limitation, pension and other post
employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with the
assets sold or disposed of in such Asset Sale, and
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(2) promissory notes and other noncash consideration received by AOA
Holding or any Subsidiary thereof from such Asset Sale or other disposition
upon the liquidation or conversion of such notes or noncash consideration
into cash.
"Attributable Indebtedness" under the Indenture in respect of a Sale and
Lease-Back Transaction means, as at the time of determination, the greater of
(1) the fair value (as defined) of the property subject to such
arrangement (as determined in good faith by the Board of Directors) and
(2) the present value of the notes (discounted at the rate of interest
implicit in such transaction) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such
Sale and Lease-Back Transaction (including any period for which such lease
has been extended).
"Board of Directors" means, as to any Person, the board of directors or
managers or any duly authorized committee thereof of such Person or, if such
Person is a partnership, of the managing general partner of such Person.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such
Indebtedness shall be the capitalized amount of such obligations determined in
accordance with GAAP.
A "Change of Control" will be deemed to have occurred at such time as
(1) the Permitted Holders, individually or in the aggregate, shall cease
to beneficially own (as defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act), directly or indirectly,
50.1% or more of the Common Equity Interests of AOA Holding, AOALP or AOAI
and any Person (including a Person's Affiliates and associates), other than
a Permitted Holder, beneficially owns (as defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act), directly
or indirectly, 35% or more of the Common Equity Interests of AOA Holding,
AOALP or AOAI;
(2) there shall be consummated any consolidation or merger of AOA
Holding, AOALP or AOAI in which AOA Holding, AOALP or AOAI, as the case may
be, is not the continuing or surviving corporation or pursuant to which the
Common Equity Interests of AOA Holding, AOALP or AOAI, as the case may be,
would be converted into cash, securities or other property, other than a
merger or consolidation of AOA Holding, AOALP or AOAI in which the holders
of the Common Equity Interests of AOA Holding, AOALP or AOAI, as the case
may be, outstanding immediately prior to the consolidation or merger hold,
directly or indirectly, at least a majority of the Common Equity Interests
of the surviving corporation immediately after such consolidation or
merger;
(3) there is a sale, lease or transfer of all or substantially all of the
assets of AOA Holding, AOALP or AOAI to any Person or group (as such term
is defined in Section 13(d)(3) of the Exchange Act), other than a Permitted
Holder;
(4) the members of AOA Holding, the shareholders of AOAI or the partners
of AOALP shall approve any plan or proposal for the liquidation or
dissolution of AOA Holding, AOAI or AOALP, as the case may be;
(5) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of AOA Holding
or AOAI (together with any new members of such Board of Directors whose
election by such Board of Directors has been approved by 66 2/3% of the
members of such Board of Directors still in office who either were members
of such Board of Directors at the beginning of such period or whose
election or recommendation for election was previously so approved) cease
to constitute a majority of the Board of Directors of AOA Holding or AOAI,
as the case may be; or
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(6) any Person is admitted as general partner of AOALP after which AOAI
does not have the responsibility to take all of the actions to the same
extent it is entitled or required to take under the partnership agreement
of AOALP as in effect on the Issue Date.
"Common Equity Interests" of any Person means all Equity Interests of such
Person that are generally entitled to
(1) vote in the election of directors of such Person or
(2) if such Person is not a corporation, vote or otherwise participate in
the selection of the governing body, partners, managers or others that will
control the management and policies of such Person.
"Consolidated Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP, would
be set forth opposite the caption "interest expense" or any like caption on an
income statement for such Person and its Subsidiaries on a consolidated basis,
imputed interest included in Capitalized Lease Obligations, all commissions,
discounts and other fees and charges owed with respect to letters of credit
and bankers' acceptance financing, the net costs associated with hedging
obligations, amortization of other financing fees and expenses, the interest
portion of any deferred payment obligation, amortization of discount or
premium, if any, and all other non-cash interest expense (other than interest
amortized to cost of sales)) plus, without duplication, all net capitalized
interest for such period and all interest incurred or paid under any guarantee
of Indebtedness (including a guarantee of principal, interest or any
combination thereof) of any Person, plus the amount of all dividends or
distributions paid on Disqualified Equity Interests (other than dividends paid
or payable in Equity Interests).
"Consolidated Net Income" means, with respect to any Person, for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP, plus the
amount of any dividends or distributions received by such Person from
Unrestricted Subsidiaries; provided, however, that
(1) the Net Income of any Person (the "other Person") in which the Person
in question or any of its Subsidiaries has less than a 100% interest (which
interest does not cause the net income of such other Person to be
consolidated into the net income of the Person in question in accordance
with GAAP) shall be included only to the extent of the amount of dividends
or distributions paid to the Person in question or the Subsidiary;
(2) the Net Income of any Subsidiary of the Person in question that is
subject to any restriction or limitation on the payment of dividends or the
making of other distributions (other than pursuant to the Notes, the
Indenture, the Credit Facility, the Existing Subsidiary Notes and the
related indenture) shall be excluded to the extent such restriction or
limitation would prevent such Subsidiary from being able to pay dividends
or make other distributions out of its Net Income;
(3)(a) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition and
(b) any net gain (but not loss) resulting from an Asset Sale by the
Person in question or any of its Subsidiaries other than in the
ordinary course of business shall be excluded,
(4) extraordinary gains and losses (including any related tax effects on
AOA Holding) shall be excluded;
(5) the net income of any Subsidiary to the extent of any restrictions or
encumbrances on its ability to distribute such net income to such Person
shall be excluded and
(6) the amount of any Permitted Tax Distributions shall be excluded.
Consolidated Net Income shall be calculated without deducting therefrom any
accruals made for Phantom Compensation.
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"Consolidated Net Worth" with respect to any Person means the equity of the
holders of Equity Interests of such Person and its Subsidiaries (excluding any
Disqualified Equity Interests), as reflected in a balance sheet of such Person
determined on a consolidated basis and in accordance with GAAP.
"Credit Facility" means the credit facility by and among the Subsidiary
Issuers, Canadian Imperial Bank of Commerce as administrative agent and
collateral agent and the lenders listed therein, as the same may be amended,
modified, replaced, renewed, refunded or refinanced from time to time.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Equity Interests" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the maturity date of the Notes, for cash
or securities constituting Indebtedness. Without limitation of the foregoing,
Disqualified Equity Interests shall be deemed to include
(1) any Preferred Equity Interests of a Subsidiary of AOA Holding and
(2) any Preferred Equity Interests of AOA Holding, with respect to either
of which, under the terms of such Preferred Equity Interests, by agreement
or otherwise, such Subsidiary or AOA Holding is obligated to pay current
dividends or distributions in cash during the period prior to the maturity
date of the Notes; provided, however, that Preferred Equity Interests of
AOA Holding or any Subsidiary thereof that is issued with the benefit of
provisions requiring a change of control offer to be made for such
Preferred Equity Interests in the event of a change of control of AOA
Holding or such Subsidiary, which provisions have substantially the same
effect as the provisions of the Indenture described under "Change of
Control," shall not be deemed to be Disqualified Equity Interests solely by
virtue of such provisions.
"EBITDA" means, with respect to any Person for any period, the sum, without
duplication, of
(1) Consolidated Net Income;
(2) Consolidated Interest Expense;
(3) provision for taxes based on income or profits of such Person for
such period;
(4) depreciation;
(5) amortization;
(6) Phantom Compensation;
(7) the amount of any Permitted Tax Distributions and
(8) any other non-cash charges to the extent deducted from Consolidated
Net Income (including non-cash expenses recognized in accordance with
Financial Accounting Standards Bulletin Number 106 but excluding any non-
cash charge to the extent that it requires an accrual of or a reserve for
cash disbursements for any future period),
in each case to the extent deducted from Consolidated Net Income for the
period as to which the computation of EBITDA is made, all as determined in
accordance with GAAP.
"Equity Interests" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interest in the nature of an equity
interest in such Person or any option, warrant or other security convertible
into or exchangeable for any of the foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Existing Subsidiary Notes" means the 10 3/4% senior notes of the Subsidiary
Issuers.
"fair market value" or "fair value" means, with respect to any assets or
property, the price which could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a fully informed, willing
and able buyer, neither of whom is under undue pressure or compulsion to
complete the transaction, all as determined by a majority of the Board of
Directors acting in good faith, such determination to be evidenced by a board
resolution delivered to the Trustee. No such determination need be supported
by an appraisal or expert opinion.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become, directly or indirectly, liable in
respect of such Indebtedness or other obligation or the recording, as required
pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on
the balance sheet of such person (and "incurrence," "incurred," "incurable,"
and "incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in GAAP that results in an obligation of such Person
that exists at such time becoming Indebtedness shall not be deemed an
incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other liabilities arising in the ordinary
course of business) if and to the extent any of the foregoing indebtedness
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and shall also include, to the extent not otherwise
included
(1) any Capitalized Lease Obligations;
(2) obligations secured by a lien to which the property or assets owned
or held by such Person is subject, whether or not the obligation or
obligations secured thereby shall have been assumed;
(3) all Indebtedness of others of the type described in the other clauses
of this definition (including all dividends of other Persons) the payment
of which is guaranteed, directly or indirectly, by such Person or that is
otherwise its legal liability or which such Person has agreed to purchase
or repurchase or in respect of which such Person has agreed contingently to
supply or advance funds (whether or not such items would appear upon the
balance sheet of the guarantor);
(4) all obligations for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction;
(5) in the case of AOA Holding, Disqualified Equity Interests of AOA
Holding or any Subsidiary thereof; and
(6) obligations of any such Person under any Interest Rate Agreement
applicable to any of the foregoing (if and to the extent such Interest Rate
Agreement obligations would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP).
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation; provided,
however, that
(1) the amount outstanding at any time of any Indebtedness issued with
original issue discount, including the Notes, is the principal amount of
such Indebtedness less the remaining unamortized portion of the original
issue discount of such Indebtedness at such time as determined in
conformity with GAAP;
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(2) Indebtedness shall not include any liability for federal, state,
local or other taxes; and
(3) Indebtedness shall not include obligations for Phantom Compensation
or Prior Accrued Bonus Payments.
Notwithstanding any other provision of the foregoing definition, any trade
payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business shall not be deemed to be
"Indebtedness" of the Issuers or any Subsidiaries for purposes of this
definition. Furthermore, guarantees of (or obligations with respect to letters
of credit supporting) Indebtedness otherwise included in the determination of
such amount shall not also be included.
"Independent Financial Advisor" means an accounting, appraisal, investment
banking or consulting firm of nationally recognized standing that is, in the
reasonable and good faith judgment of the Board of Directors of AOA Holding,
qualified to perform the task for which such firm has been engaged and
disinterested and independent with respect to AOA Holding and its Affiliates.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement designed to protect the party indicated therein
against fluctuations in interest rates.
"Investments" means, directly or indirectly, any advance, account receivable
(other than an account receivable arising in the ordinary course of business,
including accounts receivable arising in the ordinary course of business and
acquired as a part of the assets acquired by AOALP or any of its Subsidiaries
in connection with an acquisition of assets which is otherwise permitted by
the terms of the Indenture), loan or capital contribution to (by means of
transfers of property to others, payments for property or services for the
account or use of others or otherwise), the purchase of any stock, bonds,
notes, debentures, partnership or joint venture interests or other securities
of, the acquisition, by purchase or otherwise, of all or substantially all of
the business or stock or other evidence of beneficial ownership of, any
Person, the guarantee or assumption of the Indebtedness of any other Person
(except for an assumption of Indebtedness for which the assuming Person
receives consideration with a fair market value at least equal to the
principal amount of the Indebtedness assumed), the designation of a Subsidiary
of AOALP as an Unrestricted Subsidiary or the making of any investment in any
Person and all other items that would be classified as investments on a
balance sheet of such Person prepared in accordance with GAAP. Investments
shall exclude extensions of trade credit on commercially reasonable terms in
accordance with normal trade practices.
"Issue Date" means the closing date for the sale and original issuance of
the Notes.
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority, or other security agreement or preferential arrangement
of any kind or nature whatsoever on or with respect to such property or assets
(including, without limitation, any Capitalized Lease Obligation, conditional
sales, or other title retention agreement having substantially the same
economic effect as any of the foregoing).
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Investments" means the excess of
(1) the aggregate of all Investments made by AOA Holding or a Subsidiary
thereof on or after the Issue Date (in the case of an Investment made other
than in cash, the amount shall be the fair market value of such Investment
as determined in good faith by the Board of Directors of AOA Holding) over
(2) the sum of
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(a) the aggregate amount returned in cash on such Investments whether
through interest payments, principal payments, dividends or other
distributions and
(b) the net cash proceeds received by AOA Holding or such Subsidiary
from the disposition of all or any portion of such Investments (other
than to a Subsidiary of AOA Holding);
provided, however, that with respect to all Investments made in Unrestricted
Subsidiaries the sum of clauses (a) and (b) above with respect to such
Investments shall not exceed the aggregate amount of all Investments made in
all Unrestricted Subsidiaries.
"Net Proceeds" means
(1) in the case of any sale of Equity Interests by the Issuers, the
aggregate net proceeds received by AOA Holding, after payment of expenses,
commissions and the like incurred in connection therewith, whether such
proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the Board of Directors of AOA
Holding, at the time of receipt) and
(2) in the case of any exchange, exercise, conversion or surrender of
outstanding securities of any kind for or into Equity Interests of AOA
Holding which are not Disqualified Equity Interests, the net book value of
such outstanding securities on the date of such exchange, exercise,
conversion or surrender (plus any additional amount required to be paid by
the holder to AOA Holding upon such exchange, exercise, conversion or
surrender, less any and all payments made to the holders, e.g., on account
of fractional shares and less all expenses incurred by AOA Holding in
connection therewith).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman, the Chief Executive Officer, the President or any Vice
President and the Chief Financial Officer or any Treasurer of such Person (or,
in the case of a Person that is a partnership, of a general partner of such
Person in such capacity) that shall comply with applicable provisions of the
Indenture.
"Permitted Holders" means Stephen Adams, his spouse and lineal descendants
and trusts for the exclusive benefit of any of the foregoing persons.
"Permitted Indebtedness" means:
(1) Indebtedness (plus interest, premium, fees and other obligations
associated therewith) arising under or in connection with Permitted Secured
Indebtedness;
(2) Indebtedness under the Notes;
(3) Indebtedness not covered by any other clause of this definition which
is outstanding on the date of the Indenture (including the Existing
Subsidiary Notes);
(4) Interest Rate Agreements;
(5) Additional Indebtedness, including Indebtedness incurred in
connection with or arising out of Capitalized Lease Obligations, in an
aggregate principal amount outstanding at any time not to exceed $1
million;
(6) Indebtedness of a Subsidiary of AOA Holding issued to and held by AOA
Holding or a Wholly-Owned Subsidiary of AOA Holding; provided, however,
that any subsequent issuance or transfer of any Equity Interest that
results in such Subsidiary ceasing to be a Wholly-Owned Subsidiary of AOA
Holding or any transfer of such Indebtedness to any Person other than AOA
Holding or a Wholly-Owned Subsidiary of AOA Holding shall be deemed to be
the incurrence of such Indebtedness by AOA Holding;
(7) Indebtedness of AOA Holding to a Wholly-Owned Subsidiary in respect
of intercompany advances or transactions; and
(8) Refinancing Indebtedness.
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"Permitted Investments" means, for any Person, Investments made on or after
the date of the Indenture consisting of:
(1) Temporary Cash Investments;
(2) Investments by AOA Holding or any of its Subsidiaries in AOA Holding
or a Wholly-Owned Subsidiary of AOA Holding; provided, however, that the
proceeds of any such Investment by AOA Holding in a Wholly-Owned Subsidiary
of AOA Holding other than AOALP or one of its Wholly-Owned Subsidiaries may
only be used for the purpose of making Investments in AOALP or Investments
in accordance with clause (1) above or clause (4) below;
(3) Investments by AOALP or any of its Subsidiaries in any Person, if
(a) as a result of such Investment
(i) such Person becomes a Wholly-Owned Subsidiary of AOALP or
(ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or
is liquidated into, AOALP or a Wholly-Owned Subsidiary thereof and
(b) after giving effect to such Investment AOA Holding is in
compliance with the covenant described under "Line of Business" above;
(4) (a) Net Investments of AOA Holding and its Subsidiaries (other than
AOALP and any of its Subsidiaries) in securities that are not equity
securities or debt securities maturing more than 365 days after the date of
such Investment and (b) Net Investments of AOALP or any of its Subsidiaries
in any Person; provided, however, that the aggregate amount of all such Net
Investments made pursuant to this clause (4) shall not exceed $3.0 million
at any one time outstanding;
(5) Investments by AOALP or any of its Subsidiaries represented by
accounts receivable created or acquired in the ordinary course of business;
(6) Advances by AOALP or any of its Subsidiaries to employees in the
ordinary course of business not to exceed an aggregate of $100,000
outstanding at any one time;
(7) Investments by AOA Holding or any of its Subsidiaries under or
pursuant to Interest Rate Agreements;
(8) Investments by AOALP or any of its Subsidiaries in the Notes and the
Existing Subsidiary Notes; and
(9) Investments existing on the Issue Date.
"Permitted Liens" means, without duplication,
(1) Liens existing on the date of the Indenture;
(2) Liens in favor of AOA Holding or any Subsidiary thereof;
(3) Liens on property of a Person existing at the time such Person is
acquired by, merged into or consolidated with AOA Holding or any Subsidiary
thereof; provided, however, that such Liens
(a) were not created in anticipation of such acquisition, merger or
consolidation and
(b) are not applicable to any other property of AOA Holding or any of
the other Subsidiaries of AOA Holding,
(4) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted;
provided, however, that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor;
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(5) landlords', carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
and with respect to amounts which are not yet delinquent or are being
contested in good faith by appropriate proceedings;
(6) pledges or deposits made in the ordinary course of business in
connection with
(a) leases, performance bonds and similar obligations,
(b) workers' compensation, unemployment insurance and other social
security legislation, or
(c) securing the performance of surety bonds and appeal bonds
required
(i) in the ordinary course of business or in connection with the
enforcement of rights or claims of AOA Holding or a Subsidiary
thereof or
(ii) in connection with judgments that do not give rise to an
Event of Default and which do not exceed $3 million in the
aggregate,
(7) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar encumbrances which, in the
aggregate, do not materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the business
of AOA Holding or any Subsidiary thereof;
(8) Liens on property or assets of, or any Equity Interests of or secured
debt of, any Person existing at the time such Person becomes a Subsidiary
of AOA Holding or at the time such Person is merged into AOA Holding or any
Subsidiary thereof; provided, however, that such Liens are not incurred in
connection with, or in contemplation of, such Person becoming a Subsidiary
of AOA Holding or merging into AOA Holding or any of its Subsidiaries;
(9) Liens in favor of AOA Holding or any of its Subsidiaries;
(10) Liens granted by AOALP or any Subsidiary thereof to secure Purchase
Money Indebtedness that is otherwise permitted under the Indenture;
provided, however, that
(a) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund,
the cost (including sales and excise taxes, installation and delivery
charges and other direct costs of, and other direct expenses paid or
charged in connection with, such purchase or construction) of such
Property,
(b) the principal amount of the Indebtedness secured by such Lien
does not exceed 100% of such costs, and
(c) such Lien does not extend to or cover any Property other than
such item of Property and any improvements on such item,
(11) Liens granted by AOA Holding or any Subsidiary thereof securing (a)
Permitted Secured Indebtedness and (b) Refinancing Indebtedness incurred to
refinance the Existing Subsidiary Notes;
(12) Liens granted by AOA Holding or any Subsidiary thereof or any
securing Capitalized Lease Obligations permitted to be incurred under
clause (5) of the definition of "Permitted Indebtedness," provided,
however, that such Lien does not extend to any property other than that
subject to the underlying lease;
(13) Liens pursuant to leases and subleases of real property which do not
interfere with the ordinary conduct of the business of AOA Holding or any
of its Subsidiaries and which are made on customary and usual terms
applicable to similar properties;
(14) Liens securing reimbursement obligations under letters of credit,
but only in or upon the goods the purchase of which was financed by such
letters of credit; and
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(15) Liens securing Refinancing Indebtedness; provided, however, that
such Liens extend only to the assets securing the Indebtedness being
extended, refinancing, renewed or replaced, and such Indebtedness was
previously secured by such assets; and provided, further, the terms of such
Liens are no less favorable to the holders of the Notes than the Liens
being extended, refinanced, renewed or replaced.
"Permitted Secured Indebtedness" means any Indebtedness of AOA Holding or
any Subsidiary thereof (plus interest, premium, fees and other obligations
associated therewith), and any refinancing, refunding, replacement, renewal or
extension thereof, under
(1) the Credit Facility, and
(2) agreements evidencing any other Indebtedness which is secured by
assets of AOA Holding or any Subsidiary thereof, whether involving the same
or any other lender or creditor or group of lenders or creditors as has
provided the Credit Facility; provided, however, that the aggregate amount
of all such Indebtedness outstanding (or committed to be advanced under the
agreements to which such Indebtedness relates) at any time shall not exceed
$35 million.
"Permitted Tax Distributions" means,
(1) with respect to AOALP, for so long as AOALP is a partnership or
substantially similar pass-through entity for federal income tax purposes,
distributions to the partners of AOALP based on estimates of the amount of
federal, state and local income taxes that AOALP would be required to pay
with respect to a fiscal year calculated as if, for the applicable fiscal
year, AOALP were treated as a "C corporation" incorporated under the laws
of the State of Minnesota rather than as a partnership and
(2) without duplication of the payments made pursuant to clause (1), with
respect to AOA Holding, for so long as AOA Holding is a limited liability
company or substantially similar pass-through entity for federal income tax
purposes, distributions to the members of AOA Holding based on estimates of
the amount of federal, state and local income taxes that AOA Holding would
be required to pay with respect to a fiscal year calculated as if, for the
applicable fiscal year, AOA Holding were treated as a "C corporation"
incorporated under the laws of the State of Minnesota rather than as a
limited liability company.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
"Phantom Compensation" means the compensation accrued after the Issue Date
pursuant to Article II of the "phantom stock" agreements entered into, in
writing, between AOALP and certain of its employees other than Stephen Adams
or substitutions to or replacements of such article of such agreements, and
any comparable subordinated incentive compensation agreement with its
employees on the basis of the increase in value of AOALP or a division or
Subsidiary thereof.
"Preferred Equity Interest" means any Equity Interest of a Person, however
designated, which entities the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the
holders of other Equity Interests issued by such Person.
"Prior Accrued Bonus Payments" means payments in respect of Phantom
Compensation accrued prior to the Issue Date.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in
the most recent consolidated balance sheet of such Person and its Subsidiaries
under GAAP.
"Purchase Money Indebtedness" means any Indebtedness incurred in the
ordinary course of business by a Person to finance the cost (including the
cost of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of
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(1) 100% of such cost and
(2) reasonable fees and expenses of such Person incurred in connection
therewith.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances,
renews, replaces or extends any Indebtedness of AOA Holding or its
Subsidiaries outstanding on the Issue Date or other Indebtedness permitted to
be incurred by the Issuers or the Subsidiaries pursuant to the terms of the
Indenture, whether involving the same or any other lender or creditor or group
of lenders or creditors, but only to the extent that
(1) the Refinancing Indebtedness is subordinated to the Notes to at least
the same extent as the Indebtedness being refunded, refinanced or extended,
if at all;
(2) the Refinancing Indebtedness is scheduled to mature either
(a) no earlier than the Indebtedness being refunded, refinanced or
extended, or
(b) after the maturity date of the Notes,
(3) the Refinancing Indebtedness has a weighted average life to maturity
at the time it is incurred that is equal to or greater than the weighted
average life to maturity of the Indebtedness being refunded, refinanced or
extended;
(4) such Refinancing Indebtedness is in an aggregate principal amount
that is less than or equal to the aggregate principal or accreted amount
(in the case of any Indebtedness issued with original issue discount, as
such) then outstanding (plus any applicable prepayment premiums or
penalties and accrued interest thereon) under the Indebtedness being
refunded, refinanced or extended; and
(5) such Refinancing Indebtedness is incurred by the same Person that
initially incurred the Indebtedness being refunded, refinanced or extended,
except that AOA Holding may incur Refinancing Indebtedness to refund,
refinance or extend Indebtedness of any Wholly-Owned Subsidiary of AOA
Holding.
"Restricted Payment" means any of the following:
(1) the declaration or payment of any dividend or any other distribution
or payment on Equity Interests of AOA Holding or any Subsidiary thereof or
any payment made to the direct or indirect holders (in their capacities as
such) of Equity Interests of AOA Holding or any Subsidiary thereof (other
than
(a) dividends or distributions payable solely in Equity Interests
(other than Disqualified Equity Interests) or in options, warrants or
other rights to purchase Equity Interests (other than Disqualified
Equity Interests),
(b) in the case of Subsidiaries of AOA Holding, dividends or
distributions payable to AOA Holding or to a Wholly-Owned Subsidiary of
AOA Holding and
(c) Permitted Tax Distributions),
(2) the purchase, redemption or other acquisition or retirement for value
of any Equity Interests of AOA Holding or any Subsidiary thereof (other
than Equity Interests owned by AOA Holding or a Wholly-Owned Subsidiary,
excluding Disqualified Equity Interests);
(3) the making of any principal payment on, or the purchase, defeasance,
repurchase, redemption or other acquisition or retirement for value, prior
to any scheduled maturity, scheduled repayment or scheduled sinking fund
payment, of any Indebtedness which is subordinated in right of payment to
the Notes;
(4) the making of any Investment or guarantee of any Investment in any
Person other than a Permitted Investment;
(5) forgiveness of any Indebtedness of an Affiliate of AOA Holding to AOA
Holding or a Subsidiary thereof;
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(6) cash payments in respect of Phantom Compensation and
(7) the payment of amounts to Stephen Adams (other than dividends or
distributions otherwise permitted by the terms of the Indenture) to the
extent the aggregate amount of such payments made in any one year exceeds
the sum of
(a) $200,000 and
(b) the cumulative effect of reasonable annual cost-of-living
adjustments made from the Issue Date to the date of such payment.
For purposes of determining the amount expended for Restricted Payments,
cash distributed or invested shall be valued at the face amount thereof and
property other than cash shall be valued at its fair market value.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by AOA Holding or any Subsidiary of AOA Holding of
any real or tangible personal property, which property
(1) has been or is to be sold or transferred by AOA Holding or such
Subsidiary to such Person in contemplation of such leasing and
(2) would constitute an Asset Sale if such property had been sold in an
outright sale thereof.
"Subsidiary" of any specified Person means any corporation, partnership,
limited liability company, joint venture, association or other business
entity, whether now existing or hereafter organized or acquired,
(1) in the case of a corporation, of which more than 50% of the total
voting power of the Equity Interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
officers or trustees thereof is held by such first-named Person or any of
its Subsidiaries; or
(2) in the case of a partnership, limited liability company, joint
venture, association or other business entity, with respect to which such
first-named Person or any of its Subsidiaries has the power to direct or
cause the direction of the management and policies of such entity by
contract or otherwise or if in accordance with generally accepted
accounting principles such entity is consolidated with the first-named
Person for financial statement purposes.
Notwithstanding the foregoing, an Unrestricted Subsidiary shall not be
deemed a Subsidiary of AOA Holding or of AOALP other than for purposes of the
definition of Unrestricted Subsidiary, unless AOALP or a Subsidiary of AOALP
shall have designated such Unrestricted Subsidiary as a "Subsidiary" of AOALP
by written notice to the Trustee. An Unrestricted Subsidiary may be designated
as a Subsidiary of AOALP at any time by AOALP or a Subsidiary of AOALP by
written notice to the Trustee; provided, however, that
(1) no Default or Event of Default shall have occurred and be continuing
or would arise therefrom and
(2) if such Unrestricted Subsidiary is an obligor of any Indebtedness,
any such designation shall be deemed to be an incurrence as of the date of
such designation by AOALP or a Subsidiary of AOALP of such Indebtedness and
immediately after giving effect to such designation, AOALP could incur
$1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the covenant described under "Limitation on Additional
Indebtedness."
"Subsidiary Issuers" means AOALP and Adams Outdoor Advertising, Inc., a
Minnesota corporation.
"Temporary Cash Investments" means
(1) Investments in marketable, direct obligations issued or guaranteed by
the United States of America, or of any governmental agency or political
subdivision thereof, maturing within 365 days of the date of purchase;
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(2) Investments in certificates of deposit issued by a bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia, in each case having capital, surplus and undivided
profits totaling more than $500 million and rated at least A by Standard &
Poor's Corporation and A-2 by Moody's Investors Service, Inc., maturing
within 365 days of purchase;
(3) commercial paper with a maturity of 180 days or less issued by a
corporation (except any Affiliate of AOA Holding) organized under the laws
of any state of the United States or the District of Columbia and rated at
the time of investment at least A-1 by Standard & Poor's Corporation or at
least P-1 by Moody's Investors Service, Inc.;
(4) repurchase agreements and reverse repurchase agreements relating to
marketable obligations issued or unconditionally guaranteed by the United
States of America or issued by any agency thereof and backed by the full
faith and credit of the United States Government, in each case maturing
within one year from the date of acquisition, provided, however, that the
terms of such agreements comply with the guidelines set forth in the
Federal Financial Agreements of Depository Institutions with Securities
Dealers and Others, as adopted by the Comptroller of the Currency;
(5) instruments backed by letters of credit satisfying the conditions of
clause (2) above; or
(6) investments not exceeding 365 days in duration in money market funds
that invest substantially all of such funds' assets in the Investments
described in the preceding clauses (1) through (5).
"Unrestricted Subsidiary" means any Subsidiary of AOALP which shall have
been designated as an Unrestricted Subsidiary by AOALP or any Subsidiary of
AOALP by written notice to the Trustee and any Subsidiary of an Unrestricted
Subsidiary. A Subsidiary of AOALP may be designated as an Unrestricted
Subsidiary at any time by AOALP or any Subsidiary of AOALP by written notice
to the Trustee; provided, however, that
(1) no Default or Event of Default shall have occurred and be continuing
or would arise therefrom;
(2) such designation is at that time permitted under the covenant
described under "Limitation on Restricted Payments"; and
(3) immediately after giving effect to such designation, AOALP could
incur $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the covenant described under "Limitation on Additional
Indebtedness."
An Unrestricted Subsidiary may be designated as a Subsidiary of AOALP at a
later date in the manner provided in the definition of "Subsidiary" above.
"Wholly-Owned Subsidiary" of any Person means any Subsidiary, all of the
outstanding voting securities (other than directors' qualifying shares) of
which are owned, directly or indirectly, by such Person. As used herein, AOALP
will be deemed a Wholly-Owned Subsidiary of AOA Holding as long as
(1) at least 69.0% of the aggregate partnership interests of AOALP are
owned, directly or indirectly, of record and beneficially by AOA Holding,
(2) the general partner or partners of AOALP are AOA Holding or a Wholly-
Owned Subsidiary of AOA Holding and
(3) the partnership agreement of AOALP provides that all limited partner
distributions (other than Permitted Tax Distributions) may be made only to
AOA Holding, directly or through a Wholly-Owned Subsidiary of AOA Holding,
until the Notes have been paid in full.
Book-Entry, Delivery and Form
The exchange notes initially will be represented by one or more Notes in
registered, global form without interest coupons (collectively, the "Global
Notes"). The Global Notes will be deposited upon issuance with the
85
<PAGE>
Trustee as custodian for The Depository Trust Company ("DTC"), in New York,
New York, and registered in the name of DTC or its nominee, in each case for
credit to an account of a direct or indirect participant as described below.
Except as set forth below, the Global Notes may be transferred, in whole but
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for
exchange notes in certificated form except in the limited circumstances
described below. Except in the limited circumstances described below, owners
of beneficial interest in the Global Note will not be entitled to receive
physical delivery of certificated notes. See "--Exchange of Book-Entry Notes
for Certificated Notes."
The exchange notes may be presented for registration of transfer and
exchange at the offices of the Registrar.
Depository Procedures
DTC has advised the Issuers that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between the Participants through electronic
book-entry changes in accounts of the Participants. The Participants include
securities brokers and dealers (including the Initial Purchaser), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interest and transfer
of ownership interest of each actual purchaser of each security held by or on
behalf of DTC are recorded on the records of the Participants and the Indirect
Participants.
DTC has also advised the Issuers that pursuant to procedures established by
it:
. upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchaser with portions of the
principal amount of the Global Notes and
. ownership of such interests in the Global Notes will be shown on, and
the transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners
of beneficial interests in the Global Notes).
Except as described below, owners of interests in the Global Notes will not
have exchange notes registered in their names, will not receive physical
delivery of exchange notes in certificated form and will not be considered the
registered owners or holders thereof under the Indenture for any purpose.
Payments in respect of the principal of (and premium, if any) and interest
on a Global Notes registered in the name of DTC or its nominee will be payable
to DTC or its nominee in its capacity as the registered holder under the
Indenture. Under the terms of the Indenture, the Issuers and the Trustee will
treat the persons in whose names the exchange notes, including the Global
Note, are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, none of
the Issuers, the Trustee nor any agent of the Issuers or the Trustee has or
will have any responsibility or liability for:
. any aspect or accuracy of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership or
. any other matter relating to the actions and practices of DTC or any of
the Participants or the Indirect Participants.
86
<PAGE>
DTC has advised the Issuers that its current practice, upon receipt of any
payment in respect of securities such as the exchange notes (including
principal and interest), is to credit the accounts of the relevant
Participants with the payment on the payment date, in amounts proportionate to
their respective holdings in principal amount of beneficial interests in the
relevant security as shown on the records of DTC. Payments by the Participants
and the Indirect Participants to the beneficial owners of exchange notes will
be governed by standing instructions and customary practices and will not be
the responsibility of DTC, the Trustee or the Issuers. Neither the Issuers nor
the Trustee will be liable for any delay by DTC or any of the Participants in
identifying the beneficial owners of the exchange notes, and the Issuers and
the Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee as the registered owner of the Global
Notes for all purposes.
Interests in the Global Notes are expected to be eligible to trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and the Participants.
DTC has advised the Issuers that it will take any action permitted to be
taken by a holder of exchange notes only at the direction of one or more
Participants to whose account with DTC interests in the Global Note are
credited and only in respect of such portion of the aggregate principal amount
of the Notes as to which such Participant or Participants has or have given
such direction. However, if any of the events described under "--Exchange of
Book-Entry Notes for Certificated Notes" occurs, DTC reserves the right to
exchange the Global Notes for legended exchange notes in certificated form and
to distribute such exchange notes to its Participants.
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that the Issuers
believe to be reliable, but the Issuers take no responsibility for the
accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Note among accountholders in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Issuers, the Initial
Purchaser or the Trustee nor any agent of the Issuers, the Initial Purchaser
or the Trustee will have any responsibility for the performance by DTC or its
participants, indirect participants or accountholders of their respective
obligations under the rules and procedures governing their operations.
Exchange of Book-Entry Notes for Certificated Notes
In addition, a Global Note is exchangeable for definitive exchange notes in
registered certificated form if:
. DTC (x) notifies the Issuers that it is unwilling or unable to continue
as depository for the Global Note and the Issuers thereupon fail to
appoint a successor depository or (y) has ceased to be a clearing agency
registered under the Exchange Act,
. the Issuers, at their option, notify the Trustee in writing that they
elect to cause the issuance of the exchange notes in certificated form
or
. there shall have occurred and be continuing a Default or an Event of
Default with respect to the exchange notes. In all cases, certificated
exchange notes delivered in exchange for any Global Note or beneficial
interests therein will be registered in the names, and issued in any
approved denominations, requested by or on behalf of DTC (in accordance
with its customary procedures).
Neither the Issuers nor the Trustee will be liable for any delay by the
Global Note holder or DTC in identifying the beneficial owners of exchange
notes and the Issuers and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note holder or DTC for
all purposes.
87
<PAGE>
Exchange of Certificated Notes for Book-Entry Notes
Certificated exchange notes may not be exchanged for a beneficial interest
in any Global Note unless the transferor first delivers to the Trustee a
written certificate (in the form provided in the indenture) to the effect that
such transfer will comply with the appropriate transfer restrictions
applicable to such Notes.
88
<PAGE>
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives exchange notes for its own
account purpose to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with the resale of
exchange notes received in exchange for outstanding notes where such existing
notes were acquired as a result of market-making activities or other trading
activities. The Issuers have agreed that for a period of 180 days from the
consummation of the exchange offer, they will make this prospectus, as amended
or supplemented, available to any Participating Broker-Dealer for use in
connection with any such resale.
The Issuers will not receive any proceeds from any sales of the exchange
notes by Participating Broker-Dealers. Exchange notes received by
Participating Broker-Dealers for their own account pursuant to the exchange
offer may be sold from time to time in one or more transactions in the over-
the-counter market, in negotiated transactions, through the writing of options
on the exchange notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such Participating Broker-
Dealer and/or the purchasers of any such exchange notes. Any Participating
Broker-Dealer that resells the exchange notes that were received by it for its
own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of exchange notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
LEGAL MATTERS
Kaplan, Strangis and Kaplan, P.A. will pass upon the validity of the Notes
offered hereby and certain other legal matters on behalf of the Issuers.
EXPERTS
The financial statements of Adams Outdoor Advertising, Inc. and Adams
Outdoor Advertising Limited Partnership as of and for the year ended December
31, 1998 included in this prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said report.
The financial statements of Adams Outdoor Advertising, Inc. and Adams
Outdoor Advertising Limited Partnership as of December 31, 1997 and for each
of the years in the two-year period ended December 31, 1997 have been included
in this registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, upon the authority of said firm as
experts in accounting and auditing.
89
<PAGE>
ADDITIONAL INFORMATION
We have filed with the Commission a Registration Statement on Form S-4 (the
"Registration Statement," which term shall encompass all amendments, exhibits,
annexes and schedules thereto) pursuant to the Securities Act, and the rules
and regulations promulgated thereunder, covering the exchange offer
contemplated hereby. This prospectus does not contain all the information set
forth in the Registration Statement. For further information with respect to
our company and the exchange offer, reference is made to the Registration
Statement. Statements made in this prospectus as to the contents of any
contract, agreement, or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the document or matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
We are not currently subject to the periodic reporting and other
informational requirements of the Securities Exchange Act. Upon the
effectiveness of the Registration Statement, we will become subject to the
periodic reporting and other informational requirements of the Securities
Exchange Act, and in accordance therewith, will be required to file periodic
reports and other information with the SEC. We have agreed that, whether or
not we are required to do so by the rules and regulations of the SEC, for so
long as any of the exchange notes remain outstanding, we will furnish to the
holders of the exchange notes, on a combined consolidated basis:
. quarterly and annual financial statements substantially equivalent to
financial statements that would have been included in a filing with the
SEC on Forms 10-Q and 10-K if we were required to file such financial
information, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" that describes our
financial condition and results of operations and, with respect to the
annual information only, reports thereon by our independent public
accountants, and
. all information that would be required to be filed with the SEC on Form
8-K if we were required to file such reports.
In addition, for so long as any of the exchange notes remain outstanding, we
have agreed to furnish to the holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered by Rule 144A(d)(4) under the Securities Act.
The Registration Statement may be inspected at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 and at the regional offices of the SEC located at 7 World Trade Center,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such materials may
be obtained from the Public Reference Section of the SEC, 450 Fifth Street
N.W., Washington, D.C. 20549 at prescribed rates. The SEC maintains a web site
at http://www.sec.gov that contains reports and other information regarding
registrants that file electronically with the SEC.
90
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Audited Financial Statements:
<TABLE>
<S> <C>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
Report of Independent Public Accountants................................ F-2
Independent Auditors' Report ........................................... F-3
Consolidated Balance Sheets as of December 31, 1998 and 1997............ F-4
Consolidated Statements of Operations for the years ended December 31,
1998, 1997, and 1996................................................... F-5
Consolidated Statements of Changes in Partners' Equity (Deficit) for
years ended December 31, 1998, 1997, and 1996.......................... F-6
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997, and 1996................................................... F-7
Notes to Consolidated Financial Statements.............................. F-8
ADAMS OUTDOOR ADVERTISING, INC.
Report of Independent Public Accountants................................ F-18
Independent Auditors' Report............................................ F-19
Balance Sheets as of December 31, 1998, and 1997........................ F-20
Statements of Operations for the years ended December 31, 1998, 1997,
and 1996............................................................... F-21
Statements of Stockholder's Equity for the years ended December 31,
1998, 1997, and 1996................................................... F-22
Statements of Cash Flows for the years ended December 31, 1998, 1997,
and 1996............................................................... F-23
Notes to Financial Statements........................................... F-24
Unaudited Interim Financial Statements:
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998
(unaudited)............................................................ F-26
Consolidated Statements of Operations for the quarters ended March 31,
1999, and 1998 (unaudited)............................................. F-27
Consolidated Statements of Cash Flows for the quarters ended March 31,
1999 and 1998 (unaudited).............................................. F-28
Notes to Interim Consolidated Financial Statements (unaudited).......... F-29
ADAMS OUTDOOR ADVERTISING, INC.
Balance Sheet as of March 31, 1999 and December 31, 1998 (unaudited).... F-30
Statements of Operations for the quarters ended March 31, 1999 and 1998
(unaudited)............................................................ F-31
Statements of Cash Flows for the quarters ended March 31, 1999 and 1998
(unaudited)............................................................ F-32
Notes to Interim Financial Statements (unaudited)....................... F-33
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Adams Outdoor Advertising
Limited Partnership:
We have audited the accompanying consolidated balance sheet of ADAMS OUTDOOR
ADVERTISING LIMITED PARTNERSHIP (a Minnesota limited partnership) AND
SUBSIDIARIES as of December 31, 1998 and the related consolidated statements
of operations, partners' equity (deficit), and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of Adams Outdoor
Advertising Limited Partnership and subsidiaries as of and for the two years
ended December 31, 1997, were audited by other auditors whose report dated
March 18, 1998, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Adams Outdoor Advertising
Limited Partnership as of December 31, 1998 and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
March 26, 1999
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Adams Outdoor Advertising Limited Partnership:
We have audited the accompanying consolidated balance sheet of ADAMS OUTDOOR
ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES as of December 31, 1997 and
the related consolidated statements of operations, changes in partners' equity
(deficit), and cash flows for each of the years in the two-year period ended
December 31, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 1997 and the results of their operations and their cash flows for each of
the years in the two-year period ended December 31, 1997 in conformity with
generally accepted accounting principles.
KPMG LLP
Atlanta, Georgia
March 18, 1998
F-3
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................ $ 1,686,788 $ 3,120,542
Investments...................................... 1,878,977 1,280,765
Trade accounts receivable, less allowance for
doubtful accounts of $648,101 and $700,429,
respectively.................................... 8,423,606 7,576,375
Other accounts receivable (Note 3)............... 129,059 316,485
Inventories...................................... 68,674 142,274
Prepaid rent..................................... 2,826,362 2,452,455
Prepaid expenses................................. 647,103 794,911
------------ ------------
Total current assets........................... 15,660,569 15,683,807
PROPERTY, PLANT, AND EQUIPMENT, NET................ 53,350,148 51,090,177
INTANGIBLE ASSETS, NET............................. 9,107,911 10,449,973
OTHER ASSETS....................................... 74,076 250,203
------------ ------------
$ 78,192,704 $ 77,474,160
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current installments of long-term debt........... $ 0 $ 4,000,000
Accounts payable................................. 557,626 540,377
Interest payable................................. 3,606,150 4,042,392
Accrued expenses and other liabilities........... 2,583,609 2,673,505
Deferred compensation............................ 4,108,077 1,331,713
------------ ------------
Total current liabilities...................... 10,855,462 12,587,987
LONG-TERM DEBT, LESS CURRENT INSTALLMENTS.......... 132,727,500 131,033,750
DEFERRED COMPENSATION.............................. 4,057,232 3,438,651
------------ ------------
Total liabilities.............................. 147,640,194 147,060,388
------------ ------------
COMMITMENTS AND CONTINGENCIES (NOTE 11)
PARTNERS' DEFICIT:
General partners' deficit........................ (67,829,366) (67,829,366)
Limited partners' deficit........................ (1,618,124) (1,756,862)
------------ ------------
Total partners' deficit........................ (69,447,490) (69,586,228)
------------ ------------
$ 78,192,704 $ 77,474,160
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-4
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
GROSS REVENUES........................... $71,591,716 $63,301,642 $52,421,172
Less agency commissions................ 7,023,144 6,017,105 5,161,376
----------- ----------- -----------
Net outdoor advertising revenue...... 64,568,572 57,284,537 47,259,796
----------- ----------- -----------
OPERATING EXPENSES:
Direct advertising expenses............ 32,096,318 29,089,188 22,411,959
Corporate, general and administrative.. 3,903,136 3,589,189 2,404,834
Depreciation and amortization.......... 7,875,001 8,148,621 6,105,151
Deferred compensation.................. 4,315,971 900,876 1,451,031
----------- ----------- -----------
Total operating expenses............. 48,190,426 41,727,874 32,372,975
----------- ----------- -----------
OPERATING INCOME......................... 16,378,146 15,556,663 14,886,821
----------- ----------- -----------
OTHER EXPENSES (INCOME):
Interest expense....................... 14,407,950 14,586,568 12,247,794
Interest expense--related party........ 0 13,934 275,175
Other expenses (income), net........... 78,827 42,517 (31,362)
Loss on disposals of property and
equipment, net........................ 377,853 122,287 860,706
----------- ----------- -----------
Total other expenses................. 14,864,630 14,765,306 13,352,313
----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT.................. 1,513,516 791,357 1,534,508
EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT.................. 329,778 0 0
----------- ----------- -----------
NET INCOME............................... $ 1,183,738 $ 791,357 $ 1,534,508
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
Limited
General Partners' Total
Partners' Equity Partners'
(Deficit) (Deficit) (Deficit)
------------ ----------- ------------
<S> <C> <C> <C>
BALANCE, December 31, 1995............ $(67,829,366) $ 1,000,000 $(66,829,366)
Net income.......................... 0 1,534,508 1,534,508
Distributions....................... 0 (3,149,620) (3,149,620)
------------ ----------- ------------
BALANCE, December 31, 1996............ (67,829,366) (615,112) (68,444,478)
Net income.......................... 0 791,357 791,357
Distributions....................... 0 (1,933,107) (1,933,107)
------------ ----------- ------------
BALANCE, December 31, 1997............ (67,829,366) (1,756,862) (69,586,228)
Net income.......................... 0 1,183,738 1,183,738
Distributions....................... 0 (1,045,000) (1,045,000)
------------ ----------- ------------
BALANCE, December 31, 1998............ $(67,829,366) $(1,618,124) $(69,447,490)
============ =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------ ----------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................... $ 1,183,738 $ 791,357 $ 1,534,508
Adjustments to reconcile net income
to net cash provided by operating
activities:
Extraordinary loss on early
extinguishment of debt............. 329,778 0 0
Depreciation........................ 7,043,434 7,294,989 5,811,083
Amortization of intangible assets... 1,308,205 1,423,664 1,126,505
Deferred compensation expense....... 4,315,971 900,876 1,451,031
Payments for deferred
compensation....................... (1,332,193) (1,118,144) (1,226,579)
Loss on disposals of property and
equipment, net..................... 377,853 122,287 860,706
Change in unrealized gain on
investments........................ (712) (122,682) 0
Barter (income) loss................ (24,729) 42,692 86,729
Purchases of investments............ (183,604) (2,545,125) (315,000)
Proceeds from sale of investments... 0 1,735,345 0
Changes in assets and liabilities,
net of effects from acquisitions
of businesses:
Accounts receivable................ (659,805) (978,663) (1,171,643)
Inventories........................ 73,600 74,438 61,705
Prepaid rent, expenses, and other
assets............................ (49,972) (346,265) 339,399
Accounts payable, accrued
expenses, and other liabilities... (72,647) (420,808) 1,374,950
Interest payable................... (436,242) 402,018 2,619,687
Other liabilities--long-term....... 0 (106,407) (16,321)
------------ ----------- -------------
Net cash provided by operating
activities....................... 11,872,675 7,149,572 12,536,760
------------ ----------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and
equipment.......................... (10,144,346) (7,645,961) (4,419,452)
Proceeds from sales of property,
plant, and equipment............... 485,088 184,416 45,017
Acquisitions of businesses.......... 0 0 (24,300,464)
------------ ----------- -------------
Net cash used in investing
activities....................... (9,659,258) (7,461,545) (28,674,899)
------------ ----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt financing costs................ (97,921) (11,703) (5,288,384)
Advances from long-term debt........ 19,910,007 12,037,500 145,725,354
Payments on long-term debt.......... (22,216,257) (10,193,133) (119,747,164)
Premium on senior notes redemption.. (198,000) 0 0
Distributions to partners........... (1,045,000) (1,933,107) (3,149,620)
------------ ----------- -------------
Net cash (used in) provided by
financing activities............. (3,647,171) (100,443) 17,540,186
------------ ----------- -------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS.................... (1,433,754) (412,416) 1,402,047
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR............................. 3,120,542 3,532,958 2,130,911
------------ ----------- -------------
CASH AND CASH EQUIVALENTS, END OF
YEAR................................ $ 1,686,788 $ 3,120,542 $ 3,532,958
============ =========== =============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-7
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997, AND 1996
1. Organization and Nature of Operations
Adams Outdoor Advertising Limited Partnership (the "Company") was organized
under the Minnesota Uniform Limited Partnership Act on December 12, 1985 and
will terminate on December 31, 2025 unless terminated sooner under the
provisions of the partnership agreement. The Company was organized for the
purpose of acquiring and operating businesses engaged in the outdoor
advertising industry. The Company owns and operates outdoor advertising
structures in 14 markets in the Midwest, Southeast, and Mid-Atlantic states.
The managing general partner is Adams Outdoor Advertising, Inc.
The partnership agreement was amended and restated on March 31, 1995 to
convert and transfer 99% of the general partners' interest to limited
partners' interests. The partnership agreement was amended and restated on
January 1, 1996 to, among other matters, eliminate classes of limited partner
interests resulting in general partners' interests of 0.71% and limited
partners' interests of 99.29%
The partnership agreement provides that losses will be allocated 100% to the
general partners. Profits will be allocated to the general and limited
partners in the same proportion, based on their aggregate interest in the
Company, as they have received distributions of distributable cash (defined as
annual cash gross receipts, less cash expenses and any amount set aside for
reserves) for such calendar year. In the event there are profits in a calendar
year in which no distribution of distributable cash has been made, profits
will be allocated 100% to the general partners.
In the event of a sale, refinancing, or dissolution of the partnership, the
proceeds available for distribution, after payment of all expenses and
previously outstanding debt of the partnership, will be distributed first to
the partners up to an amount equal to the respective partner's adjusted
aggregate interest in the partnership.
2. Summary of Significant Accounting Policies
Basis for Presentation
The consolidated financial statements include the financial statements of
the Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Use of Estimates
The Company's consolidated financial statements are prepared in accordance
with generally accepted accounting principles, which require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all short-term, highly liquid investments purchased
with an original maturity of three months or less to be cash equivalents.
Investments
Investments consist primarily of corporate and U.S. government debt
instruments and equity securities. Securities are classified in one of three
categories: trading, available-for-sale, or held-to-maturity. Management of
the Company determines the appropriate classification of its investments at
the time of acquisition and reevaluates such determination at each balance
sheet date.
F-8
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
DECEMBER 31, 1998, 1997, AND 1996
The Company has classified all securities purchased and held during 1998 and
1997 as trading securities, as they are intended to be sold in the near term.
Trading securities are carried at fair value, with realized and unrealized
gains and losses included in net income.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined by
using the first-in, first-out method. Market approximates net realizable
value.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost, less accumulated
depreciation. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, which are as follows:
<TABLE>
<S> <C>
Buildings and equipment................................... 5 to 32 years
Outdoor advertising structures............................ 12 to 15 years
Vehicles, machinery and equipment, and office equipment... 3 to 5 years
</TABLE>
Intangible Assets
Intangible assets include financing costs, noncompete agreements, and
goodwill. Goodwill is being amortized using the straight-line method over
periods of between 12 and 40 years. The remaining intangible assets are
recorded at cost and are amortized using the straight-line method over the
assets' estimated useful lives of two to five years for noncompete agreements
and the terms of the related debt for financing costs. The Company assesses
the recoverability of intangible assets based on expected future cash flows.
Income Taxes
The Company is not considered a taxable entity for federal and state income
tax purposes. Any taxable income or loss, tax credits, and certain other items
are reported by the partners on their own tax returns in accordance with the
partnership agreement.
Revenue Recognition
Revenues represent outdoor advertising services provided by the Company. The
Company recognizes revenue when rendered, usually on a monthly basis in
accordance with contract terms, as advertising services are provided.
Barter Transactions
Barter transactions, which represent the exchange of advertising for goods
or services, are recorded at the estimated fair value of the advertising
provided and the products or services received. Barter revenue is recognized
when advertising services are rendered, and barter expense is recognized when
the related products or services are received.
Impairment of Long-lived Assets and Long-lived Assets to Be Disposed Of
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," on
F-9
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
DECEMBER 31, 1998, 1997, AND 1996
January 1, 1996. This statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair
value less costs to sell. Adoption of this statement resulted in the
recognition of a loss during the year ended December 31, 1996 related to
impairment of long-lived assets to be disposed of (Note 14).
New Accounting Standards
The Company adopted SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information." This statement establishes standards for
the way enterprises report information about operating segments in annual
financial statements and requires that enterprises report selected information
about operating segments in interim financial statements. Adams operates in a
single reportable segment in the outdoor advertising industry.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
statement, which will be effective for the Company beginning January 1, 2000,
establishes accounting and reporting standards requiring that every derivative
instrument (including certain embedded in other contracts) be recorded in the
balance sheet as either assets or liabilities measured at its fair value. The
statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. The
Company has not yet quantified the impact of adopting SFAS No. 133 and has not
determined the timing or method of its adoption, however it is not expected
that adoption will have a material impact on earnings.
3. Related-Party Transactions
Certain partners and employees of the general partner have ownership in HSP
Graphics ("HSP"), a printing operation headquartered in Canada. The Company
pays the salary and expenses of HSP employees, and HSP reimburses the Company
for these expenses in cash or services. At December 31, 1998 and 1997, the
Company had accounts receivable of $114 and $227,991, respectively,
outstanding related to this arrangement with HSP. The Company expensed
$11,000, $84,000, and $54,000 for printing services provided by HSP during
1998, 1997, and 1996, respectively.
During 1998, the Company loaned $100,000 to an officer of the Company which
is to be repaid during 1999. This amount is included in other accounts
receivable.
During 1998, the Company entered into a building lease with an officer of
the Company. The lease term is for ten years and has been classified as an
operating lease. Rent expense of approximately $52,000 related to this
transaction has been included in direct advertising expense during the year
ended December 31, 1998.
During 1997, the Company entered an aircraft lease with a related party to
the Company. The lease term is for seven years and has been classified as an
operating lease. Lease and operating expenses of approximately $549,000 and
$466,000 related to this transaction have been included in corporate, general
and administrative expense during the year ended December 31, 1998 and 1997,
respectively.
F-10
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
DECEMBER 31, 1998, 1997, AND 1996
Pursuant to the refinancing discussed in Note 8, notes payable of $6,730,436
to Central Advertising Company and $1,900,293 to Illinois Outdoor Advertising
Company Limited Partnership were repaid in 1996, except for $231,379 payable
to an unlocated noteholder which remains outstanding at December 31, 1998.
Both entities are related to the Company through common ownership.
Also pursuant to the refinancing discussed in Note 8, $11,389,165 in 9%
subordinated notes and convertible notes payable to an affiliate of the
general partner were repaid in 1996. Related-party interest expense of
$275,175 was recorded during the year ended December 31, 1996 related to these
notes.
4. Investments
The carrying and estimated fair values of investment securities at December
31, 1998 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
1998
-------------------------------------------
Gross Gross
Unrealized Unrealized Estimated
Holding Holding Fair
Type of Each Issue Cost Gains Losses Value
------------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Trading securities:
Cash and money market funds..... $1,127,721 $ 0 $ 0 $1,127,721
U.S. Treasury obligations....... 74,722 1,403 0 76,125
Equity securities............... 481,639 106,109 (6,592) 581,156
Fixed income debt securities.... 91,453 2,991 (469) 93,975
---------- -------- -------- ----------
$1,775,535 $110,503 $ (7,061) $1,878,977
========== ======== ======== ==========
<CAPTION>
1997
-------------------------------------------
Gross Gross
Unrealized Estimated Estimated
Holding Fair Fair
Type of Each Issue Cost Gains Losses Value
------------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Trading securities:
Overnight investments........... $ 132,032 $ 0 $ 0 $ 132,032
U.S. Treasury obligations....... 73,139 0 0 73,139
Equity securities............... 793,543 150,147 (24,967) 918,723
Fixed income debt securities.... 136,403 3,128 (956) 138,575
Other........................... 15,174 3,122 0 18,296
---------- -------- -------- ----------
$1,150,291 $156,397 $(25,923) $1,280,765
========== ======== ======== ==========
</TABLE>
F-11
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
DECEMBER 31, 1998, 1997, AND 1996
5. Property, Plant, and Equipment
Property, plant, and equipment consists of the following at December 31, 1998
and 1997:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Land................................................ $ 2,398,489 $ 2,673,295
Buildings and improvements.......................... 4,185,364 3,929,319
Outdoor advertising structures...................... 100,950,797 95,018,461
Vehicles............................................ 3,436,538 2,931,049
Machinery and equipment............................. 739,698 724,939
Office equipment.................................... 4,065,258 2,895,530
Construction in progress............................ 1,459,417 824,196
----------- -----------
117,235,561 108,996,789
Less accumulated depreciation....................... 63,885,413 57,906,612
----------- -----------
$53,350,148 $51,090,177
=========== ===========
6. Intangible Assets
Intangible assets consist of the following at December 31, 1998 and 1997:
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Goodwill............................................ $ 7,582,597 $ 7,582,597
Noncompete agreements............................... 2,425,500 2,425,500
Financing costs..................................... 5,170,270 5,304,128
----------- -----------
15,178,367 15,312,225
Less accumulated amortization....................... 6,070,456 4,862,252
----------- -----------
$ 9,107,911 $10,449,973
=========== ===========
7. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consist of the following at December
31, 1998 and 1997:
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Accrued insurance................................... $ 391,872 $ 432,141
Accrued payroll..................................... 205,236 690,619
Other............................................... 1,986,501 1,550,745
----------- -----------
$ 2,583,609 $ 2,673,505
=========== ===========
</TABLE>
F-12
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
DECEMBER 31, 1998, 1997, AND 1996
8. Long-Term Debt
Long-term debt at December 31, 1998 and 1997 consists of the following:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
10.75% senior notes .............................. $101,000,000 $105,000,000
Revolving credit facilities ...................... 31,727,500 30,033,750
------------ ------------
132,727,500 135,033,750
Less current installments......................... 0 4,000,000
------------ ------------
Long-term debt, less current installments......... $132,727,500 $131,033,750
============ ============
</TABLE>
On March 12, 1996, the Company completed a refinancing (the "Refinancing")
of its outstanding debt. Pursuant to the Refinancing, substantially all of the
partnership's existing debt was repaid, $105 million of 10.75% senior notes
due 2006 (the "Senior Notes") were issued, and a credit agreement (the "Credit
Agreement") was executed which provided for a revolving credit facility with
total availability of $15 million. On December 2, 1996, the Credit Agreement
was amended and restated to increase the availability on the revolving credit
facility from $15 million to $35 million for a fee of $387,500. On March 31,
1998, the Company entered into an additional $3 million senior unsecured
credit facility to increase the line of credit to $38 million. In September
1998, proceeds from the senior unsecured facility were used to purchase $4
million of the Company's Senior Notes on the open market at 105% of principal
plus accrued interest. As a result of the purchase, the Company recognized an
extraordinary loss of $329,778, which represented the premium plus recognition
of a proportionate share of the associated deferred financing fees. In
November 1998, the senior unsecured credit facility was increased to $8
million.
