<PAGE> 1
As filed with the Securities and Exchange Commission on November 14, 2000
REGISTRATION NO. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
LAMAR ADVERTISING COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 72-1449411
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5551 CORPORATE BOULEVARD
BATON ROUGE, LOUISIANA 70808
(225) 926-1000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
KEVIN P. REILLY, JR.
Chief Executive Officer
Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
(225) 926-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
with a copy to:
PAUL M. KINSELLA JOSEPH M. CRABB
STACIE S. AARESTAD Squire, Sanders & Dempsey, L.L.P.
Palmer & Dodge LLP Two Renaissance Square
One Beacon Street 40 North Central Avenue, Suite 2700
Boston, Massachusetts 02108 Phoenix, Arizona 85004
(617) 573-0100 (602) 528-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective time of this Registration Statement
and the effective time of the merger contemplated by the Agreement and Plan of
Merger dated as of October 3, 2000 among Lamar Advertising Company, Lamar
Southwest Acquisition Corporation, and Bowlin Outdoor Advertising & Travel
Centers Incorporated, which is attached as Annex A to the proxy
statement/prospectus forming a part of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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 earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(C) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================================
Title of securities to be Amount to be Proposed maximum aggregate Proposed maximum Amount of
registered Registered offering price per unit aggregate offering price registration fee
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A common stock, $.001 par
value, of the Company 725,000(1) N/A $4,621,875(2) $1,220.18(3)
===========================================================================================================================
</TABLE>
(1) Represents the maximum number of shares of Class A common stock of
Registrant that would be issued by the Registrant in connection with the
merger of Bowlin with a wholly owned subsidiary of the Registrant.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rules 457(f) and 457(c) under the Securities Act of 1993,
as amended (the "Securities Act"). Based upon the average of the high and
low sale price for Bowlin common stock on November 7, 2000.
(3) Calculated pursuant to Rules 457(f) and 457(c) under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH 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.
<PAGE> 2
The information in this proxy statement/prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This proxy
statement/prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
PROSPECTUS
SUBJECT TO COMPLETION, NOVEMBER 14, 2000
BOWLIN OUTDOOR ADVERTISING AND TRAVEL CENTERS INCORPORATED
150 LOUISIANA NE
ALBUQUERQUE, NM 87108
Dear Bowlin Outdoor Advertising and Travel Centers Stockholder:
You are cordially invited to attend the special meeting of the
stockholders of Bowlin Outdoor Advertising and Travel Centers to be held at
9:00 a.m., Mountain Standard Time, on January 19, 2001, at 150 Louisiana NE,
Albuquerque, New Mexico 87108. At the special meeting, you will be asked to
consider and vote upon a proposal to adopt the merger agreement among Bowlin,
Lamar Advertising Company and Lamar Southwest Acquisition Corporation, pursuant
to which Bowlin will become a wholly owned subsidiary of Lamar and you will
become a shareholder of Lamar.
Upon the closing of the merger, outstanding shares of Bowlin common
stock will convert into the right to receive 725,000 shares of Lamar common
stock, with each Bowlin stockholder entitled to a pro rata share of the 725,000
shares.
Bowlin common stock is traded on the American Stock Exchange under the
symbol "BWN." Lamar common stock is traded on the Nasdaq National Market under
the symbol "LAMR."
Your board of directors has carefully considered and approved the
merger and has determined that the merger is in your best interests.
Accordingly, the Bowlin board recommends that you vote for adoption of the
merger agreement at the special meeting. In reaching this determination, the
Bowlin board has received the written opinion of Sanders Morris Harris Inc.
which states that the consideration to be paid by Lamar in the merger is fair,
from a financial point of view, to you. A copy of this opinion is attached to
the accompanying proxy statement/prospectus as Annex C, and we urge you to read
this opinion in its entirety.
We have enclosed a notice of special meeting and a proxy
statement/prospectus discussing the proposed merger and the merger agreement to
be considered at the special meeting. A copy of the merger agreement is also
attached to the proxy statement/prospectus as Annex A. We encourage you to read
the merger agreement. Also enclosed is a proxy card so you can vote on the
proposals without attending the special meeting.
The merger involves certain risks to Bowlin Outdoor Advertising and
Travel Centers Stockholders. See "Risk Factors," beginning on page 12.
It is important that your shares be represented at the special meeting.
Whether or not you expect to attend in person, please promptly sign, date and
return the enclosed proxy card in the enclosed, postage prepaid envelope.
Thank you, and we look forward to seeing you at the special meeting.
Very truly yours,
Michael L. Bowlin
Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the shares of Lamar Advertising Company
common stock to be issued under this proxy statement/prospectus or determined
if this proxy statement/prospectus is accurate or adequate. Any representation
to the contrary is a criminal offense.
This proxy statement/prospectus is dated December ____, 2000 and is first being
mailed to stockholders on or about December _____, 2000.
<PAGE> 3
BOWLIN OUTDOOR ADVERTISING AND TRAVEL CENTERS INCORPORATED
150 LOUISIANA NE
ALBUQUERQUE, NM 87108
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 19, 2001
TO THE STOCKHOLDERS OF BOWLIN OUTDOOR ADVERTISING AND TRAVEL CENTERS
INCORPORATED:
The special meeting of the stockholders of Bowlin Outdoor Advertising
and Travel Centers Incorporated, a Nevada corporation, will be held on January
19, 2001, at 9:00 a.m., Mountain Standard Time at 150 Louisiana NE,
Albuquerque, New Mexico 87108 for the following purposes:
1. To adopt and approve the merger agreement among Bowlin Outdoor
Advertising and Travel Centers Incorporated, Lamar Advertising
Company and Lamar Southwest Acquisition Corporation; and
2. To transact any other business that properly comes before the
meeting.
Your board of directors has determined that the merger agreement and
the merger are in your best interests and recommends that you vote for adoption
of the merger agreement.
The close of business on December __, 2000 has been fixed by the board
of directors of Bowlin Outdoor Advertising and Travel Centers Incorporated as
the record date for determination of the stockholders of Bowlin entitled to
notice of, and to vote at, the special meeting or any postponement or
adjournment. Whether or not you plan to attend the special meeting, we urge you
to complete, sign and return the enclosed proxy card in the enclosed
postage-paid envelope. You may revoke your proxy at any time before it is voted
by delivering a written notice of such revocation or a duly executed,
later-dated proxy to Bowlin Outdoor Advertising and Travel Centers Incorporated
at 150 Louisiana NE, Albuquerque, New Mexico 87108, Attention: Corporate
Secretary, or by attending the special meeting and voting in person.
By Order of the Board of Directors
Michael L. Bowlin
Chairman of the Board and
Chief Executive Officer
Albuquerque, New Mexico
December ___, 2000
You are invited to attend the special meeting in person. Even if you own only a
few shares, and whether or not you expect to be present at the meeting, please
vote, sign, date and mail the enclosed proxy in the accompanying postage-paid
reply envelope.
<PAGE> 4
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about Lamar and Bowlin from other documents that are not
included in or delivered with this proxy statement/prospectus. This information
is available to you without charge upon your written or oral request. You can
obtain those documents, which are incorporated by reference in this proxy
statement/prospectus, by requesting them in writing or by telephone from the
appropriate company at the following address and telephone numbers:
Lamar Advertising Company Bowlin Outdoor Advertising & Travel
5551 Corporate Boulevard Centers Incorporated
Baton Rouge, LA 70808 150 Louisiana NE
(225) 926-1000 Albuquerque, NM 87018
(505) 266-5985
See "Where You Can Find More Information" on page __.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Questions & Answers About The Merger..............................................................................1
Summary...........................................................................................................2
Lamar Advertising Company and Subsidiaries Selected Historical Financial Information..............................6
Bowlin Outdoor Advertising and Travel Centers Incorporated Selected Historical Financial Information..............8
Comparative Per Share Data........................................................................................9
Comparative Stock Prices and Dividends...........................................................................10
Risk Factors.....................................................................................................12
Special Note Regarding Forward-Looking Statements................................................................18
The Bowlin Special Meeting.......................................................................................19
Business of Lamar................................................................................................20
Recent Developments..............................................................................................20
Completed Acquisitions........................................................................................20
Pending Acquisitions..........................................................................................20
Business of Bowlin...............................................................................................20
Bowlin Management's Discussion and Analysis of Financial Condition and Results of Operations.....................21
Overview......................................................................................................21
Results of Operations.........................................................................................21
Liquidity and Capital Resources...............................................................................26
Quantitative and Qualitative Disclosures About Market Risk....................................................26
Background and Reasons For the Merger............................................................................27
Background....................................................................................................27
Bowlin's Reasons for the Merger...............................................................................28
Opinion of Financial Advisor To Bowlin's Board of Directors...................................................30
Potential Conflicts of Interest of Bowlin Management in the Merger............................................35
The Merger and the Merger Agreement..............................................................................36
General Description of the Merger.............................................................................36
Effective Time................................................................................................37
Merger Consideration for Bowlin Stock and Exchange Ratio......................................................37
No Fractional Shares..........................................................................................37
Exchange of Bowlin Stock Certificates.........................................................................38
Treatment of Bowlin Stock Options.............................................................................38
Treatment of Bowlin Benefits..................................................................................38
Accounting Treatment..........................................................................................38
Material United States Federal Income Tax Consequences of the Merger..........................................39
Covenants Under the Merger Agreement..........................................................................40
Representations and Warranties................................................................................41
Conditions to the Merger......................................................................................43
Termination of the Merger Agreement...........................................................................44
Termination Fees and Expenses.................................................................................45
Amendments and Waivers........................................................................................45
Appraisal or Dissenters' Rights...............................................................................45
Nasdaq Listing of Lamar Stock.................................................................................45
Delisting of Bowlin Stock.....................................................................................45
Resales of Lamar Stock by Bowlin Affiliates...................................................................46
Regulatory Matters............................................................................................46
Stock Ownership..................................................................................................47
Ownership of Lamar Stock......................................................................................47
Ownership of Bowlin Stock.....................................................................................49
Comparison of Rights of Lamar and Bowlin Stockholders............................................................51
Legal Matters....................................................................................................59
Experts..........................................................................................................59
Future Bowlin Stockholder Proposals..............................................................................60
Other Matters....................................................................................................60
Where You Can Find More Information..............................................................................60
Index to Financial Statements...................................................................................F-1
</TABLE>
Annex A - Merger Agreement
Annex B - Contribution Agreement
Annex C - Fairness Opinion of Sanders Morris Harris Inc.
Annex D - Bowlin's Annual Report on Form 10-K for the period ended
January 31, 2000
<PAGE> 6
QUESTIONS & ANSWERS ABOUT THE MERGER
Q: WHAT DO I NEED TO DO NOW?
A: Carefully read and consider the information contained in this proxy
statement/prospectus. Then, please complete, sign and date your proxy and
return it as soon as possible so that your shares may be represented at the
special meeting. If you sign and send in your proxy, your shares will be voted
as you indicate in your proxy. If you sign and send in your proxy, but do not
indicate how you want to vote, we will count the shares represented by your
proxy as a vote FOR adoption of the merger agreement. If you abstain from
voting or do not vote, it will have the effect of a vote against the merger
agreement.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?
A: Yes. You can change your vote at any time before your proxy is voted.
You can do this in one of three ways. First, you can send a written notice
stating that you are revoking your proxy. Second, you can complete and submit a
new proxy dated after the date of your original proxy. If you choose either of
these two methods, you must submit your notice of revocation or your new proxy
to the Secretary of Bowlin at 150 Louisiana NE, Albuquerque, New Mexico 87108.
Third, you can attend the special meeting and vote in person. Simply attending
the meeting, however, will not revoke your proxy; you must also vote at the
special meeting.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A: Your broker generally will vote your shares only if you provide
instructions on how to vote. Follow the information provided to you by your
broker. If your broker does not vote your shares, it will have the effect of a
vote against the merger.
Q: WHAT WILL I RECEIVE IN EXCHANGE FOR MY BOWLIN STOCK IN THE MERGER?
A: You will receive shares of Class A common stock of Lamar. Assuming the
exercise of all outstanding Bowlin options, the number of shares of Class A
common stock of Lamar that you will receive will equal the number of Bowlin
shares that you own multiplied by .1502.
Q: WHAT IS THE DIFFERENCE BETWEEN THE LAMAR CLASS A COMMON STOCK THAT I
WILL RECEIVE IN EXCHANGE FOR MY BOWLIN STOCK IN THE MERGER AND LAMAR'S
CLASS B COMMON STOCK?
A: The Class A common stock and the Class B common stock have the same
rights and powers, except that a share of Class A common stock entitles the
holder to one vote and a share of Class B common stock entitles the holder to
ten votes.
Q: SHOULD I SEND IN MY BOWLIN STOCK CERTIFICATES NOW?
A: No. After the merger is completed, you will receive written
instructions for exchanging your stock certificates. Please do not send in your
stock certificates with your proxy.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working toward completing the merger as quickly as possible. If
approved by the Bowlin stockholders, we expect to complete the merger during the
first quarter of 2001.
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: You can call Bowlin Investor Relations at (505) 266-5985 with questions
about the merger.
1
<PAGE> 7
SUMMARY
This summary highlights what we believe is the most important information about
the merger. Nonetheless, to fully understand the transaction, you should read
this entire proxy statement/prospectus, including the materials attached as
annexes, as well as the other documents to which we have referred you. See
"Where You Can Find More Information" on page ___. The page references in
parentheses will direct you to a more detailed description of the topics
presented in this summary.
THE COMPANIES
LAMAR (SEE PAGE ____)
Lamar is one of the largest and most experienced owners and operators
of outdoor advertising structures in the United States. Lamar also operates the
largest logo sign business in the United States. Lamar has a holding company
structure, in which Lamar Advertising Company and its direct wholly-owned
subsidiary, Lamar Media Corp., serve as holding companies for Lamar's indirect
subsidiaries.
The principal executive offices of Lamar, a Delaware corporation, are
located at 5551 Corporate Boulevard, Baton Rouge, LA 70808 and its telephone
number at these offices is (225) 926-1000.
BOWLIN (SEE PAGE ____)
Bowlin is a regional leader in the operation of travel centers and
outdoor advertising displays dedicated to serving the traveling public in rural
and smaller metropolitan areas of the Southwestern United States. The travel
center assets are being "spun off," or transferred, to a separate entity and
will not be a part of Bowlin at the time of the merger.
The principal offices of Bowlin, a Nevada corporation, are located at
150 Louisiana NE, Albuquerque, New Mexico 87108 and its telephone number at
these offices is (505) 266-5985.
THE MERGER
SUMMARY OF THE TRANSACTIONS (SEE PAGE ____)
In the proposed merger, Lamar Southwest Acquisition Corporation, a
Nevada corporation and a wholly owned subsidiary of Lamar, will be merged into
Bowlin. Bowlin will be the surviving corporation and its name will be changed
to Lamar Southwest, Inc. Prior to the merger, Bowlin and its subsidiary, Bowlin
Travel Centers, Inc., will enter into a contribution agreement. The
contribution agreement will provide that certain assets and liabilities related
to Bowlin's travel centers line of business will be contributed to Bowlin
Travel. Bowlin will then distribute the shares of Bowlin Travel to the Bowlin
stockholders immediately prior to completion of the merger. The business,
assets and liabilities of the travel centers line of business will not,
therefore, be acquired by Lamar in the merger with Bowlin. The shares of Bowlin
Travel must be distributed to the stockholders of Bowlin prior to the
consummation of the merger.
The proposed merger will occur following adoption of the merger
agreement by the Bowlin stockholders and satisfaction or waiver of all other
conditions to the merger. The merger agreement is attached as Annex A. We
encourage you to read it because it is the legal document that governs the
merger.
WHAT THE HOLDERS OF BOWLIN COMMON STOCK WILL RECEIVE IN THE MERGER (SEE PAGE___)
In the proposed merger, Bowlin common stockholders will receive Lamar
Class A common stock, which is referred to in this proxy statement/prospectus
as "Lamar stock." When we complete the merger, all of the outstanding shares of
Bowlin common stock, which is referred to in this proxy statement/prospectus as
"Bowlin stock," will be exchanged for 725,000 shares of Lamar stock. Assuming
the exercise of all outstanding options, each outstanding share of Bowlin stock
will convert into a right to receive .1502 of a share of Lamar stock. Lamar
2
<PAGE> 8
will not issue any fractional shares of Lamar stock in the merger. Instead,
Bowlin stockholders will receive cash for fractional shares.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES (SEE PAGE ____)
We intend that the merger qualify as a reorganization within the
meaning of Section 368 of the Internal Revenue Code. If the merger does qualify
as a reorganization, no gain or loss will be recognized by Bowlin, Lamar or the
merger subsidiary by reason of the merger. In addition, you will not recognize
gain or loss on the exchange of your shares of Bowlin stock for shares of Lamar
stock, except for any cash you receive instead of fractional shares.
BECAUSE THE TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON EACH
BOWLIN STOCKHOLDER'S PARTICULAR CIRCUMSTANCES, WE URGE YOU TO CONSULT
YOUR OWN TAX ADVISORS ABOUT THE FEDERAL, STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES TO YOU OF THE MERGER.
APPRAISAL OR DISSENTERS' RIGHTS (SEE PAGE ____)
Bowlin stockholders do not have appraisal or dissenters' rights in
connection with the merger.
BOWLIN'S REASONS FOR THE MERGER (SEE PAGE ____)
The Bowlin board concluded that the separation of its two business
segments, the distribution to the Bowlin stockholders of Bowlin Travel stock,
and the merger were in the best interests of Bowlin and its stockholders. In
reaching its decision, the board considered, among other things, its belief
that:
o the separation of Bowlin into two separate entities, one to
operate the travel centers business, and the other to operate
the outdoor advertising business, would improve the travel
centers business, and would improve the ability of investors
to value each business and as a result increase stockholder
value; and
o a merger with Lamar Advertising Company would further increase
stockholder value by giving Bowlin stockholders the
opportunity to hold shares in a much larger outdoor
advertising company with greater financial resources and
opportunities for growth than Bowlin, as well as a more liquid
trading market for its shares.
FAIRNESS OPINION OF SANDERS MORRIS HARRIS INC. (SEE PAGE ____)
In deciding to approve the merger, the Bowlin board considered an
opinion from its financial advisor, Sanders Morris Harris Inc. On October 2,
2000, Sanders Morris Harris Inc. delivered its written opinion to the Bowlin
board that as of that date and based on and subject to the matters set forth in
the opinion, the consideration pursuant to the merger agreement was fair, from
a financial point of view, to Bowlin stockholders. The full text of this
written opinion is attached as Annex C to this proxy statement/prospectus. We
encourage you to read this opinion carefully in its entirety. The opinion of
Sanders Morris Harris Inc. is directed to the Bowlin board and is not a
recommendation to any stockholder on how to vote on the merger agreement.
THE SPECIAL MEETING
DATE AND PURPOSE (SEE PAGE ____)
A special meeting of Bowlin stockholders will be held at Bowlin's
headquarters at 150 Louisiana NE, Albuquerque, New Mexico 87108 on January 19,
2001 at 9:00 a.m., Mountain Standard Time.
RECORD DATE; VOTING RIGHTS (SEE PAGE ____)
If you owned shares of Bowlin stock as of the close of business on
December __, 2000, the record date for the special meeting, you may vote on the
adoption of the merger agreement.
3
<PAGE> 9
On that date, there were _______________ shares of Bowlin stock
outstanding. Bowlin stockholders will have one vote at the meeting for each
share of common stock they owned on the record date.
QUORUM; REQUIRED VOTES (SEE PAGE ____)
The holders of a majority of the outstanding shares of Bowlin stock
must be present, in person or by proxy, at the Bowlin special meeting for there
to be a quorum. To approve the merger, holders of a majority of the outstanding
shares of Bowlin stock must vote to adopt the merger agreement. If you fail to
vote or abstain from voting, it will have the effect of a vote against the
merger. A broker who holds Bowlin stock as your nominee generally will not have
authority to vote your shares unless you provide the broker with voting
instructions.
On the record date, directors and officers of Lamar as a group owned
no shares of Bowlin stock, and directors and officers of Bowlin as a group
owned approximately 62.2% of the outstanding shares of Bowlin stock.
RECOMMENDATION OF THE BOWLIN BOARD (SEE PAGE ____)
BOWLIN'S BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS IN THE BEST
INTEREST OF BOWLIN STOCKHOLDERS AND RECOMMENDS THAT YOU VOTE "FOR" ADOPTION OF
THE MERGER AGREEMENT.
OTHER SELECTED INFORMATION
TREATMENT OF STOCK OPTIONS (SEE PAGE ____)
Any options for Bowlin stock that have not been exercised at the
effective time of the merger will be cancelled and will cease to represent the
right to receive either Bowlin stock or Lamar stock.
EMPLOYEE MATTERS (SEE PAGE ____)
The Bowlin employees who become employed by Lamar will be eligible to
participate in Lamar's 401(k) plan and any assets held in their respective
accounts of Bowlin's plan will be transferred to Lamar's plan.
ACCOUNTING TREATMENT (SEE PAGE ____)
Lamar will account for the merger under the purchase method of
accounting, which means the assets and liabilities of Bowlin, including its
intangible assets, will be recorded on Lamar's books at their fair market
values. The results of operations and cash flows of Bowlin will be included in
Lamar's financial statements prospectively as of the closing of the merger.
REGULATORY APPROVALS (SEE PAGE ____)
United States antitrust laws prohibit Lamar and Bowlin from completing
the merger until we have furnished information and materials about the
companies and the merger to the Antitrust Division of the Department of Justice
and the Federal Trade Commission and the required waiting period has expired.
Lamar and Bowlin have filed the required forms with these government agencies.
We are not aware of any other governmental or regulatory approvals required for
closing the merger other than compliance with federal securities laws.
CONDITIONS TO THE MERGER (SEE PAGE ____)
We must satisfy the following conditions before completing the merger:
o Bowlin stockholders must adopt the merger agreement;
o the registration statement of which this proxy
statement/prospectus is a part must have been declared
effective by the SEC and must not be the subject of any stop
order or related proceeding; and
4
<PAGE> 10
o we must obtain regulatory approval.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE ____)
We can mutually terminate the merger agreement without completing the
merger. Either Lamar or Bowlin may terminate the agreement if the merger is not
completed by March 31, 2001, and under other circumstances, including failure
to obtain required stockholder approval. Bowlin may terminate the agreement if
the average closing share price of Lamar stock for the 30 trading days ending
on the last trading day immediately prior to the closing of the merger is below
$40.00.
TERMINATION FEES AND EXPENSES (SEE PAGE ____)
If we do not complete the merger, each party generally will pay its
own expenses. If we complete the merger, Lamar will pay all of Bowlin's
merger-related expenses up to $1,250,000. Bowlin Travel will assume any costs
incurred by Bowlin in excess of $1,250,000. Bowlin has agreed to pay Lamar a
termination fee of $580,000 if either party terminates the merger agreement
because Bowlin's stockholders fail to adopt the merger agreement.
COMPARATIVE STOCKHOLDER RIGHTS (SEE PAGE ____)
When we complete the merger, Bowlin stockholders will hold shares of
Lamar stock. Their rights will thus be governed by Lamar's charter, by-laws and
the Delaware General Corporation Law.
COMPARATIVE STOCK PRICE INFORMATION (SEE PAGE ____)
Lamar stock is quoted on the Nasdaq National Market and Bowlin stock
is quoted on the American Stock Exchange. The following table presents the
market value of Lamar stock and the market value of Bowlin stock as of October
3, 2000, the last business day before we publicly announced the merger
agreement.
<TABLE>
<CAPTION>
LAMAR STOCK BOWLIN STOCK
------------------------------ --------------------- --------
HIGH LOW CLOSING HIGH LOW CLOSING
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
October 3, 2000 .... $ 38.13 $ 37.13 $ 37.44 $ 6.56 $ 6.56 $ 6.56
</TABLE>
You are encouraged to obtain current market quotations for Lamar stock and
Bowlin stock.
5
<PAGE> 11
LAMAR ADVERTISING COMPANY AND SUBSIDIARIES
SELECTED HISTORICAL FINANCIAL INFORMATION
Lamar is providing the following information to aid you in your
analysis of the financial aspects of the merger. The table below represents
selected historical consolidated statement of operations and balance sheet data
of Lamar and its subsidiaries. Lamar derived this information from audited
financial statements for the years ended October 31, 1995 through October 31,
1996 and December 31, 1997 through December 31, 1999 and from unaudited
financial statements for the six months ended June 30, 1999 and June 30, 2000.
Effective January 1, 1997, Lamar changed its fiscal year from a twelve-month
period ending October 31 to a twelve-month period ending December 31.
In Lamar's opinion, the information for the six months ended June 30,
1999 and 2000 reflects all adjustments, consisting only of normal recurring
adjustments, necessary to fairly present the results of operations and financial
condition. Results from interim periods should not be considered indicative of
results for any other periods or for the year. This information is only a
summary. You should read it in conjunction with Lamar's historical financial
statements and related notes and the "Management's Discussion and Analysis of
Financial Condition and Results of Operations," which are incorporated by
reference into this proxy statement/prospectus.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, YEAR ENDED DECEMBER 31,
------------------------- ----------------------------------------
1995 1996 1997 1998 1999
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues ........................... $ 102,408 $ 120,602 $ 201,062 $ 288,588 $ 444,135
Operating expenses:
Direct advertising expenses .......... 34,386 41,184 63,390 92,849 143,090
General and administrative
expenses ............................ 27,057 29,466 45,368 60,935 94,372
Depreciation and amortization ........ 15,597 16,712 48,317 88,791 177,138
---------- ---------- ---------- ---------- ----------
Total operating expenses ............ 77,040 87,362 157,075 242,575 414,600
---------- ---------- ---------- ---------- ----------
Operating income (loss) ................ 25,368 33,240 43,987 46,013 29,535
---------- ---------- ---------- ---------- ----------
Other expense (income):
Interest income ...................... (199) (240) (1,723) (762) (1,421)
Interest expense ..................... 15,783 15,441 38,230 60,008 89,619
Loss (gain) on disposition of
assets .............................. 1,476 91 (15) (1,152) (5,481)
---------- ---------- ---------- ---------- ----------
Total other expense ................. 17,060 15,292 36,492 58,094 82,717
---------- ---------- ---------- ---------- ----------
Earnings (loss) before income
taxes, extraordinary item and
cumulative effect of an
accounting change .................... 8,308 17,948 7,495 (12,081) (53,182)
Income tax expense (benefit) ........... (2,390) 7,099 4,654 (191) (9,596)
---------- ---------- ---------- ---------- ----------
Earnings (loss) before
extraordinary item and
cumulative effect of an
accounting change .................... 10,698 10,849 2,841 (11,890) (43,586)
Extraordinary loss on debt
extinguishment ....................... -- -- -- -- (182)
---------- ---------- ---------- ---------- ----------
Earnings (loss) before
cumulative effect of an
accounting change .................... 10,698 10,849 2,841 (11,890) (43,768)
Cumulative effect of an
accounting change .................... -- -- -- -- (767)
---------- ---------- ---------- ---------- ----------
Net earnings (loss) .................... 10,698 10,849 2,841 (11,890) (44,535)
Preferred stock dividends .............. -- (365) (365) (365) (365)
---------- ---------- ---------- ---------- ----------
Net earnings (loss) applicable
to common stock ...................... 10,698 10,484 2,476 (12,255) (44,900)
========== ========== ========== ========== ==========
Earnings (loss) per common share
- basic and diluted:
Earnings (loss) before
extraordinary item and
accounting change(1) ................ $ 0.21 $ 0.25 $ 0.05 $ (.24) $ (.64)
Extraordinary loss on debt
extinguishment(1) ................... -- -- -- -- --
Cumulative effect of a change
in accounting principle(1) .......... $ -- $ -- $ -- $ -- $ (.01)
---------- ---------- ---------- ---------- ----------
Net earnings (loss)(1) ............... $ 0.21 $ 0.25 $ 0.05 $ (.24) $ (.65)
========== ========== ========== ========== ==========
Other Data:
EBITDA(2) .............................. $ 40,965 $ 49,952 $ 92,304 $ 134,804 $ 206,673
EBITDA margin .......................... 40% 41% 46% 47% 47%
Cash flows from operating ..............
activities(3) ........................ $ 25,065 $ 32,493 $ 45,783 $ 72,498 $ 110,551
Cash flows from investing
activities(3) ........................ $ (17,817) $ (48,124) $ (370,228) $ (535,217) $ (950,650)
Cash flows from financing
activities(3) ........................ $ (9,378) $ 18,175 $ 250,684 $ 584,070 $ 719,903
</TABLE>
LAMAR ADVERTISING COMPANY AND SUBSIDIARIES
SELECTED HISTORICAL FINANCIAL INFORMATION -- (CONTINUED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
SEPTEMBER 30
1999 2000
--------- ---------
(UNAUDITED)
(in thousands, except
per share data)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues ................................. $ 294,614 $ 509,026
Operating expenses:
Direct advertising expenses ................ 93,481 162,176
General and administrative
expenses .................................. 64,025 103,213
Depreciation and amortization .............. 104,951 231,533
--------- ---------
Total operating expenses .................. 262,457 496,922
--------- ---------
Operating income (loss) ...................... 32,157 12,104
--------- ---------
Other expense (income):
Interest income ............................ (1,067) (968)
Interest expense ........................... 57,471 109,186
Loss (gain) on disposition of
assets .................................... (5,666) (274)
--------- ---------
Total other expense ....................... 50,738 107,944
--------- ---------
Earnings (loss) before income
taxes, extraordinary item and
cumulative effect of an
accounting change .......................... (18,581) (95,840)
Income tax expense (benefit) ................. (362) (26,959)
--------- ---------
Earnings (loss) before
extraordinary item and
cumulative effect of an
accounting change .......................... (18,219) (68,881)
Extraordinary loss on debt
extinguishment ............................. (182) --
--------- ---------
Earnings (loss) before
cumulative effect of an
accounting change .......................... $ (18,401) $ (68,881)
--------- ---------
Cumulative effect of an
accounting change .......................... (767) --
--------- ---------
Net earnings (loss) .......................... (19,168) (68,881)
Preferred stock dividends .................... (365) (273)
--------- ---------
Net earnings (loss) applicable
to common stock ............................ $ (19,533) $ (69,154)
========= =========
Earnings (loss) per common
share - basic and diluted:
Earnings (loss) before
extraordinary item and
accounting change(1) ...................... $ (.30) $ (.77)
--------- ---------
Extraordinary loss on debt
extinguishment(1) ......................... -- --
--------- ---------
Cumulative effect of a change
in accounting principle(1) ................ $ (.01) $ --
--------- ---------
Net earnings (loss)(1) ..................... $ (.31) $ (.77)
========= =========
OTHER DATA:
EBITDA(2) .................................... $ 137,108 $ 244,037
EBITDA margin ................................ 47% 48%
Cash flows from operating
activities(3) .............................. $ 65,311 $ 115,468
Cash flows from investing
activities(3) .............................. $(882,760) $(378,097)
Cash flows from financing
activities(3) .............................. $ 699,630 $ 260,904
</TABLE>
6
<PAGE> 12
LAMAR ADVERTISING COMPANY AND SUBSIDIARIES
SELECTED HISTORICAL FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
AS OF OCTOBER 31, AS OF DECEMBER 31, 2000
1995 1996 1997 1998 1999 (UNAUDITED)
---------- ---------- ---------- ---------- ---------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents .......... $ 5,886 $ 8,430 $ 7,246 $ 128,597 $ 8,401 $ 6,676
Working capital .................... 1,737 1,540 18,662 94,221 40,787 45,340
Total assets ....................... 133,885 173,189 651,336 1,413,377 3,206,945 3,611,253
Long term debt (including current
maturities) ...................... 146,051 131,955 539,200 876,532 1,615,781 1,875,657
Total long term obligations ........ 143,944 130,211 551,865 857,760 1,730,710 1,998,488
Stockholders' equity (deficit) ..... (28,154) 19,041 68,713 466,779 1,391,529 1,508,495
</TABLE>
----------
(1) After giving effect to the three-for-two split of Lamar's Class A and
Class B common stock effective in February 1998.
(2) "EBITDA" is defined as operating income before depreciation and
amortization. It represents a measure which management believes is
customarily used to evaluate the financial performance of companies in the
media industry. However, EBITDA is not a measure of financial performance
under generally accepted accounting principles and should not be
considered an alternative to operating income or net earnings as an
indicator of Lamar's operating performance or to net cash provided by
operating activities as a measure of its liquidity.
(3) Cash flows from operating, investing and financing activities are obtained
from the Company's consolidated statements of cash flows prepared in
accordance with generally accepted accounting principles.
7
<PAGE> 13
BOWLIN OUTDOOR ADVERTISING AND TRAVEL CENTERS INCORPORATED
SELECTED HISTORICAL FINANCIAL INFORMATION
The table below represents selected historical consolidated statement
of income and balance sheet data of Bowlin Outdoor Advertising and Travel
Centers Incorporated. Bowlin derived this information from audited consolidated
financial statements for the five years ended January 31, 2000 and from the
unaudited financial statements for the six months ended July 31, 2000 and 1999.
This information is only a summary. The data presented below should be read in
conjunction with the audited consolidated financial statements, related notes
and Management's Discussion and Analysis of Financial Condition and Results of
Operations, which are included in this proxy statement/prospectus and provided
in the enclosed materials.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS ENDED, JULY 31,
-------------------------------------------------------- --------------------
1996 1997 1998 1999 2000 1999 2000
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales .............................. $ 22,945 $ 24,848 $ 27,159 $ 30,295 $ 34,618 $ 17,727 $ 18,813
Cost of goods sold ..................... (15,003) (16,340) (17,531) (18,848) (22,350) (11,188) (12,138)
-------- -------- -------- -------- -------- -------- --------
Gross profit ........................... 7,942 8,508 9,628 11,447 12,268 6,539 6,675
General and administrative
expenses ............................. (6,408) (6,115) (6,568) (7,480) (8,069) (3,953) (3,862)
Depreciation and amortization .......... (857) (780) (1,150) (1,895) (2,526) (1,201) (1,353)
Other operating income ................. 490 379 90 7 31 -- --
-------- -------- -------- -------- -------- -------- --------
Income from operations ................. 1,167 1,992 2,000 2,079 1,704 1,385 1,460
Interest expense ....................... (612) (678) (722) (1,108) (1,934) (909) (1,076)
Other income (loss), net ............... 81 194 469 139 813 291 188
-------- -------- -------- -------- -------- -------- --------
Income before income taxes ............. 636 1,508 1,747 1,110 583 767 572
Income taxes ........................... 252 603 678 437 245 300 226
-------- -------- -------- -------- -------- -------- --------
$ 384 $ 905 $ 1,069 $ 673 $ 338 $ 467 $ 346
======== ======== ======== ======== ======== ======== ========
Basic and diluted earnings per
share ................................ $ 0.11 $ 0.26 $ 0.24 $ 0.15 $ 0.08 $ 0.11 $ 0.08
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA:
Property & equipment ................... $ 8,910 $ 9,971 $ 16,197 $ 26,425 $ 30,556 $ 29,594 $ 30,289
Total assets ........................... $ 13,598 $ 21,843 $ 25,859 $ 37,489 $ 40,781 $ 40,298 $ 41,360
Long-term debt, including
current installments ................. $ 6,577 $ 6,695 $ 8,903 $ 20,252 $ 22,388 $ 21,356 $ 21,642
</TABLE>
8
<PAGE> 14
COMPARATIVE PER SHARE DATA
We are providing the following comparative per share information to
aid you in your analysis of the financial aspects of the merger. You should
read this information in conjunction with each of our historical financial
statements and unaudited pro forma consolidated financial statements and the
related notes that are included elsewhere in this proxy statement/prospectus or
incorporated into this proxy statement/prospectus by reference. The unaudited
pro forma consolidated per share data presented below reflects the purchase
method of accounting for business combinations. The results may have been
different if our companies had always been consolidated. In addition, the per
share data of Bowlin does not reflect the effect of the anticipated spin-off of
Bowlin Travel.
Lamar's fiscal year ends on December 31 and Bowlin's fiscal year ends
on January 31. For purposes of pro forma information (a) Lamar's nine month
ended September 30, 2000 was combined with Bowlin's three month period ended
January 31, 2000 and six month period ended July 31, 2000, (b) Lamar's year
ended December 31, 1999 was combined with Bowlin's year ended January 31, 2000
and (c) Lamar's balance sheet as of September 30, 2000 was combined with
Bowlin's balance sheet as of July 31, 2000. The Bowlin pro forma equivalent per
share data equals the exchange ratio, assuming the exercise of all outstanding
options, of .1502 multiplied by the Lamar pro forma consolidated per share data.
The pro forma per share data are not necessarily indicative of the results that
would have occurred if the merger had been completed on the dates indicated or
the results that will occur after the merger.
<TABLE>
<CAPTION>
LAMAR STOCKHOLDERS
-----------------------
HISTORICAL PRO FORMA
---------- ---------
<S> <C> <C>
Loss per share:
Year ended December 31, 1999........... $ (.65) n/a
Nine months ended September 30, 2000... $ (.77) n/a
Loss per share before extraordinary item
and cumulative effect of an accounting
change:
Year ended December 31, 1999........... $ (.64) $ (.67)
Nine months ended September 30, 2000... $ (.77) $ (.78)
Dividends per share:
Year ended December 31, 1999........... n/a n/a
Nine months ended September 30, 2000... n/a n/a
Book value per share at
September 30, 2000..................... $ 16.32 $ 16.51
<CAPTION>
BOWLIN STOCKHOLDERS
-----------------------
PRO FORMA
HISTORICAL EQUIVALENT
---------- ---------
<S> <C> <C>
Earnings per share:
Year ended January 31, 2000............ $ .08 n/a
Six months ended July 31, 2000......... $ .08 n/a
Dividends per share:
Year ended January 31, 2000............ n/a n/a
Six months ended July 31, 2000......... n/a n/a
Loss per share before extraordinary
item and cumulative effect of an
accounting change:
Year ended December 31, 1999........... n/a $ (.10)
Nine months ended September 30, 2000... n/a $ (.12)
Book value per share at July 31, 2000.... $ 3.48 n/a
Book value per share at
September 30, 2000..................... n/a $ 2.48
</TABLE>
9
<PAGE> 15
COMPARATIVE STOCK PRICES AND DIVIDENDS
Lamar stock is quoted on the Nasdaq National Market under the trading
symbol "LAMR." Bowlin stock is quoted on the American Stock Exchange under the
trading symbol "BWN." The following table sets forth the high and low bid prices
per share of Lamar stock as reported on the Nasdaq National Market and the high
and low sales prices of Bowlin stock as reported on the American Stock Exchange.