Borrowings under the Credit Agreement bear interest at a rate equal to, at
the option of the Company, either (i) the base rate (which is defined as the
higher of the prime rate or the federal funds rate, or (ii) LIBOR, in each
case plus an applicable margin, as defined, determined by reference to the
ratio of total debt to cash flow of the Company. At December 31, 1998, the
weighted-average interest rate was 8.8% on outstanding borrowings,
respectively.
The obligations of the Company under the Credit Agreement are secured
primarily by a first priority pledge of the stock of Adams Outdoor
Advertising, Inc., the corporate general partner, a first priority pledge of
the Company interests, and a first priority lien on all the assets of the
Company, with the exception of certain real estate assets which are subject to
a negative pledge.
The Credit Agreement contains, among other things, covenants restricting the
ability of the Company to dispose of assets, make distributions to its
partners, create liens, make capital expenditures, make certain investments or
acquisitions, enter into transactions with affiliates, and otherwise restrict
certain activities. The Credit Agreement also contains financial covenants
related to minimum interest coverage, maximum leverage ratio, and a minimum
fixed-charge coverage ratio.
The Senior Notes were issued under an indenture dated March 12, 1996 (the
"Indenture") among the Company and the trustee of the Senior Notes. The Senior
Notes are senior unsecured obligations of the Company ranking pari passu in
right of payment with all existing and future senior indebtedness of the
Company and senior in right of payment to all existing and future subordinated
indebtedness of the Company that by its terms is subordinated in right of
payment to the Senior Notes. The Senior Notes are effectively subordinated to
all secured indebtedness of the Company to the extent of the value of the
assets securing such indebtedness.
F-13
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
DECEMBER 31, 1998, 1997, AND 1996
The Senior Notes mature on March 15, 2006 and bear interest at an annual
rate of 10.75% from the date of issuance until maturity. Interest is payable
semiannually in arrears on March 15 and September 15 to holders of record of
the Senior Notes.
The Senior Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after March 15, 2001 at the following redemption
prices (expressed as a percentage of principal amount), together, in each
case, with accrued and unpaid interest to the redemption date, if redeemed
during the 12-month period beginning on March 15 of each year as listed below:
<TABLE>
<S> <C>
Year:
2001.............................. 105.375%
2002.............................. 103.583
2003.............................. 101.792
2004 and thereafter............... 100.000
</TABLE>
Also, up to 25% of the Senior Notes are redeemable at the option of the
Company in the event of a public equity offering.
The Indenture contains, among other things, covenants restricting the
ability of the Company to incur additional indebtedness, make certain
distributions, make certain investments, change the status of company
subsidiaries, create liens, enter into transactions with affiliates, dispose
of assets, enter into sale and lease-back transactions, make payments for
consents, enter into any additional lines of business, and otherwise restrict
certain activities.
At December 31, 1998, the fair value of the Company's long-term debt based
on quoted market prices for the same or similar issues or on the current rates
offered to the Company for debt of similar remaining maturities was
approximately $140.3 million.
Annual minimum maturities of long-term debt based on amounts outstanding at
December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999............................ $ 0
2000............................ 2,000,000
2001............................ 29,727,500
2002............................ 0
2003............................ 0
Thereafter...................... 101,000,000
------------
$132,727,500
============
</TABLE>
9. Employee Benefit Plan
The Company has a 401(k) plan deferred savings and profit-sharing plan.
Employees must be at least age 21 and have completed one year of service to
participate in the plan. Employees may contribute up to 10% of their salaries,
and the Company matches employee contributions at the rate of 50% up to 6% of
the employee's salary. The Company's contributions to the plan were
approximately $240,000, $188,000, and $166,000 in the years ended December 31,
1998, 1997, and 1996, respectively.
F-14
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
DECEMBER 31, 1998, 1997, AND 1996
10. Deferred Compensation Benefits
Phantom Stock Agreements
The Company has deferred compensation benefits referred to as phantom stock
agreements with certain management personnel. The compensation is calculated
using a multiple of the operating profit of a division or the Company for the
year ending immediately prior to the determination date over the base cost,
which is the assigned value of the division or the Company, at the date of the
agreement's execution. The agreements provide for three equal annual payments
to the participants on the determination date, which is defined as
termination, death, disability, the sale of the Company, or the fifth
anniversary of the agreement's execution. The Company incurred deferred
compensation expense related to these agreements of $4,098,014, $698,376, and
$1,136,031 for the years ended December 31, 1998, 1997, and 1996,
respectively.
Nonqualified Retirement Plans
The Company also maintains certain nonqualified retirement plans (the
"Plans") to provide deferred compensation benefits for certain members of
management. The Company has established trusts (the "Trusts") for
contributions to provide sources of funds for liabilities under the Plans. The
Trusts are revocable and constitute unfunded arrangements as their assets are
subject to the claims of the Company's creditors in the event of insolvency,
until such time as the obligations have been paid to plan participants in
accordance with the Plans. Earnings of the trusts are allocated
proportionately to participant accounts. During the years ended December 31,
1998, 1997, and 1996, the Company recorded deferred compensation expense of
$217,501, $202,500, and $315,000 respectively, to these plans.
11. Commitments and Contingencies
Operating Lease Commitments
The Company leases real estate to erect signs in commercial and industrial
areas along traffic routes in cities or close to populated urban areas. The
partnership also leases certain vehicles used in its operations. These leases
have terms ranging from one to ten years.
Approximate future minimum lease payments under noncancelable operating
leases with terms in excess of one year at December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999............................. $ 4,404,357
2000............................. 3,372,665
2001............................. 2,597,828
2002............................. 2,127,747
2003............................. 3,169,800
Thereafter....................... 17,789,695
-----------
$33,462,092
===========
</TABLE>
Rent expense incurred under operating leases aggregated approximately
$7,315,000 $7,735,000, and $6,042,000 for the years ended December 31, 1998,
1997, and 1996, respectively.
Zoning Regulations
In 1988, the city of Charlotte, North Carolina, adopted a comprehensive sign
ordinance prohibiting the construction of virtually all new, off-premise
outdoor advertising signs within the city limits and mandating that
F-15
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
DECEMBER 31, 1998, 1997, AND 1996
all nonconforming signs either be brought into compliance or be removed by
February 1, 1998 at the owner's expense without payment of compensation.
Through March 1998, the Company had received a total of 307 notices of
violation ("NOVs"). The Company does not anticipate receiving any additional
NOVs at this time. In 1988, the Company filed a lawsuit in the Superior Court
of Mecklenburg County, North Carolina, challenging the constitutionality of
the Charlotte sign ordinance. In 1998 the case was settled, and approximately
160 of the billboards in question must be removed at the Company's expense by
December 5, 2002. This will result in a material adverse impact on the gross
revenues and cash flow attributable to the Charlotte market, but, in the
opinion of management, not on the financial condition of the Company as a
whole.
In other localities in which the Company operates, outdoor advertising is
subject to restrictive and, in some cases, prohibitive, zoning regulations.
Management expects federal, state, and local regulations to continue to be a
significant factor in the operation of the Company's business.
Litigation
The Company is a party to a number of lawsuits and claims which it is
vigorously defending. Such matters arise out of the normal course of business
and relate to government regulations and other issues. Certain of these
actions seek damages in significant amounts. While the results of litigation
cannot be predicted with certainty, management believes, based on advice of
Company counsel, the final outcome of such litigation will not have a material
adverse effect on the consolidated financial statements of the Company.
Concentration Of Risks
Approximately 10.3%, 10.5%, and 12.5% of the Company's net revenues for the
years ended December 31, 1998, 1997, and 1996, respectively, were attributable
to the tobacco products industry. In November 1998, the major U.S. tobacco
companies (the "Tobacco Companies") reached an out of court settlement (the
"Agreement") with 46 states, the District of Columbia, the Commonwealth of
Puerto Rico and four other U.S. territories (the "Settling States"). The
remaining four states had already reached similar settlements with the Tobacco
Companies. The Agreement calls for the removal of tobacco advertising from
out-of-home media, including billboards, along with signs and placards in
arenas, stadiums, shopping malls and video game arcades by April 23, 1999.
Additionally, the Agreement provides that, at the Settling States' option, the
Tobacco Companies must, at their expense, substitute for tobacco advertising
alternative advertising which discourages youth smoking. That alternative
advertising must remain in place for the duration of the Tobacco Companies'
out-of-home media advertising contracts which existed as of the date of the
Agreement.
The elimination of tobacco advertising as called for by the Agreement will
cause a reduction in direct revenues from Tobacco Companies and may
simultaneously increase the available space on the existing inventory of
billboards in the outdoor advertising industry. Although the extent of the
future impact on operations is not known, the Company has been successful thus
far in replacing tobacco advertising in its Minneapolis market where
settlement was reached prior to the Agreement. While this is positive, the
Company can give no assurance that the further cutbacks in tobacco advertising
during 1999 will not have an adverse effect on operations for 1999 or beyond.
12. Supplemental Cash Flow Information
The following summarizes supplemental cash paid and noncash activities for
the years ended December 31, 1998, 1997, and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- ----------
<S> <C> <C> <C>
Supplemental disclosure of cash paid during
the year for interest..................... $14,367,555 $13,639,516 $9,095,866
=========== =========== ==========
</TABLE>
F-16
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
DECEMBER 31, 1998, 1997, AND 1996
13. Acquisitions
During 1996, the Company completed acquisitions of two outdoor advertising
operations. Both acquisitions were accounted for using the purchase method of
accounting and, accordingly, the purchase price was allocated to the assets
purchased and the liabilities assumed based on their fair values at the dates
of acquisition. Both acquisitions were funded through borrowings.
On October 25, 1996, the Company executed a purchase agreement for the
Northeast Pennsylvania division ("NEPA") by acquiring all of the outstanding
shares of PA Outdoor, Inc., for $6,765,000 in cash, and by acquiring selected
assets and liabilities of Matthew Outdoor Advertising Acquisition Co., L.P.
for $1,450,000 in cash. The Company also paid $100,000 for noncompete
agreements which were amortized over two years, and incurred $243,000 in
transaction costs.
On November 18, 1996, the Company acquired selected assets and liabilities
of Morgan Newsome Monroe, Inc. ("MNM") for $14,029,000 in cash. The Company
also paid $1,650,000 for noncompete agreements which were amortized over three
years, and incurred $64,000 in transaction costs.
The net purchase price of the acquisitions was allocated as follows:
<TABLE>
<CAPTION>
NEPA MNM
---------- -----------
<S> <C> <C>
Working capital...................................... $ 158,000 $ 629,000
Property, plant, and equipment....................... 8,300,000 13,464,000
Other assets......................................... 100,000 1,650,000
---------- -----------
Purchase price....................................... $8,558,000 $15,743,000
========== ===========
</TABLE>
The following unaudited pro forma information presents a summary of the
results of operations of the Company, NEPA, and MNM as if the acquisitions had
occurred at the beginning of 1996, with pro forma adjustments to give effect
to additional depreciation based on the fair market value of the property,
plant, and equipment acquired; interest expense on acquisition debt; and the
amortization of intangibles arising from the transactions. The pro forma
financial information is not necessarily indicative of the results of
operations as they would have resulted if the transactions had been effected
on the assumed dates.
<TABLE>
<CAPTION>
Year Ended
December 31,
1996
------------
(Unaudited)
<S> <C>
Net outdoor advertising revenue................................ $53,342,000
===========
Operating income............................................... $14,843,000
===========
Net loss....................................................... $ (462,000)
===========
</TABLE>
14. Disposal Of Equipment
In June 1996, the Company invested $662,098 in assets to provide in-store
advertising equipment. These assets were utilized from June through December
1996, resulting in $179,864 in operating expenses in excess of revenue. In
December 1996, management determined that the asset value had been impaired
and approved a plan of disposal to be completed in January 1997. A loss equal
to the carrying value of the assets of $662,098 was recognized in 1996 and has
been included in the consolidated statement of operations as loss on disposal
of property and equipment, net.
F-17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Adams Outdoor Advertising, Inc.:
We have audited the accompanying balance sheet of ADAMS OUTDOOR ADVERTISING,
INC. (a Minnesota corporation) as of December 31, 1998 and the related
statements of operations, shareholder's equity, and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of Adams Outdoor
Advertising, Inc. as of and for the two years ended December 31, 1997, were
audited by other auditors whose report dated March 18, 1998, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Adams Outdoor Advertising,
Inc. as of December 31, 1998 and the results of its operations and its cash
flows for the year ended December 31, 1998 in conformity with generally
accepted accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
March 26, 1999
F-18
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Adams Outdoor Advertising, Inc.:
We have audited the accompanying balance sheet of Adams Outdoor Advertising,
Inc. (the "Company") as of December 31, 1997 and the related statements of
operations, stockholders' equity, and cash flows for each of the years in the
two-year period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 1997 and the results of its operations and its cash flows for each of the
years in the two-year period ended December 31, 1997 in conformity with
generally accepted accounting principles.
KPMG LLP
Atlanta, Georgia
March 18, 1998
F-19
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----- -----
<S> <C> <C>
ASSETS
INVESTMENT (NOTE 2).............................................. $ 40 $ 40
===== =====
STOCKHOLDER'S EQUITY
COMMITMENT AND CONTINGENCIES (NOTE 3)
SHAREHOLDER'S EQUITY:
Preferred stock, $.001 par value; authorized 800,000 shares, no
shares issued or outstanding.................................. $ 0 $ 0
Common stock, $.001 par value; authorized 200,000 shares,
10,000 shares issued and outstanding.......................... 100 100
Additional paid-in capital..................................... 900 900
Common stock subscribed........................................ (960) (960)
----- -----
Total........................................................ $ 40 $ 40
===== =====
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-20
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues...................................................... $ 0 $ 0 $ 0
Expenses...................................................... 0 0 0
--- --- ---
Net Income (loss)............................................. $ 0 $ 0 $ 0
=== === ===
</TABLE>
The accompanying notes are an integral part of these statements.
F-21
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
Additional Common Total
Preferred Common Paid-in Stock Stockholder's
Stock Stock Capital Subscribed Equity
--------- ------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31,
1995.................... $ 0 $100 $900 $(960) $40
Net income (loss)...... 0 0 0 0 0
--- ---- ---- ----- ---
BALANCE, December 31,
1996.................... 0 100 900 (960) 40
Net income (loss)...... 0 0 0 0 0
--- ---- ---- ----- ---
BALANCE, December 31,
1997.................... 0 100 900 (960) 40
Net income (loss)...... 0 0 0 0 0
--- ---- ---- ----- ---
BALANCE, December 31,
1998.................... $ 0 $100 $900 $(960) $40
=== ==== ==== ===== ===
</TABLE>
The accompanying notes are an integral part of these statements.
F-22
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash Flows From Operating Activities.......................... $ 0 $ 0 $ 0
Cash Flows From Investing Activities.......................... 0 0 0
Cash Flows From Financing Activities.......................... 0 0 0
--- --- ---
Net Change in Cash............................................ 0 0 0
Cash, beginning of year....................................... 0 0 0
--- --- ---
Cash, end of year............................................. $ 0 $ 0 $ 0
=== === ===
</TABLE>
The accompanying notes are an integral part of these statements.
F-23
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1. Summary of Significant Accounting Policies
The Company
Adams Outdoor Advertising, Inc. ("AOAI") was organized as a corporation
under the Minnesota Statutes on December 12, 1985. AOAI is the managing
general partner of Adams Outdoor Advertising Limited Partnership (the
"Company"). AOAI is wholly owned by the individual general partner of the
Company, who is also a limited partner in the Company. AOAI has nominal assets
and does not conduct any operations, except for its activities as managing
general partner of the Company.
AOAI and its sole stockholder have agreed that all profits or losses
allocable to the general partners will be allocated to the individual general
partner, and none will be allocated to AOAI.
Investment
The investment balance consists of a general and limited partnership
interest which are carried at cost, since the partnership interest is not
readily marketable.
Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Use of Estimates
The Company's consolidated financial statements are prepared in accordance
with generally accepted accounting principles, which require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
F-24
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
DECEMBER 31, 1998 AND 1997
2. Investment In Affiliated Partnership
AOAI has a 1% aggregate partnership interest in the Company which consists
of .01% general partnership interest and .99% limited partnership interest.
Summary audited financial information for the investee Company as of and for
the years ended December 31, 1998 and 1997 is presented as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Balance sheet information:
Current assets...................................... $ 15,661 $ 15,684
Current liabilities................................. (10,855) (12,588)
Working capital..................................... 4,806 3,096
Property, plant, and equipment, net................. 53,350 51,090
Intangible assets, net.............................. 9,108 10,450
Other assets........................................ 74 250
Long-term debt, less current installments........... (132,727) (131,034)
Deferred compensation, less current installments.... (4,057) (3,438)
Partners' deficit................................... (64,641) (69,447)
Income statement information:
Net outdoor advertising revenues.................... $ 64,569 $ 57,285
========= =========
Operating income.................................... $ 16,378 $ 15,557
========= =========
Net income.......................................... $ 1,183 $ 791
========= =========
</TABLE>
3. Employment Agreement With Sole Stockholder
Effective January 1, 1996, AOAI entered into an employment agreement with
the sole stockholder as an executive, which provides a base salary and
benefits, subject to increases based on the Consumer Price Index annually,
plus reimbursement of business expenses. The agreement expires December 31,
2001 unless terminated by AOAI or the sole stockholder and provides one year
of severance pay, if terminated by AOAI under certain circumstances.
F-25
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
ASSETS ----------- ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents............................ $ 2,389 $ 1,687
Investments.......................................... 2,511 1,879
Accounts receivable, less allowance for doubtful
accounts of $766 and $648 at March 31, 1999 and
December 31, 1998, respectively..................... 8,491 8,424
Receivables from related parties..................... 191 129
Inventories.......................................... 46 69
Prepaid rent......................................... 2,958 2,826
Prepaid expenses..................................... 777 647
-------- --------
Total current assets............................... 17,363 15,661
Property, plant and equipment, net..................... 53,477 53,350
Intangible assets, net................................. 8,775 9,108
Other assets........................................... 74 74
-------- --------
$ 79,689 $ 78,193
======== ========
<CAPTION>
LIABILITIES AND PARTNERS' DEFICIT
<S> <C> <C>
Current liabilities:
Accounts payable..................................... $ 516 $ 558
Interest payable..................................... 919 3,606
Accrued expenses and other liabilities............... 2,630 2,583
Deferred compensation................................ 1,412 4,108
-------- --------
Total current liabilities.......................... 5,477 10,855
Long-term debt, less current installments.............. 139,440 132,728
Deferred compensation.................................. 3,904 4,057
-------- --------
Total liabilities.................................. 148,821 147,640
-------- --------
Commitments and contingencies
Partners' deficit:
General partners' deficit............................ (67,829) (67,829)
Limited partners' deficit............................ (1,303) (1,618)
-------- --------
Total partners' deficit............................ (69,132) (69,447)
-------- --------
$ 79,689 $ 78,193
======== ========
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
F-26
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
----------------
1999 1998
------- -------
(Unaudited)
<S> <C> <C>
Gross Revenues............................................... $16,552 $15,742
Less agency commissions.................................... 1,503 1,527
------- -------
Net outdoor advertising revenue.......................... 15,049 14,215
------- -------
Operating expenses:
Direct advertising expenses................................ 7,967 7,468
Corporate general and administrative....................... 594 1,004
Depreciation and amortization.............................. 1,857 2,063
Deferred compensation...................................... 360 128
------- -------
Total operating expenses................................. 10,778 10,663
------- -------
Operating income......................................... 4,271 3,552
------- -------
Other expenses (income):
Interest expense........................................... 3,445 3,644
Interest expense--related parties.......................... 0 8
Other expense (income), net................................ 12 (5)
(Gain) loss on disposals of property, plant and equipment,
net....................................................... (1) 4
------- -------
Total other expenses..................................... 3,456 3,651
------- -------
Net income (loss)........................................ $ 815 $ (99)
======= =======
</TABLE>
See accompanying notes to unaudited interim financial statements.
F-27
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
----------------
1999 1998
------- -------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss).......................................... $ 815 $ (99)
Adjustments to reconcile net income to cash used in
operating activities:
Depreciation............................................. 1,659 1,853
Amortization of intangible assets........................ 333 343
Deferred compensation expense............................ 360 366
Payments of Deferred Compensation........................ (3,557) (300)
Barter income............................................ (82) (22)
(Gain) loss on disposals of property, plant and
equipment, net.......................................... (1) 4
Purchases of investments................................. (380) (523)
Changes in assets and liabilities:
Accounts receivable, net............................... (129) (636)
Inventories............................................ 23 29
Prepaid rent and other prepaid expenses................ (262) (204)
Other assets........................................... -- 9
Accounts payable and accrued expenses.................. 101 71
Interest payable....................................... (2,687) (2,903)
Other liabilities--long term........................... -- (327)
------- -------
Net cash used in operating activities................ (3,807) (2,339)
------- -------
Cash flows from investing activities:
Additions to property, plant and equipment................. (1,711) (1,481)
Proceeds from sales of property, plant and equipment....... 8 --
------- -------
Net cash used in investing activities................ (1,703) (1,481)
------- -------
Cash flows from financing activities:
Debt financing costs....................................... -- (37)
Payments on long-term debt................................. (2,700) (2,494)
Advances on revolving line of credit....................... 9,412 6,744
Distributions to partners.................................. (500) --
------- -------
Net cash provided by financing activities............ 6,212 4,213
------- -------
Net increase in cash and cash equivalents.................... 702 393
Cash and cash equivalents at beginning of period............. 1,687 3,121
------- -------
Cash and cash equivalents at end of period................... $ 2,389 $ 3,514
======= =======
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
F-28
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
(1) Basis of Presentation
The unaudited consolidated financial statements presented herein have been
prepared in accordance with generally accepted accounting principles
applicable to interim financial statements. Accordingly, they do not include
all of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of Adams Outdoor
Advertising Limited Partnership's management, these consolidated financial
statements contain all adjustments (which comprise only normal and recurring
accruals) necessary to present fairly the financial position as of March 31,
1999 and 1998. The interim results for the three months ended March 31, 1999
are not necessarily indicative of the results to be expected for the full
year. These statements should be read in conjunction with the Company's
combined financial statements for the fiscal year ended December 31, 1998, as
filed in its annual report on form 10-K.
F-29
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
ASSETS --------- ------------
(Unaudited)
<S> <C> <C>
Investment.............................................. $ 40 $ 40
===== =====
STOCKHOLDER'S EQUITY
Preferred stock, $0.001 par value
Authorized 800,000 shares; no shares issued and
outstanding............................................ $ -- $ --
Common stock, $0.001 par value
Authorized 200,000 shares; 10,000 shares issued and
outstanding............................................ 100 100
Additional paid-in capital.............................. 900 900
Common stock subscribed................................. (960) (960)
----- -----
$ 40 $ 40
===== =====
</TABLE>
See accompanying notes to unaudited interim financial statements.
F-30
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended
March 31,
--------------
1999 1998
------ ------
(Unaudited)
<S> <C> <C>
Revenues......................................................... $ -- $ --
Expenses......................................................... -- --
------ ------
Net income (loss)................................................ $ -- $ --
====== ======
</TABLE>
See accompanying notes to unaudited interim financial statements.
F-31
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Quarters Ended
March 31,
----------------
1999 1998
------- -------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities.......................... $ -- $ --
Cash flows from investing activities.......................... -- --
Cash flows from financing activities.......................... -- --
------- -------
Net change in cash.......................................... -- --
Cash at beginning of period................................... -- --
------- -------
Cash at end of period......................................... $ -- $ --
======= =======
</TABLE>
See accompanying notes to unaudited interim financial statements.
F-32
<PAGE>
ADAMS OUTDOOR ADVERTISING, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
(1) Basis of Presentation
The unaudited consolidated financial statements presented herein have been
prepared in accordance with generally accepted accounting principles
applicable to interim financial statements. Accordingly, they do not include
all of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of Adams Outdoor
Advertising, Inc.'s management, these consolidated financial statements
contain all adjustments (which comprise only normal and recurring accruals)
necessary to present fairly the financial position as of March 31, 1999 and
1998. The interim results for the three months ended March 31, 1999 are not
necessarily indicative of the results to be expected for the full year. These
statements should be read in conjunction with the Company's combined financial
statements for the fiscal year ended December 31, 1998, as filed in its annual
report on form 10-K.
F-33
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
AOA Holding LLC. AOA Holding LLC is a limited liability company organized
under the laws of the State of Minnesota. Section 699 of the Minnesota Limited
Liability Company Act (the "LLC Act") provides that, subject to such
prohibition or conditions if any as are set forth in its articles of
organization or operating agreement, a limited liability company shall
indemnify its employees, managers and governors for expenses and liabilities,
including attorney's fees and disbursements, incurred by such person by reason
of their former or present official capacity as an employee, manager or
governor. In order to be entitled to indemnification with respect to a
purported error or omission, an employee, manager or governor must (i) have
acted in good faith, (ii) have received no improper personal benefit, (iii) in
the case of a criminal proceeding, had no reasonable cause to believe the
conduct was unlawful, and (iv) reasonably believed that the conduct was in the
best interests of the limited liability company.
Section 4.02 of AOA Holding LLC's Operating Agreement provides that AOA
Holding LLC shall indemnify its managers and governors for such expenses and
liabilities, in such manner, under such circumstances, and to such extent, as
required by Section 699 of the LLC Act, as amended from time to time, or as
required or permitted by applicable law.
AOA Capital Corp. AOA Capital Corp is incorporated under the laws of the
State of Minnesota. Section 521 of the Minnesota Business Corporation Act (the
"MBCA") provides that, subject to such prohibition or condition if any as set
forth in its articles and bylaws, a corporation shall indemnify its officers
and directors for expenses and liabilities, including attorney's fees and
disbursements, incurred by such person by reason of their former or present
office as an officer or director. In order to be entitled to indemnification
with respect to a purported error or omission, an officer or director must (i)
have acted in good faith, (ii) have received no improper personal benefit,
(iii) in the case of a criminal proceeding, had no reasonable cause to believe
the conduct was unlawful, and (iv) reasonably believed that the conduct was in
the best interests of the corporation.
Section 7.01 of AOA Capital Corp's Bylaws provides that AOA Capital Corp
shall indemnify persons for such expenses and liabilities in such manner,
under such circumstances, and to the extent required by the MBCA.
AOA Holding LLC, AOA Capital Corp and each of their respective directors,
governors and managers have entered into an indemnity agreement in the form
filed as an exhibit to this Registration Statement. The agreements provide
that AOA Holding LLC and AOA Capital Corp shall indemnify such directors,
governors, and managers in accordance with, and to the fullest extent
authorized, by the LLC Act or the MBCA. The agreements also provide that AOA
Holding LLC and AOA Capital Corp shall indemnify such directors, governors and
managers for all expenses and liabilities incurred by such indemnitee in
connection with a proceeding to which such indemnitee is, was or is threatened
to be made a witness or a party by reason of the fact that such indemnitee is
or was a director, officer, employee or agent of AOA Holding LLC or AOA
Capital Corp. The agreements also provide for a right of contribution in the
event that such indemnification is unavailable.
II-1
<PAGE>
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
3.1 Articles of Incorporation of AOA Capital Corp
3.2 Bylaws of AOA Capital Corp
3.3 Articles of Organization of AOA Holding LLC
3.4 Operating Agreement of AOA Holding LLC
3.5 Member Control Agreement of AOA Holding LLC
Indenture, dated as of May 26, 1999 among AOA Capital Corp, AOA
4.1 Holding LLC and United States Trust Company of New York, as trustee
Form of 10-3/8% Senior Notes due 2006 (included in Exhibit 4.1 above
4.2 as Exhibit A)
Registration Rights Agreement dated as of May 26, 1999 by and among
4.3 AOA Holding LLC, AOA Capital Corp and CIBC World Markets Corp.
Securities Purchase Agreement, dated as of May 21, 1999 by and among
4.4 AOA Holding LLC, AOA Capital Corp and CIBC World Markets Corp.
5.1 Opinion of Kaplan, Strangis and Kaplan, P.A.
Employment Agreement between Adams Outdoor Advertising Inc. ("AOAI")
and Stephen Adams, incorporated by reference to Exhibit 10.2 of AOAI's
Registration Statement on Form S-4 (File No. 333-3338) (the "AOAI
10.1 Registration Statement")
Phantom Stock Agreement between Adams Outdoor Advertising Limited
10.2 Partnership ("AOALP") and J. Kevin Gleason
Phantom Stock Agreement between AOALP and Abe Levine, incorporated by
10.3 reference to Exhibit 10.4 of the AOAI Registration Statement
AOALP Nonqualified Plan for Key Employees, incorporated by reference
10.4 to Exhibit 10.5 of the AOAI Registration Statement
Deficit Capital Contribution Agreement between Stephen Adams and AOA
10.5 Holding LLC
Proceeds Allocation and Indemnity Agreement between AOA Holding LLC
10.6 and AOA Capital Corp
10.7 Form of Indemnity Agreement
12.1 Statement re: Computation of Ratios
21.1 Subsidiaries of AOA Holding LLC
Consent of Kaplan, Strangis and Kaplan, P.A. (included in Exhibit 5.1
23.1 above)
23.2 Consent of KPMG, LLP
23.3 Consent of Arthur Andersen LLP
24.1 Powers of Attorney
25.1 Statement of Eligibility of Trustee on Form T1
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Tender Instructions
</TABLE>
(b) Financial Statement Schedules
Report of Independent Public Accountants on Financial Statement
Schedule
Schedule II--Valuation and Qualifying Accounts
II-2
<PAGE>
Item 22. Undertakings.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
the time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
directors, officers and controlling persons of the registrants
pursuant to the provisions described under Item 20 or otherwise,
the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrants of expenses incurred or paid by a director,
officer or controlling person of the registrants in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrants will, unless in the
opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
(5) The undersigned registrants hereby undertake to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form,
within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(6) The undersigned registrants hereby undertake to supply by means of
a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement
when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1933, AOA
Capital Corp has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta
and the State of Georgia on this 1st day of July, 1999.
AOA CAPITAL CORP
/s/ J. Kevin Gleason
By: ________________________________
J. Kevin Gleason
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ J. Kevin Gleason President and Chief July 1, 1999
- ------------------------------------- Executive Officer
J. Kevin Gleason (principal
executive officer)
/s/ Abe Levine Vice President, July 1, 1999
- ------------------------------------- Chief Financial
Abe Levine Officer and
Treasurer
(principal
financial and
accounting officer)
* Director July 1, 1999
- -------------------------------------
Stephen Adams
/s/ J. Kevin Gleason Director July 1, 1999
- -------------------------------------
J. Kevin Gleason
* Director July 1, 1999
- -------------------------------------
George Pransky
* Director July 1, 1999
- -------------------------------------
David Frith-Smith
* Director July 1, 1999
- -------------------------------------
Andris A. Baltins
- --------
* J. Kevin Gleason, pursuant to Powers of Attorney executed by each of the
directors listed above whose name is marked with an "x" and filed as an
exhibit hereto, by signing his name hereto does hereby sign and execute
this Registration Statement of AOA Capital Corp on behalf of each of such
officers and directors in the capacities in which the names of each appear
above.
II-4
<PAGE>
Pursuant to the requirements of the Securities and Exchange Act of 1933, AOA
Holding LLC has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta
and the State of Georgia on this 1st day of July, 1999.
AOA Holding LLC
/s/ J. Kevin Gleason
By: _________________________________
J. Kevin Gleason
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ J. Kevin Gleason President and Chief July 1, 1999
- ------------------------------------- Executive Officer
J. Kevin Gleason (principal
executive officer)
/s/ Abe Levine Vice President, July 1, 1999
- ------------------------------------- Chief Financial
Abe Levine Officer and
Treasurer
(principal
financial and
accounting officer)
* Governor July 1, 1999
- -------------------------------------
Stephen Adams
/s/ J. Kevin Gleason Governor July 1, 1999
- -------------------------------------
J. Kevin Gleason
* Governor July 1, 1999
- -------------------------------------
George Pransky
* Governor July 1, 1999
- -------------------------------------
David Frith-Smith
* Governor July 1, 1999
- -------------------------------------
Andris A. Baltins
- --------
* J. Kevin Gleason, pursuant to Powers of Attorney executed by each of the
governors listed above whose name is marked with an "x" and filed as an
exhibit hereto, by signing his name hereto does hereby sign and execute
this Registration Statement of AOA Holding LLC on behalf of each of such
officers and governors in the capacities in which the names of each appear
above.
II-5
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To: Adams Outdoor Advertising Limited Partnership
We have audited in accordance with generally accepted auditing standards, the
consolidated balance sheet of Adams Outdoor Advertising Limited Partnership as
of December 31, 1998 and the related consolidated statements of operations,
partners' equity (deficit), and cash flows for the year then ended, and have
issued our report thereon dated March 26, 1999. Our audit was made for the
purpose of forming an opinion on the basic financial statements taken as a
whole. The accompanying Schedule II -- Valuation and Qualifying Accounts is
the responsibility of the company's management and is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not
part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Arthur Andersen LLP
Atlanta, GA
March 26, 1999
S-1
<PAGE>
ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Additions
---------------------
Balance
at Charged to Charged to
beginning costs and other Balance at
Description of period expenses accounts(a) Deductions(b) end of period
----------- --------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1998 Allowance for
Doubtful Accounts...... $ 700,429 287,494 -- (339,823) $ 648,100
1997 Allowance for
Doubtful Accounts...... $ 696,260 231,973 -- (227,804) $ 700,429
1996 Allowance for
Doubtful Accounts...... $ 546,123 57,387 169,740 (76,990) $ 696,260
</TABLE>
- --------
(a) Purchased through acquisitions during 1996
(b) Write-offs, net of recoveries
S-2
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
3.1 Articles of Incorporation of AOA Capital Corp
3.2 Bylaws of AOA Capital Corp
3.3 Articles of Organization of AOA Holding LLC
3.4 Operating Agreement of AOA Holding LLC
3.5 Member Control Agreement of AOA Holding LLC
4.1 Indenture, dated as of May 26, 1999 among AOA Capital Corp, AOA
Holding LLC and United States Trust Company of New York, as trustee
4.2 Form of 10-3/8% Senior Notes due 2006 (included in Exhibit 4.1 above
as Exhibit A)
4.3 Registration Rights Agreement dated as of May 26, 1999 by and among
AOA Holding LLC, AOA Capital Corp and CIBC World Markets Corp.
4.4 Securities Purchase Agreement, dated as of May 21, 1999 by and among
AOA Holding LLC, AOA Capital Corp and CIBC World Markets Corp.
5.1 Opinion of Kaplan, Strangis and Kaplan, P.A.
10.2 Phantom Stock Agreement between Adams Outdoor Advertising Limited
Partnership ("AOALP") and J. Kevin Gleason
10.5 Deficit Capital Contribution Agreement between Stephen Adams and AOA
Holding LLC
10.6 Proceeds Allocation and Indemnity Agreement between AOA Holding LLC
and AOA Capital Corp
10.7 Form of Indemnity Agreement
12.1 Statement re: Computation of Ratios
21.1 Subsidiaries of AOA Holding LLC
23.1 Consent of Kaplan, Strangis and Kaplan, P.A. (included in Exhibit 5.1
above)
23.2 Consent of KPMG, LLP
23.3 Consent of Arthur Andersen LLP
24.1 Powers of Attorney
25.1 Statement of Eligibility of Trustee on Form T1
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Tender Instructions
</TABLE>
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
AOA CAPITAL CORP
The undersigned incorporator, being a natural person of full age, for
the purpose of forming a corporation under Minnesota Statutes, Chapter 302A,
hereby adopts the following Articles of Incorporation:
ARTICLE I
Name
The name of the corporation is AOA Capital Corp
ARTICLE II
Registered Office
The registered office of this corporation is located at 90 South 7th
Street, Suite 5500, Minneapolis, MN 55402.
ARTICLE III
Incorporator
The name and address of the incorporator is:
Name Mailing Address
---- ---------------
Robert T. York 90 South 7th Street
Suite 5500
Minneapolis, MN 55402
ARTICLE IV
Capital
The aggregate number of shares of common stock which this corporation
shall have the authority to issue is 1,000,000 of which 800,000 shares of the
par value of $.001 each are to be of a class designated "Preferred Stock" and
200,000 shares of the par value of $.001 each are to be of a class designated
"Common Stock".
ARTICLE V
Classes and Series
The Preferred Stock may be issued from time to time in one ore more
series of any number of shares, provided that the aggregate number of shares
issued and not canceled of any and all such series shall not exceed the total
number of shares of Preferred Stock hereinabove authorized. Each series of
Preferred Stock shall be distinctively designated by letter or descriptive words
or both.
<PAGE>
Authority is hereby vested in the Board of Directors from time to time
to issue the Preferred Stock of any series, and in connection with the creation
of each such series to fix by resolution or resolutions providing for the issue
of shares thereof the voting powers, if any, the designations, preference and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of such series to the full
extent now or hereafter permitted by these Articles of Incorporation and the
laws of the State of Minnesota, in respect of the matters set forth in the
following paragraphs (a) to (e), inclusive:
(a) the liquidation value to which each share shall be entitled
and the preference, if any, in relation to any other series or
class of securities of the corporation;
(b) whether such shares shall be convertible into Common Stock
and, if so, the ratio conversion expressed in whole and/or
fractional shares of Common Stock, together with terms and
conditions relating to conversion;
(c) the number of votes, if any, to which each share shall be
entitled;
(d) whether such shares may be called in and retired or be
otherwise subject to redemption (including redemption through
the operation of a sinking fund, purchase fund or retirement
fund) and, if so, the terms and conditions thereof; and
(e) the dividend, if any, for such shares, stated in an amount per
share, together with terms and conditions relating to the
declaration and payment of such dividend and the preference,
if any, in relation to any other series or class of securities
of the corporation.
In addition to the foregoing, the Board of Directors may in its
discretion assign such stock in connection with each issue thereof under other
terms, conditions, restrictions, limitations, rights and privileges as it may
deem appropriate.
Subject to dividend rights of holders of Preferred Stock, the holders
of Common Stock shall be entitled to receive such dividends as from time to time
may be declared by the Board of Directors. The holders of Common Stock shall be
entitled to one vote per share of Common Stock.
Subject to the provisions of these Articles of Incorporation and except
as otherwise provided by law, the shares of stock of the corporation, regardless
of class, may be issued for such consideration and for such corporate purpose as
the Board of Directors may from time to time determine.
ARTICLE VI
Written Action Without Meeting
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting by written action signed by a
majority of the Board of Directors then in office, except as to those matters
which require shareholder approval, in which case the written action shall be
signed by all members of the Board of Directors then in office.
2
<PAGE>
ARTICLE VII
Cumulative Voting Denied
No shareholder of this corporation shall be entitled to any cumulative
voting rights.
ARTICLE VIII
Pre-Emptive Rights Denied
No shareholder of this corporation shall have any preferential,
pre-emptive, or other rights of subscription to any shares of any class or
series of stock of this corporation allotted or sold or to be allotted or sold
and now or hereafter authorized, or to any obligations or securities convertible
into any class or series of stock of this corporation, nor any right of
subscription to any part thereof as provided under Minnesota Statutes, Chapter
302A.
IN WITNESS WHEREOF, the incorporator has executed these Articles of
Incorporation this 3rd day of May, 1999.
INCORPORATOR:
/s/ Robert T. York
------------------
Robert T. York
3
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
AOA CAPITAL CORP
AOA Capital Corp is a corporation organized under Minnesota Statutes
Chapter 302A.
ARTICLE I.
CORPORATE OFFICES AND SEAL
Section 1.01. Offices. The corporation may have offices within the
State of Minnesota or at such other place as the Board of Directors may from
time to time appoint or the business of the corporation may require.
Section 1.02. Corporate Seal. If so directed by the Board of Directors,
the corporation may use a corporate seal; however, failure to use the seal shall
not affect the validity of any document executed on behalf of the corporation.
The seal need only include the word "Seal", but it may include, at the
discretion of the Board, the name of the corporation and the words "Corporate
Seal, Minnesota".
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 2.01. Regular Meetings. Regular meetings of shareholders may be
called by the President, the Secretary, the Board of Directors, or by
shareholder demand in accordance with Section 2.04. At any regular meeting of
shareholders, there shall be an election of qualified successors for directors
who serve for an indefinite term of office or whose terms have expired. Any
business appropriate for action by the shareholders may be transacted at a
regular meeting. Regular meetings may be held no more frequently than once per
year. No meeting shall be designated a regular meeting unless specifically
described as such in the notice of meeting or unless all the shareholders are
present in person or by proxy and none of them objects to this designation.
Section 2.02. Special Meetings. Special meetings of the shareholders
may be called for any purpose or purposes at any time by the President, the
Treasurer, two or more directors, or by shareholder demand in accordance with
Section 2.04. Business transacted at a special meeting is limited to the
purposes stated in the notice of meeting. Any business transacted at a special
meeting that is not included in the stated purposes is voidable by or on behalf
of the corporation, unless all of the shareholders have waived notice of the
meeting at or after the meeting in accordance with Section 2.06.
<PAGE>
Section 2.03. Time and Place of Shareholder Meetings. Any meeting of
shareholders shall be held on the date and at the time and place fixed by the
President or the Board of Directors, except that a meeting called at shareholder
demand pursuant to Section 2.04 shall be held in the county where the principal
executive office of the corporation is located.
Section 2.04. Demand of Regular or Special Meeting by Shareholders. If a
regular meeting of shareholders has not been held during the immediately
preceding fifteen months, a shareholder or shareholders holding three percent or
more of all voting shares may demand a regular meeting of shareholders by
written notice of demand given to the President or Treasurer of the corporation.
A shareholder or shareholders holding ten percent or more of the voting shares
may demand a special meeting of shareholders by written notice of demand,
stating the purpose of the special meeting, given to the President or Treasurer
of the corporation. Within thirty days after receipt of the demand by the
President or Treasurer, the Board of Directors shall cause the President or
Treasurer or Secretary to call and give notice of the regular or special meeting
to be held no later than ninety days after receipt of the shareholder demand,
all at the expense of the corporation. If the Board fails to cause a regular or
special meeting to be called and held on shareholder demand as described in this
Section, the shareholder or shareholders making the demand may call the meeting
by giving notice in accordance with Section 2.05, all at the expense of the
corporation.
Section 2.05. Notice of Shareholder Meetings. Except as otherwise provided by
statute, written notice of the date, time, and place of any meeting of
shareholders shall be given to every holder of voting shares at such address as
appears on the stock book of the corporation at least five days prior to the
meeting if by mail, or two days prior to the meeting if by telex, telegram, or
in person, except when the meeting is an adjourned meeting and the date, time,
and place of the meeting were announced at the time of adjournment. In the case
of a special meeting, the notice shall contain a statement of the purpose or
purposes of the meeting.
Section 2.06. Waiver of Notice. A shareholder may waive notice of any meeting
of shareholders. A waiver of notice by a shareholder entitled to notice is
effective whether given before, at, or after the meeting, and whether given in
writing, orally or by attendance. Attendance by a shareholder at a meeting is a
waiver of notice of that meeting, except when the shareholder objects at the
beginning of the meeting to the transaction of business because the meeting is
not lawfully called or convened, or objects before a vote on an item of business
because the item may not lawfully be considered at that meeting and does not
participate in the consideration of the item at that meeting.
Section 2.07. Quorum. The holders of a majority of the voting power of
the shares entitled to vote at a meeting, present in person or by proxy, shall
constitute a quorum for the transaction of business. If a quorum is present when
a duly called or held meeting is convened, the shareholders present may continue
to transact any business which could have been transacted at the meeting
originally noticed until adjournment, even though withdrawal of a number of
shareholders originally present leaves less than the proportion or number
otherwise required for a quorum.
<PAGE>
Section 2.08. Adjourned Meeting. If a quorum is not present at any
meeting of shareholders, the shareholders entitled to vote thereat, present in
person or represented by proxy, may adjourn the meeting to a day they shall, by
majority vote, agree upon, and a notice of the adjournment shall be mailed to
each holder of voting shares at least five days before the adjourned meeting. If
a quorum is present, a meeting may be adjourned from time to time without
notice, other than announcement at the meeting. At adjourned meetings at which a
quorum is present, any business may be transacted which could have been
transacted at the meeting originally noticed.
Section 2.09. Voting. At any meeting of shareholders, every shareholder
having the right to vote shall be entitled to vote either in person or by proxy
duly authorized by written appointment and valid at the time of the meeting.
Each shareholder shall have one vote for each share of stock having voting power
and duly registered on the books of the corporation. Except where a greater
percentage is required by statute, the shareholders shall take action by the
affirmative vote of the holders of a majority of the voting power of the shares
present.
Section 2.10. Voting By Class. In any case when a class or series of
shares is entitled by statute or the terms of the shares to vote as a class or
series, the matter being voted upon must also receive the affirmative vote of
the holders of the same proportion of the shares of that class or series as is
required pursuant to Section 2.09.
Section 2.11. Action Without a Meeting. An action required or permitted
to be taken at a meeting of the shareholders may be taken without a meeting by
written action signed by all of the shareholders entitled to vote on that
action. The written action is effective when it has been signed by all of those
shareholders, unless a different effective time is provided in the written
action.
Section 2.12. Record Date. The Board of Directors may fix a time, not
exceeding sixty days preceding the date of any meeting of shareholders, as a
record date for the determination of the holders of voting shares entitled to
notice of and to vote at the meeting, notwithstanding any transfer of shares on
the books of the corporation after any record date so fixed. The Board of
Directors may close the books of the corporation against the transfer of shares
during the whole or any part of the period from the record date through the date
of the meeting.
ARTICLE III.
DIRECTORS
Section 3.01. Powers. The property, affairs, and business of the
corporation shall be managed by the Board of Directors. In addition to the
powers and authorities conferred upon the Board by these Bylaws, the Board may
exercise all such powers of the corporation and do all such lawful acts as are
not by statute or by the Articles of Incorporation or by these Bylaws directed
by or required to be exercised or done by the shareholders.
<PAGE>
Section 3.02. Number, Qualifications, Term of Office. If the first
Board of Directors is not named in the Articles of Incorporation, the
Incorporators may elect the first Board or may act as directors with all of the
powers, rights, duties and liabilities of directors until directors are elected
by the Incorporators or the shareholders. Thereafter, the number of directors of
the corporation shall be such number as may be established from time to time by
the Shareholders. The number of directors may be increased at any time by action
of the Board or shareholders. Vacancies created by reason of an increase in the
number of directors shall be filled in accordance with Section 3.04. The number
of directors may be decreased only by resolution of the shareholders. Directors
need not be shareholders. Each director shall hold office for an indefinite
term, not to exceed five years, that expires at the regular meeting of
shareholders next held after the director's election and until a successor is
elected and has qualified, or until the earlier death, resignation, removal, or
disqualification of the director.
Section 3.03. Removal. The Board of Directors may remove any director
of the corporation at any time, for cause or without cause. New directors may be
elected at a meeting at which directors are removed.
Section 3.04. Vacancies. Vacancies on the Board resulting from the
death, resignation, removal, or disqualification of any director may be filled
by the affirmative vote of a majority of the remaining directors, though less
than a quorum. Vacancies on the Board resulting from newly created directorships
may be filled by the affirmative vote of a majority of the directors serving at
the time of the increase.
Section 3.05. Board Meetings, Notice. Meetings of the Board of
Directors may be held at the day or date, time, and place, as shall be
determined by the Board. If the day or date, time, and place have been announced
at a previous meeting of the Board, or if a meeting schedule is adopted by the
Board, no notice is required. In the absence of a designation by the Board of
Directors, Board meetings shall be held at the principal executive offices of
the corporation, except as may be otherwise unanimously agreed orally or in
writing or by attendance. The President (if a director), the Chairman of the
Board (if one is elected) or one-third of the number of directors then in office
may call a Board meeting by giving five days notice if by mail, or two days
notice if by telephone, telex, telegram, or in person, to all directors of the
day or date and time of the meeting. The notice need not state the purpose of
the meeting.
Section 3.06. Waiver of Notice. A director may waive notice of a
meeting of the Board. A waiver of notice by a director entitled to notice is
effective whether given before, at, or after the meeting, and whether given in
writing, orally, or by attendance. Attendance by a director at a meeting is a
waiver of notice of that meeting, except when the director objects at the
beginning of the meeting to the transaction of business because the meeting is
not lawfully called or convened and does not participate thereafter in the
meeting.
Section 3.07. Quorum. A majority of the directors currently holding
office present at a meeting is a quorum for the transaction of business. in the
absence of a quorum, a majority of the directors present may adjourn a meeting
from time to time until a quorum is present. If a quorum is present when a duly
called or held meeting is convened, the directors present may continue to
<PAGE>
transact business until adjournment, even though the withdrawal of a number of
directors originally present leaves less than the proportion or number required
for a quorum.
Section 3.08. Voting. The Board shall take action by the affirmative
vote of a majority of directors present at a duly held meeting.
Section 3.09. (a) Advance Written Consent or Opposition. Any member of
the Board or a committee thereof, as the case may be, may give advance written
consent or opposition to a proposal to be acted on at a Board or committee
meeting. If a director or committee member is not present at the meeting,
advance written consent or opposition to a proposal does not constitute presence
for the purpose of determining whether a quorum exists, but such advance written
consent or opposition shall be a vote in favor of or against the proposal or
resolution if the proposal or resolution acted upon at the meeting is
substantially the same or has substantially the same effect as the proposal or
resolution to which the member of the Board or committee has consented or
objected.
(b) Action Without Meeting. Any action, other than an action requiring
shareholder approval, may be taken by written action signed by the number of
directors that would be required to take the same action at a meeting of the
board at which all directors were present. An action requiring shareholder
approval required or permitted to be taken at a board meeting may be taken by
written action signed by all of the directors. Any such written action is
effective when signed by the required number of directors, unless a different
effective time is provided in the written action. When written action is taken
by less than all directors, all directors shall be notified immediately of its
text and effective date. Failure to provide the notice does not invalidate the
written action. A director who does not sign or consent to the written action
has no liability for the action or actions taken thereby.
Section 3.10. Electronic Communications. A conference among directors
or any committee thereof by any means of electronic communication through which
the directors may simultaneously hear each other during the conference
constitutes a board meeting, if notice was given in accordance with Section 3.05
and if the number of directors participating in the conference constitutes a
quorum. Participation in a meeting by electronic communications constitutes
presence in person at the meeting.
Section 3.11. Committees. By resolution approved by the affirmative
vote of a majority of the Board of Directors, the Board may establish committees
of one or more persons having the authority of the Board in the management of
the business of the corporation to the extent provided in the resolution.
Committee members shall be appointed by the affirmative vote of a majority of
the Board of Directors. Committee members need not be directors, officers, or
shareholders. A majority of the members of a committee present at a meeting
constitutes a quorum for the transaction of business.
Section 3.12. Compensation. By resolution of the Board of Directors,
directors may receive compensation and expenses of attendance, if any, for their
services as directors, including services on any Committee of the Board of
Directors. Nothing herein contained shall be
<PAGE>
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV.
OFFICERS
Section 4.01. Required Officers. The corporation shall have one or more
persons exercising the functions of the offices, however designated, of
President, Vice President, Treasurer and Secretary. The corporation may also
have one or more Assistant Vice President, Assistant Treasurers and/or Assistant
Secretaries.
Section 4.02. Election; Term of Office; Removal. The Board of Directors
shall elect a President ' Vice President, Treasurer and Secretary, and may elect
such other officers as it may deem necessary for the operation and management of
the corporation, each of whom shall have the duties and responsibilities
incident to the offices which they hold or as determined by the Board. officers
may be but need not be directors or shareholders. officers shall hold office at
the will of the Board for an indefinite term until their successors are elected
and qualified. Any officer elected or appointed by the Board of Directors may be
removed by the Board at any time with or without cause.
Section 4.03. Multiple Offices. Any number of offices or functions of
those offices may be held or exercised by the same person. If a document must be
signed by persons holding different offices or functions and a person holds or
exercises more than one of those offices or functions, that person may sign the
document in more than one capacity, but only if the document indicates each
capacity in which the person signs.
Section 4.04. President. The President shall have general active
management of the business of the corporation; when present, preside at all
meetings of the Board (in the absence of a Chairman of the Board) and of the
shareholders; see that all orders and resolutions of the Board are carried into
effect; sign and deliver in the name of the corporation any deeds, mortgages,
bonds, contracts or other instruments pertaining to the business of the
corporation, except in cases in which the authority to sign and deliver is
required by law to be exercised by another person or is expressly delegated by
the Board to some other officer or agent of the corporation; in the absence of a
corporate secretary shall- maintain records of and, whenever necessary,, certify
all proceedings of the Board and the shareholders; and perform such other duties
as are prescribed by the Board.
Section 4.05. Treasurer. The Treasurer shall, except where such duties
are expressly delegated by the Board to some other officer or agent, keep
accurate financial records for the corporation; deposit all money, drafts, and
checks in the name of and to the credit of the corporation in the banks and
depositories designated by the Board; endorse for deposit all notes, checks, and
drafts received by the corporation as ordered by the Board, making proper
vouchers therefor; disburse corporate funds and issue checks and drafts in the
name of the corporation as ordered by the Board; render to the President and the
Board, whenever requested, an account of
<PAGE>
all transactions by the Treasurer and of the financial condition of the
corporation; and perform other duties prescribed by the Board or by the
President.
ARTICLE V.
CERTIFICATES OF STOCK
Section 5.01. Certificates. Certificates of stock of the corporation
shall be numbered and shall be entered into the books of the corporation as they
are issued. Each such certificate shall exhibit the holder's name and number of
shares, and shall be signed by the President and Secretary. Such signatures may
be by facsimile if authorized by the Board.
Section 5.02. Lost Certificates. Any shareholder claiming that a
certificate for shares has been lost, destroyed, or wrongfully taken, shall make
an affidavit in such form as the Board of Directors may require, and shall take
such action as is required by Minnesota Statutes, whereupon a new certificate or
equivalent uncertificated security may be issued of the same tenor and for the
same number of shares as the one alleged to be lost, destroyed or wrongfully
taken.
ARTICLE VI.
NOTICES
Section 6.01. Written Notice. Whenever under the provisions of these
Bylaws, written notice is required to be given to any person, such notice may be
given by mail, telegram, or telex at the address designated by the person on the
books of the corporation or at the last known address of the person, or when
handed to the person, or when left at the office of the person with a clerk or
other person in charge of the office, of if there is no one in charge, when left
in a conspicuous place in the office, or if the office is closed or the person
to be notified has no office, when left at the dwelling house or usual place of
abode of the person with some person of suitable age and discretion then
residing therein. Notice is given to the corporation when mailed or delivered to
it at its registered office. Notice by mail is given when deposited in the
United States mail with sufficient postage affixed.
Section 6.02. Waiver of Notice. Whenever notice is required to be given
to any director or officer of the corporation under the provisions of these
Bylaws or under the provisions of the Articles of Incorporation or by statute, a
waiver thereof in writing signed by the person or persons entitled to such
notice, shall be deemed equivalent to the giving of such notice.
ARTICLE VII.
INDEMNIFICATION
Section 7.01. The corporation shall indemnify persons for such expenses
and liabilities in such manner, under such circumstances, and to the extent
required by Minnesota Statutes.
<PAGE>
ARTICLE VIII.
AMENDMENTS
Section 8.01. Subject to the power of shareholders to adopt, amend, or
repeal these Bylaws as provided in Minnesota Statutes, any Bylaw may be amended
or repealed by the Board of Directors at any meeting, provided that, after
adoption of the initial Bylaws, the Board shall not adopt, amend, or repeal a
Bylaw fixing a quorum for meetings of shareholders, prescribing procedures for
removing directors or filling vacancies in the Board, or fixing the number of
directors or their classifications, qualifications, or terms of office, except
that the Board may adopt or amend a Bylaw to increase the number of directors.
<PAGE>
EXHIBIT 3.3
ARTICLES OF ORGANIZATION
OF
AOA HOLDING LLC
The undersigned organizer, being a natural person 18 years of age or
older, in order to form a limited liability company under Minnesota Statutes,
Chapter 322B, hereby adopts the following Articles of Organization:
ARTICLE I
Name
The name of this Company is AOA Holding LLC.
ARTICLE II
Registered Office and Registered Agent
The registered office of the Company is located at 90 South 7th Street,
Suite 5500, Minneapolis, MN 55402.
ARTICLE III
Period of Existence
Unless the Company is dissolved earlier in accordance with law, the period of
existence of the Company shall be 33 years from the date of filing of these
Articles of Organization.
ARTICLE IV
Organizer
The name and address of the organizer of this Company is as follows:
NAME ADDRESS
---- -------
Robert T. York 90 South 7th Street
Suite 5500
Minneapolis, MN 55402
ARTICLE V
Consent to avoid Dissolution
Unless dissolved earlier according to law, this Company shall exist for
a period of thirty years from and after the date these Articles of Organization
are filed with the Minnesota Secretary of State.
1
<PAGE>
ARTICLE VI
Business Continuation Agreement
Upon the occurrence of any event under Section 322B.80, subdivision 1,
clause (5) of the Minnesota Statutes that terminates the continued membership of
a member in the Company and leaves the Company with at least two remaining
members, the remaining members shall have the power to avoid dissolution by
giving dissolution avoidance consent.
ARTICLE VII
Preemptive Rights Prohibition
The members of the Company shall have the power to enter into a
business continuation agreement.
ARTICLE VIII
Cumulative Voting Prohibition
Any action required or permitted to be taken at a meeting of the Board
of Governors of this Company not needing approval by the members may be taken by
written action signed by the number of governors that would be required to take
such action at a meeting of the Board of Governors at which all governors are
present.
ARTICLE IX
Limitation of Liability of Governors
No governor of this Company shall be personally liable to the Company
or its members for monetary damages for breach of fiduciary duty by such
governor as a governor; provided, however, that this Article shall not eliminate
or limit the liability of a governor to the extent provided by applicable law
(i) for any breach of the governor's duty of loyalty to the Company or its
members, (ii) for facts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
322B.56 or 80A.23 of the Minnesota Statutes, (iv) for any transaction from which
the governor derived an improper personal benefit or (v) for any act or omission
occurring prior to the effective date of this Article. No amendment to or repeal
of this Article shall apply to or have any effect on the liability or alleged
liability of any governor of the Company for or with respect to any acts or
omissions of such governor occurring prior to such amendment or repeal.
ARTICLE X
Action by Written Consent
Any action required or permitted to be taken at a meeting of the Board
of Governors, which does not require the approval of the members, may be taken
by written action signed by the number of governors that would be required to
take the same action at a meeting at which all governors were present. However,
if the action is one which must be approved by the members, such action may be
taken by written action signed by all of the governors then in office.
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Any action required or permitted to be taken at a meeting of the
members may be taken by written action signed by the members who possess the
voting power that would be required to take the same action at a meeting of the
members at which all members were present.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of May,
1999.
ORGANIZER:
/s/ Robert T. York
Robert T. York
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Exhibit 3.4
OPERATING AGREEMENT
OF
AOA HOLDING LLC
MEMBERS
Section 1.01 Place of Meetings. Each meeting of the members shall be held
at the principal executive office of the Company or at such other place as may
be designated by the Board of Governors or the Chief Manager; provided, however,
that any meeting called by or at the demand of a member or members shall be held
in the county where the principal executive office of the Company is located.
Section 1.02 Regular Meetings. Regular meetings of the members may be held
on an annual or other less frequent basis as determined by the Board of
Governors; provided, however, that if a regular meeting has not been held during
the immediately preceding 15 months, any member may demand a regular meeting of
members by written demand given to the Chief Manager or Treasurer of the
Company. At each regular meeting, the members entitled to vote shall elect
qualified successors for governors who serve for an indefinite term or whose
terms have expired or are due to expire within six months after the date of the
meeting and may transact any other business, provided, however, that no business
with respect to which special notice is required by law shall be transacted
unless such notice shall have been given.
Section 1.03 Special Meetings. A special meeting of the members may be
called for any purpose or purposes at any time by the Chief Manager; by the
Treasurer; by the Board of Governors or any two or more governors; or by one or
more members owning not less than ten percent of the voting power of all
membership interests of the Company entitled to vote, who shall demand such
special meeting by written notice given to the Chief Manager or the Treasurer of
the Company specifying the purposes of such meeting.
Section 1.04 Meetings Held Upon Member Demand. Within 30 days after receipt
of a demand by the Chief Manager or the Treasurer from any member or members
entitled to call a meeting of the members, it shall be the duty of the Board of
Governors of the Company to cause a special or regular meeting of members, as
the case may be, to be duly called and held on notice no later than 90 days
after receipt of such demand. If the Board fails to cause such a meeting to be
called and held as required by this Section, the member or members making the
demand may call the meeting by giving notice as provided in Section 1.06 hereof
at the expense of the Company.
Section 1.05 Adjournments. Any meeting of the members may be adjourned from
time to time to another date, time and place. If any meeting of the members is
so adjourned, no notice as to such adjourned meeting need be given if the date,
time and place at which the meeting will be reconvened are announced at the time
of adjournment.
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Section 1.06 Notice of Meetings. Unless otherwise required by law, written
notice of each meeting of the members, stating the date, time and place and, in
the case of a special meeting, the purpose or purposes, shall be given at least
ten days and not more than 60 days prior to the meeting to every owner of
membership interests entitled to vote at such meeting except as specified in
Section 1.05 or as otherwise permitted by law. The business transacted at a
special meeting of members is limited to the purposes stated in the notice of
the meeting.
Section 1.07 Waiver of Notice. A member may waive notice of the date, time,
place and purpose or purposes of a meeting of members. A waiver of notice by a
member entitled to notice is effective whether given before, at or after the
meeting, and whether given in writing, orally or by attendance. Attendance by a
member at a meeting is a waiver of notice of that meeting, unless the member
objects at the beginning of the meeting to the transaction of business because
the meeting is not lawfully called or convened, or objects before a vote on an
item of business because the item may not lawfully be considered at that meeting
and does not participate in the consideration of the item at that meeting.
Section 1.08 Voting Rights. A member shall have voting power in proportion
to the member's voting interest as provided in a member control agreement.
Except as otherwise required by law, an owner of a membership interest entitled
to vote may vote any portion of the membership interest in any way the member
chooses. If a member votes without designating the proportion of the membership
interest voted in a particular way, the member is deemed to have voted all of
the membership interest in that way.
Section 1.09 Proxies. A member may cast or authorize the casting of a vote
by filing a written appointment of a proxy with a manager of the Company at or
before the meeting at which the appointment is to be effective. The member may
sign or authorize the written appointment by telegram, cablegram or other means
of electronic transmission setting forth or submitted with information
sufficient to determine that the member authorized such transmission. Any copy,
facsimile, telecommunication or other reproduction of the original of either the
writing or transmission may be used in lieu of the original, provided that it is
a complete and legible reproduction of the entire original.
Section 1.10 Quorum. The owners of a majority of the voting power of the
membership interests entitled to vote at a meeting of the members are a quorum
for the transaction of business, unless a larger or smaller proportion is
provided in the Articles of Organization of the Company or a member control
agreement. If a quorum is present when a duly called or held meeting is
convened, the members present may continue to transact business until
adjournment, even though the withdrawal of members originally present leaves
less than the proportion otherwise required for a quorum.
Section 1.11 Acts of Members. Except as otherwise required by law or
specified in the Articles of Organization of the Company or a member control
agreement, the members shall take action by the affirmative vote of the owners
of the greater of (a) a majority of the voting power of the membership interests
present and entitled to vote on that item of business or (b) a majority of the
voting power that would constitute a quorum for the transaction of business at a
duly held meeting of members.
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Section 1.12 Action Without a Meeting. Any action required or permitted to
be taken at a meeting of the members of the Company may be taken without a
meeting by written action signed by all of the members entitled to vote on that
action. Any action, if the Articles of Organization or a member control
agreement so provide, may be taken by written action signed by the members who
own voting power equal to the voting power that would be required to take the
same action at a meeting of the members at which all members were present. The
written action is effective when signed by the required members, unless a
different effective time is provided in the written action. When written action
is permitted to be taken by less than all members, all members shall be notified
immediately of its text and effective date.
GOVERNORS
Section 2.01 Number; Qualifications. Except as authorized by the members
pursuant to a member control agreement or unanimous affirmative vote, the
business and affairs of the Company shall be managed by or under the direction
of a Board of one or more governors. Governors shall be natural persons. The
members at each regular meeting shall determine the number of governors to
constitute the Board, provided that thereafter the authorized number of
governors may be increased by the members or the Board and decreased by the
members. Governors need not be members.
Section 2.02 Term. Each governor shall serve for an indefinite term that
expires at the next regular meeting of the members. A governor shall hold office
until a successor is elected and has qualified or until the earlier death,
resignation, removal or disqualification of the governor.
Section 2.03 Vacancies. Vacancies on the Board of Governors resulting from
the death, resignation, removal or disqualification of a governor may be filled
by the affirmative vote of a majority of the remaining governors, even though
less than a quorum. Vacancies on the Board resulting from newly created
governorships may be filled by the affirmative vote of a majority of the
governors serving at the time such governorships are created. Each person
elected to fill a vacancy shall hold office until a qualified successor is
elected by the members at the next regular meeting or at any special meeting
duly called for that purpose.
Section 2.04 Place of Meetings. Each meeting of the Board of Governors
shall be held at the principal executive office of the Company or at such other
place as may be designated from time to time by a majority of the governors or
by the Chief Manager. A meeting may be held by conference among the governors
using any means of communication through which the governors may simultaneously
hear each other during the conference.
Section 2.05 Regular Meetings. Regular meetings of the Board of Governors
for the election of managers and the transaction of any other business shall be
held without notice at the place of and immediately after each regular meeting
of the members.
Section 2.06 Special Meetings. A special meeting of the Board of Governors
may be called for any purpose or purposes at any time by any governor by giving
not less than two days' notice to all governors of the date, time and place of
the meeting, provided that when notice is mailed, at least four days' notice
shall be given. The notice need not state the purpose of the meeting.
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Section 2.07 Waiver of Notice; Previously Scheduled Meetings.
Subdivision 1. A governor of the Company may waive notice of the date, time
and place of a meeting of the Board. A waiver of notice by a governor entitled
to notice is effective whether given before, at or after the meeting, and
whether given in writing, orally or by attendance. Attendance by a governor at a
meeting is a waiver of notice of that meeting, unless the governor objects at
the beginning of the meeting to the transaction of business because the meeting
is not lawfully called or convened and thereafter does not participate in the
meeting.
Subdivision 2. If the day or date, time and place of a Board meeting have
been provided herein or announced at a previous meeting of the Board, no notice
is required. Notice of an adjourned meeting need not be given other than by
announcement at the meeting at which adjournment is taken of the date, time and
place at which the meeting will be reconvened.
Section 2.08 Quorum. A majority of the governors currently holding office
shall be necessary to constitute a quorum for the transaction of business. In
the absence of a quorum, a majority of the governors present may adjourn a
meeting from time to time without further notice until a quorum is present. If a
quorum is present when a duly called or held meeting is convened, the governors
present may continue to transact business until adjournment, even though the
withdrawal of a number of the governors originally present leaves less than the
proportion or number otherwise required for a quorum.
Section 2.09 Acts of Board. Except as otherwise required by law or
specified in the Articles of Organization of the Company or a member control
agreement, the Board shall take action by the affirmative vote of a majority of
the governors present at a duly held meeting.
Section 2.10 Participation by Electronic Communications. A governor may
participate in a Board meeting by any means of communication through which the
governor, other governors so participating and all governors physically present
at the meeting may simultaneously hear each other during the meeting. A governor
so participating shall be deemed present in person at the meeting.
Section 2.11 Absent Governors. A governor of the Company may give advance
written consent or opposition to a proposal to be acted on at a Board meeting.
If the governor is not present at the meeting, consent or opposition to a
proposal does not constitute presence for purposes of determining the existence
of a quorum, but consent or opposition shall be counted as a vote in favor of or
against the proposal and shall be entered in the minutes or other record of
action at the meeting, if the proposal acted on at the meeting is substantially
the same or has substantially the same effect as the proposal to which the
governor has consented or objected.
Section 2.12 Action Without a Meeting. An action required or permitted to
be taken at a Board meeting may be taken without a meeting by written action
signed by all of the governors. Any action, other than an action requiring
member approval, if the Articles of Organization or a member control agreement
so provide, may be taken by written action signed by the number of governors
that would be required to take the same action at a meeting of the Board at
which all governors were present. The written action is effective when signed by
the required number of governors, unless a different effective time is provided
in the written action. When written action is
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permitted to be taken by less than all governors, all governors shall be
notified immediately of its text and effective date.
Section 2.13 Committees.
Subdivision 1. A resolution approved by the affirmative vote of a majority
of the Board may establish committees having the authority of the Board in the
management of the business of the Company only to the extent provided in the
resolution. Committees shall be subject at all times to the direction and
control of the Board, except as provided in Section 2.14.
Subdivision 2. A committee shall consist of one or more natural persons,
who need not be governors, appointed by affirmative vote of a majority of the
governors present at a duly held Board meeting.
Subdivision 3. Section 2.04 and Sections 2.06 to 2.12 hereof shall apply to
committees and members of committees to the same extent as those sections apply
to the Board and governors.
Subdivision 4. Minutes, if any, of committee meetings shall be made
available upon request to members of the committee and to any governor.
Section 2.14. Special Litigation Committee. Pursuant to the procedure set
forth in Section 2.13, the Board may establish a committee composed of one or
more independent governors or other independent persons to determine whether it
is in the best interests of the Company to pursue a particular legal right or
remedy of the Company and whether to cause, to the extent permitted by law, the
dismissal or discontinuance of a particular proceeding that seeks to assert a
right or remedy on behalf of the Company. The committee, once established, is
not subject to the direction or control of, or termination by, the Board. A
vacancy on the committee may be filled by a majority vote of the remaining
committee members. The good faith determinations of the committee are binding
upon the Company and its governors, managers and members to the extent permitted
by law. The committee terminates when it issues a written report of its
determinations to the Board.
Section 2.15 Compensation. The Board may fix the compensation, if any, of
governors.
MANAGERS
Section 3.01 Number and Designation. The Company shall have one or more
natural persons exercising the functions of the position of Chief Manager and
Treasurer. The Board of Governors may elect or appoint such other managers or
agents as it deems necessary for the operation and management of the Company,
with such powers, rights, duties and responsibilities as may be determined by
the Board, each of whom shall have the powers, rights, duties and
responsibilities set forth in this Operating Agreement unless otherwise
determined by the Board. Any of the positions or functions of those positions
may be held by the same person.
Section 3.02 Chief Manager. Unless provided otherwise by a resolution
adopted by the Board of Governors, the Chief Manager (a) shall have general
active management of the business of the Company; (b) shall, when present,
preside at all meetings of the members and Board; (c) shall see that all orders
and resolutions of the Board are carried into effect; (d) may maintain
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records of and certify proceedings of the Board and members; and (e) shall
perform such other duties as may from time to time be prescribed by the Board.
Section 3.03 Treasurer. Unless provided otherwise by a resolution adopted
by the Board of Governors, the Treasurer (a) shall keep accurate financial
records for the Company; (b) shall deposit all moneys, drafts and checks in the
name of and to the credit of the Company in such banks and depositories as the
Board shall designated from time to time; (c) shall endorse for deposit all
notes, checks and drafts received by the Company as ordered by the Board, making
proper vouchers therefor; (d) shall disburse Company funds and issue checks and
drafts in the name of the Company, as ordered by the Board; (e) shall render to
the Chief Manager and the Board, whenever requested, an account of all of such
manager's transactions as Treasurer and of the financial condition of the
Company; and (f) shall perform such other duties as may be prescribed by the
Board or the Chief Manager from time to time.
Section 3.04 President. Unless otherwise determined by the Board of
Governors, the President shall be the Chief Manager of the Company. If a manager
other than the President is designated Chief Manager, the President shall
perform such duties as may from time to time be assigned by the Board.
Section 3.05 Vice Presidents. Any one or more Vice Presidents, if any, may
be designated by the Board of Governors as Executive Vice presidents or Senior
Vice Presidents. During the absence or disability of the President, it shall be
the duty of the highest ranking Executive Vice President and, in the absence of
any such Vice President, it shall be the duty of the highest ranking Senior Vice
President or other Vice President, who shall be present at the time and able to
act, to perform the duties of the President. The determination of who is the
highest ranking of two or more persons holding the same position shall, in the
absence of specific designation of order of rank by the Board, be made on the
basis of the earliest date of appointment or election, or, in the event of a
simultaneous appointment or election, on the basis of the longest continuous
employment by the Company.
Section 3.06 Secretary. The Secretary, unless otherwise determined by the
Board of Governors, shall attend all meetings of the members and all meetings of
the Board, shall record or cause to be recorded all proceedings thereof in a
book to be kept for that purpose, and may certify such proceedings. Except as
otherwise required or permitted by law or by this Operating Agreement, the
Secretary shall give or cause to be given notice of all meetings of the members
and all meetings of the Board.
Section 3.07 Authority and Duties. In addition to the foregoing authority
and duties, all managers of the Company shall respectively have such authority
and perform such duties in the management of the business of the Company as may
be designated from time to time by the Board of Governors. Unless prohibited by
a resolution approved by the affirmative vote of a majority of the governors
present, a manager elected or appointed by the Board may, without the approval
of the Board, delegate some or all of the duties and powers of a position to
other persons.
Section 3.08 Term.
Subdivision 1. All managers of the Company shall hold office until their
respective successors are chosen and have qualified or until their earlier
death, resignation or removal.
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Subdivision 2. A manager may resign at any time by giving written notice to
the Company. The resignation is effective without acceptance when the notice is
given to the Company, unless a later effective date is specified in the notice.
Subdivision 3. A manager may be removed at any time, with or without cause,
by a resolution approved by the affirmative vote of a majority of the governors
present at a duly held Board meeting, subject to the provisions of any member
control agreement.
Subdivision 4. A vacancy in a position because of death, resignation,
removal, disqualification or other cause may, or in the case of a vacancy in the
position of Chief Manager or Treasurer shall, be filled for the unexpired
portion of the term by the Board.
Section 3.09 Salaries. The salaries of all managers of the Company shall be
fixed by the Board of Governors or by the Chief Manager if authorized by the
Board.
INDEMNIFICATION
Section 4.01 Indemnification. The Company shall indemnify its managers and
governors for such expenses and liabilities, in such manner, under such
circumstances, and to such extent, as required or permitted by Minnesota
Statutes, Section 322B.699, as amended from time to time, or as required or
permitted by other provisions of law.
Section 4.02 Insurance. The Company may purchase and maintain insurance on
behalf of any person in such person's official capacity against any liability
asserted against and incurred by such person in or arising from that capacity,
whether or to the Company would otherwise be required to indemnify the person
against the liability.
MEMBERSHIP INTERESTS
Section 5.01 Statement of Membership Interest. At the request of any
member, the Company shall state in writing the particular membership interest
owned by that member as of the moment the Company makes the statement. The
statement must describe the member's rights to vote, to share in profits and
losses, and to share in distributions, as well as any assignment of the member's
rights then in effect.
Section 5.02 Declaration of Distributions. The Board of Governors shall
have the authority to declare distributions upon the membership interests of the
Company to the extent permitted by law.
Section 5.03 Transfer of Membership Interests. Membership interests in the
Company may be transferred only to the extent permitted by law and subject to
any member control agreement.
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MISCELLANEOUS
Section 6.01 Execution of Instruments. Consent to avoid Dissolution.
Subdivision 1. All deeds, mortgages, bonds, checks, contracts and other
instruments pertaining to the business and affairs of the Company shall be
signed on behalf of the Company by the Chief Manager, or the President, or any
Vice President, or by such other person or persons as may be designated from
time to time by the Board of Governors.
Subdivision 2. If a document must be executed by persons holding different
positions or functions and one person holds such positions or exercises such
functions, that person may execute the document in more than one capacity if the
document indicates each such capacity.
Section 6.02 Advances. The Company may, without a vote of the governors,
advance money to its governors, managers or employees to cover expenses that can
reasonably be anticipated to be incurred by them in the performance of their
duties and for which they would be entitled to reimbursement in the absence of
an advance.
Section 6.03 Company Seal. The seal of the Company, if any, shall be a
circular embossed seal having inscribed thereon the name of the Company and the
following words:
"Limited Liability Company Seal Minnesota."
Section 6.04 Fiscal Year. The fiscal year of the Company shall be
determined by the Board of Governors.
Section 6.05 Construction. This Operating Agreement is subject to the terms
of any member control agreement from time to time in effect and to the extent
inconsistent the member control agreement shall be controlling.
Section 6.06 Amendments. The Board of Governors shall have the power to
adopt, amend or repeal the Operating Agreement of the Company, subject to the
power of the members to change or repeal the same, provided, however, that the
Board shall not adopt, amend or repeal any Section fixing a quorum for meetings
of members, prescribing procedures for removing governors or filling vacancies
in the Board, or fixing the number of governors or their classifications,
qualifications or terms of office, but may adopt or amend a Section that
increases the number of governors.
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IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
5th day of May, 1999.
GOVERNORS:
/s/ Stephen Adams
Stephen Adams
/s/ Kevin Gleason
Kevin Gleason
/s/ George Pransky
George Pransky
/s/ David Frith-Smith
David Frith-Smith
/s/ Andris A. Baltins
Andris A. Baltins
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EXHIBIT 3.5
MEMBER CONTROL AGREEMENT
OF
AOA HOLDING LLC
THIS MEMBER CONTROL AGREEMENT is made as of the 5th day of May, 1999,
by the undersigned:
RECITALS
WHEREAS, the undersigned constitutes the sole member of AOA Holding
LLC, a Minnesota limited liability company; and
WHEREAS, Section 322B.37 of the Minnesota limited liability company act
authorizes a "member control agreement" as defined therein; and
WHEREAS, the undersigned wishes to enter into such an agreement,
NOW, THEREFORE, the undersigned agrees as follows:
ARTICLE I
Definitions
Section 1.01 Definitions. The terms defined in this Article I (except
as may be otherwise expressly provided in this Agreement or unless the context
otherwise requires) shall, for all purposes of this Agreement, have the
following respective meanings:
"Act" means the Minnesota limited liability company act contained in
Minnesota Statutes, Section 322B.
"Agreement" means this Member Control Agreement as hereafter amended
from time to time, including any schedules to the Agreement.
"Board" or "Board of Governors" means the board of governors of the
Company.
"Capital Account" means the account of a Member which is maintained in
accordance with the provisions of Section 3.07 hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor thereto. Any reference herein to specific sections of the Code shall
be deemed to include a reference to any corresponding provisions of future law.
"Company" means AOA Holding LLC, a Minnesota limited liability company.
"Distribution" means the distributions to the Members of cash or other
assets of the Company made from time to time pursuant to the provisions of this
Agreement.
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"Estimated Member Tax Liability" means 40% of the taxable income and
gains of the Company as reported on the Company's federal partnership tax return
for the fiscal year.
"Financial Rights" means a member's rights to share in Net Income and
Net Losses and Distributions with respect to a membership interest in accordance
with the terms of this Agreement.
"Governance Rights" means all of a member's rights as a member in the
Company other than Financial Rights and the right to assign Financial Rights.
"Governor" means a natural person serving on the Board of Governors.
"Manager" means a person elected, appointed, or otherwise designated as
a manager by the Board of Governors, and any other person considered elected as
a manager pursuant to the Act.
"Member" means a person reflected in the required records of the
Company as the owner of some Governance Rights of a Membership Interest of the
Company.
"Membership Interest" means a Member's interest in the Company
consisting of the Member's Financial Rights and Governance rights with respect
to the Company.
"Net Income" and "Net Losses" mean the profits and losses of the
Company, as the case may be, as determined for federal income tax purposes as of
the close of each of the fiscal years of the Company.
"Percentage Interest" as to any Member means the "Percentage Interest"
reflected on Schedule A for such Member.
"Voting Interest" as to any Member means the "Voting Interest"
reflected on Schedule A for such Member.
ARTICLE II
First Governors
Section 2.01 First Governors. The first board of governors of the
Company shall consist of Stephen Adams, Kevin Gleason, George Pransky, David
Frith-Smith and Andris A. Baltins, who are hereby elected to hold office until
their successor(s) is (are) elected and qualified pursuant to the Operating
Agreement of the Company.
ARTICLE III
Membership Interests
Section 3.01 Membership Interests and Board Authority as to Additional
Membership Interests. The names of the Members and their respective
contributions and the agreed value thereof are reflected on Schedule A, which is
attached hereto and incorporated herein by reference.
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No additional contributions shall be accepted and Membership Interests granted
by the Board without the consent of more than 51% of the outstanding Voting
Interests. Upon such consent and the issuance of additional Membership
Interests, Schedule A shall be appropriately amended.
Section 3.02 Terms of Membership Interests. The original Membership
Interests reflected in Schedule A are ordinary membership interests of one
class, without series, and shall have the rights provided by law, subject to any
statement in this Agreement of the specific rights or terms of such Membership
Interests.
Section 3.03 Allocation of Net Income and Net Losses. Net Income and
Net Losses shall be allocated annually among the Members based on their
Percentage Interests as reflected on Schedule A.
Section 3.04 Operating Distributions. Any distributions authorized by
the Board other than Liquidating Distributions pursuant to Section 3.05 shall be
distributed among the Members based on their Percentage Interests as reflected
on Schedule A; provided, however, that the Board shall annually distribute cash
to the members based on their Percentage Interests as reflected on Schedule A in
an amount equal to the Estimated Member Tax Liability to the extent such a
distribution is legally permitted.
Section 3.05 Liquidating Distributions. If the Company is dissolved and
(i) dissolution is not avoided under section 5.01 and (ii) its business is being
liquidated in accordance with Section 322B.873, Subd. 1, the Company shall cease
to carry on its business, except to the extent necessary for the winding up of
the business of the Company. The Company shall thereafter be wound up and
terminated as provided by the Act. All tangible or intangible property of the
Company, including money, remaining after the discharge of the debts,
obligations, and liabilities of the Company shall be distributed to the Members
as follows:
(a) to the Members in proportion to, and to the extent of, the
positive balances in their Capital Accounts; and
(b) to the Members in accordance with their Percentage
Interests as set forth on Schedule A.
Section 3.06 Voting. Members shall be entitled to vote on all matters
in proportion to their Voting Interests as set forth on Schedule A.
Section 3.07 Capital Accounts. A Capital Account shall be established
for each Member and shall be maintained in accordance with Treasury Regulation
ss.1.704-1(b). Any Member who shall receive any Membership Interest in the
Company or whose Membership Interest shall be increased by means of the transfer
to such Member of any financial interest in the Company from another Member
shall have a Capital Account that has been appropriately adjusted to reflect
such transfer. No interest shall be paid by the Company on capital contributions
or on balances in Members' Capital Accounts.
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Section 3.08 Additional Capital Contributions. No Member shall have any
obligation to make additional capital contributions to the Company or to fund,
advance, or loan moneys which may be necessary to pay deficits, if any, incurred
by the Company during the term hereof. Members may make loans to the Company
from time to time, as authorized by the Board. Any payment or transfer accepted
by the Company from a Member which is not a capital contribution complying with
Section 3.01 shall be deemed a loan and shall neither be treated as a
contribution to the capital of the Company for any purpose hereunder, nor
entitle such Member (as such) to any increase in such Member's Percentage
Interest. Any such loan shall be repaid at such times and with such interest (at
rates not to exceed the maximum permitted by law) as the Board and the lending
Member shall reasonably agree.
ARTICLE IV
Tax Matters
Section 4.01 Tax Characterization and Returns. The Members acknowledge
that the Company will be treated as a "partnership" for tax purposes. Within 90
days after the end of each fiscal year, the Chief Manager will cause to be
delivered to each person who was a Member at any time during such fiscal year a
Form K-1 and such other information, if any, with respect to the Company as may
be necessary for the preparation of such Member's federal or state income tax
(or information) returns, including a statement showing each Member's share of
income, gain, or loss and credits for such fiscal year for federal or state
income tax purposes.
Section 4.02 Accounting Decisions. All decisions as to accounting
matters shall be made by the Board in its sole discretion. The Company, at the
sole discretion of the Board, also may make or revoke such elections as may be
allowed pursuant to the Code, including the election referred to in Section 754
of the Code to adjust the basis of Company property.
Section 4.03 Tax Matters Partner. The Board shall designate a Member to
act on behalf of the Company as the "tax matters partner" within the meaning of
Section 6231(a)(7) of the Code.
ARTICLE V
Transfers of Interests
Section 5.01 Transfers. A Member may assign the Member's full
Membership Interest only by assigning all of the Member's Governance Rights
coupled with a simultaneous assignment to the same assignee of all of the
Member's Financial Rights. A Member's Governance Rights may be assigned, without
the consent of any other Member, in whole or in part, to another person already
a Member at the time of the assignment. Any other assignment of any Governance
Rights is effective only if (i) all the Members, other than the Member seeking
to make the assignment, approve the assignment by unanimous written consent,
which consent may be given or withheld, conditioned or delayed as the remaining
Members may determine in their sole discretion, and (ii) if the assignee
executes this Agreement as amended to reflect such assignee's interest in the
Company and any other instrument or instruments that the Board may deem
necessary or desirable to effect such assignment, a Member's Financial Rights
may be transferred, in whole or in part, without the consent of the Board or any
other Member.
4
<PAGE>
ARTICLE VI
Amendments
Section 6.01 Amendment of Agreement. No change, modification or
amendment of this Agreement shall be valid or binding unless such change,
modification or amendment shall be in writing signed by 51% of the Voting
Interests.
ARTICLE VII
Miscellaneous
Section 7.01 Governing Law. This Agreement and the rights of the
parties hereunder will be governed by, interpreted and enforced in accordance
with the laws of the State of Minnesota.
Section 7.02 Binding Effect. This Agreement will be binding upon and
inure to the benefit of the Members, and their respective distributees,
successors and assigns.
Section 7.03 Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under the present or future laws
effective during the term of this Agreement, such provision will be fully
severable; this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Agreement;
and the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance form this Agreement. Furthermore, in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.
Section 7.04 Multiple Counterparts. This Agreement may be executed in
several counterparts, each of which will be deemed an original but all of which
will constitute one and the same instrument. However, in making proof hereof it
will be necessary to produce only one copy hereof signed by the party to be
charged.
Section 7.05 Additional Documents and Acts. Each Member agrees to
execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
the transactions contemplated hereby.
Section 7.06 No Third Party Beneficiary. This Agreement is made solely
and specifically among and for the benefit of the parties hereto, and their
respective successors and assigns, and no other person will have any rights,
interests or claims hereunder or be entitled to any benefits under or on account
of this Agreement as a third party beneficiary or otherwise.
Section 7.07 Notices. Any notice to be given or to be served upon the
Company or any party hereto in connection with this Agreement must be in writing
and will be deemed to have been given and received when delivered to the address
specified by the party to receive the notice. Such notices will be given to a
Member at the address specified in the Company's Required Records.
5
<PAGE>
Any Member or the Company may, at any time by giving 5 days' prior written
notice to the other Members and the Company, designate any other address in
substitution of the foregoing address to which such notice will be given.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the day and date above set forth.
/s/ Stephen Adams
-------------------------
Stephen Adams
6
<PAGE>
SCHEDULE A
Name of Member Contribution Percentage Voting
Interest Interest
Stephen Adams 68.3% Limited Partnership Interest in 100% 100%
Adams Outdoor Advertising Limited
Partnership;
.7% General Partnership Interest in
Adams Outdoor Advertising Limited
Partnership;
10,000 Shares of Common Stock of
Adams Outdoor Advertising, Inc.,
represented by Stock Certificate #4.
7
<PAGE>
EXHIBIT 4.1
================================================================================
AOA HOLDING LLC
AOA CAPITAL CORP,
as Issuers,
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
----------------
INDENTURE
Dated as of May 26, 1999
----------------
$50,000,000
103/8% Senior Notes Due 2006
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
---------------------
TIA Section Indenture Section
- ----------- -----------------
ss. 310(a)(1)....................................................7.10
(a)(2)....................................................7.10
(a)(3)....................................................N.A.
(a)(4)....................................................N.A.
(a)(5)....................................................7.10
(b).......................................................7.8; 7.10; 10.2
(c).......................................................N.A.
ss. 311(a) ......................................................7.11
(b).......................................................7.11
(c).......................................................N.A.
ss. 312(a) ......................................................2.6
(b).......................................................10.3
(c).......................................................10.3
ss. 313(a) ......................................................7.6
(b)(1)....................................................N.A.
(b)(2)....................................................7.6
(c).......................................................7.6; 10.2
(d).......................................................7.6
ss. 314(a) ......................................................4.6; 4.7; 10.2
(b).......................................................N.A.
(c)(1)....................................................10.4
(c)(2)....................................................10.4
(c)(3)....................................................10.4
(d).......................................................N.A.
(e).......................................................10.5
(f).......................................................N.A.
ss. 315(a) ......................................................7.1(b)
(b).......................................................7.5; 10.2
(c).......................................................7.1(a)
(d).......................................................7.1(c)
(e).......................................................6.11
ss. 316(a) (last sentence).......................................2.10
(a)(1)(A).................................................6.5
(a)(1)(B).................................................6.4
(a)(2)....................................................N.A.
(b).......................................................6.7
(c).......................................................9.4
ss. 317(a)(1)....................................................6.8
(a)(2)....................................................6.9
(b).......................................................2.5
ss. 318(a) ......................................................10.1
(c).......................................................10.1
- -----------------------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.....................................................1
SECTION 1.2 Other Definitions..............................................23
SECTION 1.3 Incorporation by Reference to Trust Indenture Act..............24
SECTION 1.4 Rules of Construction..........................................25
ARTICLE II
THE NOTES
SECTION 2.1 Amount of Notes................................................25
SECTION 2.2 Form and Dating................................................26
SECTION 2.3 Execution and Authentication...................................26
SECTION 2.4 Registrar and Paying Agent.....................................27
SECTION 2.5 Paying Agent to Hold Money in Trust............................28
SECTION 2.6 Noteholder Lists...............................................29
SECTION 2.7 Transfer and Exchange..........................................29
SECTION 2.8 Replacement Notes..............................................30
SECTION 2.9 Outstanding Notes..............................................30
SECTION 2.10 Treasury Notes.................................................31
SECTION 2.11 Temporary Notes................................................31
SECTION 2.12 Cancellation...................................................31
SECTION 2.13 Defaulted Interest.............................................32
SECTION 2.14 CUSIP Number...................................................32
SECTION 2.15 Deposit of Moneys..............................................33
SECTION 2.16 Book-Entry Provisions for
Global Notes...............................................33
SECTION 2.17 Special Transfer Provisions....................................36
SECTION 2.18 Computation of Interest........................................38
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<PAGE>
ARTICLE III
OPTIONAL REDEMPTION
SECTION 3.1 Notices to Trustee.............................................38
SECTION 3.2 Selection of Notes To Be Redeemed..............................39
SECTION 3.3 Notice of Redemption...........................................39
SECTION 3.4 Effect of Notice of Redemption.................................40
SECTION 3.5 Deposit of Redemption Price....................................40
SECTION 3.6 Notes Redeemed in Part.........................................41
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Notes...............................................41
SECTION 4.2 Maintenance of Office or Agency................................41
SECTION 4.3 Corporate Existence............................................42
SECTION 4.4 Payment of Taxes and Other Claims..............................42
SECTION 4.5 Maintenance of Properties; Insurance;
Books and Records; Compliance with Law.....................43
SECTION 4.6 Compliance Certificates........................................44
SECTION 4.7 Reports........................................................45
SECTION 4.8 Further Assurance to the Trustee...............................45
SECTION 4.9 Limitation on Additional Indebtedness..........................45
SECTION 4.10 Limitation on Indebtedness of Certain Subsidiaries.............46
SECTION 4.11 Limitation on Liens............................................46
SECTION 4.12 Limitation on Restricted Payments..............................47
SECTION 4.13 Limitation on Subsidiaries and Unrestricted Subsidiaries.......50
SECTION 4.14 Limitations on Investments.....................................51
SECTION 4.15 Limitation on Certain Asset Sales; Disposition of Proceeds.....51
SECTION 4.16 Limitation on Transactions with Affiliates.....................54
SECTION 4.17 Change of Control..............................................55
SECTION 4.18 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.....................................58
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<PAGE>
SECTION 4.19 Limitation on Equity Interests of
Subsidiaries. ...........................59
SECTION 4.20 Limitation on Creation of
Subsidiaries. ...................................60
SECTION 4.21 Limitation on Sale and Lease-back Transactions. 60
SECTION 4.22 Payments for Consent...........................................60
SECTION 4.23 Line of Business...............................................60
SECTION 4.24 Limitation on Additional Indebtedness of the Issuers...........61
SECTION 4.25 Limitation of Guarantees by Subsidiaries.......................61
SECTION 4.26 Waiver of Stay, Extension or Usury Laws........................61
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 Merger, Consolidation or Sale of Assets........................62
SECTION 5.2 Successor Entity Substituted...................................63
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default..............................................63
SECTION 6.2 Acceleration...................................................66
SECTION 6.3 Other Remedies.................................................66
SECTION 6.4 Waiver of Past Default.........................................67
SECTION 6.5 Control by Majority............................................67
SECTION 6.6 Limitation on Suits............................................67
SECTION 6.7 Rights of Holders To Receive Payment...........................68
SECTION 6.8 Collection Suit by Trustee.....................................68
SECTION 6.9 Trustee May File Proofs of Claim...............................68
SECTION 6.10 Priorities.....................................................69
SECTION 6.11 Undertaking for Costs..........................................69
SECTION 6.12 Restoration of Rights and Remedies.............................70
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<PAGE>
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee..............................................70
SECTION 7.2 Rights of Trustee..............................................72
SECTION 7.3 Individual Rights of Trustee...................................73
SECTION 7.4 Trustee's Disclaimer...........................................73
SECTION 7.5 Notice of Defaults.............................................73
SECTION 7.6 Reports by Trustee to Holders..................................73
SECTION 7.7 Compensation and Indemnity.....................................74
SECTION 7.8 Replacement of Trustee.........................................75
SECTION 7.9 Successor Trustee by Merger, Etc...............................76
SECTION 7.10 Eligibility; Disqualification..................................76
SECTION 7.11 Preferential Collection of Claims Against Issuers..............77
ARTICLE VIII
DISCHARGE OF INDENTURE: DEFEASANCE
SECTION 8.1 Termination of Issuers' Obligations............................77
SECTION 8.2 Legal Defeasance and Covenant Defeasance.......................78
SECTION 8.3 Application of Trust Money.....................................82
SECTION 8.4 Repayment to Issuers...........................................83
SECTION 8.5 Reinstatement..................................................83
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders.....................................84
SECTION 9.2 With Consent of Holders........................................84
SECTION 9.3 Compliance with Trust Indenture Act............................86
SECTION 9.4 Revocation and Effect of Consents..............................86
SECTION 9.5 Notation on or Exchange of Notes...............................87
SECTION 9.6 Trustee To Sign Amendments, Etc................................87
ARTICLE X
SECTION 10.2 Execution and Delivery of Guarantees...........................90
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<PAGE>
SECTION 10.3 Limitation of Guarantee........................................90
SECTION 10.4 Additional Guarantors..........................................90
SECTION 10.5 Release of Guarantor...........................................90
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Trust Indenture Act Controls...................................91
SECTION 11.2 Notices........................................................91
SECTION 11.3 Communications by Holders with Other Holders...................93
SECTION 11.4 Certificate and Opinion of Counsel
as to Conditions Precedent.................................93
SECTION 11.5 Statements Required in Certificate
and Opinion of Counsel.....................................93
SECTION 11.6 Rules by Trustee, Paying Agent, Registrar......................94
SECTION 11.7 Legal Holidays.................................................94
SECTION 11.8 Governing Law..................................................94
SECTION 11.9 Release from Liability.........................................94
SECTION 11.10 Successors.....................................................94
SECTION 11.11 Duplicate Originals............................................95
SECTION 11.12 Separability...................................................95
SECTION 11.13 Table of Contents, Headings, Etc...............................95
SIGNATURES ...................................................................96
EXHIBIT A - Form of Note ...................................................A-1
EXHIBIT B - Form of Legend and Assignment for 144A Note......................B-1
EXHIBIT C - Form of Legend and Assignment for Regulation S Note..............C-1
EXHIBIT D - Form of Legend for Global Note...................................D-1
EXHIBIT E - Form of Certificate To Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors.....................E-1
EXHIBIT F - Form of Certificate To Be Delivered in Connection with
Transfers Pursuant to Regulation S............................F-1
EXHIBIT G - Form of Guarantee................................................G-1
-v-
<PAGE>
INDENTURE dated as of May 26, 1999, among AOA HOLDING LLC, a Minnesota
limited liability company (the "Company"), AOA CAPITAL CORP, a Minnesota
corporation and a wholly-owned subsidiary of the Company ("Capital Corp" and
together with the Company, the "Issuers"), and UNITED STATES TRUST COMPANY OF
NEW YORK, a New York corporation, as trustee (the "Trustee").
The Issuers have duly authorized the execution and delivery of this
Indenture to provide for the issuance of the Notes (as hereinafter defined) to
be issued as provided for in this Indenture.
The parties hereto agree as follows for the benefit of each other and
for the equal and ratable benefit of the Holders (as hereinafter defined) of the
Notes:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
SECTION 1.1 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (including a
Subsidiary) existing at the time such Person becomes a Subsidiary or assumed in
connection with the acquisition of assets from such Person.
"Additional Interest" has the meaning provided in Section 4 of the
Registration Rights Agreement.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser
of (x) the amount by which the fair value of the property of such Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities), but excluding liabilities under the Guarantee, of such Guarantor
at such date and (y) the amount by which the present fair salable value of the
assets of such Guarantor at such date exceeds the amount that will be required
to pay the probable liability of such Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities and after
<PAGE>
-2-
giving effect to any collection from any Subsidiary of such Guarantor in respect
of the obligations of such Subsidiary under the Guarantee), excluding
Indebtedness in respect of the Guarantee, as they become absolute and matured.
"Affiliate" of any specified Person means any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise.
"Agent" means any Registrar or Paying Agent.
"AOALP" means Adams Outdoor Advertising Limited Partnership, a
Minnesota limited partnership.
"Asset Sale" means the direct or indirect sale, transfer, issuance,
conveyance, lease (other than operating leases entered into in the ordinary
course of business pursuant to ordinary business terms), assignment or other
disposition for value (including, without limitation, by eminent domain,
condemnation or similar governmental proceeding) or any merger or consolidation
of any Subsidiary of the Company with or into another Person (other than the
Company or any Wholly-Owned Subsidiary of the Company) whereby such Subsidiary
shall cease to be a Wholly-Owned Subsidiary in any single transaction or series
of related transactions (separate eminent domain, condemnation or similar
governmental proceedings to each be considered a single transaction but not to
be considered together as a series of related transactions) involving property
or assets with a fair market value in excess of $250,000 of (a) any Equity
Interest in any Subsidiary of the Company, (b) real property owned by the
Company or any Subsidiary thereof, or a division, line of business or comparable
business segment of the Company or any Subsidiary thereof or (c) other property,
assets
<PAGE>
-3-
or rights of the Company, any Subsidiary thereof or any division or line of
business of the Company or any Subsidiary thereof, provided, however, that Asset
Sales shall not include (i) sales, leases, conveyances, transfers or other
dispositions to the Company or to a Subsidiary thereof or to any other Person if
after giving effect to such sale, lease, conveyance, transfer or other
disposition such other Person becomes a Wholly-Owned Subsidiary of the Company,
(ii) transactions complying with Section 5.1 hereof (except as otherwise
provided in Section 4.15(d) hereof), (iii) sales, transfers, issuances,
conveyances, leases, assignments or other dispositions for value to the Company
or any Wholly-Owned Subsidiary of the Company, (iv) transfers or other
distributions of assets which constitute (1) Permitted Investments or (2)
Restricted Payments made in compliance with Section 4.12 and (v) the exchange of
property or assets of the Company or a Subsidiary of the Company for similar
assets constituting one or more outdoor advertising properties owned by another
Person.
"Asset Sale Proceeds" means, with respect to any Asset sale, (i) cash
received by the Company or any Subsidiary thereof from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all imputed income or other taxes measured by or resulting from
such Asset Sale (calculated as provided in the definition of "Permitted Tax
Distributions"), (b) payment of all brokerage commissions, underwriting and
other fees and expenses related to such Asset Sale, (c) provision for minority
interest holders in any Subsidiary as a result of such Asset Sale, (d) payments
made to retire Indebtedness secured by the assets subject to such Asset Sale and
(e) deduction of appropriate amounts to be provided by the Company or a
Subsidiary as a reserve, in accordance with GAAP, against any liabilities
associated with the assets sold or disposed of in such Asset Sale and retained
by the Company or a Subsidiary thereof after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with the assets sold or disposed of in such
<PAGE>
-4-
Asset Sale, and (ii) promissory notes and other non-cash consideration received
by the Company or by any Subsidiary thereof from such Asset Sale or other
disposition upon the liquidation or conversion of such notes or non-cash
consideration into cash.
"Attributable Indebtedness" in respect of a Sale and Lease-Back
Transaction means, as at the time of determination, the greater of (i) the fair
value of the property subject to such arrangement (as determined in good faith
by the Board of Directors) and (ii) the present value of the notes (discounted
at the rate of interest implicit in such transaction) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale and LeaseBack Transaction (including any period for which
such lease has been extended).
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar federal
or state law for the relief of debtors as the same may be amended from time to
time.
"Board of Directors" means, as to any Person, the board of directors or
governors or any duly authorized committee thereof of such Person or, if such
Person is a partnership, of the managing general partner of such Person.
"Board Resolution" means, as to any Person, a copy of a resolution
certified pursuant to an Officers' Certificate to have been duly adopted by the
Board of Directors of such Person, and to be in full force and effect, and, if
required hereunder, delivered to the Trustee.
"Business Day" means any day except a Saturday, a Sunday or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capital-
<PAGE>
-5-
ized amount of such obligations determined in accordance with GAAP.
A "Change of Control" will be deemed to have occurred at such time as
(i) the Permitted Holders, individually or in the aggregate, shall cease to
beneficially own (as defined under Rule 13(d)(3) or any successor rule or
regulation promulgated under the Exchange Act), directly or indirectly, 50.1% or
more of the Common Equity Interests of the Company AOALP or AOAI and any Person
(including a Person's Affiliates and associates), other than a Permitted Holder,
beneficially owns (as defined under Rule 13(d)(3) or any successor rule or
regulation promulgated under the Exchange Act), directly or indirectly, 35% or
more of the Common Equity Interests of the Company AOALP or AOAI, (ii) there
shall be consummated any consolidation or merger of the Company AOALP or AOAI in
which the Company AOALP or AOAI, as the case may be, is not the continuing or
surviving corporation or pursuant to which the Common Equity Interests of the
Company would be converted into cash, securities or other property, other than a
merger or consolidation of the Company AOALP or AOAI in which the holders of the
Common Equity Interests of the Company AOALP or AOAI, as the case may be,
outstanding immediately prior to the consolidation or merger hold, directly or
indirectly, at least a majority of the Common Equity Interests of the surviving
corporation immediately after such consolidation or merger, (iii) there is a
sale, lease or transfer of all or substantially all of the assets of the Company
AOALP or AOAI to any Person or group (as such term is defined in Section
13(d)(3) of the Exchange Act), (iv) the members of the Company, the shareholders
of AOAI or the partners of AOALP shall approve any plan or proposal for the
liquidation or dissolution of AOAI or AOALP, as the case may be; (v) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company or AOAI (together with any new
members of the Board of Directors whose election to such Board of Directors has
been approved by 66 2/3% of the members of the Board of Directors then still in
office who either were members of the Board of Directors at the beginning of
such period or whose election or recommendation for election was previously so
approved) cease
<PAGE>
-6-
to constitute a majority of the Board of Directors of the Company or AOAI, as
the case may be, or (vi) any Person is admitted as a general partner of AOALP
after which AOAI does not have the responsibility to take all of the actions to
the same extent it is entitled or required to take under the partnership
agreement of AOALP as in effect on the Issue Date.
"Common Equity Interests" of any Person means all Equity Interests of
such Person that are generally entitled to (i) vote in the election of directors
of such Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.
"Company" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and,
thereafter, means the successor.
"Consolidated Interest Expense" means, with respect to any Person, for
any period, the aggregate amount of interest which, in conformity with GAAP,
would be set forth opposite the caption "interest expense" or any like caption
on an income statement for such Person and its Subsidiaries on a consolidated
basis, imputed interest included in Capitalized Lease Obligations, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, the net costs associated with
hedging obligations, amortization of other financing fees and expenses, the
interest portion of any deferred payment obligation, amortization of discount or
premium, if any, and all other non-cash interest expense (other than interest
amortized to cost of sales) plus, without duplication, all net capitalized
interest for such period and all interest incurred or paid under any guarantee
of Indebtedness (including a guarantee of principal, interest or any combination
thereof) of any Person, plus the amount of all dividends or distributions paid
on Disqualified Equity Interests (other than dividends paid or payable in shares
of Equity Interests).
<PAGE>
-7-
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP, plus
the amount of any dividends or distributions received by such Person from
Unrestricted Subsidiaries, provided, however, that (a) the Net Income of any
Person (the "other Person") in which the Person in question or any of its
Subsidiaries has less than a 100% interest (which interest does not cause the
net income of such other Person to be consolidated into-the net income of the
Person in question in accordance with GAAP) shall be included only to the extent
of the amount of dividends or distributions paid to the Person in question or
the Subsidiary, (b) the Net Income of any Subsidiary of the Person in question
that is subject to any restriction or limitation on the payment of dividends or
the making of other distributions (other than pursuant to the Notes, this
Indenture, the Credit Facility, the Existing Subsidiary Notes and the related
indenture) shall be excluded to the extent such restriction or limitation would
prevent such subsidiary from being able to pay dividends or make other
distributions out of its Net Income, (c)(i) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition and (ii) any net gain (but not loss) resulting from an Asset
Sale by the Person in question or any of its Subsidiaries other than in the
ordinary course of business shall be excluded, (d) extraordinary gains and
losses (including any related tax effects on the Company) shall be excluded and
(e) the amount of any Permitted Tax Distributions shall be excluded.
Consolidated Net Income shall be calculated without deducting therefrom any
accruals made for Phantom Compensation.
"Consolidated Net Worth" with respect to any Person, at any date of
determination, means the consolidated equity of the holders of Equity Interests
of such Person and its Subsidiaries (excluding any Disqualified Equity
Interests) outstanding at such date, as determined on a consolidated basis and
in accordance with GAAP.
<PAGE>
-8-
"Credit Facility" means the credit facility by and among the Subsidiary
Issuers, Canadian Imperial Bank of Commerce as administrative agent and
collateral agent and the lenders listed therein, as the same may be amended,
modified, replaced, renewed, refunded or refinanced from time to time.
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Depository" means, with respect to the Notes issued in the form of one
or more Global Notes, The Depository Trust Company or another Person designated
as Depository by the Issuers, which Person must be a clearing agency registered
under the Exchange Act.
"Disqualified Equity Interests" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable at the option of the holder), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the maturity date of the Notes, for cash or
securities constituting Indebtedness. Without limitation of the foregoing,
Disqualified Equity Interests shall be deemed to include (i) any Preferred
Equity Interests of a Subsidiary of the Company and (ii) any Preferred Equity
Interests of the Company, with respect to either of which, under the terms of
such Preferred Equity Interests, by agreement or otherwise, such Subsidiary or
the Company is obligated to pay current dividends or distributions in cash
during the period prior to the maturity date of the Notes, provided, however,
that Preferred Equity Interests of the Company or any Subsidiary thereof that
are issued with the benefit of provisions requiring a change of control offer to
be made for such Preferred Equity Interests in the event of a change of control
of the Company or such Subsidiary, which provisions have substantially the same
effect as the provisions of Section 4.17, shall not be deemed to be Disqualified
Equity Interests solely by virtue of such provisions.
<PAGE>
-9-
"EBITDA" means, with respect to any Person for any period, the sum,
without duplication, of (i) Consolidated Net Income, (ii) Consolidated Interest
Expense, (iii) provisions for taxes based on income or profits of such Person
for such period, (iv) depreciation, (v) amortization, (vi) Phantom Compensation,
(vii) the amount of any Permitted Tax Distributions and (viii) any other
non-cash charges to the extent deducted from Consolidated Net Income (including
non-cash expenses recognized in accordance with Financial Accounting Standards
Bulletin Number 106 but excluding any non-cash charge to the extent that it
requires an accrual of or a reserve for cash disbursements for any future
period), in each case to the extent deducted from Consolidated Net Income for
the period as to which the computation of EBITDA is made, all as determined in
accordance with GAAP.
"Equity Interests" means, with respect to any Person, any and all
shares or other equivalents (however designated) of capital stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person or any option, warrant or other security
convertible into or exchangeable for any of the foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Existing Subsidiary Notes" means the 10 3/4% Senior Notes due 2006 of
the Subsidiary Issuers.
"fair market value" or "fair value" means, with respect to any asset or
property, the price which could be negotiated in an arms'-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the transaction. Fair
market value or fair value shall be determined by a majority of the Board of
Directors acting in good faith and shall be evidenced by a Board Resolution and,
if required hereunder, delivered to the Trustee. No such determination need be
supported by an appraisal or other expert opinion.
<PAGE>
-10-
"GAAP" means generally accepted accounting principles consistently
applied as in effect in the United States from time to time.
"Guarantee" means, as the context may require, individually, a
guarantee, or collectively, any and all guarantees, of the Obligations of the
Company with respect to the Notes by each Guarantor, if any, pursuant to the
terms of Article 10 hereof, substantially in the form set forth in Exhibit G.
"Guarantor" means each Person that hereafter becomes a Guarantor
pursuant to Sections 10.02 and 10.04, and "Guarantors" means such entities,
collectively.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become, directly or indirectly, liable in respect
of such Indebtedness or other obligation or the recording, as required pursuant
to GAAP or otherwise, of any such Indebtedness or other obligation on the
balance sheet of such Person (and "incurrence," "incurred," "incurrable," and
"incurring" shall have meanings correlative to the foregoing), provided,
however, that a change in GAAP that results in an obligation of such Person that
exists at such time becoming Indebtedness shall not be deemed an incurrence of
such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person,
any indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other liabilities arising in the ordinary course
of business) if and to the extent any of the foregoing indebt-
<PAGE>
-11-
edness would appear as a liability upon a balance sheet of such Person prepared
in accordance with GAAP, and shall also include, to the extent not otherwise
included, (i) any Capitalized Lease Obligations, (ii) obligations secured by a
lien to which the property or assets owned or held by such Person are subject,
whether or not the obligation or obligations secured thereby shall have been
assumed, (iii) all Indebtedness of others of the type described in the other
clauses of this definition (including all dividends of other Persons) the
payment of which is guaranteed, directly or indirectly, by such Person or that
is otherwise its legal liability or which such Person has agreed to purchase or
repurchase or in respect of which such Person has agreed contingently to supply
or advance funds (whether or not such items would appear upon the balance sheet
of the guarantor), (iv) all obligations for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit transaction, (v) in
the case of the Company, Disqualified Equity Interests of the Company or any
Subsidiary thereof, and (vi) obligations of any such Person under any Interest
Rate Agreement applicable to any of the foregoing (if and to the extent such
Interest Rate Agreement obligations would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP). The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided, however, that (i) the
amount outstanding at any time of any Indebtedness issued with original issue
discount, including the Notes, is the principal amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP, (ii)
Indebtedness shall not include any liability for federal, state, local or other
taxes, and (iii) Indebtedness shall not include obligations for Phantom
Compensation or Prior Accrued Bonus Payments. Notwithstanding any other
provision of the foregoing definition, any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary course
of business shall not be deemed to be "Indebtedness" of the Issuers or any
<PAGE>
-12-
Subsidiary for purposes of this definition. Furthermore, guarantees of (or
obligations with respect to letters of credit supporting) Indebtedness otherwise
included in the determination of such amount shall not also be included.
"Indenture" means this Indenture as amended or supplemented from time
to time pursuant to the terms hereof.
"Independent Financial Advisor" means an accounting, appraisal,
investment banking or consulting firm of nationally recognized standing that is,
in the good faith judgment of the Board of Directors of the Company, qualified
to perform the task for which such firm has been engaged and disinterested and
independent with respect to the Company and its Affiliates.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
promulgated under the Securities Act.
"interest" when used with respect to any Note, means the amount of all
interest accruing on such Note, including all interest accruing subsequent to
the occurrence of any events specified in Sections 6.1(a)(viii) and (ix) or
which would have accrued but for any such event and any Additional Interest.
"Interest Payment Date" when used with respect to any Note means the
stated maturity of an installment of interest specified in such Note.
"Interest Rate" when used with respect to any Note means the rate per
annum specified in such Note as the rate of interest accruing on the principal
amount of such Note.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
<PAGE>
-13-
"Investments" means, directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course of
business, including accounts receivable arising in the ordinary course of
business and acquired as a part of the assets acquired by AOALP or any of its
Subsidiaries in connection with an acquisition of assets which is otherwise
permitted hereunder), loan or capital contribution to (by means of transfers of
property to others, payments for property or services for the account or use of
others or otherwise), the purchase of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities of, or the
acquisition, by purchase or otherwise, of all or substantially all of the
business or stock or other evidence of beneficial ownership of, any Person, the
guarantee or assumption of the Indebtedness of any other Person (except for an
assumption of Indebtedness for which the assuming Person receives consideration
with a fair market value at least equal to the principal amount of the
Indebtedness assumed), the designation of a Subsidiary of AOALP as an
Unrestricted Subsidiary or the making of any investment in any Person and all
other items that would be classified as investments on a balance sheet of such
Person prepared in accordance with GAAP. Investments shall exclude extensions of
trade credit on commercially reasonable terms in accordance with normal trade
practices.
"Issue Date" means the closing date for the sale and original issuance
of the Notes.
"Issuers" means, collectively, AOA Holding LLC, a Minnesota limited
liability company, and AOA Capital Corp, a Minnesota corporation and a
Wholly-Owned Subsidiary of AOA Holding LLC.
"Issuers Request" means any written request signed in the names of each
of the Issuers by the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer or the Treasurer of each of the Issuers
and attested to by the Secretary or any Assistant Secretary of each of the
Issuers.
<PAGE>
-14-
"Legal Holiday" means any day other than a Business Day, a Saturday or
a Sunday.
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any Capitalized Lease Obligation, conditional sales or other
title retention agreement having substantially the same economic effect as any
of the foregoing).
"Maturity Date," when used with respect to any Note, means the date
specified in such Note as the fixed date on which the principal of such Note is
due and payable.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Investments" means the excess of (i) the aggregate of all
Investments made by the Company or a Subsidiary thereof on or after the Issue
Date (in the case of an Investment made other than in cash, the amount shall be
the fair market value of such Investment as determined in good faith by the
Board of Directors of the Company) over (ii) the sum of (A) the aggregate amount
returned in cash on such Investments whether through interest payments,
principal payments, dividends or other distributions and (B) the net cash
proceeds received by the Company or such Subsidiary from the disposition of all
or any portion of such Investments (other than to a Subsidiary of the Company),
provided, however, that with respect to all Investments made in Unrestricted
Subsidiaries, the sum of clauses (A) and (B) above with respect to such
Investments shall not exceed the aggregate amount of all Investments made in all
Unrestricted Subsidiaries.
"Net Proceeds" means (a) in the case of any sale of Equity Interests by
the Issuers, the aggregate net proceeds re-
<PAGE>
-15-
ceived by the Company, after payment of expenses, commissions and the like
incurred in connection therewith, whether such proceeds are in cash or in
property (valued at the fair market value thereof, as determined in good faith
by the Board of Directors of the Company, at the time of receipt), and (b) in
the case of any exchange, exercise, conversion or surrender of outstanding
securities of any kind for or into Equity Interests of the Company which are not
Disqualified Equity Interests, the net book value of such outstanding securities
on the date of such exchange, exercise, conversion or surrender (plus any
additional amount required to be paid by the holder to the Company upon such
exchange, exercise, conversion or surrender, less any and all payments made to
the holders, e.g., on account of fractional shares and less all expenses
incurred by the Company in connection therewith).
"Notes" means the 103/8% Senior Notes Due 2006, the Exchange Notes and
the Private Exchange Notes issued, authenticated and delivered under this
Indenture, as amended or supplemented from time to time pursuant to the terms of
this Indenture.
"Obligations" means, with respect to any Indebtedness, any principal,
premium, interest, penalties, fees, indemnifications, reimbursements, damages
and other expenses payable under the documentation governing such Indebtedness.
"Officer" means, with respect to any Person, the Chairman, the
President, the Chief Executive Officer, any Vice President, the Chief Financial
Officer, the Treasurer or the Secretary of such Person (or, in the case of a
Person that is a partnership, the general partner of such Person in such
capacity).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by an Officer that shall comply with applicable provisions of
this Indenture.
"Opinion of Counsel" means a written opinion from legal counsel which
is acceptable to the Trustee, which may include counsel to the Company.
<PAGE>
-16-
"Permitted Holders" means Stephen Adams, his spouse and lineal
descendants and trusts for the exclusive benefit of any of the foregoing
persons.
"Permitted Indebtedness" means: (i) Indebtedness (plus interest,
premium, fees and other obligations associated therewith) arising under or in
connection with Permitted Secured Indebtedness;
(ii) Indebtedness under the Notes;
(iii) Indebtedness not covered by any other clause of this
definition which is outstanding on the date hereof (including the
Existing Subsidiary Notes);
(iv) Interest Rate Agreements;
(v) Additional Indebtedness, including Indebtedness incurred
in connection with or arising out of Capitalized Lease Obligations, in
an aggregate principal amount outstanding at any time not to exceed $1
million;
(vi) Indebtedness of a Subsidiary of the Company issued to and
held by the Company or a Wholly-Owned Subsidiary of the Company;
provided, however, that any subsequent issuance or transfer of any
Equity Interest that results in such Subsidiary ceasing to be a
Wholly-Owned Subsidiary of the Company or any transfer of such
Indebtedness to any Person other than the Company or a Wholly-Owned
Subsidiary of the Company shall be deemed to be the incurrence of such
Indebtedness by the Company;
(vii) Indebtedness of the Company to a Wholly-Owned Subsidiary
in respect of intercompany advances or transactions; and
(viii) Refinancing Indebtedness.