For purposes of comparison, the periods indicated reflect calendar year quarters
and do not reflect fiscal quarters corresponding to Bowlin's January 31 fiscal
year end.
<TABLE>
<CAPTION>
LAMAR STOCK BOWLIN STOCK
--------------------- ---------------------
HIGH LOW HIGH LOW
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CALENDAR QUARTER 1998
First Quarter.......................................... $ 38.50 $ 24.42 $ 9.50 $ 3.75
Second Quarter......................................... $ 36.75 $ 29.25 $ 10.88 $ 7.88
Third Quarter.......................................... $ 41.50 $ 24.50 $ 9.13 $ 4.00
Fourth Quarter......................................... $ 39.25 $ 19.25 $ 6.00 $ 4.25
CALENDAR QUARTER 1999
First Quarter.......................................... $ 41.63 $ 32.25 $ 7.00 $ 5.13
Second Quarter......................................... $ 43.00 $ 27.75 $ 7.13 $ 6.00
Third Quarter.......................................... $ 50.69 $ 35.25 $ 6.88 $ 5.00
Fourth Quarter......................................... $ 64.50 $ 44.63 $ 5.88 $ 3.50
CALENDAR QUARTER 2000
First Quarter.......................................... $ 70.25 $ 40.13 $ 6.00 $ 4.38
Second Quarter......................................... $ 50.38 $ 36.50 $ 7.50 $ 4.63
Third Quarter.......................................... $ 50.75 $ 37.63 $ 7.13 $ 6.38
Fourth Quarter (through November 10, 2000)............. $ 49.00 $ 36.00 $ 7.00 $ 5.50
</TABLE>
RECENT CLOSING PRICES
The following table sets forth the high, low and closing sales prices
per share of Lamar stock as reported on the Nasdaq National Market and Bowlin
stock as reported on the American Stock Exchange on October 3, 2000, the last
trading day before our public announcement/execution of the merger agreement,
and on November 10, 2000, the last practicable trading day before the date of
this document.
<TABLE>
<CAPTION>
LAMAR STOCK BOWLIN STOCK
-------------------------------- -------------------------------
HIGH LOW CLOSING HIGH LOW CLOSING
------ ------ ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
October 3, 2000.............. $38.13 $37.13 $37.44 $6.56 $6.56 $6.56
November 10, 2000............ $46.13 $44.00 $44.63 $6.50 $6.38 $6.50
</TABLE>
The market price of Lamar stock is likely to fluctuate prior to the
merger. You should obtain current market quotations. We cannot predict the
future prices for Lamar stock, or on which markets it will be traded in the
future.
DIVIDEND INFORMATION
No cash dividends have ever been paid or declared on the shares of
Lamar stock or on the Bowlin stock. Lamar does not intend to pay cash dividends
on its Class A common stock in the foreseeable future. Any future payment of
dividends on Lamar stock will be at the board's discretion and will depend
upon, among other things, Lamar's earnings, financial condition, capital
requirements, level of indebtedness and other factors that Lamar's board deems
relevant.
10
<PAGE> 16
NUMBER OF STOCKHOLDERS AND NUMBER OF SHARES OUTSTANDING
As of November 10, 2000 there were 210 stockholders of Lamar
of record who held an aggregate of 75,393,922 shares of Lamar Class A common
stock. The Reilly Family Limited Partnership is the sole holder of Lamar's
Class B common stock. As of November 10, 2000, the RFLP held 17,000,000 shares
of Class B common stock.
As of November 10, 2000, there were 394 stockholders of Bowlin of
record who held an aggregate of 4,533,748 shares of Bowlin stock.
11
<PAGE> 17
RISK FACTORS
In addition to the other information included in this proxy
statement/prospectus, you should consider carefully the risk factors described
below in deciding how to vote on the merger proposal. It is especially
important that you keep these risk factors in mind when you read
forward-looking statements.
RISKS RELATING TO THE MERGER
THE NUMBER OF SHARES OF LAMAR STOCK THAT WILL BE EXCHANGED FOR BOWLIN STOCK IS
FIXED AND WILL NOT BE ADJUSTED IF THERE IS ANY CHANGE IN THE PRICE OF LAMAR
STOCK.
Assuming the exercise of all outstanding Bowlin stock options, in the
merger, each share of Bowlin stock will be exchanged for .1502 of a share of
Lamar stock. This exchange ratio is based upon the exchange of 725,000 shares
of Lamar stock upon conversion of the Bowlin stock and will not be adjusted as
a result of any change in the price of Lamar stock. The market value of Lamar
stock on and after the closing date of the merger may vary significantly from
the prices on the date of execution of the merger agreement, the date of this
proxy statement/prospectus or the date on which you vote on the merger. Any
change in the price of Lamar stock will affect the value of the consideration
that Bowlin stockholders receive in the merger. On October 3, 2000, the date of
the execution of the merger, the closing price of Lamar stock was $37.44 per
share. On November 10, 2000, the date preceding the filing of this proxy
statement/prospectus, the closing price of Lamar stock was $44.63 per share. We
encourage you to obtain current market quotations for Lamar stock.
LAMAR FACES DIFFERENT MARKET RISKS FROM THOSE FACED BY BOWLIN, AND THESE RISKS
MAY CAUSE THE VALUE OF THE SHARES OF LAMAR STOCK ISSUED TO YOU TO DECLINE.
In the merger you will receive shares of Lamar stock. The business,
strategy and financial condition of Lamar are somewhat different from that of
Bowlin. Lamar's results of operations, as well as the price of Lamar stock,
will be affected by various factors different from those affecting Bowlin's
results of operations and its common stock price. Future events that may not
have affected the price of Bowlin stock may cause the price of Lamar stock to
fall.
OFFICERS AND DIRECTORS OF BOWLIN HAVE CONFLICTS OF INTEREST THAT MAY HAVE
INFLUENCED THEIR DECISIONS REGARDING THE MERGER.
You should be aware of potential conflicts of interest, and the
benefits available to officers and directors of Bowlin when considering the
Bowlin board's recommendation of the merger. The officers and directors of
Bowlin have interests in the merger that are in addition to, or different from,
their interests as Bowlin stockholders. The Bowlin board was aware of these
conflicts of interest when it approved the merger. These interests include the
right of Bowlin's officers and directors to:
o exercise options to purchase Bowlin stock at an exercise price
that is less than the current trading price; and
o indemnification and insurance coverage with respect to acts
and omissions in their capacities as officers and directors of
Bowlin. For a more detailed discussion of potential conflicts
of interests of Bowlin management, see "Background and Reasons
for the Merger - Potential Conflicts of Interests of Bowlin
Management in the Merger" on page ____ of this proxy
statement/prospectus.
12
<PAGE> 18
RISKS RELATING TO LAMAR
LAMAR'S DEBT AGREEMENTS AND THOSE OF ITS WHOLLY-OWNED, DIRECT SUBSIDIARY LAMAR
MEDIA CORP. CONTAIN COVENANTS AND RESTRICTIONS THAT CREATE THE POTENTIAL FOR
DEFAULTS.
The terms of the indenture relating to Lamar's outstanding notes,
Lamar Media Corp.'s bank credit facility and the indentures relating to Lamar
Media's outstanding notes restrict, among other things, the ability of Lamar
and Lamar Media to:
o dispose of assets;
o incur or repay debt;
o create liens; and
o make investments.
Lamar Media's ability to make distributions to Lamar is also
restricted under the terms of these agreements.
Under Lamar Media's bank credit facility Lamar must maintain specified
financial ratios and levels including:
o interest coverage;
o fixed charges ratio;
o senior debt ratios; and
o total debt ratios.
If Lamar fails to comply with these tests, the lenders have the right
to cause all amounts outstanding under the bank credit facility to become
immediately due. If this were to occur and the lenders decide to exercise their
right to accelerate the indebtedness, it would create serious financial problems
for Lamar. Lamar's ability to comply with these restrictions, and any similar
restrictions in future agreements, depends on its operating performance. Because
Lamar's performance is subject to prevailing economic, financial and business
conditions and other factors that are beyond its control, Lamar may be unable to
comply with these restrictions in the future.
BECAUSE LAMAR HAS SIGNIFICANT FIXED PAYMENTS ON ITS DEBT, LAMAR MAY LACK
SUFFICIENT CASH FLOW TO OPERATE ITS BUSINESS AS IT HAS IN THE PAST AND MAY NEED
TO BORROW MONEY IN THE FUTURE TO MAKE THESE PAYMENTS AND OPERATE ITS BUSINESS.
Lamar has borrowed substantial amounts of money in the past and may
borrow more money in the future. At September 30, 2000, Lamar had approximately
$288 million of convertible notes outstanding. At September 30, 2000, Lamar
Media had approximately $1,588 million of debt outstanding consisting of
approximately $1,037 million in bank debt, $541 million in various series of
senior subordinated notes of Lamar Media and $10 million in various other
short-term and long-term debt of Lamar Media.
A large part of Lamar's cash flow from operations must be used to make
principal and interest payments on its debt. If Lamar's operations make less
money in the future, it may need to borrow to make these payments. In addition,
Lamar finances most of its acquisitions through borrowings under Lamar Media's
bank credit facility which presently has a total committed amount of $1.25
billion in term and revolving credit loans. At September 30, 2000, there was
approximately $212 million available to borrow under this bank credit facility.
Since Lamar's borrowing capacity under Lamar Media's bank credit facility is
limited, Lamar may not be able to continue to finance future acquisitions at
Lamar's historical rates with borrowings under this bank credit facility. Lamar
may need to borrow additional amounts or seek other sources of financing to
fund future acquisitions. Lamar cannot
13
<PAGE> 19
guarantee that additional financing will be available or available on favorable
terms. Lamar also may need the consent of the banks under Lamar Media's bank
credit facility, or the holders of other indebtedness, to borrow additional
money.
LAMAR'S BUSINESS COULD BE HURT BY CHANGES IN ECONOMIC AND ADVERTISING TRENDS.
Lamar sells advertising space to generate revenues. A decrease in
demand for advertising space could adversely affect Lamar's business. General
economic conditions and trends in the advertising industry affect the amount of
advertising space purchased. A reduction in money spent on Lamar's displays
could result from:
o a general decline in economic conditions;
o a decline in economic conditions in particular markets where
Lamar conducts business;
o a reallocation of advertising expenditures to other available
media by significant users of Lamar's displays; or
o a decline in the amount spent on advertising in general.
LAMAR'S OPERATIONS ARE IMPACTED BY THE REGULATION OF OUTDOOR ADVERTISING.
Lamar's operations are significantly impacted by federal, state and
local government regulation of the outdoor advertising business.
The federal government conditions federal highway assistance on states
imposing location restrictions on the placement of billboards on primary and
interstate highways. Federal laws also impose size, spacing and other
limitations on billboards. Some states have adopted standards more restrictive
than the federal requirements. Local governments generally control billboards
as part of their zoning regulations. Some local governments have enacted
ordinances which require removal of billboards by a future date. Others
prohibit the construction of new billboards and the reconstruction of
significantly damaged billboards, or allow new construction only to replace
existing structures.
Local laws which mandate removal of billboards at a future date often
do not provide for payment to the owner for the loss of structures that are
required to be removed. Some federal and state laws require payment of
compensation in such circumstances. Local laws that require the removal of a
billboard without compensation have been challenged in state and federal courts
with conflicting results. Accordingly, Lamar may not be successful in
negotiating acceptable arrangements when its displays have been subject to
removal under these types of local laws.
Additional regulations may be imposed on outdoor advertising in the
future. Legislation regulating the content of billboard advertisements has been
introduced in Congress from time to time in the past. Additional regulations or
changes in the current laws regulating and affecting outdoor advertising at the
federal, state or local level may have a material adverse effect on Lamar's
results of operations.
LAMAR'S CONTINUED GROWTH THROUGH ACQUISITIONS MAY BECOME MORE DIFFICULT AND
INVOLVES COSTS AND UNCERTAINTIES.
Lamar has substantially increased its inventory of advertising
displays through acquisitions. Lamar's operating strategy involves making
purchases in markets where it currently competes as well as in new markets.
However, the following factors may affect Lamar's ability to continue to pursue
this strategy effectively:
o The outdoor advertising market has been consolidating, and
this may adversely affect Lamar's ability to find suitable
candidates for purchase.
14
<PAGE> 20
o Lamar is also likely to face increased competition from other
outdoor advertising companies for the companies or assets that
Lamar wishes to purchase. Increased competition may lead to
higher prices for outdoor advertising companies and assets and
decrease those that Lamar is able to purchase.
o Lamar does not know if it will have sufficient capital
resources to make purchases, obtain any required consents from
its lenders, or find acquisition opportunities with acceptable
terms.
o Lamar must integrate newly acquired assets and businesses into
its existing operations. From January 1, 2000 to September 30,
2000, Lamar completed 71 transactions involving the purchase
of complementary outdoor advertising assets. The process of
integrating these acquisitions may result in unforeseen
difficulties and could require significant time and attention
from Lamar's management that would otherwise be directed at
developing its existing business. Further, Lamar cannot be
certain that the benefits and cost savings that it anticipates
from these purchases will develop.
LAMAR FACES COMPETITION FROM LARGER AND MORE DIVERSIFIED OUTDOOR ADVERTISERS
AND OTHER FORMS OF ADVERTISING THAT COULD HURT ITS PERFORMANCE.
Lamar cannot be sure that in the future it will compete successfully
against the current and future forms of outdoor advertising and other media.
The competitive pressure that Lamar faces could adversely affect its
profitability or financial performance. Although Lamar is the largest company
focusing exclusively on outdoor advertising, it faces competition from larger
companies with more diversified operations which also include radio and other
broadcast media. Lamar also faces competition from other forms of media,
including television, radio, newspapers and direct mail advertising. Lamar must
also compete with an increasing variety of other out-of-home advertising media
that include advertising displays in shopping centers, malls, airports,
stadiums, movie theaters and supermarkets, and on taxis, trains and buses.
In Lamar's logo sign business, it currently faces competition for
state-awarded service contracts from two other logo sign providers as well as
local companies. Initially, Lamar competes for state-awarded service contracts
as they are privatized. Because these contracts expire after a limited time,
Lamar must compete to keep its existing contracts each time they are up for
renewal.
THE REQUIRED DISPOSITION OF SHARES OF LAMAR STOCK CURRENTLY HELD BY CLEAR
CHANNEL COMMUNICATIONS, INC. COULD CAUSE THE MARKET PRICE OF THE LAMAR STOCK TO
DECLINE.
A wholly-owned subsidiary of Clear Channel Communications, Inc.
currently holds approximately 26 million shares of Lamar stock. These shares
represent approximately 34.8% of Lamar's outstanding Lamar Class A common stock
and 28.4% of all of Lamar's outstanding common stock as of September 30, 2000.
Clear Channel must dispose of all of these shares prior to January 1, 2003
under the terms of a consent decree with the Department of Justice. The consent
decree was issued in connection with the merger of AMFM Inc. with Clear
Channel, which was subject to review and clearance by the Federal Trade
Commission and U.S. Department of Justice under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, because Clear Channel is also in the outdoor
advertising business. These shares were originally issued to a subsidiary of
AMFM Inc. in connection with Lamar's acquisition of the Chancellor outdoor
advertising business. This required disposition could adversely affect the
market price of Lamar stock.
IF LAMAR'S CONTINGENCY PLANS RELATING TO HURRICANES FAIL, THE RESULTING LOSSES
COULD HURT LAMAR'S BUSINESS.
Although Lamar has developed contingency plans designed to deal with
the threat posed to its advertising structures by hurricanes, Lamar cannot
guarantee that these plans will work. If these plans fail, significant losses
could result.
A significant portion of Lamar's structures is located in the
Mid-Atlantic and Gulf Coast regions of the United States. These areas are
highly susceptible to hurricanes during the late summer and early fall. In the
past, Lamar has incurred significant losses due to severe storms. These losses
resulted from structural damage, overtime
15
<PAGE> 21
compensation, loss of billboards that could not be replaced under applicable
laws and reduced occupancy because billboards were out of service.
Lamar has determined that it is not economical to obtain insurance
against losses from hurricanes and other storms. Instead, Lamar has developed
contingency plans to deal with the threat of hurricanes. For example, Lamar
attempts to remove the advertising faces on billboards at the onset of a storm,
when possible, which permits the structures to better withstand high winds
during a storm. Lamar then replaces these advertising faces after the storm has
passed. However, these plans may not be effective in the future and, if they
are not, significant losses may result.
LAMAR'S LOGO SIGN CONTRACTS ARE SUBJECT TO STATE AWARD AND RENEWAL.
A portion of Lamar's revenues and operating income come from
state-awarded service contracts for logo signs. Lamar cannot predict what
remaining states, if any, will start logo sign programs or convert state-run
logo sign programs to privately operated programs. Lamar competed with many
other parties for new state-awarded service contracts for logo signs. Even when
Lamar is awarded a contract, the award may be challenged under state contract
bidding requirements. If an award is challenged, Lamar may incur delays and
litigation costs.
Generally, state-awarded logo sign contracts have a term, including
renewal options, of ten to twenty years. States may terminate a contract early,
but in most cases must pay compensation to the logo sign provider for early
termination. Typically, at the end of the term of the contract, ownership of
the structures is transferred to the state without compensation to the logo
sign provider. Of Lamar's 20 logo sign contracts in place at September 30,
2000, two are subject to renewal in January and February 2001. Lamar cannot
guarantee that it will be able to obtain new logo sign contracts or renew its
existing contracts. In addition, after Lamar received a new state-awarded logo
contract, it generally incurs significant start-up costs. Lamar cannot
guarantee that it will continue to have access to the capital necessary to
finance those costs.
LAMAR'S OPERATIONS COULD BE AFFECTED BY THE LOSS OF KEY EXECUTIVES.
Lamar's success depends to a significant extent upon the continued
services of its executive officers and other key management and sales
personnel. Kevin P. Reilly, Jr., Lamar's Chief Executive Officer, its nine
regional managers and the manager of its logo sign business, in particular, are
essential to Lamar's continued success. Although Lamar has designed its
incentive and compensation programs to retain key employees, Lamar has no
employment contracts with any of its employees and none of its executive
officers have signed non-compete agreements. Lamar does not maintain key man
insurance on its executives. If any of Lamar's executive officers or other key
management and sales personnel stopped working with Lamar in the future, it
could have an adverse effect on Lamar's business.
LAMAR HAS A CONTROLLING STOCKHOLDER THAT CAN CONTROL ANY VOTES TO EXCLUSION OF
THE OTHER HOLDERS OF LAMAR STOCK.
Recipients of Lamar stock under this prospectus will have no control
over the management or business practices of the company.
Kevin P. Reilly, Jr., Chief Executive Officer of Lamar, is the
managing general partner of the Reilly Family Limited Partnership. On September
30, 2000 this partnership beneficially owned all of the outstanding shares of
Class B common stock, which shares represented approximately 69% total voting
power of the Lamar common stock as of September 30, 2000. As a result, Mr.
Reilly, or his successor as managing general partner, controls the outcome of
matters requiring a stockholder vote. These matters include electing directors,
amending Lamar's certificate of incorporation or by-laws, adopting or
preventing certain mergers or other similar transactions, such as a sale of
substantially all of Lamar's assets. Mr. Reilly would also decide the outcome
of transactions that could give the holders of Lamar common stock the
opportunity to realize a premium over the then-prevailing market price for
their shares.
16
<PAGE> 22
Further, subject to contractual restrictions and general fiduciary
obligations, Lamar is not prohibited from engaging in transactions with
management or its principal stockholders or with entities in which members of
management or Lamar's principal stockholders have an interest. Lamar's
certificate of incorporation does not provide for cumulative voting in the
election of directors and, consequently, the Reilly Family Limited Partnership
can elect all the directors.
LAMAR'S BY-LAWS AND CERTIFICATE OF INCORPORATION CONTAIN CERTAIN ANTI-TAKEOVER
PROVISIONS THAT MAY MAKE IT HARDER TO REALIZE A PREMIUM OVER THE COMMON STOCK'S
MARKET PRICE OR MAY AFFECT THE MARKET PRICE OF LAMAR STOCK.
Provisions of Lamar's certificate of incorporation and by-laws may
discourage a third party from offering to purchase Lamar . These provisions,
therefore, inhibit actions that would result in a change in control of Lamar.
Some of these actions would otherwise give the holders of Lamar stock the
opportunity to realize a premium over the then-prevailing market price of the
stock.
These provisions may also adversely affect the market price of Lamar
stock. For example, under Lamar's certificate of incorporation Lamar can issue
"blank check" preferred stock with such designations, rights and preferences as
Lamar's board of directors determines from time to time. If issued, this type
of preferred stock could be used as a method of discouraging, delaying or
preventing a change in control of Lamar. In addition, if Lamar issues preferred
stock, it may adversely affect the voting and dividend rights, rights upon
liquidation and other rights that holders of the common stock currently hold.
Lamar does not currently intend to issue any shares of this type of preferred
stock, but retains the right to do so in the future.
Furthermore, Lamar is subject to Section 203 of the Delaware General
Corporation Law, which may discourage takeover attempts. Section 203 generally
prohibits a publicly held Delaware corporation from engaging in a business
combination with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder.
YOU MAY NOT RECEIVE ANY CASH DIVIDENDS ON THE LAMAR STOCK.
Lamar has never paid cash dividends on its Class A common stock and
does not plan to do so in the foreseeable future.
17
<PAGE> 23
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus, including documents incorporated by
reference, contains forward-looking statements about Lamar's and Bowlin's
financial condition, results of operations, business strategies, market
opportunities, acquisition opportunities, plans and objectives of management
and other matters. These forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause our actual
results, performance or achievements, or industry results, to differ materially
from any future results, performance or achievements expressed or implied by
these forward-looking statements.
Generally, the words "anticipates," "believes," "expects," "intends"
and similar expressions identify forward-looking statements. These
forward-looking statements are found at various places throughout this proxy
statement/prospectus and other documents incorporated by reference.
Forward-looking statements, therefore, should be considered in light of all of
the information included or referred to in this proxy statement/prospectus,
including the information set forth under the heading "Risk Factors" on page
___ and included in the documents that we file from time to time with the SEC.
See "Where You Can Find More Information."
The forward-looking statements contained in this proxy
statement/prospectus speak only as of the date of this proxy
statement/prospectus.
18
<PAGE> 24
THE BOWLIN SPECIAL MEETING
INTRODUCTION
This proxy statement/prospectus is being furnished to the stockholders
of Bowlin Outdoor Advertising and Travel Centers in connection with the special
meeting of stockholders of Bowlin to be held on January 19, 2001, and any
postponement or adjournment of that meeting. The approximate date this proxy
statement/prospectus is first being sent to Bowlin stockholders is December __,
2000.
ACTION TO BE TAKEN AT THE BOWLIN SPECIAL MEETING
At the special meeting, holders of common stock, $.001 par value, of
Bowlin will be asked to consider and vote on a proposal to adopt the merger
agreement and to transact any other business that properly comes before the
meeting. The merger agreement is attached as Annex A to this proxy
statement/prospectus and is incorporated herein by reference.
VOTING AT THE BOWLIN SPECIAL MEETING
Only stockholders of record at the close of business on December ___,
2000 will be entitled to vote at the special meeting. As of the close of
business on December __, 2000, ____________ shares of Bowlin stock were
outstanding and entitled to vote at the special meeting.
Any person giving a proxy in the form accompanying this proxy
statement/prospectus has the power to revoke it at any time before its
exercise. The proxy may be revoked by filing with the Secretary of Bowlin an
instrument of revocation or a duly executed proxy bearing a later date. The
proxy also may be revoked by affirmatively electing to vote in person while
attending the special meeting. A stockholder who attends the meeting, however,
need not revoke the proxy and vote in person unless the stockholder wishes to
do so. All valid, unrevoked proxies will be voted at the special meeting in
accordance with the instructions given. IF THE SIGNED PROXY IS RETURNED WITHOUT
INSTRUCTIONS, IT WILL BE VOTED FOR ADOPTION OF THE MERGER AGREEMENT. A majority
of the shares of the Bowlin stock entitled to vote, present in person or
represented by proxy, will constitute a quorum at the special meeting. The
affirmative vote of the holders of a majority of the shares of outstanding
Bowlin stock is required to adopt the merger agreement. Abstentions have the
same effect as "no" votes in determining whether the proposal is approved.
Broker non-votes are counted for purposes of determining whether a quorum
exists at the special meeting and have the same effect as "no" votes in
determining whether the proposal is approved. Although the Notice of Special
Meeting of Bowlin Outdoor Advertising and Travel Centers Stockholders provides
for transaction of any other business as may properly come before the meeting,
the board of directors of Bowlin has no knowledge of any matters to be
presented at the meeting other than those referred to herein. The accompanying
proxy, however, gives discretionary authority to the proxy holders to vote in
accordance with the recommendation of management if any other matters are
presented.
SOLICITATION OF PROXIES
The accompanying proxy is being solicited on behalf of the board of directors
of Bowlin. The expense of preparing, printing, and mailing the form of proxy
and the material used in the solicitation thereof will be borne by Lamar
Advertising Company. See "Termination Fees and Expenses." In addition to the
use of the mails, proxies may be solicited by personal interview, telephone,
and telegram by directors, officers, and employees of Bowlin. Arrangements have
also been made with brokerage houses, banks, and other custodians, nominees,
and fiduciaries for the forwarding of solicitation materials to the beneficial
owners of Bowlin stock held of record by such person, and Bowlin will reimburse
them for reasonable out-of-pocket expenses they incur.
19
<PAGE> 25
BUSINESS OF LAMAR
Lamar is one of the largest and most experienced owners and operators
of outdoor advertising structures in the United States. Lamar conducts a
business that has operated under the Lamar name since 1902. As of September 30,
2000, Lamar operated approximately 130,600 displays in 43 states. Lamar also
operates the largest logo sign business in the United States. Logo signs are
signs located near highway exits which deliver brand name information on
available gas, food, lodging and camping services. As of September 30, 2000,
Lamar maintained over 89,000 logo sign displays in 20 states. Lamar also
operates transit advertising displays on bus shelters, bus benches and buses in
several markets.
RECENT DEVELOPMENTS
COMPLETED ACQUISITIONS
From January 1, 2000 to September 30, 2000, Lamar completed 71
acquisitions of complementary outdoor advertising assets, for an aggregate
price of approximately $488 million. These acquisitions included approximately
15,400 displays. Lamar expects that these acquisitions will allow it to take
advantage of operating efficiencies and cross-market sales opportunities.
PENDING ACQUISITIONS
Lamar has entered into agreements relating to several other
acquisitions which are pending, including the acquisition of Bowlin that is the
subject of this proxy statement/prospectus. If Lamar completes all of these
acquisitions, it will acquire approximately 5,800 outdoor advertising displays
for an aggregate purchase price of approximately $108 million. These
acquisitions are subject to various conditions including the satisfaction of
customary closing conditions. Lamar cannot be sure whether or when these
acquisitions will be completed.
BUSINESS OF BOWLIN
For the most current description of Bowlin Outdoor Advertising and
Travel Centers business, please see Bowlin's annual report on Form 10-K for the
fiscal year ended January 31, 2000, as amended, a copy of which is being mailed
with this proxy statement/prospectus.
20
<PAGE> 26
BOWLIN MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The following is a discussion of the consolidated financial condition
and results of operations of Bowlin as of and for the periods ended July 31,
2000 and 1999. This discussion should be read in conjunction with the
Consolidated Financial Statements of Bowlin and the related notes included in
Bowlin's Form 10-K for the fiscal year ended January 31, 2000, which is
enclosed with this proxy statement/prospectus as Annex D.
Bowlin operates in two industry segments: outdoor advertising and
travel centers. In order to perform a meaningful evaluation of Bowlin's
performance in each of its operating segments, Bowlin has presented selected
operating data which separately sets forth the revenue, expenses and operating
income attributable to each segment, and also separately sets forth the
corporate expenses of Bowlin which management does not allocate to either of
Bowlin's segments for purposes of determining their respective operating
income. The discussion of results of operations which follows compares such
selected operating data and corporate expense data for the interim periods
presented.
RESULTS OF OPERATIONS
The following table presents certain income and expense items derived
from the Consolidated Statements of Income for the six and three months ended
July 31 (unaudited and amounts in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
------------------------- -------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
TRAVEL CENTERS:
Gross sales $ 14,753 $ 14,072 $ 7,987 $ 7,863
Discounts on sales 201 181 110 102
---------- ---------- ---------- ----------
Net sales 14,552 13,891 7,877 7,761
Cost of sales 10,171 9,475 5,361 5,261
---------- ---------- ---------- ----------
4,381 4,416 2,516 2,500
General and administrative expenses 3,042 3,160 1,592 1,652
Depreciation and amortization 298 294 151 161
---------- ---------- ---------- ----------
Operating income 1,041 962 773 687
Interest expense 269 252 139 130
---------- ---------- ---------- ----------
Segment profit 772 710 634 557
OUTDOOR ADVERTISING:
Gross sales 4,261 3,836 2,205 1,998
Direct operating expenses 1,967 1,713 1,002 913
---------- ---------- ---------- ----------
2,294 2,123 1,203 1,085
General and administrative expenses 540 514 260 236
Depreciation and amortization 976 846 486 433
---------- ---------- ---------- ----------
Operating income 778 763 457 416
Interest expense 758 616 395 329
---------- ---------- ---------- ----------
Segment profit 20 147 62 87
CORPORATE AND OTHER:
General and administrative expenses (280) (279) (143) (145)
Depreciation and amortization (79) (61) (45) (37)
Interest expense (49) (41) (26) (20)
Other income, net 188 291 73 263
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 572 767 555 705
INCOME TAXES 226 300 212 273
---------- ---------- ---------- ----------
NET INCOME $ 346 $ 467 $ 343 $ 432
========== ========== ========== ==========
EBITDA(1) - TRAVEL CENTERS $ 1,339 $ 1,256 $ 924 $ 848
========== ========== ========== ==========
EBITDA(1) - OUTDOOR ADVERTISING $ 1,754 $ 1,609 $ 943 $ 849
========== ========== ========== ==========
EBITDA(1) - TOTAL COMPANY $ 2,813 $ 2,586 $ 1,724 $ 1,552
========== ========== ========== ==========
EBITDA MARGIN - TRAVEL CENTERS 9.1% 8.9% 11.6% 10.8%
========== ========== ========== ==========
EBITDA MARGIN - OUTDOOR ADVERTISING 41.2% 41.9% 42.8% 42.5%
========== ========== ========== ==========
EBITDA MARGIN - TOTAL COMPANY 14.8% 14.4% 16.9% 15.7%
========== ========== ========== ==========
</TABLE>
----------
(1) EBITDA is defined as operating income before depreciation and
amortization. It represents a measure which management believes is
customarily used to evaluate the financial performance of companies in the
media industry. However, EBITDA is not a measure of financial performance
under generally accepted accounting principals and should not be
considered an alternative to operating income or net income as an
indicator of Bowlin's operating performance or to net cash provided by
operating activities as a measure of its liquidity.
21
<PAGE> 27
Comparison of the Six Months Ended July 31, 2000 and July 31, 1999
OUTDOOR ADVERTISING. Gross sales from Bowlin's outdoor advertising
increased 11.1% to $4.261 million for the six months ended July 31, 2000, from
$3.836 million for the six months ended July 31, 1999. The increase was
primarily attributable to the continual assimilation of Bowlin's acquisitions,
internal development, increased usage of available sign inventory, and
increases in rates.
Direct operating expenses related to outdoor advertising consist of
rental payments to property owners for the use of land on which advertising
displays are located, production expenses and selling expenses. Selling
expenses consist primarily of salaries and commissions for salespersons and
travel related to sales. Direct operating costs increased 14.8% to $1.967
million for the six months ended July 31, 2000, from $1.713 million for the six
months ended July 31, 1999. The increase is principally due to increases in
salaries, sign repairs, cost of production and utilities. Direct operating
expenses as a percentage of gross revenues for the six months ended July 31,
2000 was 46.2% compared to 44.7% for the six months ended July 31, 1999.
General and administrative expenses for outdoor advertising consist of
salaries and wages for administrative personnel, insurance, legal fees,
association dues and subscriptions and other indirect operating expenses.
General and administrative expenses were $540,000 for the six months ended July
31, 2000, compared to $514,000 for the six months ended July 31, 1999.
Depreciation and amortization expense increased 15.4% to $976,000 for
the six months ended July 31, 2000, from $846,000 for the six months ended July
31, 1999. The increase is attributable to scheduled depreciation of advertising
display structures as well as the amortization of goodwill and non-compete
covenants.
The above factors contributed to the increase in outdoor advertising
operating income of 2.0% to $778,000 for the six months ended July 31, 2000,
from $763,000 for the six months ended July 31, 1999.
Interest expense increased 23.1% to $758,000 for the six months ended
July 31, 2000, from $616,000 for the six months ended July 31, 1999 due to
additional borrowings to fund acquisitions and internal development.
Segment profit decreased 86.4% to $20,000 for the six months ended
July 31, 2000, from $147,000 for the six months ended July 31, 1999 primarily
as a result of increases in depreciation and amortization, and interest
expense.
EBITDA for outdoor advertising increased 9.0% to $1.754 million for
the six months ended July 31, 2000, from $1.609 million for the six months
ended July 31, 1999. The EBITDA margin for outdoor advertising decreased to
41.2% for the six months ended July 31, 2000, compared to 41.9% for the six
months ended July 31, 1999.
TRAVEL CENTERS. Gross sales at Bowlin's travel centers increased by
4.8% to $14.753 million for the six months ended July 31, 2000, from $14.072
million for the six months ended July 31, 1999. Merchandise sales increased
1.1% to $5.257 million for the six months ended July 31, 2000, from $5.200
million for the six months ended July 31, 1999. Gasoline sales increased 8.6%
to $7.114 million for the six months ended July 31, 2000, from $6.551 million
for the same period in 1999. Wholesale gasoline sales increased 16.2% to
$945,000 for the six months ended July 31, 2000, from $813,000 for the six
months ended July 31, 1999. Restaurant sales decreased 4.7% to $1.437 million
for the six months ended July 31, 2000, from $1.508 million for the six months
ended July 31, 1999.
Cost of goods sold for the travel centers increased 7.3% to $10.171
million for the six months ended July 31, 2000, from $9.475 million for the six
months ended July 31, 1999. Merchandise cost of goods increased 0.5% to $2.350
million for the six months ended July 31, 2000, from $2.338 million for the six
months ended July 31, 1999.
22
<PAGE> 28
Gasoline cost of goods increased 10.4% to $6.520 millions for the six months
ended July 31, 2000, from $5.905 million for the six months ended July 31, 1999.
Wholesale gasoline cost of goods increased 17.1% to $917,000 for the six months
ended July 31, 2000, from $783,000 for the six months ended July 31, 1999.
Restaurant cost of goods decreased 14.5% to $384,000 for the six months ended
July 31, 2000, from $449,000 for the six months ended July 31, 1999. Cost of
goods sold as a percentage of gross revenues for the six months ended July 31,
2000 was 68.9% compared to 67.3% for the six months ended July 31, 1999.
Gross profit for the travel centers slightly decreased 0.8% to $4.381
million for the six months ended July 31, 2000, from $4.416 million for the six
months ended July 31, 1999. Lower margins on convenience store product sales
and gasoline sales for the six months ended July 31, 2000 continued to
negatively impact gross margin.
General and administrative expenses for travel centers consist of
salaries, bonuses and commissions for travel center personnel, property costs
and repairs and maintenance. General and administrative expenses for the travel
centers decreased 3.7% to $3.042 million for the six months ended July 31,
2000, from $3.160 million for the six months ended July 31, 1999.
Depreciation and amortization expense increased 1.4% to $298,000 for
the six months ended July 31, 2000, from $294,000 for the six months ended July
31, 1999.
The above factors contributed to an overall increase in travel center
operating income of 8.2% to $1.041 million for the six months ended July 31,
2000, from $962,000 for the six months ended July 31, 1999.
Interest expense increased 6.7% to $269,000 for the six months ended
July 31, 2000, from $252,000 for the six months ended July 31, 1999.
Segment profit increased 8.7% to $772,000 for the six months ended
July 31, 2000 from $710,000 for the six months ended July 31, 1999 primarily as
a result of increases in gross sales with a corresponding decrease in general
and administrative expenses.
EBITDA for travel centers increased 6.6% to $1.339 million for the six
months ended July 31, 2000, from $1.256 million for the six months ended July
31, 1999. The EBITDA margin for travel centers increased to 9.1% for the six
months ended July 31, 2000, compared to 8.9% for the six months ended July 31,
1999.
CORPORATE AND OTHER. General and administrative expenses for corporate
and other operations of Bowlin consist primarily of executive and
administrative compensation and benefits, accounting, legal and investor
relations fees. General and administrative expenses increased to $280,000 for
the six months ended July 31, 2000, from $279,000 for the six months ended July
31, 1999.
Depreciation and amortization expenses for Bowlin's corporate and
other operations consist of depreciation associated with the corporate
headquarters, furniture and fixtures and vehicles. Depreciation and
amortization expenses increased to $79,000 for the six months ended July 31,
2000, from $61,000 for the six months ended July 31, 1999.
Interest expense increased 19.5% to $49,000 for the six months ended
July 31, 2000, from $41,000 for the six months ended July 31, 1999.
Other income, net, includes gains and/or losses from the sales of
assets and interest income. Other income, net, decreased 35.4% to $188,000 for
the six months ended July 31, 2000, from $291,000 for the six months ended July
31, 1999. The decrease is primarily due to a one-time gain of $227,000 from
insurance proceeds in fiscal year 2000 not present in fiscal year 2001.
Income before income taxes decreased 25.4% to $572,000 for the six
months ended July 31, 2000, from $767,000 for the six months ended July 31,
1999. As a percentage of gross revenues, income before income taxes decreased
to 3.0% for the six months ended July 31, 2000, from 4.3% for the six months
ended July 31, 1999.
23
<PAGE> 29
Income taxes were $226,000 for the six months ended July 31, 2000,
compared to $300,000 for the six months ended July 31, 1999, as the result of
lower pretax income.
The foregoing factors contributed to an increase in Bowlin's net
income for the six months ended July 31, 2000 to $346,000 compared to $467,000
for the six months ended July 31, 1999.
Increases in depreciation and amortization as well as interest expense
have been substantial. Management expects depreciation and amortization and
interest expense to continue to increase which may lead to future net losses.
Comparison of the Three Months Ended July 31, 2000 and July 31, 1999
OUTDOOR ADVERTISING. Gross sales from Bowlin's outdoor advertising
increased 10.4% to $2.205 million for the three months ended July 31, 2000,
from $1.998 million for the three months ended July 31, 1999. The increase was
primarily attributable to the continual assimilation of Bowlin's acquisitions,
internal development, increased usage of available sign inventory, and
increases in rates.
Direct operating expenses related to outdoor advertising consist of
rental payments to property owners for the use of land on which advertising
displays are located, production expenses and selling expenses. Selling
expenses consist primarily of salaries and commissions for salespersons and
travel related to sales. Direct operating costs increased 9.7% to $1.002
million for the three months ended July 31, 2000, from $913,000 for the three
months ended July 31, 1999. The increase is principally due to increases in
salaries, sign repairs, cost of production and utilities. Direct operating
expenses as a percentage of gross revenues for the three months ended July 31,
2000 was 45.4% compared to 45.7% for the three months ended July 31, 1999.
General and administrative expenses for outdoor advertising consist of
salaries and wages for administrative personnel, insurance, legal fees,
association dues and subscriptions and other indirect operating expenses.
General and administrative expenses were $260,000 for the three months ended
July 31, 2000, compared to $236,000 for the three months ended July 31, 1999.
Depreciation and amortization expense increased 12.2% to $486,000 for
the three months ended July 31, 2000, from $433,000 for the three months ended
July 31, 1999. The increase is attributable to scheduled depreciation of
advertising display structures as well as the amortization of goodwill and
non-compete covenants.
The above factors contributed to the increase in outdoor advertising
operating income of 9.9% to $457,000 for the three months ended July 31, 2000,
from $416,000 for the three months ended July 31, 1999.
Interest expense increased 20.1% to $395,000 for the three months
ended July 31, 2000, from $329,000 for the three months ended July 31, 1999 due
to additional borrowings to fund acquisitions and internal development.
Segment profit decreased 28.7% to $62,000 for the three months ended
July 31, 2000, from $87,000 for the three months ended July 31, 1999 primarily
as a result of increases in depreciation and amortization, and interest
expense.
EBITDA for outdoor advertising increased 11.1% to $943,000 for the
three months ended July 31, 2000, from $849,000 for the three months ended July
31, 1999. The EBITDA margin for outdoor advertising increased to 42.8% for the
three months ended July 31, 2000, compared to 42.5% for the three months ended
July 31, 1999.
TRAVEL CENTERS. Gross sales at Bowlin's travel centers increased by
1.6% to $7.987 million for the three months ended July 31, 2000, from $7.863
million for the three months ended July 31, 1999. Merchandise sales decreased
0.9% to $3.032 million for the three months ended July 31, 2000, from $3.061
million for the three months ended July 31, 1999. Gasoline sales increased 3.8%
to $3.628 million for the three months ended July 31, 2000, from $3.495 million
for the same period in 1999. Wholesale gasoline sales increased 15.8% to
$536,000 for the three months ended July 31, 2000, from $463,000 for the three
months ended July 31, 1999. Restaurant sales
24
<PAGE> 30
decreased 6.3% to $791,000 for the three months ended July 31, 2000, from
$844,000 for the three months ended July 31, 1999.
Cost of goods sold for the travel centers increased 1.9% to $5.361
million for the three months ended July 31, 2000, from $5.261 million for the
three months ended July 31, 1999. Merchandise cost of goods decreased 4.2% to
$1.339 million for the three months ended July 31, 2000, from $1.398 million
for the three months ended July 31, 1999. Gasoline cost of goods increased 3.7%
to $3.290 millions for the three months ended July 31, 2000, from $3.174
million for the three months ended July 31, 1999. Wholesale gasoline cost of
goods increased 16.8% to $521,000 for the three months ended July 31, 2000,
from $446,000 for the three months ended July 31, 1999. Restaurant cost of
goods decreased 13.2% to $211,000 for the three months ended July 31, 2000,
from $243,000 for the three months ended July 31, 1999. Cost of goods sold as a
percentage of gross revenues for the three months ended July 31, 2000 was 67.1%
compared to 66.9% for the three months ended July 31, 1999.
Gross profit for the travel centers increased 0.6% to $2.516 million
for the three months ended July 31, 2000, from $2.500 million for the three
months ended July 31, 1999. Lower margins on convenience store product sales
and gasoline sales for the three months ended July 31, 2000 continued to
negatively impact gross margin.
General and administrative expenses for travel centers consist of
salaries, bonuses and commissions for travel center personnel, property costs
and repairs and maintenance. General and administrative expenses for the travel
centers decreased 3.6% to $1.592 million for the three months ended July 31,
2000, from $1.652 million for the three months ended July 31, 1999.
Depreciation and amortization expense decreased 6.2% to $151,000 for
the three months ended July 31, 2000, from $161,000 for the three months ended
July 31, 1999.
The above factors contributed to an overall increase in travel center
operating income of 12.5% to $773,000 for the three months ended July 31, 2000,
from $687,000 for the three months ended July 31, 1999.
Interest expense increased 6.9% to $139,000 for the three months ended
July 31, 2000, from $130,000 for the three months ended July 31, 1999.
Segment profit increased 13.8% to $634,000 for the three months ended
July 31, 2000 from $557,000 for the three months ended July 31, 1999 primarily
as a result of decreases in general and administrative expenses and
depreciation and amortization.
EBITDA for travel centers increased 9.0% to $924,000 for the three
months ended July 31, 2000, from $848,000 for the three months ended July 31,
1999. The EBITDA margin for travel centers decreased slightly to 11.6% for the
three months ended July 31, 2000, compared to 10.8% for the three months ended
July 31, 1999.
CORPORATE AND OTHER. General and administrative expenses for corporate
and other operations of Bowlin consist primarily of executive and
administrative compensation and benefits, accounting, legal and investor
relations fees. General and administrative expenses decreased to $143,000 for
the three months ended July 31, 2000, from $145,000 for the three months ended
July 31, 1999.
Depreciation and amortization expenses for Bowlin's corporate and
other operations consist of depreciation associated with the corporate
headquarters, furniture and fixtures and vehicles. Depreciation and
amortization expenses increased to $45,000 for the three months ended July 31,
2000, from $37,000 for the three months ended July 31, 1999.
Interest expense increased 30.0% to $26,000 for the three months ended
July 31, 2000, from $20,000 for the three months ended July 31, 1999.
Other income, net, includes gains and/or losses from the sales of
assets and interest income. Other income, net, decreased 72.2% to $73,000 for
the three months ended July 31, 2000, from $263,000 for the three months
25
<PAGE> 31
ended July 31, 1999. The decrease is due to a one-time gain from insurance
proceeds of $227,000 in fiscal year 2000 not present in fiscal year 2001.
Income before income taxes decreased 21.3% to $555,000 for the three
months ended July 31, 2000, from $705,000 for the three months ended July 31,
1999. As a percentage of gross revenues, income before income taxes decreased
to 5.4% for the three months ended July 31, 2000, from 7.1% for the three
months ended July 31, 1999, primarily as a result of increased depreciation and
amortization, and interest expense.
Income taxes were $212,000 for the three months ended July 31, 2000,
compared to $273,000 for the three months ended July 31, 1999, as the result of
lower pretax income.
The foregoing factors contributed to a decrease in Bowlin's net income
for the three months ended July 31, 2000 to $343,000 compared to $432,000 for
the three months ended July 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 2000, Bowlin had working capital of $4.065 million and a
current ratio of 1.9:1, compared to working capital of $4.166 million and a
current ratio of 2.1:1 at January 31, 2000. Net cash provided by operating
activities was $2.695 million for the six months ended July 31, 2000, compared
to $2.446 million for the six months ended July 31, 1999. Net cash provided in
the current period is primarily attributable to increased depreciation and
amortization expense and other operating assets and liabilities.
Net cash used in investing activities for the six months ended July
31, 2000 was $1.048 million, of which $1.257 million was used for purchases of
property and equipment, partially offset by proceeds from sales of assets. For
the six months ended July 31, 1999, net cash used for investing activities was
$3.683 million, of which $2.814 was used for purchases of property and
equipment and $1.516 million was used for acquisitions.
Net cash used in financing activities for the six months ended July
31, 2000 was $70,000 as compared to cash provided by financing activities of
$1.667 million for the six months ended July 31, 1999. At July 31, 2000 and
1999, financing activities were primarily a result of borrowings and payments
on debt.
Although Bowlin does not have any agreements in place, it will
continue discussions with acquisition candidates. Bowlin has not executed a
letter of intent or other agreement, binding or non-binding, to make any such
acquisitions. Any such acquisition would be subject to the negotiation and
execution of definitive agreements, appropriate financing arrangements,
performance of due diligence, approval of Bowlin's board of directors, receipt
by Bowlin of unqualified audited financial statements, and the satisfaction of
other customary closing conditions. Bowlin would likely finance any such
acquisitions with cash, additional indebtedness or a combination of the two.
Any commercial financing obtained for purposes of acquiring additional assets
is likely to impose certain financial and other restrictive covenants upon
Bowlin and increase Bowlin's interest expense.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The principal market risks Bowlin is exposed to are interest rates on
Bowlin's debt. Bowlin's interest sensitive liabilities are its debt
instruments. Variable interest on the majority of Bowlin's debt equals LIBOR
plus an applicable margin. Because rates may increase or decrease at any time,
Bowlin is exposed to market risk as a result of the impact that changes in
these base rates may have on the interest rate applicable to Bowlin's
borrowings. Management does not, however, believe that any risk inherent in the
variable rate nature of its debt is likely to have a material effect on
Bowlin's financial position, results of operations or liquidity.
26
<PAGE> 32
BACKGROUND AND REASONS FOR THE MERGER
BACKGROUND
The terms and conditions of the merger were determined through arm's
length negotiations between the senior managements, boards of directors and
financial advisors of Lamar and Bowlin. In determining the form of the
transaction and the form and amount of the consideration, numerous factors were
reviewed by the senior managements and boards of directors of Lamar and Bowlin.
The following is a brief discussion of the contacts and negotiations that have
occurred between Lamar and Bowlin.
Prior to the beginning of the year, the board of directors and senior
management of Bowlin and Rudy R. Miller, Chairman, President and CEO of Miller
Capital Corporation, Bowlin's financial advisor, discussed structuring the
company so as to maximize stockholder value. Because Bowlin operated two very
separate and distinct businesses (outdoor advertising and travel centers), it
was uncertain that the trading price of Bowlin's common stock was capturing the
value of each of the business operations.
In mid January 2000, after consultation with, and at the request of,
the board of directors of Bowlin, Miller Capital contacted REGENT
Communications, Inc.; Eller Outdoor, a part of Clear Channel; Outdoor Systems,
a part of Infinity Broadcasting; and Lamar Advertising Company, to discuss a
possible transaction. At that time, Miller Capital mailed public information to
REGENT, Outdoor Systems and Lamar. Of the companies contacted, Lamar was the
only company that expressed an interest in pursuing negotiations with Bowlin.
On March 27, 2000, a meeting was held in Baton Rouge, Louisiana where
Lamar is headquartered. Attending the meeting were:
Kevin Reilly, Chairman of the Board, President and CEO, Lamar
Sean Reilly, Board member and Vice President/Director of Acquisitions,
Lamar
Rod Rackley, Vice President Real Estate, Lamar
Mike Bowlin, Chairman, President and CEO, Bowlin
Chris Bess, Executive Vice President and COO, Bowlin
Rudy Miller, Chairman, President and CEO, Miller Capital
At this meeting Lamar provided a list of additional information they required
to evaluate a potential transaction. Bowlin assembled the requested diligence
materials on or about May 10, 2000.
On April 13, 2000, Bowlin announced its fiscal year financial results.
In that announcement, Michael Bowlin, Chairman, President and Chief Executive
Officer of Bowlin stated that the company believed that its stock remained
"undervalued when applying an analysis of Bowlin's assets as compared to other
outdoor related companies with a standard industry multiple of EBITDA." Mr.
Bowlin also stated that the company continued to analyze strategies that
included both the outdoor advertising business and the travel centers business
that might enhance stockholder value.
On May 5, 2000, the board of directors of Bowlin held a meeting to
discuss further a plan to enhance stockholder value. The board discussed
separating its two business segments into separate entities, contributing all
of the travel center assets and liabilities to a new travel center entity, and
pursuing a separate transaction or disposition of the outdoor advertising
business.
Negotiations between Lamar and Bowlin continued. Throughout the
process, all communications between Lamar and Bowlin were mediated through
Miller Capital.
27
<PAGE> 33
On June 8, 2000, Bowlin announced its financial results for the quarter
ended April 30, 2000. In that press release, Mr. Bowlin stated that the company
was actively pursuing transactions to accomplish the separation of the outdoor
advertising company and the travel centers business to enhance stockholder
value.
On June 15, 2000, Lamar submitted a letter of intent to Bowlin,
indicating that it was interested in pursuing an acquisition of the outdoor
advertising business.
On June 22, 2000, Mike Bowlin signed the letter of intent.
At that time Bowlin brought in their outside counsel, Squire, Sanders
& Dempsey, and in concert with Miller Capital and Bowlin's senior management,
began working on a definitive agreement for the transaction.
On September 11, 2000, Bowlin retained Sanders Morris Harris Inc.,
Houston, Texas, a registered broker/dealer to review all aspects of the
transaction and to prepare and issue a fairness opinion to Bowlin.
On September 13, 2000, Bowlin announced its financial results for the
quarter ended July 31, 2000. In that press release Mr. Bowlin stated that the
company was moving forward with the previously announced plan to divide the
company into two separate operating entities and that it expected to announce
the details and time frame of the process within the next 30 days.
On September 14, 2000, the board of directors of Bowlin met, along
with Miller Capital and Squire, Sanders & Dempsey, to discuss the potential
transaction with Lamar. The board discussed in detail the acquisition by Lamar,
the contribution of assets and liabilities to a newly formed subsidiary, Bowlin
Travel Centers, Inc., the registration of the shares of Bowlin Travel Centers,
and the anticipated spin-off of the shares of Bowlin Travel Centers to the
stockholders of Bowlin.
On September 29, 2000, Bowlin held another special board meeting,
which included Sanders Morris Harris Inc., Miller Capital and Squire Sanders as
meeting guests, to discuss the fairness opinion issued by Sanders Morris Harris
Inc. This meeting provided board members another opportunity to ask additional
questions from all the outside professionals invited to participate in the
meeting. At this meeting, the board concluded that the transaction was fair to
the stockholders from a financial point of view and in the best interest of
Bowlin and its stockholders and approved the definitive agreement in
substantially the form presented to the board at that meeting.
On October 3, 2000, a definitive agreement was signed by Lamar and
Bowlin.
Directors and officers of Bowlin have interests in the merger
different from the interests of other Bowlin stockholders. See "Potential
Conflicts of Interest of Bowlin Management in the Merger."
BOWLIN'S REASONS FOR THE MERGER
The following discussion of Bowlin's reasons for the merger contains a
number of forward-looking statements that reflect the current views of Bowlin
with respect to future events that may have an effect on their future financial
performance. These forward-looking statements include statements regarding the
markets for Lamar's, Bowlin's and the combined company's services, their
planned response to the demands of their markets, their business strategies,
and certain potential technological and operating synergies intended to be
achieved by the merger. These forward-looking statements are subject to various
risks and uncertainties that could cause actual results of Lamar, Bowlin and
the combined company to differ materially from those currently anticipated,
including the ability of Lamar and Bowlin to successfully integrate their
operations and achieve expected synergies; the ability of Bowlin to retain key
employees following announcement of the merger; changes in business conditions
and growth trends affecting Lamar's and Bowlin's markets, the outdoor
advertising industry and the economy in general; and a variety of other
competitive factors. These and other factors that could cause actual results to
differ materially are described under "Risk Factors" and elsewhere in this
proxy statement/prospectus.
The Bowlin board believes that the terms of the merger are fair to,
and in the best interests of, Bowlin and its stockholders. ACCORDINGLY THE
BOWLIN BOARD HAS APPROVED THE PROPOSED MERGER AND
28
<PAGE> 34
RECOMMENDS THAT BOWLIN STOCKHOLDERS VOTE FOR ADOPTION OF THE MERGER AGREEMENT.
In reaching their decision, the directors considered, with the assistance of
management and its legal and financial advisors, the following factors:
o the financial and other terms and conditions of the merger
agreement, including the 725,000 shares of Lamar stock being
offered to the stockholders of Bowlin in exchange for their
Bowlin stock;
o the fact that Bowlin's obligation to consummate the merger is
conditioned upon the approval of Bowlin's stockholders and
other conditions as set forth in the merger agreement;
o the historical market price of, and recent trading activity
in, the Lamar stock;
o the opportunity for Bowlin stockholders to participate in the
long-term growth and appreciation of Bowlin's business through
their ownership interest in Lamar;
o the strategic fit between the outdoor advertising businesses
of Bowlin and Lamar;
o anticipated cost savings resulting from the merger, including
(a) the consolidation of corporate, administrative and support
functions, and (b) the elimination of public reporting
obligations of Bowlin (the Bowlin board did not consider any
quantified amount of such cost savings in reaching its
decision to engage in the merger);
o the opinion of Sanders Morris Harris Inc. that, as of October
3, 2000, the consideration to be paid in the transaction is
fair, from a financial point of view, to the Bowlin
stockholders (See "Fairness Opinion of Bowlin's Financial
Advisor");
o the financial presentation and analysis of Sanders Morris
Harris Inc. prepared in connection with its fairness opinion;
o the familiarity of the board with the business, results of
operations, properties and financial condition of Bowlin and
the nature of the industry in which it operates;
o the Bowlin board considered the financial and other terms of
the merger, including the fact that Bowlin's board is
prevented from seeking out alternative transactions under the
merger agreement; notwithstanding this restriction, the Bowlin
board may provide information to or enter into discussions or
negotiations with other persons if it determines that it is
necessary to fulfill the directors' fiduciary duties to
Bowlin's stockholders;
o publicly available information with respect to the financial
condition and business of Lamar, including, among other
things, Lamar's recent operating performance and future
prospects;
o the capital structure of Lamar;
o reports from management and legal advisors on specific terms
of the merger agreement;
o information received concerning the financial performance,
condition, business operations and prospects of each of Bowlin
and Lamar; and
o the proposed terms, timing and structure of the merger.
The Bowlin board also considered a number of risks associated with the
merger, including:
29
<PAGE> 35
o the possibility of management disruption associated with the
merger and the risk that, despite the efforts of the combined
company, key management personnel of Bowlin might not continue
their employment with the combined company;
o the possibility that certain of the operating economies of
scale such as the elimination of redundant administrative
costs sought to be achieved as a result of the merger might
not be realized; and
o the possibility of Bowlin's failure to be successfully
integrated into Lamar. On balance, however, the Bowlin board
determined that the benefits of the merger outweighed the
potential risks and approved the merger.
The foregoing discussion of information and factors considered by the
Bowlin board is not intended to be exhaustive but is intended to include the
material factors considered. In view of the wide variety of factors considered,
the Bowlin board did not find it practical to, and did not, quantify or
otherwise assign relative weight to the specific factors considered and
individual directors may have given different weights to different factors.
OPINION OF FINANCIAL ADVISOR TO BOWLIN'S BOARD OF DIRECTORS
The Bowlin board retained Sanders Morris Harris Inc., who we refer to
as SMH, to act as its financial advisor in connection with the proposed
transaction and to render an opinion as to the fairness, from a financial point
of view, to the stockholders of Bowlin of the consideration to be received in
the proposed transaction. SMH is an independent investment banking firm that
has no ownership interest in Bowlin and that is not an affiliate of Bowlin. On
October 2, 2000, SMH rendered its opinion to the board of directors of Bowlin
to the effect that, as of such date and based upon and subject to the various
considerations described in the opinion, the consideration was fair, from a
financial point of view, to the stockholders of Bowlin.
The full text of SMH's written opinion dated as of October 2, 2000
which sets forth, among other things, the assumptions made, matters considered,
and scope and limitations on the review undertaken, is attached as Annex C
hereto and is incorporated by reference. Stockholders are urged to, and should,
read SMH's opinion carefully and in its entirety. SMH's opinion was prepared
for the use of the board of directors in connection with the transaction and
does not address the relative merits of the proposed transaction or constitute
a recommendation to the stockholders as to how they should vote in connection
with the transaction. In addition, the opinion addresses only the financial
fairness of the terms of the transaction to the stockholders and does not
address the relative merits of the transaction or any alternatives, the
underlying decision of the board to engage in the transaction or any other
aspect of the transaction. The summary of SMH's opinion set forth below is
qualified in its entirety by reference to SMH's opinion and should be read
together with the full text of the opinion.
In arriving at its opinion, SMH has, among other things:
1. Reviewed a draft of the Agreement and Plan of Merger dated
September 20,2000;
2. Reviewed a Letter of Intent from Lamar dated June 15, 2000;
3. Reviewed Bowlin's audited financials and annual reports for
the years ended January 31, 2000 and January 31, 1999;
4. Reviewed Bowlin's unaudited financial statements for the
quarters ended July 31, 2000 and April 30, 2000;
5. Reviewed Lamar's audited financial statements for the year
ended December 31, 1999;
6. Reviewed Lamar's unaudited financial statements for the six
months ended June 30, 2000;
7. Reviewed Lamar's Form S-3 (i.e., prospectus relating to the
sale of 26.2 million shares of Lamar by Clear Channel
Communications) dated September 8, 2000;
8. Reviewed Bowlin's Form 10 (i.e., registration statement for
the travel centers spin-off) draft dated September 14, 2000;
9. Reviewed Bowlin management's outdoor advertising segment
budget for the year ending January 31, 2001;
10. Reviewed historical market prices and trading volume for
common stocks of both Bowlin and Lamar;
30
<PAGE> 36
11. Reviewed recent Lamar equity research reports;
12. Reviewed a 1999 Confidential Memorandum prepared by Miller
Capital Corporation regarding the sale of Bowlin's travel
center segment;
13. Reviewed Bowlin's December 17, 1996 Prospectus prepared by HD
Brous & Co., Inc.;
14. Discussed various assets, liabilities and operations of Bowlin
involved in the transaction; and
15. Reviewed such other financial studies and analyses and
performed such other investigations as SMH deemed appropriate.
In conducting its analyses, SMH also held discussions with members of
Bowlin's senior management regarding the past and current business operations,
financial condition and future prospects of Bowlin. SMH assumed that the merger
agreement had been executed and delivered by the parties thereto on terms
substantially the same to those contained in the most recent draft thereof
supplied to and reviewed by SMH as of the date of its opinion. SMH relied upon
and assumed the accuracy and completeness of the financial and other
information made available to it and did not assume responsibility for
independent verification of such information. SMH assumed, and the management
of Bowlin has represented, that the information provided by Bowlin, including
projections, had a reasonable basis and reflected the best currently available
estimates and judgments of Bowlin's management as to the recent and likely
future performance of Bowlin. SMH also relied on representations of Bowlin's
management that they were not aware of any information or fact that would make
the information provided to SMH incomplete or misleading.
In rendering its opinion, SMH assumed and relied upon, without
independent verification, the accuracy and completeness of all information
reviewed by it for the purposes of its opinion. SMH assumed that the
transaction would be consummated on the terms set forth in the merger agreement
and that, in the course of obtaining necessary regulatory and third-party
consents for the transaction, no restriction would be imposed that would have a
material adverse effect on the future results of operations or financial
condition of Bowlin. SMH did not make any independent valuation or appraisal of
the assets or liabilities of Bowlin. SMH's opinion was necessarily based on
economic, market, financial and other conditions as they existed on, and on the
information made available to SMH as of, the date of such opinion. It should be
understood that, although subsequent developments may affect its opinion,
except as agreed upon by Bowlin, SMH does not have any obligation to update,
revise or reaffirm its opinion.
In arriving at its opinion, SMH was not authorized to solicit, and did
not solicit, indications of interest from any potential buyers of part or all
of Bowlin nor did it have discussions with any party other than Bowlin's
affiliates with respect to the acquisition of Bowlin or any of its assets.
Furthermore, SMH was not authorized to negotiate the terms of the transaction
and has based its opinion solely on the terms of the merger agreement as
negotiated by others.
The following is a summary of the most significant factors considered
and the principal financial analyses performed by SMH to arrive at its opinion
dated October 2, 2000:
(1) Value Range Comparison. SMH's fairness analysis was primarily that the
value received per share for 100% of Bowlin was equal to or greater
than the midpoint of the range of fair market value per share for 100%
of Bowlin's common stock given up by its stockholders. The following
table summarizes SMH's Value Range Comparison:
<TABLE>
<S> <C>
Estimated Fair Market Value Per Share of Bowlin Stock "Given Up".................... $6.00 - $7.00
APPROXIMATE MID-POINT VALUE OF STOCK "GIVEN UP"..................................... $6.50
Estimated Fair Market Value Per Share for approximately 0.165 Shares of Lamar Stock $6.61 (A)
"Received" for Each Share of Bowlin Stock.........................................
Additional Value Per Share "Received" from Spin-Off of Travel Center Division....... $1.50 - $3.00
Approximate Mid-Point............................................................... $2.25
Total Range of "Value Received"..................................................... $8.11 - $9.61
APPROXIMATE MID-POINT OF TOTAL VALUE "RECEIVED"..................................... $8.86
Premium of $8.86 over $6.50......................................................... 36%
</TABLE>
(A) Based on a minimum Lamar price of $40.00 per share.
31
<PAGE> 37
Since the mid-point of the value per share of 100% of Bowlin's common
stock "given up" by its stockholders was approximately $6.50 and the
"value received" for (a) the Lamar common stock and (b) the travel
center spin-off was $8.86 per share, the exchange appeared to be fair
to Bowlin's stockholders. SMH also noted that Lamar has a much larger
market capitalization and a more liquid market for its stock than
Bowlin's stock.
(2) Analysis of value for Bowlin stock. In valuing Bowlin's stock, SMH
believed the current stock market price, recent historical stock prices
as well as past and current Bowlin financials were the best indicators
of fair market value. Based on Bowlin's October 1, 2000 stock market
price of $6.50 per share, Bowlin's past trading history and a review of
Bowlin's financial information, SMH believed the range of fair market
value for Bowlin's common stock was between $6.00 and $7.00 per share,
with a mid-point of $6.50.
(3) Analysis of value for Lamar common stock. Based on Lamar's relatively
large market capitalization, recent trading history, analyst comments
and valuations from recent equity research reports on Lamar, and SMH's
overall business judgment, SMH believed the current fair market value
per share of Lamar's common stock was approximately $35.00 - $45.00,
with a mid-point of $40.00. In applying this mid-point to BOWLIN stock,
SMH multiplied 725,000 shares to be issued to Bowlin stockholders by
the $40.00 mid-point (i.e., $29.0 million) and then divided by
4,390,098 total outstanding shares of Bowlin stock to arrive at $6.61
per share of value "received" per share of Bowlin "given up" by its
stockholders.
(4) Analysis of value for 100% of the Travel Center Division.
o EBITDA multiple valuation. SMH began by calculating a
preliminary enterprise value for the travel center division. A
range of multiples was applied, but a midpoint of 6 was used
in the analysis. SMH then applied the 6 multiple to the
average of the travel center division's fiscal 2000 earnings
before interest, taxes, depreciation and amortization
("EBITDA") and the first 6 months of fiscal 2001 annualized
EBITDA. This gave an implied equity value per share of $1.22
($10.0 million minus $6.6 million of debt plus $1.9 million of
cash divided by 4.4 million shares) for the travel center
division.
o Discounted Cash Flow Analysis. SMH's primary methodology to
value the travel center division was a discounted cash flow
analysis (i.e., an internal rate of return or IRR analysis),
which is one method SMH believes investors use to evaluate
similar businesses and divisions. SMH discussed appropriate
assumptions for such analysis with BOWLIN management on
September 15, 2000 and on September 21, 2000. SMH began with
fiscal 2001 estimated EBITDA and grew EBITDA at 5% per year
based on discussions with management. SMH used a pre-tax
discount rate of 15% because of the risk involved in
investments in this industry and used the present value of 4 -
6 times 2005 estimated EBITDA as the terminal value. Based on
these parameters, SMH arrived at an implied fair market value
for 100% of the division's equity of $10.1 million, or $2.31
per share.
Based on SMH's valuations of the travel center division, but giving
more weight to its DCF analysis, SMH believed the travel center
division's fair market value was $1.50 - $3.00 per share. Although the
financial analyses employed by SMH imply a market value for 100% of
the division, SMH does not express an opinion on what the travel
center division's stock might trade for after the spin-off. The values
implied by the analyses do not purport to suggest future trading
prices for the stock of the spin-off company.
(5) Premium Over Recent Stock Prices. SMH believed a premium of 30 - 40%
was clearly fair and attractive to a Bowlin stockholder whose
alternative at the time of SMH's analysis was to sell the stock at
$6.50. Such premiums can range from zero to more than 100% due to
special circumstances, but SMH believed a normal range was probably
20 - 60% based on industry and size of operations.
32
<PAGE> 38
As reported in Mergerstat Review, average premiums offered for 1999
and 1998 were 43.3% and 40.7%, respectively. Reported figures for 1999
were based on 723 announced public deals and 1998 were based on 523
announced public deals. Mergerstat defines premiums offered as price
over seller's closing market price five days prior to announcement.
(6) Comparable Company Analysis for Bowlin Travel. Since the companies
used in this analysis were not very comparable to Bowlin (due to their
size and business mix) and the fact that the multiples derived were
extremely high in comparison to most companies, SMH did not give any
weight to the analysis. Nevertheless, SMH reviewed certain financial
ratios for the following public companies:
o Infinity Broadcasting Corporation o Obie Media Corporation
o Lamar Advertising Company
The three key valuation multiples used in their analysis were: (1)
Enterprise Value (i.e., market value of equity plus total debt) to
EBITDA, (2) Enterprise Value to earnings before interest and taxes
("EBIT") and (3) Enterprise Value to Revenues. All of these multiples
were based on trailing-twelve month financials. In addition to
individual company multiples, SMH calculated the mean (i.e., average),
and adjusted mean (i.e., average excluding highest and lowest
multiples) of each ratio.
Key Comparable Company Multiples
<TABLE>
<CAPTION>
Enterprise Value to: HIGH LOW MEAN ADJUSTED MEAN
---- --- ---- -------------
<S> <C> <C> <C> <C>
EBITDA 29.5x 12.5x 21.1x 21.2x
EBIT 540.7x 19.2x 202.0x 46.1x
Revenues 13.3x 1.5x 8.2x 9.9x
</TABLE>
EBITDA multiples for the three guideline companies ranged from 12.5x
to 29.5x on September 26, 2000. The adjusted mean multiple for the
three guideline companies was 21.2x. SMH multiplied 21.2 by the
division's trailing-twelve month EBITDA of $3,115,000, which resulted
in an implied enterprise value of $66,038,000.
The next multiple was Enterprise Value/EBIT. EBIT multiples for the
three public comparables ranged from 19.2x to 540.7x. The adjusted
mean multiple for the three guideline companies was 46.1x. SMH
multiplied 46.1 by the division's trailing-twelve month EBIT of
$1,178,000, which resulted in an implied enterprise value of
$54,305,800.
The next multiple was the ratio of Enterprise Value to trailing-twelve
month Revenues. The three guideline public companies had a range of
enterprise value/revenue ratios from 1.5x to 13.3x. The adjusted mean
revenue multiple for the three guideline companies was 9.9x. SMH then
multiplied 9.9 by the division's trailing-twelve month Revenue of
$8,187,000, which resulted in an implied enterprise value of
$81,051,300.
SMH then averaged the three enterprise values cited above for the
division to arrive at an average enterprise value of $67,131,700. In
order to arrive at an implied equity value, SMH subtracted debt and
added excess cash. As of June 30, 2000, Bowlin had $220,000 in cash
and $15,426,000 in total debt. This gave the outdoor advertising
division an implied equity value of $54,925,700 (i.e., $67,131,700
minus $15,426,000 plus $220,000), or $11.83 per share as of September
26, 2000.
(7) Comparable Transactions and Premiums. SMH considered several
transactions from the past year and a half in the outdoor advertising
industry, but none were comparable enough to the transaction to make
their analysis of such transactions more important than the other
valuation methodologies used. The following table summarizes the
transactions and price to trailing twelve months EBITDA (prior to
acquisitions) multiples. Bowlin's outdoor division had trailing twelve
month ("TTM") EBITDA of $3.1 million as of July 31, 2000, which
represents a purchase multiple (from $45 million) of 14.7 times. Based
on the adjusted mean (i.e., excluded highest and lowest multiples)
price to TTM EBITDA multiple from these
33
<PAGE> 39
transactions of 15.2x compared to the price to TTM EBITDA multiple of
14.2x for the outdoor division, the multiple Bowlin common stockholders
will receive appeared to be fair.
<TABLE>
<CAPTION>
PRICE PRICE/
ACQUIRER TARGET DATE ($MIL.) TTMEBITDA
-------- ------ ---- ------- ---------
<S> <C> <C> <C> <C>
Lamar Root Outdoor & Ohio Outdoor Holding 5/00 60.0 14.5x
Corp.
Lamar Macon, GA Properties 5/00 75.0 22.1x
Lamar Advantage Outdoor 5/00 170.0 12.7x
Infinity Giraudy Outdoor Advert. 3/00 425.0 11.1x
Clear Channel Ackerly Florida Outdoor 10/99 330.0 34.0x
Clear Channel Plankanda Holdings 7/99 102.4 12.5x
Clear Channel Dauphin OTA 6/99 250.0 11.3x
Lamar AMFM Inc. Outdoor 6/99 1,600.0 14.9x
Lamar Vivid, Inc. 6/99 22.1 14.4x
Infinity
Broadcasting Outdoor Systems 5/99 8,300.0 19.1x
Lamar Frank Hardie, Inc. 4/99 20.3 15.6x
Lamar KJS LLC. 2/99 40.5 12.1x
Lamar American Displays, Inc. 1/99 14.5 18.4x
-----
MEAN 16.4x
HIGH 34.0x
LOW 11.1x
ADJUSTED MEAN(1) 15.2x
</TABLE>
The preparation of a fairness opinion is a complex process involving
subjective judgments and is not necessarily susceptible to a partial analysis
or summary description. SMH believes that selecting any portion of SMH's
analyses, without considering all analyses, would create a misleading or
incomplete view of the processes underlying the analyses and its opinion. In
addition, SMH may have deemed various assumptions more or less probable than
other assumptions, so that the ranges of valuations resulting for any
particular analysis described above should not be taken to be SMH's view of the
actual value of Bowlin, which may be more or less than suggested by the
analyses.
The analyses performed by SMH are not necessarily indicative of actual
value, which may be significantly more or less favorable than suggested by such
analyses. Such analyses were performed solely as part of SMH's analysis of
whether the consideration to be received pursuant to the Agreement and Plan of
Merger was fair from a financial point of view to Bowlin stockholders, and were
conducted in connection with the delivery of SMH's opinion. The analyses do not
purport to be appraisals or to be indicative of actual values or future
results, or to reflect the prices at which Bowlin or its assets might actually
be sold.
As described above, SMH's opinion provided to the board of directors
was one of a number of factors taken into consideration by the board in making
its determination to recommend adoption of the Agreement and Plan of Merger and
the transaction resulting from it. Consequently, SMH's analyses described above
should not be viewed as determinative of the opinion of the board of directors
or management with respect to the value of Bowlin or its divisions. The Lamar
common stock to be received by the stockholders pursuant to the Agreement and
Plan of Merger was determined through negotiations between representatives of
Bowlin and was approved by the entire board.
SMH was selected by the board of directors to render a fairness
opinion in connection with the transaction because of SMH's reputation and
expertise as an investment banking firm. SMH, as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with going-private transactions, mergers and
acquisitions, underwritings of equities, private placements and valuations for
estate, corporate and other purposes. In the ordinary course of its business,
SMH may actively trade Bowlin's equity
34
<PAGE> 40
securities for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short-term position in such
securities.
In accordance with its engagement letter, the opinion of SMH is
addressed to the board of directors for its use in connection with its review
and evaluation of the proposed transaction. Neither the opinion nor the
underlying SMH analyses may be relied upon by any person other than the members
of the board without the prior written consent of SMH. Accordingly, under the
terms of the engagement letter and the opinion letter prepared pursuant to the
engagement letter, no stockholders of Bowlin may rely or allege any reliance on
SMH's opinion or analysis in connection with the stockholder's consideration of
the merits of the transaction or otherwise. It is SMH's position that its
duties in connection with its fairness opinion are solely to the board of
directors, and that it has no legal responsibility to any other persons,
including stockholders of Bowlin, under the laws of the State of Texas, the
governing law of the engagement letter. SMH would likely assert the substance
of this disclaimer as a defense to claims, if any, that might be brought
against it by stockholders of Bowlin with respect to its fairness opinion.
Further, courts interpreting Texas law have strictly limited the persons who
can sue for professional negligence to the parties to the agreement that
provided for the engagement of the professional. SMH believes that the
principles adopted in these cases would limit its liability solely to the board
of directors. However, since no Texas court has ruled specifically on these
issues in the context of SMH's engagement, they necessarily would have to be
resolved by a court of competent jurisdiction.
Pursuant to the engagement letter agreement between the board of
directors and SMH, dated September 11, 2000, Bowlin agreed to pay SMH (i) a
non-refundable retainer of $25,000 upon execution of the engagement letter and
(ii) an additional $75,000 payable upon submission of SMH's opinion. In
addition to any fees for professional services, SMH will also be reimbursed by
Bowlin for expenses incurred in connection with SMH's assignment. Bowlin has
also agreed to indemnify SMH against specified liabilities, including
liabilities under the federal securities laws, related to, arising out of or in
connection with the engagement of SMH by the board of directors.
POTENTIAL CONFLICTS OF INTEREST OF BOWLIN MANAGEMENT IN THE MERGER
In considering the merger, you should be aware of the interests
executive officers and directors of Bowlin have in the merger that are
different from your interests and their interests as stockholders. Michael L.
Bowlin, Chairman, President and Chief Executive Officer, beneficially owns
approximately 38.5% of the outstanding common stock. All directors and
executive officers as a group own approximately 62.2% of the outstanding common
stock of Bowlin. Directors have a fiduciary duty to act in the best interest of
the stockholders. Officers have a duty to act in the best interest of the
company. However, because the directors and officers of Bowlin are also
stockholders of Bowlin, they might be inclined to vote to adopt the merger
agreement if they believe it is in their own individual best interests as a
stockholder, irrespective of the impact of that vote on other stockholders. In
addition, some directors and officers may hold options to purchase shares of
Bowlin stock at an exercise price that is less than the current trading price.