"Permitted Investments" means, for any Person, Investments made on or
after the date hereof consisting of:
<PAGE>
-17-
(i) Temporary Cash Investments;
(ii) Investments by the Company or any of its Subsidiaries in
the Company or a Wholly-Owned Subsidiary of the Company; provided,
however, that the proceeds of any such Investment by the Company in a
Wholly-Owned Subsidiary of the Company other than AOALP or one of its
Wholly-Owned Subsidiaries may only be used for the purpose of making
Investments in AOALP or Investments in accordance with clause (i) above
or clause (iv) below;
(iii) Investments by AOALP or any of its Subsidiaries in any
Person, if (A) as a result of such Investment (1) such Person becomes a
Wholly-Owned Subsidiary of AOALP or (2) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, AOALP or a
Wholly-Owned Subsidiary thereof and (B) after giving effect to such
Investment the Company is in compliance with Section 4.23;
(iv) (A) Net Investments of the Company and its Subsidiaries
(other than AOALP and any of its Subsidiaries) in securities that are
not equity securities or debt securities maturing more than 365 days
after the date of such Investment and (B) Net Investments of AOALP or
any of its Subsidiaries in any Person; provided, however, that the
aggregate amount of all such Net Investments made pursuant to this
clause (iv) shall not exceed $3.0 million at any one time outstanding;
(v) Investments by AOALP or any of its Subsidiaries
represented by accounts receivable created or acquired in the ordinary
course of business;
(vi) Advances by AOALP or any of its Subsidiaries to employees
in the ordinary course of business not to exceed an aggregate of
$100,000 outstanding at any one time;
(vii) Investments by the Company or any of its Subsidiaries
under or pursuant to Interest Rate Agreements;
<PAGE>
-18-
(viii) Investments by AOALP or any of its Subsidiaries in the
Notes and the Existing Subsidiary Notes; and
(ix) Investments existing on the Issue Date.
"Permitted Liens" means, without duplication, (i) Liens existing on the
date of this Indenture, (ii) Liens in favor of the Company or any Subsidiary
thereof, (iii) Liens on property of a Person existing at the time such Person is
acquired by, merged into or consolidated with the Company or any Subsidiary
thereof, provided, however, that such Liens (a) were not created in anticipation
of such acquisition, merger or consolidation and (b) are not applicable to any
other property of the Company or any of the other Subsidiaries of the Company,
(iv) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, provided, however,
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor, (v) landlords', carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business and with respect to amounts which are
not yet delinquent or are being contested in good faith by appropriate
proceedings, (vi) pledges or deposits made in the ordinary course of business in
connection with (a) leases, performances bonds and similar obligations, (b)
workers' compensation, unemployment insurance and other social security
legislation, or (c) securing the performance of surety bonds and appeal bonds
required (1) in the ordinary course of business or in connection with the
enforcement of rights or claims of the Company or a Subsidiary thereof or (2) in
connection with judgments that do not give rise to an Event of Default and which
do not exceed $3 million in the aggregate, (vii) easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar
encumbrances which, in the aggregate, do not materially detract from the value
of the property subject thereto or materially interfere with the ordinary
conduct of the business of the Company or any Subsidiary thereof, (viii) Liens
on property or assets of, or any Equity Interests of or secured debt of,
<PAGE>
-19-
any Person existing at the time such Person becomes a Subsidiary of the Company
or at the time such Person is merged into the Company or any Subsidiary thereof,
provided, however, that such Liens are not incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary of the Company or merging
into the Company or any of its Subsidiaries, (ix) Liens in favor of the Company
or any of its Subsidiaries, (x) Liens granted by AOALP or any Subsidiary thereof
to secure Purchase Money Indebtedness that is otherwise permitted under this
Indenture, provided, however, that (a) any such Lien is created solely for the
purpose of securing Indebtedness representing, or incurred to finance, refinance
or refund, the cost (including sales and excise taxes, installation and delivery
charges and other direct costs of, and other direct expenses paid or charged in
connection with, such purchase or construction) of such Property, (b) the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of such costs, and (c) such Lien does not extend to or cover any-Property other
than such item of Property and any improvements on such item, (xi) Liens granted
by the Company or any Subsidiary thereof securing (A) Permitted Secured
Indebtedness and (B) Refinancing Indebtedness incurred to refinance the Existing
Subsidiary Notes, (xii) Liens granted by the Company or any Subsidiary thereof
securing Capitalized Lease Obligations permitted to be incurred under clause (v)
of the definition of "Permitted Indebtedness," provided, however, that such Lien
does not extend to any property other than that subject to the underlying lease,
(xiii) Liens pursuant to leases and subleases of real property which do not
interfere with the ordinary conduct of the business of the Company or any of its
Subsidiaries and which are made on customary and usual terms applicable to
similar properties, (xiv) Liens securing reimbursement obligations under letters
of credit, but only in or upon the goods the purchase of which was financed by
such letters of credit and (xv) Liens securing Refinancing Indebtedness,
provided, however, that such Liens extend only to the assets securing the
Indebtedness being extended, refinanced, renewed or replaced, and such
Indebtedness was previously secured by such assets and provided, further, that
the terms of such Liens are not less favorable to the
<PAGE>
-20-
holders of the Notes than the Liens being extended, refinanced, renewed or
replaced.
"Permitted Secured Indebtedness" means any Indebtedness of the Company
or any Subsidiary thereof (plus interest, premium, fees and other obligations
associated therewith), and any refinancing, refunding, replacement, renewal or
extension thereof, under (a) the Credit Facility and (b) agreements evidencing
any other Indebtedness which is secured by assets of the Company or any
Subsidiary thereof, whether involving the same or any other lender or creditor
or group of lenders or creditors as has provided the Credit Facility, provided,
however, that the aggregate amount of all such Indebtedness outstanding (or
committed to be advanced under the agreements to which such Indebtedness
relates) at any time shall not exceed $35 million (plus interest, premium, fees
and other obligations associated therewith).
"Permitted Tax Distributions" means, (i) with respect to AOALP, for so
long as AOALP is a partnership or substantially similar "pass-through" entity
for federal income tax purposes, distributions to the partners of AOALP based on
estimates of the amount of federal, state and local income taxes that AOALP
would be required to pay with respect to a fiscal year calculated as if, for the
applicable fiscal year, AOALP were treated as a "C corporation" incorporated
under the laws of the State of Minnesota rather than as a partnership and (ii)
without duplication of the payments made pursuant to clause (i), with respect to
the Company, for so long as the Company is a limited liability company or
substantially similar "pass-through" entity for federal income tax purposes,
distributions to the members of the Company based on estimates of the amount of
federal, state and local income taxes that the Company would be required to pay
with respect to a fiscal year calculated as if, for the applicable fiscal year,
the Company were treated as a "C corporation" incorporated under the laws of the
State of Minnesota rather than as a limited liability company.
"Person" means individual, corporation, partnership, limited liability
company, joint venture, association, joint-
<PAGE>
-21-
stock company, trust, unincorporated organization or government (including any
agency or political subdivision thereof).
"Phantom Compensation" means the compensation accrued after the Issue
Date pursuant to Article II of the "phantom stock" agreements entered into, in
writing, between AOALP and certain of its employees other than Stephen Adams or
substitutions to or replacements of such Article of such agreements, and any
comparable subordinated incentive compensation agreement with its employees on
the basis of the increase in value of AOALP or a division or Subsidiary thereof.
"Physical Notes" means certificated Notes in registered form in
substantially the form set forth in Exhibit A.
"Preferred Equity Interest" means any Equity Interest of a Person,
however designated, which entitles the holder thereof to a preference with
respect to dividends, distributions or liquidation proceeds of such Person over
the holders of other Equity Interests issued by such Person.
"principal" of a debt security means the principal amount of the
security plus, when appropriate, the premium, if any, on the security.
"Prior Accrued Bonus Payments" means payments in respect of Phantom
Compensation accrued prior to the Issue Date.
"Private Exchange Notes" shall have the meaning assigned thereto in the
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
Rule 144A Notes and on any Physical Notes (other than Regulation S Notes)
delivered prior to the issuance of the Exchange Notes in the form set forth in
Exhibit B.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
<PAGE>
-22-
"Purchase Money Indebtedness" means any Indebtedness incurred in the
ordinary course of business by a Person to finance the cost (including the cost
of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Qualified Institutional Buyer" or "QIB" has the meaning specified in
Rule 144A promulgated under the Securities Act.
"Redemption Date" means, with respect to any Note, the Maturity Date of
such Note or the date on which such Note is to be redeemed by the Issuers
pursuant to the terms of the Notes.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances,
renews, replaces or extends any Indebtedness of the Company or its Subsidiaries
outstanding on the Issue Date or other Indebtedness permitted to be incurred by
the Issuers or the Subsidiaries pursuant to the terms of this Indenture, whether
involving the same or any other lender or creditor or group of lenders or
creditors, but only to the extent that (i) the Refinancing Indebtedness is
subordinated to the Notes to at least the same extent as the Indebtedness being
refunded, refinanced or extended, if at all, (ii) the Refinancing Indebtedness
is scheduled to mature either (a) no earlier than the Indebtedness being
refunded, refinanced or extended, or (b) after the maturity date of the Notes,
(iii) the Refinancing Indebtedness has a weighted average life to maturity at
the time it is incurred that is equal to or greater than the weighted average
life to maturity of the Indebtedness being refunded, refinanced or extended,
(iv) such Refinancing Indebtedness is in an aggregate principal amount that is
less than or equal to the aggregate principal or accreted amount (in the case of
any Indebtedness issued with original issue discount, as such) then outstanding
(plus any applicable prepayment premiums or penalties and accrued interest
thereon) under the Indebtedness being refunded, refinanced or extended and (v)
such Refinancing Indebtedness is incurred by the same Person that
<PAGE>
-23-
initially incurred the Indebtedness being refunded, refinanced or extended,
except that the Company may incur Refinancing Indebtedness to refund, refinance
or extend Indebtedness of any Wholly-Owned Subsidiary of the Company.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of May 26, 1999 among the Issuers and CIBC World Markets Corp., as
Initial Purchaser.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution or payment on Equity Interests
of the Company or any Subsidiary thereof or any payment made to the direct or
indirect holders (in their capacities as such) of Equity Interests of the
Company or any Subsidiary thereof (other than (a) dividends or distributions
payable solely in Equity Interests (other than Disqualified Equity Interests) or
in options, warrants or other rights to purchase Equity Interests (other than
Disqualified Equity Interests), (b) in the case of Subsidiaries of the Company,
dividends or distributions payable to the Company or to a Wholly-Owned
Subsidiary of the Company and (c) Permitted Tax Distributions), (ii) the
purchase, redemption or other acquisition or retirement for value of any Equity
Interests of the Company or any Subsidiary thereof (other than Equity Interests
owned by the Company or a Wholly-Owned Subsidiary, excluding Disqualified Equity
Interests), (iii) the making of any principal payment on, or the purchase,
defeasance, repurchase, redemption or other acquisition or retirement for value,
prior to any scheduled maturity, scheduled repayment or scheduled sinking fund
payment, of any Indebtedness which is subordinated in right of payment to the
Notes, (iv) the making of any Investment or guarantee of any Investment in any
Person other than a Permitted Investment, (v) forgiveness of any Indebtedness of
an Affiliate of the Company to the Company or a Subsidiary thereof, (vi) cash
payments in respect of Phantom Compensation and (vii) the payment of amounts to
Stephen Adams (other than dividends or distributions otherwise permitted by the
terms of this Indenture) to the extent the aggregate amount
<PAGE>
-24-
of such payments made in any one year exceeds the sum of (i) $200,000 and (ii)
the cumulative effect of reasonable annual cost-of-living adjustments made from
the Issue Date to the date of such payment. For purposes of determining the
amount expended for Restricted Payments, cash distributed or invested shall be
valued at the face amount thereof and property other than cash shall be valued
at its fair market value.
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
promulgated under the Securities Act; provided that the Trustee shall be
entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether any Note is a Restricted Security.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of the Company of any
real or tangible personal property, which property (i) has been or is to be sold
or transferred by the Company or such Subsidiary to such Person in contemplation
of such leasing and (ii) would constitute an Asset Sale if such property had
been sold in an outright sale thereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" of any specified Person means any corporation,
partnership, limited liability company, joint venture, association or other
business entity, whether now existing or hereafter organized or acquired, (i) in
the case of a corporation, of which more than 50% of the total voting power of
the Equity Interests entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, officers or trustees thereof
is held by such first-named Person or any of its Subsidiaries; or (ii) in the
case of a partnership, limited liability company, joint venture, association or
other
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business entity, with respect to which such first-named Person or any of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise or if in accordance with
generally accepted accounting principles such entity is consolidated with the
first-named Person for financial statement purposes. Notwithstanding the
foregoing, an Unrestricted Subsidiary shall not be deemed a Subsidiary of the
Company or of AOALP other than for purposes of the definition of Unrestricted
Subsidiary, unless AOALP or a Subsidiary of AOALP shall have designated such
Unrestricted Subsidiary as a "Subsidiary" of AOALP by written notice to the
Trustee. An Unrestricted Subsidiary may be designated as a Subsidiary of AOALP
at any time by AOALP or a Subsidiary of AOALP by written notice to the Trustee,
provided, however that (i) no Default or Event of Default shall have occurred
and be continuing or would arise therefrom and (ii) if such Unrestricted
Subsidiary is an obligor of any Indebtedness, any such designation shall be
deemed to be an incurrence as of the date of such designation by AOALP or a
Subsidiary of AOALP of such Indebtedness and immediately after giving effect to
such designation, AOALP could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to Section 4.9.
"Subsidiary Issuers" means AOALP and Adams Outdoor Advertising, Inc., a
Minnesota corporation.
"Temporary Cash Investments" means (i) Investments in marketable,
direct obligations issued or guaranteed by the United States of America, or of
any governmental agency or political subdivision thereof, maturing within 365
days of the date of purchase; (ii) Investments in certificates of deposit issued
by a bank organized under the laws of the United States of America or any state
thereof or the District of Columbia, in each case having capital, surplus and
undivided profits totaling more than $500 million and rated at least A by
Standard & Poor's Corporation and A-2 by Moody's Investors Service, Inc.,
maturing within 365 days of purchase; (iii) commercial paper with a maturity of
180 days or less issued by a corporation (except any Affiliate of the Company)
organized under the laws
<PAGE>
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of any state of the United States or the District of Columbia and rated at the
time of investment at least A-1 by Standard & Poor's Corporation or at least P-1
by Moody's Investors Service, Inc.; (iv) repurchase agreements and reverse
repurchase agreements relating to marketable obligations issued or
unconditionally guaranteed by the United States of America or issued by any
agency thereof and backed by the full faith and credit of the United States
Government, in each case maturing within one year from the date of acquisition,
provided, however, that the terms of such agreements comply with the guidelines
set forth in the Federal Financial Agreements of Depository Institutions with
Securities Dealers and Others, as adopted by the Comptroller of the Currency;
(v) instruments backed by letters of credit satisfying the conditions of clause
(ii) above; or (vi) investments not exceeding 365 days in duration in money
market funds that invest substantially all of such funds' assets in the
Investments described in the preceding clauses (i) through (v).
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb), as amended, as it may be amended from time to time.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means an officer or assistant officer of the Trustee
assigned to the Corporate Trustee Administration Department or similar
department performing corporate trust work, or any successor to such department
or, in the case of a successor trustee, an officer assigned to the department,
division or group performing the corporate trust work of such successor and also
means with respect to any particular corporate trust matter any other officer of
the Trustee to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Unrestricted Subsidiary" means any Subsidiary of AOALP which shall
have been designated as an Unrestricted Sub-
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sidiary by AOALP or any Subsidiary of AOALP by written notice to the Trustee and
any Subsidiary of an Unrestricted Subsidiary. A Subsidiary of AOALP may be
designated as an Unrestricted Subsidiary at any time by AOALP or any Subsidiary
of AOALP by written notice to the Trustee, provided, however, that (i) no
Default or Event of Default shall have occurred and be continuing or would arise
therefrom, (ii) such designation is at that time permitted under Section 4.12
and (iii) immediately after giving effect to such designation, AOALP could incur
$1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.9. An Unrestricted Subsidiary may be designated as a Subsidiary of
AOALP at a later date in the manner provided in the definition of "Subsidiary."
"Wholly-Owned Subsidiary" means any Subsidiary all of the outstanding
voting securities (other than directors' qualifying shares) of which are owned,
directly or indirectly, by such Person. As used herein, AOALP shall be deemed a
Wholly-Owned Subsidiary of the Company as long as (i) at least 69.0% of the
aggregate partnership interests of AOALP are owned, directly or indirectly, of
record and beneficially by the Company; (ii) the general partner or partners of
AOALP are the Company or a Wholly-Owned Subsidiary of the Company; and (iii) the
partnership agreement of AOALP provides that all limited partner distributions
(other than Permitted Tax Distributions) may be made only to the Company,
directly or through a Wholly-Owned Subsidiary of the Company, until the Notes
have been paid in full.
SECTION 1.2 Other Definitions.
The definitions of the following terms may be found in the sections
indicated as follows:
Term Defined in Section
- ---- ------------------
"Affiliate Transaction".......................................... 4.16(a)
"Agent Members".................................................. 2.16(a)
"Base Period".................................................... 4.12(a)
"CEDEL".......................................................... 2.16(a)
"Change of Control Offer"........................................ 4.17(a)
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Term Defined in Section
- ---- ------------------
"Change of Control Payment Date"................................. 4.17(b)
"Change of Control Purchase Price"............................... 4.17(a)
"covenant defeasance"............................................ 8.2(c)
"Custodian"...................................................... 6.1(b)
"Euroclear"...................................................... 2.16(a)
"Event of Default"............................................... 6.1(a)
"Excess Proceeds"................................................ 4.16(b)
"Excess Proceeds Offer".......................................... 4.16(b)
"Global Notes"................................................... 2.16(a)
"Guarantee"...................................................... 4.25
"Legal Defeasance"............................................... 8.2(b)
"Other Notes".................................................... 2.2
"Paying Agent"................................................... 2.4
"Registrar"...................................................... 2.4
"Regulation S Global Notes"...................................... 2.16(a)
"Regulation S Notes"............................................. 2.2
"Reinvestment Date".............................................. 4.15(a)
"Required Filing Dates".......................................... 4.7
"Restricted Global Note"......................................... 2.16(a)
"Restricted Period".............................................. 2.16(f)
"Rule 144A Notes"................................................ 2.2
"U.S. Government Obligations".................................... 8.1(b)
SECTION 1.3 Incorporation by Reference to Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
shall be deemed incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
(a) "Commission" means the SEC;
(b) "indenture securities" means the Notes;
(c) "indenture security holder" means a Holder or Noteholder;
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(d) "indenture to be qualified" means this Indenture;
(e) "indenture trustee" or "institutional trustee" means the
Trustee; and
(f) "obligor" on the indenture securities means the Issuers or
any other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings so assigned to them therein.
SECTION 1.4 Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is exclusive;
(c) words in the singular include the plural, and words in the
plural include the singular;
(d) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other Subdivision; and
(e) unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with GAAP as in
effect from time to time, applied on a basis consistent with the most
recent audited financial statements of the Company.
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ARTICLE II
THE NOTES
---------
SECTION 2.1 Amount of Notes.
The Trustee shall authenticate Notes for original issue on the Issue
Date in the aggregate principal amount of $50,000,000, upon a written order of
the Issuers in the form of an Officers' Certificate of the Issuers. Such written
order shall specify the amount of Notes to be authenticated and the date on
which the Notes are to be authenticated.
Upon receipt of an Issuers Request and Officers' Certificate certifying
that a registration statement relating to an exchange offer specified in the
Registration Rights Agreement is effective and that the conditions precedent to
a private exchange thereunder have been met, the Trustee shall authenticate an
additional series of Notes in an aggregate principal amount not to exceed
$50,000,000 outstanding at any time for issuance in exchange for the Notes
tendered for exchange and cancellation pursuant to such exchange offer
registered under the Securities Act not bearing the Private Placement Legend or
pursuant to a Private Exchange (as defined in the Registration Rights
Agreement). Exchange Notes or Private Exchange Notes may have such distinctive
series designations and such changes in the form thereof as are specified in the
Issuers Request referred to in the preceding sentence.
SECTION 2.2 Form and Dating.
The Notes and the Trustee's certificate of authentication with respect
thereto shall be substantially in the form set forth in Exhibit A, which is
incorporated in and forms a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, rule or usage to which the
Issuers are subject. Any such notations, legends or endorsements shall be
furnished to the Trustee in writing. Without limiting the generality of the
foregoing, Notes offered and sold to Qualified Institutional Buyers in reliance
on Rule 144A ("Rule 144A Notes") shall bear the legend and include the form of
as-
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signment set forth in Exhibit B, Notes offered and sold in offshore transactions
in reliance on Regulation S ("Regulation S Notes") shall bear the legend and
include the form of assignment set forth in Exhibit C, and Notes offered and
sold to Institutional Accredited Investors in transactions exempt from
registration under the Securities Act not made in reliance on Rule 144A or
Regulation S ("Other Notes") shall be represented by Physical Notes bearing the
Private Placement Legend. Each Note shall be dated the date of its
authentication.
The terms and provisions contained in the Notes shall constitute, and
are expressly made, a part of this Indenture and, to the extent applicable, the
Issuers and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and agree to be bound thereby.
The Notes may be presented for registration of transfer and exchange at
the offices of the Registrar in the Borough of Manhattan.
SECTION 2.3 Execution and Authentication.
One Officer shall sign (who shall have been duly authorized by all
requisite corporate actions) and shall attest to the Notes for the Issuers by
manual or facsimile signature.
If an Officer whose signature is on a Note was an Officer at the time
of such execution but no longer holds that office at the time the Trustee
authenticates the Note, the Note shall be valid nevertheless.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Notwithstanding the foregoing, if
any Note shall have been authenticated and delivered hereunder but never issued
and sold by the Issuers, and the Issuers shall deliver such Note to the
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Trustee for cancellation as provided in Section 2.12, for all purposes of this
Indenture such Note shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
The Trustee may appoint an authenticating agent acceptable to the
Issuers to authenticate the Notes at the expense of the Issuers. Unless
otherwise provided in the appointment, an authenticating agent may authenticate
the Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Issuers
and Affiliates of the Issuers. Each Paying Agent is designated as an
authenticating agent for purposes of this Indenture.
The Notes shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
SECTION 2.4 Registrar and Paying Agent.
The Issuers shall maintain an office or agency (which shall be located
in the Borough of Manhattan in The City of New York, State of New York) where
Notes may be presented for registration of transfer or for exchange (the
"Registrar"), and an office or agency where Notes may be presented for payment
(the "Paying Agent") and an office or agency where notices and demands to or
upon the Issuers, if any, in respect of the Notes and this Indenture may be
served. The Issuers hereby initially designate the office of United States Trust
Company of New York, 114 West 47th Street, New York, New York 10036-1532, ATTN:
Corporate Trust Administration, as their office or agency in the Borough of
Manhattan, The City of New York. The Registrar shall keep a register of the
Notes and of their transfer and exchange. The Issuers may have one or more
additional Paying Agents. The term "Paying Agent" includes any additional Paying
Agent. Neither the Issuers nor any Affiliate thereof may act as Paying Agent.
The Issuers may change any Paying Agent or Registrar without notice to any
Noteholder.
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The Issuers shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Issuers shall notify the Trustee of the name and
address of any such Agent. If the Issuers fail to maintain a Registrar or Paying
Agent, or fail to give the foregoing notice, the Trustee shall act as such and
shall be entitled to compensation in accordance with Section 7.7.
The Issuers initially designate the Corporate Trust Administration
Office of the Trustee as Registrar, Paying Agent and agent for service of
notices and demands in connection with the Notes and this Indenture.
SECTION 2.5 Paying Agent to Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Noteholders or the Trustee all money held by the Paying Agent for the payment of
principal of or premium or interest on the Notes (whether such money has been
paid to it by the Issuers or any other obligor on the Notes), and the Issuers
and the Paying Agent shall notify the Trustee of any default by the Issuers (or
any other obligor on the Notes) in making any such payment. Money held in trust
by the Paying Agent need not be segregated except as required by law and in no
event shall the Paying Agent be liable for any interest on any money received by
it hereunder. The Issuers at any time may require the Paying Agent to pay all
money held by it to the Trustee and account for any funds disbursed and the
Trustee may at any time during the continuance of any Event of Default specified
in Section 6.1(a)(i) or (ii), upon written request to the Paying Agent, require
such Paying Agent to pay forthwith all money so held by it to the Trustee and to
account for any funds disbursed. Upon making such payment, the Paying Agent
shall have no further liability for the money delivered to the Trustee.
SECTION 2.6 Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of
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the names and addresses of the Noteholders. If the Trustee is not the Registrar,
the Issuers shall furnish to the Trustee at least five Business Days before each
Interest Payment Date, and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Noteholders.
SECTION 2.7 Transfer and Exchange.
Subject to Sections 2.16 and 2.17, when Notes are presented to the
Registrar with a request from the Holder of such Notes to register a transfer or
to exchange them for an equal principal amount of Notes of other authorized
denominations, the Registrar shall register the transfer as requested. Every
Note presented or surrendered for registration of transfer or exchange shall be
duly endorsed or be accompanied by a written instrument of transfer in form
satisfactory to the Issuers and the Registrar, duly executed by the Holder
thereof or his attorneys duly authorized in writing. To permit registrations of
transfers and exchanges, the Issuers shall issue and execute and, at the request
and the expense of the Issuers, the Trustee shall authenticate new Notes
evidencing such transfer or exchange at the Registrar's request. No service
charge shall be made to the Noteholder for any registration of transfer or
exchange. The Issuers may require from the Noteholder payment of a sum
sufficient to cover any transfer taxes or other governmental charge that may be
imposed in relation to a transfer or exchange, but this provision shall not
apply to any exchange pursuant to Section 2.11, 3.6, 4.15, 4.17 or 9.5 (in which
events the Issuers shall be responsible for the payment of such taxes). The
Trustee shall not be required to exchange or register a transfer of any Note for
a period of 15 days immediately preceding the selection of Notes to be redeemed
or any Note selected for redemption.
Any Holder of the Global Note shall, by acceptance of such Global Note,
agree that transfers of the beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Global Note shall be required to be reflected in a book entry.
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Each Holder of a Note agrees to indemnify the Issuers, the Registrar
and the Trustee against any liability that may result from the transfer,
exchange or assignment of such Holder's Note in violation of any provision of
this Indenture and/or applicable U.S. Federal or state securities law.
Except as expressly provided herein, neither the Trustee nor the
Registrar shall have any duty to monitor the Issuers' compliance with or have
any responsibility with respect to the Issuers' compliance with any Federal or
state securities laws.
SECTION 2.8 Replacement Notes.
If a mutilated Note is surrendered to the Registrar or the Trustee, or
if the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken, the Issuers shall issue and, at the written request set forth
in an Officers' Certificate and the expense of the Issuers, the Trustee shall
authenticate a replacement Note if the Holder of such Note furnishes to the
Issuers and the Trustee evidence reasonably acceptable to them of the ownership
and the destruction, loss or theft of such Note. If required by the Trustee or
the Issuers, an indemnity bond shall be posted, sufficient in the judgment of
both to protect the Issuers, the Trustee or any Paying Agent from any loss that
any of them may suffer if such Note is replaced. The Issuers may charge such
Holder for the Issuers' reasonable expenses in replacing such Note and the
Trustee may charge the Issuers for the Trustee's expenses (including, without
limitation, reasonable attorneys' fees and disbursements) in replacing such
Note. Every replacement Note shall constitute an additional contractual
obligation of the Issuers, subject to Section 2.9.
SECTION 2.9 Outstanding Notes.
The Notes outstanding at any time are all Notes that have been
authenticated by the Trustee except for (a) those canceled by it, (b) those
delivered to it for cancellation, (c) to the extent set forth in Sections 8.1
and 8.2, on or after the date on which the conditions set forth in Section 8.1
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or 8.2 have been satisfied, those Notes theretofore authenticated and delivered
by the Trustee hereunder and (d) those described in this Section 2.9 as not
outstanding. Subject to Section 2.10, a Note does not cease to be outstanding
because an Issuer or one of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.8, it ceases to be
outstanding unless the Trustee receives written notice that the replaced Note is
held by a bona fide purchaser in whose hands such Note is a legal, valid and
binding obligation of the Issuers.
If the Paying Agent holds, in its capacity as such, on any Maturity
Date or on any optional Redemption Date, money sufficient to pay all accrued
interest and principal with respect to the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.10 Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any declaration of acceleration or notice of default or
direction, waiver or consent or any amendment, modification or other change to
this Indenture, Notes owned by the Issuers or any Affiliate of the Issuers shall
be disregarded as though they were not outstanding, except that for the purposes
of determining whether the Trustee shall be protected in relying on any such
declaration, notice, direction, waiver or consent or any amendment, modification
or other change to this Indenture, only Notes as to which a Trust Officer of the
Trustee has received an Officers' Certificate stating that such Notes are so
owned shall be so disregarded. Notes so owned which have been pledged in good
faith shall not be disregarded if the pledgee establishes the pledgee's right so
to act with respect to the Notes and that the pledgee is not either of the
Issuers, any other obligor or guarantor on the Notes or any of their respective
Affiliates.
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SECTION 2.11 Temporary Notes.
Until definitive Notes are prepared and ready for delivery, the Issuers
may prepare, and the Trustee shall authenticate, temporary Notes. Temporary
Notes shall be substantially in the form of definitive Notes but may have
variations that the Issuers and the Trustee consider appropriate for temporary
Notes. Without unreasonable delay, the Issuers shall prepare, and the Trustee
shall authenticate, definitive Notes in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as definitive Notes.
SECTION 2.12 Cancellation.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment,
as the case may be. The Trustee shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall (subject to the record-retention requirements of the Exchange Act) destroy
canceled Notes shall and deliver a certificate of destruction thereof to the
Issuers. The Issuers may not reissue or resell, or issue new Notes to replace,
Notes that the Issuers have redeemed or paid, or that have been delivered to the
Trustee for cancellation.
SECTION 2.13 Defaulted Interest.
If the Issuers default on a payment of interest on the Notes, they
shall pay the defaulted interest, plus (to the extent permitted by law) any
interest payable on the defaulted interest, pursuant to Section 4.1 hereof, to
the Persons who are Noteholders on a subsequent special record date, which date
shall be at least five Business Days prior to the payment date. The Issuers
shall fix such special record date and payment date and provide the Trustee at
least 20 days notice of the proposed amount of defaulted interest to be paid and
the special payment date and at the same time the Issuers shall deposit with the
Trustee the aggregate amount proposed to be paid in respect of
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such defaulted interest. At least 15 days before such special record date, the
Issuers shall mail to each Noteholder a notice that states the special record
date, the payment date and the amount of defaulted interest, and interest
payable on defaulted interest, if any, to be paid. The Issuers may make payment
of any defaulted interest in any other lawful manner not inconsistent with the
requirements (if applicable) of any securities exchange on which the Notes may
be listed and, upon such notice as may be required by such exchange, if, after
written notice given by the Issuers to the Trustee of the proposed payment
pursuant to this sentence, such manner of payment shall be deemed practicable by
the Trustee.
SECTION 2.14 CUSIP Number.
The Issuers in issuing the Notes may use a "CUSIP" number, and if so,
such CUSIP number shall be included in notices of redemption or exchange as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Issuers shall
promptly notify the Trustee of any such CUSIP number used by the Issuers in
connection with the issuance of the Notes and of any change in the CUSIP number.
SECTION 2.15 Deposit of Moneys.
Prior to 11:30 a.m., New York City time, on each Interest Payment Date
and Maturity Date, the Issuers shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Trustee to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be. The principal and
interest on Global Notes shall be payable to the Depository or its nominee, as
the case may be, as the sole registered owner and the sole holder of the Global
Notes represented thereby. The principal and interest on Physical Notes shall be
payable at the office of the Paying Agent. The Issuers shall deliver an
Officers' Certificate to
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the Trustee, at least 5 business days before any applicable payment date,
setting forth the amount of Additional Interest due per $1,000 aggregate
principal amount of Notes.
SECTION 2.16 Book-Entry Provisions for Global Notes.
(a) Rule 144A Notes initially shall be represented by one or more notes
in registered, global form without interest coupons (collectively, the
"Restricted Global Note"). Regulation S Notes initially shall be represented by
one or more notes in registered, global form without interest coupons
(collectively, the "Regulation S Global Note," and, together with the Restricted
Global Note and any other global notes representing Notes, the "Global Notes").
The Global Notes shall bear legends as set forth in Exhibit D. The Global Notes
initially shall (i) be registered in the name of the Depository or the nominee
of such Depository, in each case for credit to an account of an Agent Member
(or, in the case of the Regulation S Global Notes, Agent Members of the
Depository holding for Euroclear System ("Euroclear") and Cedel Bank, S.A.
("CEDEL")), (ii) be delivered to the Trustee as custodian for such Depository
and (iii) bear legends as set forth in Exhibit B with respect to Restricted
Global Notes and Exhibit C with respect to Regulation S Global Notes.
Members of, or direct or indirect participants in, the Depository
("Agent Members") shall have no rights under this Indenture with respect to any
Global Note held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Notes, and the Depository may be treated by the
Issuers, the Trustee and any agent of the Issuers or the Trustee as the absolute
owner of the Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Trustee or any agent of the Issuers
or the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
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(b) Transfers of Global Notes shall be limited to transfer in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition, a Global Note shall
be exchangeable for Physical Notes if (i) the Depository (x) notifies the
Issuers that it is unwilling or unable to continue as depository for such Global
Note and the Issuers thereupon fail to appoint a successor depository or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Issuers, at their option, notify the Trustee in writing that they elect to cause
the issuance of such Physical Notes or (iii) there shall have occurred and be
continuing a Default or an Event of Default with respect to the Notes. In all
cases, Physical Notes delivered in exchange for any Global Note or beneficial
interests therein shall be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depository (in accordance with
its customary procedures).
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Issuers
shall execute, and the Trustee shall upon receipt of a written order from the
Issuers authenticate and make available for delivery, one or more Physical Notes
of like tenor and amount.
(d) In connection with the transfer of Global Notes as an entirety to
beneficial owners pursuant to paragraph (b), the Global Notes shall be deemed to
be surrendered to the Trustee for cancellation, and the Issuers shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in writing in exchange for
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its beneficial interest in the Global Notes, an equal aggregate principal amount
of Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Note delivered in
exchange for an interest in a Global Note pursuant to paragraph (b), (c) or (d)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.17, bear the Private Placement Legend or, in the case of the Regulation S
Global Note, the legend set forth in Exhibit C, in each case, unless the Issuers
determine otherwise in compliance with applicable law.
(f) On or prior to the 40th day after the later of the commencement of
the offering of the Notes represented by a Regulation S Global Note and the
original issue date of such Notes (such period through and including such 40th
day, the "Restricted Period"), a beneficial interest in the Regulation S Global
Note may be held only through Euroclear or CEDEL, as indirect participants in
DTC, unless transferred to a Person who takes delivery in the form of an
interest in the corresponding Restricted Global Note, only upon receipt by the
Trustee of a written certification from the transferor to the effect that such
transfer is being made (i)(a) to a Person who the transferor reasonably believes
is a Qualified Institutional Buyer in a transaction meeting the requirements of
Rule 144A or (b) pursuant to another exemption from the registration
requirements under the Securities Act which is accompanied by an opinion of
counsel regarding the availability of such exemption and (ii) in accordance with
all applicable securities laws of any state of the United States or any other
jurisdiction.
(g) Beneficial interests in the Restricted Global Note may be
transferred to a Person who takes delivery in the form of an interest in the
Regulation S Global Note, whether before or after the expiration of the
Restricted Period, only if the transferor first delivers to the Trustee a
written certificate to the effect that such transfer is being made in accordance
with Rule 903 or 904 of Regulation S or Rule 144 (if available) and that, if
such transfer occurs prior to the expiration of the Restricted Period, the
interest transferred will be held immediately thereafter through Euroclear or
CEDEL.
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(h) Any beneficial interest in one of the Global Notes that is
transferred to a Person who takes delivery in the form of an interest in another
Global Note shall, upon transfer, cease to be an interest in such Global Note
and become an interest in such other Global Note and, accordingly, shall
thereafter be subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(i) The Holder of any Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.17 Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and
Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted Note
to any Institutional Accredited Investor which is not a QIB or to any Non-U.S.
Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Note, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after May
26, 2001 or such other date as such Note shall be freely transferable
under Rule 144 as certified in an Officers' Certificate or (y) (1) in
the case of a transfer to an Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate substantially in the form of
Exhibit E hereto or (2) in the case of a transfer to a Non-U.S. Person
(including a QIB), the proposed transferor has delivered to the
Registrar a certificate substantially in the form of Exhibit F hereto;
provided that in the case of a transfer of a Note bearing the Private
Placement Legend for a Note not bearing the Private Placement Legend,
the Registrar has
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received an Officers' Certificate authorizing such transfer; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Registrar shall reflect on its books and records the date and an
increase in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note transferred or
the Issuers shall execute and the Trustee shall authenticate and make available
for delivery one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed registration of transfer of a Note
constituting a Restricted Note to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided
for on such Holder's Note stating, or has otherwise advised the Issuers
and the Registrar in writing, that the sale has been made in compliance
with the provisions of Rule 144A to a transferee who has signed the
certification provided for on such Holder's Note stating, or has
otherwise advised the Issuers and the Registrar in writing, that it is
purchasing the Note for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a QIB within the meaning of Rule 144A, and is aware that the
sale to it is being made in reliance on
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Rule 144A and acknowledges that it has received such information
regarding the Issuers as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order
to claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in the Restricted Global Note, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of the Restricted Global Note in an amount equal to
the principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.
(c) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) it has received the Officers' Certificate
required by paragraph (a)(i)(x) of this Section 2.17, (ii) there is delivered to
the Registrar an Opinion of Counsel reasonably satisfactory to the Issuers to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act or (iii) such Note has been sold pursuant to an effective registration
statement under the Securities Act and the Registrar has received an Officers'
Certificate from the Issuers to such effect.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees
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that it will transfer such Note only as provided in this Indenture.
The Registrar shall retain for a period of two years copies of all
letters, notices and other written communications received pursuant to Section
2.16 or this Section 2.17. The Issuers shall have the right to inspect and make
copies of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable notice to the Registrar.
SECTION 2.18 Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.
ARTICLE III
OPTIONAL REDEMPTION
-------------------
SECTION 3.1 Notices to Trustee.
If the Issuers elect to redeem Notes pursuant to Paragraph 5 of the
Notes, they shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of Notes to be redeemed.
The Issuers shall give each notice provided for in this Section 3.1 at
least 60 days before the Redemption Date (unless a shorter notice shall be
agreed to by the Trustee in writing), together with an Officers' Certificate
stating that such redemption will comply with the conditions contained herein
and in the Notes. The notice shall include the Redemption Date, the principal
amount of Notes to be redeemed and the redemption price and, if such redemption
is during the nine month period beginning on April 15, 2001, a statement that
the redemption is concurrent with an optional redemption by the Subsidiary
Issuers of the Existing Subsidiary Notes pursuant to Paragraph 5 of the Notes
and all other information required to be furnished to the Holders pursuant to
Section 3.3.
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SECTION 3.2 Selection of Notes To Be Redeemed.
If less than all of the Notes are to be redeemed, the Trustee shall
select the Notes to be redeemed, on a pro rata basis, by lot or by such other
method as the Trustee may deem fair and equitable. The Trustee shall make the
selection from the Notes outstanding and not previously called for redemption.
The Trustee shall promptly notify the Issuers in writing of such Notes selected
for redemption. The Trustee may select for redemption portions of the principal
amount of Notes that have denominations larger than $1,000. Notes and portions
of them the Trustee selects shall be in amounts of $1,000 or integral multiples
thereof. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
SECTION 3.3 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Issuers shall mail or cause the mailing of, in the name of, at the request
of, and at the expense of the Issuers, a notice of redemption by first-class
mail to each Holder of Notes to be redeemed with a copy to each of the Trustee
and any Paying Agent.
The notice shall identify the Notes to be redeemed and shall state:
(a) the Redemption Date;
(b) the redemption price and the amount of accrued interest,
if any, to be paid;
(c) the name and address of the Paying Agent;
(d) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price and accrued interest,
if any;
(e) that, unless the Issuers default in making the redemption
payment, interest on Notes called for redemption ceases to accrue on
and after the Redemption Date and
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the only remaining right of the Holders of such Notes is to receive
payment of the redemption price upon surrender to the Paying Agent of
the Notes redeemed;
(f) if any Note is to be redeemed in part, the portion of the
principal amount (equal to $1,000 or any integral multiple thereof) of
such Note to be redeemed and that, on or after the Redemption Date,
upon surrender of such Note, a new Note or Notes in aggregate principal
amount equal to the unredeemed portion thereof will be issued without
charge to the Noteholder; and
(g) the CUSIP number, if any, pursuant to Section 2.14.
At the Issuers' written request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense.
SECTION 3.4 Effect of Notice of Redemption.
Once notice of redemption is mailed, Notes called for redemption become
due and payable on the Redemption Date and at the redemption price. Upon
surrender for redemption to the Paying Agent, such Notes shall be paid at the
redemption price plus accrued interest to the Redemption Date, but interest
installments whose maturity is on or prior to such Redemption Date will be
payable on the relevant Interest Payment Dates to the Holders of record at the
close of business on the relevant record dates referred to in the Notes.
SECTION 3.5 Deposit of Redemption Price.
At least one Business Day prior to the Redemption Date, the Issuers
shall deposit with the Paying Agent in immediately available funds money
sufficient to pay the redemption price of and accrued interest on all Notes or
portions thereof to be redeemed on the Redemption Date.
If any Note surrendered for redemption in the manner provided in the
Notes shall not be so paid on the Redemption
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Date due to the failure of the Issuers to deposit sufficient funds with the
Paying Agent, interest will continue to accrue from the Redemption Date until
such payment is made on the unpaid principal and, to the extent lawful, on any
interest not paid on such unpaid principal, in each case at the date and in the
manner provided in the Notes.
SECTION 3.6 Notes Redeemed in Part.
Upon surrender to the Paying Agent of a Note that is redeemed in part,
the Issuers shall execute and the Trustee shall authenticate for the Holder a
new Note equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE IV
COVENANTS
---------
SECTION 4.1 Payment of Notes.
The Issuers shall pay the principal of and interest on the Notes on the
dates and in the manner provided in the Notes and this Indenture.
An installment of principal or interest shall be considered paid on the
date due if the Trustee or the Paying Agent holds on such date immediately
available funds designated for and sufficient to pay such installment.
The Issuers shall pay interest on overdue principal and (to the extent
permitted by law) on overdue installments of interest at a rate equal to .5% per
annum; and the per annum interest rate of such additional interest will increase
by an additional .25% per annum for each subsequent 90-day period during which
such overdue principal and installments of interest remain unpaid, up to a
maximum additional interest rate of 2.0% per annum.
SECTION 4.2 Maintenance of Office or Agency.
The Issuers shall maintain in the Borough of Manhattan, the City of New
York, an office or agency where Notes may
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be surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Issuers in respect of the
Notes and this Indenture may be served. The Issuers will give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Issuers shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section 11.2.
The Issuers may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Issuers of their obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York, for such purposes. The Issuers will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Issuers hereby initially designate the Corporate Trust
Administration Office of the Trustee set forth in Section 11.2 as an agency of
the Issuers in accordance with Section 2.4.
SECTION 4.3 Corporate Existence.
Subject to Article V, the Issuers shall do or cause to be done, at
their own cost and expense, all things necessary to, and will cause each of
their Subsidiaries to, preserve and keep in full force and effect the existence
as a limited liability company or corporation, as the case may be, rights
(charter and statutory), licenses and/or franchises of the Issuers and each of
their Subsidiaries; provided, however, that the Issuers or any of their
Subsidiaries shall not be required to preserve any such rights, licenses or
franchises if the Board of Directors of the Company shall reasonably and in good
faith determine that the preservation thereof is no longer desirable in the
conduct of the business of the Issuers or such
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Subsidiary and the loss thereof is not adverse in any material respect to the
Holders.
SECTION 4.4 Payment of Taxes and Other Claims.
The Issuers shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon them or their Subsidiaries' or
Unrestricted Subsidiaries' income, profits or property and (b) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a Lien
upon their property; provided, however, that the Issuers shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate negotiations or proceedings and for which disputed
amounts adequate reserves (in the good faith judgment of the Officers of the
Issuers) have been made.
SECTION 4.5 Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.
(a) The Company shall, and shall cause each of its Subsidiaries to, at
all times cause all material properties used or useful in the conduct of their
business to be maintained and kept in good condition, repair and working order
(reasonable wear and tear excepted) and supplied with all equipment deemed
necessary in the good faith judgment of the Officers of the Company, and shall
cause to be made all repairs, renewals, replacements, betterments and
improvements thereto; provided, however, that the Issuers or any of their
Subsidiaries shall not be required to maintain, repair, renew, replace, better
or improve any such equipment if the Board of Directors of the Company shall
reasonably and in good faith determine that the maintenance thereof is no longer
desirable in the conduct of the business of the Issuers or such Subsidiaries and
the loss thereof is not adverse in any material respect to the Holders.
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(b) The Company and each of its Subsidiaries shall maintain insurance
in such amounts and covering such risks as are usually and customarily carried
with respect to similar facilities according to their respective locations.
(c) The Issuers shall and shall cause each of their Subsidiaries to
keep proper books of record and account, in which full and correct entries shall
be made of all financial transactions and the assets and business of the Issuers
and each Subsidiary of the Issuers, in accordance with GAAP consistently applied
to the Issuers and their Subsidiaries taken as a whole.
(d) The Issuers shall and shall cause each of their Subsidiaries to
comply with all statutes, laws, ordinances, or government rules and regulations
to which they are subject, non-compliance with which would materially adversely
affect the business, prospects, earnings, properties, assets or condition
(financial or otherwise) of the Issuers and their Subsidiaries taken as a whole.
SECTION 4.6 Compliance Certificates.
(a) Each Issuer shall deliver to the Trustee, within 50 days after the
end of each of the first three quarters of each Issuer's fiscal year, and within
120 days after the end of such fiscal year, Officers' Certificates of the
Issuers signed by the Officers specified under TIA ss. 314(a)(4) stating (i)
that a review of the activities of the Issuers during the preceding fiscal
quarter or year, as the case may be, has been made under the supervision of the
signing Officers with a view to determining whether the Issuers have kept,
observed, performed and fulfilled its obligations under this Indenture, and (ii)
that, to the best knowledge of each Officer signing such certificate, the
Issuers have kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which such Officers may
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have knowledge, their status and what action the Issuers are taking or propose
to take with respect thereto).
(b) So long as (and to the extent) not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
annual financial statements delivered pursuant to Section 4.7 shall be
accompanied by a written statement of the Company's independent public
accountants that in making the examination necessary for certification of such
annual financial statements nothing has come to their attention that would lead
them to believe that the Company has violated any provisions of Article IV or of
Article V of this Indenture or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Issuers shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Issuers are taking or propose to take with
respect thereto.
(d) The Company's and Capital Corp's fiscal years end on December 31.
SECTION 4.7 Reports.
So long as any of the Notes are outstanding, whether or not the Issuers
are subject to Section 13(a) or 15(d) of the Exchange Act, the Issuers shall
file with the SEC the annual reports, quarterly reports and other documents
which the Issuers would have been required to file with the SEC pursuant to such
Sections 13(a) and 15(d) if the Issuers were so subject, such documents to be
filed with the SEC on or prior to the respective dates (the "Required Filing
Dates") by which the Issuers would have been required so to file such documents
if the Issuers were so subject. The Issuers shall also in any event within 15
days after each Required Filing Date (i) transmit by
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mail to all Holders, as their names and addresses appear in the register of
Notes maintained by the Registrar, without cost to such Holders and (ii) file
with the Trustee copies of the annual reports, quarterly reports and other
documents which the Issuers would have been required to file with the SEC
pursuant to Sections 13(a) and 15(d) of the Exchange Act if the Issuers were
subject to such Sections. The Issuers shall also comply with the other
provisions of TIA Section 314(a).
SECTION 4.8 Further Assurance to the Trustee.
The Issuers shall, upon request of the Trustee, execute and deliver
such further instruments and do such further acts as may reasonably be necessary
or proper to carry out more effectively the provisions of this Indenture.
SECTION 4.9 Limitation on Additional Indebtedness.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, incur (as defined herein) any Indebtedness
(including Acquired Indebtedness) other than Permitted Indebtedness, provided,
however, that the Company and its Subsidiaries may incur Indebtedness (including
Acquired Indebtedness) and interest, premium, fees and other obligations
associated therewith if: (i) (A) in the case of Indebtedness of AOALP or any of
its Subsidiaries after giving effect to the incurrence of such Indebtedness and
the receipt and application of the proceeds thereof, the ratio of the total
Indebtedness of AOALP and its Subsidiaries to AOALP's EBITDA (determined on a
pro forma basis for the most recently ended four full fiscal quarters of AOALP
for which financial statements are available at the date of determination) is
less than (1) 5.25 to 1 if the Indebtedness is incurred prior to March 15, 2001
and (2) 5.0 to 1 if the Indebtedness is incurred on or after March 15, 2001; and
(B) in the case of Indebtedness of the Company or any of its Subsidiaries, after
giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof, the ratio of the total Indebtedness of the
Company and its Subsidiaries to the Company's EBITDA (determined as provided
above) is less than (1) 6.25 to 1 if the Indebtedness is incurred prior to March
15, 2001 and
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(2) 6.0 to 1 if the Indebtedness is incurred on or after March 15, 2001;
provided, however, that if the Indebtedness which is the subject of a
determination under this provision is Acquired Indebtedness, or Indebtedness
incurred in connection with the simultaneous acquisition of any Person,
business, property or assets, then such ratio shall be determined by giving
effect to (on a pro forma basis, as if the transaction had occurred at the
beginning of the four-quarter period) both the incurrence or assumption of such
Acquired Indebtedness or such other Indebtedness by the Company or AOALP, as the
case may be, and the inclusion in the Company's EBITDA or AOALP's EBITDA, as the
case may be, of the EBITDA of the acquired Person, business, property or assets,
and (ii) no Default or Event of Default shall have occurred and be continuing at
the time or as a consequence of the incurrence of such Indebtedness.
(b) The Company shall not, directly or indirectly, incur any
Indebtedness that by its terms (or by the terms of any agreement governing such
Indebtedness) is expressly made subordinate to any other Indebtedness of the
Company unless such Indebtedness is also expressly by its terms (or by the terms
of any agreement governing such Indebtedness) subordinated to the same extent
and in the same manner to the Notes; provided, however, that no Indebtedness of
the Company shall be deemed to be subordinated to any other Indebtedness of the
Company solely because such other Indebtedness is secured.
SECTION 4.10 Limitation on Indebtedness of Certain Subsidiaries.
The Company shall not permit any Subsidiary of AOALP to incur any
Indebtedness except Permitted Indebtedness or Acquired Indebtedness, provided,
however, that such Acquired Indebtedness was not incurred in connection with, or
in anticipation of, such Person becoming a Subsidiary.
SECTION 4.11 Limitation on Liens.
The Company shall not, and shall not permit any of its Subsidiaries to,
create, incur or otherwise cause or suffer to exist or become effective any
Liens of any kind (other than
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Permitted Liens) upon any property or asset of the Company or any Subsidiary
whether owned on the Issue Date or acquired after the Issue Date or on any
shares of stock or debt of any Subsidiary which owns property or assets, now
owned or hereafter acquired, or on any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits thereon.
SECTION 4.12 Limitation on Restricted Payments.
(a) The Company shall not make, and shall not permit any of its
Subsidiaries to, directly or indirectly, make, any Restricted Payment prior to
January 15, 2002, except cash payments in respect of Phantom Compensation so
long as subparagraphs (i), (ii) and (iii) below are satisfied. Thereafter, the
Company shall not make, and shall not permit any of its Subsidiaries to,
directly or indirectly, make, any Restricted Payment unless:
(i) no Default or Event of Default shall have occurred and
be continuing at the time of or immediately after giving effect to such
Restricted Payment;
(ii) immediately after giving pro forma effect to such
Restricted Payment, the Company (or in the case of Phantom
Compensation, AOALP) could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under Section 4.9 hereof; and
(iii) immediately after giving effect to such Restricted
Payment, the aggregate of all Restricted Payments declared or made
after the Issue Date through and including the date of such Restricted
Payment (the "Base Period") does not exceed the sum of (A)(1) in the
case of Phantom Compensation, 50% of the Company's Consolidated Net
Income before reduction for interest expense with respect to the Notes
(or in the event such Consolidated Net Income before reduction for
interest expense with respect to the Notes shall be a deficit, minus
100% of such deficit) during the Base Period, or (2) in the case of
other Restricted Payments, 50% of the Company's Consolidated Net
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Income (or in the event such Consolidated Net Income shall be a
deficit, minus 100% of such deficit) during the Base Period and (B)
100% of the aggregate Net Proceeds, including the fair market value of
securities or other property received by the Company from the issue or
sale, during the Base Period, of Equity Interests (other than
Disqualified Equity Interests or Equity Interests of the Company issued
to any Subsidiary of the Company) of the Company or any Indebtedness or
other securities of the Company convertible into or exercisable or
exchangeable for Equity Interests (other than Disqualified Equity
Interests) of the Company which have been so converted or exercised or
exchanged, as the case may be. For purposes of determining under this
clause (iii) the amount expended for Restricted Payments, cash
distributed shall be valued at the face amount thereof and property
other than cash shall be valued at its fair market value.
(b) The provisions of this covenant shall not prohibit:
(i) the agreement or commitment to make any payment or
distribution otherwise permitted under this Section 4.12 or the payment
or distribution so agreed or committed to be made as long as such
payment or distribution is made on the date of such agreement or
commitment or within 60 days thereof, provided, however, that on the
date of such agreement or commitment such payment would comply with
Section 4.12(a) hereof, it being understood that the agreement or
commitment to make such payment or distribution shall constitute
Permitted Indebtedness;
(ii) the retirement of any Equity Interests of the Company or
subordinated Indebtedness by conversion into, or by or in exchange for,
Equity Interests (other than Disqualified Equity Interests), or out of,
the Net Proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of other shares of Equity Interests of the
Company (other than Disqualified Equity Interests);
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(iii) the redemption or retirement of Indebtedness of the
Company subordinated to the Notes in exchange for, by conversion into,
or out of the Net Proceeds of, a substantially concurrent sale or
incurrence of Indebtedness (other than any Indebtedness owed to a
Subsidiary) of the Company that is contractually subordinated in right
of payment to the Notes to at least the same extent as the subordinated
Indebtedness being redeemed or retired;
(iv) the retirement of any shares of Disqualified Equity
Interests by conversion into, or by exchange for, shares of
Disqualified Equity Interests, or out of the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the
Company) of other shares of Disqualified Equity Interests; or
(v) Prior Accrued Bonus Payments, provided, however, that the
aggregate amount of all such payments made after the Issue Date does
not exceed $500,000;
provided, however, that in the case of the immediately preceding clauses (ii),
(iii) and (v), no Default or Event of Default shall have occurred and be
continuing at the time of such Restricted Payment or would occur as a result
thereof.
(c) In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date for purposes of clause (a)(iii) above, amounts
expended pursuant to clauses (b)(i) and (b)(ii) shall be included, but without
duplication, in such calculation.
(d) For purposes of calculating the net proceeds received by the
Company from the issuance or sale of its Equity Interests either upon the
conversion of, or in exchange for, Indebtedness of the Company or any
Subsidiary, such amount will be deemed to be an amount equal to the difference
of (i) the sum of (x) the principal amount or accreted value (whichever is less)
of such Indebtedness on the date of such conversion or exchange and (y) the
additional cash consideration, if any, received by the Company upon such
conversion or exchange, less any payment on account of fractional shares, minus
(ii) all ex-
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penses incurred in connection with such issuance or sale. In addition, for
purposes of calculating the net proceeds received by the Company from the
issuance or sale of its Equity Interests upon the exercise of any options or
warrants of the Company, such amount will be deemed to be an amount equal to the
difference of (i) the additional cash consideration, if any, received by the
Company upon such exercise, minus (ii) all expenses incurred in connection with
such issuance or sale.
(e) Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this covenant were computed, which calculations may be
based upon the Company's latest available financial statements, and that no
Default or Event of Default exists and is continuing and no Default or Event of
Default will occur immediately after giving effect to such Restricted Payment.
SECTION 4.13 Limitation on Subsidiaries and Unrestricted Subsidiaries.
(a) AOALP or any of its Subsidiaries may designate any Subsidiary of
AOALP (including a newly acquired or newly formed Subsidiary of AOALP) to be an
Unrestricted Subsidiary, provided that for purposes of Section 4.12 hereof:
(i) an "Investment" shall be deemed to have been made at the
time any Subsidiary of AOALP is designated as an Unrestricted
Subsidiary in an amount (proportionate to the Company's or AOALP's, as
the case may be, percentage Equity Interest in such Subsidiary) equal
to the net worth of such Subsidiary at the time that such Subsidiary is
designated as an Unrestricted Subsidiary;
(ii) at any date the aggregate of all Restricted Payments made
as Investments since the Issue Date shall exclude and be reduced by an
amount (proportionate to the Company's or AOALP's, as the case may be,
percentage Equity Interest in such Subsidiary) equal to the net worth
of any Unrestricted Subsidiary at the time that such Unre-
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stricted Subsidiary is designated a Subsidiary of AOALP, not to exceed,
in the case of any such redesignation of an Unrestricted Subsidiary as
a Subsidiary, the amount of Investments previously made by AOALP and
its Subsidiaries in such Unrestricted Subsidiary (in case of clauses
(a)(i) and (a)(ii) hereof, "net worth' shall be calculated based upon
the fair market value of the assets of such Subsidiary as of any such
date of designation); and
(iii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer.
(b) Notwithstanding clause (a) above, the Board of Directors of AOALP
or any of its Subsidiaries may not designate any Subsidiary of AOALP to be an
Unrestricted Subsidiary if, after such designation:
(i) the Company or any Subsidiary of the Company (x) provides
credit support for, or a guarantee of, any Indebtedness of such
Subsidiary (including any undertaking, agreement or instrument
evidencing such Indebtedness) or (y) is directly or indirectly liable
for any Indebtedness of such Subsidiary;
(ii) a default with respect to any Indebtedness of such
Subsidiary (including any right which the holders thereof may have to
take enforcement action against such Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of
the Company or any Subsidiary of the Company to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated
or payable prior to its final scheduled maturity; or
(iii) such Subsidiary owns any Equity Interests in, or owns or
holds any Lien on any property of, any Subsidiary which is not a
Subsidiary of the Subsidiary to be so designated.
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SECTION 4.14 Limitations on Investments.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any Investment except (i) a Permitted Investment or (ii) an Investment by
AOALP or any of its Subsidiaries that is made in compliance with Section 4.12
hereof.
SECTION 4.15 Limitation on Certain Asset Sales; Disposition of
Proceeds.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, consummate an Asset Sale unless:
(i) the Company or such Subsidiary, as the case may be,
receives consideration at the time of such sale or other disposition at
least equal to the fair market value thereof (as determined for Asset
Sales other than eminent domain, condemnation or similar governmental
proceedings in good faith by its Board of Directors); and
(ii) either (A) not less than 85% of the consideration
received by the Company or the Subsidiary, as the case may be, from
such Asset Sale is in the form of cash or cash equivalents (those
equivalents allowed under "Temporary Cash Investments") or (B) after
giving effect to such Asset Sale the Company and its Subsidiaries hold
in the aggregate no more than $2.5 million of Asset Sale Proceeds that
are in a form other than cash or cash equivalents; and
(iii) the Asset Sale Proceeds received by the Company or such
Subsidiary are applied, to the extent the Company elects, (A) to repay
and permanently reduce outstanding Permitted Secured Indebtedness,
Existing Subsidiary Notes and/or Refinancing Indebtedness incurred to
refinance the Existing Subsidiary Notes and to permanently reduce the
commitments in respect thereof, provided, however, that such repayment
and commitment reduction occurs within 270 days following the receipt
of such Asset Sale Proceeds or (B) to an investment in assets
(including Equity Interests or other securities purchased in connection
with the ac-
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quisition of Equity Interests or property of another person) used or
useful in businesses similar or ancillary to the business of the
Company or such Subsidiary as conducted at the time of such Asset Sale,
provided, however, that such investment occurs or the Company or such
Subsidiary enters into contractual commitments to make such investment,
subject only to customary conditions (other than the obtaining of
financing), on or prior to the 180th day following receipt of such
Asset Sale Proceeds (the "Reinvestment Date") and Asset Sale Proceeds
contractually committed are so applied within 270 days following the
receipt of such Asset Sale Proceeds.