Although the officers and directors of Bowlin have not signed any agreements
that require them to vote for the merger, they have indicated their intention to
vote in favor of the transaction.
35
<PAGE> 41
THE MERGER AND THE MERGER AGREEMENT
The following is a summary of significant provisions of the merger
agreement. For a more complete understanding of the merger agreement, you
should read the agreement. The agreement is attached as Annex A and is
incorporated into this proxy statement/prospectus by reference.
GENERAL DESCRIPTION OF THE MERGER
In the merger, Lamar Southwest Acquisition Corporation, a newly
formed, wholly owned subsidiary of Lamar, will merge with and into Bowlin.
Bowlin will be the surviving corporation and will continue to exist under
Nevada law as a wholly owned subsidiary of Lamar. The articles of incorporation
of Bowlin, which will be amended and restated and filed with the articles of
merger, will be the articles of incorporation of the surviving corporation. The
by-laws of Lamar Southwest, as in effect immediately before the merger, will be
the by-laws of the surviving corporation.
Bowlin and its subsidiary, Bowlin Travel Centers, Inc., entered into a
contribution agreement dated as of November 1, 2000 in the form attached as
Annex B to this proxy statement/prospectus. This contribution agreement
provides that certain assets and liabilities of Bowlin related to Bowlin's
travel centers line of business will be contributed to Bowlin Travel. Bowlin
will then distribute the shares of Bowlin Travel to the Bowlin stockholders
immediately prior to the completion of the merger. The business, assets and
liabilities of the travel center's line of business, therefore, will not be
acquired by Lamar in the merger.
Contribution Agreement
Under the contribution agreement, Bowlin contributed all of the assets
and liabilities directly associated with the ownership and operation of the
travel centers business to Bowlin Travel Centers, Inc. Bowlin and Bowlin Travel
each represented that it was duly organized, had the authority to enter into
the agreement, and that there were no conflicts or violations resulting from,
or consents required by, the execution and delivery of the agreement. Bowlin
Travel also covenants under the agreement to offer employment to all of the
employees of Bowlin that work in the travel centers business, on the same terms
and conditions of employment they currently enjoy with Bowlin, and to assume
all obligations and liabilities associated with those employees. Under the
agreement, Bowlin Travel agreed to indemnify Bowlin, its directors, officers,
shareholders, employees, affiliates, successors and assigns for any and all
losses, liabilities, claims, demands, penalties, fines, settlements, damages,
or expenses (including, without limitation, interest, penalties, costs of
preparation and investigation, and the reasonable fees, disbursements and
expenses of attorneys, accountants and professional advisors) incurred by any
of the Bowlin indemnitees:
o arising under federal, state or local environmental laws and
arising out of or in connection with the travel center
business or the ownership or operation of any of the assets or
assumed liabilities;
o resulting from any labor or employment dispute arising out of
or in connection with the operation of the travel center
business or otherwise involving a travel centers business
employee; and
o any attempt (whether or not successful) by any person to cause
or require Bowlin to discharge or pay any assumed liability,
or otherwise arising out of or relating to any assumed
liability.
Tax Sharing and Disaffiliation Agreement
As part of the Contribution Agreement, Bowlin and Bowlin Travel
entered into a Tax Sharing and Disaffiliation Agreement, which we refer to as
the Tax Agreement. The Tax Agreement sets forth rights and obligations of
Bowlin and Bowlin Travel with respect to taxes imposed on their respective
businesses both before and after the distribution of Bowlin Travel shares to
the Bowlin shareholders and with respect to "Restructuring Taxes." For purposes
of the Tax Agreement, "Restructuring Taxes" are taxes imposed in connection
with the contribution by Bowlin of the travel centers-related assets and
liabilities to Bowlin Travel and the distribution.
36
<PAGE> 42
General Taxes. Under the Tax Agreement, Bowlin Travel will be liable
for and indemnify Bowlin against any taxes that are attributable to the travel
centers business (both before and after transfer of such business to Bowlin
Travel), Restructuring Taxes and sales, transfer and other similar taxes
incurred in connection with the contribution and distribution. Bowlin will be
liable for and indemnify Bowlin Travel against any taxes that are attributable
to the outdoor advertising business. The Tax Agreement sets forth additional
rules for determining the tax obligations of Bowlin and Bowlin Travel.
Restructuring Taxes. Under the Tax Agreement, Bowlin Travel is
generally responsible for all Restructuring Taxes. Bowlin and Bowlin Travel
anticipate that the contribution will not result in any tax liability and that
the distribution will not result in any tax liability to Bowlin shareholders.
However, Bowlin may be liable for Restructuring Taxes in connection with the
distribution. More specifically, Bowlin will be required to pay tax on gain (if
any) equal to the value of Bowlin Travel on the date of the distribution, less
Bowlin's basis in Bowlin Travel shares immediately before the distribution.
Bowlin and Bowlin Travel plan to base the value of Bowlin Travel on the
first-day trading price of Bowlin Travel shares. Therefore, the amount of this
gain and any consequent Restructuring Taxes will not be determined until the
time of the distribution. Depending upon the value of Bowlin Travel as of the
distribution, the amount of Restructuring Taxes could be substantial. In
addition, it is possible that the IRS may successfully challenge any valuation
of Bowlin Travel for this purpose and thereby assess additional Restructuring
Taxes. As stated previously, under the Tax Agreement, Bowlin Travel is required
to reimburse Bowlin for any Restructuring Taxes.
Administrative Matters. The Tax Agreement also sets forth the
obligations of Bowlin and Bowlin Travel with respect to the filing of tax
returns, the administration of tax contests and other matters.
Reasons for the Distribution
The distribution of the Bowlin Travel stock is being carried out for
the purpose of facilitating the tax-free acquisition of Bowlin by Lamar because
Lamar is not interested in acquiring the travel center business.
EFFECTIVE TIME
We expect to close the merger during the first quarter of 2001. The
merger will be effective upon the filing of articles of merger with the Nevada
Secretary of State, or a later time that we specify in the articles of merger.
We plan to file the articles of merger soon after the Bowlin special meeting.
MERGER CONSIDERATION FOR BOWLIN STOCK AND EXCHANGE RATIO
At the effective time of the merger, each share of Bowlin stock will
be converted into the right to receive Lamar stock equal to the product of (A)
one share of Lamar stock and (B) the quotient of (x) 725,000, divided by (y)
the total number of shares of Bowlin stock issued and outstanding. Assuming
that all outstanding Bowlin stock options are exercised prior to the closing of
the merger, there would be 4,827,848 shares of Bowlin stock outstanding and the
exchange ratio would be .1502. Cash will be paid for any fractional shares. In
no event will Lamar issue more than 725,000 shares of Lamar stock for the
outstanding shares of Bowlin stock. The exchange formula was agreed to in
arm's-length negotiations between representatives of Lamar and Bowlin.
The 725,000 shares of Lamar stock issuable in the merger represent
approximately .95% of the total Lamar stock that will be outstanding after the
issuance.
NO FRACTIONAL SHARES
Lamar will not issue fractional shares in the merger. Instead, Lamar
will pay cash to each Bowlin stockholder who otherwise would be entitled to
receive a fractional share of Lamar stock. The cash amount will equal the
fractional share number multiplied by the average of the closing sales prices
of a share of Lamar stock as reported on the Nasdaq National Market System for
the 30 trading days ending on the last trading day immediately prior to the
closing of the merger.
37
<PAGE> 43
EXCHANGE OF BOWLIN STOCK CERTIFICATES
Promptly after the effective time, the exchange agent will mail
transmittal forms to each person who held shares of Bowlin stock as of the
effective time for use in exchanging Bowlin stock certificates for Lamar stock
certificates and any cash for fractional shares. The transmittal forms will
include instructions specifying details of the exchange.
DO NOT SEND IN YOUR BOWLIN CERTIFICATES UNTIL YOU RECEIVE A
TRANSMITTAL FORM.
If certificates for any shares of Bowlin stock have been lost, stolen
or destroyed, the holder must submit appropriate evidence regarding the
ownership, loss, theft or destruction of the certificate, an affidavit to that
effect and a customary indemnification agreement to the exchange agent.
Lamar will honor a request from a person surrendering a Bowlin stock
certificate that the Lamar stock being given in exchange be issued to a person
other than the registered holder of the certificate on the exchange agent's
books, so long as the requesting person:
o submits all documents necessary to evidence and effect the
transfer to the new holder; and
o pays any transfer or other taxes for issuing shares of Lamar
stock to a person other than the registered holder of the
certificate, unless the requesting person satisfactorily
establishes to Lamar that any tax has been paid or is
inapplicable.
Holders of Bowlin stock exchanged for Lamar stock in the merger will
be entitled to receive dividends and other distributions on Lamar stock
(without interest) that are declared or made with a record date after the
effective time. Dividends or other distributions will not be paid to any former
holder of Bowlin stock, however, until that holder surrenders its shares of
Bowlin stock to the exchange agent.
TREATMENT OF BOWLIN STOCK OPTIONS
Any options for Bowlin stock that were issued to directors or employees under
Bowlin's option plans that remain outstanding at the effective time of the
merger shall be cancelled and shall not represent the right to receive Bowlin
stock or Lamar stock. On October 17, 2000, Bowlin notified each holder of an
option to purchase Bowlin stock that they had the right to exercise any and all
options to purchase Bowlin stock, whether or not currently exercisable
according to their respective terms, prior to November 17, 2000. Any options
not exercised by November 17, 2000 would automatically terminate. At the time
the notice to the option holders was distributed, there were outstanding
options to purchase 191,000 shares of Bowlin stock at an exercise price of
$4.00 per share, and options to purchase 244,000 shares of Bowlin stock at an
exercise price of $8.00 per share. The only other options outstanding are
options to purchase 10,000 shares of Bowlin stock at an exercise price of $5.00
per share, held by HD Brous & Co., Inc. These options will expire on the
earlier to occur of (i) 5:00 p.m. Arizona time on the business day immediately
prior to the date on which the merger is effectuated, or (ii) 5:00 p.m. Arizona
time on December 31, 2000.
TREATMENT OF BOWLIN BENEFITS
The Bowlin employees who remain employees of the surviving corporation
will be eligible to participate in Lamar's 401(k) plan and any assets that they
have in the Bowlin plan will be transferred to Lamar's plan. After the spin-off
of Bowlin Travel, Bowlin Travel will continue to maintain the Bowlin 401(k)
plan as a successor employer to those employees who do not remain with the
surviving corporation following the merger.
ACCOUNTING TREATMENT
Lamar will account for the merger using the purchase method of
accounting for a business combination. Under this method of accounting, the
assets and liabilities of Bowlin, including intangible assets, will be recorded
at their fair market values. The results of operations and cash flows of Bowlin
will be included in Lamar's financial statements following the completion of
the merger.
38
<PAGE> 44
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the material U.S. federal income
tax consequences of the merger. The discussion is based on the Internal Revenue
Code, related regulations, existing administrative interpretations and court
decisions, all of which may change, possibly with retroactive effect. This
discussion assumes that Bowlin stockholders hold their shares of Bowlin stock
as capital assets within the meaning of Section 1221 of the Internal Revenue
Code. This discussion does not address all aspects of U.S. federal income
taxation that may be important to you either in light of your particular
circumstances or if you are subject to special rules. These special rules
include those relating to:
o stockholders who are not U.S. citizens or residents or that
are foreign corporations, partnerships, estates or trusts;
o financial institutions;
o tax-exempt organizations;
o insurance companies;
o dealers in securities;
o stockholders who acquired their Bowlin stock by exercising
options or similar derivative securities or otherwise as
compensation; and
o stockholders who hold their Bowlin stock as part of a hedge,
straddle, appreciated financial position or conversion
transaction.
This section, as it relates to matters of United States federal income
tax law, constitutes the opinion of Squire, Sanders & Dempsey L.L.P., counsel
to Bowlin. These opinions are based on a number of assumptions, representations
and covenants, including the assumption that the merger will be completed as
described in this document. The opinions neither bind the IRS nor preclude the
IRS from adopting a position contrary to that expressed in the opinions. Bowlin
and Lamar cannot assure you that contrary positions will not be successfully
asserted by the IRS or adopted by a court if the issues are litigated. Neither
of us intends to obtain a ruling from the IRS with respect to the tax
consequences of the merger.
Tax Consequences to Bowlin Stockholders
Except as discussed below, Bowlin stockholders will not recognize gain
or loss for U.S. federal income tax purposes on the exchange of Bowlin stock
for Lamar stock in the merger. The aggregate tax basis of Lamar stock received
in the merger will be the same as the aggregate tax basis of the Bowlin stock
surrendered in exchange therefor, reduced by the portion of the tax basis of
the Bowlin stock allocable to fractional shares of Lamar stock for which cash
is received instead. The holding period of Lamar stock received as a result of
the exchange will include the holding period of the Bowlin stock surrendered in
exchange. Bowlin stockholders will recognize gain or loss for U.S. federal
income tax purposes on the cash they receive in place of fractional shares of
Lamar stock. The gain or loss will be measured by the difference between the
amount of cash received and the portion of the tax basis of the Bowlin stock
surrendered in the merger that is allocable to those fractional shares of Lamar
stock.
Tax Consequences to Lamar and Bowlin
Lamar, including its merger subsidiary, and Bowlin will not recognize
gain or loss for U.S. federal income tax purposes by reason of the merger.
However, Bowlin may be liable for taxes imposed in connection with the
contribution by Bowlin of the travel centers-related assets and liabilities to
Bowlin Travel and the distribution. More specifically, Bowlin will be required
to pay tax on the gain (if any) equal to the value of Bowlin Travel on the date
of the distribution, less Bowlin's basis in the Bowlin Travel shares
immediately before the distribution. Bowlin Travel has agreed to indemnify
Bowlin for these taxes. See "The Merger and the Merger Agreement -- Tax Sharing
and Disaffiliation Agreement."
39
<PAGE> 45
Backup Withholding
Unless a stockholder complies with reporting and/or certification
procedures or is an exempt recipient under the backup withholding and
information reporting provisions of the Internal Revenue Code and Treasury
regulations, the holder may be subject to a 31% backup withholding tax on any
cash payments received in the merger. Any amounts withheld under the backup
withholding rules may be allowed as a refund or a credit against the holder's
federal income tax liability, provided the required information is furnished to
the IRS.
THE FOREGOING DISCUSSION IS ONLY INTENDED TO PROVIDE YOU WITH A
GENERAL SUMMARY. IT IS NOT A COMPLETE ANALYSIS OR DESCRIPTION OF EVERY
POTENTIAL U.S. FEDERAL INCOME TAX CONSEQUENCE OR ANY OTHER CONSEQUENCE OF THE
MERGER. IN ADDITION, THE DISCUSSION DOES NOT ADDRESS TAX CONSEQUENCES THAT MAY
VARY WITH, OR ARE CONTINGENT ON, YOUR INDIVIDUAL CIRCUMSTANCES. MOREOVER, THIS
DISCUSSION DOES NOT ADDRESS ANY NON-INCOME TAX OR ANY FOREIGN, STATE OR LOCAL
TAX CONSEQUENCES OF THE MERGER. ACCORDINGLY, WE STRONGLY URGE YOU TO CONSULT
WITH YOUR TAX ADVISOR TO DETERMINE THE PARTICULAR U.S. FEDERAL, STATE, LOCAL OR
FOREIGN TAX CONSEQUENCES TO YOU OF THE MERGER.
COVENANTS UNDER THE MERGER AGREEMENT
Bowlin's Interim Operations
Until the closing of the merger and except regarding the contribution
of Bowlin's travel center assets and liabilities to Bowlin Travel in connection
with the spin-off, Bowlin has agreed to operate its business solely in the
ordinary course. Bowlin also agreed to:
o use best efforts to preserve its assets;
o use best efforts to preserve the goodwill of its suppliers,
customers and others having business relations with it;
o do nothing to impair its ability to keep and preserve its
business.
Joint Interim Obligations
Bowlin and Lamar have agreed that they will not do anything or fail to
do anything that will result in a breach of any of the agreements or
commitments made in the merger agreement. Each also has agreed that it will not
do anything or fail to do anything that would cause any of its representations
and warranties in the merger agreement to become untrue.
No Solicitation by Bowlin
Bowlin has agreed not to directly or indirectly (1) solicit any person
regarding either a business combination or any other transaction with Bowlin as
an alternative to this merger, (2) participate in any negotiations with, or
provide information to, any person to seek any alternative transaction to this
merger, (3) agree to or recommend an alternative transaction or (4) enter into
any agreements regarding an alternative transaction to the merger, unless prior
to the adoption of the merger agreement by the Bowlin's stockholders, Bowlin's
board is required to do so by its fiduciary duties. Bowlin has agreed to inform
Lamar of any inquiry it receives relating to an alternative transaction.
Recommendation of the Bowlin Board
The Bowlin board has agreed to take all lawful action that does not
interfere with its fiduciary duties to secure the vote of its stockholders
adopting the merger agreement, including recommending this transaction to its
stockholders.
40
<PAGE> 46
Other Covenants
The merger agreement contains covenants of both parties relating to,
among other things, public announcements, notifications, regulatory filings,
employee matters, and cooperation in obtaining consents and approvals.
Bowlin has also agreed, among other things, to grant Lamar access to
company information as is reasonably necessary to investigate Bowlin and to
confer with Lamar on a regular basis to report material operational matters and
report the general status of its operations.
Lamar has also agreed, among other things, to use its best efforts to
cause the shares of Lamar stock that it will issue in the merger to be approved
for listing on the Nasdaq National Market.
REPRESENTATIONS AND WARRANTIES
Each of Lamar, Lamar Southwest Acquisition Corporation and Bowlin has
made customary representations and warranties to the other in the merger
agreement regarding, among other things:
o its organization and similar corporate matters;
o the authorization, execution, delivery, performance and
enforceability of the merger agreement;
o its capital structure;
o reports and financial statements filed with the SEC and the
accuracy of the information contained in those documents;
o the absence of any undisclosed liabilities since their latest
audited balance sheet;
o necessary governmental consents and filings;
o the absence of conflicts, violations or defaults under its
organizational documents and other agreements and documents as
a result of executing the merger agreement and the
consummation of the merger;
o the absence of conflicts with or violations of any laws as a
result of executing the merger agreement;
o merger-related brokers' and finders' fees; and
o the accuracy of the information in this proxy
statement/prospectus.
Bowlin has made additional representations and warranties to Lamar
regarding, among other things:
o its advertising revenues and lease expense over certain
prescribed periods, as well as the level of its long-term debt
as of the effective time of the merger;
o its material contracts;
o its owned real property;
o the type, location and condition of its outdoor advertising
faces;
o insurance coverage;
41
<PAGE> 47
o the absence of litigation;
o legal proceedings;
o its accounts receivable;
o the intellectual property it uses in its business;
o the filing of tax returns and payment of taxes;
o its employee benefit plans;
o its bank accounts;
o employee matters;
o possession of all necessary permits;
o compliance with all applicable laws;
o compliance with governmental regulations concerning employees
and relations with employees;
o compliance with environmental laws and other environmental
matters;
o board approval of the merger;
o the voting requirements for stockholder approval of the
merger;
o the absence of a stockholder rights plan;
o adherence to corporate formalities; and
o transactions with related parties.
Bowlin has also made the following representations and warranties to
Lamar that, since its latest audited balance sheet, with several exceptions, it
has not:
o amended its certificate of incorporation or bylaws;
o incurred any liability exceeding $50,000 individually or
$100,000 in the aggregate;
o permitted any of its assets to be subject to any mortgage or
other encumbrance;
o merged with another entity, agreed to acquire any business or
sold any of its assets;
o made any material capital expenditures;
o declared any dividends or redeemed any outstanding securities;
o adopted or changed any employee benefit plans;
o made any bonus or profit sharing distributions;
42
<PAGE> 48
o made any loans;
o changed any banking arrangements;
o entered into or amended any employment agreements;
o canceled or released any debts;
o entered into any transactions that were not negotiated at
arm's-length;
o suffered any material losses; or
o incurred any liability with respect to a labor or collective
bargaining agreement.
Lamar has made additional representations and warranties to Bowlin
regarding, among other things, its intention to satisfy certain requirements so
that the merger qualifies as a tax free reorganization.
CONDITIONS TO THE MERGER
Conditions to Each Party's Obligation to Effect the Merger
Lamar and Bowlin do not have to consummate the merger unless the
following conditions are met or, where permissible, waived:
o Bowlin stockholders must adopt the merger agreement;
o the registration statement of which this proxy
statement/prospectus is a part must have been declared
effective and not be subject to any stop order or related
proceeding;
o Lamar and Bowlin must obtain all required approvals from
governmental entities and satisfy any required waiting
periods;
o no injunction or other judgment is in effect to prohibit the
consummation of the merger;
o no litigation or other proceeding is pending or threatened
that would adversely affect Lamar or the entity surviving the
merger; and
o the shares to be issued in the merger have been authorized for
listing on the Nasdaq National Market System.
Conditions to the Obligation of Lamar and Lamar Southwest Acquisition
Corporation
Lamar and Lamar Southwest Acquisition Corporation do not have to
consummate the merger unless the following additional conditions are met or
waived by Lamar:
o Bowlin must have performed and complied in all material
respects with all its agreements and covenants in the merger
agreement, and the representations and warranties of Bowlin
contained in the merger agreement must be true and correct
when made and as of the closing date as if made as of that
date, except for any inaccuracies or failures to perform that
would not reasonably be expected to have a material adverse
effect on Bowlin;
o nothing has occurred after the signing of the merger agreement
that could reasonably be expected to have a material adverse
effect on Bowlin;
43
<PAGE> 49
o all necessary consents and approvals must be obtained;
o Bowlin's working capital must not be less then $100,000;
o Bowlin's long-term debt must not exceed $14,500,000;
o none of Bowlin's assets will secure any debts or obligations
of Bowlin Travel;
o certain outdoor advertising faces that are to be completed
prior to the closing of the merger must be completed in
suitable condition;
o the contribution of assets to, and assumption of liabilities
by, Bowlin Travel in the spin-off transaction must have been
completed in accordance with the terms of the contribution
agreement;
o Bowlin must distribute all of the shares of Bowlin Travel to
the Bowlin stockholders;
o Lamar must receive the resignations of all of the directors of
Bowlin;
o Lamar must receive the customary closing documents described
in the merger agreement; and
o each affiliate of Bowlin must deliver to Lamar an agreement
regarding restrictions on the resale of the shares of Lamar
stock issued in the merger.
Conditions to the Obligation of Bowlin
Bowlin does not have to consummate the merger unless the following
additional conditions are met or waived by Bowlin:
o Lamar must have performed and complied in all material
respects with all its agreements and covenants in the merger
agreement, and the representations and warranties of Lamar
contained in the merger agreement must be true and correct
when made as of the closing date as if made as of that date,
except for any inaccuracies or failures to perform that would
not reasonably be expected to have a material adverse effect
on Lamar;
o nothing has occurred after the signing of the merger agreement
that could reasonably be expected to have a material adverse
effect on Bowlin;
o nothing has occurred since the signing of the merger agreement
that has a material adverse effect on Lamar;
o all necessary consents and approvals must be obtained; and
o Bowlin must receive the customary closing documents described
in the merger agreement.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time before the
effective time, whether before or after its adoption by Bowlin stockholders:
o by mutual written consent of Lamar and Bowlin;
o by either Lamar or Bowlin:
- for material uncured breaches of representations by
the other party;
44
<PAGE> 50
- if the merger has not occurred by March 31, 2001,
unless the terminating party's own breach of the
agreement is the reason that the merger has not been
consummated and, with respect to Bowlin, only if the
applicable termination fee is paid;
- if there is a non-appealable government order
prohibiting the consummation of the merger; or
- if the Bowlin stockholders fail to approve the
merger, unless the failure is caused by that party's
failure to perform any obligation under that
agreement;
o by Bowlin if the average closing share price of Lamar stock
for the 30 trading days ending on the last trading day
immediately prior to the closing of the merger is below
$40.00.
TERMINATION FEES AND EXPENSES
Payment of Termination Fee
Bowlin has agreed to pay Lamar a termination fee of $580,000 if either
party terminates the merger agreement because Bowlin's stockholders have failed
to adopt the merger agreement.
Payment of Expenses
If the merger is consummated, Lamar will pay up to $1,250,000 of
Bowlin's merger-related fees and expenses and Bowlin Travel will assume any
merger costs incurred by Bowlin in excess of $1,250,000. If the merger is not
consummated, Lamar and Bowlin will each pay its own merger-related fees and
expenses.
AMENDMENTS AND WAIVERS
Generally, Lamar and Bowlin may amend or waive any provision of the
merger agreement before the effective time of the merger. However, if a
material condition is waived, Lamar will amend the registration statement of
which this proxy statement/prospectus forms a part, and Bowlin will resolicit
proxies for the adoption of the merger agreement. In addition, after Bowlin
stockholders have approved the merger, their further approval would be required
to modify the amount or type of consideration that they will receive in the
merger, to alter the charter of the surviving corporation or to otherwise alter
the merger agreement in a manner materially adverse to them.
APPRAISAL OR DISSENTERS' RIGHTS
Under Nevada law, Bowlin stockholders are not entitled to appraisal or
dissenters' rights in connection with the merger because:
o Bowlin stock was, as of the record date for the special
meeting, designated and reported for trading on the American
Stock Exchange; and
o Bowlin stock will be converted into shares of Lamar stock,
which will be designated and reported for trading on the
Nasdaq National Market.
NASDAQ LISTING OF LAMAR STOCK
Lamar has agreed to file a listing notification with Nasdaq concerning
the Lamar stock to be issued to Bowlin stockholders in the merger.
DELISTING OF BOWLIN STOCK
If the merger is completed, Bowlin stock will cease to be quoted on
the American Stock Exchange. Bowlin does not intend to apply for the listing of
the stock of Bowlin Travel on any securities exchange.
45
<PAGE> 51
RESALES OF LAMAR STOCK BY BOWLIN AFFILIATES
Bowlin stockholders may freely transfer the shares of Lamar stock
received in the merger, unless they are individuals and entities who are deemed
to be "affiliates" of Bowlin before the merger or affiliates of Lamar after the
merger. Persons who may be deemed to be affiliates of Bowlin or Lamar include
individuals or entities that control, are controlled by, or are under common
control with Bowlin or Lamar and may include executive officers and directors
as well as principal stockholders. These affiliates or their brokers may be
characterized as "underwriters" when they sell shares of Lamar stock received
in the merger. The United States securities laws require registration of shares
sold by underwriters. An affiliate and its broker can avoid being characterized
as an underwriter and, therefore, avoid the Securities Act registration
requirements by selling shares in compliance with Rule 145 or Rule 144 under
the Securities Act. Rule 145 covers sales by Bowlin affiliates, and Rule 144
covers sales by Lamar affiliates. Each rule limits the number of shares an
affiliate can sell in a particular period of time. The merger agreement
requires Bowlin to use its best efforts to cause each of its affiliates to
execute and deliver to Lamar a written agreement to the effect that the
affiliate will not offer or sell or otherwise dispose of Lamar stock issued to
the affiliate in the merger in violation of the Securities Act or the related
rules and regulations adopted by the SEC. The receipt of these "affiliate
letters" is a condition to Lamar's obligation to close the merger.
This proxy statement/prospectus does not cover resales of Lamar stock
received by any person who may be deemed to be an affiliate of Bowlin and/or
Lamar.
REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act and related
rules, this merger may not be completed unless information and materials about
the companies and the merger are furnished to the Antitrust Division of the
Department of Justice and the Federal Trade Commission and the appropriate
waiting period requirements have been satisfied. Lamar and Bowlin have made the
required filings with both agencies. At any time before or after the completion
of the merger, the Department of Justice, the Federal Trade Commission or
others could take action under the antitrust laws, including seeking to prevent
the merger, to rescind the merger or to conditionally approve the merger upon
the divestiture of substantial assets of Lamar or Bowlin. Lamar and Bowlin
cannot guarantee that a challenge to the merger on antitrust grounds will not
be made or, if a challenge is made, that it would not be successful.
Lamar and Bowlin are not aware of any other material governmental or
regulatory requirements that must be complied with regarding the merger, other
than federal securities laws and the filing of documents describing principal
terms of the merger agreement with the secretary of state of Nevada.
46
<PAGE> 52
STOCK OWNERSHIP
OWNERSHIP OF LAMAR STOCK
The following table sets forth certain information with respect to the
beneficial ownership of Lamar stock as of September 30, 2000:
o each person, or group of affiliated persons, who is known by
Lamar to beneficially own more than 5% of the common stock;
o each of its directors;
o each of its named executive officers; and
o all of its directors and current executive officers as a
group.
Except as otherwise noted, the persons or entities in this table have
sole voting and investing power with respect to all shares of Lamar stock
beneficially owned by them.
The "Percent of Class" column below is based on 75,386,851 shares of
Lamar stock outstanding as of September 30, 2000. For purposes of the table
below, Lamar deems shares of Lamar stock subject to options that are currently
exercisable or exercisable within 60 days of September 30, 2000, to be
outstanding and to be beneficially owned by the person holding the options for
the purpose of computing the percentage ownership of the person, but does not
treat them as outstanding for the purpose of computing the percentage ownership
of any other person.
The following table and footnotes set forth certain information
regarding the beneficial ownership of Lamar stock as of September 30, 2000
by (i) persons known by Lamar to be beneficial owners of more than 5% of either
class of common stock, (ii) the Chief Executive Officer and each of the other
executive officers other than the Chief Executive Officer, (iii) each director
and nominee for election as a director of Lamar and (iv) all current executive
officers and directors of Lamar as a group:
<TABLE>
<CAPTION>
DIRECTORS, OFFICERS TITLE OF NUMBER OF PERCENT
AND 5% STOCKHOLDERS CLASS SHARES(1) OF CLASS
------------------- -------- --------- --------
<S> <C> <C> <C>
Kevin P. Reilly, Jr. Class B(2) 17,000,000(3) 100.0%(4)
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
Sean E. Reilly Class B(2) 17,000,000(3) 100.0%(4)
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
Wendell Reilly Class B(2) 17,000,000(3) 100.0%(4)
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
Clear Channel Communications, Inc. Class A 26,227,273(5) 34.8%
1845 Woodall Rodgers Freeway
Suite 1300
Dallas, TX 75201
Putnam Investments, Inc. Class A 7,117,044(6) 9.4%
One Post Office Square
Boston, MA 02109
</TABLE>
47
<PAGE> 53
<TABLE>
<CAPTION>
DIRECTORS, OFFICERS TITLE OF NUMBER OF PERCENT
AND 5% STOCKHOLDERS CLASS SHARES(1) OF CLASS
------------------- ----- ---------- --------
<S> <C> <C> <C>
Janus Capital Corporation Class A 5,912,671(7) 7.8%
100 Fillmore Street
Denver, CO 80206
Charles W. Lamar, III Class A 5,071,259(8) 6.7%
c/o The Lamar Corporation
5551 Corporate Blvd.
Baton Rouge, LA 70808
AMVESCAP PLC Class A 4,478,394(9) 5.9%
11 Devonshire Square
London ECZ2M 4YR
England
Gerald H. Marchand Class A 133,362(10) *
Keith A. Istre Class A 51,512(11) *
T. Everett Stewart, Jr. Class A 76,800(12) *
Stephen P. Mumblow Class A 5,000(13) *
John Marshall Hamilton Class A 4,000(14) *
Thomas Reifenheiser Class A 4,000(14) *
All Directors and Executive Officers as a Class A 22,345,933(15) 24.2%(16)
Group (10 Persons)
</TABLE>
----------
* Less than 1%
(1) The persons and entities named in the table have sole voting and
investment power with respect to all shares beneficially owned by them,
except as noted below.
(2) Upon the sale of any shares of Class B common stock to a person other than
to a permitted transferee, such shares will automatically convert into
shares of Class A common stock. Permitted transferees include (i) Kevin P.
Reilly, Sr.; (ii) a descendant of Kevin P. Reilly, Sr.; (iii) a spouse or
surviving spouse (even if remarried) of any individual named or described
in (i) or (ii) above; (iv) any estate, trust, guardianship, custodianship,
curatorship or other fiduciary arrangement for the primary benefit of any
one or more of the individuals named or described in (i), (ii) and (iii)
above; and (v) any corporation, partnership, limited liability company or
other business organization controlled by and substantially all of the
interests in which are owned, directly or indirectly, by any one or more
of the individuals and entities named or described in (i), (ii), (iii) and
(iv) above. Except for voting rights, the Class A and Class B common stock
are substantially identical. The holders of Class A common stock and Class
B common stock vote together as a single class (except as may otherwise be
required by Delaware law), with the holders of Class A common stock
entitled to one vote per share and the holders of Class B common stock
entitled to ten votes per share, on all matters on which the holders of
common stock are entitled to vote.
(3) Consists of shares held by the RFLP, of which Kevin Reilly, the President
and Chief Executive Officer of the Company, is the managing general
partner. Kevin Reilly's three siblings, Wendell S. Reilly, Sean E. Reilly
and Anna Reilly Cullinan, are the other general partners of the RFLP. The
managing general partner has sole voting power over the shares but
dispositions of the shares require the approval of 50% of the general
partnership interests of the RFLP.
(4) Represents 18.4% of the Class A common stock if all shares of Class B
common stock are converted into Class A common stock.
(5) Clear Channel shares voting and investment power over these shares with
AMFM, Inc., AMFM Holdings, Inc., Capstar Broadcasting Partners, Inc. and
AMFM Operating Inc. Based on the Schedule 13D filed by Clear Channel with
the SEC on September 6, 2000.
(6) Putnam Investments, Inc. ("PI") shares voting power as to 97,750 of these
shares with The Putnam Advisory Co., Inc. and shares investment power with
Putnam Investment Management, Inc. and The Putnam Advisory Co., Inc. as to
6,812,827 and 304,217 of these shares, respectively. Based on the Schedule
13G/A for the year ended December 31, 1999 filed by PI with the SEC.
48
<PAGE> 54
(7) Based on the Schedule 13G/A filed with the SEC by Janus Capital
Corporation for the year ended December 31, 1999.
(8) Includes (a) 200,000 shares of which Mr. Lamar may, on November 19, 2001,
put to a broker at $50.36 per share and the broker has the right to call
Mr. Lamar at $76.95 per share; (b) 425,000 shares that Mr. Lamar has
exchanged for units in exchange funds over which he retains voting power;
(c) 1,289,967 shares held in trust for Mr. Lamar's two minor children who
reside with him, 250,000 shares of which the trusts may, on October 5,
2001, put to a broker at $39.07 per share and the broker has the right to
call the trusts at $61.64 per share; Mr. Lamar disclaims beneficial
ownership to these shares (d) 80,000 shares that the trusts for Mr.
Lamar's two minor children who reside with him have exchanged for units in
an exchange fund over which they retain voting power; Mr. Lamar disclaims
beneficial ownership to these shares; (e) 2,225,000 shares of held by
limited liability companies and a trust as to which Mr. Lamar is deemed
the beneficial owner and (f) 30,750 shares owned by Mr. Lamar's spouse, as
to which Mr. Lamar disclaims beneficial ownership.
(9) AMVESCAP PLC shares voting and investment power over these shares with AVZ,
Inc., AIM Management Group, Inc., AMVESCAP Group Services, Inc., INVESCO
Inc., INVESCO Capital Management, Inc., INVESCO Management & Research,
Inc., INVESCO Realty Advisers, Inc., INVESCO North America Holdings, Inc.,
INVESCO Funds Group, Inc. and INVESCO (NY) Asset Management, Inc. Based on
the Schedule 13G/A for the year ended December 31, 1999 filed by AMVESCAP
PLC with the SEC.
(10) Includes 16,000 shares of Class A common stock subject to stock options
exercisable within 60 days of September 30, 2000, and 51,282 shares owned
by the Marchand Family Partnership of which Mr. Marchand is a partner. Mr.
Marchand shares voting power over the partnership shares with his wife.
(11) Includes 50,200 shares of Class A common stock subject to stock options
exercisable within 60 days of September 30, 2000.
(12) Includes 18,000 shares of Class A common stock subject to stock options
exercisable within 60 days of September 30, 2000.
(13) Includes 4,000 shares of Class A common stock subject to stock options
exercisable within 60 days of September 30, 2000.
(14) Subject to stock options exercisable within 60 days of September 30, 2000.
(15) See Notes 2, 4, 6, 10, 12, 13 and 14.
(16) Assumes the conversion of all shares of Class B common stock into shares of
Class A common stock.
OWNERSHIP OF BOWLIN STOCK
The following table sets forth information concerning the beneficial
ownership of Bowlin stock as of September 30, 2000, by:
o each stockholder known by Bowlin to own beneficially more than
five percent of the outstanding shares of Bowlin stock;
o each director of Bowlin;
o each of its named executive officers; and
o all directors and current executive officers as a group.
Except as otherwise noted, the persons or entities in this table have
sole voting and investing power with respect to all shares of common stock
beneficially owned by them.
The following table and footnotes set forth certain information as of
September 30, 2000, concerning the beneficial ownership of shares of common
stock of Bowlin by (i) all persons known by Bowlin to be the beneficial owners
of more than five percent of the outstanding shares of common stock; (ii) each
Director and Director-Nominee of Bowlin; (iii) the executive officers of
Bowlin; and (iv) all Directors and executive officers of Bowlin as a group.
49
<PAGE> 55
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2) PERCENT OF CLASS
---------------------------- ------------------------ ----------------
<S> <C> <C>
Michael L. Bowlin(3) 1,687,829 38.5%
C. Christopher Bess(4) 488,623 11.1%
Nina J. Pratz 156,802 3.6%
William J. McCabe 101,590 2.3%
Michael Mons 30,330 *
Cynthia K. Biggers 9,000 *
Johnny Riley 15,100 *
Robert J. Beckett 135,646 3.1%
Harold Van Tongeren(5) 56,099 1.3%
James A. Clark 37,000 *
Jack Ayers 9,000 *
Monica A. Bowlin(6) 1,687,829 38.5%
The Francis W. McClure and Evelyn Hope McClure
Revocable Trust 391,695 8.9%
Wellington Management Company, LLP 228,000 5.2%
All directors and executive officers as a group
(10 persons)(3)(4)(5)(6) 2,727,019 62.2%
</TABLE>
----------
*Less than 1.0%
All of the holders have an address at c/o Bowlin, 150 Louisiana NE,
Albuquerque, NM, 87108.
(1) Unless otherwise noted and subject to community property laws, where
applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of common stock as shown
beneficially owned by them.