(b) Any Asset Sale Proceeds that are not applied as permitted by
Section 4.15(a)(iii) hereof shall constitute "Excess Proceeds." If at any time
the aggregate amount of Excess Proceeds exceeds $3 million, the Issuers shall
offer (an "Excess Proceeds Offer") to purchase from all holders of Notes,
pursuant to procedures set forth herein, the maximum principal amount of Notes
that may be purchased with such Excess Proceeds at a purchase price in cash
equal to 100% of the principal amount thereof plus accrued interest, if any, to
the date of the purchase. To the extent that the aggregate amount of Notes
tendered pursuant to such Excess Proceeds Offer is less than the amount of
Excess Proceeds, the Company may use such portion of the Excess Proceeds that is
not used to purchase Notes so tendered for general corporate purposes. If the
aggregate principal amount of Notes tendered pursuant to such Excess Proceeds
offer is more than the amount of the Excess Proceeds, the Notes tendered will be
repurchased on a pro rata basis or by such other method as the Trustee shall
deem fair and equitable. Upon the closing of any repurchase of Notes tendered
pursuant to such Excess Proceeds Offer, the amount of Excess Proceeds shall be
deemed to be zero.
(c) If the Issuers are required to make an Excess Proceeds Offer, the
Issuer shall mail, within 30 days following the Reinvestment Date, a notice to
the holders of the Notes stating, among other things:
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(i) that such holders have the right to require the Issuers to
apply the Excess Proceeds to repurchase such Notes at a purchase price
in cash equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase;
(ii) the purchase date, which shall be no earlier than 30 days
and not later than 60 days from the date such notice is mailed;
(iii) the instructions, determined by the Issuers, that each
holder of Notes must follow in order to have such Notes repurchased;
and
(iv) the calculations used in determining the amount of Excess
Proceeds to be applied to the repurchase of such Notes.
(d) In the event of the transfer of substantially all (but not all) of
the assets of the Company or any Subsidiary of the Company or substantially all
(but not all) of the assets of any division or line of business of the Company
or any Subsidiary of the Company as an entirety to a Person in a transaction
permitted under Section 5.1 hereof, the successor corporation shall be deemed to
have sold the assets of the Company, the Subsidiary or the division or line of
business, as the case may be, not so transferred for purposes of this covenant,
and shall comply with the provisions of this covenant with respect to such
deemed sale as if it were an Asset Sale. In addition, the fair market value of
such assets of the Company, the Subsidiary or the division or line of business,
as the case may be, deemed to be sold shall be deemed to be Asset Sale Proceeds
for purposes of this Section 4.15.
(e) Any Excess Proceeds Offer shall be made in substantially the same
manner as a Change of Control Offer. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations to the extent such laws and regulations are applicable to an
Excess Proceeds Offer.
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(f) Notwithstanding any of the foregoing, no transaction or action
otherwise permitted under this Section 4.15 shall occur until the Trustee shall
have received an Officers' Certificate and an opinion of Counsel as to (i) the
Company's compliance with this Section 4.15 and (ii) the fulfillment of all
conditions precedent to such transaction or action.
SECTION 4.16 Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, enter into or suffer to exist any transaction or
series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any Affiliate
of the Company or any of its Subsidiaries (including entities in which the
Company or any Subsidiary thereof owns a minority interest) or holder of 10% or
more of an Issuer's Equity Interests (each such transaction, an "Affiliate
Transaction") or extend, renew, waive or otherwise modify the terms of any
Affiliate Transaction entered into prior to the Issue Date unless:
(i) such Affiliate Transaction is solely between or among the
Company and its Wholly-Owned Subsidiaries;
(ii) such Affiliate Transaction is solely between or among
Wholly-Owned Subsidiaries of the Company;
(iii) such Affiliate Transaction is for reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers,
directors, employees or consultants of the Company or any Subsidiary
thereof as determined in good faith by the Board of Directors or senior
management of the Company or of such Subsidiary, as the case may be; or
(iv) the terms of such Affiliate Transaction are fair and
reasonable to the Company or such Subsidiary, as the case may be, and
the terms of such Affiliate Transaction are at least as favorable as
the terms which could be ob-
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tained by the Company or such Subsidiary, as the case may be, in a
comparable transaction made on an arm's length basis between
unaffiliated parties.
(b) In any Affiliate Transaction involving an amount or having a value
in excess of $250,000 in any one year which is not permitted under Section
4.16(a)(i) or (a)(ii), the Company or such Subsidiary, as the case may be, must
obtain a resolution of its Board of Directors certifying that such Affiliate
Transaction complies with 4.16(a)(iv). In transactions with a value in excess of
$2.5 million which are not permitted under Section 4.16(a)(i) or (a)(ii), the
Company or such Subsidiary, as the case may be, must obtain a written opinion as
to the fairness of such a transaction, from a financial point of view, from an
Independent Financial Advisor.
(c) The provisions of Sections 4.16(a) and (b) shall not apply to (i)
the payment of reasonable annual compensation to directors or executive officers
of the Issuers, (ii) payments to Stephen Adams pursuant to the employment
agreement by and between Adams Outdoor Advertising, Inc. and Stephen Adams as in
effect on the Issue Date and (iii) Restricted Payments made in compliance with
Section 4.12 hereof.
SECTION 4.17 Change of Control.
(a) Within 30 days of the occurrence of a Change of Control, the
Issuers shall notify the Trustee in writing of such occurrence and shall make an
offer to purchase (the "Change of Control Offer") the outstanding Notes at a
purchase price equal to 101% of the principal amount thereof plus any accrued
and unpaid interest thereon to the Change of Control Payment Date (as
hereinafter defined) (such applicable purchase price being hereinafter referred
to as the "Change of Control Purchase Price") in accordance with the procedures
set forth herein.
(b) Within 30 days of the occurrence of a Change of Control, the
Issuers also shall (x) send a notice of the Change of Control Offer at least
once to the Dow Jones News Service or similar business news service in the
United States and (y) send
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by first-class mail, postage prepaid, to the Trustee and to each Holder of the
Notes, at the address appearing in the register maintained by the Registrar of
the Notes, a notice stating:
(i) that the Change of Control Offer is being made pursuant to
this Section 4.17 and that all Notes tendered will be accepted for
payment, and otherwise subject to the terms and conditions set forth
herein;
(ii) the Change of Control Purchase Price and the purchase
date (which shall be a Business Day no earlier than 20 business days
from the date such notice is mailed (the "Change of Control Payment
Date"));
(iii) that any Note not tendered will continue to accrue
interest;
(iv) that, unless the Issuers default in the payment of the
Change of Control Purchase Price, any Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(v) that (x) Holders of Physical Notes accepting the offer to
have their Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes to the Paying Agent at the address
specified in the notice and (y) Holders of beneficial interests under a
Global. Note accepting the offer to have such interests purchased
pursuant to a Change of Control Offer will be required to notify the
Depository by telegram, telex or facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the
interests to be purchased and a statement that such Holder is electing
to have such interests purchased; in each case prior to the close of
business on the Business Day preceding the Change of Control Payment
Date;
(vi) that Holders will be entitled to withdraw their
acceptance if the Paying Agent receives, not later than
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the close of business on the third Business Day preceding the Change of
Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
the Notes delivered for purchase, and a statement that such holder is
withdrawing his election to have such Notes purchased;
(vii) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to be
unpurchased portion of the Notes surrendered, provided that each Note
purchased and each such new Note issued shall be in an original
principal amount in denominations of $1,000 and integral multiples
thereof;
(viii) any other procedures that a holder must follow to
accept a Change of Control Offer or effect withdrawal of such
acceptance; and
(ix) the name and address of the Paying Agent.
(c) On the Change of Control Payment Date, the Issuers shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof or
beneficial interests under a Global Note tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Notes or portions thereof or beneficial interests, so
tendered, (iii) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Issuers and (iv) deliver to the Registrar an Officers'
Certificate stating the amount of beneficial interests so tendered and cause the
Registrar to reflect on its books and records the decrease in principal amount
of a Global Note in an amount equal to the principal amount of the beneficial
interest in a Global Note so tendered. The Paying Agent shall promptly (1) mail
to each Holder of Notes so accepted and (2) cause to be credited to the
respective accounts of the Holders under a Global Note of beneficial interests
so accepted payment in an amount equal to the Change of Control Purchase Price
for such Notes (which such payment shall, in the case of Holders of beneficial
interests in a Global Note, be through the facili-
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ties of the Depository), and the Issuers shall execute and issue, and the
Trustee shall promptly authenticate and mail to such Holder, a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered and shall
issue a new Global Note equal in principal amount to any unpurchased portion of
beneficial interests so surrendered; provided, however, that each such new Note
shall be issued in an original principal amount in denominations of $1,000 and
integral multiples thereof.
(d) If the Credit Facility is in effect, or any Existing Subsidiary
Notes are outstanding, or any other Permitted Secured Indebtedness or
Refinancing Indebtedness incurred to refinance the Existing Subsidiary Notes (to
the extent such Refinancing Indebtedness contains provisions requiring repayment
or an offer to repay upon such Change of Control or prohibiting or limiting the
repurchase of the Notes as described above) is outstanding, then at the time of
the occurrence of a Change of Control, prior to the mailing of the notice to
holders described in clause (b) hereof, but in any event within 30 days
following any Change of Control, the Company shall (i) repay (or cause to be
repaid) in full all obligations and terminate (or cause to be terminated) all
commitments under such Permitted Secured Indebtedness, Existing Subsidiary Notes
and/or Refinancing Indebtedness and/or such Refinancing Indebtedness or offer to
repay in full all obligations and terminate all commitments under such Permitted
Secured Indebtedness, Existing Subsidiary Notes and/or such Refinancing
Indebtedness of each lender or holder who has accepted such offer or (ii) obtain
(or cause to be obtained) the requisite consent under such Permitted Secured
Indebtedness to permit the repurchase of the Notes pursuant to this Section
4.17. The Company must first comply with the first sentence of this clause (d)
before it shall be required to purchase Notes in the event of a Change of
Control, provided, however, that the Company's failure to comply with the first
sentence of this clause (d) constitutes an Event of Default under Section
6.1(a)(iii) hereof. Failure by the Issuers to make a Change of Control Offer
when required pursuant to this Section 4.17 shall constitute an Event of Default
hereunder.
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(e) If the Company or any of its Subsidiaries have issued any
outstanding (i) Indebtedness that is subordinated in right of payment to the
Notes or (ii) Preferred Equity Interests, and the Company or such Subsidiary is
required to make a Change of Control Offer or to make a distribution with
respect to such subordinated Indebtedness or Preferred Equity Interests in the
event of a change of control, the Company and such Subsidiary shall not
consummate any such offer or distribution with respect to such subordinated
Indebtedness or Preferred Equity Interests until such time as the Issuers shall
have paid the Change of Control Purchase Price in full to the holders of Notes
that have accepted the Issuers' Change of Control Offer and shall otherwise have
consummated the Change of Control offer made to holders of the Notes.
(f) The Company shall not issue Indebtedness that is subordinated in
right of payment to the Notes or Preferred Equity Interests with change of
control provisions requiring the payment of such Indebtedness or Preferred
Equity Interests prior to the payment of the Notes in the event of a Change in
Control hereunder.
(g) In the event that a Change of Control occurs and the holders of
Notes exercise their right to require the Issuers to purchase Notes, if such
purchase constitutes a "tender offer" for purposes of Rule 14e-1 under the
Exchange Act at that time, the Issuers will comply with the requirements of Rule
14e-1 as then in effect with respect to such repurchase.
SECTION 4.18 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any of its Subsidiaries to (i) pay dividends or make any other distributions
to the Company or any Subsidiary on its Equity Interests, (ii) pay any
Indebtedness owed to the Company or any Subsidiary, (iii) make loans or advances
to the Company or any
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Subsidiary thereof or (iv) transfer any of its properties or assets to the
Company or any Subsidiary thereof, except, in each case, for such encumbrances
or restrictions existing under or contemplated by or by reason of (w) the Notes
or this Indenture, (x) any restrictions existing under or contemplated by
agreements in effect on the Issue Date, including, without limitation,
restrictions under the New Credit Facility as in effect on the Issue Date and
comparable provisions in the agreements evidencing any other Permitted Secured
Indebtedness, the Existing Subsidiary Notes and the related indenture, (y) any
restrictions, with respect to a Subsidiary of the Company that is not a
Subsidiary of the Company on the Issue Date, in existence at the time such
Person becomes a Subsidiary of the Company (but not created in contemplation of
such Person becoming a Subsidiary of the Company and which encumbrance or
restriction is not applicable to any Person or the property or assets of any
Person other than such Person or the property or assets of such Person so
acquired) and (z) any restrictions existing under any agreement that refinances
or replaces an agreement containing a restriction permitted by clause (w), (x)
or (y) above, provided, however, that the terms and conditions of any such
restrictions are not materially less favorable in the aggregate to the holders
of the Notes than those under or pursuant to the agreement being replaced or the
agreement evidencing the Indebtedness refinanced or replaced.
SECTION 4.19 Limitation on Equity Interests of Subsidiaries.
The Company shall at all times directly or indirectly own 100% of the
Equity Interests of its Subsidiaries other than limited partnership interests in
AOALP held by ASSKM, L.P., a California limited partnership, in an amount not to
exceed 30.0% of the total outstanding Equity Interest of AOALP. The Company
shall not (i) sell, pledge, hypothecate or otherwise convey or dispose of any
Equity Interests of a Subsidiary (other than pursuant to an agreement evidencing
Permitted Secured Indebtedness, Refinancing Indebtedness incurred to refinance
the Existing Subsidiary Notes or a successor facility or to the Company or a
Wholly-Owned Subsidiary of the Company) or
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(ii) permit any of its Subsidiaries to issue any Equity Interests, other than to
the Company or a Subsidiary of the Company. The foregoing restrictions shall not
apply to an Asset Sale made in compliance with Section 4.15 hereof or the
issuance of Preferred Equity Interests in compliance with Section 4.9 hereof.
SECTION 4.20 Limitation on Creation of Subsidiaries.
The Company shall not create or acquire, and shall not permit any of
its Subsidiaries to create or acquire, any Subsidiary other than (i) a
Wholly-Owned Subsidiary existing as of the Issue Date, (ii) a Wholly-Owned
Subsidiary that is acquired or created after the date hereof or (iii) an
Unrestricted Subsidiary.
SECTION 4.21 Limitation on Sale and Lease-back Transactions.
The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any Sale and Lease-Back Transaction unless (i) the consideration
received in such Sale and Lease-Back Transaction is at least equal to the fair
market value of the property sold and (ii) immediately prior to and after giving
effect to the Attributable Indebtedness in respect of such Sale and Lease-Back
Transaction, the Company could incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.9 hereof.
SECTION 4.22 Payments for Consent.
None of the Issuers or any of their Affiliates, nor any of the Issuers'
Subsidiaries or any of their Affiliates, shall, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any holder of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions hereof or the Notes unless
such consideration is offered to be paid or agreed to be paid to all holders of
the Notes which so consent, waive or agree to amend in the time frame set forth
in the so-
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licitation documents relating to such consent, waiver or agreement.
SECTION 4.23 Line of Business.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any business other than the owning, operating or managing of outdoor
advertising businesses or out-of-home media businesses and related or ancillary
activities.
SECTION 4.24 Limitation on Additional Indebtedness of the Issuers.
The Issuers will not incur any Indebtedness which is senior to or pari
passu with the Notes other than Permitted Indebtedness.
SECTION 4.25 Limitation of Guarantees by Subsidiaries.
The Company will not permit any of its Subsidiaries, directly or
indirectly, by way of the pledge of any intercompany note or otherwise, to
assume, guarantee or in any other manner become liable with respect to any
Indebtedness of the Company, unless, in any such case (i) such Subsidiary
executes and delivers a supplemental indenture to this Indenture, providing a
guarantee of payment of the Notes by such Subsidiary (the "Guarantee") and (ii)
if any such assumption, guarantee or other liability of such Subsidiary is
provided in respect of Indebtedness that is expressly subordinated to the Notes,
the guarantee or other instrument provided by such Subsidiary in respect of such
subordinated Indebtedness shall be subordinated to the Guarantee substantially
to the same extent as such Indebtedness is subordinated to the Notes.
Notwithstanding the foregoing, any such Guarantee by a Subsidiary of
the Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged, without any further action required on
the part of the Trustee or any holder, upon (a) the unconditional release of
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such Subsidiary from its liability in respect of the Indebtedness in connection
with which such Guarantee was executed and delivered pursuant to the preceding
paragraph or (b) any sale or other disposition (by merger or otherwise) to any
Person which is not a Subsidiary of the Company of all of the Company's Equity
Interests in, or all or substantially all of the assets of, such Subsidiary;
provided that (1) such sale or disposition of such Equity Interests or assets is
otherwise in compliance with the terms of this Indenture and (2) such
assumption, guarantee or other liability of such Subsidiary has been released by
the holders of the other Indebtedness so guaranteed.
SECTION 4.26 Waiver of Stay, Extension or Usury Laws.
Each of the Issuers covenants (to the extent permitted by law) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Issuers from paying all or any
portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that may affect the
covenants or the performance of this Indenture; and (to the extent permitted by
law) each of the Issuers hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE V
SUCCESSOR CORPORATION
---------------------
SECTION 5.1 Merger, Consolidation or Sale of Assets.
(a) The Company shall not and shall not permit any of its Subsidiaries
to consolidate with, merge with or into, or transfer all or substantially all of
its assets (as an entirety
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or substantially as an entirety in one transaction or a series of related
transactions), to any Person unless:
(i) the Company or such Subsidiary, as the case may be, shall
be the continuing Person, or the Person (if other than the Company or
such Subsidiary) formed by such consolidation or into which the Company
or such Subsidiary, as the case may be, is merged or to which the
properties and assets of the Company or such Subsidiary, as the case
may be, are transferred shall be a corporation, partnership or limited
liability company organized and existing under the laws of the United
States or any State thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture, executed and delivered
to the Trustee, in form satisfactory to the Trustee, all of the
obligations of the Company or such Subsidiary, as the case may be,
under the Notes and this Indenture, and the obligations under this
Indenture shall remain in full force and effect; provided that at any
time the Company or its successor is a partnership or a limited
liability company, there shall be a co-issuer of the Notes that is a
corporation;
(ii) immediately before and immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred
and be continuing;
(iii) immediately after giving effect to such transaction on a
pro forma basis the Company or such Person could incur at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) under
Section 4.9 hereof; and
(iv) immediately thereafter, the Company, such Subsidiary or
the other surviving entity, as the case may be, shall have a
Consolidated Net Worth equal to or greater than the Consolidated Net
Worth of the Company or such Subsidiary, as the case may be,
immediately prior to such transaction.
(b) In connection with any consolidation, merger or transfer of assets
contemplated by this provision, the Company
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shall deliver, or cause to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an Officers' Certificate and an opinion
of counsel, each stating that such consolidation, merger or transfer and the
supplemental indenture in respect thereto comply with this provision and that
all conditions precedent herein provided for relating to such transaction or
transactions have been complied with.
SECTION 5.2 Successor Entity Substituted.
Upon any consolidation, merger or any transfer of all or substantially
all of the assets of an Issuer in accordance with Section 5.1, the Surviving
Entity formed by such consolidation or into which such Issuer is merged or to
which such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, an Issuer under this Indenture with the same
effect as if such Surviving Entity had been named as an Issuer herein.
ARTICLE VI
DEFAULT AND REMEDIES
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SECTION 6.1 Events of Default.
(a) An "Event of Default" occurs if:
(i) the Issuers default in the payment of the principal of, or
premium, if any, on, the Notes when due; or
(ii) the Issuers default in the payment of interest on the
Notes when the same becomes due and payable and any such Default
continues for a period of 30 days; or
(iii) the Issuers default in the observance or performance of
the covenants set forth in Section 4.15 or Section 4.17 hereof; or
(iv) the Issuers default in the performance of, or breach, any
covenant contained in the Notes or this Indenture (other than defaults
specified in clause (i), (ii) or (iii) above), and such default or
breach continues for a
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period of 30 days after written notice to the Issuers by the Trustee or
to the Issuers and the Trustee by the Holders of at least 25% in
aggregate principal amount of the outstanding Notes; or
(v) the Issuers or any Subsidiary fails to pay when due
principal, interest or premium on one or more classes or issues of
other Indebtedness aggregating $3,000,000 or more in principal amount,
or any such Indebtedness aggregating $3,000,000 or more in principal
amount is accelerated prior to the express maturity thereof; or
(vi) one or more final judgments, orders or decrees which can
no longer be appealed for the payment of money in excess of $3,000,000,
either individually or in an aggregate amount (which are not paid or
covered by third party insurance by financially sound insurers that
have not disclaimed coverage), shall be entered against an Issuer, any
Subsidiary thereof or any of their respective properties and shall not
be discharged and there shall have been a period of 60 consecutive days
during which a stay of enforcement of such judgment or order, by reason
of pending appeal or otherwise, shall not be in effect; or
(vii) any of the Guarantees ceases to be in full force and
effect or any of the Guarantees is declared to be null and void and
unenforceable or any of the Guarantees is found to be invalid or any of
the Guarantors denies its liability under its Guarantee (other than by
reason of a release of such Guarantor in accordance with the terms of
this Indenture); or
(viii) an Issuer or any Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
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(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors or
(E) shall generally not pay its debts when such debts
become due or shall admit in writing its inability to pay its
debts generally; or
(ix) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against an Issuer or any Subsidiary
in an involuntary case or proceeding,
(B) appoints a Custodian of an Issuer or any
Subsidiary for all or substantially all of its properties, or
(C) orders the liquidation of an Issuer or any
Subsidiary,
and in each case the order or decree remains unstayed and in effect for
60 consecutive days; provided, however, that if the entry of such order
or decree is appealed and dismissed on appeal then the Event of Default
hereunder by reason of the entry of such order or decree shall be
deemed to have been cured.
(b) For purposes of this Section 6.1, the term "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator or similar official
charged with maintaining possession or control over property for one or more
creditors.
(c) Subject to the provisions of Sections 7.1 and 7.2, the Trustee
shall not be charged with knowledge of any Event of Default unless written
notice thereof shall have been given to a Trust officer at the corporate trust
office of the Trustee by the Issuers or any other Person.
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SECTION 6.2 Acceleration.
If an Event of Default (other than an Event of Default specified in
Section 6.1(a)(viii) or (ix) with respect to the Issuers or any Subsidiary
thereof) occurs and is continuing, the Holders of at least 25% in aggregate
principal amount of the outstanding Notes may, by written notice to the Issuers
and the Trustee, and the Trustee upon the written request of the Holders of not
less than 25% in aggregate principal amount of the outstanding Notes, shall
declare the principal of and accrued interest on all the Notes to be due and
payable immediately. Upon any such declaration such principal, premium, if any,
and accrued interest shall become due and payable immediately. If an Event of
Default specified in Section 6.1(a)(viii) or (ix) with respect to the Issuers or
any Subsidiary occurs and is continuing, then the principal of, premium, if any,
and accrued interest on all the Notes shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holder. The Holders of a majority in aggregate principal amount of
outstanding Notes may, by written notice to the Trustee, rescind such
declaration or event of acceleration if all existing Events of Default have been
cured or waived, other than the non-payment of principal of, premium, if any,
and accrued interest on the Notes that have become due solely as a result of
such acceleration and if the rescission of acceleration would not conflict with
any judgment or decree. No such rescission shall affect any subsequent default
or impair any right consequent thereto.
SECTION 6.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
principal of or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
All rights of action and claims under this Indenture or the Notes may
be enforced by the Trustee even if the Trustee does not possess any of the Notes
or does not produce any of
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them in the proceeding. A delay or omission by the Trustee or any Noteholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
SECTION 6.4 Waiver of Past Default.
Subject to Sections 6.7 and 9.2, the Holders of at least a majority in
aggregate principal amount of the outstanding Notes by notice to the Trustee may
waive an existing Default or Event of Default and its consequences, except a
Default specified in Section 6.1(a)(i) or (ii) or in respect of any provision
hereof which cannot be modified or amended without the consent of the Holder so
affected pursuant to Section 9.2. When a Default or Event of Default is so
waived, it shall be deemed cured and ceases.
SECTION 6.5 Control by Majority.
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it; provided, however, that the Trustee may refuse to follow
any direction that (i) conflicts with law or this Indenture, (ii) the Trustee
determines may be unduly prejudicial to the rights of another Noteholder, or
(iii) may involve the Trustee in personal liability unless the Trustee has asked
for and received indemnification reasonably satisfactory to it in its sole
discretion against any loss, liability or expense caused by its following such
direction; and provided, further, that the Trustee may take any other action
deemed proper by the Trustee that is not inconsistent with such direction.
SECTION 6.6 Limitation on Suits.
A Noteholder may not pursue any remedy with respect to this Indenture
or the Notes unless:
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(a) the Holder or Holders give to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in aggregate principal amount
of the outstanding Notes make a written request to the Trustee to
pursue a remedy;
(c) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity reasonably satisfactory to the Trustee in its
sole discretion against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested,
provision of indemnity by the Holders; and
(e) during such 60-day period the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the
Trustee a written direction inconsistent with the request.
The foregoing limitations shall not apply to a suit instituted by a
Holder for the enforcement of the payment of principal of or accrued interest on
such Note on or after the respective due dates set forth in such Note.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over such other
Noteholder.
SECTION 6.7 Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of and interest on a Note, on or after
the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, is absolute
and unconditional and shall not be impaired or affected without the consent of
such Holder.
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SECTION 6.8 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a)(i) or (ii) occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Issuers or any other obligor on the
Notes for the whole amount of principal and accrued interest remaining unpaid,
together with interest overdue on principal and, to the extent that payment of
such interest is lawful, interest on overdue installments of interest, in each
case at the Interest Rate and such further amount as shall be sufficient to
cover the costs and expenses of collection (including counsel fees and
expenses), including all sums due and owing to the Trustee pursuant to Section
7.7 hereof.
SECTION 6.9 Trustee May File Proofs of Claim.
The Trustee shall be entitled and empowered to file such proofs of
claim and other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Noteholders allowed in any judicial proceedings relative to
the Issuers or the Subsidiaries of the Issuers (or any other obligor upon the
Notes), their respective creditors or property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Noteholder to make
such payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Noteholders, to pay to the Trustee
any amounts due the Trustee under Section 7.7. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Noteholder in any
such proceeding.
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SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article VI, it shall
pay out such money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: to Holders for interest accrued on the Notes, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes for interest;
Third: to Holders for principal amounts owing under the Notes, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal; and
Fourth: to the Issuers.
The Trustee, upon prior written notice to the Issuers, may fix a record
date and payment date for any payment to Noteholders pursuant to this Section
6.10.
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit instituted by the Trustee, a suit
instituted by a Holder pursuant to Section 6.7, or a suit instituted by Holders
of more than 10% in aggregate principal amount of the outstanding Notes.
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SECTION 6.12 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Issuers, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
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SECTION 7.1 Duties of Trustee.
(a) If a Trust Officer of the Trustee has received written notice that
an Event of Default has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture and use the same
degree of care and skill in their exercise as a prudent person would exercise or
use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default actually known
to the Trustee:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others and no implied
covenants or obligations shall be read into this Indenture against the
Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
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opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine such certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture but need not verify the contents
thereof.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of paragraph (b)
of this Section 7.1.
(ii) In the absence of bad faith on its part, the Trustee
shall not be liable for any error of judgment made in good faith by a
Trust Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or reasonable indemnity against such risk or liability
is not reasonably assured to it. The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity satisfactory to it in
its sole discretion against any loss, liability or expense.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d), (f) and (g) of this Section
7.1 and the requirements of the TIA.
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(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuers. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) The Trustee may refuse to perform any duty or exercise any right or
power unless it is provided adequate funds to enable it to do so and it receives
indemnity reasonably satisfactory to it in its sole discretion against any loss,
liability, fee or expense.
SECTION 7.2 Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of the
Issuers, personally or by agent or attorney.
(b) Before the Trustee acts or refrains from acting with
respect to any matter contemplated by this Indenture, it may require an
Officers' Certificate or an Opinion of Counsel, which shall conform to
the provisions of Section 11.5. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
certificate or opinion.
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(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
(other than the negligence or willful misconduct of an agent who is an
employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers, provided that the Trustee's
conduct does not constitute negligence or bad faith.
(e) Before taking or refraining from taking any action, the
Trustee may consult with counsel and the advice or opinion of such
counsel as to matters of law shall be full and complete authorization
and protection from liability in respect of any action taken, omitted
or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
SECTION 7.3 Individual Rights of Trustee.
The Trustee in its individual capacity or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Issuers or their
respective Subsidiaries and Affiliates with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights. However, the
Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.4 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes and it shall not be
accountable for the Issuers' use of the proceeds from the issuance of the Notes,
and it shall not be responsible for any statement of the Issuers in this
Indenture or any document issued in connection with the sale of Notes or any
statement in the Notes other than the Trustee's certificate of authentication.
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SECTION 7.5 Notice of Defaults.
If a Default or an Event of Default with respect to the Notes occurs
and is continuing and is known to the Trustee, the Trustee shall mail to each
Noteholder notice of the Default or Event of Default within 90 days after the
occurrence thereof. Except in the case of a Default or an Event of Default under
Section 6.1(a)(i) or (ii), the Trustee may withhold such notice to the
Noteholders if a committee of its Trust officers in good faith determines that
withholding such notice is in the interest of Noteholders.
SECTION 7.6 Reports by Trustee to Holders.
To the extent required by TIA ss. 313(a), within 60 days after July of
each year commencing with July , 1999 and for as long as there are Notes
outstanding hereunder, the Trustee shall mail to each Noteholder the Issuers'
brief report dated as of such date that complies with TIA ss. 313(a); provided,
however, that no report need be transmitted if no such event listed in TIA ss.
313(a) has occurred within such period. The Trustee also shall comply with TIA
ss. 313(b) and TIA ss. 313(c) and (d). A copy of such report at the time of its
mailing to Noteholders shall be filed with the SEC, if required, and each stock
exchange, if any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any stock exchange, and the Trustee shall comply with TIA ss. 313(d).
SECTION 7.7 Compensation and Indemnity.
The Issuers and the Guarantors (on a joint and several basis) shall pay
to the Trustee, the Paying Agent and the Registrar from time to time such
reasonable compensation for their respective services rendered hereunder as may
be agreed in writing from time to time. The Trustee's, the Paying Agent's and
the Registrar's compensation shall not be limited by any law on compensation of
a trustee of an express trust. The Issuers (on a joint and several basis) shall
reimburse the
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Trustee, the Paying Agent and the Registrar upon request for all reasonable
out-of-pocket disbursements, expenses and advances (including fees and expenses
of counsel) incurred or made by each of them in addition to the compensation for
their respective services. Such expenses shall include the reasonable
compensation, out-of-pocket disbursements and expenses of the Trustee's, the
Paying Agent's and the Registrar's agents and counsel.
The Issuers and the Guarantors shall jointly and severally indemnify
the Trustee, the Paying Agent and the Registrar for, and hold each of them
harmless against, any claim, demand, expense (including but not limited to
attorneys' fees and expenses), loss or liability incurred by each of them
arising out of or in connection with the administration of this Indenture and
their respective duties hereunder without negligence or bad faith on its part.
Each of the Trustee, the Paying Agent and the Registrar shall notify the Issuers
promptly of any claim asserted against it for which it may seek indemnity.
However, failure by the Trustee, the Paying Agent or the Registrar to so notify
the Issuers shall not relieve the Issuers of their obligations hereunder. The
Issuers need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee, the Paying Agent or the Registrar through the
Trustee's, the Paying Agent's or the Registrar's, as the case may be, negligence
or bad faith.
To secure the Issuers' and the Guarantors' payment obligations in this
Section 7.7, each of the Trustee, the Paying Agent and the Registrar shall have
a lien prior to the Notes on all money or property held or collected by it, in
its capacity as Trustee, Paying Agent or Registrar, as the case may be, except
money or property held in trust to pay principal of or interest on particular
Notes. Such lien and indemnity shall survive the satisfaction, discharge and
termination of this Indenture, including the termination or rejection hereof in
any bankruptcy proceeding.
When any of the Trustee, the Paying Agent and the Registrar incurs
expenses or renders services after an Event of Default specified in Section
6.1(a)(viii) or (ix) occurs, the
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expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee.
The Trustee may resign at any time by so notifying the Issuers in
writing, such resignation to be effective upon the appointment of a successor
Trustee. The Holders of a majority in principal amount of the outstanding Notes
may remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the Issuers' consent, which consent shall not be
unreasonably withheld. The Issuers may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of the Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuers shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the Notes may appoint a successor
Trustee to replace the successor Trustee appointed by the Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee (subject to the lien provided in Section 7.7), the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A succes-
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sor Trustee shall mail notice of its succession to each Noteholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the
Holders of at least 25% in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Issuers' obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another corporation
or national banking association, the resulting, surviving or transferee
corporation or national banking association without any further act shall be the
successor Trustee, provided such corporation shall be otherwise qualified and
eligible under this Article VII.
SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1) and (2). The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA ss.
310(b); provided, however, that there shall be excluded from the operation of
TIA ss. 310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Issuers
are outstanding if the requirements for such exclusion set forth in TIA
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ss. 310(b)(1) are met. The provisions of TIA ss. 310 shall apply to the Issuers,
as obligors of the Notes, and to any person directly or indirectly controlling,
controlled by, or under common control with the Issuers.
SECTION 7.11 Preferential Collection of Claims Against Issuers.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The
provisions of TIA ss. 311 shall apply to the Issuers, as obligors on the Notes.
ARTICLE VIII
DISCHARGE OF INDENTURE: DEFEASANCE
----------------------------------
SECTION 8.1 Termination of Issuers' Obligations.
The Issuers may terminate its obligations under the Notes and this
Indenture, except those obligations referred to in the penultimate paragraph of
this Section 8.1, if all Notes previously authenticated and delivered (other
than destroyed, lost or stolen Notes which have been replaced or paid) have been
delivered to the Trustee for cancellation and the Issuers have paid all sums
payable by them hereunder, or if:
(a) pursuant to Article III, the Issuers shall have given
notice to the Trustee and mailed a notice of redemption to each Holder
of the redemption of all of the Notes under arrangements satisfactory
to the Trustee for the giving of such notice;
(b) the Issuers shall have irrevocably deposited or caused to
be deposited with the Trustee or a trustee satisfactory to the Trustee,
under the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the
benefit of the Holders for that purpose, money or direct non-callable
obligations of, or non-callable obligations guar-
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anteed by, the United States of America for the payment of which
guarantee or obligation the full faith and credit of the United States
is pledged ("U.S. Government Obligations") maturing as to principal and
interest in such amounts and at such times as are sufficient without
consideration of any reinvestment of such interest, to pay principal of
and interest on the outstanding Notes to redemption, provided that the
Trustee shall have been irrevocably instructed to apply such money or
the proceeds of such U.S. Government Obligations to the payment of said
principal and interest with respect to the Notes; and
(c) the Issuers shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent providing for the termination of the Issuers'
obligations under the Notes and this Indenture have been complied with.
Notwithstanding the foregoing paragraph, the Issuers' obligations in
Sections 2.6, 2.7, 2.8, 2.9, 4.1, 4.2, 7.7, 7.8, 8.4, 8.5 and 10.1 shall survive
until the Notes are no longer outstanding. After the Notes are no longer
outstanding, the Issuers' obligations in Sections 7.7 and 8.5 shall survive.
After such delivery or irrevocable deposit the Trustee upon request
shall acknowledge in writing the discharge of the Issuers' obligations under the
Notes and this Indenture except for those surviving obligations specified above.
SECTION 8.2 Legal Defeasance and Covenant Defeasance.
(a) The Issuers may, at their option by Board Resolutions, at any time,
with respect to the Notes, elect to have either paragraph (b) or paragraph (c)
below be applied to the outstanding Notes upon compliance with the conditions
set forth in paragraph (d).
(b) Upon the Issuers' exercise under paragraph (a) of the option
applicable to this paragraph (b), the Issuers shall be deemed to have been
released and discharged from their
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obligations with respect to the outstanding Notes on the date the conditions set
forth below are satisfied (hereinafter, "legal defeasance"). For this purpose,
such legal defeasance means that the Issuers shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be "outstanding" only for the purposes of
paragraph (e) below and the other Sections of and matters under this Indenture
referred to in (i) and (ii) below, and to have satisfied all their other
obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the expense of the Issuers, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Notes to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth in such paragraph, payments in
respect of the principal of and interest on such Notes when such payments are
due, (ii) the Issuers' obligations with respect to such Notes under Sections
2.6, 2.7, 2.8, 2.9, 4.2, 7.7, 7.8, 8.4 and 8.5, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (iv) this Section
8.2. Subject to compliance with this Section 8.2, the Issuers may exercise their
option under this paragraph (b) notwithstanding the prior exercise of their
option under paragraph (c) below with respect to the Notes.
(c) Upon the Issuers' exercise under paragraph (a) of the option
applicable to this paragraph (c), the Issuers shall be released and discharged
from their obligations under any covenant contained in Article V and in Sections
4.6 through 4.24 with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "covenant defeasance"),
and the Notes shall thereafter be deemed to be not "outstanding" for the purpose
of any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to the outstanding
Notes, the Issuers may omit to comply with and shall have no liability in
respect
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of any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.1 nor will any
judgment default or default in respect of other Indebtedness constitute a
Default or an Event of Default under Section 6.1(a)(v) or (vi), but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Notes:
(i) the Issuers shall irrevocably have deposited or caused to
be deposited with the Trustee as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of such Notes, (A)
money in an amount, or (B) U.S. Government Obligations which through
the scheduled payment of principal of and interest in respect thereof
in accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount, or (C) a
combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and
discharge and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge principal of and interest on
the outstanding Notes on the Maturity Date of such principal or
installment of principal or interest in accordance with the terms of
this Indenture and of such Notes; provided, however, that the Trustee
(or other qualifying trustee) shall have received an irrevocable
written order from the Issuers instructing the Trustee (or other
qualifying trustee) to apply such money or the proceeds of such U.S.
Government Obligations to said payments with respect to the Notes;
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(ii) no Default or Event of Default or event which with notice
or lapse of time or both would become a Default or an Event of Default
with respect to the Notes shall have occurred and be continuing on the
date of such deposit or, insofar as Sections 6.1(a)(viii) and (ix) are
concerned, at any time during the period ending on the 91st day after
the date of such deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such period);
(iii) such legal defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a Default or Event of
Default under, this Indenture or any other agreement or instrument to
which the Issuers are parties or by which they are bound;
(iv) in the case of an election under paragraph (b) above, the
Issuers shall have delivered to the Trustee an Opinion of Counsel
stating that (x) the Issuers have received from, or there has been
published by, the Internal Revenue Service a ruling or (y) since the
date of this Indenture, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the outstanding
Notes will not recognize income, gain or loss for Federal income tax
purposes as a result of such legal defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such legal defeasance had not
occurred;
(v) in the case of an election under paragraph (c) above, the
Issuers shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the outstanding Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of
such covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not occurred;
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(vi) in the case of an election under either paragraph (b) or
(c) above, an Opinion of Counsel to the effect that, (x) the trust
funds will not be subject to any rights of any other holders of
Indebtedness of the Issuers, and (y) after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable Bankruptcy Law; provided, however, that if a court were to
rule under any such law in any case or proceeding that the trust funds
remained property of the Issuers, no opinion need be given as to the
effect of such laws on the trust funds except the following: (A)
assuming such trust funds remained in the Trustee's possession prior to
such court ruling to the extent not paid to Holders of Notes, the
Trustee will hold, for the benefit of the Holders of Notes, a valid and
enforceable security interest in such trust funds that is not avoidable
in bankruptcy or otherwise, subject only to principles of equitable
subordination, (B) the Holders of Notes will be entitled to receive
adequate protection of their interests in such trust funds if such
trust funds are used, and (C) no property, rights in property or other
interests granted to the Trustee or the Holders of Notes in exchange
for or with respect to any of such funds will be subject to any prior
rights of any other Person, subject only to prior Liens granted under
Section 364 of Title 11 of the U.S. Bankruptcy Code (or any section of
any other Bankruptcy Law having the same effect), but still subject to
the foregoing clause (B); and
(vii) the Issuers shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that (A)
all conditions precedent provided for relating to either the legal
defeasance under paragraph (b) above or the covenant defeasance under
paragraph (c) above, as the case may be, have been complied with and
(B) if any other Indebtedness of the Issuers shall then be outstanding,
such legal defeasance or covenant defeasance will not violate the
provisions of the agreements or instruments evidencing such
Indebtedness.
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(e) All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this paragraph (e), the "Trustee") pursuant to paragraph (d)
above in respect of the outstanding Notes shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Notes and this Indenture,
to the payment, either directly or through any Paying Agent (other than the
Issuers or any of their respective Affiliates) as the Trustee may determine, to
the Holders of such Notes of all sums due and to become due thereon in respect
of principal and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Issuers shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to paragraph (d) above or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Notes.
Anything in this Section 8.2 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon the request,
in writing, by the Issuers any money or U.S. Government Obligations held by it
as provided in paragraph (d) above which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
legal defeasance or covenant defeasance.
SECTION 8.3 Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Sections 8.1 and 8.2, and shall apply the
deposited money and the money from U.S. Government Obligations in accordance
with this Indenture to the payment of principal of and interest on the Notes.
The Trustee shall be under no obligation to invest such trust money
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or U.S. Government Obligations except as it may agree with the Issuers in
writing. The Trustee shall not be liable for any losses incurred in connection
with such investments.
SECTION 8.4 Repayment to Issuers.
Subject to Sections 7.7, 8.1 and 8.2, the Trustee shall promptly pay to
the Issuers, upon receipt by the Trustee of an Officers' Certificate, any excess
money, determined in accordance with Sections 8.2(d)(i) and (e), held by it at
any time. The Trustee and the Paying Agent shall pay to the Issuers, upon
receipt by the Trustee or the Paying Agent, as the case may be, of an Officers'
Certificate, any money held by it for the payment of principal or interest that
remains unclaimed for two years; provided, however, that the Trustee and the
Paying Agent before being required to make any such payment may, but need not,
at the expense of the Issuers cause to be published once in a newspaper of
general circulation in The City of New York or mail to each Holder entitled to
such money notice that such money remains unclaimed and that after a date
specified therein, which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining will
be repaid to the Issuers. After payment to the Issuers, Noteholders entitled to
money must look solely to the Issuers for payment as general creditors unless an
applicable abandoned property law designates another Person, and all liability
of the Trustee or Paying Agent with respect to such money shall thereupon cease.
SECTION 8.5 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Indenture by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
and only then shall the Issuers' obligations under this Indenture and the Notes
be revived and reinstated as though no deposit had been made pursuant to this
Indenture until such time as the Trustee is permitted to apply all such money or
U.S. Government Obligations in accordance with this Article
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VIII; provided, however, that if the Issuers have made any payment of interest
on or principal of any Notes because of the reinstatement of their obligations,
the Issuers shall be subrogated to the rights of the holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
-----------------------------------
SECTION 9.1 Without Consent of Holders.
The Issuers, when authorized by Board Resolutions of each of them, and
the Trustee may modify, amend, waive or supplement this Indenture or the Notes
without notice to or consent of any Noteholder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with any requirements of the SEC under the TIA;
(c) to evidence the succession in accordance with Article V
hereof of another Person to the Issuers and the assumption by any such
successor of the covenants of the Issuers herein and in the Notes;
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes;
(e) to make any change that does not adversely affect the
rights of any Holder;
(f) to add a Guarantor; or
(g) to provide for the issuance of the Exchange Notes or the
Private Exchange Notes in accordance with Section 2.01 in a manner that
does not adversely affect the rights of any Holder.
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SECTION 9.2 With Consent of Holders.
Subject to Section 6.7 and the provisions of this Section 9.2, the
Issuers, when authorized by Board Resolutions of each of them, and the Trustee
may modify, amend, waive or supplement this Indenture or the Notes with the
written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding. Subject to Section 6.7 and the
provisions of this Section 9.2, the Holders of not less than a majority in
aggregate principal amount of the outstanding Notes affected may waive
compliance by the Issuers with any provision of this Indenture or the Notes
without notice to any other Noteholder. However, without the consent of each
Noteholder affected, an amendment, modification, supplement or waiver, including
a waiver pursuant to Section 6.4, may not:
(a) reduce the amount of Notes the Holders of which must
consent to an amendment, modification, supplement or waiver of any
provision of this Indenture or the Notes or who must consent to take
any action under the Notes or the Indenture;
(b) reduce the rate of, change the method of calculation of,
or change the time for, payment of interest on any Note;
(c) reduce the principal amount of or premium on or change the
stated maturity of any Note;
(d) make any Note payable in currency other than that stated
in the Note or change the place of payment from New York, New York;
(e) change the amount or time of any payment required by the
Notes or reduce the premium payable upon any redemption of Notes, or
change the time before which no redemption can be made;
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(f) waive a default in the payment of the principal of,
interest on, or redemption payment with respect to, any Note;
(g) amend, alter, change or modify the obligation of the
Issuers to make and consummate a Change of Control Offer in the event
of a Change of Control or make and consummate an Excess Proceeds Offer
or waive any Default in the performance of any such offers or modify
any of the provisions or definitions with respect thereto;
(h) subordinate in right of payment, or otherwise subordinate
the Notes to any other Indebtedness or obligations of the Issuers;
(i) impair the right to institute suit for the enforcement of
any payment on or with respect to the Notes; or
(j) modify this Section 9.2, Section 6.4 or Section 4.22.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment,
modification, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, modification, supplement or waiver under this
Section 9.2 becomes effective, the Issuers shall mail to the Holders a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Issuers to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, modification,
supplement or waiver.
SECTION 9.3 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect.
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SECTION 9.4 Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a written consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
that Note or portion of that Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. However,
any such Holder or subsequent Holder may revoke the consent as to his Note or
portion of his Note. Such revocation shall be effective only if the Trustee
receives the written notice of revocation before the date the amendment,
supplement or waiver becomes effective. Notwithstanding the above, nothing in
this paragraph shall impair the right of any Noteholder under ss. 316(b) of the
TIA.
The Issuers may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the second
and third sentences of the immediately preceding paragraph, those Persons who
were Holders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. Such consent shall be effective
only for actions taken within 90 days after such record date.
After an amendment, supplement or waiver becomes effective in
accordance with the terms of this Article IX, it shall bind every Noteholder.
SECTION 9.5 Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee shall (in accordance with the specific written direction of the Issuers
and at the expense of the Issuers) request the Holder of the Note to deliver
such Note to the Trustee. The Trustee shall (in accordance with the specific
direction of the Issuers set forth in an Officers' Certificate) place an
appropriate notation on the Note about
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the changed terms and return such Note to the Holder. Alternatively, if the
Issuers or the Trustee so determines, the Issuers in exchange for the Note shall
issue and the Trustee shall upon receipt of a written order authenticate a new
Note that reflects the changed terms. Failure to make the appropriate notation
or issue a new Note shall not affect the validity and effect of such amendment,
supplement-or waiver.
SECTION 9.6 Trustee To Sign Amendments, Etc.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article IX if the amendment, supplement or waiver does not
adversely affect the rights, duties or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing any amendment, supplement or
waiver, the Trustee shall be entitled to receive, if requested, an indemnity
reasonably satisfactory to it and to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article IX is authorized or
permitted by this Indenture and that any supplemental indenture constitutes the
legal, valid and binding obligation of the Issuers, enforceable against each of
them in accordance with its terms (subject to customary exceptions). The Issuers
may not sign an amendment until any of their respective Board of Directors
approves it.
ARTICLE X
GUARANTEE OF NOTES
------------------
SECTION 10.1 Guarantee.
Subject to the provisions of this Article 10, each Guarantor, by
execution of a Guarantee, will jointly and severally unconditionally guarantee
to each Holder and to the Trustee, on behalf of the Holders, (i) the due and
punctual payment of the principal of, and premium, if any, and interest, if any,
on each Note, when and as the same shall become due and payable, whether at
maturity, by acceleration or otherwise, the
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due and punctual payment of interest (including Additional Interest) on the
overdue principal of, and premium, if any, and interest, if any, on the Notes,
to the extent lawful, and the due and punctual performance of all other
Obligations of the Company to the Holders or the Trustee (including without
limitation amounts due the Trustee under Section 7.7) all in accordance with the
terms of such Note and this Indenture, and (ii) in the case of any extension of
time of payment or renewal of any Notes or any of such other Obligations, that
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, at stated maturity, by acceleration or
otherwise. Each Guarantor, by execution of a Guarantee, will agree that its
obligations hereunder shall be absolute and unconditional, irrespective of, and
shall be unaffected by, any invalidity, irregularity or unenforceability of any
such Note or this Indenture, any failure to enforce the provisions of any such
Note or this Indenture, any waiver, modification or indulgence granted to the
Company with respect thereto by the Holder of such Note or the Trustee, or any
other circumstances which may otherwise constitute a legal or equitable
discharge of a surety or such Guarantor.
Each Guarantor, by execution of a Guarantee, will waive diligence,
presentment, demand for payment, filing of claims with a court in the event of
merger or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest or notice with respect to any such Note or the
Indebtedness evidenced thereby and all demands whatsoever, and will covenant
that the Guarantee will not be discharged as to any such Note except by payment
in full of the principal thereof, premium, and interest, if any, thereon and as
provided in Section 9.1 hereof. Each Guarantor, by execution of a Guarantee,
will further agree that, as between such Guarantor, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in Article VI hereof for the
purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (ii) in the event of any declaration of acceleration of
such Obligations as provided in
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Article VI hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by each Guarantor for the purpose of this
Guarantee. In addition, without limiting the foregoing provisions, upon the
effectiveness of an acceleration under Article VI hereof, the Trustee shall
promptly make a demand for payment on the Notes under the Guarantee provided for
in this Article X and not discharged. Failure to make such a demand shall not
affect the validity or enforceability of the Guarantee upon any Guarantor.
A Guarantee shall not be valid or become obligatory for any purpose
with respect to a Note until the certificate of authentication on such Note
shall have been signed by or on behalf of the Trustee.
A Guarantee shall remain in full force and effect and continue to be
effective should any petition be filed by or against the Company for liquidation
or reorganization, should the Company become insolvent or make an assignment for
the benefit of creditors or should a receiver or trustee be appointed for all or
any significant part of the Company's assets, and shall, to the fullest extent
permitted by law, continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Notes are, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee on the Notes, whether as a "voidable preference," "fraudulent
transfer" or otherwise, all as though such payment or performance had not been
made. In the event that any payment, or any part thereof, is rescinded, reduced,
restored or returned, the Notes shall, to the fullest extent permitted by law,
be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
No stockholder, officer, director, employer or incorporator, past,
present or future, of any Guarantor, as such, shall have any personal liability
under this Guarantee by reason of his, her or its status as such stockholder,
officer, director, employer or incorporator.
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A Guarantor, by execution of a Guarantee, will have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under such Guarantee.
SECTION 10.2 Execution and Delivery of Guarantees.
A Guarantee shall be executed on behalf of a Guarantor by the manual or
facsimile signature of an Officer of such Guarantor in the form attached hereto
as Exhibit G.
If an Officer of a Guarantor whose signature is on the Guarantee no
longer holds that office, such Guarantee shall be valid nevertheless.
SECTION 10.3 Limitation of Guarantee.
The obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
this Indenture, result in the obligations of such Guarantor under the Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Guarantee
shall be entitled to a contribution from each other Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Guarantor.
SECTION 10.4 Additional Guarantors.
Any person may become a Guarantor by executing and delivering to the
Trustee (a) a supplemental indenture in form and substance satisfactory to the
Trustee, which subjects such person to the provisions of this Indenture as a
Guarantor, and (b) an Opinion of Counsel to the effect that such supplemental
indenture has been duly authorized and executed by such person and constitutes
the legal, valid, binding and enforceable obligation of such person (subject to
such customary exceptions
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concerning fraudulent conveyance laws, creditors' rights and equitable
principles as may be acceptable to the Trustee in its discretion).
SECTION 10.5 Release of Guarantor.
A Guarantor shall be automatically and unconditionally released and
discharged from all of its obligations under its Guarantee upon:
(i) the unconditional release of such Subsidiary from its
liability in respect of the Indebtedness in connection with which such
Guarantee was executed and delivered pursuant to Section 4.25; or
(ii) any sale or other disposition (by merger or otherwise) to
any Person which is not a Subsidiary of the Company of all of the
Company's Equity Interests in, or all or substantially all of the
assets of, such Subsidiary; provided that
(a) such sale or disposition of such Equity Interests
or assets is otherwise in compliance with the terms of the
Indenture and
(b) such assumption, guarantee or other liability of
such Subsidiary has been released by the holders of the other
Indebtedness so guaranteed.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control. If any provision of this Indenture limits,
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qualifies or conflicts with the duties imposed by TIA ss. 318(c), the imposed
duties shall control.
SECTION 11.2 Notices.
Any notice or communication shall be sufficiently given only if in
writing and delivered in Person or mailed by first-class mail (or as between the
Issuer and Trustee, by facsimile transmission) addressed as follows:
(a) if to the Issuers:
AOA Holding LLC
1380 W. Paces Ferry Road, N.W.
Suite 170, South Wing
Atlanta, Georgia 30327
Attention: Chief Financial Officer
with a copy (which copy shall not constitute notice) to:
Kaplan, Strangis and Kaplan, P.A.
5500 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Attention: Andris A. Baltins, Esq.
(b) if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Administration
with a copy (which copy shall not constitute notice) to:
Kramer Levin Naftalis Kamin & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Michele D. Ross, Esq.
<PAGE>
-108-
The Issuers or the Trustee by written notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder, including any
notice delivered in connection with TIA ss. 310(b), TIA ss. 313(c), TIA ss.
314(a) and TIA ss. 315(b), shall be mailed to him, first-class postage prepaid,
at his address as it appears on the registration books of the Registrar and
shall be deemed to have been sufficiently given to him on the date so deposited
in the mail, whether or not the addressee receives it.
Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders. Except
for a notice to the Trustee, which is deemed given only when received, if a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
In case, by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 11.3 Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Issuers, the Trustee, the Registrar and any other Person shall have the
protection of TIA ss. 312(c).
SECTION 11.4 Certificate and Opinion of Counsel as to Conditions
Precedent.
Upon any request or application by the Issuers to the Trustee to take
any action under this Indenture, the Issuers shall furnish to the Trustee at the
request of the Trustee (a) an Officers' Certificate in form and substance
satisfactory to
<PAGE>
-109-
the Trustee stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (b) an Opinion of Counsel in form and substance
satisfactory to the Trustee stating that, in the opinion of counsel, all such
conditions have been complied with and (c) where applicable, a certificate or
opinion by an independent certified public accountant satisfactory to the
Trustee that complies with TIA ss. 314(c).
SECTION 11.5 Statements Required in Certificate and Opinion of Counsel.
Each certificate and Opinion of Counsel with respect to compliance with
a condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or
Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or Opinion of Counsel are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
SECTION 11.6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a
<PAGE>
-110-
meeting of Noteholders. The Paying Agent or Registrar may make reasonable rules
for its functions.
SECTION 11.7 Legal Holidays.
If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.
SECTION 11.8 Governing Law.
The internal laws of the State of New York shall govern this Indenture
and the Notes without regard to principles of conflict of laws.
SECTION 11.9 Release from Liability.
No trustee, member, manager, director, officer, employee, stockholder
(other than the Company), partner, affiliate or beneficiary, as such, of the
Issuers shall have any liability for any obligations of the Issuers under the
Notes or this Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation. Each Noteholder by accepting a Note waives
and releases all such liability as part of the consideration for the Notes. It
is understood that this limitation on recourse is made expressly for the benefit
of any such trustee, director, officer, employee, stockholder, partner affiliate
or beneficiary and may be enforced by any one or all of them.
SECTION 11.10 Successors.
All agreements of the Issuers in this Indenture and the Notes shall
bind their respective successors. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 11.11 Duplicate Originals.
The parties may sign any multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an
<PAGE>
-111-
original, but all of them together represent the same agreement.
SECTION 11.12 Separability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim therefor against any party hereto.
SECTION 11.13 Table of Contents, Headings, Etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, and are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
AOA HOLDING LLC
(a Minnesota limited liability
company)
By: /s/ Abe Levine
---------------------------------
Name: Abe Levine
Title: Vice President
AOA CAPITAL CORP
(a Minnesota corporation)
By: /s/ Abe Levine
---------------------------------
Name: Abe Levine
Title: Vice President
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By: /s/ Gerard F. Ganey
---------------------------------
Name: Gerard F. Ganey
Title: Senior Vice President
<PAGE>
EXHIBIT A
---------
[FORM OF FACE OF NOTE]
AOA HOLDING LLC
AOA CAPITAL CORP
Number CUSIP
% SENIOR NOTE DUE 2006
AOA HOLDING LLC and AOA CAPITAL CORP, jointly and severally, for value
received promise to pay to CEDE & CO. or registered assigns the principal sum of
$[ ] Dollars on May [ ], 2006.
Interest Payment Dates: March 15 and September 15, commencing September
15, 1999.
Record Dates: March 1 and September 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
A-1
<PAGE>
IN WITNESS WHEREOF, AOA Holding LLC and AOA Capital Corp have caused
this Note to be signed normally or by facsimile by its duly authorized officers.
AOA HOLDING LLC
By:______________________
Name:
Title:
AOA CAPITAL CORP
By:______________________
Name:
Title:
Certificate of Authentication
This is one of the % Senior Notes Due 2006 referred to in the
within-mentioned Indenture.
Dated: May [ ], 1999 UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:
---------------------------------
Authorized Signatory
A-2
<PAGE>
(REVERSE OF NOTE)
AOA HOLDING LLC
AOA CAPITAL CORP
% SENIOR NOTE DUE 2006
1. Interest. AOA HOLDING LLC, a Minnesota limited liability company
(the "Company"), and AOA CAPITAL CORP, a Minnesota corporation (and, together
with the Company, the "Issuers"), jointly and severally, promise to pay, until
the principal hereof is paid or made available for payment, interest on the
principal amount set forth on the reverse side hereof at a rate of % per annum.
Interest on this % Senior Note Due 2006 (the "Note") will accrue from and
including the most recent date to which interest has been paid or, if no
interest has been paid, from and including May , 1999 through but excluding the
date on which interest is paid. Interest shall be payable in arrears on March 15
and September 15 and at the stated maturity commencing June 1, 2006. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. The
Issuers shall pay interest on overdue principal and on overdue interest (to the
full extent permitted by law) at a rate equal to 0.5% per annum; and the per
annum interest rate of such additional interest will increase by an additional
0.25% per annum for each subsequent 90-day period during which such overdue
principal and installments of interest remain unpaid, up to a maximum additional
interest rate of 2.0% per annum.
2. Method of Payment. The Issuers will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on March 15 and September 15 (whether or not a Business
Day) next preceding the interest payment date. Holders must surrender Notes to a
Paying Agent to collect principal payments. The Issuers will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts.
A-3
<PAGE>
3. Paying Agent and Registrar. Initially, UNITED STATES TRUST COMPANY
OF NEW YORK, a New York banking corporation (the "Trustee") will act as Paying
Agent and Registrar. The Issuers may change any Paying Agent or Registrar
without notice. Either of the Issuers or any of their Affiliates may act as
Registrar.