(2) The shares and percentages shown include the shares of common stock
actually owned as of September 30, 2000, and the shares of common stock
which the person had the right to acquire beneficial ownership within
sixty days of such date pursuant to options. All shares of common stock
the identified person had the right to acquire within sixty days of
September 30, 2000 upon the exercise of options are deemed outstanding
when computing the percentage of the securities owned by such person, but
are not deemed to be outstanding when computing the percentage of
securities owned by any other person.
(3) Includes 425,687 shares held by Mr. Bowlin's wife and 171,332 shares held
by each of three daughters. Mr. Bowlin disclaims beneficial ownership of an
aggregate of 513,996 of such shares, which are held by three of his
daughters.
(4) Includes 48,006 shares held by Mr. Bess' wife and 26,623 shares held by Mr.
Bess' minor daughter.
(5) All of such 56,099 shares are held by Mr. Van Tongeren jointly with his
wife.
(6) Includes 747,930 shares held by Mrs. Bowlin's husband and 171,332 shares
held by each of her three daughters. Mrs. Bowlin disclaims beneficial
ownership of an aggregate of 513,996 of such shares, which are held by
three of her daughters.
50
<PAGE> 56
COMPARISON OF RIGHTS OF LAMAR AND BOWLIN STOCKHOLDERS
Lamar is a Delaware corporation subject to the provisions of the
Delaware General Corporation Law or DGCL. Bowlin is a Nevada corporation
subject to the provisions of the Nevada General Corporation Law or NRS. Upon
completion of the merger, Bowlin stockholders, whose rights are governed by the
Bowlin charter, bylaws and the NRS, will become stockholders of Lamar and the
Lamar charter, by-laws and the DGCL will govern their rights.
The following description summarizes material differences that may
affect the rights of holders of Bowlin stock. This is not a complete statement
of all those differences, or a complete description of the specific provisions
referred to in this summary. The identification of specific differences is not
intended to indicate that other equally or more significant differences do not
exist. For additional information regarding the specific rights of holders of
Lamar Class A common stock, see the description of Lamar's Class A common stock
incorporated by reference into this proxy statement/prospectus. You should read
carefully the relevant provisions of the DGCL and the NRS, the charter and
by-laws of Lamar and the charter and bylaws of Bowlin, which are incorporated
by reference into this proxy statement/prospectus.
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
<S> <C> <C>
CORPORATE Delaware law and Lamar's charter and Nevada law and Bowlin's charter and
GOVERNANCE by-laws govern the rights of Lamar by-laws currently govern the rights of
stockholders. Upon completion of the Bowlin stockholders. Upon completion of
merger, the rights of Lamar stockholders the merger, the rights of Bowlin
will continue to be governed by Delaware stockholders when they become Lamar
law and Lamar's charter and by-laws. stockholders in the merger will be
governed by Delaware law and Lamar's
charter and by-laws.
AUTHORIZED The authorized capital of Lamar consists The authorized capital stock of Bowlin
CAPITAL STOCK of 175,000,000 shares of Class A common consists of 100,000,000 shares of common
stock, $.001 par value per share, stock, $.001 par value per share, and
37,500,000 shares of Class B common stock, 10,000,000 shares of preferred stock,
$.001 par value per share; 10,000 shares $.001 par value per share.
of Class A preferred stock, $638 par value
per share, and 1,000,000 shares of With respect to Bowlin's preferred stock,
undesignated preferred stock $.001 par value the Bowlin board is authorized, without
per share, of which 5,720 shares of Series stockholder approval, to issue shares of
AA Preferred Stock are currently outstanding. preferred stock in one or more series and
to determine the preferences, voting
With respect to Lamar's undesignated powers, qualifications, and special or
preferred stock, the Lamar board is relative rights or privileges of that
authorized, without stockholder approval, series.
to issue shares of preferred stock in one
or more series and to determine the
preferences, voting powers,
qualifications, and special or relative
rights or privileges of that series.
DIVIDENDS Dividends are payable on Lamar stock only Dividends are payable on Bowlin stock as
when, as and if declared by Lamar's board Bowlin's board of directors may from time
of directors, out of funds legally to time declare. Under the NRS, a
available for distribution. Under the corporation may pay dividends unless,
DGCL, a corporation may pay dividends out after giving effect to the proposed
of surplus or net profits for the current dividend, (i) the corporation would not be
or preceding fiscal year, provided that able to pay its debts as they become due
the capital of the corporation is not less in the usual course of business or (ii)
than the aggregate liquidation preference the corporation's total assets would be
of the corporation's outstanding stock less than the sum of its total liabilities
having a preference upon distribution of plus the amount that would be needed, if
assets. the corporation were to be dissolved at
the time of distribution, to satisfy the
preferential rights upon dissolution of
stockholders whose preferential rights are
superior to those receiving the
distribution.
</TABLE>
51
<PAGE> 57
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
<S> <C> <C>
LIQUIDATION Upon liquidation or dissolution, after Subject to the rights of any preferred
RIGHTS payment has been made to any holder of stock, upon liquidation, dissolution or
preferred stock of the full amount to winding up of Bowlin, the holders of
which they are entitled, the holders of Bowlin stock are entitled to receive the
Lamar stock are entitled to share ratably net assets of the corporation available
according to the number of shares of for distribution in proportion to their
common stock held by them in all remaining interest therein.
assets of the company available for
distribution to its stockholders.
VOTING RIGHTS Stockholders of Lamar stock vote together Bowlin stockholders vote together as one
as one class on all matters on which class on all matters that common
common stockholders generally are entitled stockholders are entitled to vote.
to vote. The Lamar stock that Bowlin Holders of Bowlin stock are entitled to
stockholders will receive in the merger is one vote for each share of stock held at
Class A common stock. The Class A common any meeting of stockholders.
stock is entitled to one vote per share.
Lamar also has Class B common stock. The
Class B common stock is entitled to ten
votes per share, but is otherwise
identical to the Class A common stock.
Holders of Series AA preferred stock are
entitled to one vote per share and the
holders of Class A preferred stock have no
voting rights, except as provided by the
DGCL.
CUMULATIVE Neither Lamar's charter nor its by-laws Neither Bowlin's charter nor its by-laws
VOTING FOR provide for cumulative voting in the provide for cumulative voting in the
ELECTION OF election of directors, which means that election of directors, which means that
DIRECTORS the holders of a majority of the shares the holders of a majority of the shares
voted can elect all of the directors then voted can elect all of the directors then
outstanding for election. nominated for election.
MEETINGS OF A special meeting of Lamar's stockholders A special meeting of Bowlin's stockholders
STOCKHOLDERS; may be called only by the chief executive may be called only by the President, the
NOTICE officer or by a majority of the board of Chairman of the Board or by a majority of
directors. the board of directors.
A written notice stating the date, time, A written notice stating the date, time,
place and purpose of the meeting shall be place and purpose of the meeting shall be
given not less than 10 nor more than 60 given not less than 10 nor more than 60
days before the meeting to each days before the date of the meeting to
stockholder entitled to vote at the each stockholder entitled to vote at the
meeting. meeting.
</TABLE>
52
<PAGE> 58
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
<S> <C> <C>
STOCKHOLDER Lamar's by-laws permit stockholders to act Bowlin's charter and bylaws permit
ACTION BY without a meeting, prior notice or vote, stockholders to act without a meeting,
WRITTEN if they do so by written consent. prior notice or vote, if they do so by
CONSENT written consent.
STOCKHOLDER Lamar's by-laws provide that for a Bowlin's by-laws provide that the order of
PROPOSALS stockholder proposal to be brought business at a meeting of stockholders may
properly before an annual meeting, the be changed by the vote of the stockholders
stockholder must notify Lamar of the holding a majority of the shares present
proposal the earlier of: (a) not less in person or by proxy at such meeting and
than 75 days before the anniversary date entitled to vote.
of the prior years' annual meeting;
unless, there was no annual meeting in the
prior year or if the date of the current
annual meeting is more than 30 days from
the anniversary date of the prior year's
annual meeting, in which case this
provision does not apply, or (b) 45 days
prior to the current years' annual meeting.
QUORUM FOR The holders of one-third of all The holders of a majority of all
MEETING OF outstanding stock entitled to vote at a outstanding stock entitled to vote at a
STOCKHOLDERS Lamar stockholder meeting, present in Bowlin stockholder meeting, present in
person or represented by proxy, constitute person or represented by proxy, constitute
a quorum for transacting business at a a quorum for transacting business at a
meeting. meeting.
STOCKHOLDER Under the DGCL, any stockholder has the Under the NRS, any stockholder who has
INSPECTION right to inspect the company's stock been a stockholder of record for at least
RIGHTS ledger, stockholder list, and other books 6 months or is authorized in writing by
and records for a purpose reasonably holders of at least 5 percent of all
related to the person's interest as a outstanding shares has, upon 5 days'
stockholder. written demand, the right to inspect the
company's stock ledger, stockholder list,
and other books and records.
NUMBER OF Lamar currently has ten directors. Bowlin currently has seven directors.
DIRECTORS Lamar's by-laws provide that the board of Bowlin's by-laws provide that the board of
directors shall consist of at least one directors shall be at least five. The
director. The number of directors is number of directors is fixed by the board
fixed by the board and may be enlarged at and may be enlarged at any time by a vote
any time by a vote of the majority of of the majority of directors.
directors.
CLASSIFICATION Lamar does not have a classified board, Bowlin's charter provides that the board
OF BOARD OF which means that all members of Lamar's of directors will consist of three
DIRECTORS board of directors are up for re-election classes, with each class being as equal in
every year. size as possible. Each class of directors
is elected for a three-year term at
alternating annual meetings of the
stockholders.
REMOVAL OF Under the DGCL, directors may be removed, Bowlin's by-laws provide that directors
DIRECTORS with or without cause, by the holders of a may be removed only for cause and by the
majority of the shares entitled to vote affirmative vote of at least 66 2/3% of
for the election of directors. Under the outstanding stock of Bowlin. Bowlin's
</TABLE>
53
<PAGE> 59
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
<S> <C> <C>
Lamar's by- laws, vacancies on the board by-laws also provide that, vacancies on
may be filled by the board by a majority the board resulting from an increase in
vote of the directors then in office, the number of directors may be filled by a
though less than a quorum, or by the sole majority of the board, though less than a
remaining director. quorum, or by the sole remaining
director. If there is a vacancy due to
death, resignation or other causes and no
directors remain in office, any officer or
stockholder or an executor, administrator
or trustee or guardian of a stockholder,
may call a special meeting of stockholders
to elect directors, may be filled only by
the affirmative vote of a majority of the
remaining directors then in office, though
less than a quorum.
LIMITATION ON Lamar's charter provides that directors Bowlin's charter provides that directors
PERSONAL shall not be personally liable to Lamar or shall not be personally liable to Bowlin
LIABILITY OF its stockholders for monetary damages for or its stockholders for monetary damages
DIRECTORS AND breaching their fiduciary duties except: for breaching their fiduciary duties
OFFICERS except for:
o breaches of their duty of loyalty
to Lamar or its stockholders; o acts or omissions which involve
intentional misconduct, fraud or
knowing violation of law; and
o acts or omissions not in good
faith or involving intentional o authorizing the payment of
misconduct or a knowing violation of dividends in violation of the NRS.
law;
o unlawful payment of dividends or
unlawful repurchases of stock; or
o transactions from which the
directors derived improper personal
benefit.
INDEMNIFICATION Delaware law permits and Lamar's by-laws Nevada law permits and Bowlin's charter
OF DIRECTORS provide for, indemnification of directors provides for, indemnification of
AND OFFICERS and officers for expenses, judgments or directors, officers, employees and agents
settlements actually and reasonably for expenses, judgments or settlements
incurred by them in legal proceedings if actually and reasonably incurred by them
they acted in good faith and in a manner in legal proceedings if they acted in good
they reasonably believed to be in Lamar's faith and in a manner they reasonably
best interests. believed to be in or not opposed to
Bowlin's best interests. Whether
Lamar's by-laws provide that indemnification is proper shall be
indemnification is a contract right for determined:
the benefit of the directors, officers and
other persons entitled to be indemnified. o by the stockholders;
The DGCL does not permit a corporation to o by a majority vote of a quorum of
indemnify persons against judgments in disinterested directors; or
actions brought by or in the right of the
corporation. o if a quorum of disinterested
directors so directs, by independent
legal counsel in a written opinion.
</TABLE>
54
<PAGE> 60
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
<S> <C> <C>
AMENDMENTS TO Under the DGCL, a charter may be amended Under the NRS, a charter may be amended by
CHARTER by the affirmative vote of a majority of the affirmative vote of a majority of the
the outstanding stock and a majority of outstanding stock and a majority of the
the outstanding shares of each class outstanding shares of each class entitled
entitled to vote as a class. Lamar's to vote as a class. Bowlin's charter
charter provides for amendments to be made reserves the right to amend any provision
in the manner prescribed by Delaware law. in its charter, but requires the
affirmative vote of the holders of at
least 66 2/3% of the outstanding stock
entitled to vote to amend any provision in
a manner inconsistent with the charter.
AMENDMENTS TO Lamar's by-laws may be altered or Bowlin's by-laws may be altered or
BY-LAWS repealed, and new by-laws may be made by a repealed and new by-laws may be made by
majority of the board of directors. the affirmative vote of the holders of a
Lamar's by-laws may also be altered, majority of the outstanding stock entitled
amended or repealed, and new by-laws may to vote at meeting of stockholders or by a
be adopted, by the stockholders at an majority of the board of directors. The
annual or special meeting of affirmative vote of 66 2/3% of outstanding
stockholders. In the case of a special stock, however, is required to repeal,
meeting, a description of the alteration, alter or amend the provisions relating to
amendment, repeal or adoption must be the nomination of directors, removal of
included in the notice of the special directors and indemnification of directors.
meeting.
ANTI-TAKEOVER Section 203 of the DGCL prohibits a Bowlin's charter provides that the
PROVISIONS Delaware corporation from engaging in a affirmative vote of not less than 66 2/3%
"business combination" with a person of the votes entitled to be cast by the
owning 15% or more of the corporation's holders of all outstanding stock entitled
voting stock (an "interested stockholder") to vote on the election of directors,
for three years following the time that excluding shares held by the subject
person became an interested stockholder, interested stockholder, must approve a
unless: "business combination" with any person who
(a) is or has announced or publicly
o the board, before the time the disclosed a plan or intention to become
person became an interested the beneficial owner of 10% or more of the
stockholder, approved either the voting stock of Bowlin or (b) is an
business combination or the affiliate or associate of Bowlin and at
transaction that resulted in the any time within the two-year period
person becoming an interested immediately prior to the date in question,
stockholder; was a beneficial owner of 10% of voting
stock (an "interested stockholder"),
o the person became an interested unless:
stockholder and 85% owner of the
voting stock in the transaction, o the board approved either the
excluding shares owned by directors business combination specifically or
and officers and shares owned by some as a transaction which is within an
employee stock plans; or approved category of transactions
(whether or not the interested
o the combination transaction is stockholder was an interested
approved by the board and authorized stockholder at the time of that
by the affirmative vote of at least approval) by a majority of the
two-thirds of the outstanding voting directors of Bowlin who are not
stock not owned by the interested affiliated with the interested
stockholder. stockholder ("independent
directors"); or
</TABLE>
55
<PAGE> 61
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
<S> <C> <C>
A Delaware corporation can elect in its
charter or by-laws not to be governed by o all of the following are met:
Section 203. Lamar has not made that
election.
- the aggregate amount of cash and
the fair market value as of the
date of the closing of the
business combination of
consideration other than cash to
be received by the holders of the
capital stock in the business
combination shall be at least
equal to the highest of (x) the
highest per share price paid by
or on behalf of the interested
stockholder for any share of that
class of stock of Bowlin to be
exchanged or in the transaction
in which the stockholder became
an interested stockholder and (y)
the fair market value per share
of that class of stock to be
exchanged on the higher of the
date the first public
announcement of the business
combination was made or the date
of the transaction in which the
stockholder became an interested
stockholder;
- the consideration received by
holders of a particular class of
stock of Bowlin shall be in the
same form as paid by the
interested stockholder for those
shares and if it varied as to
form, either cash or the form
used to acquire the majority of
the shares;
- after the date of the transaction
in which the stockholder became
an interested stockholder and
prior to the closing the business
combination there shall have been
no failure to declare a dividend
(except as approved by a majority
of the independent directors), no
reduction in the annual rate of
dividends and no increase in the
annual rate of dividends paid on
the common stock and no increase
in the ownership percentage of
the interested stockholder;
- after the date of the transaction
in which the stockholder became
an interested stockholder, the
interested stockholder shall not
have received the benefit any
financial assistance form Bowlin;
</TABLE>
56
<PAGE> 62
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
<S> <C> <C>
- a proxy or information statement
describing the proposed business
combination shall be mailed to
all stockholder of Bowlin at
lease 30 days prior to the
closing of the business
combination; and
- the interested stockholder shall
not have made any major changes
in Bowlin's business or equity
capital structure without the
approval of a majority of the
independent directors.
If the business combination does not
involve the payment of consideration to
holders of Bowlin's outstanding capital
stock, both conditions above must be met.
STOCKHOLDER Lamar does not have a stockholders rights Bowlin does not have a stockholders right
RIGHTS PLAN plan. plan.
PROVISIONS The DGCL generally requires that a merger The NRS generally requires that a merger
RELATING TO and consolidation, or sale, lease or or exchange be approved by the directors
SOME BUSINESS exchange of all or substantially all of a and by a majority of the outstanding
COMBINATIONS corporation's property and assets be stock. A corporation's charter may
approved by the directors and by a require a greater vote. Bowlin's charter
majority of the outstanding stock. A does not provide for a greater vote.
corporation's charter may require a
greater vote. Lamar's charter does not Under the NRS, a surviving corporation
provide for a greater vote. need not obtain stockholder approval for a
merger if:
Under the DGCL, a surviving corporation
need not obtain stockholder approval for a o the articles of incorporation of
merger if: the surviving corporation will not
differ from its articles before the
o each share of the surviving merger;
corporation's stock outstanding prior
to the merger remains outstanding in o each share of the surviving
identical form after the merger; corporation's stock outstanding prior
to the merger remains outstanding in
o the merger agreement does not identical form after the merger;
amend the charter of the surviving
corporation; and o the number of voting shares
outstanding immediately after the
o either no shares of common stock merger, plus the number of voting
of the surviving corporation are to shares issued as a result of the
be issued or delivered in the merger merger, either by conversion of
or, if common stock will be issued or securities issued pursuant to the
delivered, it will not increase the merger or the exercise of rights and
number of shares of common stock warrants issued pursuant to the
outstanding prior to the merger by merger, will not exceed by more than
more than 20%. 20 per cent the total number o voting
shares of the surviving corporation
outstanding immediately before the
merger; and
</TABLE>
57
<PAGE> 63
<TABLE>
<CAPTION>
LAMAR STOCKHOLDER RIGHTS BOWLIN STOCKHOLDER RIGHTS
<S> <C> <C>
o the number of participating
shares outstanding immediately after
the merger, plus the numbers of
participating shares issuable as a
result of the merger, either by the
conversion of securities issue
pursuant to the merger or the
exercise of rights and warrants
issued pursuant to the merger, will
not exceed by more than 20 percent
the total number of participating
shares outstanding immediately before
the merger.
APPRAISAL OR Under Delaware law, the right of Under Nevada law, the right of dissenting
DISSENTERS' dissenting stockholders to obtain the fair stockholders to obtain the fair value for
RIGHTS value for their shares is available in their shares is available in connection
connection with some mergers or with some mergers or consolidations.
consolidations. Unless otherwise provided Unless otherwise provided in the corporate
in the corporate charter, appraisal rights charter, appraisal rights are not
are not available to stockholders when the available to stockholders when no vote of
corporation will be the surviving its stockholders is required to approve
corporation in a merger and no vote of its the merger. In addition, no appraisal
stockholders is required to approve the rights are available to holders of shares
merger. In addition, no appraisal rights of any class of stock which is either:
are available to holders of shares of any
class of stock which is either: o listed on a national securities
exchange or included in the national
o listed on a national securities market system by the NASD, or
exchange or designated as a national
market system security on an o held of record by more than 2,000
interdealer quotation system by the stockholders,
NASD, or
unless those stockholders are required by
o held of record by more than 2,000 the terms of the merger to accept anything
stockholders, other than (1) shares of stock of the
surviving corporation, (2) shares of stock
unless those stockholders are required by of another corporation which, on the
the terms of the merger to accept anything effective date of the merger or
other than (1) shares of stock of the consolidation, are of the kind described
surviving corporation, (2) shares of stock above, (3) cash, owners' interests or
of another corporation which, on the owners' interests and cash in lieu of
effective date of the merger or fractional shares of stock, or (4) any
consolidation, are of the kind described combination of the consideration set forth
above, (3) cash instead of fractional in (1) through (3). Since Bowlin's stock
shares of stock, or (4) any combination of is listed on the American Stock Exchange
the consideration set forth in (1) through and stockholders will receive shares of
(3). Lamar common stock in the merger, Bowlin
stockholders are not entitled to appraisal
rights.
</TABLE>
58
<PAGE> 64
LEGAL MATTERS
Palmer & Dodge LLP, Boston, Massachusetts, counsel to Lamar
Advertising, will give Lamar Advertising an opinion on the validity of the
securities offered by this proxy statement/prospectus.
EXPERTS
The consolidated financial statements of Lamar Advertising Company and
subsidiaries as of December 31, 1999 and 1998 and for each of the years in the
three-year period ended December 31, 1999, incorporated by reference into this
proxy statement/prospectus and registration statement have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of such firm as experts in accounting
and auditing. The report of KPMG LLP covering the December 31, 1999 financial
statements refers to a change in the method of accounting for the costs of
start-up activities.
The consolidated balance sheet of Chancellor Media Outdoor Corporation
as of December 31, 1998 and the consolidated statements of operations, equity
and cash flows for the period from July 22, 1998 to December 31, 1998, the
statements of income, divisional equity and cash flows of The Outdoor Division
of Whiteco Industries, Inc. for the eleven months ended November 30, 1998, the
statements of operations, partners' capital and cash flows of Martin Media, L.P.
for the seven months ended July 31, 1998, and the statements of operations,
retained earnings and cash flows of Martin & MacFarlane, Inc. for the seven
months ended July 31, 1998, incorporated in this registration statement by
reference to the Current Report on Form 8-K of Lamar Advertising Company dated
July 6, 1999 have been so incorporated in reliance upon the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of the Outdoor Advertising Division of Whiteco
Industries, Inc., incorporated by reference in this proxy statement/prospectus
have been audited by BDO Seidman, LLP, independent certified public accountants,
to the extent and for the periods set forth in their report incorporated herein
by reference, and are incorporated herein in reliance upon such report given the
authority of said firm as experts in auditing and accounting.
The balance sheets of Martin Media as of December 31, 1997 and 1996 and
the related statements of operations, partners' capital (deficit) and cash flows
for each of the years ended December 31, 1997, 1996, and 1995 and the balance
sheets of Martin & MacFarlane, Inc. as of December 31, 1997 and 1996 and the
related statements of income, retained earnings and cash flows for each of the
years ended December 31, 1997 and 1996 and the six-month period ended December
31, 1995, all of which have been incorporated by reference in this proxy
statement/prospectus and in the registration statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
The balance sheet of Martin & MacFarlane, Inc. as of June 30, 1995 and
the related statements of income, retained earnings and cash flows of Martin &
MacFarlane, Inc. for the year ended June 30, 1995, all of which have been
incorporated by reference in this prospectus and in the registration statement
have been incorporated by reference herein and in the registration statement in
reliance upon the report of Barbich Longcrier Hooper & King, Accounting
Corporation, independent certified public accountants, incorporated by reference
herein, and upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Bowlin Outdoor Advertising
and Travel Centers Incorporated as of January 31, 2000 and 1999, and for each
of the years in the three-year period ended January 31, 2000, have been
included in this proxy statement/prospectus and registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of such firm as experts in
accounting and auditing.
59
<PAGE> 65
FUTURE BOWLIN STOCKHOLDER PROPOSALS
If the stockholders of Bowlin do not approve the merger agreement or
if the merger is not consummated, Bowlin anticipates holding its next annual
meeting of stockholders on or about January __, 2001. Stockholder proposals to
be presented at that meeting were required to have been submitted by ________
__, 2000, in order to be considered for inclusion in the proxy materials for
that meeting.
OTHER MATTERS
Bowlin is in the process of separating its travel centers business
from its outdoor advertising business. Bowlin will contribute its existing
travel center business to Bowlin Travel Centers, Inc., a newly formed
subsidiary, and, as part of the spin-off, all of the capital stock of Bowlin
Travel will be distributed to the Bowlin stockholders on a pro rata basis.
Accordingly, each holder of Bowlin's common stock as of the record date will
receive one share of the common stock of Bowlin Travel for each share of the
common stock of Bowlin they own on that date. The record date for the
distribution has not yet been determined. This spin-off must occur prior to the
merger of Bowlin with Lamar. It is anticipated that the stock of Bowlin Travel
will be distributed to stockholders of Bowlin immediately prior to the closing
of the merger with Lamar.
Neither Lamar nor Bowlin presently intends to bring before the Bowlin
special meeting any matters other than those specified in the notice and
accompanying this proxy statement/prospectus, and neither Lamar nor Bowlin has
any knowledge of any other matters that may be brought up by other persons.
However, if any other matters come before the Bowlin special meeting or any
adjournments of the meeting, the persons named in the enclosed proxy, including
any substitutes, will use their best judgment to vote the proxies.
WHERE YOU CAN FIND MORE INFORMATION
Bowlin and Lamar each file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any
document that Bowlin and Lamar files at the SEC's public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549, and in New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Bowlin's and Lamar's SEC filings are
also available on the SEC's Website at "http://www.sec.gov." Copies of Lamar's
materials can also be inspected and copied at the office of the Nasdaq National
Market, 1735 K Street, N.W., Washington, D.C. 20006-1500.
The SEC allows Lamar and Bowlin to "incorporate by reference"
information from other documents that it files with them, which means that Lamar
and Bowlin can disclose important information by referring to those documents.
The information incorporated by reference is considered to be part of this
prospectus, and information that Lamar and Bowlin file later with the SEC will
automatically update and supersede this information. Lamar and Bowlin each
incorporate by reference the documents listed below. Lamar incorporates by
reference any future filings it makes with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 prior to the sale of all the
shares covered by this proxy statement/prospectus. Bowlin has also included or
enclosed with this proxy statement/prospectus its Annual Report on Form 10-K and
10-K/A for the fiscal year ended January 31, 2000.
o Annual Report on Form 10-K of Lamar for the year ended
December 31, 1999;
o Quarterly Reports on Form 10-Q of Lamar for the quarters ended
March 31, 2000, June 30, 2000 and September 30, 2000;
o Current Reports on Form 8-K of Lamar filed with the SEC on
July 7, 1999, November 23, 1999, February 9, 2000, August 31,
2000 and September 6, 2000; and
o The description of the Class A common stock contained in the
Registration Statement on Form 8-A/A of Lamar filed with the
SEC on July 27, 1999.
o Annual Report on Form 10-K and 10-K/A of Bowlin for the fiscal
year ended January 31, 2000 (attached as Annex D);
60
<PAGE> 66
o Quarterly Reports on Form 10-Q of Bowlin for the quarters
ended April 30, 2000 and July 31, 2000; and
o Current Reports on Form 8-K of Bowlin filed with the SEC on
October 17, 2000 and October 30, 2000.
You may request a copy of these filings, at no cost, by writing or
telephoning using the following contact information:
So that you will receive requested documents in time to vote, we urge
Bowlin stockholders to make any request by January 12, 2001, 5 business days
prior to the Bowlin Special Meeting.
Shareholder Services Investor Relations
Lamar Advertising Company Bowlin Outdoor Advertising & Travel
5551 Corporate Boulevard Centers Incorporated
Baton Rouge, LA 70808 150 Louisiana NE
(225) 926-1000 Albuquerque, NM 87018
(505) 266-5985
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus. Lamar and Bowlin have not
authorized anyone to provide information different from that contained or
incorporated by reference in this proxy statement/prospectus. Neither the
delivery of this proxy statement/prospectus nor the sale of the Class A common
stock offered by this proxy statement/prospectus means that information
contained or incorporated by reference in this proxy statement/prospectus from
previous filings by Lamar Advertising and Bowlin are correct after the date of
this proxy statement/prospectus. This proxy statement/prospectus is not an
offer to sell or solicitation of an offer to buy Class A common stock offered
by this proxy statement/prospectus in any circumstance under which the offer or
solicitation is unlawful.
61
<PAGE> 67
INDEX TO FINANCIAL STATEMENTS
BOWLIN OUTDOOR ADVERTISING AND TRAVEL CENTERS INCORPORATED FINANCIAL STATEMENTS
The following financial statements are a part of this report and filed as a
part thereof:
o Balance Sheets as of January 31, 2000 and as of July 31, 2000;
o Statements of Income for the three-month and six-month periods
ended July 31, 2000 and July 31, 1999;
o Statements of Cash Flows for the six-month periods ended July
31, 2000 and July 31, 1999; and
o Notes to Financial Statements.
(Information as of July 31, 2000 and for the three and six-month periods
ended July 31, 2000 and 1999 is unaudited)
F-1
<PAGE> 68
BOWLIN CONSOLIDATED FINANCIAL STATEMENTS
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JULY 31, 2000 JANUARY 31, 2000
-------------- ----------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ......................... $ 3,136 $ 1,559
Accounts receivable, Outdoor Advertising, net ..... 678 595
Accounts receivable, other ........................ 259 559
Accounts receivable, related parties .............. 123 122
Inventories ....................................... 3,448 3,534
Prepaid expenses and other current assets ......... 946 693
Income taxes ...................................... 174 849
Notes receivable, related parties ................. 14 14
-------------- --------------
Total current assets ............................ 8,778 7,925
Property & equipment, net ............................ 30,289 30,556
Intangible assets, net ............................... 1,869 2,024
Other assets ......................................... 424 276
-------------- --------------
Total assets .................................. $ 41,360 $ 40,781
============== ==============
(continued)
</TABLE>
F-2
<PAGE> 69
BOWLIN CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JULY 31, 2000 JANUARY 31, 2000
-------------- ----------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Short-term borrowings, bank ................................. $ 907 $ 242
Accounts payable ............................................ 1,381 1,417
Current installments of long-term debt ...................... 1,568 1,503
Accrued liabilities ......................................... 624 455
Deferred income ............................................. 233 142
-------------- --------------
Total current liabilities ................................. 4,713 3,759
Deferred income taxes ....................................... 972 898
Long-term debt, less current installments ................... 20,074 20,886
-------------- --------------
Total liabilities ......................................... 25,759 25,543
Stockholders' equity:
Common stock, $.001 par value; authorized 100,000,000
shares; issued and outstanding 4,389,098 and 4,384,848
shares ...................................................... 4 4
Additional paid-in capital .................................. 11,621 11,604
Retained earnings ......................................... 3,976 3,630
-------------- --------------
Total stockholders' equity ................................ 15,601 15,238
-------------- --------------
Total liabilities and stockholders' equity .............. $ 41,360 $ 40,781
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 70
BOWLIN CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------- --------------------------------
JULY 31, 2000 JULY 31, 1999 JULY 31, 2000 JULY 31, 1999
-------------- -------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Gross sales .............................. $ 10,192 $ 9,861 $ 19,014 $ 17,908
Less discounts on sales .................. 110 102 201 181
-------------- -------------- -------------- --------------
Net sales ............................. 10,082 9,759 18,813 17,727
Costs of goods sold ...................... 6,363 6,174 12,138 11,188
-------------- -------------- -------------- --------------
Gross profit .......................... 3,719 3,585 6,675 6,539
General and administrative expenses ...... (1,995) (2,033) (3,862) (3,953)
Depreciation and amortization ............ (682) (631) (1,353) (1,201)
-------------- -------------- -------------- --------------
Operating income ...................... 1,042 921 1,460 1,385
Non-operating income (expense):
Interest income ....................... 36 26 57 49
Gain from insurance proceeds .......... -- 227 -- 227
Gain on sale of property and
equipment ............................. 37 10 131 15
Interest expense ...................... (560) (479) (1,076) (909)
-------------- -------------- -------------- --------------
Total non-operating income (expense) .. (487) (216) (888) (618)
Income before income taxes ............... 555 705 572 767
-------------- -------------- -------------- --------------
Income taxes ............................. 212 273 226 300
-------------- -------------- -------------- --------------
Net income ............................... $ 343 $ 432 $ 346 $ 467
============== ============== ============== ==============
Weighted average common shares ........... 4,385,941 4,384,848 4,385,397 4,384,848
Weighted average common and potential
dilutive common shares ................ 4,457,647 4,384,848 4,445,604 4,384,848
Earnings per share
Basic ................................. $ 0.08 $ 0.10 $ 0.08 $ 0.11
============== ============== ============== ==============
Diluted ............................... $ 0.08 $ 0.10 $ 0.08 $ 0.11
============== ============== ============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 71
BOWLIN CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JULY 31, 2000
(UNAUDITED)
ADDITIONAL
NUMBER COMMON PAID-IN RETAINED
OF SHARES STOCK, AT PAR CAPITAL EARNINGS TOTAL
<S> <C> <C> <C> <C> <C>
Balance at January 31, 2000..... 4,384,848 $ 4 $ 11,604 $ 3,630 $ 15,238
-------- -------- -------- --------
Stock option exercises.......... 4,250 17 17
Net income ..................... 346 346
--------- -------- -------- -------- --------
Balance at July 31, 2000........ 4,389,098 $ 4 $ 11,621 $ 3,976 $ 15,601
-------- -------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 72
BOWLIN CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
--------------------------------
JULY 31, JULY 31,
2000 1999
(UNAUDITED) (UNAUDITED)
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 346 $ 467
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,353 1,201
Amortization of loan fees 89 78
Provision for bad debts 57 18
Gain from insurance proceeds -- (227)
Gain on sales of property and equipment (131) (15)
Deferred income taxes 74 187
Imputed interest 5 6
Changes in operating assets and liabilities, net 902 731
-------------- --------------
Net cash provided by operating activities 2,695 2,446
Cash flows from investing activities:
Proceeds from sale of assets 202 31
Business acquisitions -- (1,516)
Purchases of property and equipment, net (1,257) (2,814)
Proceeds from insurance -- 599
Capital received from partnership -- 15
Proceeds from notes receivable, net 7 2
-------------- --------------
Net cash used in investing activities (1,048) (3,683)
Cash flows from financing activities:
Short-term borrowings, bank, net 665 569
Borrowings on long-term debt 48 1,750
Payments on long-term debt (800) (652)
Proceeds from stock option exercises 17 --
-------------- --------------
Net cash (used in) provided by financing activities (70) 1,667
Net increase in cash and cash equivalents 1,577 430
Cash and cash equivalents at beginning of period 1,559 2,199
-------------- --------------
Cash and cash equivalents at end of period $ 3,136 $ 2,629
============== ==============
(Continued)
</TABLE>
F-6
<PAGE> 73
BOWLIN CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 31, JULY 31,
2000 1999
(UNAUDITED) (UNAUDITED)
-------------- --------------
<S> <C> <C>
Supplemental disclosure of cash flow information:
Sale of property and equipment in exchange
for note receivable $ 166 $ --
============== ==============
Acquisitions:
Fair value of assets acquired and liabilities assumed at the date of
the acquisitions were as follows:
Prepaid expenses $ -- $ 3
Billboards -- 1,463
Covenants not to compete -- 50
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The consolidated financial statements for the three and six months
ended July 31, 2000 and 1999 are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods. The
consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes, together with
management's discussion and analysis of financial condition and results
of operations, contained in Bowlin's annual report on Form 10-K for the
fiscal year ended January 31, 2000. Results of operations for interim
periods are not necessarily indicative of results that may be expected
for the year as a whole.
2. In May 2000, Bowlin sold certain assets, including land and equipment,
to a third party for $25,000 cash and a note receivable for $400,000.
The note receivable has a stated rate of interest of 8 percent and is
payable in annual installments of $37,500 through 2004 with the balance
due in 2005. The assets sold had a carrying value of $170,258 and the
costs incurred to sell the assets was $6,043. The gain on the sale of
the property was $248,699, of which $14,625 was recognized initially
and $234,074 was deferred and will be recognized into income using the
installment method as payments are received. The deferred gain is
reflected as a reduction to the note receivable in the accompanying
balance sheet.
F-8
<PAGE> 75
3. Earnings per Share. The following table is a reconciliation of the
numerators and denominators of the basic and diluted per share
computations for income from continuing operations.
<TABLE>
<CAPTION>
Three months ended July 31,
--------------------------------------------------------------------------------
2000 1999
-------------------------------------- ----------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Basic EPS - net income $ 343,000 4,385,941 $ 0.08 $ 432,000 4,384,848 $ 0 .10
------- --------
Effect of Dilutive Securities
Stock options 71,706 --
--------- ----------- ---------- -----------
Diluted EPS - net income $ 343,000 4,457,647 $ 0.08 $ 432,000 4,384,848 $ 0.10
========= =========== ======= ========== =========== ========
</TABLE>
<TABLE>
<CAPTION>
Six months ended July 31,
--------------------------------------------------------------------------------
2000 1999
-------------------------------------- ----------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS - net income $ 346,000 4,385,397 $ 0.08 $ 467,000 4,384,848 $ 0.11
------- --------
Effect of Dilutive Securities
Stock options 60,207 --
--------- ----------- ---------- -----------
Diluted EPS - net income $ 346,000 4,445,604 $ 0.08 $ 467,000 4,384,848 $ 0.11
========= =========== ======= ========== =========== ========
</TABLE>
4. Segment Information: Travel center operations, which represents 77
percent of net sales of Bowlin, and outdoor advertising operations,
which represents 23 percent of net sales, are Bowlin's reportable
segments under SFAS No. 131, Disclosure about Segments of an Enterprise
and Related Information. The travel center segment provides for the
retail sale of merchandise, food and gasoline to the traveling public
while the outdoor advertising segment operates billboard advertising
displays which are situated on interstate highways, primarily in the
Southwestern United States. No single customer accounted for 10 percent
of consolidated net sales in any period.
Effective February 1, 2000, Bowlin measures its segments' results of
operations (segment profit) based on operating income less allocable
interest expense. Accordingly, segment profit for all periods presented
has been retroactively restated to conform to the new presentation. The
accounting policies used to measure segment results of operations are
the same as those described in note 1 to the consolidated financial
statements included in Form 10-K for the year ended January 31, 2000.
Summarized financial information concerning Bowlin's reportable
segments as of and for the respective periods ended July 31, are shown
in the following table.
F-9
<PAGE> 76
<TABLE>
<CAPTION>
TRAVEL OUTDOOR
CENTER ADVERTISING CORPORATE
(IN THOUSANDS) OPERATIONS OPERATIONS AND OTHER (1) TOTAL
----------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
Three months
ended July 31,
Net sales (2)
2000 $ 7,877 2,205 - 10,082
1999 7,761 1,998 - 9,759
Segment profit (3)
(Income before
income taxes)
2000 $ 634 62 (141) 555
1999 557 87 61 705
Six months
ended July 31,
Net sales (2)
2000 $ 14,552 4,261 - 18,813
1999 13,891 3,836 - 17,727
Segment profit (3)
(Income before
income taxes)
2000 $ 772 20 (220) 572
1999 710 147 (90) 767
</TABLE>
(1) Corporate and other results of operations include costs associated with
certain members of executive management, the corporate accounting and finance
function and other typical administrative functions not considered in assessing
segment profit.
(2) There were no inter-segment sales.
(3) Management does not consider interest income, non-operating income and
expense amounts or income tax expense in the determination of the operating
performance of the reportable segments. However, the amount reported for
corporate and other includes interest income and non-operating income and
expense. The total segment profit agrees to income before income taxes in the
consolidated statements of income.
F-10
<PAGE> 77
ANNEX A
AGREEMENT AND PLAN OF MERGER
By and Among
LAMAR ADVERTISING COMPANY,
LAMAR SOUTHWEST ACQUISITION CORPORATION,
on the one hand,
and
BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS INCORPORATED,
on the other
Dated October 3, 2000
<PAGE> 78
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated October 3,
2000, is by and among Lamar Advertising Company, a Delaware corporation
("Lamar"), and Lamar Southwest Acquisition Corporation, a Nevada corporation
("NewCo"), on the one hand, and Bowlin Outdoor Advertising & Travel Centers
Incorporated, a Nevada corporation ("Bowlin"), on the other. Capitalized terms
not otherwise defined in this Agreement have the meanings ascribed to them in
Article 8.
Background
A. The respective Boards of Directors of Lamar, NewCo and Bowlin have
approved the merger of NewCo with and into Bowlin (the "Merger") in accordance
with Nevada law, whereby, among other things, all outstanding shares of Bowlin
common stock, $.001 par value per share ("Bowlin Common Stock") will be
converted into the right to receive a certain number of shares of Class A Common
Stock, par value $.001 per share, of Lamar ("Lamar Common Stock") in the manner
set forth in Article 2 of this Agreement.
B. Prior to the Merger, Bowlin and its subsidiary, Bowlin Travel
Centers, a Nevada corporation ("Bowlin Travel"), will enter into a Contribution
Agreement in the form of Exhibit A (the "Contribution Agreement") pursuant to
which Bowlin will contribute to Bowlin Travel certain specified assets and
liabilities used or usable by, or incurred in connection with, its travel
centers line of business.
C. Immediately prior to the Merger, Bowlin will distribute the shares
of Bowlin Travel to the holders of Bowlin Common Stock (the "Spin-Off") in
accordance with their respective interests.
D. The respective Boards of Directors of Bowlin, Lamar and NewCo have
determined that the Merger is in furtherance of their respective long-term
business interests, and is fair to and in the best interests of their respective
stockholders.
Agreement
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth in this Agreement, Lamar, NewCo and Bowlin agree as
follows:
ARTICLE 1
THE CLOSING; THE MERGER; EFFECTS OF THE MERGER
1.1 Closing.
(1) The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at 10:00 a.m. on the third business day following the
satisfaction or waiver of each of the closing conditions set forth in Article 6
(other than those conditions that can only be satisfied on or as of the Closing
Date, which must be satisfied or waived at or as of the Closing) of this
Agreement at the offices of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P., Fifth Floor, Four United Plaza, 8555 United Plaza Boulevard,
Baton Rouge, Louisiana, 70809.
<PAGE> 79
(2) At the Closing, each party to this Agreement will:
(1) deliver the documents and certificates required to be
delivered by it pursuant to Article 6;
(2) provide proof or indication of the satisfaction or waiver
of each of the conditions to the other party's obligations set forth in Article
6;
(3) cause its appropriate officers to execute and deliver
Articles of Merger in the form of Exhibit B (the "Articles of Merger") in
accordance with the Nevada Revised Statutes, Chapter 92A, Mergers and Exchanges
of Interest (the "Law"); and
(4) consummate the Merger by causing to be filed properly
executed Articles of Merger with the Secretary of State of the State of Nevada
in accordance with Section 200 of the Law.
1.2 The Merger; Effective Date and Effective Time. On the terms and
subject to the conditions of this Agreement, and in accordance with the
applicable provisions of the Law, NewCo will merge with and into Bowlin at the
Effective Time (as defined below). Following the Merger, the separate existence
of NewCo will cease and Bowlin will continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of NewCo in accordance with the Law. The Merger will be effective as
of the date and time specified in the Articles of Merger (the "Effective Date"
and the "Effective Time", respectively).
1.3 Effects of Merger. The Merger will have the effects set forth under
the Law and as set forth in this Agreement, including, without limitation, those
specified in Section 250 of the Law.
1.4 Articles of Incorporation and Bylaws of the Surviving Corporation.
(1) The Articles of Incorporation of Bowlin, as amended and
restated and filed with the Articles of Merger with the Secretary of State of
the State of Nevada, shall be the Articles of Incorporation of the Surviving
Corporation thereafter unless and until amended in accordance with the terms of
the Articles of Incorporation and as provided by law.
(2) The Bylaws of NewCo, as in effect at the Effective Time,
shall be the Bylaws of the Surviving Corporation thereafter unless and until
amended in accordance with their terms, the terms of the Articles of
Incorporation and as provided by law.
1.5 Directors and Officers of the Surviving Corporation. The directors
and officers of NewCo immediately prior to the Effective Time will be the
directors and officers of the Surviving Corporation thereafter, each to hold a
directorship or office in accordance with the Articles of Incorporation and
Bylaws of the Surviving Corporation until the earlier of their resignation or
removal, or until their respective successors are duly elected or appointed and
qualified, as the case may be.
2
<PAGE> 80
ARTICLE 2
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any further action on the part of Lamar, NewCo, Bowlin or the
stockholders of such entities:
(1) Capital Stock of NewCo. Each issued and outstanding share
of capital stock of NewCo will be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(2) Cancellation of Bowlin Treasury Stock. Each share of
Bowlin capital stock that is held in treasury by Bowlin (or by any Bowlin
subsidiary) shall be canceled and no Lamar Common Stock or other consideration
will be delivered in exchange therefor.
(3) Conversion of Bowlin Common Stock.
(1) Subject to Sections 2.1(b) and 2.1(c)(ii), each
share of Bowlin Common Stock issued and outstanding immediately prior to the
Effective Time (including shares of Bowlin Common Stock issued upon the exercise
of options prior to the Effective Time but excluding treasury shares cancelled
pursuant to Section 2.1(b)) will be converted into the right to receive a number
of validly issued, fully paid and nonassessable shares of Lamar Common Stock
equal to the product of (A) one share of Lamar Common Stock and (B) the quotient
of (x) 725,000, divided by (y) a number equal to the total number of shares of
Bowlin Common Stock issued and outstanding at the Effective Time (including
shares of Bowlin Common Stock issued upon the exercise of options prior to the
Effective Time but excluding treasury shares cancelled pursuant to Section
2.1(b)). In no event will Lamar be required to issue in connection with the
Merger more than 725,000 shares of Lamar Common Stock (the "Merger Shares")
(except to reflect adjustment for any stock splits, combinations or
recapitalizations relating to Lamar Common Stock effected by Lamar after the
date of this Agreement).
(2) No certificates or scrip representing fractional
shares of Lamar Common Stock will be issued upon conversion of the shares of
Bowlin Common Stock, and fractional share interests will not entitle the owners
of the fractional interests to vote or to any rights of a holder of Lamar Common
Stock. Any holder of Bowlin Common Stock who would otherwise be entitled to
receive a fraction of a share of Lamar Common Stock (after aggregating all
fractional shares issuable to such holder) shall, in lieu of such fraction of a
share, be entitled to receive an amount in cash, without interest and rounded to
the nearest cent, equal to the product of (A) such fraction and (B) the Average
Closing Share Price. Payments for fractional shares will be made at the time the
Merger Shares are delivered to the Bowlin stockholders pursuant to Section 2.2.
2.2 Exchange of Stock Certificates; Record Date.
(1) Prior to the Effective Time, Lamar will appoint
the American Stock Transfer & Trust Company or another entity (the "Exchange
Agent") to arrange for the exchange of certificates that, immediately prior to
the Effective Time, represented issued and outstanding shares of Bowlin Common
Stock (the "Bowlin Certificates") for the Merger Shares. On or before the
Closing Date, Lamar will
3
<PAGE> 81
deliver to the Exchange Agent, in trust for the benefit of each holder of record
of Bowlin Common Stock, (x) stock certificates representing all of the shares of
Lamar Common Stock issuable pursuant to Section 2.1(c)(i), and (y) sufficient
funds to make cash payments in lieu of fractional Merger Shares pursuant to
Section 2.1(c)(ii). As soon as practicable after the Effective Time, Lamar will
cause the Exchange Agent to mail a notice and letter of transmittal to each
recordholder of Bowlin Common Stock advising such recordholder of the
effectiveness of the Merger and providing instructions for surrendering to the
Exchange Agent the Bowlin Certificates representing Bowlin Common Stock in
exchange for the Merger Shares and any cash payment in lieu of fractional Merger
Shares. Each holder of Bowlin Certificates, upon proper surrender thereof and a
duly completed letter of transmittal to the Exchange Agent, will be entitled to
receive from the Exchange Agent in exchange for the Bowlin Certificates (subject
to any taxes required to be withheld) the number of Merger Shares determined in
accordance with Section 2.1(c). Until properly surrendered, after the Effective
Time each Bowlin Certificate will be deemed for all purposes to evidence only
the right to receive Merger Shares and any cash payment in lieu of fractional
shares. Holders of Bowlin Certificates will not be entitled to receive
certificates representing Merger Shares or any cash payment in lieu of
fractional shares until their Bowlin Certificates are properly surrendered.
(b) If any Bowlin Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
the Bowlin Certificate to be lost, stolen or destroyed (a "Missing
Certificate"), Lamar will direct the Exchange Agent to issue in exchange for the
shares of Bowlin Common Stock represented by the Missing Certificate, the Merger
Shares issuable pursuant to Section 2.1(c) and any cash payment in lieu of
fractional shares. The Board of Directors of Lamar may, in its discretion and as
a condition to the issuance of any Merger Shares or cash payment in lieu of
fractional shares to the owner of shares of Bowlin Common Stock represented by a
Missing Certificate, require the owner to provide Lamar with an affidavit and a
bond in a sum as Lamar may reasonably direct as an indemnity against any claim
that may be made against Lamar or the Exchange Agent with respect to the Missing
Certificate.
2.3 No Further Rights in Bowlin Common Stock. As of the Effective Time,
all shares of Bowlin Common Stock will no longer be outstanding and will
automatically be canceled and retired and will cease to exist, and each holder
of a Bowlin Certificate representing shares of Bowlin Common Stock as of the
Effective Time will cease to have any rights with respect to the Bowlin Common
Stock, except the right to receive Merger Shares and any cash payment in lieu of
fractional shares as provided in this Agreement.
2.4 Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared on or after the Effective Time with respect to
shares of Lamar Common Stock will be paid to any Bowlin stockholder with respect
to any Merger Shares that such Bowlin stockholder has the right to receive in
the Merger until the stockholder has properly surrendered shares of Bowlin
Common Stock in exchange for Lamar Common Stock (and any fractional payment) in
accordance with this Article 2. Subject to Applicable Law, following the proper
surrender of any Bowlin Certificate by a Bowlin stockholder and delivery to such
stockholder of a certificate representing whole shares of Lamar Common Stock,
Lamar will pay to such stockholder, without interest, the amount of any
dividends or other distributions declared by Lamar on or after the Effective
Time.
4
<PAGE> 82
2.5 Undelivered Merger Consideration. Any certificates representing
shares of Lamar Common Stock or cash that remain undistributed by the Exchange
Agent to former holders of Bowlin Common Stock as of the date that is one year
after the Effective Date shall be returned by the Exchange Agent to Lamar upon
demand, and any holder of Bowlin Certificates who has not theretofore
surrendered his or her shares of Bowlin Common Stock in accordance with Section
2.2 shall thereafter look only to Lamar for satisfaction of his or her claims
for Lamar Common Stock, cash in lieu of fractional shares of Lamar Common Stock
and any dividends or distributions with respect to Lamar Common Stock.
2.6 Escheat. Neither Lamar nor the Surviving Corporation shall be
liable to any holder or former holder of Bowlin Common Stock or to any other
Person with respect to any shares of Lamar Common Stock (or dividends or
distributions with respect thereto), or for any cash amounts, delivered to any
public official pursuant to any applicable abandoned property law, escheat law,
or similar legal requirement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BOWLIN
Bowlin represents and warrants to Lamar and NewCo that as of the date
of this Agreement and as of the Closing Date:
3.1 Organization; Qualification; Subsidiaries. Schedule 3.1 lists the
jurisdiction of incorporation, the number of authorized and issued shares of
capital stock and the members of the Board of Directors of Bowlin. Bowlin is
duly organized, validly existing and in good standing under the laws of its
state of organization, having all requisite power and authority to own its
property and to carry on its business as it is now being conducted. Except as
disclosed in Schedule 3.1, Bowlin does not, directly or indirectly, own of
record or beneficially, or have the right or obligation to acquire, any direct
or indirect ownership interest, capital stock, membership interest, partnership
interest, joint venture interest or other equity interest in any Person. All
outstanding shares of capital stock of Bowlin have been validly issued and are
fully paid, nonassessable and free and clear of any Adverse Claim. No actions or
proceedings to dissolve Bowlin are pending. Bowlin is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the
property owned, leased or operated by it or the conduct of its business requires
qualification or licensing, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect.
3.2 Bowlin Capital Stock. The authorized capital stock of Bowlin
consists exclusively of 100,000,000 shares of common stock, $.001 par value per
share, of which as of September 29, 2000, 4,390,098 shares were outstanding and
no shares were held in treasury. All of the issued and outstanding shares of
Bowlin have been validly issued, are fully paid and nonassessable and are free
of preemptive rights. As of September 29, 2000, (a) 429,750 shares of Bowlin
Common Stock were reserved for issuance pursuant to the exercise of stock
options granted and outstanding under the stock option plan designated Bowlin's
Incorporated 1996 Stock Option Plan (the "Option Plan"), which is the only stock
option plan adopted by Bowlin pursuant to which stock options have been or may
be granted, (b) 10,000 shares of Bowlin Common Stock were reserved for issuance
to H.D. Brous & Co., Inc. pursuant to options granted on September 19, 2000 (the
options referred to under (a) and (b), are referred to individually as a "Bowlin
Option, and collectively, as the "Bowlin Options"). Schedule 3.2 sets forth the
following information with respect to the Bowlin Options outstanding as of
September 29, 2000: (i) the name of the optionee for each outstanding Bowlin
Option; (ii) the number of shares of Bowlin Common Stock subject
5
<PAGE> 83
to such Bowlin Option; and (iii) the per share exercise price of such Bowlin
Option. Except as disclosed in Schedule 3.2, no share of capital stock of Bowlin
will be, or may be required to be, reacquired by Bowlin for any reason or is, or
may be required to be, issued by Bowlin for any reason, including, without
limitation, by reason of any option, warrant, security or right convertible into
or exchangeable for such shares, or any agreement to issue any of the foregoing.
3.3 Authority; Enforceability.
(1) Bowlin has all requisite corporate power and authority to
enter into and carry out its obligations under this Agreement or any of the
other agreements referred to in this Agreement to which it is a party. The
execution, delivery and performance of this Agreement, the Contribution
Agreement or any of the other agreements referred to in this Agreement to which
it is a party and the consummation of the transactions contemplated hereby or
thereby has been duly authorized by all necessary corporate action on the part
of Bowlin, except for the approval of this Agreement by the stockholders of
Bowlin.
(2) This Agreement, the Contribution Agreement and each other
agreement executed or to be executed by Bowlin in connection with the
transactions contemplated by this Agreement have been, or when executed will be,
duly executed and delivered by Bowlin and constitute, or when executed and
delivered will constitute, valid and binding obligations of Bowlin, enforceable
against Bowlin in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and equitable principles which may limit the
availability of certain equitable remedies in certain instances.
3.4 No Conflicts or Consents.
(1) Except as set forth on Schedule 3.4, neither the
execution, delivery or performance of this Agreement, the Contribution Agreement
or any of the other agreements referred to in this Agreement to which Bowlin is
a party by Bowlin nor the consummation of the transactions contemplated by this
Agreement, the Contribution Agreement or any of the other agreements referred to
in this Agreement to which Bowlin is a party:
(1) will violate, conflict with, or result in a
breach of any provision of, constitute a default (or an event that, with notice
or lapse of time or both, would constitute a default) under, result in the
termination of, or accelerate the performance required by, or result in the
creation of any Adverse Claim against any of the material properties or material
assets of Bowlin under, (A) its articles of incorporation or bylaws, (B) any
note, bond, mortgage, indenture, deed of trust, or other debt obligation (other
than ordinary course trade credit) to which Bowlin is a party or by which any of
its assets are bound, or (C) any lease, agreement or other instrument or other
obligation that is material to the business or operations of Bowlin and to which
Bowlin is a party, or by which any of its assets are bound; or
(2) violate any order, writ, injunction, decree,
judgment, statute, rule or regulation of any Governmental Entity to which Bowlin
is subject or by which any of its assets are bound.
6
<PAGE> 84
(2) No filing or registration with, or authorization, consent
or approval of, any Governmental Entity is required by or with respect to Bowlin
in connection with the execution and delivery of this Agreement by Bowlin, or is
necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement, except for: (i) the filing of a premerger
notification and report form (the "HSR Report") by each of Lamar and Bowlin
under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing and recordation requirements of the Law with respect
to the Articles of Merger, (iii) the filing of the Registration Statement and
the Proxy Statement/Prospectus with the SEC and any other filings required by
the Securities Act or the Exchange Act, and (iv) the filing of appropriate
documents with the relevant authorities of other states in which Bowlin is
qualified to do business.
3.5 Advertising Revenues. The Advertising Revenues for the one-month
period ending April 30, 2000 exceeded $700,000.
3.6 Lease Expense. The Lease Expense did not exceed $108,000.
3.7 Bowlin Long-Term Debt. As of the date of this Agreement and as of
the Effective Date, the Bowlin Long-Term Debt does not and will not exceed
$14,500,000.
3.8 Leases and Advertising Contracts. Schedule 3.8 sets forth a
complete and accurate list of the Leases and Advertising Contracts in effect as
of the date of this Agreement, indicating any Leases that will expire on or
before December 31, 2000. Except as set forth on Schedule 3.8, or for
deficiencies, not material individually or in the aggregate, that are customary
for the outdoor advertising industry, each of the Leases and Advertising
Contracts is in full force and effect, and constitutes a valid and binding
agreement that is enforceable in accordance with its terms. Except as set forth
on Schedule 3.8, no member of the Bowlin Group or any other party is in default
under any Lease or Advertising Contract, and there is no condition or
circumstance which with the giving of notice or the passage of time could become
such a default under any Lease or Advertising Contract. Except as set forth on
Schedule 3.8, all Lease rental payments that are due by any member of the Bowlin
Group have been made and are current. Except as set forth on Schedule 3.8, no
member of the Bowlin Group has been informed by a lessor or its representative
that a lessor does not intend to renew an existing Lease.
3.9 Faces. Schedule 3.9 sets forth a complete and correct list of the
type and location of each outdoor advertising face (a "Face") owned or leased by
Bowlin, designating those Faces that Bowlin owns and those Faces that Bowlin
leases from third parties (including Bowlin Travel). Except as set forth in
Schedule 3.9, Bowlin owns and operates at least 609 poster Faces, 2730 bulletin
panel Faces and 754 eight-sheet Faces, except as the number of Faces leased or
owned by Bowlin may be reduced by customary and usual attrition of Leases that
is consistent with the historical experience of Bowlin. Schedule 3.9 reflects
the Advertising Revenue attributable to each of the Faces for the one month
period ended September 30, 2000. Except as set forth in Schedule 3.9, each Face
(a) is legal and conforming or legal and non-conforming, (b) available for sale,
and (c) is standing and in good condition acceptable within the standards of the
outdoor advertising industry. Except as set forth on Schedule 3.9, each Face is
operated under a Lease or is located on Owned Real Property (as defined below).
7
<PAGE> 85
3.10 Permits; Compliance with Laws.
(1) Bowlin has (i) all permits, licenses and governmental
authorizations required for the ownership and operation of each Face and (ii)
all other material permits, licenses and governmental authorizations required
for the lease, ownership, occupancy or operation of its other properties and
assets and the carrying on of its business as presently conducted (subsections
(i) and (ii) collectively, the "Permits"). No suspension, cancellation or
termination of any Permits is threatened or imminent. Schedule 3.10 sets forth a
complete and accurate list of each of the Permits.
(2) Without limiting the scope of Section 3.10(a), each member
of the Bowlin Group, to its Knowledge, has conducted its business in compliance
with and is in compliance with all Applicable Laws, except where the failure to
comply would not have a Material Adverse Effect.
3.11 Owned Real Property.
(1) Schedule 3.11 sets forth a complete and correct list of
all real property owned in fee by Bowlin ("Owned Real Property"). Bowlin has
good and marketable fee simple title to all of its Owned Real Property, free and
clear of any Adverse Claims, subject in each case to Permitted Liens.
(2) Except as set forth on Schedule 3.11, there are no pending
or threatened condemnation proceedings with respect to any portion of Owned Real
Property, or litigation or administrative actions relating to any portion of
Owned Real Property.
(3) All Owned Real Property and related improvements are
supplied with utilities and other services necessary for the operation of the
facilities currently operated on the property.
3.12 Corporate Formalities; Corporate Documents and Stockholder
Agreements.
(1) Each member of the Bowlin Group has maintained its
separate corporate existence and complied with all necessary corporate
formalities such as the holding of annual meetings of directors and
stockholders.
(2) Bowlin has delivered to Lamar true and complete copies of
its articles of incorporation and bylaws, as amended or restated through the
date of this Agreement, as well as the articles of incorporation and bylaws
governing each other member of the Bowlin Group. The minute books of each member
of the Bowlin Group contain complete and accurate records of all corporate
actions of the equity owners of the various entities and of the boards of
directors or other governing bodies, including committees of such boards or
governing bodies of the various entities. The stock transfer records of Bowlin
contain complete and accurate records of all issuances, and redemptions of stock
by Bowlin.
(3) There are no agreements among or between any of the Bowlin
stockholders with respect to the capital stock of Bowlin to which Bowlin is a
party or of which Bowlin has Knowledge.
3.13 SEC Documents; Financial Statements; Liabilities.
8
<PAGE> 86
(1) Bowlin has timely filed all required reports, schedules,
forms, statements and other documents with the SEC since February 1, 1997 (the
"Bowlin SEC Documents"). The Bowlin SEC Documents, and any such reports, forms
and documents filed by Bowlin with the SEC after the date of this Agreement,
complied, or will comply, at the time of filing as to form in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to the Bowlin SEC Documents, and except to the extent that
information contained in any Bowlin SEC Document has been superseded by a later
filed Bowlin SEC Document, none of the Bowlin SEC Documents at the time of
filing contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(2) The Bowlin Financial Statements included in the Bowlin SEC
Documents complied at the time of filing with the SEC as to form in all material
respects with the applicable accounting requirements and published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP applied on a basis consistent with prior periods, and fairly present the
consolidated financial position of Bowlin and the other members of the Bowlin
Group at such dates and the consolidated results of operations and cash flow for
the respective periods then ended, subject, in the case of the Bowlin Interim
Financial Statements, to normal, recurring year-end audit adjustments that are
not, individually or in the aggregate, material in amount. The Bowlin Audited
Financial Statements have been audited by KPMG, LLP, independent auditors of
Bowlin, in accordance with generally accepted auditing standards. No member of
the Bowlin Group has, nor are any of their respective assets subject to, any
liability, commitment, debt or obligation (of any kind whatsoever whether
absolute or contingent, accrued, fixed, known, unknown, matured or unmatured) of
a type required by GAAP to be reflected in the Bowlin Financial Statements,
except, (i) as and to the extent reflected on the Bowlin Latest Balance Sheet or
the footnotes that are a part of the Bowlin Financial Statements, (ii) as may
have been incurred or may have arisen since the date of the Bowlin Latest
Balance Sheet in the ordinary course of business and that are not material
individually or in the aggregate or (iii) are permitted or contemplated by this
Agreement or the Contribution Agreement. Except as set forth in the Bowlin SEC
Documents, since February 1, 1997, Bowlin has not made any change in the
accounting policies or practices applied in the preparation of the Bowlin
Financial Statements. Bowlin's independent auditors have not issued any audit
reports or other reports on internal controls which indicate that the internal
controls associated with or otherwise covering Bowlin have had any material
weaknesses or that the accounting records associated with or otherwise covering
Bowlin contained or could contain any material errors.
(3) The Bowlin Latest Balance Sheet includes appropriate
reserves for all Taxes and other known liabilities incurred as of such date but
not yet payable.
(4) The statements of income included in the Bowlin Financial
Statements do not contain any income or revenue realized from products or
services that the Surviving Corporation would be prohibited or restricted from
offering after the Effective Time pursuant to any covenant or provision in any
Material Contract to which any member of the Bowlin Group is a party.
9
<PAGE> 87
3.14 Documents and Written Materials. Originals or true and complete
copies of all documents or other written materials requested by Lamar have been
furnished or made available to Lamar in the form in which each of such documents
is in effect, and will not be modified in any material respect prior to the
Closing Date without Lamar's prior written consent (not to be unreasonably
withheld).
3.15 Absence of Certain Changes or Events. Since the date of the Bowlin
Latest Balance Sheet, each member of the Bowlin Group has conducted its business
only in the ordinary course, and, except as set forth on Schedule 3.15, has not:
(1) amended its certificate of incorporation, bylaws or
similar organizational documents;
(2) except for capital expenditures set forth on Schedule
3.15(e), incurred any liability or obligation of any nature (whether absolute or
contingent, accrued, fixed, known, unknown, matured or unmatured), including,
without limitation, increasing indebtedness for borrowed money, except in the
ordinary course of business and not exceeding $50,000 individually or $100,000
in the aggregate;
(3) suffered or permitted any of its assets to be or remain
subject to any mortgage or other encumbrance, except for Permitted Liens;
(4) merged or consolidated with another entity or acquired or
agreed to acquire any business or any corporation, partnership or other business
organization, or sold, leased, transferred or otherwise disposed of any assets
except for assets sold for fair value in the ordinary course of business;
(5) made any capital expenditure or commitment therefor,
except in the ordinary course of business and, in the aggregate, not materially
in excess of those capital expenditures made or proposed to be made for the
period after the Bowlin Latest Balance Sheet that are set forth on Schedule
3.15(e);
(6) declared or paid any dividend or made any distribution
with respect to any of its equity interests, or redeemed, purchased or otherwise
acquired any of its equity interests, or issued, sold or granted any equity
interests or any option, warrant or other right to purchase or acquire any such
interest;
(7) adopted any employee benefit plan or made any change in
any existing employee benefit plans;
(8) made any bonus or profit sharing distribution or payment
of any kind, except bonuses and profit sharing distributions made to employees
of Bowlin who are not directors or officers of Bowlin, which payments or
distributions do not exceed $40,000 in the aggregate in any calender month;
(9) made any loan to any Person;
10
<PAGE> 88
(10) made any change affecting any banking, safe deposit or
power of attorney arrangements;
(11) except for employment agreements entered into in the
ordinary course of business and consistent with past practices with employees of
Bowlin who are not directors or officers of Bowlin, entered into or amended any
employment, severance or similar agreement or arrangement with any director,
officer or employee, or granted any increase in the rate of wages, salaries,
bonuses or other compensation or benefits of any director, officer or employee;
(12) canceled, waived, released or otherwise compromised any
debt, claim or right, except in the ordinary course of business consistent with
past practices;
(13) made any change in any method of accounting or auditing
practice;
(14) suffered the termination, suspension or revocation of any
license or permit necessary for the operation of its business;
(15) entered into any transaction other than on an
arm's-length basis;
(16) suffered any damage, destruction or loss (whether or not
covered by insurance) which has had or could have a Material Adverse Effect on
Bowlin;
(17) agreed, whether or not in writing, to do any of the
foregoing;
(18) been the subject of, or incurred any liability under or
with respect to, any determination made by an arbitrator with respect to a
grievance filed under any collective bargaining or other labor agreement to
which Bowlin is a party.
3.16 Legal Proceedings. Except as set forth in Schedule 3.16, there is
no lawsuit, action, suit, claim or other proceeding at law or in equity, or
investigation, before or by any court or Governmental Entity or before any
arbitrator that is pending or, to the Knowledge of Bowlin, threatened against
any member of the Bowlin Group, or any unsatisfied judgment, order or decree or
any open injunction binding upon any member of the Bowlin Group. Except as
specifically set forth on Schedule 3.16, no lawsuits, actions, suits, claims,
proceedings, investigations, unsatisfied judgments, orders, decrees or open
injunctions will or is reasonably likely to have a Material Adverse Effect or
adversely effect the ability of Bowlin to enter into and perform its obligations
under this Agreement.
3.17 Accounts Receivable. All of the accounts receivable reflected on
the Bowlin Financial Statements or arising thereafter that have not been
collected have arisen only from bona fide transactions in the ordinary course of
business, represent valid obligations owing to Bowlin and have been accrued in
accordance with GAAP. On the Closing Date, the allowance for doubtful
receivables (the "AR Allowance") reflected in the Pre-Closing Balance Sheet (as
defined in Section 5.8(b)(i)) will be at least equal to the aggregate amount of
Bowlin's accounts receivable that will have been outstanding for more than 90
days as of the Closing Date. On the Closing Date, the accounts receivable of
Bowlin will be, to the Knowledge of Bowlin, collectible in full when due,
without any counterclaim or set-off (net of the AR Allowance).
11
<PAGE> 89
3.18 Contracts.
(1) Schedule 3.18 lists and describes all Material Contracts.
A complete and correct copy of each Material Contract has been furnished to or
made available to Lamar. To the Knowledge of Bowlin, each Material Contract is
valid, binding and enforceable, except to the extent that enforcement may be
limited by bankruptcy, reorganization, insolvency and other similar laws and
court decisions relating to or affecting the enforcement of creditors' rights
generally and by general equitable principles. Bowlin and, to the Knowledge of
Bowlin, each other party to each Material Contract are in compliance in all
material respects with the provisions of each Material Contract by which such
party is bound.
(2) Except as may be set forth in the Bowlin SEC Documents or
described on Schedule 3.18, Bowlin is not a party to:
(1) any collective bargaining agreement;
(2) any written or oral employment or other agreement
or contract with or commitment to any employee;
(3) any agreement, contract or commitment containing
any covenant limiting its freedom to engage in any line of business or to
compete with any Person;
(4) any oral or written obligation of guaranty or
indemnification arising from any agreement, contract or commitment, except as
provided in its certificate of incorporation or bylaws;
(5) any joint venture, partnership or similar
contract involving a sharing of profits or expenses;
(6) any non-disclosure agreement, non-competition
agreement, agreement with an officer, director or employee of Bowlin, tax
indemnity, tax sharing or tax allocation agreement, or any severance, bonus or
commission agreement;
(7) any indenture, mortgage, loan, credit,
sale-leaseback or similar contract under which Bowlin has borrowed any money or
issued any note, bond or other evidence of indebtedness for borrowed money or
guaranteed indebtedness for money borrowed by others; or
(8) any hedge, swap, exchange, futures or similar
agreements or contracts.
3.19 Environmental Matters. Bowlin is not in violation in any material
respect of any Applicable Law relating to the environment or is a party to any
proposed removal, response or remedial action. Except as set forth on Schedule
3.19, Bowlin has not received any notice with respect to its business, its
leased or owned properties, or the use by third parties of its assets that:
12
<PAGE> 90
(1) any investigation, administrative order, consent order and
agreement, removal or remedial action, litigation or settlement with respect to
any environmental permit, law or regulation is proposed, threatened, anticipated
or in existence;
(2) any release of any hazardous substances, pollutant or
contaminant into the environment by Bowlin has occurred; or
(3) any exposure of any person or property to any hazardous
substance, pollutant or contaminant has occurred.
Except as set forth on Schedule 3.19, the properties currently and previously
leased or owned by Bowlin are not and have never been on or associated with any
"national priorities" list or any equivalent state list or any federal or state
"superlien" list. Bowlin has made available to Lamar all internal and external
environmental audits and studies relating to the Leases or Owned Real Property,
and all correspondence on substantial environmental matters relating to the
Leases or the Owned Real Property is in the possession of Bowlin.
3.20 Employee Matters.
(1) Schedule 3.20(a) sets forth:
(1) a list of the name, title, current annual
compensation rate (including bonus and commissions) of each employee of Bowlin;
(2) organizational charts;
(3) employment, consulting, employee confidentiality
or similar agreements;
(4) any employee handbook(s); and
(5) any reports and/or plans prepared or adopted
pursuant to the Equal Employment Opportunity Act of 1972, as amended. Accruals
with respect to the bonus, sick leave and vacation benefits of the employees of
Bowlin Group have been made in accordance with the terms of the applicable
Employee Plans and GAAP.
(2) Each of the following is true:
(1) (A) each member of the Bowlin Group is in
compliance with all Applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours and occupational
safety and health; (B) no member of the Bowlin Group is engaged in any unfair
labor practice within the meaning of Section 8 of the National Labor Relations
Act; and (C) there is no proceeding pending or threatened, or any investigation
pending or threatened, against any member of the Bowlin Group, relating to
subsections (A) or (B) above, and no member of the Bowlin Group has any
Knowledge of any basis for any such proceeding or investigation;
13
<PAGE> 91
(2) none of the employees of any member of the Bowlin
Group is a member of, or represented by, any labor union and there are no
efforts being made to unionize any of such employees; and
(3) there are no charges of, formal, informal or
internal complaints of, or proceedings involving, discrimination or harassment
(including but not limited to discrimination or harassment based upon sex, age,
marital status, race, religion, color, creed, national origin, sexual
preference, handicap or veteran status) pending or, to Bowlin's Knowledge,
threatened, nor is there any investigation pending or threatened, including, but
not limited to, investigations before the Equal Employment Opportunity
Commission or any federal, state or local agency or court, with respect to any
member of the Bowlin Group.
3.21 ERISA and Related Matters.
(1) Schedule 3.21(a) lists each Employee Plan that Bowlin or a
member of the Bowlin Group maintains, administers or contributes to. Bowlin has
provided Lamar a true and complete copy of each such Employee Plan, current
summary plan description, (and, if applicable, related trust documents) and all
amendments thereto together with (i) the most recent annual report, if any, that
has been prepared in connection with each Employee Plan; (ii) all material
communications received from or sent to the Internal Revenue Service or the
Department of Labor within the last two years; and (iii) the most recent
Internal Revenue Service determination letter with respect to each Employee
Plan, if any, and the most recent application for a determination letter, if
any.
(2) Schedule 3.21(b) identifies each Benefit Arrangement that
Bowlin or a member of the Bowlin Group maintains or administers. Bowlin has
furnished to Lamar copies or descriptions of each Benefit Arrangement. To the
Knowledge of Bowlin, each Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to such Benefit
Arrangement.
(3) Except as set forth on Schedule 3.21(c), no member of the
Bowlin Group maintains or has ever maintained an "employee benefit plan" (as
defined in Section 3(3) of ERISA) which is or was (i) a plan subject to Title IV
of ERISA or (ii) a "multiemployer plan" (as defined in Section 3(37) of ERISA).
(4) Benefits under any Employee Plan or Benefit Arrangement
are as represented in said documents and have not been increased or modified
(whether written or not written) subsequent to the dates of such documents. No
member of the Bowlin Group has communicated to any employee or former employee
any intention or commitment to modify any Employee Plan or Benefit Arrangement
or to establish or implement any other employee or retiree benefit or
compensation arrangement.
(5) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code satisfies in form the requirements of that Section
except to the extent amendments are not required by law to be made until a date
after the Closing Date, has received a favorable determination letter from the
Internal Revenue Service regarding such qualified status, and no event has
occurred regarding the adoption of such plan that would adversely affect such
qualification. Each trust created in connection with each Employee Plan forming
a part thereof is exempt from tax pursuant to Section
14
<PAGE> 92
501(a) of the Code. Each Employee Plan has been maintained and administered in
compliance with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Code. Except as set forth on Schedule 3.21(e), no Employee Plan
has been operated in a manner which could give rise to penalties, excise taxes
or adverse tax consequences to Bowlin or to its employees, and no Employee Plan
has violated in a material manner any provision of the Code or of ERISA.
(6) Full payment has been made of all amounts which each
member of the Bowlin Group has, or has been required to have, paid as
contributions to any Employee Plan or Benefit Arrangement under Applicable Law
or under the terms of any such plan or any arrangement. All amounts withheld by
Bowlin from its employees have been paid to the appropriate Employee Plan or
Benefit Arrangement by the due date prescribed by the Department of Labor to
avoid penalties.
(7) No member of the Bowlin Group has any current or projected
liability in respect of post-retirement or post-employment health, life or other
welfare benefits for retired, current or former employees.
(8) Except as set forth on Schedule 3.21(h) or in this
Agreement, no employee or former employee of a member of the Bowlin Group will
become entitled to any bonus, retirement, severance, job security or similar
benefit or enhanced benefit (including acceleration of compensation, an award,
vesting or exercise of an incentive award) or any fee or payment of any kind
solely as a result of any of the transactions contemplated by this Agreement.
3.22 Taxes. For purposes of this Section 3.22, the "Bowlin Group"
means, individually and collectively, Bowlin and any individual, trust,
corporation, partnership or any other entity as to which Bowlin is liable for
Taxes incurred by such individual or entity either as transferee or pursuant
Treasury Regulation Section 1.1502-6 or pursuant to any other provision of
federal, territorial, state, local, or foreign law or regulations. Except as set
forth on Schedule 3.22:
(1) All Returns required to be filed by or on behalf of
members of the Bowlin Group have been duly filed on a timely basis and such
Returns (including all attached statements and schedules) are true, complete and
correct. All Taxes shown to be payable on the Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis, and
no other Taxes are payable by the Bowlin Group with respect to items or periods
covered by such Returns (whether or not shown on or reportable on such Returns)
or with respect to any period prior to the date of this Agreement. No member of
the Bowlin Group is currently the beneficiary of any extension of time within
which to file any Return.