4. Indenture. The Issuers issued the Notes under an Indenture dated as
of May , 1999 (the "Indenture"), among the Issuers and the Trustee. This Note is
one of an issue of Notes of the Issuers issued, or to be issued, under the
Indenture. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code ss.ss. 77aaa-77bbbb), as amended from time to time. The Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of them. Capitalized and certain other terms used herein and
not otherwise defined have the meanings set forth in the Indenture. The Notes
are joint and several general unsecured senior obligations of the Issuers
limited in aggregate principal amount to $50,000,000. The Indenture limits,
among other things, the incurrence of Indebtedness by the Company and its
Subsidiaries; the creation of Liens by the Company and its Subsidiaries; the
declaration or payment of any dividend or any other distribution on Equity
Interests of the Company or its Subsidiaries; purchases, redemptions, and other
acquisitions or retirements of Equity Interests of the Company and its
Subsidiaries; transactions by the Company and its Subsidiaries with its
respective Affiliates; the issuance of Equity Interests by the Company's
Subsidiaries; and the ability of the Company or any of its Subsidiaries to merge
with or into another entity. The limitations are subject to a number of
important qualifications and exceptions. The Issuers must report to the Trustee
quarterly on compliance with the limitations contained in the Indenture.
5. Optional Redemption. The Notes will be redeemable at the option of
the Issuers, in whole or in part, at any time on or after June 1, 2003 at the
following redemption prices (expressed as a percentage of principal amount),
together, in each case, with accrued and unpaid interest to the
A-4
<PAGE>
redemption date, if redeemed during the twelve-month period beginning on May of
each year listed below:
Year Percentage
---- ----------
2003............................ 105.188%
2004............................ 102.594%
2005 and thereafter............. 100.000%
In the event of redemption of fewer than all of the Notes, the Trustee
shall select pro rata, by lot or in such other manner as it shall deem fair and
equitable, the Notes to be redeemed. The Notes will be redeemable in whole or in
part upon not less than 30 nor more than 60 days' prior written notice, mailed
by first class mail to a Holder's last address as it shall appear on the
register maintained by the Registrar of the Notes. If any Note is to be redeemed
in part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note, in a
principal amount equal to the unredeemed portion thereof, will be issued in the
name of the Holder thereof upon cancellation of the original Note. After any
redemption date, unless the Issuers shall default in the payment of the
redemption price, interest will cease to accrue on the Notes or portions thereof
called for redemption.
The Issuers may also redeem the Notes, in whole but not in part, at any
time during the nine-month period beginning on April 15, 2001 and ending on
January 15, 2002 at a redemption price equal to 100% of the aggregate principal
amount so redeemed, plus accrued and unpaid interest to the redemption date, in
the event of a concurrent optional redemption by the Subsidiary Issuers of the
Existing Subsidiary Notes.
6. Offers To Purchase. Sections 4.15 and 4.17 of the Indenture provide
that after an Asset Sale or upon the occurrence of a Change of Control, and
subject to further limitations contained therein, the Issuers shall make an
offer to purchase certain amounts of Notes in accordance with the procedures set
forth in the Indenture.
A-5
<PAGE>
7. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. A
Holder may transfer or exchange Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay to it any taxes and fees required
by law or permitted by the Indenture. The Registrar need not transfer or
exchange any Notes or portion of a Note selected for redemption, or transfer or
exchange any Notes for a period of 15 days before a selection of Notes to be
redeemed.
8. Persons Deemed Owners. The registered Holder of a Note may be
treated as the owner of it for all purposes.
9. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Issuers at their written request. After that, Holders entitled to
the money must look to the Issuers for payment as general creditors unless an
"abandoned property" law designates another Person.
10. Amendment, Supplement, Waiver. The Issuers and the Trustee may,
without the consent of the Holders of any outstanding Notes, amend, waive or
supplement the Indenture or the Notes for certain specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies, maintaining
the qualification of the Indenture under the Trust Indenture Act of 1939, as
amended, making any change that does not adversely affect the rights of any
Holder. Other amendments and modifications of the Indenture or the Notes may be
made by the Issuers and the Trustee with the consent of the Holders of not less
than a majority of the aggregate principal amount of the outstanding Notes,
subject to certain exceptions requiring the consent of each Holder.
11. Successor Corporation. When a successor corporation assumes all the
obligations of its predecessor under the Notes and the Indenture and the
transaction complies with the terms of Article V of the Indenture, the
predecessor corporation will be released from those obligations.
A-6
<PAGE>
12. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.1(a)(viii) or
(ix) of the Indenture) occurs and is continuing, then the Holders of not less
than 25% in aggregate principal amount of the outstanding Notes may, and the
Trustee upon the request of the Holders of not less than 25% in aggregate
principal amount of the outstanding Notes shall, declare the principal of and
interest on all of the Notes to be due and payable immediately. If an Event of
Default specified in Section 6.1(a)(viii) or (ix) of the Indenture occurs and is
continuing, the principal of, and premium, if any, and interest on all of the
Notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may require indemnity reasonably satisfactory to it, in its sole
discretion, before it enforces the Indenture or the Notes. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders notice of any continuing default (except a
default in payment of principal or interest) if it determines that withholding
notice is in their interests. The Issuers must furnish an annual compliance
certificate to the Trustee.
13. Trustee Dealings with Issuers. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Issuers or their Affiliates, and may otherwise deal with the
Issuers or their Affiliates, as if it were not Trustee.
14. No Recourse Against Others. No trustee, manager, member, director,
officer, employee, stockholder (other than the Company), partner, affiliate or
beneficiary as such, of the Issuers shall have any liability for any obligations
of the Issuers under the Notes or the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and re-
A-7
<PAGE>
leases all such liability. The waiver and release are part of the consideration
for the issue of the Notes.
15. General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in the Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in the
Indenture.
16. Discharge. The Issuers' obligations pursuant to the Indenture will
be discharged, except for obligations pursuant to certain sections thereof,
subject to the terms of the Indenture, upon the payment of all the Notes or upon
the irrevocable deposit with the Trustee of money or U.S. Government Obligations
sufficient to pay when due principal of, and premium, if any, and interest on
the Notes to maturity or redemption, as the case may be.
17. Authentication. This Note shall not be valid until the Trustee
manually signs the certificate of authentication on the other side of this Note.
18. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants
by the entireties), JT TEN (= joint tenants with right of survivorship and not
as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
The Issuers will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
A-8
<PAGE>
AOA Holding LLC
1380 W. Paces Ferry Road, N.W.
Suite 170, South Wing
Atlanta, Georgia 30327
Attention: Chief Financial Officer
A-9
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint:
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Issuers. The Agent may
substitute another to act on his or her behalf.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act provided
by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with
(a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Note and the
Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been
satisfied.
Date: Your Signature:
----------------------- ----------------------------------
(Sign exactly as your name appears
on the face of this Note)
A-10
<PAGE>
Signature Guarantee*:
-----------------------------------------------------------
*Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:_______________ _______________________________________
NOTICE: To be executed by an executive
officer
A-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Issuers pursuant to
Section 4.15 or 4.17 of the Indenture, check the appropriate box:
[ ] Section 4.15 [ ] Section 4.17
If you wish to have a portion of this Note purchased by the Issuers
pursuant to Section 4.15 or 4.17 of the Indenture, state the principal amount at
maturity you elect to have purchased:
$
====================
(multiple of $1,000)
Date: Your Signature:
------------------- ----------------------------------------
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee*:
---------------------------------------------------------
*Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-12
<PAGE>
EXHIBIT B
---------
[FORM OF LEGEND FOR 144A NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS NOTE AND THE LAST DATE ON
WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER, WAS THE OWNER OF THIS NOTE (OR
ANY PREDECESSOR OF SUCH NOTE), RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A)
TO AN ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (D)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE
COMPANY AND THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) OUTSIDE THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT OR (F)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT
(IF AVAILABLE) AND (2) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE PRIOR TO THE RESALE RESTRICTION
TERMINATION DATE, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS
OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE ACT.
B-1
<PAGE>
[FORM OF ASSIGNMENT FOR 144A NOTE]
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint:
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Issuers. The Agent may
substitute another to act on his or her behalf.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act provided
by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with
(a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Note and the
Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been
satisfied.
Date: Your Signature:
------------------------ ----------------------------------
(Sign exactly as your name appears
on the face of this Note)
B-2
<PAGE>
Signature Guarantee*:
----------------------------------------------------------
*Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:_______________ _________________________________________
NOTICE: To be executed by an executive
officer
B-3
<PAGE>
EXHIBIT C
---------
[FORM OF LEGEND FOR REGULATION S NOTE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, UNLESS SO
REGISTERED, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES
ACT OR EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
C-1
<PAGE>
[FORM OF ASSIGNMENT FOR REGULATION S NOTE]
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint:
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Issuers. The Agent may
substitute another to act on his or her behalf.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act provided
by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with
(a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Note and the
Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been
satisfied.
Date: Your Signature:
----------------------- -----------------------------------
(Sign exactly as your name appears
on the face of this Note)
C-2
<PAGE>
Signature Guarantee*:
-----------------------------------------------------------
*Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:_______________ ________________________________________
NOTICE: To be executed by an executive
officer
C-3
<PAGE>
EXHIBIT D
---------
[FORM OF LEGEND FOR GLOBAL NOTE]
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Note or Regulation S Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF
THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER OR
THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IT REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
D-1
<PAGE>
EXHIBIT E
---------
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------, ----
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention:
Re: AOA HOLDING LLC and AOA CAPITAL CORP
(the "Issuers") % Senior Notes
due 2006 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
Indenture dated as of March 24, 1999 relating to the Notes and we agree
to be bound by, and not to resell, pledge or otherwise transfer the
Notes except in compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the Notes have not been registered under
the Securities Act, and that the Notes may not be offered, sold,
pledged or otherwise transferred except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for
which we are acting as hereinafter stated, that if we should sell any
Notes, we will do so only (i) to the Issuers or any
E-1
<PAGE>
subsidiary thereof, (ii) pursuant to an effective registration
statement under the Securities Act, (iii) in accordance with Rule 144A
under the Securities Act to a "qualified institutional buyer" (as
defined in Rule 144A), (iv) to an institutional "accredited investor"
(as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you a signed letter
containing certain representations and agreements relating to the
restrictions on transfer of the Notes, (v) outside the United States to
persons other than U.S. persons in offshore transactions meeting the
requirements of Rule 904 of Regulation S under the Securities Act, or
(vi) pursuant to any other exemption from registration under the
Securities Act (if available), and we further agree to provide to any
person purchasing any of the Notes from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Issuers such certifications,
legal opinions and other information as you and the Issuers may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are
acting each are able to bear the economic risk of our or their
investment, as the case may be.
5. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
E-2
<PAGE>
You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
------------------------------
Authorized Signature
E-3
<PAGE>
EXHIBIT F
---------
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
----------, ----
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention:
Re: AOA HOLDING LLC and AOA CAPITAL CORP (the
"Issuers") % Senior Notes due
2006 (the "Notes")
Dear Sirs:
In connection with our proposed sale of $50,000,000 aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a U.S. person or to
a person in the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been prearranged with a buyer in the United States;
F-1
<PAGE>
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------------------
Authorized Signature
F-2
<PAGE>
EXHIBIT G
---------
[FORM OF GUARANTEE]
The undersigned (the "Guarantor") hereby guarantees, to the extent set
forth in the Indenture dated as of May , 1999 by and between AOA HOLDING LLC
(the "Company") and AOA CAPITAL CORP ("Capital Corp" and together with the
Company, the "Issuers"), as issuers and UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee (as amended, restated or supplemented from time to time, the
"Indenture"), and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of, and premium, if any, and interest on the
Notes, when and as the same shall become due and payable, whether at maturity,
by acceleration or otherwise, the due and punctual payment of interest on
overdue principal of, and premium and, to the extent permitted by law, interest,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee, all in accordance with the terms set forth in
Article X of the Indenture, and (b) in case of any extension of time of payment
or renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantor to the Holders and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
X of the Indenture and reference is hereby made to the Indenture for the precise
terms and limitations of this Guarantee.
[GUARANTOR]
By: ________________
Name:
Title:
G-1
<PAGE>
EXHIBIT 4.3
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of May 26, 1999
by and among
AOA HOLDING LLC
and
AOA CAPITAL CORP
as Issuers
and
CIBC WORLD MARKETS CORP.
as Initial Purchaser
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions........................................................... 1
2. Exchange Offer........................................................ 5
3. Shelf Registration.................................................... 8
4. Additional Interest................................................... 10
5. Registration Procedures............................................... 11
6. Registration Expenses................................................. 22
7. Indemnification....................................................... 23
8. Rules 144 and 144A.................................................... 27
9. Underwritten Registrations............................................ 27
10. Miscellaneous......................................................... 27
a. Remedies ........................................................ 27
b. Enforcement...................................................... 28
c. No Inconsistent Agreements....................................... 28
d. Adjustments Affecting Registrable Notes.......................... 28
e. Amendments and Waivers........................................... 28
f. Notices ........................................................ 29
g. Successors and Assigns........................................... 29
h. Counterparts..................................................... 29
i. Headings ........................................................ 29
j. Governing Law.................................................... 30
k. Severability..................................................... 30
l. Entire Agreement................................................. 30
m. Joint and Several Obligations.................................... 30
n. Notes Held by the Issuers or Their
Affiliates.................................................. 30
o. Release from Liability........................................... 30
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of May 26,
1999 by and among AOA HOLDING LLC, a Minnesota limited liability company (the
"Company"), AOA CAPITAL CORP, a Minnesota corporation and a wholly-owned
subsidiary of the Company ("Capital Corp" and, together with the Company, the
"Issuers"), and CIBC WORLD MARKETS CORP., as initial purchaser (the "Initial
Purchaser").
This Agreement (this "Agreement") is entered into in connection with
the Securities Purchase Agreement, dated as of May 21, 1999, among the Issuers
and the Initial Purchaser (the "Purchase Agreement") relating to the sale by the
Issuers to the Initial Purchaser of $50,000,000 aggregate principal amount of
the Issuers' 103/8% Senior Notes due 2006 (the "Notes"). In order to induce the
Initial Purchaser to enter into the Purchase Agreement, the Issuers have agreed
to provide the registration rights set forth in this Agreement for the benefit
of the Initial Purchaser. The execution and delivery of this Agreement is a
condition to the Initial Purchaser's obligation to purchase the Notes under the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4(a).
Advice: See Section 5.
Applicable Period: See Section 2(b).
Closing: See the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 150th day after the Issue Date.
<PAGE>
-2-
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 45th day after the Issue Date.
Holder: Any registered holder of a Registrable Note or Registrable
Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of May , 1999, among the Issuers
and United States Trust Company, as trustee, pursuant to which the Notes are
being issued, as amended or supplemented from time to time in accordance with
the terms thereof.
Initial Purchaser: See the introductory paragraph to this Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the original Notes are sold to the
Initial Purchaser pursuant to the Purchase Agreement.
Issuers: The Company and Capital Corp.
Lien: See the Indenture.
<PAGE>
-3-
NASD: See Section 5(t).
Notes: See the introductory paragraphs to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: An individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this Agreement.
Records: See Section 5(o).
Registrable Notes: The Notes upon original issuance of the Notes and
at all times subsequent thereto and, if issued, the Private Exchange Notes,
until in the case of any such Notes or any such Private Exchange Notes, as the
case may be, (i) a Registration Statement covering such Notes or such Private
Exchange Notes has been declared effective by the SEC and
<PAGE>
-4-
such Notes or such Private Exchange Notes, as the case may be, have been
disposed of in accordance with such effective Registration Statement, (ii) such
Notes or such Private Exchange Notes, as the case may be, are sold in compliance
with Rule 144, (iii) in the case of any Note, such Note has been exchanged for
an Exchange Note or Exchange Notes pursuant to an Exchange Offer or (iv) such
Notes or such Private Exchange Notes, as the case may be, cease to be
outstanding.
Registration Default: See Section 4(a).
Registration Statement: Any registration statement of the Issuers,
including, but not limited to, the Exchange Registration Statement, which covers
any of the Registrable Notes pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
<PAGE>
-5-
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
Underwritten registration or underwritten offering: A registration in
which securities of one or more of the issuers are sold to an underwriter(s) for
reoffering to the public.
2. Exchange Offer
(a) Each of the Issuers agrees to file with the SEC as soon as
practicable after the Closing, but in no event later than the Filing Date, an
offer to exchange (the "Exchange Offer") any and all of the Registrable Notes
for a like aggregate principal amount of debt securities of the Issuers, which
are identical to the Notes (the "Exchange Notes") (and which are entitled to the
benefits of the Indenture or a trust indenture which is substantially identical
to the Indenture (other than such changes to the Indenture or any such identical
trust indenture as are necessary to comply with any requirements of the SEC to
effect or maintain the qualification thereof under the TIA) and which, in either
case, has been qualified under the TIA), except that the Exchange Notes shall
have been registered pursuant to an effective Registration Statement under the
Securities Act. The Exchange Offer will be registered under the Securities Act
on the appropriate form (the "Exchange Registration Statement") and will comply
with all applicable tender offer rules and regulations under the Exchange Act.
Each of the
<PAGE>
-6-
Issuers agrees to (x) use its best efforts to cause the Exchange Registration
Statement to become effective under the Securities Act on or before the
Effectiveness Date; (y) keep the Exchange Offer open for at least 30 days (or
longer if required by applicable law) after the date that notice of the Exchange
Offer is mailed to Holders; and (z) use its best efforts to consummate the
Exchange Offer on or prior to the 30th day following the date on which the
Exchange Registration Statement is declared effective. Each Holder who
participates in the Exchange Offer will be required to represent that any
Exchange Notes received by it will be acquired in the ordinary course of its
business, that at the time of the consummation of the Exchange Offer such Holder
will have no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, and that such Holder is not an affiliate of
any of the Issuers within the meaning of Rule 405 promulgated under the
Securities Act or if it is such an affiliate, that it will comply with the
registration and prospectus delivery requirements of the Securities Act, to the
extent applicable. Upon consummation of the Exchange Offer in accordance with
this Section 2, the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Notes that are Private
Exchange Notes and Exchange Notes held by Participating Broker-Dealers (as
defined below), and the Issuers shall have no further obligation to register
Registrable Notes (other than Private Exchange Notes) pursuant to Section 3 of
this Agreement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchaser, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act)
of Exchange Notes received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the staff of the SEC or such positions or policies, in
the reasonable judgment of the Initial
<PAGE>
-7-
Purchaser, represent the prevailing views of the staff of the SEC. Such "Plan of
Distribution" section shall also allow the use of the Prospectus by all persons
subject to the prospectus delivery requirements of the Securities Act, including
all Participating Broker-Dealers, and include a statement describing the means
by which Participating Broker-Dealers may resell the Exchange Notes.
Each of the Issuers shall use its best efforts to keep the Exchange
Registration Statement effective and shall amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Notes, provided that such period shall not
exceed 180 days (or such longer period if extended pursuant to the last
paragraph of Section 5) (the "Applicable Period").
If, prior to consummation of the Exchange offer, the Initial Purchaser
holds any Notes acquired by it and having, or which are reasonably likely to be
determined to have, the status as an unsold allotment in the initial
distribution, the Issuers upon the request of the Initial Purchaser shall,
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
issue and deliver to the Initial Purchaser, in exchange (the "Private Exchange")
for the Notes held by the Initial Purchaser, a like principal amount of debt
securities of the Issuers, that are identical in all material respects to the
Exchange Notes (the "Private Exchange Notes") (and which are issued pursuant to
the same indenture as the Exchange Notes). The Private Exchange Notes shall bear
the same CUSIP number as the Exchange Notes. Interest on the Exchange Notes and
Private Exchange Notes will accrue from the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or, if no
interest has been paid on the Notes, from the date of original issue.
In connection with the Exchange Offer, the Issuers shall:
<PAGE>
-8-
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
(iii) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business day
on which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Issuers shall:
(i) accept for exchange all Notes tendered and not validly
withdrawn pursuant to the Exchange offer or the Private Exchange;
(ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly
to each Holder of Notes, Exchange Notes or Private Exchange Notes, as
the case may be, equal in principal amount to the Notes of such Holder
so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture substantially identical to the Indenture,
which in either event will provide that the Exchange Notes will not be subject
to the transfer restrictions set forth in the Indenture and that the Exchange
Notes, the Private Exchange Notes and the Notes will vote and consent together
on all matters as one class and that neither the Exchange Notes, the Private
Exchange Notes nor the Notes will have the right to vote or consent as a
separate class on any matter.
<PAGE>
-9-
(c) If (1) prior to the consummation of the Exchange Offer, the Issuers
or Holders of at least a majority in aggregate principal amount of the
Registrable Notes reasonably determine in good faith that (i) the Exchange Notes
would not, upon receipt, be tradeable by such Holders which are not affiliates
(within the meaning of the Securities Act) of the Issuers without restriction
under the Securities Act and without restrictions under applicable state
securities laws, (ii) the interests of the Holders under this Agreement would be
adversely affected by the consummation of the Exchange Offer or (iii) after
conferring with counsel, the SEC is unlikely to permit the consummation of the
Exchange Offer prior to the Effectiveness Date, (2) within 10 days after the
consummation of the Private Exchange, any holder of the Private Exchange Notes
so requests or (3) the Exchange Offer is commenced and not consummated within
180 days of the Issue Date, then the Issuers shall promptly deliver to the
Holders and the Trustee written notice thereof (the "Shelf Notice") and shall
file an Initial Shelf Registration pursuant to Section 3. Following the delivery
of a Shelf Notice to the Holders of Registrable Notes (in the circumstances
contemplated by clauses (1) and (3) of the preceding sentence), the Issuers
shall not have any further obligation to conduct the Exchange Offer or the
Private Exchange under this Section 2.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Initial Shelf Registration. The Issuers shall prepare and file with
the SEC a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Registrable Notes (the "Initial
Shelf Registration"). If the Issuers shall have not yet filed an Exchange
Registration Statement, each of the Issuers shall file with the SEC the Initial
Shelf Registration on or prior to the Filing Date. In any other instance, each
of the Issuers shall file with the SEC the Initial Shelf Registration within 30
days of the delivery of the Shelf Notice. The Initial Shelf Registration shall
be on Form S-1 or another appropriate form per-
<PAGE>
-10-
mitting registration of such Registrable Notes for resale by such Holders in the
manner or manners designated by them (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other than
the Registrable Notes to be included in the Initial Shelf Registration or any
Subsequent Shelf Registration (as defined below). Each of the Issuers shall use
its best efforts to cause the Initial Shelf Registration to be declared
effective under the Securities Act on or prior to the Effectiveness Date and to
keep the Initial Shelf Registration continuously effective under the Securities
Act until the date which is 24 months from the date on which such Initial Shelf
Registration is declared effective (subject to extension pursuant to the last
paragraph of Section 5 hereof) (the "Effectiveness Period"), or such shorter
period ending when (i) all Registrable Notes covered by the Initial Shelf
Registration have been sold in the manner set forth and as contemplated in the
Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering all
of the Registrable Notes has been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period (other than because of the sale of all
of the securities registered thereunder), each of the Issuers shall use its best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 30 days of such cessation
of effectiveness amend the Shelf Registration in a manner reasonably expected to
obtain the withdrawal of the order suspending the effectiveness thereof, or file
an additional "shelf" Registration Statement pursuant to Rule 415 covering all
of the Registrable Notes (a "Subsequent Shelf Registration"). If a Subsequent
Shelf Registration is filed, each of the Issuers shall use its best efforts to
cause the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf
<PAGE>
-11-
Registration or any Subsequent Shelf Registration was previously continuously
effective. As used herein the term "Shelf Registration" means the Initial Shelf
Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly supplement
and amend the Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if requested by the Holders
of a majority in aggregate principal amount of the Registrable Notes covered by
such Registration Statement or by any underwriter(s) of such Registrable Notes.
4. Additional Interest
(a) The Issuers and the Initial Purchaser agree that the Holders of
Registrable Notes will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers, jointly and severally, agree to pay additional interest on the
Notes ("Additional Interest") under the circumstances set forth below:
If (i) (A) neither the Exchange Registration Statement nor
Initial Shelf Registration is filed within 45 days after the Issue Date
or (B) notwithstanding that the Issuers have consummated or will
consummate an Exchange Offer, the Issuers are required to file an
Initial Shelf Registration and such Initial Shelf Registration is not
filed on or prior to the date required by Section 3(a) hereof;
(ii) (A) neither the Exchange Registration Statement nor
Initial Shelf Registration is declared effective within 150 days after
the Issue Date or (B) notwithstanding that the Issuers have consummated
or will consummate an Exchange Offer, the Issuers are required to file
an Initial Shelf Registration and such Initial Shelf Registration is
not declared effective by the SEC on or prior
<PAGE>
-12-
to the 105th day following the date such Initial Shelf Registration was
filed; and/or
(iii) either (A) the Issuers have not exchanged the Exchange
Notes for all Notes validly tendered in accordance with the terms of
the Exchange Offer on or prior to 180 days after the Issue Date or (B)
the Exchange Registration Statement ceases to be effective at any time
prior to the time that the Exchange offer is consummated or (C) if
applicable, the Initial Shelf Registration has been declared effective
and such Initial Shelf Registration ceases to be effective at any time
prior to the earlier of the disposition of the Notes covered by the
Initial Shelf Registration or the second anniversary of its effective
date:
(each such events referred to in clauses (i) through (iii) above is a
"Registration Default"), the sole remedy available to Holders of Registrable
Securities will be the immediate accrual (commencing on the date of the
Registration Default) of Additional Interest as follows: the per annum interest
rate on the Notes will increase by 50 basis points; and the per annum interest
rate will increase by an additional 25 basis points for each subsequent 90-day
period during which the Registration Default remains uncured, up to a maximum
additional interest rate of 200 basis points per annum, provided that (1) upon
the filing of the Exchange Registration Statement and/or the Initial Shelf
Registration (in the case of (i) above), (2) upon the effectiveness of the
Exchange Registration Statement and/or an Initial Shelf Registration (in the
case of (ii) above) or (3) upon the exchange of Exchange Notes for all Notes
tendered (in the case of (iii)(A) above), or upon the effectiveness of the
Exchange Registration Statement which had ceased to remain effective (in the
case of (iii)(B) above), or upon the effectiveness of the Shelf Registration
which had ceased to remain effective (in the case of (iii)(C) above), Additional
Interest on the Notes as a result of such clause (i), (ii) or (iii) (or the
relevant subclause thereof), as the case may be, shall cease to accrue and the
interest rate on the Notes will revert to the interest rate originally borne by
the Notes.
<PAGE>
-13-
(b) The Issuers shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Any amounts of Additional
Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be
payable in cash semi-annually on each May and November (to the Holders of record
on the May and November immediately preceding such dates), commencing with the
first such date occurring after any such Additional Interest commences to
accrue, by depositing with the Trustee, in trust for the benefit of such
Holders, immediately available funds in sums sufficient to pay such Additional
Interest. The amount of Additional Interest will be determined by multiplying
the applicable Additional Interest rate by the principal amount of the
Registrable Notes, multiplied by a fraction, the numerator of which is the
number of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360.
5. Registration Procedures
In connection with the registration of any Registrable Notes or Private
Exchange Notes pursuant to Section 2 or 3 hereof, the Issuers shall effect such
registrations to permit the sale of such Registrable Notes or Private Exchange
Notes in accordance with the intended method or methods of disposition thereof,
and pursuant thereto the Issuers shall:
(a) Prepare and file with the SEC, prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by
Section 2 or 3, and to use their respective best efforts to cause each
such Registration Statement to become effective and remain effective as
provided herein, provided that, if (1) such filing is pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or
<PAGE>
-14-
supplements thereto, the Issuers shall, if requested, furnish to and
afford the Holders of the Registrable Notes and each such Participating
Broker-Dealer, as the case may be, covered by such Registration
Statement, their counsel and the managing underwriters), if any, a
reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (at least 5
business days prior to such filing). The Issuers shall not file any
Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity
to review prior to the filing of such document, if the Holders of a
majority in aggregate principal amount of the Registrable Notes covered
by such Registration Statement, or such Participating Broker-Dealer, as
the case may be, their counsel, or the managing underwriter(s), if any,
shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and comply with the provisions of the
Securities Act, the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to them with respect to the
disposition of all securities covered by such Registration Statement as
so amended or in such Prospectus as so supplemented and with respect to
the subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Issuers shall be
deemed not to have used their best efforts to keep a Registration
Statement effective during the Applicable Period if any of them
voluntarily takes any action that would result in selling Holders
<PAGE>
-15-
of the Registrable Notes covered thereby or Participating
Broker-Dealers seeking to sell Exchange Notes not being able to sell
such Registrable Notes or such Exchange Notes during that period unless
such action is required by applicable law or unless the Company
complies with this Agreement, including, without limitation, the
provisions of clause 5(c)(v) below.
(c) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, notify the selling Holders
of Registrable Notes, or each such Participating Broker-Dealer, as the
case may be, their counsel and the managing underwriter(s), if any,
promptly (but in any event within two business days), and confirm such
notice in writing, (i) when a Prospectus or any prospectus supplement
or post-effective amendment thereto has been filed, and, with respect
to a Registration Statement or any post-effective amendment thereto,
when the same has become effective (including in such notice a written
statement that any Holder may, upon request, obtain, without charge,
one conformed copy of such Registration Statement or post-effective
amendment thereto including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order suspending
the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary Prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time
when a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Notes the representations and
warranties of the Issuers contained in any agreement (including any
underwriting agreement) contemplated by Section 5(n) below cease to be
true and correct, (iv) of the receipt by any of the Issuers of any
notification with respect to the suspension of the qualification or
exemp-
<PAGE>
-16-
tion from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation
or threatening of any proceeding for such purpose, (v) of the happening
of any event or any information becoming known that makes any statement
made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any
changes in, or amendments or supplements to, such Registration
Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vi) of any Issuer's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, use their best efforts to
prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use
of a Prospectus or suspending the qualification (or exemption from
qualification) of any of the Registrable Notes or the Exchange Notes to
be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use their best
efforts to obtain the withdrawal of any such order at the earliest
possible moment.
<PAGE>
-17-
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriter(s), if any, or the Holders of
a majority in aggregate principal amount of the Registrable Notes being
sold in connection with an underwritten offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment
thereto such information as the managing underwriter(s), if any, or
such Holders reasonably request to be included therein, (ii) make all
required filings of such Prospectus supplement or such post-effective
amendment thereto as soon as practicable after the Issuers have
received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment thereto and (iii)
supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, furnish to each selling
Holder of Registrable Notes and to each such Participating
Broker-Dealer who so requests and to counsel and the managing
underwriter(s), if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, deliver to each selling
Holder of Registrable Notes, or each such Participating Broker-Dealer,
as the case may be, their counsel, and the managing underwriter or
underwriters, if any, without
<PAGE>
-18-
charge, as many copies of the Prospectus or Prospectuses (including
each form of preliminary Prospectus) and each amendment or supplement
thereto and any documents incorporated by reference therein as such
Persons may reasonably request; and, subject to the last paragraph of
this Section 5, each Issuer hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the
selling Holders of Registrable Notes or each such Participating
Broker-Dealer, as the case may be, and the managing underwriter or
underwriters or agents, if any, and dealers (if any), in connection
with the offering and sale of the Registrable Notes covered by or the
sale by Participating Broker-Dealers of the Exchange Notes pursuant to
such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, to use its best efforts to register
or qualify, and to cooperate with the selling Holders of Registrable
Notes or each such Participating Broker-Dealer, as the case may be, the
managing underwriter or underwriters, if any, and their respective
counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Notes for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder,
Participating Broker-Dealer, or the managing underwriter or
underwriters, if any, reasonably request in writing, provided that
where Exchange Notes held by Participating Broker-Dealers or
Registrable Notes are offered other than through an underwritten
offering, the Issuers agree to cause their counsel to perform Blue Sky
investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and
<PAGE>
-19-
all other acts or things reasonably necessary or advisable to enable
the disposition in such jurisdictions of the Exchange Notes held by
Participating Broker-Dealers or the Registrable Notes covered by the
applicable Registration Statement, provided that none of the Issuers
shall be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action
that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use its best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the managing underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Notes, except as may be required solely as a consequence of the nature
of such selling Holder's business, in which case each of the Issuers
will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange
<PAGE>
-20-
Notes during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 5(c)(v) or 5(c)(vi) above, as promptly as
reasonably practicable prepare and (subject to Section 5(a) above) file
with the SEC, at the joint and several expense of each of the Issuers,
a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, or file any other
required document so that, as thereafter delivered to the purchasers of
the Registrable Notes being sold thereunder or to the purchasers of the
Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(l) Use their best efforts to cause the Registrable Notes
covered by a Registration Statement or the Exchange Notes, as the case
may be, to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement or the
Exchange Notes, as the case may be, or the managing underwriter or
underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with printed certificates for the Registrable Notes in a form eligible
for deposit with The Depository Trust Company and (ii) provide a CUSIP
number for the Registrable Notes.
(n) In connection with an underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings of debt securities
similar to the Notes and take all such other actions as are reasonably
requested by the managing underwriter(s), if any, in order
<PAGE>
-21-
to expedite or facilitate the registration or the disposition of such
Registrable Notes, and in such connection, (i) make such
representations and warranties to the managing underwriter or
underwriters on behalf of any underwriters, with respect to the
business of the Issuers and their respective subsidiaries and the
Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, as are
customarily made by issuers to underwriters in underwritten offerings
of debt securities, and confirm the same if and when requested; (ii)
obtain opinions of counsel to the Issuers and updates thereof as are
customary in underwritten offerings of debt securities similar to the
Notes covering the matters customarily covered in opinions requested in
underwritten offerings of debt securities and such other matters as may
be reasonably requested by underwriters; (iii) obtain "cold comfort"
letters and updates thereof as are customary in underwritten offerings
of debt securities similar to the Notes from the independent certified
public accountants of the Issuers (and, if necessary, any other
independent certified public accountants of any subsidiary of any of
the Issuers or of any business acquired by any of the Issuers for which
financial statements and financial data for the most recent three
fiscal years included in the Registration Statement are, or are
required to be, included in the Registration Statement), addressed to
the managing underwriter or underwriters on behalf of any underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities and such other matters as
reasonably requested by the managing underwriter or underwriters; and
(iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures as set forth in
Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to
be indemnified pur-
<PAGE>
-22-
suant to said Section. The above shall be done at each closing under
such underwriting agreement, or as and to the extent required
thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Notes being sold,
or each such Participating Broker-Dealer, as the case may be, the
managing underwriter or underwriters participating in any such
disposition of Registrable Notes, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and properties of the Issuers and their respective
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of
the Issuers and their respective subsidiaries to supply all information
in each case reasonably requested by any such Inspector in connection
with such Registration Statement. Records which the Issuers determine,
in good faith, to be confidential and any Records which they notify the
Inspectors are confidential shall not be disclosed by the Inspectors
unless (i) the disclosure of such Records is necessary to avoid or
correct a material misstatement or material omission in such
Registration Statement, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction or (iii) the information in such Records has been made
generally available to the public. Each selling Holder of such
Registrable Notes and each such Participating Broker-Dealer or
underwriter will be required to agree that information obtained by it
as a re-
<PAGE>
-23-
sult of such inspections shall be deemed confidential and shall not be
used by it as the basis for any market transactions in the securities
of the Issuers unless and until such is made generally available to the
public. Each selling Holder of such Registrable Notes and each such
Participating Broker-Dealer will be required to further agree that it
will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Issuers and allow
the Issuers to undertake appropriate action to prevent disclosure of
the Records deemed confidential at their expense.
(p) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the
Exchange Offer or the first Registration Statement relating to the
Registrable Notes; and in connection therewith, cooperate with the
trustee under any such indenture and the Holders of the Registrable
Notes, to effect such changes to such indenture as may be required for
such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Notes are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to
underwriters in
<PAGE>
-24-
such an offering, commencing on the first day of the first fiscal
quarter of the Issuers after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(r) Upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Issuers, in a form
customary for underwritten offerings of debt securities similar to the
Notes, addressed to the Trustee for the benefit of all Holders of
Registrable Notes participating in the Exchange Offer or the Private
Exchange, as the case may be, and which includes an opinion that (i)
each of the Issuers has duly authorized, executed and delivered the
Exchange Notes and Private Exchange Notes and the related indenture and
(ii) each of the Exchange Notes or the Private Exchange Notes, as the
case may be, and related indenture constitute a legal, valid and
binding obligation of each of the Issuers, enforceable against each of
the Issuers in accordance with its respective terms (with customary
exceptions).
(s) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Issuers (or to such other Person as directed by the Issuers) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Issuers shall mark, or cause to be marked, on such
Registrable Notes that such Registrable Notes are being cancelled in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; and, in no event shall such Registrable Notes be marked as
paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and the managing underwriter(s), if any,
participating in the disposition of such Registrable Notes and their
respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc. (the "NASD").
<PAGE>
-25-
(u) Use their respective best efforts to take all other steps
necessary to effect the registration of the Registrable Notes covered
by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, as the
Issuers may, from time to time, reasonably request. The Issuers may exclude from
such registration the Registrable Notes of any seller or Participating
Broker-Dealer who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Issuers of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by such Registration
Statement or Prospectus or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
5(k), or until it is advised in writing (the "Advice") by the Issuers that the
use of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto. In the event the Issuers shall give any such
notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Notes covered by such Registration Statement or Exchange Notes to be
sold by such Holder or Participating Broker-Dealer, as the case may be, shall
have received (x)
<PAGE>
-26-
the copies of the supplemented or amended Prospectus contemplated by Section
5(k) or (y) the Advice.
6. Registration Expenses
All fees and expenses incident to the performance of or compliance with
this Agreement by the Issuers shall be borne by the Issuers, jointly and
severally, whether or not the Exchange Offer or a Shelf Registration is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
within the United States (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the Holders of Registrable Notes are located, if located
in the United States, in the case of the Exchange Notes, or (y) as provided in
Section 5(h), in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses if the printing of
Prospectuses is reasonably requested by the managing underwriter or
underwriters, if any, or, in respect of Registrable Notes or Exchange Notes to
be sold by any Participating Broker-Dealer during the Applicable Period, by the
Holders of a majority in aggregate principal amount of the Registrable Notes
included in any Registration Statement or of such Exchange Notes, as the case
may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Issuers, (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii)
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
<PAGE>
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agency fees, (vii) Securities Act liability insurance, if the Issuers desire
such insurance, provided that nothing contained herein shall require the Issuers
to purchase such insurance, (viii) fees and expenses of the Trustee, (ix) fees
and expenses of all other Persons retained by the Issuers, (x) internal expenses
of the Issuers (including, without limitation, all salaries and expenses of
officers and employees of the Issuers performing legal or accounting duties),
(xi) the expense of any annual audit, (xii) the fees and expenses incurred in
connection with any listing of the securities to be registered on any securities
exchange if the Issuers elect to list any such securities and (xiii) the
expenses relating to printing, word processing and distributing all Registration
Statements and any other documents necessary in order to comply with this
Agreement.
7. Indemnification
(a) Each of the Issuers, jointly and severally, agrees to indemnify and
hold harmless each Holder of Registrable Notes and each Participating
Broker-Dealer selling Exchange Notes during the Applicable Period, the officers
and directors of each such person, and each person, if any, who controls any
such person within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Participant"), from and against any and
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other expenses actually incurred in connection with
any suit, action or proceeding or any claim asserted) caused by, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus (as amended or
supplemented if the Issuers shall have furnished any amendments or supplements
thereto) or any Preliminary Prospectus, or caused by, arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, provided that the
Issuers shall not be liable under this paragraph (a) to the extent that such
losses, claims, damages
<PAGE>
-28-
or liabilities arose out of or are based upon an untrue statement or omission
made in any of the documents referred to in this paragraph (a) in reliance upon
and in conformity with the information relating to the Initial Purchaser
furnished in writing by the Initial Purchaser for inclusion therein and
provided, further, that the foregoing indemnity with respect to any preliminary
Prospectus shall not inure to the benefit of any Participant (or to the benefit
of any person controlling such Participant) from whom the person asserting any
such losses, claims, damages or liabilities purchased Registrable Notes or
Exchange Notes if such untrue statement or omission or alleged untrue statement
or omission made in such preliminary Prospectus is eliminated or remedied in the
related Prospectus (as amended or supplemented if the Issuers shall have
furnished any amendments or supplements thereto) and a copy of the related
Prospectus (as so amended or supplemented) shall have been furnished to such
Participant at or prior to the sale of such Registrable or Exchange Notes, as
the case may be, to such person.
(b) Each Participant will be required to agree severally and not
jointly, to indemnify and hold harmless the Issuers, their respective directors
and officers and each person who controls any of the Issuers within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Issuers to each Participant, but
only with reference to information relating to such Participant furnished to the
Issuers in writing by such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any Preliminary
Prospectus.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either
paragraph (a) or (b) of this Section 7, such person (the "Indemnified Person")
shall promptly notify the person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request of
the Indemnified Per-
<PAGE>
-29-
son, shall retain one counsel reasonably satisfactory to the Indemnified Person
to represent the Indemnified Person and any others the Indemnifying Person may
reasonably designate in such proceeding and shall pay the reasonable fees and
expenses incurred by such counsel related to such proceeding. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representations of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate law
firm (in addition to any local counsel who shall be reasonably acceptable to the
Issuers) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Participants
and such control persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Notes sold by all
such Participants and any such separate firm for the Issuers, their directors,
their officers and such control persons of the Issuers shall be designated in
writing by the Issuers. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Person agrees to indemnify any Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Person shall have
requested an Indemnifying Person to reimburse the Indemnified Person for
reasonable fees and expenses incurred by counsel as contemplated by the third
sentence of this paragraph, the Indemnifying Person agrees that it shall be
<PAGE>
-30-
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement; provided, however, that the Indemnifying
Person shall not be liable for any settlement effected without its consent
pursuant to this sentence if the Indemnifying Party is contesting, in good
faith, the request for reimbursement. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
If the indemnification provided for in paragraphs (a) and (b) of this
Section 7 is unavailable to an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraphs, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the Issuers on the
one hand and the Participants on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Issuers on the one hand and the Participants on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers or by the Participants and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
<PAGE>
-31-
The parties shall agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes exceeds the amount of any damages that such Participant has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Each of the Issuers covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
any of the Issuers is not required to file such reports, it will, upon the
request of any Holder of
<PAGE>
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Registrable Notes, make publicly available other information of a like nature so
long as necessary to permit sales pursuant to Rule 144 or Rule 144A. Each of the
Issuers further covenants that so long as any Registrable Notes remain
outstanding to make available to any Holder of Registrable Notes in connection
with any sale thereof, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Notes pursuant to
(a) such Rule 144A, or (b) any similar rule or regulation hereafter adopted by
the SEC.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by any Issuer of any of its
obligations under this Agreement, other than the occurrence of an event which
requires payment of Additional Interest, each Holder of Registrable Notes, in
addition to being entitled to exercise all rights provided herein, in the
Indenture or, in the case of the Initial Purchaser, in the Purchase Agreement or
granted by law, including recovery of damages, under this Agreement.
(b) Enforcement. The Trustee shall be authorized to enforce the
provisions of this Agreement for the ratable benefit of the Holders.
<PAGE>
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(c) No Inconsistent Agreements. Neither of the Issuers has, as of the
date hereof, and the Issuers shall not, after the date of this Agreement, enter
into any agreement with respect to any of its securities that is inconsistent
with the rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. Neither of the Issuers has
entered or will enter into any agreement with respect to any of its securities
which will grant to any Person piggy-back rights with respect to a Registration
Statement.
(d) Adjustments Affecting Registrable Notes. Neither of the Issuers
shall, directly or indirectly, take any action with respect to the Registrable
Notes as a class that would adversely affect the ability of the Holders of
Registrable Notes to include such Registrable Notes in a registration undertaken
pursuant to this Agreement.
(e) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Issuers have obtained the written consent of Holders of at
least a majority of the then outstanding aggregate principal amount of
Registrable Notes. Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter that relates exclusively to
the rights of Holders of Registrable Notes whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Notes may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Notes being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(f) Notices. All notices and other communications (including without
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall
<PAGE>
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be made in writing by hand-delivery, registered first-class mail, next-day air
courier or telecopier:
(i) if to a Holder of Registrable Notes, at the most current
address given by the Trustee to the Issuers; and
(ii) if to the Issuers, AOA HOLDING LLC, 1380 W. Paces Ferry
Road, N.W., Suite 170, South Wing, Atlanta, Georgia 30327 Attention:
Chief Financial Officer, with a copy to Kaplan, Strangis & Kaplan,
P.A., 5500 Norwest Center, 90 South Seventh Street, Minneapolis,
Minnesota 55402 Attention: Andris Baltins, Esq.
All such notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered; (ii) five business
days after being deposited in the mail, postage prepaid, if mailed; (iii) one
business day after being timely delivered to a next-day air courier; and (iv)
when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Registrable Notes.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE>
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(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final expression of
their agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(m) Joint and Several Obligations. Unless otherwise stated herein, each
of the obligations of the Issuers under this Agreement shall be joint and
several obligations of each of them.
(n) Notes Held by the Issuers or Their Affiliates. Whenever the consent
or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuers or their affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
<PAGE>
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(o) Release from Liability. No trustee, director, officer, employee,
stockholder, partner (other than the Company), affiliate or beneficiary, as
such, of the Issuers shall have any liability for any of the obligations of the
Issuers under this Agreement. It is understood that this limitation on recourse
is made expressly for the benefit of any such trustee, director, officer,
employee, stockholder, partner or beneficiary and may be enforced by any one or
all of them. Specifically, the Initial Purchaser acknowledges and agrees that
Stephen Adams, a general partner of the Company, has no liability under this
Agreement for the obligations of the Company hereunder.
<PAGE>
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AOA HOLDING LLC
(a Minnesota limited liability company)
By: /s/ Abe Levine
-----------------------------------
Name: Abe Levine
Title: Vice President
AOA CAPITAL CORP.
(a Minnesota corporation)
By: /s/ Abe Levine
-----------------------------------
Name: Abe Levine
Title: Vice President
CIBC WORLD MARKETS CORP.
By: /s/ Bruce Spohler
---------------------
Name: Bruce Spohler
Title:
19955/1
<PAGE>
EXHIBIT 4.4
================================================================================
SECURITIES PURCHASE AGREEMENT
by and among
AOA HOLDING LLC
and
AOA CAPITAL CORP,
as Issuers
and
CIBC WORLD MARKETS CORP.,
as Initial Purchaser
Dated as of May 21, 1999
================================================================================
1
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.......................................................3
Section 1.2. Accounting Terms; Financial Statements............................7
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE OF NOTES; RIGHTS OF HOLDERS
OF NOTES; OFFERING BY INITIAL PURCHASER
Section 2.1. Issue of Notes....................................................7
Section 2.2. Purchase, Sale and Delivery of Notes..............................8
Section 2.3. Registration Rights of Holders of Notes...........................8
Section 2.4. Offering by the Initial Purchaser.................................9
Section 2.5. Joint and Several Liability.......................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of the Issuers.....................9
Section 3.2. Resale of Notes..................................................20
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the Initial Purchaser.....21
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Issuers.........................................24
-i-
<PAGE>
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes........................................26
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity........................................................27
Section 7.2. Contribution.....................................................30
Section 7.3. Registration Rights Agreement....................................31
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions...........................................31
Section 8.2. Termination......................................................32
Section 8.3. No Waiver; Modifications in Writing..............................33
Section 8.4. Information Supplied by the Initial Purchaser....................33
Section 8.5. Communications...................................................34
Section 8.6. Execution in Counterparts........................................34
Section 8.7. Successors.......................................................34
Section 8.8. Governing Law....................................................35
Section 8.9. Severability of Provisions.......................................35
Section 8.10. Headings........................................................35
Section 8.11. Release from Liability..........................................35
-ii-
<PAGE>
SECURITIES PURCHASE AGREEMENT, dated as of May 21, 1999 (the
"Agreement"), among AOA Holding LLC, a Minnesota limited liability company (the
"Company"), AOA Capital Corp, a Minnesota corporation and a wholly-owned
subsidiary of the Company ("Capital Corp." and, together with the Company, the
"Issuers"), and CIBC World Markets Corp. (the "Initial Purchaser").
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder.
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Person in question. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", 'controlled by" and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise; provided, however, that beneficial ownership of at least 10% of the
voting securities of a Person shall be deemed to be control.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof and in effect.
"AOAI" means Adams Outdoor Advertising, Inc., a Minnesota corporation,
which is a wholly-owned subsidiary of the Company and the general partner of
AOALP.
<PAGE>
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"AOALP" means Adams Outdoor Advertising Limited Partnership, a
Minnesota limited partnership, the partnership interests of which are owned 69%
by the Company and 1% by AOAI.
"Basic Documents" means, collectively, the Indenture, the Notes, the
Registration Rights Agreement, this Agreement and the Holding Company Documents.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York
are authorized or obligated by law to close.
"Closing" has the meaning provided therefor in Section 2.2 of this
Agreement.
"Closing Date" has the meaning provided therefor in Section 2.2 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Act.
"Credit Facility Amendments" means, collectively, the amendments to the
AOALP secured credit facility (as described in the Memoranda) and the amendment
to the unsecured credit facility of AOALP (as described in the Memoranda), each
to be dated as of May 24, 1999.
"Default" means any event, act or condition which, with notice or lapse
of time or both, would constitute an Event of Default.
"Deficit Capital Contribution Agreement" means the Deficit Capital
Contribution Agreement dated as of May 21, 1999 by and between the Company and
Stephen Adams.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means any event defined as an Event of Default in
the Indenture.
<PAGE>
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Final Memorandum" has the meaning provided therefor in Section 2.1 of
this Agreement.
"Holding Company Documents" means, collectively, the Credit Facility
Amendments, the Deficit Capital Contribution Agreement, the Indemnity Agreement
and the Partnership Agreement Amendment.
"Indemnified Party" has the meaning provided therefor in Section 7.1(c)
of this Agreement.
"Indemnity Agreement" means the Proceeds Allocation and Indemnity
Agreement dated as of May 21, 1999 by and between the Company and Capital Corp.
"Indemnifying Party" has the meaning provided therefor in Section
7.1(c) of this Agreement.
"Indenture" means the indenture to be dated as of May 26, 1999 among
the Issuers and United States Trust Company of New York, as Trustee, under which
the Notes will be issued.
"Initial Purchaser" has the meaning provided therefor in the
introductory paragraph of this Agreement.
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including
without limitation, any Capitalized Lease Obligation (as defined in the
Indenture)), conditional sales, or other title retention agreement having
substantially the same economic effect as any of the foregoing.
"Material Adverse Effect" means, with respect to the Issuers, a
material adverse effect on the business, financial condition or results of
operations of the Company or AOALP; provided, however, that, with respect to the
Issuers, "Material Adverse Effect" shall also mean a material adverse effect on
the ability of the Issuers to perform their respective obligations under this
Agreement or any of the Basic Documents.
<PAGE>
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"Memoranda" has the meaning provided therefor in Section 2.1 of this
Agreement.
"Notes" means the 10 3/8% Senior Notes due 2006 of the Issuers.
"Offering Materials" has the meaning provided therefor in Section 7.1
of this Agreement.
"Organizational Document" has the meaning provided therefor in Section
3.1 of this Agreement.
"Other Issuer Obligations" has the meaning provided therefor in Section
2.5 of this Agreement.
"Partnership Agreement Amendment" means the amendment to the
partnership agreement of AOALP dated as of May 21, 1999.
"Person" means any individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint-stock company,
government (including any agency or political subdivision thereof) or other
entity of any kind.
"PORTAL" means the Private Offerings Resales and Trading through
Automated Linkages Market.
"Preliminary Memorandum" has the meaning provided therefor in Section
2.1 of this Agreement.
"Private Exchange Notes" shall have the meaning provided therefor in
the Registration Rights Agreement.
"Proceeding" has the meaning provided therefor in Section 7.1(c) of
this Agreement.
"QIB" has the meaning provided therefor in Section 3.2 of this
Agreement.
"Registration Rights Agreement" means the registration rights agreement
between the Issuers and the Initial Purchaser relating to the Notes.
"State" means each of the states of the United States of America, the
District of Columbia and the Commonwealth of Puerto Rico.
"State Commission" means any agency of any State having jurisdiction to
enforce such State's securities laws.
<PAGE>
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"Taxes" has the meaning provided therefor in Section 3.1 of this
Agreement.
"Time of Purchase" has the meaning provided therefor in Section 2.2 of
this Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission thereunder.
"Trustee" has the meaning provided therefor in the Indenture.
Section 1.2. Accounting Terms; Financial Statements. All accounting
terms used herein not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standard Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession.
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE
OF NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASER
Section 2.1. Issue of Notes. The Issuers have authorized the issuance
of $50,000,000 aggregate principal amount of the Notes which are to be issued
pursuant to the Indenture. Each Note will be substantially in the form of the
Note set forth as Exhibit A to the Indenture.
The Notes will be offered and sold to the Initial Purchaser without
being registered under the Act, in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Issuers have prepared a
preliminary offering memorandum dated May 13, 1999(the "Preliminary Memorandum")
and prepared a final offering memorandum dated May 21, 1999 (the "Final
Memorandum" and, together with the Preliminary Memorandum, the "Memoranda")
setting forth or including a description of the terms of the
<PAGE>
-8-
Notes, the terms of the offering, a description of the Issuers and any material
developments relating to the Issuers occurring after the date of the most recent
financial statements included therein.
Section 2.2. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Issuers agree that
they will sell to the Initial Purchaser, and the Initial Purchaser agrees that
it will purchase from the Issuers at the Time of Purchase, the aggregate
principal amount of the Notes set forth opposite the name of the Initial
Purchaser on Schedule I attached hereto at a price equal to 97.375% of such
amount.
The purchase, sale and delivery of the Notes will take place at a
closing (the "Closing") at the offices of Cahill Gordon & Reindel, 80 Pine
Street, New York, New York, at 10:00 A.M., New York time, on May 26, 1999, or
such later date and time, if any, as the Initial Purchaser and the Issuers shall
agree (the "Closing Date"). The time at which such Closing is concluded is
herein called the "Time of Purchase."
One or more certificates in definitive form for the Notes that the
Initial Purchaser has agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchaser
requests upon notice to the Issuers at least 24 hours prior to the Closing,
shall be delivered by or on behalf of the Issuers to the Initial Purchaser,
against payment by or on behalf of the Initial Purchaser of the purchase price
therefor by wire transfer of immediately available funds to the account of the
Company previously designated by it in writing. The Issuers will make such
certificate or certificates for the Notes available for checking and packaging
by the Initial Purchaser at the offices of CIBC World Markets Corp., or such
other place as the Initial Purchaser may designate, at least 24 hours prior to
the Closing.
Section 2.3. Registration Rights of Holders of Notes. The Initial
Purchaser and its direct and indirect transferees of the Notes will have such
rights with respect to the registration thereof under the Act and qualification
of the Indenture under the Trust Indenture Act as are set forth in the
Registration Rights Agreement.
Section 2.4. Offering by the Initial Purchaser. The Initial Purchaser
proposes to make an offering of the Notes
<PAGE>
-9-
at the price and upon the terms set forth in the Final Memorandum, as soon as
practicable after this Agreement is entered into and as in the judgment of the
Initial Purchaser is advisable.
Section 2.5. Joint and Several Liability. Each of the Issuers shall
have joint and several liability in respect of all obligations hereunder and
under each other Basic Document to which the Issuers are parties. Each of the
Issuers hereby acknowledges that this Agreement is the independent and several
obligation of each of the Issuers and may be enforced against either of the
Issuers separately, whether or not enforcement of any right or remedy hereunder
has been sought against any other Issuer. Each of the Issuers hereby expressly
waives, with respect to any of the amounts owing hereunder by the other Issuer
in respect of the obligations (collectively, the "Other Issuer Obligations"),
diligence, presentment, demand of payment, protest and all notices whatsoever,
and any requirement that the Initial Purchaser exhaust any right, power or
remedy or proceed against such other Issuer under this Agreement, any other
Basic Document or any other agreement or instrument referred to herein or
therein, or against any other person under any other guarantee of, or security
for, any of such Other Issuer Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of the Issuers. The
Issuers, jointly and severally, represent and warrant to and agree with the
Initial Purchaser as of the date hereof and as of the Time of Purchase as
follows:
(a) The Final Memorandum, as of its date and at all times
subsequent thereto up to and including the Time of Purchase, did not,
does not and will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this Section 3.1(a) do not apply to statements or omissions
made in reliance upon and in conformity with information relating to
the Initial Purchaser furnished to the Issuers in writing by the
Initial Purchaser
<PAGE>
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expressly for use in the Final Memorandum or any amendment or
supplement thereto.
(b) The financial statements of AOALP and AOAI, together with
the related notes and schedules thereto, set forth in the Final
Memorandum fairly present the financial condition of AOALP and AOAI as
of the dates indicated and the results of operations and changes in
financial position for the periods therein specified in conformity with
generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein),
except that the unaudited interim financial statements are subject to
normal year-end adjustments. The pro forma financial data included in
the Final Memorandum has been prepared using reasonable assumptions and
in accordance with the applicable requirements of the Act and include
all adjustments necessary to present fairly the pro forma financial
information included within the Final Memorandum at the respective
dates and for the respective periods indicated. Each of Arthur Andersen
LLP and KPMG LLP, each of which is reporting upon certain of the
audited financial statements and schedules included in the Memoranda,
is an independent public accounting firm as required by the Act and the
rules and regulations thereunder.
(c) The Company and AOALP have been duly organized and are
validly existing and in good standing as a limited liability company
and a limited partnership, respectively, under the laws of the State of
Minnesota and have filed all reports with the Secretary of State of
Minnesota required to obtain a certificate of existence from that
office. Capital Corp. and AOAI have been duly incorporated and are
validly existing and in good standing as corporations under the laws of
the State of Minnesota and have filed all reports with the Secretary of
State of Minnesota required to obtain a certificate of existence from
that office. Each of the Issuers, AOALP and AOAI is duly qualified and
in good standing as a foreign limited liability company, limited
partnership or corporation, as the case may be, and is authorized to do
business, in each jurisdiction in which the ownership or leasing of any
property or the character of its operations makes such qualification
necessary and in which the failure so to qualify could have a Material
Adverse Effect.
(d) As of the date indicated in the Memoranda, the Company had
the authorized, issued and outstanding capi-
<PAGE>
-11-
talization as set forth under the caption "actual" under the heading
"Capitalization" in the Memoranda; neither Issuer owns, directly or
indirectly, any shares or any other equity or long-term debt securities
or has any equity interest in any firm, partnership, joint venture or
other entity, other than (i) the Company's interest in AOALP, AOAI and
Capital Corp. and (ii) AOAI's interest in AOALP and PA Outdoor, Inc.;
and the beneficial ownership of the equity interests in the Issuers,
AOALP and AOAI is as set forth in the Memoranda under the heading
"Principal Security Holders."
(e) This Agreement has been duly authorized by the Issuers and
the Issuers have all requisite power and authority to execute, issue
and deliver this Agreement and to incur and perform their respective
obligations provided for therein. This Agreement, when executed and
delivered by the Issuers (assuming the due authorization, execution and
delivery by the Initial Purchaser), will constitute a valid and legally
binding agreement of the Issuers, enforceable against each of them in
accordance with its terms except (i) that the enforcement hereof may be
subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and to general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought and (ii) as any rights to indemnity or
contribution hereunder may be limited by federal and state securities
laws and public policy considerations.
(f) The Indenture has been duly authorized by the Issuers and
the Issuers have all requisite power and authority to execute, issue
and deliver the Indenture and to incur and perform their respective
obligations provided for therein. The Indenture, when executed and
delivered by the Issuers (assuming the due authorization, execution and
delivery by the Trustee), will constitute a valid and legally binding
agreement of the Issuers, enforceable against each of them in
accordance with its terms except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought.
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(g) The Registration Rights Agreement has been duly authorized
by the Issuers and the Issuers have all requisite power and authority
to execute, issue and deliver the Registration Rights Agreement and to
incur and perform their respective obligations provided for therein.