(2) Each member of the Bowlin Group has withheld and paid over
all Taxes required to have been withheld and paid over (including any estimated
taxes), and has complied with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor, independent
contractor, or other third party.
15
<PAGE> 93
(3) There are no Liens on any of the assets of Bowlin or its
subsidiaries with respect to Taxes other than Liens for Taxes not yet due and
payable, or for Taxes that are being contested in good faith through appropriate
proceedings and for which appropriate reserves have been established.
(4) Bowlin has furnished or made available to Lamar true and
complete copies of: (i) all federal and state income and franchise tax returns
of the Bowlin Group for all periods beginning on or after February 1, 1995
through the date of this Agreement, and (ii) all tax audit reports, work papers,
statements of deficiencies, closing or other agreements received by any member
of the Bowlin Group, or on their behalf relating to Taxes. Neither Bowlin nor
any member of the Bowlin Group do business in or derive income from any state,
local, territorial or foreign taxing jurisdiction for which Returns must be
filed other than those for which all Returns have been furnished to Lamar. To
its Knowledge, no claim has ever been made by a taxing authority in a
jurisdiction in which Bowlin or any member of the Bowlin Group does not file a
tax return that it is or may be subject to taxation by that jurisdiction.
(5) The Returns of the Bowlin Group are not currently the
subject of any audit by a governmental or taxing authority.
(6) No deficiencies exist or are expected to be asserted with
respect to Taxes of the Bowlin Group, and there is no basis for the assertion of
any material deficiency of Taxes. No notice (either in writing or verbally,
formally or informally) has been received by any member of the Bowlin Group that
it has not filed a Return or paid Taxes required to be filed or paid by it.
(7) No member of the Bowlin Group is a party to any pending
action or proceeding for assessment or collection of Taxes, nor has such action
or proceeding been asserted or threatened (either in writing or verbally,
formally or informally) against any member of the Bowlin Group, or any of its
assets.
(8) No waiver or extension of any statute of limitations is in
effect with respect to Taxes or Returns of any member of the Bowlin Group.
(9) Bowlin and each member of the Bowlin Group has disclosed
on its federal income tax returns all positions taken thereon that could give
rise to a substantial understatement penalty within the meaning of Section 6662
of the Code.
(10) There are no requests for rulings, subpoenas or requests
for information pending with respect to any member of the Bowlin Group.
(11) No currently effective power of attorney has been granted
by any member of the Bowlin Group with respect to any matter relating to Taxes.
(12) The amount of Bowlin's liability or the liability of any
member of the Bowlin Group for unpaid Taxes for all periods ending on or before
the date of this Agreement do not, in the aggregate exceed the amount of current
liability accruals for Taxes (excluding reserves for deferral of Taxes) as of
the date of this Agreement, and the amount of Bowlin's liability or the
liability of any member of the Bowlin Group for unpaid Taxes for all periods
ending on or before the Closing Date will
16
<PAGE> 94
not, in the aggregate, exceed the amount of the current liability accruals for
Taxes (excluding reserves for deferred Taxes), as such accruals are reflected on
the balance sheets of Bowlin or its subsidiaries, respectively, as of the
Closing Date.
(13) Neither Bowlin nor any member of the Bowlin Group has
made an election, or is required to treat any asset as owned by another person
for federal income tax purposes or as tax-exempt bond financed property or
tax-exempt use property within the meaning of section 168 of the Code.
(14) Neither Bowlin nor its subsidiaries has issued or assumed
any indebtedness that is subject to Section 279(b) of the Code.
(15) No member of the Bowlin Group has entered into any
compensatory agreements with respect to the performance of services which
payment thereunder will result in a nondeductible expense pursuant to Section
280G of the Code or an excise tax to the recipient of such payment pursuant to
Section 4999 of the Code.
(16) No consent under Section 341(f) of the Code has been
filed with respect to any member of the Bowlin Group.
(17) Neither Bowlin nor its subsidiaries has agreed, nor is
required to make, any adjustment under Code Section 481(a) by reason of change
in accounting method or otherwise.
(18) Neither Bowlin nor its subsidiaries has disposed of any
property that has been accounted for under the installment method.
(19) Neither Bowlin nor its subsidiaries is a party to any
interest rate swap, currency swap or similar transaction.
(20) No member of the Bowlin Group has been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the period specified in Section 897(c)(1)(A)(ii) of the Code, and
Lamar is not required to withhold tax on the acquisition of the stock of Bowlin
by reason of Section 1445 of the Code.
(21) No member of the Bowlin Group has participated in any
international boycott as defined in Code Section 999.
(22) Neither Bowlin nor its subsidiaries is subject to any
joint venture, partnership or other arrangement or contract that is treated as a
partnership for federal income tax purposes.
(23) No member of the Bowlin Group has made any of the
foregoing elections or is required to apply any of the foregoing rules under any
comparable state or local income tax provisions.
(24) No member of the Bowlin Group has or has ever had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
17
<PAGE> 95
(25) Set forth in Schedule 3.22 or in documents furnished or
made available to Lamar is accurate and complete information with respect to
each of the following:
(1) Any tax elections made by any member of the
Bowlin Group currently in effect or that would otherwise affect Bowlin or any
member of the Bowlin Group;
(2) Any tax carryovers of Bowlin or its subsidiaries;
(3) Bowlin's basis in its assets;
(4) Bowlin's current and accumulated earnings and
profits;
(5) Excess loss accounts in the Bowlin Group; and
(6) Deferred intercompany transactions in the Bowlin
Group.
(26) Neither Bowlin nor its subsidiaries is a party to any Tax
allocation or sharing agreement or has any liability for the Taxes of any person
under Treasury Regulation Section 1. 1502-6 (or any similar provision of local,
state or federal law), as transferee or successor, by contract or otherwise.
(27) No member of the Bowlin Group has prepared or filed any
Return inconsistent with past practice or, on any such Return, taken any
position, made any election or adopted any method that is inconsistent with
positions taken, elections made or methods used in preparing or filing similar
Returns in prior periods, or settled or compromised any material federal, state
or local income tax liability.
(28) Bowlin operates at least one significant business line
(other than any business line that will be contributed to Bowlin Travel in the
Spin-Off), or owns at least a significant portion of its historic business
assets (considering the impact of the Spin-Off), in each case within the meaning
of Treasury Regulation Section 1.368-1(d).
3.23 Transactions with Related Parties.
(1) Schedule 3.23(a) and the Bowlin SEC Documents list each
transaction between February 1, 1997 and the date of this Agreement involving or
for the benefit of Bowlin, on the one hand, and any director or officer of
Bowlin or any Affiliate of such director or officer, on the other hand,
including without limitation, (i) any debtor or creditor relationship, (ii) any
transfer or lease of real or personal property, (iii) wages, salaries,
commissions, bonuses and agreements relating to employment and (iv) purchases or
sales of products or services.
(2) Schedule 3.23(b) lists (i) all agreements and claims of
any nature that any officer or director of any member of the Bowlin Group or any
Affiliate of such officer or director has with or against any member of the
Bowlin Group as of the date of this Agreement that are not identified on the
Bowlin Latest Balance Sheet and (ii) all agreements and claims of any nature
that any member of the Bowlin Group has with or against any officer or director
of any member of the Bowlin Group or any
18
<PAGE> 96
Affiliate of such officer or director as of the date of this Agreement that are
not identified on the Bowlin Latest Balance Sheet.
3.24 Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Bowlin Common Stock entitled to vote on
the Merger is the only vote of the holders of any class or series of Bowlin's
capital stock necessary to approve this Agreement and the transactions described
in this Agreement.
3.25 State Takeover Statutes; Rights Plan.
(1) Except as set forth in Schedule 3.25, the Board of
Directors of Bowlin (at a meeting duly called and held) (i) has unanimously
determined that the Merger is advisable and fair and in the best interests of
Bowlin and its stockholders, and (ii) has unanimously approved the execution,
delivery and performance of this Agreement and the transactions described in
this Agreement and has unanimously approved the Merger. No state takeover
statute or similar statute or regulation applies or purports to apply to Bowlin
in connection with the Merger, this Agreement or any of the transactions
described in this Agreement.
(2) The Bowlin stockholders are not entitled to any rights to
acquire capital stock of Bowlin pursuant to a stockholder rights plan.
3.26 Intellectual Property. Bowlin either owns or has valid rights to
use all material patents, copyrights and trademarks used in its business as
presently conducted, subject to limitations contained in the agreements
governing the use of same, which limitations are customary for companies engaged
in businesses similar to Bowlin. There are no limitations contained in any such
agreements which will alter any such rights, breach any such agreement or any
third-party vendor, or require payments of additional sums thereunder. Bowlin is
in compliance with all such licenses and agreements and there are no pending or
threatened proceedings challenging or questioning the validity or effectiveness
of any license or agreement relating to such property or the right of Bowlin to
use, copy, modify, or distribute the same.
3.27 Insurance. Lamar has been provided copies of or access to all
insurance policies or binders that relate to the businesses of each member of
the Bowlin Group. All premiums due under the policies and binders have been paid
or accrued for and all policies and binders are in full force and effect. As of
the date of this Agreement, no notice of cancellation or non-renewal of any
policy or binder and no notice of disallowance of any claim under any insurance
policy or binder, has been received by any member of the Bowlin Group. Except as
provided in the applicable policy or binder, no member of the Bowlin Group has
any liability for or exposure to any premium expense for expired policies and
there are no current claims by any member of the Bowlin Group under any such
policy or binder as to which coverage has been denied or disputed by the
underwriters of such policies, nor are there any material insured losses for
which claims have not been made.
3.28 Bank Accounts; Power of Attorney. Schedule 3.28 sets forth with
respect to each bank account or cash account maintained by Bowlin at any bank,
brokerage or other financial firm, the name of the institution at which such
account is maintained, the number of the account, and the names of the
individuals having authority to withdraw funds from such account.
19
<PAGE> 97
3.29 Registration Statement and Proxy Statement/Prospectus. None of the
information (other than information provided by Lamar or NewCo) included or
incorporated by reference in the Registration Statement will (a) in the case of
the Registration Statement, at the time it becomes effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein, in light of the circumstances under which they were made, or
necessary in order to make the statements therein not misleading, or (b) in the
case of the Proxy Statement/Prospectus, at the time of the mailing thereof, at
the time of the Bowlin Special Meeting, and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to any member of the
Bowlin Group or its respective directors or officers shall occur which is
required to be described in the Proxy Statement/Prospectus or the Registration
Statement, such event shall be so described, and an appropriate amendment or
supplement will be promptly filed with the SEC and, to the extent required by
law, disseminated to the Bowlin stockholders. With respect to information
relating to Bowlin, the Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act, and the Proxy
Statement/Prospectus will comply (with respect to Bowlin) as to form in all
material respects with the provisions of the Exchange Act.
3.30 No Finder's Fee. Neither Bowlin nor any member of the Bowlin Group
has incurred or become liable for any broker's commission or finder's fee
related to the transactions contemplated by this Agreement, except fees to be
paid pursuant to Section 5.12.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF LAMAR AND NEWCO
Lamar and NewCo represent and warrant to Bowlin, as of the date of this
Agreement and as of the Closing Date, as follows:
4.1 Organization. Each of Lamar and NewCo is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to own its
properties and carry on its business as now being conducted.
4.2 Lamar Capital Stock.
(1) The authorized capital stock of Lamar consists exclusively
of (i) 175,000,000 shares of Class A common stock, $.001 par value per share,
(ii) 37,500,000 shares of Class B common stock, $.001 par value per share, (iii)
1,000,000 shares of Series AA Preferred Stock, $.001 par value per share, and
(iv) 10,000 shares of Class A Preferred Stock, $638 par value per share, and as
of September 29, 2000, the following shares are outstanding: (A) 75,260,974
shares of Class A common stock, (B) 17,000,000 shares of Class B common stock,
(C) 5,719.49 shares of Series AA Preferred Stock, and (D) no shares of Class A
Preferred Stock. No shares of any class are held in treasury. All of the issued
and outstanding shares of Lamar have been validly issued, are fully paid and
nonassessable and are free of preemptive rights. As of the date of this
Agreement, 2,715,223 shares of the Class A common stock of Lamar are reserved
for issuance pursuant to the exercise of stock options granted and outstanding
under the stock option plan designated the Lamar Advertising 1996 Equity
Incentive Plan.
20
<PAGE> 98
(2) The authorized capital stock of NewCo consists exclusively
of 1,000 shares of Class A common stock, par value $.01 per share, of which
1,000 shares of outstanding and no shares are held in treasury.
4.3 Authority; Enforceability.
(1) Each of Lamar and NewCo has the requisite corporate power
and authority to enter into this Agreement and to carry out its obligations
under this Agreement and any of the other agreements referred to in this
Agreement to which it is a party. The execution, delivery and performance of
this Agreement and any of the other agreements referred to in this Agreement to
which it is a party and the consummation of the transactions contemplated hereby
or thereby have been (or, in the case of NewCo, will be prior to the Effective
Time) duly authorized by all necessary corporate action on the part of Lamar and
NewCo.
(2) This Agreement and each other agreement executed or to be
executed by Lamar and NewCo in connection with the transactions contemplated by
this Agreement have been, or when executed will be, duly executed and delivered
by Lamar and NewCo and constitute, or when executed and delivered will
constitute, valid and binding obligations of Lamar and NewCo, enforceable
against Lamar and NewCo in accordance with their terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles which may limit the availability of certain equitable remedies in
certain instances.
4.4 No Conflicts or Consents.
(1) Neither the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement by Lamar
and NewCo nor the consummation of the transactions contemplated by this
Agreement or any of the other agreements referred to in this Agreement will
violate, conflict with, or result in a breach of any provision of, constitute a
default (or an event that, with notice or lapse of time or both, would
constitute a default) under, result in the termination of, or accelerate the
performance required by, or result in the creation of any Adverse Claim against
any of the properties or assets of Lamar or NewCo under the articles of
incorporation, bylaws or any other organizational documents of Lamar or NewCo;
any note, bond, mortgage, indenture, deed of trust, or other debt obligation
(other than ordinary course trade credit) to which Lamar or NewCo is a party, or
by which Lamar or NewCo or any of their respective assets are bound; or any
lease, agreement or other instrument or other obligation that is material to the
business or operations of Lamar or NewCo and to which Lamar or NewCo is a party,
or by which Lamar or NewCo or any of their respective assets are bound; or
violate any order, writ, injunction, decree, judgment, statute, rule or
regulation of any Governmental Entity to which either Lamar or NewCo is subject
or by which Lamar or NewCo or any of their respective assets are bound.
(2) No filing or registration with, or authorization, consent
or approval of, any Governmental Entity is required by or with respect to Lamar
or NewCo in connection with the execution and delivery of this Agreement by
Lamar and NewCo, or is necessary for the consummation of the Merger and the
other transactions contemplated by this Agreement, except for: (i) the filing of
an HSR
21
<PAGE> 99
Report by each of Lamar and Bowlin under the HSR Act, (ii) the filing and
recordation requirements of the Law with respect to the Articles of Merger, and
(iii) the filing of the Registration Statement with the SEC.
4.5 SEC Documents; Financial Statements; Liabilities.
(1) Except as set forth on Schedule 4.5(a), Lamar has timely
filed all required reports, schedules, forms, statements and other documents
with the SEC since February 1, 1997 (the "Lamar SEC Documents"). The Lamar SEC
Documents, and any such reports, forms and documents filed by Lamar with the SEC
after the date of this Agreement, complied, or will comply, at the time of
filing as to form in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the Lamar SEC
Documents, and except to the extent that information contained in any Lamar SEC
Document has been superseded by a later filed Lamar SEC Document, none of the
Lamar SEC Documents at the time of filing contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(2) The Lamar Financial Statements included in the Lamar SEC
Documents complied at the time of filing with the SEC as to form in all material
respects with the applicable accounting requirements and published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP applied on a basis consistent with prior periods, and fairly present the
financial position of Lamar at such dates and the results of operations and cash
flow for the respective periods then ended, subject, in the case of the Lamar
Interim Financial Statements, to normal, recurring year-end adjustments that are
not, individually or in the aggregate, material in amount. The Lamar Audited
Financial Statements have been audited by KPMG, LLP, independent auditors of
Lamar, in accordance with generally accepted auditing standards. Lamar does not
have, nor are any of its assets subject to, any liability, commitment, debt or
obligation (of any kind whatsoever whether absolute or contingent, accrued,
fixed, known, unknown, matured or unmatured) of a type required by GAAP to be
reflected in the Lamar Financial Statements, except (i) as and to the extent
reflected on the Lamar Latest Balance Sheet or the footnotes that are a part of
the Lamar Financial Statements, (ii) as may have been incurred or may have
arisen since the date of the Lamar Latest Balance Sheet in the ordinary course
of business and that are not material individually or in the aggregate or (iii)
are permitted by this Agreement. Except as set forth in the Lamar SEC Documents,
since February 1997, Lamar has not made any change in the accounting policies or
practices applied in the preparation of the Lamar Financial Statements. Lamar's
independent auditors have not issued any audit reports or other reports on
internal controls which indicate that the internal controls associated with or
otherwise covering Lamar have had any material weaknesses or that the accounting
records associated with or otherwise covering Lamar contained or could contain
any material errors.
(3) The Lamar Latest Balance Sheet includes appropriate
reserves for all Taxes and other known liabilities incurred as of such date but
not yet payable.
4.6 Registration Statement and Proxy Statement/Prospectus. None of the
information (other than information provided by Bowlin) included or incorporated
by reference in the Registration Statement will (a) in the case of the
Registration Statement, at the time it becomes effective, contain any
22
<PAGE> 100
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or (b) in
the case of the Proxy Statement/Prospectus, at the time of the mailing thereof,
at the time of the Bowlin Special Meeting, and at the Effective Time contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to Lamar, its directors
or officers or any of its subsidiaries shall occur which is required to be
described in the Proxy Statement/Prospectus or the Registration Statement, such
event shall be so described, and an appropriate amendment or supplement shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the Bowlin stockholders. The Registration Statement shall comply as to form in
all material respects with the provisions of the Securities Act, and the Proxy
Statement/Prospectus shall comply as to form in all material respects with the
provisions of the Exchange Act, in each case other than as to information
provided for inclusion therein by Bowlin.
4.7 No Finder's Fee. Neither Lamar nor NewCo has incurred or become
liable for any broker's commission or finder's fee related to the transactions
contemplated by this Agreement.
4.8 Reorganization Representations.
(1) Lamar has no plan or intention to cause Bowlin to issue
additional shares of its stock after the Closing that would result in Lamar
losing control of Bowlin within the meaning of Code Section 368(c).
(2) Lamar has no plan or intention to liquidate Bowlin; to
merge Bowlin into another corporation; to cause Bowlin to sell or otherwise
dispose of any of its assets, except for dispositions made in the ordinary
course of business; or to sell or otherwise dispose of any of Bowlin Common
Stock acquired pursuant to this Agreement, except for transfers described in
Code Section 368(a)(2)(C).
(3) Lamar has no plan or intention to reacquire any Lamar
Common Stock issued pursuant to this Agreement.
(4) Lamar shall pay its own expenses incurred in connection
with the transactions contemplated by this Agreement.
(5) Lamar does not own, directly or indirectly, nor has it
owned during the past five years, directly or indirectly, any stock of Bowlin.
(6) Lamar will not pay Bowlin's dissenting shareholders (if
any) the value of their stock out of its own funds and no funds will be supplied
for that purpose, directly or indirectly, by Lamar nor will Lamar directly or
indirectly reimburse Bowlin for any payments to dissenters. Nothing in the
preceding sentence will preclude Lamar from making capital contributions to
Bowlin in the ordinary course of business.
(7) Following the Closing, Bowlin will continue its historic
business or use a significant portion of its historic business assets in a
business.
23
<PAGE> 101
ARTICLE 5
COVENANTS
5.1 Regulatory Approvals; Cooperation and Best Efforts.
(1) (i) Lamar and Bowlin shall use all reasonable efforts to
file, as soon as practicable after the date of this Agreement, all notices,
reports and other documents required to be filed with any Governmental Entity
with respect to the Merger and the other transactions contemplated by this
Agreement, and to submit promptly any additional information requested by any
such Governmental Entity. Without limiting the generality of the foregoing,
Lamar and Bowlin shall, within ten Business Days of the date of this Agreement,
prepare and file the notifications required to be filed under the HSR Act. Lamar
and Bowlin shall respond as promptly as practicable (A) to any inquiries or
requests received from the Federal Trade Commission or the Department of Justice
for additional information or documentation and (B) to any inquiries or requests
received from any state attorney general, foreign antitrust authority or other
Governmental Entity in connection with antitrust or related matters.
(ii) Each of Bowlin and Lamar shall (A) give the other
party prompt notice of the commencement or threat of commencement of any
Proceedings by or before any Governmental Entity with respect to the Merger or
any of the other transactions contemplated by this Agreement, (B) keep the other
party informed as to the status of any such Proceeding or threat, and (C)
promptly inform the other party of any communication to or from the Federal
Trade Commission, the Department of Justice or any other Governmental Entity
regarding the Merger. Except as may be prohibited by any Governmental Entity or
by any legal requirement, Bowlin and Lamar will consult and cooperate with one
another, and will consider in good faith the views of one another, in connection
with any analysis, appearance, presentation, memorandum, brief, argument,
opinion or proposal made or submitted in connection with any Legal Proceeding
under or relating to the HSR Act or any other foreign, federal or state
antitrust or fair trade law.
(iii) Notwithstanding the foregoing, neither party will be
required to accept any conditions that may be imposed by the FTC or the DOJ in
connection with such filings that would require the divestiture of any Lamar or
Bowlin assets or otherwise have a Material Adverse Effect on such party.
(2) Each party will cooperate with the other and use its
reasonable best efforts to (i) receive all necessary and appropriate consents of
third parties to the transactions contemplated by this Agreement, (ii) satisfy
all requirements prescribed by law for, and all conditions set forth in this
Agreement to, the consummation of the Merger, and (iii) effect the Merger in
accordance with this Agreement at the earliest practicable date.
5.2 Bowlin Special Meeting.
(1) Bowlin will take all action necessary under law to call,
give notice of and convene a meeting of its stockholders (the "Bowlin
Stockholders Meeting") to be held as promptly as practicable for the purpose of
voting upon a proposal to adopt this Agreement. The Bowlin Stockholders
24
<PAGE> 102
Meeting shall be held (on a date selected by Bowlin in consultation with Lamar)
as promptly as practicable after the Registration Statement is declared
effective under the Securities Act.
(2) Subject to Section 5.2(c), (i) the Proxy
Statement/Prospectus shall include a recommendation (the "Board Recommendation")
of the Board of Directors of Bowlin that Bowlin's stockholders vote to adopt
this Agreement at the Bowlin Special Meeting and (ii) the Bowlin Board
Recommendation shall not be withdrawn or modified in a manner adverse to Lamar,
and no resolution by the Board of Directors of Bowlin or any committee thereof
to withdraw or modify the Board Recommendation shall be adopted or proposed.
(3) Notwithstanding anything to the contrary contained in
Section 5.2(b), at any time prior to the adoption of this Agreement by the
Bowlin stockholders, the Board Recommendation may be withdrawn or modified in a
manner adverse to Lamar if: (i) a proposal to acquire (by merger or otherwise)
all of the outstanding shares of Bowlin Common Stock is made to Bowlin and is
not withdrawn; (ii) Bowlin's Board of Directors determines in good faith (based
upon a written opinion of an independent financial advisor of nationally
recognized reputation) that such offer constitutes a Superior Proposal; (iii)
Bowlin's Board of Directors determines in good faith, after having taken into
account the written advice of Bowlin's outside legal counsel, that, in light of
such Superior Proposal, the withdrawal or modification of the Board
Recommendation is required in order for Bowlin's Board of Directors to comply
with its fiduciary obligations to Bowlin's stockholders under applicable law;
and (iv) neither Bowlin nor any of its Representatives shall have violated any
of the restrictions set forth in Section 5.5.
(4) Bowlin shall comply with all provisions of the Exchange
Act and the Law in the solicitation of proxies from its stockholders to vote
upon the proposal to adopt this Agreement.
5.3 Preparation of the Proxy Statement/Prospectus and the Registration
Statement.
(1) Lamar and Bowlin shall jointly prepare the Proxy
Statement/Prospectus, and Lamar shall file with the SEC the Registration
Statement, in which the Proxy Statement/Prospectus shall be included. Bowlin
will cooperate with Lamar to promptly respond to any SEC comments on the Proxy
Statement/Prospectus or Registration Statement and each of Lamar and Bowlin will
use its commercially reasonable efforts to resolve all SEC comments as promptly
as practicable to the satisfaction of the SEC and to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after its filing. Lamar will also take any action (other than qualifying to do
business in any jurisdiction in which it is now not so qualified) required to be
taken under any applicable state securities laws in connection with the issuance
of the Lamar Common Stock in connection with the Merger. Bowlin will furnish all
information concerning Bowlin and the Bowlin stockholders as may be reasonably
requested by Lamar in connection with any such action.
(b) Lamar and Bowlin will comply with the Exchange Act and the
Law in the preparation, filing and distribution of the Proxy
Statement/Prospectus.
5.4 Conduct of Business Prior to the Closing Date.
(1) During the period from the date of this Agreement to the
Effective Time, Bowlin will, except as contemplated by the Contribution
Agreement or as necessary to effect the Spin-Off,
25
<PAGE> 103
(i) conduct its business only in the ordinary course and (ii) use its best
efforts to preserve the possession and control of all of its assets other than
those consumed or disposed of for value in the ordinary course of business or
pursuant to the terms of this Agreement, to preserve the goodwill of suppliers,
customers and others having business relations with it and to do nothing to
impair its ability to keep and preserve its business as it exists on the date of
this Agreement.
(2) Without the prior written consent of the other party,
neither Lamar nor Bowlin will commit or omit to do any act that (i) would cause
a breach of any of its agreements, commitments or covenants contained in this
Agreement, or (ii) would cause its representations and warranties contained in
Article 3 or Article 4, as the case may be, to become untrue.
5.5 No Solicitation.
(1) No member of the Bowlin Group will directly or indirectly,
through any officer, director, representative, agent or affiliate (a "Bowlin
Representative") of any member of the Bowlin Group, (i) initiate, solicit,
encourage, induce or otherwise facilitate the initiation or submission of any
inquiries, proposals or offers that constitute or may reasonably be expected to
lead to an Acquisition Proposal (as defined below), (ii) furnish any information
regarding any member of the Bowlin Group to any Person in connection with or in
response to an Acquisition Proposal or an inquiry or indication of interest that
could reasonably be expected to lead to an Acquisition Proposal, unless required
by Applicable Law (iii) enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries or to obtain an
Acquisition Proposal, (iv) agree to, approve, recommend or endorse any
Acquisition Proposal, or (v) enter into any letter of intent, contract or
similar agreement contemplating or otherwise relating to any Acquisition
Proposal; provided, however, that prior to the adoption of this Agreement by the
Bowlin stockholders, this Section 5.5 (a) shall not prohibit Bowlin from
furnishing nonpublic information regarding any member of the Bowlin Group to, or
entering into discussions with, any Person in response to a Superior Proposal
that is submitted to Bowlin by such Person (and not withdrawn) if (w) neither
Bowlin nor any Bowlin Representative shall have violated any of the restrictions
set forth in this Section 5.5, (x) the Board of Directors of Bowlin concludes in
good faith, after having taken into account the written advise of its outside
legal counsel, that such action is required in order for the Board of Directors
of Bowlin to comply with its fiduciary obligations to Bowlin's stockholders
under applicable law, (y) at or prior to furnishing any such nonpublic
information to, or entering into discussions with, such Person, Bowlin gives
Lamar written notice of the identify of such Person and of Bowlin's intention to
furnish nonpublic information to, or enter into discussions with, such Person,
and Bowlin receives from such Person an executed confidentiality agreement
containing provisions no less favorable to Bowlin than those contained in the
Confidentiality Agreement (as defined below) between Bowlin and Lamar, and (z)
at or prior to furnishing any such nonpublic information to such Person, Bowlin
furnishes such nonpublic information to Lamar (to the extent such nonpublic
information has not been previously furnished by Bowlin to Lamar). Without
limiting the generality of the foregoing, Bowlin acknowledges and agrees that
any violation of or the taking of any action inconsistent with any of the
restrictions set forth in the preceding sentence by any Bowlin Representative,
whether or not such Bowlin Representative is purporting to act on behalf of
Bowlin, shall be deemed to constitute a breach of this Section 5.5 by Bowlin.
26
<PAGE> 104
(2) For purposes of this Agreement, "Acquisition Proposal"
means a proposal for any of the following (other than the transactions
contemplated by this Agreement, including the Spin-Off) that involves (i) prior
to the Spin-Off, any member of the Bowlin Group, and (ii) after the Spin-Off,
any member of the Bowlin Group except Bowlin Travel: (A) any merger,
reorganization, consolidation, share exchange, recapitalization, business
combination, liquidation, dissolution, or other similar transaction involving,
or, any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of, all or any significant portion of the assets or 10% or more of the equity
securities of, any member of the Bowlin Group; (B) any tender offer or exchange
offer for 20% or more of the outstanding shares of capital stock of Bowlin or
the filing of a registration statement under the Securities Act in connection
therewith; or (C) any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.
(3) For purposes of this Agreement, "Superior Proposal" means
a bona fide proposal made by a third party to acquire Bowlin pursuant to an
Acquisition Proposal that the Board of Directors of Bowlin determines in its
good faith judgment (after considering the written advice of Bowlin's
independent advisors) to merit the withdrawal of the Board Recommendation
because such third party proposal has more favorable economic terms than the
transactions contemplated by this Agreement.
(4) Bowlin will immediately notify Lamar after receipt of any
Acquisition Proposal or any request for nonpublic information relating to any
member of the Bowlin Group in connection with an Acquisition Proposal or for
access to any of the premises, books or records of any member of the Bowlin
Group by any person or entity that informs Bowlin or its Board of Directors,
formally or informally, that it is considering making, or has made, an
Acquisition Proposal. Such notice to Lamar will be made orally and in writing
and will indicate in reasonable detail the identity of the offering party and
the terms and conditions of such proposal, inquiry or contact; except such
disclosure will be made to Lamar only to the extent such disclosure does not
violate the fiduciary responsibilities of the Board of Directors of Bowlin,
after being advised by its legal counsel, in which case Bowlin will provide
Lamar with a summary of the terms and conditions of such proposal, inquiry or
contact.
(5) Nothing contained in this Section 5.5 will prevent Bowlin
from complying with Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange
Act, if applicable, with regard to an Acquisition Proposal made in the form of a
tender offer by a third party.
(6) Bowlin shall immediately cease and cause to be terminated
any pre-existing discussions with any Person that relates to any Acquisition
Proposal; provided, however, that any such discussions may be recommenced so
long as Bowlin complies with the provisions of this Section 5.5.
5.6 Press Releases. Bowlin and Lamar will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press releases or other public statements with respect to any
transactions described in this Agreement, including the Merger, and will not
issue any such press releases or make any such public statement prior to such
consultation, except as may be required by Applicable Law, court process or by
obligations pursuant to a listing agreement with American Stock Exchange or
Nasdaq.
27
<PAGE> 105
5.7 Access to Information and Confidentiality.
(1) Prior to the Closing Date, Bowlin will afford to Lamar and
its officers, employees, accountants, counsel, financial advisors and other
representatives, reasonable access during normal business hours to its premises,
books and records and will furnish to Lamar (i) a copy of each report, schedule,
registration statement and other documents filed by it during such period
pursuant to the requirements of federal or state securities laws, and (ii) such
other information with respect to its business and properties as Lamar
reasonably requests.
(2) The confidentiality obligations of Bowlin and Lamar will
continue to be governed by the Confidentiality Agreement dated September 6, 2000
(the "Confidentiality Agreement") by and between Bowlin and Lamar.
5.8 Consultation and Reporting.
(1) During the period from the date of this Agreement to the
Closing Date, Bowlin will confer with Lamar on a regular and frequent basis to
report material operational matters with respect to its business and to report
on the general status of its ongoing operations. Bowlin will notify Lamar of any
unexpected emergency or other change in the normal course of its business or in
the operation of its properties and of any governmental complaints,
investigations, adjudicatory proceedings, or hearings (or communications
indicating that the same may be contemplated) and will keep Lamar fully informed
of such events and permit Lamar's representatives prompt access to all materials
prepared by Bowlin or on its behalf or served on Bowlin in connection therewith.
(2) At least two Business Days prior to Closing, Bowlin will
provide Lamar:
(1) a copy of Bowlin's balance sheet dated the last
day of the month immediately preceding the month of the Closing, unless the
Closing occurs prior to the 15th day of any month, in which case the balance
sheet will be dated the last day of the month immediately preceding the month
before Closing (in either case, the "Pre-Closing Balance Sheet"), along with an
aged accounts receivable report, pre-paid lease amortization schedule, copies of
notes payable and notes receivable, accounts payable journals and any other
detailed lists supporting such balance sheet;
(2) a written statement calculating the Working
Capital of Bowlin after the Spin-Off; and
(3) a written statement calculating the Bowlin
Long-Term Debt after the Spin-Off.
5.9 Notification of Changes.
(1) Bowlin, on the one hand, and Lamar and NewCo, on the other
hand, will promptly notify the other parties of any event that causes any
representation or warranty given by the other parties, respectively, in Articles
3 and 4 to become untrue.
(2) Bowlin, on the one hand, and Lamar and NewCo, on the other
hand, will each have the right until the Closing to supplement or amend any of
the Schedules described in Articles 3 or 4 with respect to any matter arising or
discovered after the date of this Agreement which, if existing or
28
<PAGE> 106
known on the date of this Agreement, would have been required to be set forth or
described in such Schedules. For all purposes of this Agreement, including for
purposes of determining whether the conditions set forth in Article 6 have been
fulfilled, the Schedules will be deemed to include only that information
contained therein on the date of this Agreement and will be deemed to exclude
all information contained in any supplement or amendment thereto, except to the
extent that they reflect an event or condition that would not have a Material
Adverse Effect on the party making the representation and warranty; provided,
however, that if the Closing will occur, then all matters disclosed pursuant to
any such supplement or amendment will be deemed included in the Schedules at
Closing (without necessity of a written waiver or other action on the part of
any party) and to modify the applicable representations and warranties for all
purposes.
5.10 Stock Option Plan. The Board of Directors of Bowlin will, in
connection with the Merger and the transactions contemplated by this Agreement,
notify in writing the holders of Bowlin Options issued under the Option Plan of
their right to exercise their options as to all shares that are subject to
Bowlin Options. Such notice will be given pursuant to Section 11 of the Option
Plan at least 30 days prior to the Closing Date.
5.11 Faces to Be Completed. Bowlin will use its best efforts to
complete the faces on Schedule 5.11 (the "Q3 Faces") prior to the Closing Date.
5.12 Fees and Expenses. If the Merger is consummated, Lamar will pay or
will cause the Surviving Corporation to pay, up to $1,250,000 of Bowlin's
aggregate costs and expenses associated with the consummation of the Merger and
the other transactions contemplated by this Agreement, including financial
advisory fees, a fairness opinion, legal fees and accounting fees (the "Closing
Costs"). Under the terms of the Contribution Agreement, Bowlin Travel will
expressly assume the obligation to pay any Closing Costs in excess of
$1,250,000.
5.13 Affiliate Agreements. Bowlin shall use all reasonable efforts to
cause each Person identified on Schedule 5.13 and each other Person who is or
becomes (or may be deemed to be) an affiliate (as that term is used in Rule 145
under the Securities Act) of Bowlin to execute and deliver to Lamar, prior to
the date of mailing of the Proxy Statement/Prospectus to Bowlin's stockholders,
an Affiliate Letter in the form of Exhibit C.
5.14 Listing. Lamar shall use its best efforts to cause the Merger
Shares to be approved for listing (subject to notice of issuance) on the Nasdaq
National Market System.
5.15 Bowlin 401(k) Plan.
(1) Within 30 days after the date of this Agreement, Bowlin
will deliver to Lamar for review and approval by Lamar, an amendment (the
"401(k) Amendment") to Bowlin's 401(k) Plan (the "Plan") whereby, in addition to
any other provisions reasonably requested by Lamar, Bowlin Travel will (i)
expressly assume the obligation to maintain the Plan as successor employer, (ii)
cause the assets held in Plan accounts of employees who remain employed by the
Surviving Corporation to be transferred from the Plan to The Lamar Savings and
Profit Sharing Plan Trust, (iii) report the transfer of Plan assets to any
employees and regulatory authorities as required by Applicable Law.
29
<PAGE> 107
(2) Bowlin Travel will execute any and all documents as needed
for the 401(k) Amendment to comply with IRS requirements and will provide Lamar
with copies of any IRS filings.
(3) Bowlin Travel will provide a list of all participating
employees to Lamar at Closing.
5.16 Repair of Faces. Bowlin will repair each of the Faces listed in
Schedule 3.9(5) to the extent repairs are commercially reasonable, so that, at
Closing, each Face will be (a) legal and conforming or legal and non-conforming,
(b) available for sale, and (c) standing and in good condition acceptable within
the standards of the outdoor advertising industry.
5.17 Management Agreement. Bowlin will give Bowlin Travel written
notice at least 31 days prior to the Closing Date that the Agreement for
Management Services dated August 1, 2000 between Bowlin and Bowlin Travel will
be terminated effective as of the day prior to the Closing Date.
5.18 Contribution Agreement; Spin-Off.
(1) Bowlin will, and will cause Bowlin Travel to, (i) within
15 days after the date of this Agreement, execute the Contribution Agreement in
a form reasonably satisfactory to Lamar, and (ii) within 45 days after the date
of this Agreement, complete and provide any schedules and exhibits to the
Contribution Agreement in forms reasonably satisfactory to Lamar.
(2) Bowlin will contribute to Bowlin Travel the assets and
liabilities related to Bowlin's travel center business in accordance with the
terms and conditions of the Contribution Agreement; provided, however, that
Lamar will have consented to the terms and conditions of the Contribution
Agreement under Section 5.18(a).
(3) Bowlin will distribute all of the shares of Bowlin Travel
to the Bowlin stockholders in compliance with Section 78.288 of the Nevada
Revised Statutes.