The Registration Rights Agreement, when executed and delivered by the
Issuers (assuming the due authorization, execution and delivery by the
Initial Purchaser), will constitute a valid and legally binding
agreement of the Issuers, enforceable against each of them in
accordance with its terms except (i) that the enforcement thereof may
be subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and to general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought and (ii) as any rights to indemnity or
contribution thereunder may be limited by federal and state securities
laws and public policy considerations.
(h) The Notes have each been duly authorized by the Issuers
and the Issuers have all requisite power and authority to execute,
issue and deliver the Notes and to incur and perform their respective
obligations provided for therein. The Notes, when executed and
delivered by the Issuers (assuming the due authorization, execution and
delivery by the Trustee) in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchaser in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will constitute valid and legally binding
obligations of the Issuers enforceable against each of them in
accordance with their terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought.
(i) Each of the Holding Company Documents has been duly
authorized by the Issuers party thereto and the Issuers have all
requisite power and authority to execute, issue and deliver each
Holding Company Document to which they are a party and to incur and
perform their respective obligations provided for therein. Each of the
Holding Company Documents, when executed and delivered by the Issuers
party thereto (assuming the due authorization, exe-
<PAGE>
-13-
cution and delivery by the other parties thereto), will constitute a
valid and legally binding agreement of the Issuers party thereto,
enforceable against each of them in accordance with its terms except
that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be brought.
(j) Immediately after the consummation of the transactions
contemplated by this Agreement (including the use of proceeds from the
sale of Notes at the Time of Purchase), to the best of their knowledge,
the fair value and present fair saleable value of the assets of each of
the Issuers (on a consolidated basis) will exceed the sum of its stated
liabilities and identified contingent liabilities; neither Issuer (on a
consolidated basis) will be, after giving effect to the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (including the use of proceeds from
the sale of Notes at the Time of Purchase), (i) left with unreasonably
small capital with which to carry on its business as it is proposed to
be conducted, (ii) unable to pay its debts (contingent or otherwise) as
they mature or (iii) otherwise insolvent.
(k) The Issuers have all requisite power and authority under
the laws of the State of Minnesota to execute, deliver and perform
their respective obligations under this Agreement. Each of the Issuers
has all requisite power and authority under the laws of the State of
Minnesota to (i) execute, deliver and perform its obligations under
this Agreement and each of the Basic Documents, (ii) execute, deliver
and perform its obligations under all other agreements and instruments
executed and delivered by the Issuers pursuant to or in connection with
this Agreement and each of the Basic Documents and (iii) issue the
Notes in the manner and for the purpose contemplated by this Agreement.
(l) Subsequent to the date as of which information is given in
the Final Memorandum to the Time of Purchase, there has not been (i)
any event or condition that has had or that could reasonably be
expected to have a Material Adverse Effect, (ii) any transaction
entered into by either of the Issuers, AOALP or AOAI, other than in the
or-
<PAGE>
-14-
dinary course of business, that is material to the Company or AOALP or
(iii) any dividend or distribution of any kind declared, paid or made
by either of the Issuers on any of its equity-interests.
(m) Except as set forth in the Final Memorandum, there is no
action, suit, investigation or proceeding, governmental or otherwise,
pending or, to the best knowledge of the Issuers, threatened to which
either of the Issuers, AOALP or AOAI is or would be a party or of which
the properties of either of the Issuers, AOALP or AOAI are or may be
subject, that (i) seeks to restrain, enjoin, prevent the consummation
of or otherwise challenge the issuance and sale of the Notes by the
Issuers, (ii) questions the legality or validity of the transfers into
the holding company structure described in the Memoranda or seeks to
recover damages or obtain other relief in connection therewith, (iii)
could have any effect on the power or ability of either Issuer to
perform its obligations under the Basic Documents or to consummate the
transactions contemplated hereby or thereby or (iv) could reasonably be
expected to have a Material Adverse Effect.
(n) The execution, delivery and performance by the Issuers of
this Agreement and the Basic Documents, the issuance and sale by the
Issuers of the Notes and the execution, delivery and performance by the
Issuers of all other agreements and instruments to be executed and
delivered by the Issuers, pursuant hereto or thereto or in connection
herewith or therewith, and compliance by the Issuers with the terms and
provisions hereof and thereof, do not and will not (i) violate any
provision of any law, rule or regulation (including, without
limitation, Regulation T, U or X of the Board of Governors of the
Federal Reserve System), order, writ, judgment, decree, determination
or award presently in effect or in effect at the Time of Purchase
having applicability to either of the Issuers, AOALP or AOAI (ii)
conflict with or result in a breach or violation of (A) any of the
terms or provisions of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) by
either Issuer, AOALP or AOAI or give rise to any right to accelerate
the maturity or require the prepayment of any indebtedness under any
contract, indenture, mortgage, deed of trust, loan agreement, note,
lease, license, franchise agreement, authorization, permit, certificate
or other agreement or document to which either Issuer, AOALP or AOAI is
a party or by which any of them may be bound, or
<PAGE>
-15-
to which any of them or any of their respective assets or businesses is
subject or (B) the certificate of formation or limited liability
company agreement, the certificate of limited partnership or limited
partnership agreement or the articles of incorporation or bylaws, as
the case may be (each, an "Organizational Document"), of either Issuer,
AOALP or AOAI or (iii) except as contemplated by this Agreement and the
Basic Documents, result in, or require the creation or imposition of,
any Lien upon or with respect to any of the properties now owned or
hereafter acquired by either of the Issuers, AOALP or AOAI, except, in
each case, where such violation, conflict, breach, default or creation
or imposition of any Lien would not (individually or in the aggregate)
(1) have a Material Adverse Effect, (2) materially impair either
Issuer's ability to perform the obligations contemplated by the Basic
Documents and the Memoranda or (3) materially affect the consummation
of the transactions contemplated by the Basic Documents and the
Memoranda.
(o) Neither of the Issuers, AOALP or AOAI is currently or,
after giving effect to the consummation of the transactions
contemplated by this Agreement, will be, (i) in violation of its
certificate of formation, certificate of limited partnership or
articles of incorporation or limited liability company agreement,
partnership agreement or bylaws, as the case may be, (ii) in default
(nor will an event occur which with notice or passage of time or both
would constitute such a default) under or in violation of any indenture
or loan or credit agreement or any other material contract, agreement
or instrument to which it is a party or by which it or any of its
properties may be bound or affected (except as set forth in the Final
Memorandum), (iii) in violation of any order of any court, arbitrator
or governmental body or subject to or party to any order of any court
or governmental authority arising out of any action, suit or proceeding
under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iv) in
violation of or will have violated any such statute, rule or regulation
of any governmental authority, which default or violation (individually
or in the aggregate) could reasonably be expected to (y) affect the
legality, validity or enforceability of this Agreement or any of the
Basic Documents or (z) have a Material Adverse Effect.
(p) Except as set forth in the Final Memorandum, no
authorization, consent, approval, license, qualification
<PAGE>
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or formal exemption from, nor any filing, declaration or registration
with, any court, governmental agency or regulatory authority or any
securities exchange is required (i) in connection with the execution,
delivery or performance by the Issuers of this Agreement or any of the
Basic Documents, (ii) to permit the Issuers to effect payments of
principal of, premium and interest on the Notes or (iii) to own, lease,
license and use their respective businesses in the manner described in
the Final Memorandum except (A) as may be required under state
securities or "Blue Sky" laws or the laws of any foreign jurisdiction
in connection with the offer and sale of the Notes or (B) as would not
(individually or in the aggregate) have a Material Adverse Effect. All
such authorizations, consents, approvals, licenses, qualifications,
exemptions, filings, declarations and registrations set forth in the
Final Memorandum (other than as disclosed therein) which are required
to have been obtained by the date hereof have been obtained or made, as
the case may be, and are in full force and effect and not the subject
of any pending or, to the knowledge of either of the Issuers,
threatened attack by appeal or direct proceeding or otherwise.
(q) Neither Issuer is, nor immediately after the Time of
Purchase will be, an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, and the rules and regulations of the
Commission thereunder.
(r) The execution and delivery of this Agreement and the other
Basic Documents and the sale of the Notes to the Initial Purchaser will
not involve any non-exempt prohibited transaction within the meaning of
Section 406 of ERISA, or Section 4975 of the Code on the part of the
Company. No Reportable Event (as defined in ERISA) has occurred during
the five-year period prior to the date on which this representation is
made or deemed made with respect to any Employee Benefit Plan (as
defined in ERISA), and each Employee Benefit Plan has complied in all
material respects with the applicable provisions of ERISA and the Code.
The present value of all benefits vested under each Employee Benefit
Plan maintained by the Issuers or any Commonly Controlled Entity (as
defined in ERISA) (based on the current liability, interest rate and
other assumptions used in preparation of the plan's Form 5500 Annual
Report) did not, as of the last annual valuation date prior to the date
on which this representation is
<PAGE>
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made or deemed made, exceed the value of the assets of such plan
allocable to such accrued benefits. Neither of the Issuers nor any
Commonly Controlled Entity has had a complete or partial withdrawal
from any Multiemployer Plan (as defined in ERISA), and neither of the
Issuers nor any Commonly Controlled Entity would become subject to any
liability under ERISA if such Issuer or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of
the valuation date most closely preceding the date on which such
representation is made or deemed made. No such Multiemployer Plan is in
reorganization or insolvent. There are no material liabilities of
either of the Issuers or any Commonly Controlled Entity for
post-retirement benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as described in
Section 3(l) of ERISA).
(s) The Issuers, AOALP or AOAI have (i) good and valid title
to all tangible properties and assets identified in the Final
Memorandum as owned by each of them and (ii) valid and enforceable
leasehold interests in all properties and assets identified in the
Final Memorandum as leased by each of them, in each case, which are
material to the business of the Company and AOALP free and clear of all
Liens, except (A) such Liens as are described in the Final Memorandum,
(B) Liens created in the ordinary course of business which are
Permitted Liens (as defined in the Indenture) or (C) in the case of
leased properties and assets, Liens on such property which exist
pursuant to the terms of the agreement evidencing such leasehold
interest. All of the leases material to the business of the Company and
AOALP and under which the Company and AOALP holds properties described
in the Final Memorandum, are valid and binding as leased by them, with
such exceptions as are not material and do not interfere with the use
made and proposed to be made of such properties by the Company and
AOALP.
(t) No form of general solicitation or general advertising was
used by the Issuers or their representatives in connection with the
offer and sale of the Notes. Neither of the Issuers nor any Person
authorized to act for either of them has, either directly or
indirectly, sold or offered for sale any of the Notes or any other
similar security of either of the Issuers to, or solicited any offers
to buy any thereof from, or has otherwise approached or negotiated in
respect thereof with, any Person or Persons other than with or through
the Initial Purchaser; and
<PAGE>
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the Issuers agree that neither they nor any Person acting on its behalf
will sell or offer for sale any Notes to, or solicit any offers to buy
any Notes from, or otherwise approach or negotiate in respect thereof
with, any Person or Persons so as thereby to bring the issuance or sale
of any of the Notes within the provisions of Section 5 of the Act.
(u) All tax returns required to be filed by either of the
Issuers, AOALP or AOAI in any jurisdiction (including foreign
jurisdictions) have been so filed and all taxes, assessments, fees and
other charges including, without limitation, withholding taxes,
penalties, and interest ("Taxes") due or claimed to be due have been
paid, other than those Taxes being contested in good faith and those
Taxes for which adequate reserves or accruals have been established in
accordance with generally accepted accounting principles, except where
the failure to file such returns or to pay such Taxes could not
reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect. The Issuers know of no actual or proposed additional
tax assessments for any fiscal period against either of the Issuers,
AOALP or AOAI that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect.
(v) The Issuers, AOALP and AOAI are the owners or licensees of
all trade names, unregistered trademarks and service marks, brand
names, patents, registered and unregistered copyrights, registered
trademarks and service marks, and all applications for any of the
foregoing, and all permits, grants and licenses or other rights with
respect thereto, the absence of which would have or could reasonably be
expected to have a Material Adverse Effect. Except as set forth in the
Final Memorandum neither of the Issuers, AOALP or AOAI has been charged
with any material infringement of any intangible property of the
character described above or been notified or advised of any material
claim of any other Person relating to any of the intangible property
which infringements or claims (individually or in the aggregate) would
have a Material Adverse Effect.
(w) Neither Issuer nor any of their Affiliates (as defined in
Rule 501(b) of Regulation D under the Act) has directly, or through any
agent, (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Act) which is
<PAGE>
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or will be integrated with the sale of the Notes in a manner that would
require the registration under the Act of the Notes or (ii) engaged in
any form of general solicitation or general advertising in connection
with the offering of the Notes (as those terms are used in Regulation D
under the Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Act.
(x) Each Basic Document conforms in all material respects to
the descriptions thereof in the Final Memorandum.
(y) The statements set forth under the heading "Description of
the Notes" in the Final Memorandum, insofar as such statements purport
to summarize certain provisions of the Notes and the Indenture provide
a fair summary of such provisions and information with respect thereto.
(z) Assuming the accuracy of the Initial Purchaser's
representations and warranties set forth in Section 3.2 hereof and the
due performance by the Initial Purchaser of the covenants and
agreements set forth in Section 3.2 hereof, the offer and sale of the
Notes to the Initial Purchaser in the manner contemplated by this
Agreement and the Memoranda does not require registration under the Act
and the Indenture does not require qualification under the Trust
Indenture Act of 1939, as amended.
(aa) Neither Issuer, AOALP or AOAI conducts business with the
government of Cuba or any Person or affiliate located in Cuba. In the
event either Issuer, AOALP or AOAI commences engaging in business with
the government of Cuba or with any Person or affiliate located in Cuba,
the Issuers will provide the Florida Department of Banking and Finance
notice of such business in a form acceptable to such Department.
(bb) No labor problem, dispute or disturbance with respect to
the employees of either Issuer, AOALP or AOAI exists or, to the best
knowledge of the Issuers, is threatened which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
(cc) No condition, omission, event or act has occurred with
respect to the Issuers, AOALP or AOAI which, had the Indenture already
been executed and delivered, would (or, with the giving of notice
and/or the lapse of time and/or the issue of a certificate, could)
constitute
<PAGE>
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a Default or Event of Default (as defined in the Indenture).
(dd) The statistical and market-related data included or
incorporated by reference in the Final Memorandum are based on or
derived-from sources which the Issuers believe to be reliable and
accurate or represent the Issuers' good faith estimates that are made
on the basis of data derived from such sources.
Section 3.2. Resale of Notes. The Initial Purchaser represents and
warrants that it is a "qualified institutional buyer" as defined in Rule 144A of
the Act ("QIB"). The Initial Purchaser agrees with the Issuers that (a) it has
not and will not solicit offers for, or offer or sell, the Notes by any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act; and (b) it has and will solicit offers
for the Notes only from, and will offer the Notes only to (A) in the case of
offers inside the United States, Persons whom the Initial Purchaser reasonably
believes to be QIBs or, if any such Person is buying for one or more
institutional accounts for which such Person is acting as fiduciary or agent,
only when such Person has represented to the Initial Purchaser that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A or (B) in the case of offers outside the United States, to Persons
other than U.S. Persons ('foreign purchasers,' which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)); provided,
however, that, in the case of this clause (B), in purchasing such Notes such
Persons are deemed to have represented and agreed as provided under the caption
"Transfer Restrictions" contained in the Final Memorandum.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the Initial
Purchaser. The obligation of the Initial Purchaser to purchase the Notes to be
purchased by it hereunder is sub-
<PAGE>
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ject, at the Time of Purchase, to the satisfaction of the following conditions:
(a) The Initial Purchaser shall have received an opinion,
addressed to the Initial Purchaser in form and substance satisfactory
to counsel to the Initial Purchaser and dated the Time of Purchase,
from Kaplan, Strangis & Kaplan, P.A., special counsel to the Issuers,
covering the matters set forth in Exhibit 1 attached hereto.
(b) The Initial Purchaser shall have received an opinion,
addressed to the Initial Purchaser in form and substance satisfactory
to the Initial Purchaser and dated the Time of Purchase, of Cahill
Gordon & Reindel, counsel to the Initial Purchaser, substantially in
the form of Exhibit 2 attached hereto.
In rendering such opinions in accordance with Sections 4.1(a)
and (b) above, each such counsel may rely as to factual matters upon
certificates or other documents furnished by officers and directors of
the Issuers and representations of the Initial Purchaser and by
government officials, and upon such other documents as such counsel
deem appropriate as a basis for their opinion. Each such counsel may
specify the jurisdictions in which it is admitted to practice and that
it is not admitted to practice in any other jurisdiction or an expert
in the law of any other jurisdiction. Any opinion relied upon by such
counsel as aforesaid shall be delivered to the Initial Purchaser
together with the opinion of such counsel, which opinion shall state
that such counsel believes that their and the Initial Purchaser's
reliance thereon is justified.
(c) The Initial Purchaser shall have received from Arthur
Andersen LLP a comfort letter or letters dated as of the date hereof
and as of the Closing Date in form and substance reasonably
satisfactory to counsel to the Initial Purchaser.
(d) The representations and warranties made by the Issuers
herein shall be true and correct in all material respects (except for
changes expressly provided for in this Agreement) on and as of the Time
of Purchase with the same effect as though such representations and
warranties had been made on and as of the Time of Purchase, each of the
Issuers shall have complied in all material respects with all
agreements as set forth in or contemplated hereunder and in the Basic
Documents required to be per-
<PAGE>
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formed by it at or prior to the Time of Purchase and the Issuers shall
have furnished to the Initial Purchaser a certificate, dated the Time
of Purchase, to such effect.
(e) Subsequent to the date of the Final Memorandum, to the
Closing Date, (i) there shall not have been any change, or any
development involving a prospective change, which has affected or is
reasonably expected to affect materially and adversely the businesses,
properties, the financial condition or the results of operations of the
Company or AOALP and (ii) the Company and AOALP shall have conducted
their business only in the ordinary course.
(f) At the Time of Purchase and after giving effect to the
consummation of the transactions contemplated by this Agreement and the
Basic Documents, there shall exist no Default or Event of Default.
(g) Subsequent to the date as of which information is given in
the Final Memorandum, neither of the Issuers, AOALP or AOAI has
incurred any liabilities or obligations, direct or contingent (other
than in the ordinary course of business) that are material to the
Issuers, AOALP or AOAI or entered into any transactions not in the
ordinary course of business that are material to the business,
condition (financial or other), assets, business prospects, results of
operations or properties of the Issuers, AOALP or AOAI and there has
not been any change in the capitalization of the Issuers, AOALP or AOAI
that is material to the business, financial condition, assets,
business, results of operations or properties of the Issuers, AOALP or
AOAI except in each case as described in the Final Memorandum.
(h) The sale of the Notes hereunder has not been enjoined
(temporarily or permanently).
(i) The purchase of and payment for the Notes by the Initial
Purchaser hereunder shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation
(including, without limitation, Regulation T, U or X of the Board of
Governors of the Federal Reserve System).
(j) At the Time of Purchase, the Initial Purchaser shall have
received a certificate, signed by the Chief Executive Officer or the
President or the principal financial or accounting officer of the
Company dated the Time
<PAGE>
-23-
of Purchase, from the Issuers stating that the conditions specified in
Sections 4.1(d), (e), (f), (g) and (h) have been satisfied or duly
waived at the Time of Purchase.
(k) Each of the Basic Documents shall be satisfactory in form
and substance to the Initial Purchaser and shall have been executed and
delivered by all the respective parties thereto and shall be in full
force and effect.
(l) All proceedings taken in connection with the issuance of
the Notes and the transactions contemplated by this Agreement, the
Basic Documents and all documents and papers relating thereto shall be
reasonably satisfactory to the Initial Purchaser and counsel to the
Initial Purchaser. The Initial Purchaser and counsel to the Initial
Purchaser shall have received copies of such papers and documents as
they may reasonably request in connection therewith, all in form and
substance reasonably satisfactory to them.
(m) There shall not have been any announcement by any
"nationally recognized statistical rating organization", as defined for
purposes of Rule 436(g) under the Act, that (A) it is downgrading its
rating assigned to any debt securities of either of the Issuers, AOALP
or AOAI or (B) it is reviewing its rating assigned to any debt
securities of either of the Issuers, AOALP or AOAI with a view to
possible downgrading, or with negative implications, or direction not
determined.
(n) At the Time of Purchase, the Holding Company Documents
shall be in full force and effect on the terms described in the Final
Memorandum and the transfers to the holding company structure described
therein shall have been consummated.
(o) The Issuers shall have furnished to the Initial Purchaser,
as soon as they have been prepared, a copy of any unaudited interim
financial statements of the Issuers for any period subsequent to the
period covered by the most recent financial statements appearing in the
Final Memorandum.
(p) On or before the Closing, the Initial Purchaser and
counsel to the Initial Purchaser shall have received such further
documents, opinions, certificates and schedules or other instruments
relating to the business, corpo-
<PAGE>
-24-
rate, legal and financial affairs of the Issuers as they may reasonably
request.
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Issuers. The Issuers covenant and agree
with the Initial Purchaser that:
(a) The Issuers will not amend or supplement the Final
Memorandum or any amendment or supplement thereto as to which the
Initial Purchaser shall not previously have been advised and furnished
a copy for a reasonable period of time prior to the proposed amendment
or supplement and as to which the Initial Purchaser shall not have
given its consent, which consent shall not be unreasonably withheld.
The Issuers will promptly, upon the reasonable request of the Initial
Purchaser or counsel to the Initial Purchaser, make any amendments or
supplements to the Preliminary Memorandum or the Final Memorandum that
may be deemed necessary or advisable by the Initial Purchaser or
counsel to the Initial Purchaser in connection with the resale of the
Notes by the Initial Purchaser.
(b) The Issuers will cooperate with the Initial Purchaser in
arranging for the qualification of the Notes for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchaser may designate and will continue such qualifications
in effect for as long as may be reasonably necessary to complete the
resale of the Notes; provided, however, that, in connection therewith,
neither Issuer shall be required to qualify as a foreign corporation or
foreign limited partnership, as the case may be, or to execute a
general consent to service of process in any jurisdiction or subject
itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchaser of the Notes or the Private
Exchange Notes, any event occurs or information becomes known as a
result of which the Final Memorandum as then amended or supplemented
would include any untrue statement of a material fact, or omit to state
a material fact necessary to make the statements therein, in the
<PAGE>
-25-
light of the circumstances under which they were made, not misleading,
or if for any other reason it is necessary at any time to amend or
supplement the Final Memorandum to comply with applicable law, the
Issuers will promptly notify the Initial Purchaser thereof (who
thereafter will not use such Final Memorandum until appropriately
amended or supplemented) and will prepare, at the sole expense of the
Issuers, an amendment or supplement to the Final Memorandum that
corrects such statement or omission or effects such compliance.
(d) The Issuers will, without charge, provide to the Initial
Purchaser and to counsel to the Initial Purchaser as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchaser may reasonably request.
(e) The Issuers will apply the net proceeds from the sale of
the Notes as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For and during the period ending on the date no Notes are
outstanding, the Issuers will furnish to the Initial Purchaser copies
of all reports and other communications (financial or otherwise)
furnished by the Issuers to the Trustee or the holders of the Notes.
(g) Neither of the Issuers nor any of their respective
Affiliates will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any "security" (as defined in the
Act) which could be integrated with the sale of the Notes in a manner
which would require the registration under the Act of the Notes.
(h) The Issuers will not solicit any offer to buy or offer to
sell the Notes by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or
in any manner involving a public offering within the meaning of Section
4(2) of the Act.
(i) The Issuers will use their respective reasonable efforts
to (i) permit the Notes to be included for quotation on PORTAL and (ii)
permit the Notes to be eligible for clearance and settlement through
the facilities of The Depository Trust Company.
<PAGE>
-26-
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes. The Issuers, jointly and
severally, agree to pay all costs and expenses incident to the performance of
their obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated pursuant to
Section 8.2 hereof, including, but not limited to, all costs and expenses
incident to (i) the negotiation, preparation, printing, typing, reproduction,
execution and delivery of this Agreement and each of the Basic Documents, any
amendment or supplement to or modification of any of the foregoing and any and
all other documents furnished pursuant hereto or thereto or in connection
herewith or therewith, (ii) any costs of printing the Preliminary Memorandum and
the Final Memorandum and any amendment or supplement thereto, and any "Blue Sky"
memoranda (which shall include the reasonable disbursements of counsel to the
Initial Purchaser in respect thereof), (iii) all arrangements relating to the
delivery to the Initial Purchaser of copies of the foregoing documents, (iv) the
fees and disbursements of the counsel, the accountants and any other experts or
advisors retained by the Issuers, (v) preparation (including printing), issuance
and delivery to the Initial Purchaser of the Notes, (vi) the qualification of
the Notes under state securities and "Blue Sky" laws, including filing fees and
fees and disbursements of counsel to the Initial Purchaser relating thereto,
(vii) one-half of all local transportation, catering, room rental and similar
expenses in connection with any "roadshow" or other meetings with prospective
investors in the Notes (it being understood that the Initial Purchaser shall pay
the other one-half of such expenses and that each party shall pay its own air
transportation, lodging, individual meal and similar expenses, whether in
connection with such "roadshow" or otherwise related to this offering), (viii)
fees and expenses of the Trustee including fees and expenses of counsel to the
Trustee, (ix) all expenses and listing fees incurred in connection with the
application for quotation of the Notes on PORTAL, (x) any fees charged by
investment rating agencies for the rating of the Notes, and (xi) except as
limited by Article VII, all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses), if any, in connection with the
enforcement of this Agreement, the Notes or any other agreement furnished
pursuant hereto or thereto or in connection herewith or therewith. In addition,
the Issuers shall pay any and all stamp, transfer and other similar taxes
payable or de-
<PAGE>
-27-
termined to be payable in connection with the execution and delivery of this
Agreement, any Basic Document or the issuance of the Notes, and shall save and
hold the Initial Purchaser harmless from and against any and all liabilities
with respect to or resulting from any delay in paying, or omission to pay, such
taxes.
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity.
(a) Indemnification by the Issuers. The Issuers, jointly and severally,
agree and covenant to hold harmless and indemnify the Initial Purchaser and any
Affiliates thereof (including any director, officer, employee, agent or
controlling Person of any of the foregoing) from and against any losses, claims,
damages, liabilities and expenses (including expenses of investigation) to which
the Initial Purchaser and its Affiliates may become subject arising out of or
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Memoranda and any amendments or supplements thereto, the Basic
Documents, any documents filed with the Commission or any State Commission
(collectively, the "Offering Materials") or arising out of or based upon the
omission or alleged omission to state in any of the Offering Materials a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Issuers shall not be liable
under this paragraph (a) to the extent that such losses, claims, damages or
liabilities arose out of or are based upon an untrue statement or omission made
in any of the documents referred to in this paragraph (a) in reliance upon and
in conformity with the information relating to the Initial Purchaser furnished
in writing by the Initial Purchaser for inclusion therein; provided, further,
that the Issuers shall not be liable under this paragraph (a) to the extent that
such losses, claims, damages or liabilities arose out of or are based upon an
untrue statement or omission made in any Preliminary Memorandum that is
corrected in the Final Memorandum (or any amendment or supplement thereto) if
the person asserting such loss, claim, damage or liability purchased Notes from
the Initial Purchaser in reliance on such Preliminary Memorandum but was not
given the Final Memorandum (or any amendment or supplement thereto) on or prior
to the confirmation of the sale of such Notes. The Issuers further agree to
<PAGE>
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reimburse the Initial Purchaser for any reasonable legal and other expenses as
they are incurred by it in connection with investigating, preparing to defend or
defending any lawsuits, claims or other proceedings or investigations arising in
any manner out of or in connection with such Person being an Initial Purchaser;
provided, however, that if the Issuers reimburse the Initial Purchaser hereunder
for any expenses incurred in connection with a lawsuit, claim or other
proceeding for which indemnification is sought, the Initial Purchaser hereby
agrees to refund such reimbursement of expenses to the extent that the losses,
claims, damages or liabilities arise out of or are based upon an untrue
statement or omission made in any of the documents referred to in this paragraph
(a) in reliance upon and in conformity with the information relating to the
Initial Purchaser furnished in writing by the Initial Purchaser for inclusion
therein. The Issuers further agree that the indemnification, contribution and
reimbursement commitments set forth in this Article VII shall apply whether or
not the Initial Purchaser is a formal party to any such lawsuits, claims or
other proceedings. The indemnity, contribution and expense reimbursement
obligations of the Issuers under this Article VII shall be in addition to any
liability the Issuers may otherwise have.
(b) Indemnification by the Initial Purchaser. The Initial Purchaser
agrees and covenants to hold harmless and indemnify the Issuers and any
Affiliates thereof (including any director, officer, employee, agent or
controlling Person of any of the foregoing) from and against any losses, claims,
damages, liabilities and expenses insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement of
any material fact contained in the Offering Materials, or upon the omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or omission was made in reliance upon and
in conformity with the information relating to the Initial Purchaser furnished
in writing by the Initial Purchaser for inclusion therein. The indemnity,
contribution and expense reimbursement obligations of the Initial Purchaser
under this Article VII shall be in addition to any liability the Initial
Purchaser may otherwise have.
(c) Procedure. If any Person shall be entitled to indemnity hereunder
(each an "Indemnified Party"), such Indemnified Party shall give prompt written
notice to the party or parties from which such indemnity is sought (each an
"Indemni-
<PAGE>
-29-
fying Party") of the commencement of any action, suit, investigation or
proceeding, governmental or otherwise (a "Proceeding"), with respect to which
such Indemnified Party seeks indemnification or contribution pursuant hereto;
provided, however, that the failure so to notify the Indemnifying Parties shall
not relieve the Indemnifying Parties from any obligation or liability except to
the extent that the Indemnifying Parties have been prejudiced materially by such
failure. The Indemnifying Parties shall have the right, exercisable by giving
written notice to an Indemnified Party promptly after the receipt of written
notice from such Indemnified Party of such Proceeding, to assume, at the
Indemnifying Parties' expense, the defense of any such Proceeding, with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that an
Indemnified Party or parties (if more than one such Indemnified Party is named
in any Proceeding) shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or parties
unless: (1) the Indemnifying Parties agree to pay such fees and expenses; or (2)
the Indemnifying Parties fail promptly to assume the defense of such Proceeding
or fail to employ counsel reasonably satisfactory to such Indemnified Party or
parties; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party or parties and the
Indemnifying Party or an Affiliate of the Indemnifying Party and such
Indemnified Parties, and the Indemnified Parties shall have been advised in
writing by counsel that there may be one or more legal defenses available to
such Indemnified Party or parties that are different from or additional to those
available to the Indemnifying Parties, in which case, if such Indemnified Party
or parties notifies the Indemnifying Parties in writing that it elects to employ
separate counsel at the expense of the Indemnifying Parties, the Indemnifying
Parties shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the Indemnifying Parties, it being understood,
however, that, unless there exists a conflict among Indemnified Parties, the
Indemnifying Parties shall not, in connection with any one such Proceeding or
separate but substantially similar or related Proceedings in the same
jurisdiction, arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such Indemnified Party
or parties, or for fees and expenses that are not reasonable. No Indemnified
Party or parties will settle any Proceeding without the consent of the
Indemnifying Party or parties (but such consent shall not be unreasonably
<PAGE>
-30-
withheld). No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened Proceeding
in respect of which any Indemnified Party is or could have been or a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability or claims that are the subject of such Proceeding.
Section 7.2. Contribution. If for any reason the indemnification
provided for in Section 7.1 of this Agreement is unavailable to an Indemnified
Party, or insufficient to hold it harmless, in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other, but
also the relative fault of the Indemnifying and Indemnified Parties in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Indemnifying and
Indemnified Parties shall be deemed to be in the same proportion as the total
proceeds from the offering of the Notes (before deducting expenses) received by
the Issuers bear to the total discounts and commissions received by the Initial
Purchaser. The relative fault of the Indemnifying and Indemnified Parties shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Indemnifying or
Indemnified Parties and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses incurred by such party in connection with investigating or
defending any such claim.
The Issuers and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to the immediately preceding paragraph
were determined pro rata or per capita or by any other method of allocation
which does not take into account the equitable considerations referred to in
such paragraph. Notwithstanding any other provision of this Sec-
<PAGE>
-31-
tion 7.2, the Initial Purchaser shall not be obligated to make contributions
hereunder that in the aggregate exceed the total discounts, commissions and
other compensation received by the Initial Purchaser under this Agreement, less
the aggregate amount of any damages that the Initial Purchaser has otherwise
been required to pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
Section 7.3. Registration Rights Agreement. Notwithstanding anything to
the contrary in this Article 7, the indemnification and contribution provisions
of the Registration Rights Agreement shall govern any claim with respect
thereto.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions. Notwithstanding any other
provision of this Agreement, the representations, warranties and covenants of
the Issuers, their respective officers and the Initial Purchaser made herein,
the indemnity and contribution agreements contained herein and each of the
provisions of Articles V, VII and VIII shall remain operative and in full force
and effect regardless of (a) any investigation made by or on behalf of the
Issuers, the Initial Purchaser or any Indemnified Party, (b) acceptance of any
of the Notes and payment therefor, (c) any termination of this Agreement, or (d)
disposition of the Notes by the Initial Purchaser whether by redemption,
exchange, sale or otherwise.
Section 8.2. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchaser by notice to the Issuers given prior to
the Time of Purchase in the event that the Issuers shall have failed, refused or
been unable to perform all obligations and satisfy all conditions on their part
to be performed or satisfied hereunder at or prior thereto or, if at or prior to
the Closing:
(i) the Issuers, AOALP or AOAI shall have sustained any loss
or interference with respect to its businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any
<PAGE>
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strike, labor dispute, slow down or work stoppage or any legal or
governmental proceeding, which loss or interference, in the sole
judgment of the Initial Purchaser, has had or has a Material Adverse
Effect, or there shall have been, in the sole judgment of the Initial
Purchaser, any event or development that, individually or in the
aggregate, has or could have a Material Adverse Effect (including,
without limitation, a change in control of either of the Issuers),
except in each case as described in the Final Memorandum (exclusive of
any amendment or supplement thereto);
(ii) trading in securities of the Issuers, AOALP or AOAI or in
securities generally on the New York Stock Exchange, American Stock
Exchange or the Nasdaq National Market shall have been suspended or
minimum or maximum prices shall have been established on any such
exchange or market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the purchase of the Notes
as contemplated by the Final Memorandum; or
(v) any securities of either of the Issuers, AOALP or AOAI
shall have been downgraded or placed on any "watch list" for possible
downgrading by any nationally recognized statistical rating
organization.
(b) Termination of this Agreement pursuant to this Section 8.2 shall be
without liability of any party to any other party except as provided in Section
8.1 hereof.
Section 8.3. No Waiver; Modifications in Writing. No failure or delay
on the part of the Issuers or the Initial Purchaser in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any
<PAGE>
-33-
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided for herein are cumulative and are not exclusive of
any remedies that may be available to the Issuers or the Initial Purchaser at
law or in equity or otherwise. No waiver of or consent to any departure by the
Issuers from any provision of this Agreement shall be effective unless signed in
writing by the party entitled to the benefit thereof, provided, however, that
notice of any such waiver shall be given to each party hereto as set forth
below. Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of each of the Issuers and the Initial Purchaser. Any
amendment, supplement or modification of or to any provision of this Agreement,
any waiver of any provision of this Agreement, and any consent to any departure
by the Issuers from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
made or given. Except where notice is specifically required by this Agreement,
no notice to or demand on the Issuers in any case shall entitle the Issuers to
any other or further notice or demand in similar or other circumstances.
Section 8.4. Information Supplied by the Initial Purchaser. The
statements set forth in the fifth and ninth paragraphs under the heading 'Plan
of Distribution' in the Final Memorandum (to the extent such statements relate
to the Initial Purchaser) constitute the only information furnished by the
Initial Purchaser to the Issuers for the purposes of Sections 3.1(a) and 7.1(a)
hereof.
Section 8.5. Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, (a) if to the
Initial Purchaser, shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, addressed to CIBC World Markets Corp., 425 Lexington Avenue, New York,
New York 10017, (b) if to the Issuers, shall be given by similar means to 1380
W. Paces Ferry Road, N.W., Suite 170, South Wing, Atlanta, Georgia 30327, attn:
Chief Financial Officer, with copies to Kaplan, Strangis & Kaplan, P.A., 5500
Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota 55402, attn:
Andris Baltins. In each case notices, demands and other communications shall be
deemed given when received.
Section 8.6. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto on separate
counterparts, each of
<PAGE>
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which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Agreement.
Section 8.7. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchaser, the Issuers and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other Person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained; this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such Persons and for the benefit of no other Person except that (i)
the indemnities of the Issuers contained in Section 7.1(a) of this Agreement
shall also be for the benefit of the directors, officers, employees and agents
of the Initial Purchaser and any Person or Persons who control the Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Initial Purchaser contained in
Section 7.1(b) of this Agreement shall also be for the benefit of the directors
of the General Partner, the officers and any Person or Persons who control
either Issuer within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of Notes from the Initial Purchaser will be deemed a
successor because of such purchase.
Section 8.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 8.9. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.10. Headings. The Article and Section headings and Table of
Contents used or contained in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.
<PAGE>
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Section 8.11. Release from Liability. No trustee, director, officer,
employee, stockholder (other than the Company), partner, affiliate or
beneficiary, as such, of the Issuers shall have any liability for any of the
obligations of the Issuers under this Agreement. It is understood that this
limitation on recourse is made expressly for the benefit of any such trustee,
director, officer, employee, stockholder, partner or beneficiary and may be
enforced by any one or all of them.
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
AOA HOLDING LLC
(a Minnesota limited liability company)
By: /s/ Abe Levine
--------------------------
Name: Abe Levine
Title: Vice President
AOA CAPITAL CORP
(a Minnesota corporation)
By: /s/ Abe Levine
--------------------------
Name: Abe Levine
Title: Vice President
CIBC WORLD MARKETS CORP.
By: /s/ Bruce Spohler
------------------------
Name: Bruce Spohler
Title:
<PAGE>
SCHEDULE I
Principal Amount
Initial Purchaser of Notes________
CIBC World Markets Corp......................................... $50,000,000
Total................................................ $50,000,000
<PAGE>
1. (a) (1) (i) (A) (b) (
(i) (A) (c) ( (i) (A) (d) (
(i) (A) (e) ( (i) (A) (f) (
(i) (A) (g) ( (i) (A) (h) (
(i) (A) (i) ( (i) (A) (j) (
(i) (A) (k) ( (i) (A) (l) (
(i) (A) (m) ( (i) (A) (n) (
(i) (A)
19956/1
<PAGE>
Exhibit 5.1
-----------
[LETTERHEAD OF KAPLAN, STRANGIS AND KAPLAN APPEARS HERE]
July __, 1999
Securities and Exchange Commission
Judicial Plaza
450 Fifth Street, N.W.
Washington, D.C., 20549
Ladies and Gentlemen:
We have acted as counsel to AOA Holding LLC, a Minnesota limited liability
company ("AOA Holding") and to AOA Capital Corp, a Minnesota corporation ("AOA
Capital" and together with AOA Holding, the "Issuers"), in connection with the
preparation of the Registration Statement on Form S-4 (the "Registration
Statement") filed by the Issuers with the Securities and Exchange Commission
(the "Commission").
The Registration Statement relates to the proposed issuance of up to
$50,000,000 principal amount of 10-3/8% Senior Notes due 2006 (the "Notes") to
be issued by the Issuers in exchange for their outstanding 10-3/8% Senior Notes
due 2006 (the "Exchange Offer"). This opinion is delivered in accordance with
the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of
1933, as amended (the "Securities Act").
We have examined such documents and have reviewed such questions of law as
we have considered necessary or appropriate for the purpose of this opinion. In
rendering this opinion, we have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures and the
conformity to authentic originals of all documents submitted to us as copies.
As to questions of fact material to our opinion, we have relied without
independent verification upon the documents referred to above, the accuracy of
factual matters contained therein, and oral and written statements and
representations of officers and other representatives of the Issuers and others,
including public officials.
We are members of the Bar of the State of Minnesota. This opinion is
limited to the Business Corporation Act of the State of Minnesota, the Limited
Liability Company Act of the State of Minnesota and the laws of the United
States. We do not express any opinion as to the laws of any other jurisdiction
or as to any other laws of the State of Minnesota.
We have assumed that (a) the Exchange Offer will occur and be conducted in
accordance with the terms, conditions, and covenants, and other provisions
referred to in the Registration
<PAGE>
Securities and Exchange Commission
July __, 1999
Page 2
Statement, (b) all applicable provisions of the Securities Act and such state
"blue sky" or other securities laws as may be applicable have been or shall be
duly complied with, and (c) the Registration Statement, as finally amended,
shall become effective under the Securities Act.
Based on the foregoing, we are of the opinion that:
1. AOA Holding has been duly organized and is validly existing and in good
standing as a limited liability company under the laws of the State of
Minnesota. AOA Capital has been duly incorporated and is validly
existing and in good standing as a corporation under the laws of the
State of Minnesota.
2. Each of AOA Holding and AOA Capital has the requisite authority to
issue the Notes.
3. The Notes proposed to be issued pursuant to the Registration Statement
will, when issued in accordance therewith, be duly and validly issued.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to this firm under the caption "Legal Matters" in
the Prospectus forming a part of the Registration Statement. In giving such
consent, we do not admit that we come within the category of persons whose
consent is required under the Section 7 of the Securities Act or the rules or
regulations of the Commission promulgated thereunder.
Very truly yours,
Kaplan, Strangis and Kaplan, P.A.
/s/ Kaplan, Strangis and Kaplan, P.A.
<PAGE>
EXHIBIT 10.2
PHANTOM STOCK AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of January, 97 by
and between Adams Outdoor Advertising Limited Partnership, a Minnesota Limited
Partnership (the "Company") and Kevin Gleason (the "President");
W I T N E S S E T H
WHEREAS, the Company owns and operates, an outdoor advertising business
internally referred to as Adams Outdoor:
WHEREAS, President is the manager of the Company and the Company is
desirous of affording President incentives in the form of phantom stock of the
Company;
WHEREAS, the parties hereto are desirous of memorializing in writing the
terms and conditions of President's employment and award of phantom stock
interest;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the Company and President hereby
agree as follows:
ARTICLE I
EMPLOYMENT
Section 1.1. Employment. The Company hereby continues the employment of
President as President of the Company to perform such duties and discharge such
functions in and about the business and affairs of the Company as the president
of the managing general partner of Company or its board of directors may from
time to time determine. President agrees, during the term hereof, to diligently
and in good faith perform and discharge such duties and functions.
Section 1.2. Basic Compensation. The Company agrees to pay President a
salary in such amount as may be from time to time determined by the board of
directors of the managing general partner of Company. Basic compensation payable
under this section shall be payable in semi-monthly or bi-weekly installments in
accordance with such practices and procedures as are generally applicable to
other employees of the Company.
Section 1.3. Fringe Benefits. While President is in the employ of the
Company, the Company agrees to provide to President such benefits as may be
provided by the Company from time to time to its similarly situated employees.
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Section 1.4. Term. The term of this Agreement shall commence on the date
hereof and continue through the fifth anniversary of the date of this Agreement
provided, however, that President shall have the continuing option to
immediately terminate the employment provided by Section 1.1. hereof by giving
two weeks' notice thereof to the Company and the Company shall have the
continuing option to immediately terminate the employment provided by Section
1.1. hereof by giving written notice thereof to President which notice may be
effective immediately. Upon any such termination, the rights and obligations set
forth in this Article I shall terminate provided, only, that the Company shall
pay to President any compensation payable under Section 1.2 pertaining to
periods prior to the date of such notice and for two weeks thereafter.
ARTICLE II
PHANTOM STOCK INTERESTS
Section 2.1. Award of Phantom Stock Interests. Provided that President
shall have been a full time employee of the Company for the twelve consecutive
calendar months preceding each such date, the Company agrees that President
shall be awarded one Phantom Stock Interest on each of on January 1, 1998,
January 1, 1999, January 1, 2000, January 1, 2001 and January 1, 2002.
Notwithstanding the foregoing, if the Company, substantially all of the assets
thereof or substantially all of the equity interests therein, shall be sold
(except to an entity controlled by, controlling or under common control with the
Company, Stephen Adams or their respective affiliates) after President shall
have been a full time employee of the Company for 24 consecutive calendar months
but prior to time that there has been awarded to the President all of the
Phantom Stock Interests to be awarded to him pursuant to this Agreement, there
shall be deemed to have been awarded to President, on the date on which such
sale is consummated, all Phantom Stock Interests which have not been theretofore
awarded to President and are to be awarded pursuant to this Section 2.1.
Section 2.2. Payment of Phantom Stock Interest. The Company shall pay, and
President shall be entitled to receive, the cash value of Awarded Phantom Stock
Interests, which shall be paid as follows:
(i) one-third thereof within 120 days of the Determination Date.
(ii) one-third thereof on the first anniversary of the First Payment
Date, and
(iii) one-third thereof on the second anniversary of the First Payment
Date.
Section 2.3. Beneficiary. President may designate (by filing with the
Company a written beneficiary designation form in form reasonably acceptable to
the Company) one or more
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primary beneficiaries or contingent beneficiaries to receive all or a specified
part of the cash value of Awarded Phantom Stock Interests which, at the time of
President's death, may remain unpaid under this Agreement and President may
change or revoke any such designation from time to time. No such designation,
change or revocation shall be effective unless executed by President and
accepted by the Company during President's lifetime. Each such designation,
change or revocation shall be effective under this Agreement until changed or
revoked in the manner specified herein. No such change or revocation shall
require the consent of any beneficiary theretofore designated by President. If
President fails to designate a beneficiary, or designates a beneficiary and
thereafter revokes such designation without naming another beneficiary, or
designates one or more beneficiaries and all such beneficiaries so designated
fail to survive President, then the beneficiary of such Awarded Phantom Stock
Interests, or the part thereof as to which President's designation fails, as the
case may be, shall be the representative of President's estate. Unless President
has otherwise specified in the beneficiary designation, the beneficiary or
beneficiaries designated by President shall become fixed as of President's death
so that, if a beneficiary survives President but dies before the receipt of all
payments due such beneficiary, such remaining payments shall be payable to the
representative of such beneficiary's estate.
Section 2.3. Benefits Not Transferable. Neither President nor any
beneficiary hereunder shall have any transferable interest in the payments due
hereunder nor any right to anticipate, alienate, dispose of, pledge or encumber
the same prior to actual receipt thereof, nor shall the same be subject to
attachment, garnishment, execution following judgment or other legal process
instituted by creditors of President or any such beneficiary provided that the
unpaid cash value of President's Phantom Stock Interests and any payments due
hereunder shall at all times be subject to set-off for debts owed by President
to the Company or any of its affiliates.
Section 2.5. Nature of the Company's Obligation. The Company shall maintain
a record of the total number of Awarded Phantom Stock Interests but the Company
shall not be required to segregate any funds or other assets to be used for the
payment of benefits under this Agreement and no such record shall be considered
as evidence of the creation of a trust fund, an escrow or any other segregation
of assets for the benefit of President or any beneficiary of President. The
obligation of the Company to make the payments described in this Agreement is an
unsecured contractual obligation only, and neither President nor any beneficiary
of President shall have any beneficial or preferred interest by way of trust,
escrow, lien or otherwise in and to any specific assets or funds. President
specifically acknowledges that the Phantom Stock Interests to be awarded
pursuant to the terms of this Agreement are not securities in the Company and do
not create any right in the equity or capital of the company or any of its
affiliates. President and each beneficiary of President shall look solely to the
general credit of the Company for satisfaction of any obligations due or to
become due under this Agreement, it being expressly acknowledged by the
President that the obligations of the Company hereunder are junior and
subordinate in right of payment to the obligations of the Company to its
lenders. If the Company should, in its sole discretion, earmark or set aside any
funds or other assets to pay benefits hereunder, the same shall, nevertheless,
remain and be regarded as part of the general assets of the Company subject to
the claims of its general creditors (and shall not be considered to be held in a
fiduciary
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capacity for the benefit of President or any beneficiary hereunder), and neither
President nor any beneficiary of President shall have any legal, beneficial,
security or other property interest therein. Upon delivery by the Company to
Manger of the consideration as provided in Section 2.2, the rights and
obligations of the Company and President under this Article II shall terminate
and President shall have no other or further rights under this Article or in
respect hereof.
ARTICLE III
COVENANT NOT TO COMPETE
Section 3.1. Covenant Not to Compete. President hereby covenants that, for
a period of three years next following the Determination Date (or such shorter
period for which the Company continues to be owned or operated by the Company,
Stephen Adams or their respective affiliates), President shall not be engaged or
interested in any business which competes, directly or indirectly, with the
business of the Company (whether as a proprietor, partner with another,
shareholder, agent or consultant of, employee of or lender to, another) in the
markets then served by the Company, except as a proprietor, partner,
shareholder, employee or consultant in or to the Company or any entity
controlled by, controlling or under common control with the Company, provided
that if the employment of President is terminated by the Company without cause
and without an offer of comparable employment by an affiliate of the Company,
Stephen Adams or their respective affiliates, the foregoing covenant shall not
apply (without affecting the obligations hereinafter contained in this Section
3.1 in respect of disclosures by President). President agrees that he will not
at any time disclose to any person or other entity who or which is, or
reasonably may be expected to be, in competition with the Company in the outdoor
advertising business, any confidential information or trade secrets of the
Company or any of its affiliates, the contents of any customer lists of the
Company or any of its affiliates or the general needs of the customers or other
contracting parties with the Company, the Company or any of its affiliates,
provided, however, the foregoing shall not prevent President from responding to
the request of a governmental agency or pursuant to court order or as otherwise
required by law. For a period of one year following the Determination Date,
President agrees not to offer employment to, not to discuss the nature of any
prospective employment opportunities with, and not to otherwise solicit any
employee of the Company (or any person who was an employee the Company within
180 days of the Determination Date) on his own behalf, on behalf of any employer
of the President, on behalf of any entity with which the President is acting as
a consultant or with which the President is then otherwise affiliated.
Section 3.2. Remedies. Recognizing that a breach of the covenant contained
in Section 3.1 would cause the Company irreparable injury and the damages at law
would be difficult to ascertain, President consents to the granting of equitable
relief by way of a restraining order or temporary or permanent injunction by any
court of competent jurisdiction to prohibit the breach or enforce the
performance of the covenants contained in Section 3.1. The invalidity or
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unenforceability of any provision of this Article or the application thereof to
any person or circumstance shall not affect or impair the validity or
enforceability of any other provision or the application of the first provision
to any other person or circumstance. Any provision of this Article that might
otherwise be invalid or unenforceable because of contravention of any applicable
law, statute or governmental regulation shall be deemed to be amended to the
extent necessary to remove the cause of such invalidation or unenforceability
and such provision as so amended shall remain in full force and effect as a part
hereof.
ARTICLE IV
DEFINITIONS AND GENERAL PROVISIONS
Section 4.1 Definitions. As used in this Agreement, the following terms
shall have the respective meanings set forth below:
Acquisitions: The purchase by the Company of any group of advertising
structures operated as a going concern the time of such acquisition but not the
acquisition of a single outdoor advertising structure or a single lease site as
part of the normal capital expenditures made by the Company not involving the
acquisition of an existing business operation.
Awarded Phantom Stock Interests: The number of Phantom Stock Interest (not
to exceed 5 such Phantom Stock Interests) awarded by the Company pursuant to
Section 2.1.
Base Cost: $213,763,000 plus (i) the purchase price (or other consideration
therefore determined in accordance with generally accepted accounting
principles) for any Acquisition made after the date hereof less (ii) the sales
price (or other consideration therefor determined in accordance with generally
accepted accounting principles) any Disposition made after the date hereof.
Determination Date: The date of any of the following events: (i)
termination of the President's employment, whether by death or otherwise, (ii)
the sale of the Company, the sale of substantially all of the assets thereof or
the sale of substantially all of the equity interests therein, or (iii) the
fifth anniversary of the date of this Agreement.
Disposition. The sale by the Company in one transaction of any group of
advertising structures but not any loss of an outdoor advertising structure or a
site lease as part of the normal attrition in the operation of the Company.
Fiscal Year: The fiscal year of the Company ending on the last day of the
calendar year.
Operating Profit: With respect to any Fiscal Year (i) the gross revenues of
the Company derived from the ongoing business operations of the Company for such
period less (ii) direct
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operating expenses (excluding interest, federal and state income taxes (or any
provision or such taxes), depreciation and amortization). Operating Profit shall
be determined on the accrual method of accounting and in accordance with
generally accepted accounting principles customarily used in the outdoor
advertising industry and consistently applied, provided that in no event shall
tradeout or barter transactions or extraordinary items of revenue or expense
(including revenue from non-operating investments and revenue from the sale of
operating assets or properties) or revenue not derived from business operations
be reflected in (or give rise to) revenues or expenses.
Operating Value: The excess, if any, of (x) the product of eight and
Operating Profit for the Fiscal Year ending immediately prior to the date on
which the Determination Date occurs over (y) the Base Cost.
Phantom Stock Interest: The cash equivalent of one percent (1%) of
Operating Value.
Section 4.2 Withholding Taxes. The Company may withhold from any payment to
be made under this Agreement (and transmit to the proper taxing authority) such
amount as it may be required to withhold under any federal, state or other law.
Section 4.3 Administration. The Company and its executive officers shall
have full power to interpret, construe and administer this Agreement, including
authority to determine any dispute or claim with respect thereto. The
determination of the Company in any matter, made in good faith, shall be binding
and conclusive upon President and all other persons having any right or benefit
hereunder. Unless President shall give notice to the Company objecting to the
Company's calculation of the cash value of the Awarded Phantom Stock Interests
within thirty days after notice of the determination thereof by the Company,
such calculation shall conclusively be deemed to have been accepted by the
parties hereto. As used herein, the expression "Operating Profit" means
operating profit for the Company as determined by the chief financial officer of
the Company consistent with prior practice, it being understood that the
financial statements for the Company may not separately segregate all expenses
with respect to the Company and that the allocation of expenses of the Company
related to the Company as made by such chief financial officer shall be deemed
to be conclusive and binding on all parties hereto. Any of the obligations of
the Company hereunder may be performed by an affiliate of the Company and such
performance by an affiliate shall be deemed to satisfy any such obligation of
the Company hereunder.
Section 4.4. Notices. All notices given under any of the provisions of this
Agreement shall be deemed to have been duly given when made in writing and
either delivered personally to the party to whom notice is to be given or on the
date deposited in the United States mail by registered or certified mail, return
receipt requested, addressed as follows:
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(i) If to the Company to:
Adams Outdoor Advertising L.P.
1380 W. Paces Ferry Road
Suite 170
Atlanta, GA 30327
Attention: Abe Levine
(ii) If to President to:
Adams Outdoor Advertising
1380 W. Paces Ferry Road
Suite 170
Atlanta, GA 30327
Attention: Kevin Gleason
or to such other address as such party shall specify in writing to the other
party hereto. Any notice delivered personally to the Company shall be delivered
to a senior corporate officer of the Company.
Section 4.5. Binding Effect. The provisions of this Agreement shall not
give President any rights to continue to be employed or otherwise retained by
the Company or any affiliate thereof. Except as so provided, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, the
successors and assigns of the Company and the beneficiaries, personal
representatives and heirs of President. It is expressly acknowledged by the
President that no general partner of the Company shall have any personal
liability hereunder, the liability of the Company being limited to the assets of
the Company.
Section 4.6. Controlling Law. This Agreement shall be construed, and the
legal relations between the parties determined, in accordance with the laws of
the state of Minnesota.
Section 4.7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original without the
production of the others, but all of which together shall constitute one and the
same instrument.
Section 4.8. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and may
not be varied, modified or amended except by a writing signed by the parties to
be charged. The making, execution and delivery of this Agreement by the parties
hereto have been induced by no representations, statements, warranties or
agreements of the other except those herein expressed.
Section 4.9. Headings. The Company of this Agreement into sections and
paragraphs and the titles assigned thereto is only a matter of convenience for
reference and shall not define or limit any of the terms or provisions thereof.
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IN WITNESS WHEREOF, the individual party has hereunto set his hand and the
corporate party has caused these presents to be executed by a proper officer
thereunto duly authorized all as of the day and year first above written.
ADAMS OUTDOOR ADVERTISING
LIMITED PARTNERSHIP
By Adams Outdoor Advertising, Inc.
Its Managing General Partner
By /s/ Abe Levine
Abe Levine
Its Chief Financial Officer
/s/ Kevin Gleason /s/ Steve Adams
Kevin Gleason, President/CEO Steve Adams, Chairman of the Board
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EXHIBIT 10.5
DEFICIT CAPITAL CONTRIBUTION AGREEMENT
This agreement is made as of the 21st of May, 1999 by and between AOA
Holding LLC, a Minnesota limited liability company ("Holding") and Stephen Adams
("Adams").
WITNESSETH
WHEREAS, Adams Outdoor Advertising Limited Partnership (the "Operating
Company") and Adams Outdoor Advertising, Inc. ("AOA Inc") are issuers of $105
million in original aggregate principal amount of 10-3/4% senior notes due 2006
(the "Existing Bonds");
WHEREAS, in connection with issuance of the Existing Bonds, the Operating
Company and AOA Inc have entered into various agreements including, without
limitation, a securities purchase agreement with CIBC/Wood Gundy Securities Corp
and an indenture with United States Trust Company of New York as trustee
(jointly, together with any other agreements or undertakings made in connection
with the issuance of the Existing Bonds, the "Existing Ancillary Agreements");
WHEREAS, Adams is the owner of all of the issued and outstanding shares of
AOA Inc;
WHEREAS, Adams is a general partner and one of the limited partners of the
Operating Company;
WHEREAS, Holding and AOA Capital Corp, a subsidiary of Holding, propose to
issue $50 million in original principal amount of senior notes due 2006 (the
"New Bonds");
WHEREAS, in connection with the issuance of the New Bonds, (i) Adams is
required to contribute his interests in the Operating Company (as both general
partner and limited partner) to Holding and is required to transfer to Holding
his shares of stock in AOA Inc, (ii) the amount of the recourse liability of
Adams in respect of the Existing Bonds is to be increased from $40 million to
$75 million and (iii) Holding has agreed to assume all of the obligations of
Adams as a general partner of the Operating Company, including his obligations
under the Existing Bonds, and Holding will become a substitute general partner
of the Operating Company;
WHEREAS, Adams is the sole member of Holding and owns all of the ownership
interests therein;
WHEREAS, a significant portion of the proceeds of the New Bonds are
intended to be distributed to Adams and, accordingly, Adams will receive
significant benefit from the issuance thereof;
WHEREAS, in consideration of the assumption by Holding of the obligations
of Adams as general partner of the Operating Company including, without
limitation, his obligations in respect of the Existing Bonds and the Existing
Ancillary Agreements (increased, in the case of the Existing Bonds, from $40
million to $75 million, as hereinbefore stated), Adams has agreed
<PAGE>
to contribute capital to Holding in an amount equal to the amount (a "Deficit
Payment") for which formal claim has been made against Holding in its capacity
as a general partner of the Operating Company by any unaffiliated party (a
"Payee");
NOW THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties hereto agree as follows:
1. Adams agrees to contribute to Holding, within three business days after
demand therefor by Holding (which demand can be made from time to time, it being
understood that the obligations of Adams hereunder shall be continuing so long
as Holding is a general partner of the Operating Company), an amount equal to
the Deficit Payment (for payment to a Payee from Adams as a primary obligor).
Adams shall not be entitled to any return or refund of such contribution from
Holding.
2. Holding shall give notice to Adams of the amount of the Deficit Payments
and any demand made pursuant to paragraph 1 above shall be accompanied by a
certification of the chief financial officer of Holding setting forth the amount
of the Deficit Payments and the calculation thereof.
3. In the event of any contribution by Adams pursuant to paragraph 1 above,
Adams shall be subrogated to the rights and claims of the general partner of the
Operating Company against the Payee.
4. All notices, requests and other communications from any of the parties
hereto to the other shall be in writing and shall be considered to have been
duly given or served when personally delivered (in the case of a corporate
entity, to an executive officer of such party), or on the first day after the
date of deposit with a recognized overnight delivery service for next day
delivery, postage prepaid, or on the third day after deposit in the United
States mail, certified or registered, return receipt requested, postage prepaid,
or on the date of telecopy, facsimile or similar telephonic transmission during
normal business hours, provided that the recipient has specifically acknowledged
by telephone receipt of such telecopy, facsimile or telephonic transmission;
addressed, in all cases, to the party at the address set forth below, or to such
other address as such party may hereafter designate by written notice to the
other parties.
AOA Holding LLC
1380 W. Paces Ferry Road NW
Suite 170 South Wing
Atlanta, GA 30327
Attn: Abe Levine
Stephen Adams
2575 Vista Del Mar Drive
Ventura, CA 93001
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5. This agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. This agreement
shall be construed and enforced in accordance with the laws of the state of
Minnesota. This agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument. This agreement contains the entire understanding of the parties
with respect to the subject matter hereof and may not be varied, modified or
amended except by a writing signed by the parties to be charged. The making,
execution and delivery of this agreement by the parties hereto have been induced
by no representations, statements, warranties or agreement of the other except
those herein expressed. Nothing in this agreement, whether express or implied,
is intended to confer upon any person, other than the parties hereto and their
respective successors and permitted assigns, any right, remedy or claim under or
by reason of this agreement or of any term, condition or covenant hereof.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the date first above written.
AOA HOLDING LLC
By /s/ Abe Levine
Its VP CFO
/s/ Stephen Adams
Stephen Adams
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EXHIBIT 10.6
PROCEEDS ALLOCATION AND INDEMNITY AGREEMENT
This agreement is made as of the 21st of May, 1999 by and between AOA
Holding LLC, a Minnesota limited liability company ("Holding") and AOA Capital
Corp, a Minnesota corporation ("Capital Corp").
WITNESSETH
WHEREAS, Holding and Capital Corp are jointly the issuers of $50 million in
original principal amount of senior notes due 2006 (the "New Bonds");
WHEREAS, in connection with the issuance of the Bonds, Holding and Capital
Corp have entered into numerous agreements including, without limitation, a
securities purchase agreement with CIBC Oppenheimer Corp. and an indenture with
United States Trust Company of New York (collectively, together with any other
instruments executed in connection with the issuance of the New Bonds, "the
Ancillary Agreements");
WHEREAS, Capital Corp is wholly owned by Holding;
WHEREAS, the proceeds of the issuance of the New Bonds are to be
distributed in their entirety to Holding and none of such proceeds are to be
distributed to Capital Corp;
WHEREAS, Capital Corp has no assets and has been formed solely for the
purpose of joining in the issuance of the New Bonds and has executed the
Ancillary Agreements solely as an accommodation to Holding in order to satisfy
certain legal requirements of the purchasers of the New Bonds;
WHEREAS, in view of the foregoing, the parties hereto are desirous of
allocating their respective liabilities in respect of the New Bonds and the
Ancillary Agreements in proportion to the amounts received by them thereunder;
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties hereto agree as follows:
1. The proceeds of the New Bonds shall be allocated, in their entirety, to
Holding. Capital Corp shall not receive any proceeds therefrom.
2. Holding shall pay all costs and expenses incurred in connection with the
issuance of the New Bonds including, without limitation, legal, accounting,
printing and other costs and expenses.
3. Holding shall indemnify, and forever hold Capital Corp, its officers,
directors and agents (each an "Indemnified Party") harmless against and in
respect of, any and all losses, liabilities, obligations, damages, deficiencies,
actions, suits, proceedings, demands, assessments,
<PAGE>
orders, judgements, costs and expenses (including the reasonable fees,
disbursements and expenses of attorneys) of any kind or nature whatsoever to the
extent sustained, suffered, or incurred by an Indemnified Party as a result of
claims made against an Indemnified Party in connection with the New Bonds or any
Ancillary Agreement.
4. An Indemnified Party shall notify the Holding in writing (at the address
and in the manner set forth in paragraph 5 below) promptly upon becoming aware
of any claim for which indemnification may be sought pursuant to paragraph 3
above (and, in the case of the assertion of a claim in writing by a third party,
whether by service of a summons and complaint or otherwise, within five days
after receipt of such notice in writing) or any other matter which may give rise
to any right to indemnification hereunder. Holding shall not be liable to an
Indemnified Party for any legal or other expenses incurred by an Indemnified
Party in connection with the defense of any claim prior to the fifth day after
the receipt by Holding of the notice from the Indemnified Party contemplated by
this paragraph and, thereafter, as long as (i) Holding shall have acknowledged
its obligation to indemnify the Indemnified Party in respect of such claim made
and (ii) Holding shall have assumed the defense of such claim. After the
acknowledgment and assumption of defense contemplated by the prior sentence,
Holding agrees (i) to provide an Indemnified Party reasonable reports upon
reasonable request by such Indemnified Party as to the status of any
indemnification claim and (ii) not to settle any claim for indemnification or
consent to the entry of any judgement in litigation arising from such a claim
without obtaining a release of such Indemnified Party from all liability in
respect of such claim or litigation. An Indemnified Party shall have the right
to employ counsel to represent it, in his or its sole discretion,
notwithstanding the assumption of the defense of any claim by the undersigned
and, in such event, the fees and expenses of the counsel engaged by the
Indemnified Party shall be paid by the Indemnified Party so electing to do. Each
Indemnified Party agrees to keep Holding informed of all negotiations with third
parties and of the progress of any litigation with third parties with respect to
which it may have engaged separate counsel or with respect to which the
undersigned have not assumed the defense. Each Indemnified Party and Holding
agrees to permit the other reasonable access to its respective books and records
and to otherwise cooperate with all reasonable requests of the other in
connection with any matter or claim in respect of the New Bonds, the Ancillary
Agreements or claims thereunder.
5. All notices, requests and other communications from any of the parties
hereto to the other shall be in writing and shall be considered to have been
duly given or served when personally delivered (in the case of a corporate
entity, to an executive officer of such party), or on the first day after the
date of deposit with a recognized overnight delivery service for next day
delivery, postage prepaid, or on the third day after deposit in the United
States mail, certified or registered, return receipt requested, postage prepaid,
or on the date of telecopy, facsimile or similar telephonic transmission during
normal business hours, provided that the recipient has specifically acknowledged
by telephone receipt of such telecopy, facsimile or telephonic transmission;
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addressed, in all cases, to the party at the address set forth below, or to such
other address as such party may hereafter designate by written notice to the
other parties.
AOA Holding LLC
1380 W. Paces Ferry Road NW
Suite 170 South Wing
Atlanta, GA 30327
Attn: Abe Levine
AOA Capital Corp
2575 Vista Del Mar Drive
Ventura, CA 93001
Attn: Paul E. Schedler
6. This agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. This agreement
shall be construed and enforced in accordance with the laws of the state of
Minnesota. This agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument. This agreement contains the entire understanding of the parties
with respect to the subject matter hereof and may not be varied, modified or
amended except by a writing signed by the parties to be charged. The making,
execution and delivery of this agreement by the parties hereto have been induced
by no representations, statements, warranties or agreement of the other except
those herein expressed. Nothing in this agreement, whether express or implied,
is intended to confer upon any person, other than the parties hereto and their
respective successors and permitted assigns, any right, remedy or claim under or
by reason of this agreement or of any term, condition or covenant hereof.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the date first above written.
AOA HOLDING LLC
By /s/ Abe Levine
Its CFO
AOA CAPITAL CORP
By /s/ Abe Levine
Its CFO
3
<PAGE>
EXHIBIT 10.7
FORM OF
INDEMNITY AGREEMENT
This agreement is made and entered into as of the 21st day of May, 1999, by
and among AOA CAPITAL CORP, a Minnesota corporation ("Capital Corp"), AOA
HOLDING LLC, a Minnesota limited liability company ("Holding"), and ____________
("Indemnitee").
WHEREAS, corporate directors, and governors or managers of limited
liability companies (and persons who have consented to become directors,
governors or managers) are faced with the prospects of significant personal
liability arising out of recent court decisions dealing with the activities of
such individuals and the increasing unavailability and high cost of insurance;
WHEREAS, Capital Corp and Holding (jointly the "Indemnitors") realize that,
to attract and retain qualified directors, governors or managers to consent to
act as such, they must provide them with increased protection against personal
liability and the costs of litigation; and
WHEREAS, Capital Corp and Holding have requested that the Indemnitee serve
as a director, governor or manager and the Indemnitee wishes to so serve;
NOW THEREFORE, the parties hereby agree as follows:
1. Agreement to Serve. Indemnitee has consented to serve as a member of the
board of directors of Capital Corp and a governor or manager of Holding. The
Indemnitors expressly confirm and agree that they have entered into this
agreement and assumed the obligations which are imposed on them in order to
induce Indemnitee to serve as a director of Capital Corp and a governor or
manager of Holding and acknowledges that Indemnitee is relying upon this
agreement in serving in such capacity.
2. Maintenance of Insurance. Indemnitors may, but shall not be required to,
put into effect policies of insurance which provide insurance protection for its
directors, officers, governors and managers against liabilities which may be
incurred by them on account of their services to Capital Corp and Holding. If
such insurance is maintained by Capital Corp or Holding, such insurance, to the
extent of the coverage it provides, shall be primary and this agreement of
indemnity shall be effective only to the extent that Indemnitee is not
reimbursed pursuant to such insurance coverage. If such insurance is not
maintained by Capital Corp or Holding, Indemnitee shall be indemnified fully by
the Indemnitors in accordance with the provisions of this agreement.
3. Indemnification. The Indemnitors jointly and severally agree to
indemnify Indemnitee from any liability which may be incurred as a result of the
Indemnitee's consenting to serve (and serving) as a director of Capital Corp and
consenting to serve (and serving) as a governor or manager of Holding in
accordance with, and to the fullest extent authorized by, as the case may be, of
the provisions of the Minnesota Business Corporation Act, or the Minnesota
Limited Liability Company Act, as either of such acts, as it may from time to
time be amended.
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<PAGE>
4. Additional Indemnification. In addition to the indemnification provided
in the preceding Section and subject to the exclusions set forth in Section 6
hereof, the Indemnitors agree jointly and severally to hold harmless and to
indemnify Indemnitee against any and all expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative to which the Indemnitee is, was, or at any time becomes a witness
or party or is threatened to be made a witness or party by reason of the fact
that Indemnitee has consented to be, is or was at any time a director, officer,
employee, or agent of the Indemnitors, except with respect to an action
commenced by Indemnitee against either Indemnitor or by Indemnitee as a
derivative action by or in the right of either Indemnitor. With respect to an
action commenced by Indemnitee against either Indemnitor or by Indemnitee as a
derivative action by or in the right of either Indemnitor, Indemnitee shall only
be indemnified as determined by the board of directors of the Indemnitor that is
a party in the specific case.
5. Contribution. If the indemnification provisions provided in Sections 3
and 4 should, under applicable law, be unenforceable or insufficient to hold
Indemnitee harmless in respect of expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Indemnitee by reason of the fact of Indemnitee's consent to serve or service
to or at the request of either Capital Corp or Holding, then the Indemnitors
jointly and severally agree that, for purposes of this Section 5, Capital Corp
and Holding shall be treated as if they were a party who was or was threatened
to be made a party defendant to the threatened, pending or completed action,
suit or proceeding in which Indemnitee was involved and the Indemnitors shall
jointly and severally contribute to the amounts paid or payable by Indemnitee as
a result of such expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by Indemnitee in
such proportion as is appropriate to reflect (i) the relative benefits accruing
to the Indemnitors on the one hand and Indemnitee on the other and which arose
out of the action or inaction or alleged action or inaction underlying the
threatened, pending or contemplated suit or proceeding in which Indemnitee was
involved, (ii) the relative fault of the Indemnitors on the one hand and
Indemnitee on the other in connection with such action or inaction, or alleged
action or inaction, and (iii) any other relevant equitable considerations. For
purposes of this Section 5, the relative benefit of the Indemnitors shall be
deemed to be the benefits accruing to either or both of them and to all of the
directors, officers, employees and agents (other than Indemnitee) as a group and
treated as one entity, and the relative benefit of Indemnitee shall be deemed to
be an amount not greater than Indemnitee's director's compensation from the
Capital Corp or Holding during the first year in which the action or inaction,
or alleged action or inaction, forming the basis for the threatened, pending or
contemplated suit or proceeding was alleged to have occurred. The relative fault
shall be determined by reference to, among other things, the fault of the
Indemnitors and all of its directors, officers, employees and agents (other than
Indemnitee) as a group and treated as one entity, and Indemnitee's and such
group's relative intent, knowledge, access to information and opportunity to
have altered or prevented the action or inaction, or alleged action or inaction,
forming the basis for the threatened, pending or contemplated suit or
proceeding. Determinations and authorizations of payments under this Section
shall be made in the manner specified in Section 9, and Indemnitee shall have
the same remedies with regard thereto as set forth
2
<PAGE>
in Section 10.
6. Limitations on Indemnity and Contribution. No indemnity pursuant to
Section 4 or contribution pursuant to Section 5 shall be paid by the
Indemnitors:
6.1. for which and to the extent that payment is actually made to
Indemnitee under a valid and collectible insurance policy;
6.2. for which and to the extent that Indemnitee is indemnified or
receives a recovery other than pursuant to this agreement;
6.3. with respect to any proceeding by or in the right of either
Indemnitor, except that indemnity or contribution shall be made, to the
extent permitted by law, against reasonable expenses in respect of any
proceeding in which Indemnitee shall not have been adjudged liable to such
Indemnitor;
6.4. with respect to acts or omissions which (in the case of directors
of Capital Corp) are prohibited under the Minnesota Business Corporation
Act, as amended from time to time or, (in the case of Holding) are
prohibited under the Minnesota Limited Liability Company Act, as amended
from time to time;
6.5. if a final decision by a court having jurisdiction in the matter
shall determine that such indemnification or contribution is not lawful.
7. Advancement of Expenses. The Indemnitors shall pay the costs and
expenses reasonably incurred by Indemnitee in investigating, defending, and
appealing any threatened, pending or completed civil or criminal action, suit or
proceeding, administrative or investigative, against Indemnitee in advance of
final determination, upon receipt by the Indemnitors of (i) a written
affirmation by Indemnitee of Indemnitee's good faith belief that Indemnitee has
met the standard of conduct necessary for indemnification or contribution, if
any, and (ii) a written undertaking by or on behalf of Indemnitee to repay any
amounts so advanced if and to the extent it ultimately shall be determined that
Indemnitee is not entitled to indemnification or contribution by the
Indemnitors. Determinations and authorizations of payments under this Section
shall be made in the manner specified in Section 9, and Indemnitee shall have
the same remedies with regard thereto as set forth in Section 10.
8. Notification and Defense of Claim. Promptly after receipt by Indemnitee
of notice of the commencement of any action, suit or proceeding, Indemnitee
shall, if a claim is to be made against the Indemnitors under this agreement,
notify the Indemnitors of the commencement of the action. The omission to notify
the Indemnitors will not relieve the Indemnitors of liability under this
agreement unless the Indemnitors are prejudiced by the omission, and will not
relieve them from any other liability which they may have to Indemnitee. With
respect to any such action, suit or proceeding as to which Indemnitee notifies
the Indemnitors:
8.1. The Indemnitors will be entitled to participate in the defense at
their own
3
<PAGE>
expense.
8.2. Except as otherwise provided below, the Indemnitors, jointly with
any other indemnifying party similarly notified, will be entitled to assume
the defense with counsel reasonably satisfactory to Indemnitee. After
notice from either Indemnitor to Indemnitee of its election to assume the
defense of a suit, such Indemnitor will not be liable to Indemnitee under
this agreement for any legal or other expenses subsequently incurred by
Indemnitee in connection with the defense, other than as provided below.
Indemnitee shall have the right to employ Indemnitee's own counsel in such
action, suit or proceeding, but the fees and expenses of such counsel
incurred after notice from either Indemnitor of its assumption of the
defense shall be at the expense of Indemnitee unless (i) the employment of
counsel by Indemnitee has been authorized by such Indemnitor, (ii)
Indemnitee shall have concluded reasonably that there may be a conflict of
interest between such Indemnitor and Indemnitee in the conduct of the
defense of such action or (iii) such Indemnitor shall not in fact have
employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of counsel shall be at the expense of such
Indemnitor. The Indemnitors shall not be entitled to assume the defense of
any action, suit or proceeding brought by or in the right of such
Indemnitor or as to which Indemnitee shall have made the conclusion
provided for in (ii) above.
8.3. An Indemnitor shall not be liable to indemnify Indemnitee under
this agreement for any amounts paid in settlement of any action or claim
effected without such Indemnitor's written consent. The Indemnitors shall
not settle any action or claim in any manner which would impose any penalty
or liability on Indemnitee without Indemnitee's prior written consent.
Neither the Indemnitors nor Indemnitee will unreasonably withhold their
consent to any proposed settlement.
9. Determination of Right to Indemnification.
9.1. To obtain indemnification under this agreement, Indemnitee shall
submit to the Indemnitors a written request, including such documentation
and information as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to
indemnification. In the case of each Indemnitor, the secretary of such
Indemnitor shall, promptly upon receipt of such a request for
indemnification, advise the board of directors or governors of such
Indemnitor in writing that Indemnitee has requested indemnification.
9.2. A determination with respect to Indemnitee's entitlement to
indemnification from an Indemnitor shall be made in the specific case (i)
by the board of directors (or governors) of such Indemnitor by a majority
vote of a quorum consisting of directors or governors not parties to the
proceeding, (ii) by independent legal counsel, (a) selected by the board of
directors or governors of such Indemnitor by vote as set forth in (i), or
(b) if the requisite quorum of the board of directors or governors of such
Indemnitor cannot be obtained, by a majority vote of the full board of
directors or governors, in which vote directors or governors who are
parties may participate, or (iii) by vote of the shareholders of
4
<PAGE>
such Indemnitor.
9.3. If the determination of entitlement to indemnification is to be
made by independent counsel under Section 9.2 of this agreement, the
Indemnitors shall give written notice to Indemnitee advising Indemnitee of
the identity of the independent counsel as selected. The Indemnitors shall
pay any and all reasonable fees and expenses of independent counsel
incurred by such independent counsel in connection with acting pursuant to
this agreement. Upon the commencement of any adjudication or arbitration
under Section 10 of this agreement, independent counsel shall be discharged
and relieved of any further responsibility in such capacity, subject to the
applicable standards of professional conduct then prevailing.
9.4. Indemnitee shall cooperate with the person, persons or entity
making the determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity any
documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to Indemnitee and
reasonably necessary to such determination. All reasonable costs or
expenses, including attorneys' fees and disbursements, incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Indemnitors, irrespective of the
determination as to Indemnitee's entitlement to indemnification.
9.5. In making any determination with respect to entitlement or
indemnification hereunder, the person, persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification
under this agreement, and the Indemnitors shall have the burden of proof to
overcome the presumption. The termination of any action, suit or proceeding
which is covered by this agreement, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption for the purpose of this agreement that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Indemnitors and, with respect to any criminal action or proceeding, had
reasonable cause to believe that the conduct was unlawful.
9.6. A determination with respect to entitlement to indemnification
shall be made and delivered in a written opinion within 90 days after
receipt by the Indemnitors of the request for indemnification. If it is
determined that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within 10 days after such determination.
10. Remedies of Indemnitee.
10.1. In the event that (i) a determination is made pursuant to
Section 9 of this agreement that Indemnitee is not entitled to
indemnification under this agreement, (ii) the determination of entitlement
to indemnification pursuant to Section 9 of this agreement shall not have
been made and delivered in a written opinion within 90 days after receipt
by
5
<PAGE>
the Indemnitors of the request for indemnification, or (iii) any payment is
not made within 10 days after a determination has been made that Indemnitee
is entitled thereto, then Indemnitee shall be entitled to an adjudication
in an appropriate court of the State of California, or in any other court
of competent jurisdiction, of Indemnitee's entitlement to such
indemnification. Alternatively, Indemnitee, at Indemnitee's option, may
seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association. Indemnitee
shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first
has the right to commence such proceeding pursuant to this Section. The
Indemnitors shall not oppose Indemnitee's right to seek any such
adjudication or award in arbitration.
10.2. In the event that a determination shall have been made pursuant
to Section 9 of this agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant
to this Section shall be conducted in all respects as a de novo trial or
arbitration, on the merits, and Indemnitee shall not be prejudiced by
reason of that adverse determination.
10.3. If a determination shall have been made pursuant to Section 9 of
this agreement that Indemnitee is entitled to indemnification, the
Indemnitors shall be bound by such determination in any judicial proceeding
or arbitration commenced pursuant to this Section, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of
such indemnification under applicable law.
10.4. The Indemnitors shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section that
the procedures and presumptions of this agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Indemnitors are bound by all the provisions of this
agreement.
10.5. The obligations of the Indemnitors to make the payments required
to be made hereunder, and to perform and observe the other agreements on
their part contained herein, shall not be subject to diminution by set off,
counterclaim, abatement or otherwise; provided, however, that the
Indemnitee shall not be released from any liability or obligation which
Indemnitee may owe either Indemnitor, whether hereunder or otherwise.
10.6. In the event that Indemnitee, pursuant to this Section, seeks a
judicial adjudication or an award in arbitration or enforce rights under,
or to recover damages for breach of, this agreement, Indemnitee shall be
entitled to recover from the Indemnitors, and shall be indemnified by the
Indemnitors against, any and all expense (including attorneys' fees)
actually and reasonably incurred in such judicial adjudication or
arbitration, but only if Indemnitee prevails therein.
6
<PAGE>
11. Continuation of Indemnity. All agreements and obligations of the
Indemnitors contained in this agreement shall continue during the period
Indemnitee has consented to be or is a director or officer of Capital Corp or a
governor or manager of Holding and shall continue thereafter so long as
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that Indemnitee has consented to be or is or was a
director or officer of Capital Corp or a governor or manager of Holding or is or
was serving in any other capacity referred to in this agreement.
12. Other Rights and Remedies. The indemnification, contribution and
advance payment of expenses provided by any provision of this agreement shall
not be deemed exclusive of any other rights to which Indemnitee may be entitled
under any provision of law, the articles of incorporation, any bylaw, other
agreement, vote of shareholders or disinterested directors or governors, or
otherwise, both as to action in Indemnitee's official capacity and as to action
in any other capacity after consenting to serve as a director or while occupying
any of the positions or having any of the relationships referred to in this
agreement.
13. Other.
13.1. All notices, requests, demands, and other communications
relating to this agreement shall be in writing and shall be deemed to be
duly given if or served when personally delivered to any individual party,
or on the first day after the date of deposit with Federal Express for next
day delivery, postage prepaid, or on the third day after deposit in the
United States mail, certified or registered, return receipt requested,
postage prepaid, or on the date of telecopy, fax or similar telephonic
transmission during normal business hours, provided that the recipient has
specifically acknowledged by telephone receipt of such telecopy, fax or
telephonic transmission; addressed, in all cases, to the party at his
address set forth below, or to such other address as such party may
hereafter designate by written notice to the other party.
If to Indemnitee, to:
__________________________
__________________________
__________________________
__________________________
or such other address as may have been furnished to Capital Corp and
Holding by Indemnitee;
If to Capital Corp, to:
AOA Capital Corp
Suite 170, South Wing
1380 West Paces Ferry Road NW
Atlanta, GA 30327
7
<PAGE>
Attention: Abe Levine
and if to Holding, to:
AOA Holding LLC
Suite 170, South Wing
1380 West Paces Ferry Road NW
Atlanta, GA 30327
Attention: Abe Levine
in each case with a copy to:
Kaplan, Strangis and Kaplan, P.A.
5500 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Attention: Andris A. Baltins
or to such other address as may have been furnished to Indemnitee by
Capital Corp or Holding, as the case may be.
Any notice given by an Indemnitee to Capital Corp or Holding shall
constitute sufficient notice to both Capital Corp and Holding and any
notice received by Indemnitee from either Capital Corp or Holding shall be
deemed to have been given on behalf of both Capital Corp and Holding.
13.2. If any provision or provisions of this agreement shall be held
to be invalid, illegal or unenforceable for any reason whatsoever (i) the
validity, legality and enforceability of the remaining provisions of this
agreement (including without limitation, all portions of any paragraphs of
this agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby, and (ii) to the
fullest extent possible, the provisions of this agreement (including,
without limitation, all portions of any paragraph of this agreement
containing any such provision held to be invalid, illegal or unenforceable,
that are not themselves invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision
held invalid, illegal or unenforceable.
13.3. The headings of the paragraphs of this agreement are inserted
for convenience only and shall not be deemed to constitute part of this
agreement or to affect the construction of it.
13.4. No supplement, modification, or amendment of this agreement
shall be binding unless executed in writing by both parties. No waiver of
any of the provisions of this agreement shall be deemed or shall constitute
a wavier of any other provisions (whether or not similar); nor shall such
waiver constitute a continuing waiver.
8
<PAGE>
13.5. The parties agree that this agreement shall be construed and
enforced in accordance with and governed by the laws of the state of
California applicable to contracts made and to be performed in that state.
13.6. This agreement shall be binding upon Capital Corp, Holding and
their successors and assigns and shall inure to the benefit of Indemnitee
and Indemnitee's spouse, heirs, executors, personal representatives and
administrators. The obligations of Capital Corp or Holding shall be joint
and several.
Entered into as of the day and year first above written.
AOA CAPITAL CORP
By
------------------------------------
Its
---------------------------------
AOA HOLDING LLC
By
------------------------------------
Its
---------------------------------
--------------------------------------
9
<PAGE>
Exhibit 12.1
Adams Outdoor Advertising Limited Partnership
Statement Re: Computation of Earnings to Combined Fixed Charges
(in thousands, except for ratio data)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
Pro Forma
1994 1995 1996 1997 1998 1998
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges Computation:
- --------------------------
Interest expense (including deferred finance fees) 9,385 10,796 12,248 14,586 14,408 18,919
Interest Element of Rentals (a) 1,447 1,622 1,813 2,321 2,195 2,195
Preferred Stock Dividends
-------- -------- -------- -------- -------- ---------
Total Fixed Charges 10,832 12,418 14,061 16,907 16,603 21,114
Earnings Computation
- --------------------
Consolidated Net Income (610) 1,562 1,535 791 1,184 (3,327)
Add:
Extraordinary Charge 330 330
Consolidated Fixed Charges (less Capitalized Interest) 10,155 11,673 14,061 16,907 16,603 21,114
-------- -------- -------- -------- -------- ---------
Total Earnings as Adjusted 9,545 13,235 15,596 17,698 18,117 18,117
Ratio of Earnings To Combined Fixed Charges - 1.07 1.11 1.05 1.09 -
======== ======== ======== ======== ======== =========
Amount by Which Earnings are Insuficient to Cover
Combined Fixed Charges (1,287) (2,997)
======== =========
</TABLE>
<TABLE>
<CAPTION>
Twelve Months Ended
Three Months Ended March 31, March 31,
--------------------------- ----------------------
Pro Forma Pro Forma
1998 1999 1999 1999
-------- -------- --------- ----------------------
<S> <C> <C> <C> <C>
Fixed Charges Computation:
- --------------------------
Interest expense (including deferred finance fees) 3,652 3,445 4,573 18,711
Interest Element of Rentals (a) 551 604 604 2,248
Preferred Stock Dividends
-------- -------- --------- ----------------------
Total Fixed Charges 4,203 4,049 5,177 20,959
Earnings Computation
- --------------------
Consolidated Net Income (99) 815 (313) (2,412)
Add:
Extraordinary Charge 330
Consolidated Fixed Charges (less Capitalized Interest) 4,203 4,049 5,177 20,959
-------- -------- --------- ----------------------
Total Earnings as Adjusted 4,104 4,864 4,864 18,877
Ratio of Earnings To Combined Fixed Charges - 1.20 - -
======== ======== ========= ======================
Amount by Which Earnings are Insuficient to Cover
Combined Fixed Charges (99) (313) (2,082)
======== ========= ======================
</TABLE>
(a) The interest factor was calculated to be one-third of rental expense and is
considered to be a representative interest factor
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF AOA HOLDING LLC
COMPANY ORGANIZATION SHARES PERCENTAGE OF
- ------- ------------ ------ -------------
OUTSTANDING OWNERSHIP
----------- ---------
AOA Capital Corp Minnesota 10,000 100%
Adams Outdoor Minnesota 10,000 100%
Advertising, Inc.
Adams Outdoor Minnesota N/A 70% (1)
Advertising Limited
Partnership
PA Outdoor, Inc. Pennsylvania 306 100% (2)
(1) AOA Holding LLC holds a 0.70% general partnership interest and a 68.30%
limited partnership interest in Adams Outdoor Advertising Limited
Partnership. Adams Outdoor Advertising, Inc. holds a 0.01% general
partnership interest and a 0.99% limited partnership interest in Adams
Outdoor Advertising Limited Partnership.
(2) Owned 100% by Adams Outdoor Advertising Limited Partnership.
- -------------------------------------------------
AOA Capital Corp has no subsidiaries.
<PAGE>
Exhibit 23.2
The Partners and Board of Directors
Adams Outdoor Advertising Limited Partnership and
Adams Outdoor Advertising, Inc.:
The audits referred to in our report dated March 18, 1998, included the related
financial statement schedule II - Valuation and Qualifying Accounts as of
December 31, 1997 and for each of the years in the two-year period ended
December 31, 1997, included in the registration statement. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
KPMG LLP
Atlanta, Georgia
June 30, 1999
<PAGE>
Exhibit 23.3
------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Atlanta, GA
June 30, 1999
<PAGE>
EXHIBIT 24.1
------------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that AOA HOLDING LLC, a Minnesota limited
liability company (the "Company"), and each of the undersigned governors of the
Company, hereby constitutes and appoints Stephen Adams, Abe Levine and J. Kevin
Gleason and each of them (with full power to each of them to act alone) his true
and lawful attorney-in-fact and agent, for him and on his behalf and his name,
place and stead, in any and all capacities to sign, execute, affix, its seal
thereto and file one or more Registration Statement on Form S-4 or any other
applicable form under the Securities Act of 1933, as amended, and amendments
thereto, including pre-effective and post-effective amendments, with all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, relating the offering of up to $50,000,000 of 10-
3/8% Senior Notes due 2006 (the "Notes") offered by, and are the joint and
several obligations of, AOA Capital Corp, a Minnesota corporation, and the
Company.
There is hereby granted to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in respect of the foregoing as fully as he or himself might or could
do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
This Power of Attorney may be executed in any number of counterparts, each
of which shall be an original, but all of which taken together shall constitute
one and the same instrument and any of the undersigned governors may execute
this Power of Attorney by signing any such counterpart.
IN WITNESS WHEREOF, AOA HOLDING LLC has caused this Power of Attorney to be
executed in its name by its Chief Executive Officer and President on the 25/th/
day of June, 1999.
AOA HOLDING LLC
By /s/ J. Kevin Gleason
J. Kevin Gleason
Chief Executive Officer and President
<PAGE>
The undersigned, governors of AOA HOLDING LLC, have hereunto set their
hands as of the 25/th/ day of June, 1999.
/s/ Stephen Adams
Stephen Adams
/s/ J. Kevin Gleason
J. Kevin Gleason
/s/ George Pransky
George Pransky
/s/ David Frith-Smith
David Frith-Smith
/s/ Andris A. Baltins
Andris A. Baltins
2
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that AOA CAPITAL CORP, a Minnesota
corporation (the "Company"), and each of the undersigned directors of the
Company, hereby constitutes and appoints Stephen Adams, Abe Levine and J. Kevin
Gleason and each of them (with full power to each of them to act alone) his true
and lawful attorney-in-fact and agent, for him and on his behalf and his name,
place and stead, in any and all capacities to sign, execute, affix, its seal
thereto and file one or more Registration Statement on Form S-4 or any other
applicable form under the Securities Act of 1933, as amended, and amendments
thereto, including pre-effective and post-effective amendments, with all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, relating the offering of up to $50,000,000 of 10-
3/8% Senior Notes due 2006 (the "Notes") offered by, and are the joint and
several obligations of, AOA Holding LLC, a Minnesota limited liability company,
and the Company.
There is hereby granted to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in respect of the foregoing as fully as he or himself might or could
do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
This Power of Attorney may be executed in any number of counterparts, each
of which shall be an original, but all of which taken together shall constitute
one and the same instrument and any of the undersigned directors may execute
this Power of Attorney by signing any such counterpart.
IN WITNESS WHEREOF, AOA CAPITAL CORP has caused this Power of Attorney to
be executed in its name by its Chief Executive Officer and President on the
25/th/ day of June, 1999.
AOA CAPITAL CORP
By /s/ J. Kevin Gleason
J. Kevin Gleason
Chief Executive Officer and President
<PAGE>
The undersigned, directors of AOA CAPITAL CORP, have hereunto set their
hands as of the 25/th/ day of June, 1999.
/s/ Stephen Adams
Stephen Adams
/s/ J. Kevin Gleason
J. Kevin Gleason
/s/ George Pransky
George Pransky
/s/ David Frith-Smith
David Frith-Smith
/s/ Andris A. Baltins
Andris A. Baltins
2
<PAGE>
Exhibit 25.1
FORM T-1
==============================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) _______
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
AOA Holding LLC
(Exact name of obligor as specified in its charter)
Minnesota 36-4298658
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1380 West Paces Ferry Road, N.W.
Suite 170, South Wing 30327
Atlanta, GA (Zip Code)
(Address of principal executive offices)
------------------
<PAGE>
- 2 -
------------------
AOA Capital Corp
(Exact name of obligor as specified in its charter)
Minnesota 36-4298659
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1380 West Paces Ferry Road, N.W.
Suite 170, South Wing 30327
Atlanta, GA (Zip Code)
(Address of principal executive offices)
------------------
10-3/8% Senior Notes due 2006
(Title of the indenture securities)
==============================================
<PAGE>
- 3 -
GENERAL
1. General Information
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
AOA Holding LLC and AOA Capital Corp currently are not in default under any
of its outstanding securities for which United States Trust Company of New
York is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10,
11, 12, 13, 14 and 15 of Form T-1 are not required under General
Instruction B.
16. List of Exhibits
----------------
T-1.1 -- Organization Certificate, as amended, issued by the
State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 4 -
16. List of Exhibits
----------------
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b)
of the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
- ----
As of June 23, 1999, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 23rd day
of June, 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ Christine C. Collins
------------------------
Assistant Vice President
<PAGE>
Exhibit T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
---------------------
By: /S/Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1999
--------------
($ IN THOUSANDS)
ASSETS
- ------
Cash and Due from Banks $ 139,755
Short-Term Investments 85,326
Securities, Available for Sale 528,160
Loans 2,081,103
Less: Allowance for Credit Losses 17,114
----------
Net Loans 2,063,989
Premises and Equipment 57,765
Other Assets 125,780
----------
Total Assets $3,000,775
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 623,046
Interest Bearing 1,875,364
----------
Total Deposits 2,498,410
Short-Term Credit Facilities 184,281
Accounts Payable and Accrued Liabilities 126,652
----------
Total Liabilities $2,809,343
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 121,759
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 1,637
----------
Total Stockholder's Equity 191,432
----------
Total Liabilities and
Stockholder's Equity $3,000,775
==========
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
May 18, 1999
<PAGE>
Exhibit 99.1
LETTER OF TRANSMITTAL
ADA HOLDING LLC
AOA CAPITAL CORP
Offer for all Outstanding
10 3/8% Senior Notes due 2006 in Exchange for
10 3/8% Senior Subordinated Notes due 2006
which Have Been Registered Under the Securities Act of 1933, As Amended,
Pursuant to the Prospectus, dated [ ], 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON [ ],
1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
Delivery To: United States Trust Company of New York, Exchange Agent
By Mail: By Overnight Courier:
United States Trust United States Trust
Company of New York Company of New York
[ADDRESS] [ADDRESS]
[ADDRESS] [ADDRESS]
Attention: [NAME] Attention: [NAME]
[NAME] [NAME]
By Hand: United States Trust
Company of New York
[ADDRESS]
[ADDRESS]
For Information Call:
[NUMBER]
By Facsimile Transmission
(for Eligible Institutions only):
[NUMBER]
Attention: [DEPARTMENT]
Confirm by Telephone:
[NUMBER]
<PAGE>
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute a valid delivery.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated [ ], 1999 (the "Prospectus"), of AOA Holding LLC, a Minnesota
limited liability company and AOA Capital Corp, a Minnesota corporation
(collectively, the "Company") and this Letter of Transmittal (the "Letter"),
which together constitute the Company's offer (the "Exchange offer") to exchange
an aggregate principal amount of up to $50,000,000 of the Company's 10 3/8%
Senior Notes due 2006 which have been registered under the Securities Act Of
1933, as amended (the "New Notes"), for a like principal amount of the Company's
issued and outstanding 10 3/8% Senior Notes due 2006 (the "Old Notes") from the
registered holders thereof (the "Holders").
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid on the
Old Notes, from May 26, 1999. Accordingly, registered Holders of New Notes
on the relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from May 26, 1999. Old Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange offer. Holders
of Old Notes whose Old Notes are accepted for exchange will not receive any
payment in respect of accrued interest on such old Notes otherwise payable on
any interest payment date the record date for which occurs on or after
consummation of the Exchange Offer.
This Letter is to be completed by a holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for Old
Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the "Book-
Entry Transfer Facility) pursuant to the procedures set forth in "The Exchange
Offer--Procedures for Tendering" section of the Prospectus. Holders of Old Notes
whose certificates are not immediately available, or who are unable to deliver
their certificates or confirmation of the book-entry tender of their Old Notes
into the Exchange Agent's account at the Book-Entry Transfer Facility (a "Book-
Entry Confirmation") and all other documents required by this Letter to the
Exchange Agent on or prior to the Expiration Date, must tender their Old Notes
according to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
-2-
<PAGE>
List below the Old Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Old Notes should be listed on a separate signed schedule affixed hereto.
- -------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES 1 2 3
- -------------------------------------------------------------------------------
Aggregate
Name(s) and Address(es) Principal Principal
of Registered Holder(s) Certificate Amount of Amount
(Please fill in, if blank) Number(s)* Old Note(s) Tendered
- -------------------------------------------------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
Total
- -------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Old Notes represented by the Old Notes indicated in
column 2. See Instruction 2. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple
thereof. See Instruction 1.
- -------------------------------------------------------------------------------
[__] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ____________________________________________
Account Number ______________________ Transaction Code Number ____________
[__] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s) __________________________________________
Window Ticket Number (if any) ____________________________________________
Date of Execution of Notice of Guaranteed Delivery _______________________
-3-
<PAGE>
Name of Institution Which Guaranteed Delivery ____________________________
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number ______________________ Transaction Code Number _____________
[__] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ________________________________________________________________________
Address: ______________________________________________________________________
-4-
<PAGE>
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act of
1933, as amended, in connection with any resale of such New Notes; however, by
so acknowledging and by delivering such a prospectus the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933, as amended. If the undersigned is a broker-dealer that will
receive New Notes, it represents that the Old Notes to be exchanged for the New
Notes were acquired as a result of market-making activities or other trading
activities.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Notes as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Old Notes, with full power of substitution, among other
things, to cause the Old Notes to be assigned, transferred and exchanged. The
undersigned hereby represents and warrants that the undersigned has full power
and authority to tender, sell, assign and transfer the Old Notes, and to acquire
Exchange Notes issuable upon the exchange of such tendered old Notes, and that,
when the same are accepted for exchange, the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim when the same are accepted
by the Company. The undersigned hereby further represents that any New Notes
acquired in exchange for Old Notes tendered hereby will have been acquired in
the ordinary course of business of the person receiving such New Notes, whether
or not such person is the undersigned, that neither the Holder of such Old Notes
nor any such other person is participating in, intends to participate in or has
an arrangement or understanding with any person to participate in the
distribution of such New Notes and that neither the Holder of such Old Notes nor
any such other person is an "affiliate," as defined in Rule 405 under the
Securities Act Of 1933, as amended (the "Securities Act"), of the Company.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued pursuant to the Exchange Offer in exchange
for the Old Notes may be offered for resale, resold and otherwise transferred by
Holders thereof (other than any such Holder that is an "affiliate" of the
Company within the
-5-
<PAGE>
meaning of Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such Holders'
business and such Holders have no arrangement with any person to participate in
the distribution of such New Notes. However, the SEC has not considered the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange offer as in other circumstances. If the undersigned is
not a broker-dealer, the undersigned represents that it is not engaged in, and
does not intend to engage in, a distribution of New Notes and has no arrangement
or understanding to participate in a distribution of New Notes. If any Holder is
an affiliate of the Company, is engaged in or intends to engage in or has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange offer, such Holder (i) could not rely on
the applicable interpretations of the staff of the SEC and (ii) must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive New Notes for its own account in exchange for Old Notes, it
represents that the Old Notes to be exchanged for the New Notes were acquired by
it as a result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes; however, by so
acknowledging and by delivering a prospectus meeting the requirements of the
Securities Act, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal of Tender"
section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
-6-
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS (See Instructions 3 and 4)
- --------------------------------------------------------------------------------
To be completed ONLY if certificates for Old Notes not exchanged and/or New
Notes are to be issued in the name of and sent to someone other than the per on
or persons whose signature(s) appear(s) on this Letter above, or if Old Notes
delivered by book-entry transfer which are not accepted for exchange are to be
returned by credit to an account maintained at the Book-Entry Transfer Facility
other than the account indicated above.
Issue: New Notes and/or Old Notes to:
Name(s) ______________________________________________________________________
(Please Type or Print)
______________________________________________________________________________
(Please Type or Print)
Address_______________________________________________________________________
______________________________________________________________________________
(Zip Code)
(Complete Substitute Form W-9)
[__] Credit unexchanged Old Notes delivered by book-entry transfer to the Book-
Entry Transfer Facility account set forth below.
- --------------------------------------------------------------------------------
(Book-Entry Transfer Facility Account Number, if applicable)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
- --------------------------------------------------------------------------------
To be completed ONLY if certificates for Old Notes not exchanged and/or New
Notes are to be sent to someone other than the person or persons whose
signature(s) appear(s) on this Letter above or to such person or persons at an
address other than shown in the box entitled "Description of Old Notes" on this
Letter above.
Mail: New Notes and/or Old Notes to:
Name(s) ______________________________________________________________________
(please Type or Print)
______________________________________________________________________________
(Please Type or Print)
Address ______________________________________________________________________
______________________________________________________________________________
(Zip Code)
- --------------------------------------------------------------------------------
-7-
<PAGE>
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES
FOR OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR
THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
-8-
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9 on reverse side)
x ..................................... ............ , 1999
x ..................................... ............ , 1999
Signature(s) of owner Date
Area Code and Telephone Number ............................
If a holder is tendering any Old Notes, this Letter must be signed by the
registered holder(s) as the name(s) appear(s) on the certificate(s) for the Old
Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a fiduciary
or representative capacity, please set forth full title. See Instruction 3.
Name(s):....................................................
....................................................
(Please Type or Print)
Capacity:...................................................
Address:....................................................
....................................................
(Including Zip Code)
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:....................................
(Authorized Signature)
............................................................
(Title)
............................................................
(Name and Firm)
Dated:.................................................., 1999
- --------------------------------------------------------------------------------
-9-
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer for the
10 3/8% Senior Notes due 2006 of AOA Holding LLC and AOA Capital Corp
in Exchange for the
10 3/8% Senior Notes due 2006 of AOA Holding LLC and AOA Capital Corp
which Have Been Registered Under the
Securities Act of 1933, As Amended
1. Delivery of this Letter and Notes; Guaranteed Delivery Procedures.
This Letter is to be completed by holders of Old Notes either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Procedures for Tendering" section of the Prospectus. Certificates for all
physically tendered Old Notes, or Book-Entry Confirmation, as the case may be,
as well as a properly completed and duly executed Letter (or manually signed
facsimile hereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure or book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange Offer-
- -Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to such
procedures, (i) such tender must be made through an Eligible Institution, (ii)
prior to 5:00 P.M., New York City time, on the Expiration Date, the Exchange
Agent must receive from such Eligible Institution a properly completed and duly
executed Letter (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by facsimile transmission,
mail or hand delivery), setting forth the name and address of the holder of Old
Notes and the amount of Old Notes tendered stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the Expiration Date, the certificates for all physically
tendered Old Notes, in proper form for transfer, or a Book-Entry confirmation,
as the case may be, and any other documents required by this Letter will be
deposited by the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other documents
required by this Letter, are received by the Exchange Agent within three NYSE
trading days after the Expiration Date.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is
-10-
<PAGE>
suggested that the mailing be registered mail, properly insured, with return
receipt requested, made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 P.M., New York City time, on the
Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not applicable to note holders who tender by book-entry
transfer).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled Description of Old
Notes--Principal Amount Tendered." A reissued certificate representing the
balance of non-tendered Old Notes will be sent to such tendering holder, unless
otherwise provided in the appropriate box on this Letter promptly after the
Expiration Date. All of the Old Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
3. Signatures on this Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
If this Letter is signed by the registered holder of the Old Notes tendered
hereby, the signature must correspond exactly with the name as written on the
face of the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the New Notes are to be issued,
or any untendered Old Notes are to be reissued, to a person other than the
registered holder, then endorsements of any certificates transmitted hereby or
separate bond powers are required. Signatures on such certificate(s) must be
guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
-11-
<PAGE>
Endorsements on certificates for Old Notes or signatures on bond owners
required by this Instruction 3 must be guaranteed by a firm which is a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchanges Medallion Program (each an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Notes are tendered: (i) by a registered holder of
Old Notes (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility s stem whose name appears on a
security position listing as the holder of such Old Notes) who has not completed
the box entitled "Special Issuance Instructions" or special Delivery
Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.
4. Special Issuance and Delivery Instructions.
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. Note holders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such note holder may designate hereon. If no such instructions are
given, such Old Notes not exchanged will be returned to the name and address of
the person signing this Letter.
5. Taxpayer Identification Number.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Company (as payor) with such
holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering holder who is an individual, is his or
her social security number. If the Company is not provided with the current TIN
or an adequate basis for an exemption from backup withholding, such tendering
holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
In addition, the Exchange Agent may be required to withhold 31% of the amount of
any reportable payments made after the exchange to such tendering holder of New
Notes. If withholding results in an overpayment of taxes, a refund may be
obtained.
-12-
<PAGE>
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of
Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying, under penalties of perjury, that the TIN provided is correct (or
that such holder is awaiting a TIN) and that (i) the holder is exempt from
backup withholding, or (ii) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result of
a failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified the holder that such holder is no longer subject to backup
withholding. If the tendering holder of Old Notes is a nonresident alien or
foreign entity not subject to backup withholding, such holder must give the
Exchange Agent a completed Form W-8, Certificate of Foreign Status. These forms
may be obtained from the Exchange Agent. If the Old Notes are in more than one
name or are not in the name of the actual owner, such holder should consult the
W-9 Guidelines for information on which TIN to report. If such holder does not
have a TIN, such holder should consult the W-9 Guidelines for instructions on
applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and write
"applied for" in lieu of its TIN Note: Checking this box and writing "applied
for" on the form means that such holder has already applied for a TIN or that
such holder intends to apply for one in the near future. If the box in Part 2
of the Substitute Form W-9 is checked, the Exchange Agent will retain 31% of
reportable payments made to a holder during the sixty (60) day period following
the date of the Substitute Form W-9. If the holder furnishes the Exchange Agent
with his or her TIN within sixty (60) days of the Substitute Form W-9, the
Exchange Agent will remit such amounts retained during such sixty (60) day
period to such holder and no further amounts will be retained or withheld from
payments made to the holder thereafter. If, however, such holder does not
provide its TIN to the Exchange Agent within such sixty (60) day period, the
Exchange Agent will remit such previously withheld amounts to the Internal
Revenue Service as backup withholding and will withhold 31% of all reportable
payments to the holder thereafter until such holder furnishes its TIN to the
Exchange Agent.
6. Transfer Taxes.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If, however,
New Notes and/or substitute Old Notes not exchanged are to be delivered to, or
are to be registered or issued in the name of, any person other than the
registered holder of the Old Notes tendered hereby, or it tendered Old Notes are
registered in the name of any person other than the person signing this Letter,
or if a transfer tax is imposed for any reason other than the transfer of Old
Notes to the Company or its order pursuant to the Exchange Offer,-the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering holder.
-13-
<PAGE>
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.
7. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Old Notes for
exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
8. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
9. Withdrawal Rights
Tenders of Old Notes may be withdrawn at any time prior to 5:00 P.M., New
York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written notice
of withdrawal must be received by the Exchange Agent at the address set forth
above prior to 5:00 P.M., New York City time, on the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having tendered the
Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including certificate number or numbers and the principal amount of
such Old Notes), (iii) contain a statement that such holder is withdrawing his
election to have such Old Notes exchanged, (iv) be signed by the holder in the
same manner as the original signature on the Letter by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer to have the Trustee with respect to the Old Notes register
the transfer of such Old Notes in the name of the person withdrawing the tender
and (v) specify the name in which such Old Notes are registered, if different
from that of the Depositor. If Old Notes have been tendered pursuant to the
procedure for book-entry transfer set forth in "The Exchange Offer--Procedures
for Tendering" section of the Prospectus, any notice of withdrawal must specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such
-14-
<PAGE>
facility. All questions as to the validity, form and eligibility (including time
of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer and no New Notes will be issued with respect
thereto unless the Old Notes so withdrawn are validly retendered. Any Old Notes
that have been tendered for exchange but which are not exchanged for any reason
will be returned to the Holder thereof without cost to such Holder (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures set forth in "The Exchange Offer--Procedures for Tendering" section
of the Prospectus, such Old Notes will be credited to an account maintained with
the Book-Entry Transfer Facility for the Old Note:) as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange offer. Properly
withdrawn Old Notes may be retendered by following the procedures described
above at any time on or prior to 5:00 P.M., New York City time, on the
Expiration Date.
10. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, and requests for Notices of
Guaranteed Delivery and other related documents may be directed to the Exchange
Agent, at the address and telephone number indicated above.
-15-
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
SUBSTITUTE
Form W-9
Department of the Treasury
Internal Revenue Service
Payor's Request for
Taxpayer
Identification Number
("TIN") and
Certification
- --------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR TIN
IN THE BOX AT RIGHT AND CERTIFY TIN: _______________________________
BY SIGNING AND DATING BELOW. Social Security Number or
Employer Identification Number
- --------------------------------------------------------------------------------
Part 2--TIN Applied For [__]
- --------------------------------------------------------------------------------
CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct (or I am waiting for a number
to be issued to me).
(2) I am not subject to backup withholding either because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE.......................... DATE...............................
- --------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified
by the IRS that you are subject to backup withholding because of under reporting
of interest or dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
- --------------------------------------------------------------------------------
-16-
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- -------------------------------------- ---------------------------------------
Signature Date
- --------------------------------------------------------------------------------
-17-
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
AOA HOLDING LLC
AOA CAPITAL CORP
This form or one substantially equivalent hereto must be used to accept the
Exchange offer of AOA Holding LLC and AOA Capital Corp (collectively, the
"Company") made pursuant to the Prospectus, dated [_________ ], 1999 (the
Prospectus"), if certificates or the outstanding 10 3/8% Senior Notes due 2006
of the Company (the "Old Notes") are not immediately available or if the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach U.S. Bank Trust National
Association, as exchange agent (the "Exchange Agent") prior to 5:00 P.M., New
York City time, on the Expiration Date of the Exchange Offer. Such form may be
delivered or transmitted by facsimile transmission, mail or hand delivery to the
Exchange Agent as set forth below. In addition, in order to utilize the
guaranteed delivery procedure to tender Old Notes pursuant to the Exchange
offer, a completed, signed and dated Letter of Transmittal (or facsimile
thereof) must also be received by the Exchange Agent prior to 5:00 P.M., New
York City time, on the Expiration Date. Capitalized terms not defined herein are
defined in the Prospectus.
Delivery To: United States Trust Company of New York, Exchange Agent
By Mail: By Overnight Courier:
United States Trust Company United States Trust Company
of New York of New York
[ADDRESS] [ADDRESS]
[ADDRESS] [ADDRESS]
Attention: [NAME] Attention: [NAME]
[NAME] [NAME]
By Hand: United States Trust
Company of New York
[ADDRESS]
[ADDRESS]
For Information Call:
[NUMBER]
By Facsimile Transmission
(for Eligible Institutions only):
[NUMBER]
Attention: [DEPARTMENT]
<PAGE>
Confirm by Telephone:
[NUMBER]
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute a valid delivery.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the accompanying
Letter of Transmittal, the undersigned hereby tenders to the Company the
principal amount of Old Notes set forth below pursuant to the guaranteed
delivery procedure described in "The Exchange Offer--Guaranteed Delivery
Procedures" section of the Prospectus.
<PAGE>
Principal Amount of Old Notes Tendered:* If Old Notes will be delivered by
book-entry transfer to The
Depository Trust Company, provide
account number.
$ ___________________________________
Certificate Nos. (if available):
Total Principal Amount Represented by Old
Notes Certificate(s):
$ ___________________________________ Account Number ______________________
- --------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X___________________________________ __________
X___________________________________ __________
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number: ____________________________
Must be signed by the holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
Please print name(s) and address(es)
Name(s):
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Capacity: ___________________________________________________________
Address(es): _______________________________________________________
_______________________________________________________
<PAGE>
------------------------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the securities
Transfer Agents Medallion on Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the certificates representing the principal amount of Old Notes tendered
hereby in proper form for transfer, or timely confirmation of the book-entry
transfer of such Old Notes into the Exchange Agent's account at The Depository
Trust Com any pursuant to the procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures" section of the Prospectus, together with any
required signature guarantee and any other documents required by the Letter of
Transmittal, will be received by the Exchange Agent at the address set forth
above, no later than three New York Stock Exchange trading days after the
Expiration Date.
__________
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
<PAGE>
______________________________ ____________________________
Name of Firm Authorized Signature
______________________________ ____________________________
Address Title
______________________________ Name: ________________________
Zip Code (Please Type or Print)
Area Code and Tel. No. __________ Dated: ________________________
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES
FOR OLD NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY
EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
Exhibit 99.3
AOA HOLDING LLC
AOA CAPITAL CORP
Offer for Outstanding
10 3/8% Senior Notes due 2006
in Exchange for
10 3/8% Senior Notes due 2006,
which have been Registered Under
the Securities Act of 1933,
as Amended
To Our Clients:
Enclosed for your consideration is a Prospectus, dated [ ], 1999 (the
"Prospectus"), and the related Letter of Transmittal relating to the offer (the
"Exchange Offer") of AOA Holding LLC and AOA Capital Corp (collectively, the
"Company") to exchange its 10 3/8% Senior Notes due 2006, which have been
registered under the Securities Act of 1933, as amended (the "New Notes"), for
its outstanding 10 3/8% Senior Notes due 2006 (the "Old Notes"), upon the terms
and subject to the conditions described in the Prospectus and the Letter of
Transmittal. The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement dated
May 26, 1999, by and among the Company and the initial purchaser referred to
therein.
This material is being forwarded to you as the beneficial owner of the Old
Notes held by us for your account but not registered in your name. A tender of
such Old Notes may only be made by us as the holder of record and pursuant to
your instructions.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Notes held by us for your account, pursuant to the terms and
conditions set forth in the enclosed Prospectus and Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.
New York City time, on [ ], 1999, unless extended by the
Company. Any Old Notes tendered pursuant to the Exchange offer may be withdrawn
at any time before the Expiration date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all old Notes.
2. Any transfer taxes incident to the transfer of Old Notes from the
holder to the Company will be paid by the Company, except as otherwise provided
in the Instructions in the Letter of Transmittal.
3. The Exchange Offer expires at 5:00 p.m., New York time, on [ ],
1999, unless extended by the Company.
If you wish to have us tender your Old Notes, please instruct us by
completing, executing and return to us the instruction form on the back of this
letter. The Letter of Transmittal is furnished to you for information only and
may not be used directly by you to tender Old Notes.
<PAGE>
INSTRUCTION WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by the Company
with respect to its Old Notes.
This will instruct you to tender the Old Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal.
Please tender the Old Notes held by you for my account as indicated below:
Aggregate Principal Amount of Old Notes
---------------------------------------
10 3/8% Senior Notes due 2006
[___] Please do not tender any
Old Notes held by you
for my accounts.
Dated: , 1999
---------------------------------------
---------------------------------------
Signature(s)
---------------------------------------
---------------------------------------
(Print Name(s) here)
---------------------------------------
---------------------------------------
Address
---------------------------------------
Area Code and Telephone Number
---------------------------------------
---------------------------------------
Tax Identification or Social Security No(s).
None of the Old Notes held by us for your account will be tendered unless
we receive written instructions from you to do so. Unless a specific contrary
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Old Notes held by us for your
account.
<PAGE>
AOA HOLDING LLC
AOA CAPITAL CORP
Offer for Outstanding
10 3/8% Senior Notes due 2006
in Exchange for
10 3/8% Senior Notes due 2006,
which have been Registered Under
the Securities Act of 1933,
as Amended
To: Brokers, Dealers, Commercial Banks
Trust Companies and Other Nominees:
AOA Holding LLC and AOA Capital Corp (collectively, the "Company") is
offering, upon and subject to the terms and conditions set forth in the
Prospectus, dated [ ], 1999 (the "Prospectus"), and the enclosed Letter of
Transmittal (the "Letter of Transmittal"), to exchange (the "Exchange Offer")
its 10 3/8% Senior Notes due 2006, which have been registered under the
Securities Act of 1933, as amended, for its outstanding 10 3/8% Senior Notes due
2006 (the "Old Notes"). The Exchange Offer is being made in order to satisfy
certain obligations of the company contained in the Registration Rights
Agreement dated May 26, 1999, by and among the Company and the initial purchaser
referred to therein.
We are requesting that you contact your clients for whom you hold Old Notes
regarding the Exchange Offer. For your information and for forwarding to your
clients for whom you hold Old Notes registered in your name or in the name of
your nominee, or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. Prospectus dated [ ], 1999;
2. The letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for Old Notes are not immediately available or time will
not permit all required documents to reach the Exchange Agent prior to the
Expiration Date (as defined below) or if the procedure for book-entry transfer
cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account
you hold Old Notes registered in your name or the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to United States Trust Company of New York,
the Exchange Agent for the Exchange Offer.
Your prompt action is required. The Exchange Offer will expire at 5:00
p.m., New York City time, on [ ], 1999. Unless extended by
the Company (the "Expiration Date"). Old Notes tendered pursuant to the
Exchange Offer may be withdrawn at any time before the Expiration Date.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
<PAGE>
Exchange Agent and certificates representing the Old Notes should be
delivered to the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus.
If a registered holder of Old Notes desires to tender, but such Old Notes
are not immediately available, or time will not permit such holder's Old Notes
or other required documents to reach the Exchange Agent before the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
described in the Prospectus under "The Exchange offer -- Guaranteed Delivery
Procedures."
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Old Notes held by them as nominee or in a fiduciary
capacity. The Company will pay or cause to be paid all stock transfer taxes
applicable to the exchange of Old Notes pursuant to the Exchange Offer, except
as set forth in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to U.S. Bank
Trust National Association, the Exchange Agent for the Exchange Offer, at its
address and telephone number set forth on the front of the Letter of
Transmittal.
Very truly yours,
AOA HOLDING LLC
AOA CAPITAL CORP
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