ARTICLE 6
CLOSING CONDITIONS
6.1 Conditions Applicable to all Parties. The respective obligations of
each party to consummate the transactions contemplated by this Agreement are
subject to the satisfaction or, where permissible, waiver by such party of the
following conditions at or prior to the Closing Date:
(1) Bowlin Stockholder Approval. The Merger will have been
duly approved by holders of at least a majority of the outstanding shares of
Bowlin Common Stock in accordance with the Law and the Articles of Incorporation
of Bowlin.
30
<PAGE> 108
(2) Registration Statement. The Registration Statement shall
have become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and no proceedings for that purpose shall have been
initiated, or to the Knowledge of Lamar or Bowlin, threatened by the SEC. All
necessary state securities authorizations (including filings, authorizations,
orders and approvals, if any, as may be required by state takeover laws) will
have been received and shall be in full force and effect.
(3) HSR Act. The waiting periods (and any extensions thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired and no condition will have been imposed on Bowlin or Lamar to
obtain such termination that would require the divestiture of any Bowlin or
Lamar assets or otherwise have a Material Adverse Effect on either party.
(4) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order, judgment or decree to
restrain or prohibit the consummation of the Merger or any of the other
transactions described in this Agreement shall have been issued and remain in
effect.
(5) Litigation. There shall not have been instituted or
pending, or threatened, any Proceeding by any Governmental Entity as a result of
this Agreement or any of the transactions contemplated hereby which, if such
Governmental Entity were to prevail, would reasonably be expected to have a
Material Adverse Effect on Lamar or the Surviving Corporation.
(6) Listing of Merger Shares. The Merger Shares shall have
been authorized for listing on the Nasdaq National Market System, subject to
official notice of issuance.
6.2 Conditions to Lamar's and NewCo's Obligations. The obligations of
Lamar and NewCo to consummate the transactions contemplated by this Agreement
are subject to the satisfaction of the following conditions, unless waived in
writing by Lamar:
(1) Representations and Warranties. The representations and
warranties of Bowlin set forth in this Agreement, disregarding all
qualifications and exceptions relating to materiality or Material Adverse
Effect, will be true and correct in all respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, except as otherwise contemplated by this Agreement, and except where the
failure of any representations and warranties, individually or in the aggregate,
would not have a Material Adverse Effect.
(2) Covenants. Bowlin will have performed or complied in all
material respects with the obligations and covenants required to be complied
with or performed by it under this Agreement at or prior to the Closing Date.
(3) No Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any Material Adverse Effect with
respect to Bowlin, and no event shall have occurred or circumstance shall exist
that, in combination with any other events, could reasonably be expected to have
a Material Adverse Effect on the Bowlin Group.
(4) Consents and Approvals. All consents and approvals of
third parties necessary
31
<PAGE> 109
for the consummation of the transactions contemplated by this Agreement shall
have been obtained.
(5) Working Capital. The Working Capital at Closing shall be
not less than $100,000.
(6) Bowlin Long-Term Debt. The Bowlin Long-Term Debt shall not
exceed $14,500,000.
(7) Bowlin Assets. None of Bowlin's assets will secure any
debts or other obligations of Bowlin Travel.
(8) Closing Certificate. Lamar will have received a
certificate executed by the Chief Executive Officer and Chief Financial Officer
of Bowlin dated the Closing Date, certifying that the conditions specified in
Section 6.2(a) through (g) have been fulfilled.
(9) Q3 Faces. The Q3 Faces that have been completed prior to
Closing will be in suitable condition to enable Lamar to use those structures
for outdoor advertising purposes, and the advertising contracts, Leases and
Permits applicable to the completed Q3 Structures will be in effect.
(10) Affiliates Letters. Lamar shall have received the letters
described in Section 5.13.
(11) Contribution Agreement; Spin-Off. The contribution from
Bowlin to Bowlin Travel of the assets and liabilities related to Bowlin's travel
center business will have been effected under the terms and conditions specified
in the Contribution Agreement, and Bowlin will have distributed all of the
shares of Bowlin Travel to the Bowlin stockholders.
(12) Director and Officer Resignations. Lamar shall have
received resignations from all of the directors and officers of Bowlin, such
resignations to be effective as of the Effective Time.
(13) Bowlin Travel Agreements. Bowlin will have terminated any
leases or other agreements between Bowlin and Bowlin Travel other than the
Contribution Agreement that Lamar requests Bowlin to terminate.
(14) Solvency Certificate. Lamar will have received a
certificate executed by the Chief Executive Officer and Chief Financial Officer
of Bowlin dated the Closing Date, certifying that each of Bowlin and Bowlin
Travel was solvent immediately prior to the Spin-Off and remained solvent from
the date of the Spin-Off through the Closing Date.
(15) 401(k) Amendment. Bowlin and Bowlin Travel will have
executed the 401(k) Amendment.
6.3 Conditions to Obligations of Bowlin. The obligations of Bowlin to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions, unless waived in writing by Bowlin:
32
<PAGE> 110
(1) Representations and Warranties. The representations and
warranties of Lamar and NewCo set forth in this Agreement, disregarding all
qualifications and exceptions relating to materiality or Material Adverse
Effect, will be true and correct in all respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, except as otherwise contemplated by this Agreement, and except where the
failure of any representations and warranties, individually or in the aggregate,
would not have Material Adverse Effect.
(2) Covenants. Each of Lamar and NewCo will have performed or
complied in all material respects with all obligations and covenants required to
be complied with or performed by it under this Agreement at or prior to the
Closing Date.
(3) No Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any Material Adverse Effect with
respect to Lamar or NewCo, and no event shall have occurred or circumstance
shall exist that, in combination with any other events, could reasonably be
expected to have a Material Adverse Effect on Lamar or NewCo.
(4) Consents and Approvals. All consents and approvals of
third parties necessary for the consummation of the transactions contemplated by
this Agreement shall have been obtained.
(5) Closing Certificate. The receipt by Bowlin of a
certificate executed by the Chief Executive Officer and Chief Financial Officer
of Lamar dated the Closing Date, certifying that the conditions specified in
Section 6.3(a) through (d) have been fulfilled.
ARTICLE 7
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated and the Merger
contemplated by this Agreement abandoned at any time before the Effective Time,
whether before or after approval by the Bowlin stockholders as follows:
(1) Mutual Consent. By the mutual consent of the Boards of
Directors of Bowlin and Lamar.
(2) Material Breach. By the Board of Directors of either
Bowlin or Lamar if there has been a material breach by the other of any
representation or warranty contained in this Agreement or of any covenant
contained in this Agreement, which in either case cannot be, or has not been,
cured within 15 days after written notice of such breach is given to the party
committing such breach; provided that the right to effect such cure will not
extend beyond the date set forth in Section 7.1(c) below.
(3) Abandonment. By the Board of Directors of either Bowlin or
Lamar if the Merger has not occurred by March 31, 2001, unless the failure to
consummate the Merger is attributable to a failure on the part of the party
seeking to terminate this Agreement to perform any material obligation required
under the terms and provisions of this Agreement to be performed by it.
33
<PAGE> 111
(4) Government Action. By the Board of Directors of either
Bowlin or Lamar if any Governmental Entity shall have issued a final,
non-appealable order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger.
(5) Failure to Obtain Required Vote of Bowlin Stockholders. By
either Bowlin or Lamar if the Bowlin Special Meeting (including any adjournments
and postponements thereof) shall have been held and completed and this Agreement
shall not have been adopted by the required affirmative vote of the Bowlin
stockholders at such meeting; provided, however, that (i) a party shall not be
permitted to terminate this Agreement pursuant to this Section 7.1(e) if the
failure to obtain such stockholder approval is attributable to a failure on the
part of such party to perform any material obligation required to be performed
by it at or prior to the Effective Time, and (ii) Bowlin shall not be permitted
to terminate this Agreement pursuant to this Section 7.1(e) unless Bowlin shall
have made the payment(s) required to be made to Lamar pursuant to Section 7.3.
(6) Average Closing Share Price. By the Board of Directors of
Bowlin, if the Average Closing Share Price is below $40.00.
7.2 Effect of Termination. Upon termination of this Agreement pursuant
to this Article 7, this Agreement will be void and of no effect, other than the
obligation to pay the Termination Fee referred to in Section 7.3, if applicable,
and will result in no obligation of or liability to any party or their
respective directors, officers, employees, agents or stockholders, unless such
termination was the result of an intentional breach of any representation,
warranty or covenant in this Agreement in which case the party who breached the
representation, warranty or covenant will be liable to the other party for
damages.
7.3 Expenses; Termination Fees. Except as set forth in this Section 7.3
or Section 5.12, all fees and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses, whether or not the Merger is consummated;
provided, however, that if this Agreement is terminated by Bowlin or Lamar
pursuant to Section 7.1(e), then Bowlin shall pay to Lamar, in cash at the time
specified in the next sentence, a nonrefundable fee in the amount equal to
$580,000 (the "Termination Fee"). In the case of termination of this Agreement
by Bowlin pursuant to Section 7.1(e), the Termination Fee shall be paid by
Bowlin prior to the time of such termination; and in the case of termination of
this Agreement by Lamar pursuant to Section 7.1(e), the fee referred to in the
preceding sentence shall be paid by Bowlin within two business days after such
termination.
ARTICLE 8
DEFINED TERMS
8.1 Definitions. In addition to the other defined terms used in this
Agreement, the following terms when capitalized have the meanings indicated.
"Adverse Claim" has the meaning assigned thereto in Section 8.102(a) of
the Uniform Commercial Code.
"Advertising Contracts" means advertising contracts associated with the
Faces.
34
<PAGE> 112
"Advertising Revenues" means Bowlin's outdoor advertising space revenue
(net of discounts, rebates, tradeouts, commercial sales, paper sales, production
revenue, agency commissions and revenue attributable to the advertising faces
(i) damaged or in need of repair that are listed in Schedule 3.9(5), and (ii)
that will be contributed to Bowlin Travel in the Contribution Agreement) under
the Advertising Contracts.
"Affiliate" will have the meaning ascribed by Rule 12b-2 promulgated
under the Exchange Act.
"Agreement" means this Agreement and Plan of Merger, including the
exhibits and schedules, as amended or otherwise modified from time to time.
"Applicable Law" means any statute, law, rule or any judgment, order,
writ, injunction or decree of any Governmental Entity to which a specified
Person or its property is subject.
"Average Closing Share Price" means the average of the closing sales
prices of a share of Lamar Common Stock as reported on the Nasdaq National
Market System for the 30 trading days ending on the last trading day immediately
prior to the Closing Date.
"Benefit Arrangement" means any employment, severance or similar
contract, or any other contract, plan, policy or arrangement (whether or not
written) providing for compensation, bonus, profit-sharing, stock option or
other stock related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured arrangement),
health or medical benefits, disability benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension, health,
medical or life insurance benefits), other than the Employee Plans, that is
maintained, administered or contributed to by the employer and covers any
employee or former employee of any member of the Bowlin Group.
"Bowlin Audited Financial Statements" means the audited consolidated
balance sheets and related consolidated statements of income, retained earnings
and cash flow, and the related notes thereto of Bowlin for the years ended
January 31, 1998, 1999 and 2000.
"Bowlin Financial Statements" means the Bowlin Audited Financial
Statements and the Bowlin Interim Financial Statements.
"Bowlin Group" means, collectively, Bowlin and its subsidiaries (if
any).
"Bowlin Interim Financial Statements" means the unaudited balance
sheet, and the related unaudited statements of income, retained earnings and
cash flows of Bowlin for the six-month period ended July 31, 2000.
"Bowlin Latest Balance Sheet" means the latest balance sheet of Bowlin
included in the Bowlin Audited Financial Statements.
"Bowlin Long-Term Debt" means Bowlin's long-term debt (excluding
current portions thereof) and any payments on employment contracts and
non-competition agreements to which Bowlin (or a predecessor in interest of
Bowlin) is a party, including, without limitation, contingent severance
obligations.
35
<PAGE> 113
"Bowlin Special Meeting" means the special meeting of the Bowlin
stockholders for the purpose of approving this Agreement.
"Business Day" means any day (other than Saturday or Sunday) on which
commercial banks in Baton Rouge, Louisiana and Albuquerque, New Mexico are open
for business.
"Closing" means the consummation of the Merger and the other
transactions contemplated by this Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Employee Plan" means a plan or arrangement as defined in Section 3(3)
of ERISA, that (a) is subject to any provision of ERISA, (b) is maintained,
administered or contributed to by any member of the Bowlin Group and (c) covers
any employee or former employee of any member of the Bowlin Group.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
"GAAP" means accounting principles generally accepted in the United
States.
"Governmental Entity" means any court or tribunal of competent
jurisdiction in any jurisdiction or any public, governmental or regulatory body,
agency, department, commission, board, bureau or other authority or
instrumentality.
"Knowledge" means, when given to qualify or limit a representation or
warranty otherwise made by Bowlin or Lamar, respectively, the actual knowledge,
after reasonable inquiry, of the officers and directors of Bowlin or Lamar,
respectively.
"Lamar Audited Financial Statements" means the audited balance sheets
and related statements of income, retained earnings and cash flow, and the
related notes thereto of Lamar for the years ended December 31, 1997, 1998 and
1999.
"Lamar Financial Statements" means the Lamar Audited Financial
Statements and the Lamar Interim Financial Statements.
"Lamar Interim Financial Statements" means the unaudited balance sheet,
and the related unaudited statements of income, retained earnings and cash flows
of Lamar for the six-month period ended June 30, 2000.
36
<PAGE> 114
"Lamar Latest Balance Sheet" means the latest balance sheet of Lamar
included in the Lamar Audited Financial Statements.
"Leases" means any (i) ground lease or (ii) office, warehouse or
facility lease (in each of (i) and (ii), whether or not reduced to writing), to
which Bowlin (or any predecessor in interest of Bowlin) is subject.
"Lease Expense" means Bowlin's total lease expense for the real
property and structures upon which the Faces are located for the one-month
period ended December 31, 1999.
"Liens" means pledges, liens, defects, leases, licenses, equities,
conditional sales contracts, charges, claims, encumbrances, security interests,
easements, restrictions, chattel mortgages, mortgages or deeds of trust, of any
kind or nature whatsoever.
"Material Adverse Effect" means any change in, effect on, or
circumstance that, individually or in the aggregate, has had or would reasonably
be likely to have a material and adverse effect on the operations, business,
prospects, results of operations or financial condition of Lamar on a
consolidated basis or Bowlin.
"Material Contract" means any executory contract, agreement or other
understanding, whether or not reduced to writing, that is not cancellable within
30 days, to which Bowlin or its property is subject, which provides for future
payments to another Person by the relevant entity or entities of more than
$50,000 in the aggregate in any calendar year.
"Multiemployer Plan" means a plan or arrangement as defined in Section
4001(a)(3) and 3(37) of ERISA.
"Nasdaq" means the National Association of Securities Dealers Automated
Quotation System.
"Permitted Liens" means (i) Liens securing Bowlin's credit facility,
(ii) Liens for Taxes not yet due and payable, and (iii) mechanics liens and
similar Liens incurred in the ordinary course of business that will not, in any
case or in the aggregate, materially detract from the value of the assets
subject thereto or cause a Material Adverse Effect with respect to Bowlin.
"Person" means an individual, firm, corporation, general or limited
partnership, limited liability company, limited liability partnership, joint
venture, trust, governmental authority or body, association, unincorporated
organization or other entity.
"Pre-Closing Periods" means all Tax periods ending at or before the
Closing Date and, with respect to any Tax period that includes but does not end
at the Closing Date, the portion of such period that ends at and includes the
Closing Date.
"Proceedings" means any suit, action, proceeding, dispute or claim
before or investigation by any Governmental Entity.
"Proxy Statement/Prospectus" means (a) the proxy statement of Bowlin to
be included in the Registration Statement for the purpose of soliciting proxies
from the Bowlin stockholders to vote in favor
37
<PAGE> 115
of the adoption of this Agreement at the Bowlin Special Meeting, and (b) the
prospectus of Lamar to be used for the purpose of offering the Lamar Common
Stock to be issued to the Bowlin stockholders upon consummation of the Merger,
together with any accompanying letter to stockholders, notice of meeting and
form of proxy.
"Registration Statement" means the registration statement on Form S-4,
including the Proxy Statement/Prospectus, to be filed by Lamar with the SEC for
the purpose, among other things, of registering the Lamar Common Stock which
will be issued to the Bowlin stockholders upon consummation of the Merger.
"Returns" means all returns, reports, estimates, declarations and
statements of any nature relating to, or required to be filed in connection
with, any Taxes, including information returns or reports with respect to backup
withholding and other payments to third parties.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
"Spin-Off" means the series of transactions contemplated by Bowlin
whereby the assets and liabilities of Bowlin directly related to the operation
of Bowlin's travel centers will be contributed to Bowlin Travel, and, upon
completion and satisfaction of all approvals and other requirements from the SEC
and all other necessary parties, Bowlin would declare and distribute as a
dividend to the stockholders of Bowlin, shares of Bowlin Travel proportionate to
each stockholder's current holdings of common stock in Bowlin.
"Spin-Off Date" means the date the shares of Bowlin Travel are
distributed to the shareholders of Bowlin.
"Taxes" means any federal, state, local or other taxes (including,
without limitation, income, alternative minimum, franchise, property, sales,
use, lease, excise, premium, payroll, wage, employment or withholding taxes),
fees, duties, assessments, withholdings or governmental charges of any kind
whatsoever (including interest, penalties and additions to tax).
"Working Capital" means the consolidated or combined current assets of
the relevant entity less the consolidated or combined current liabilities of
Bowlin.
38
<PAGE> 116
ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices under this Agreement must be in writing and
will be deemed to have been given upon receipt of delivery by: (a) personal
delivery to the designated individual; (b) certified or registered mail, postage
prepaid, return receipt requested; (c) a nationally recognized overnight courier
service (against a receipt therefor); or (d) facsimile transmission with
confirmation of receipt. All such notices must be addressed as follows or to
such other address as to which any party hereto may have notified the other in
writing:
If to Lamar, to:
Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attn: James R. McIlwain
Facsimile transmission no.: (225) 926-1005
With a copy to:
Jones, Walker, Waechter, Poitevent Carrere & Denegre, L.L.P.
Fifth Floor, Four United Plaza
8555 United Plaza Boulevard
Baton Rouge, Louisiana 70809-7000
Attn: Brad J. Axelrod
Facsimile transmission no.: (225) 231-3336
If to Bowlin, to:
Bowlin Outdoor Advertising & Travel Centers Incorporated
150 Louisiana N.E.
Albuquerque, New Mexico 87108
Attn: Michael Bowlin
Facsimile transmission no.: (505) 266-1422
With a copy to:
Squire, Sanders & Dempsey L.L.P.
40 North Central Ave.,
Suite 2700
Phoenix, AZ 85044
Attn: Christopher D. Johnson
Facsimile transmission no.: (602) 253-8129
9.2 Headings; Gender. When a reference is made in this Agreement to a
section, exhibit or schedule, such reference will be to a section, exhibit or
schedule of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and will
not affect in any way the meaning or interpretation of this Agreement. All
personal pronouns used in this Agreement will include the other genders, whether
used in the masculine, feminine
39
<PAGE> 117
or neuter gender, and the singular will include the plural and vice versa,
whenever and as often as may be appropriate.
9.3 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the documents, exhibits and instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements, and
understandings and communications, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon any
person other than the parties to this Agreement any rights or remedies under
this Agreement.
9.4 Governing Law. This Agreement will be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable principles of conflicts of law.
9.5 Assignment. Neither this Agreement nor any of the rights, interests
or obligations under it will be assigned by any of the parties to this Agreement
(whether by operation of law or otherwise) without the prior written consent of
the other parties.
9.6 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by reason of any rule of law or
public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any adverse
manner to any party.
9.7 Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original and all of which taken
together will constitute one and the same document.
9.8 AMENDMENT. This Agreement may only be amended by an instrument in
writing signed by each of the parties to this Agreement.
9.9 Effect of Spin-Off on Certain Bowlin Representations and
Warranties. The parties acknowledge and agree that Bowlin has proposed, and
Lamar has accepted, that Bowlin will not be deemed to be in breach of this
Agreement by failing to disclose against the representations and warranties set
forth in Sections 3.11, 3.15, 3.17, 3.19, 3.20(a), 3.23(a) and 3.26 with respect
to any asset, liability, act, event or circumstance relating solely to (i)
Bowlin's travel center line of business prior to the Spin-Off, and (ii) Bowlin
Travel after the Spin-Off; provided, however, that to the extent that such
non-disclosure would cause a failure of the closing condition set forth in
Section 6.2(a), Lamar shall be entitled to assert such matter as a basis for not
closing the transactions contemplated herein.
40
<PAGE> 118
IN WITNESS WHEREOF, the parties to this Agreement have caused it to be
signed by their respective duly authorized officers as of the date first above
written.
LAMAR ADVERTISING COMPANY
By: /s/ Kevin P. Reilly, Jr.
--------------------------------------------
Name: Kevin P. Reilly, Jr.
Title: President, Chief Executive Officer
LAMAR SOUTHWEST ACQUISITION CORPORATION
By: /s/ Kevin P. Reilly, Jr.
--------------------------------------------
Name: Kevin P. Reilly, Jr.
Title: President, Chief Executive Officer
BOWLIN OUTDOOR ADVERTISING &
TRAVEL CENTERS INCORPORATED
By: /s/ Michael Bowlin
--------------------------------------------
Name: Michael Bowlin
Title: Chairman of the Board, Chief Executive
Officer and President
41
<PAGE> 119
EXHIBIT A
CONTRIBUTION AGREEMENT
See Annex B to this proxy statement/prospectus
<PAGE> 120
EXHIBIT B
ARTICLES OF MERGER
of
LAMAR SOUTHWEST ACQUISITION CORPORATION
(a Nevada corporation)
with and into
BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS INCORPORATED
(a Nevada corporation)
(Filed pursuant to Section 92A.200 of the Nevada Revised Statutes)
The undersigned corporation, acting pursuant to Section 92A.200 of the
Nevada Revised Statutes, hereby certifies as follows:
1. The name and jurisdiction of organization of each constituent
corporation are as follows:
Name Jurisdiction of Organization
Lamar Southwest Acquisition Corporation Nevada corporation
(the "Merging Corporation")
Bowlin Outdoor Advertising & Travel Centers, Incorporated Nevada corporation
(the "Surviving Corporation")
2. An Agreement and Plan of Merger dated October 3, 2000 by and among
Lamar Advertising Company, a Delaware corporation, and the Merging Corporation,
on the one hand, and the Surviving Corporation, on the other (the "Merger
Agreement"), providing for the merger of the Merging Corporation with and into
the Surviving Corporation (the "Merger"), has been adopted by the Merging
Corporation and the Surviving Corporation.
3. The Merger Agreement was approved by the written consent of the sole
stockholder of the Merging Corporation.
4. The Merger Agreement was submitted to a vote of the stockholders of
the Surviving Corporation pursuant to Chapter 92A of the Nevada Revised
Statutes. The stockholders of the Surviving Corporation approved the Merger
Agreement, with ____ votes cast, ____ of which were cast to approve the Merger
Agreement and _____ of which were cast against the Merger Agreement.
4. The Articles of Incorporation of the Surviving Corporation will be
amended and restated in the form attached to these Articles of Merger as Exhibit
"A" (the "Amended Articles"). The Amended Articles will change the name of the
Surviving Corporation to Lamar Southwest, Inc.
5. A copy of the Merger Agreement is on file at the principal place of
business of the Surviving Corporation at 5551 Corporate Boulevard, Baton Rouge,
Louisiana 70808.
<PAGE> 121
These Articles of Merger have been executed on this ____ day of
________, 2001 by the Surviving Corporation.
BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED
By:
----------------------------------------
Name:
Title:
2
<PAGE> 122
EXHIBIT C
FORM OF AFFILIATES' LETTER
[Date]
Mr. Keith Istre, Vice President and Chief Financial Officer
Lamar Advertising Company
5551 Corporate Blvd.
Baton Rouge, LA 70808
Dear Mr. Istre:
Pursuant to the Agreement and Plan of Merger dated October 3, 2000 (the
"Merger Agreement") by and among Lamar Advertising Company, a Delaware
corporation ("Lamar"), and Lamar Southwest Acquisition Corporation, a Nevada
corporation and a wholly owned subsidiary of Lamar ("NewCo"), on the one hand,
and Bowlin Outdoor Advertising & Travel Centers Incorporated, a Nevada
corporation ("Bowlin"), I will receive shares of Lamar's Class A Common Stock,
$.001 par value per share (the "Lamar Stock"). I am aware and acknowledge that
as a director or executive officer of Bowlin or the beneficial owner of 10% or
more of the outstanding common stock of Bowlin, I may be deemed an "affiliate"
of the Company as that term is defined in the Securities Act of 1933, as amended
(the "Securities Act"), and the regulations promulgated under the Securities
Act.
I understand that, as a result of my status as an affiliate of Bowlin,
I may not resell or otherwise dispose of the shares of Lamar Stock that I
acquire pursuant to the Merger Agreement (the "Acquired Shares") except in
compliance with Rule 145 promulgated under the Securities Act.
On the basis of the foregoing, and in consideration of the delivery to
me of the Acquired Shares, I agree that I will not, directly or indirectly,
offer, sell, transfer, pledge or otherwise alienate, encumber or dispose of any
of the Acquired Shares in violation of the Securities Act or the rules and
regulations promulgated under it.
Very truly yours,
<PAGE> 123
ANNEX B
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of
the 1st day of November, 2000 (the "Contribution Date") by and between BOWLIN
TRAVEL CENTERS, INC., a Nevada corporation (the "Company"), and BOWLIN OUTDOOR
ADVERTISING & TRAVEL CENTERS INCORPORATED, a Nevada corporation ("BOWLIN").
RECITALS
A. BOWLIN owns and operates both travel centers and outdoor advertising
displays in the Southwestern United States. Under its travel centers business
segment, BOWLIN owns or leases and operates fifteen full-service travel centers
located along interstate highways in Arizona and New Mexico, which offer brand
name food and gasoline and a variety of Southwestern merchandise to the
traveling public (the "Travel Centers Business").
B. The Company was formed by BOWLIN on August 8, 2000, as a Nevada
corporation and is a wholly owned subsidiary of BOWLIN.
C. BOWLIN wishes to contribute the Travel Centers Business to the
Company in exchange for which BOWLIN shall receive shares of common stock in the
Company subject to the terms and conditions of this Agreement.
D. BOWLIN and the Company intend to treat BOWLIN's contribution of the
Travel Centers Business to the Company as a transfer of assets in return for
control of the Company in accordance with Section 351 of the Internal Revenue
Code of 1986, as amended (the "Code").
E. BOWLIN is a party to an Agreement and Plan of Merger by and among
BOWLIN, Lamar Advertising Company ("Lamar"), and Lamar Southwest Acquisition
Corporation, dated as of October 3, 2000 (the "Merger Agreement"), pursuant to
which Lamar Southwest Acquisition Corporation will merge with and into BOWLIN
(the "Merger").
F. Immediately prior to consummation of the Merger, BOWLIN intends to
distribute its shares of the Company's common stock to BOWLIN's shareholders
(the "Spin-Off").
In consideration of the foregoing and the mutual representations,
warranties, covenants and agreements herein contained, BOWLIN and the Company
agree as follows:
All capitalized terms used herein shall have the meanings ascribed to
them in Appendix A hereto.
<PAGE> 124
SECTION 1
CONTRIBUTION OF ASSETS BY BOWLIN
1.1 CONTRIBUTION OF THE ASSETS.
(a) Subject to the terms and conditions of this Agreement, on the
Contribution Date, BOWLIN hereby assigns, transfers, and delivers to the
Company, as a contribution, and in an "as is, where is" condition, all of the
assets, properties, and business of every kind and description, wherever located
whether real, personal, or mixed, tangible or intangible, owned or held, that
are used primarily in the conduct of the Travel Centers Business by BOWLIN as
the same shall exist on the Contribution Date (collectively, the "Assets),
including without limitation, all assets and property shown on the Contributed
Business Balance Sheet, and all right, title, and interest of BOWLIN in, to, and
under:
(i) The real property listed and described in Schedule
1.1(a)(i) (the "Real Property");
(ii) The outdoor advertising faces and underlying structures
listed and described in Schedule 1.1(a)(ii) (the "Faces");
(iii) The machinery, equipment, furniture, vehicles, and other
tangible property, other than Inventory (including, without limitation,
maintenance and operating supplies, fuel, and spare parts for such machinery and
equipment), used primarily in connection with the Travel Centers Business and
listed and described in Schedule 1.1(a)(iii) (collectively, the "Equipment");
(iv) The raw materials, finished goods, work-in-process,
supplies, and inventories, used or usable primarily in connection with the
Travel Centers Business (collectively, the "Inventory");
(v) Those patents, copyrights, trademarks, trade names,
technology, know-how, processes, trade secrets, inventions, proprietary data,
formulae, research and development data, computer software programs, and other
intangible property, and any applications for the same, used primarily in the
Travel Centers Business (and the use of and any right in and to the name
"BOWLIN") and described in Schedule 1.1(a)(v) and all goodwill associated with
such intangible property (collectively, the "Intangible Property");
(vi) The leases of certain real property used or usable
primarily in connection with the Travel Centers Business described in Schedule
1.1(a)(vi), together with all fixtures, office equipment, furnishings,
furniture, and other tangible property located at such property and
(collectively, the "Leased Property");
(vii) All of BOWLIN's rights, claims, credits, causes of
action, or rights of setoff against third parties relating solely to the Assets
and the Travel Centers Business, including, without limitation, unliquidated
rights under manufacturers' and vendors' warranties (collectively, "Claims");
2
<PAGE> 125
(viii) Those contracts, agreements, leases, licenses, and
other instruments, arrangements and commitments being assumed by the Company
pursuant to Section 1.3 of this Agreement (collectively, "Rights");
(ix) All certificates of occupancy and other transferable
licenses, permits, registrations, authorizations, use agreements, orders, or
approvals of governmental or quasi-governmental agencies and authorities
(whether federal, state, local, municipal, or foreign) or private parties
relating solely to the construction, use, operation, or enjoyment of the Travel
Centers Business (collectively, "Permits");
(x) All accounts receivable arising out of sales in the
ordinary and usual course of the operation of the Travel Centers Business prior
to the close of business on the Contribution Date (collectively, "Receivables");
(xi) All transferable bonds or deposits made by BOWLIN or its
predecessors in title (or its agents) with any governmental agency or authority
or with any utility company or third party relating solely to the construction,
use, operation, or enjoyment of the Assets;
(xii) All prepaid rentals and other prepaid expenses for goods
or services arising from payments made by BOWLIN prior to the close of business
on the Contribution Date in the ordinary and usual course of the operation of
the Travel Centers Business and related solely to the Assets;
(xiii) Originals or copies of all books, records, files, and
papers, whether in hard copy or computer format, used in the Travel Centers
Business, including without limitation, engineering information, manuals and
data, sales and advertising materials, sales and purchase correspondence, lists
of present and former suppliers, and personnel and employment records and, with
respect to information relating to any Tax, only information that is necessary
for the preparation of Tax returns to be filed by the Company after the
Contribution Date or the determination of the tax basis of the Assets
(collectively, "Files and Records");
(xiv) All lists of present, and, to the extent available,
future customers of the Travel Center Business and goodwill associated with the
Assets; and
(xv) All cash and other monetary assets attributable solely to
the Travel Center Business and all bank accounts listed on Schedule 1.1(xv).
1.2 CONVEYANCE INSTRUMENTS. In order to effectuate the contribution of
the Assets and the assumption of the Assumed Liabilities by the Company, BOWLIN
and the Company have, or will hereafter, execute and deliver, or cause to be
executed and delivered, all such documents or instruments of assignment,
transfer, or conveyance, in each case dated as of the Contribution Date
(collectively, the "Conveyance Instruments"), necessary or appropriate to vest
in or confirm title to the Assets to the Company.
1.3 ASSUMED LIABILITIES. Subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties, covenants and
agreements of the parties contained
3
<PAGE> 126
herein, the Company hereby assumes and agrees to pay, perform, discharge and
fulfill the following liabilities and obligations (collectively, the "Assumed
Liabilities"):
(i) all of the liabilities and obligations set forth
on Schedule 1.3, and
(ii) any and all liabilities and obligations, whether
known or unknown, absolute or contingent, arising before, on
or after the Contribution Date and directly relating to (A)
any of the Assets or (B) any act, event or occurrence
involving the ownership or use of the Assets or the conduct of
the Travel Centers Business by either BOWLIN or the Company.
1.4 EXCLUDED LIABILITIES. Notwithstanding any provision of this
Agreement or any Conveyance Instrument to the contrary, the Company is assuming
only the Assumed Liabilities and is not assuming any other liability or
obligation of BOWLIN (or any predecessor owner of all or part of its business
and assets) of whatever nature whether presently in existence or arising
hereafter, and all such other liabilities and obligations shall be retained by
and remain liabilities of BOWLIN (all of such liabilities and obligations not
being assumed hereinafter referred to as the "Excluded Liabilities").
Section 2
EVENTS OCCURRING ON THE CONTRIBUTION DATE
2.1 DELIVERIES BY BOWLIN AND THE COMPANY. Contemporaneously with the
execution hereof, and subject to Section 4.1(a), each of BOWLIN and the Company
has duly executed and delivered to the other the following:
(a) The Conveyance Instruments to effect the contribution of the
Assets to the Company and the assumption of the Assumed Liabilities by the
Company;
(b) A copy of the resolutions of its Board of Directors,
certified by its Secretary, authorizing or ratifying its execution and delivery
of this Agreement, and the consummation of the transactions contemplated hereby
and thereby;
(c) A copy of its Articles of Incorporation certified as of a
date within five (5) days of the Contribution Date by the Secretary of State (or
equivalent official) of Nevada;
(d) A certificate from the Secretary of State (or equivalent
official) of Nevada as to its good standing in Nevada certified as of a date
within five (5) days of the Contribution Date; and
(e) The executed counterpart copies of all consents, approvals,
authorizations, and Permits, if any, from third parties referred to in Section
4.1(a) hereof.
2.2 EFFECT OF CONTRIBUTIONS. In exchange for the transfer of the Assets
to, and assumption of the Assumed Liabilities by, the Company, BOWLIN shall
receive
4
<PAGE> 127
_________shares of the common stock of the Company (equal to the total number of
outstanding shares of common stock of Bowlin, on the Contribution Date).
SECTION 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF BOWLIN
(a) ORGANIZATION. BOWLIN is a corporation which is duly
organized, validly existing, and in good standing under the laws of Nevada, with
the corporate power and authority to own, lease, and operate its properties and
to carry on its business as now being conducted. The copies of the Articles of
Incorporation and all amendments thereto of BOWLIN, as certified by the
Secretary of State (or equivalent official) of Nevada, and the Bylaws, as
amended to date, of BOWLIN, as certified by its Secretary and delivered to the
Company, are true, complete, and correct copies of the Articles of Incorporation
and Bylaws, as amended and presently in effect, of BOWLIN.
(b) AUTHORITY. BOWLIN has the corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by BOWLIN of this Agreement, and
the consummation of the transactions contemplated hereby, have been duly
authorized by the Board of Directors of BOWLIN; no other corporate proceedings
on the part of BOWLIN or any other person or entity, whether pursuant to the
Articles of Incorporation or Bylaws of BOWLIN or by law or otherwise, are
necessary to authorize BOWLIN to enter into this Agreement or to consummate the
transactions contemplated hereby; and this Agreement is the legal, valid, and
binding obligation of BOWLIN.
(c) NO VIOLATIONS. Neither the execution nor the delivery of this
Agreement nor the consummation of the transactions contemplated hereby:
(i) Requires any filing or registration with, or consent,
authorization, approval, or permit of, any governmental or regulatory authority
on the part of BOWLIN;
(ii) Violates or will violate (A) any order, writ, injunction,
judgment, decree, or award of any court or governmental or regulatory authority,
or (B) to the knowledge of BOWLIN, violates or will violate any law of any
governmental or regulatory authority to which BOWLIN or any of its properties or
assets are subject;
(iii) Violates or will violate, or conflicts with or will
conflict with, any provision of, or constitutes a default under, the Articles of
Incorporation or Bylaws of BOWLIN; or
(iv) Except as set forth on Schedule 3.1(c), violates or
breaches or constitutes a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or give rise to a right to
terminate, any mortgage, contract, agreement, deed of trust, license, lease, or
other instrument, arrangement, commitment, obligation, understanding, or
5
<PAGE> 128
restriction of any kind to which BOWLIN is a party or by which its properties
may be bound, or (ii) will cause, or give any person grounds to cause, to be
accelerated (with notice or lapse of time or both) the maturity of, or will
increase, any liability or obligation of BOWLIN which violation, breach,
default, liability, or obligation, individually or in the aggregate, is or would
be material to the business or financial condition of BOWLIN or the Travel
Centers Business taken as a whole.
3.2 REPRESENTATION AND WARRANTIES OF THE COMPANY
(a) ORGANIZATION. The Company is a corporation which is duly organized,
validly existing, and in good standing under the laws of Nevada, with the
corporate power and authority to own, lease, and operate its properties and to
carry on its business as now being conducted. The copies of the Articles of
Incorporation and all amendments thereto of the Company, as certified by the
Secretary of State (or equivalent official) of Nevada, and the Bylaws, as
amended to date, of the Company, as certified by its Secretary and delivered to
the Company, are true, complete, and correct copies of the Articles of
Incorporation and Bylaws, as amended and presently in effect, of the Company.
(b) AUTHORITY. The Company has the corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this
Agreement, and the consummation of the transactions contemplated hereby, have
been duly authorized by the Board of Directors of the Company; no other
corporate proceedings on the part of the Company or any other person or entity,
whether pursuant to the Articles of Incorporation or Bylaws of the Company or by
law or otherwise, are necessary to authorize the Company to enter into this
Agreement or to consummate the transactions contemplated hereby; and this
Agreement is the legal, valid, and binding obligation of the Company.
(c) NO VIOLATIONS. Neither the execution nor the delivery of this
Agreement nor the consummation of the transactions contemplated hereby:
(i) Requires any filing or registration with, or consent,
authorization, approval, or permit of, any governmental or regulatory authority
on the part of the Company;
(ii) Violates or will violate (A) any order, writ, injunction,
judgment, decree, or award of any court or governmental or regulatory authority,
or (B) to the knowledge of the Company, violates or will violate any law of any
governmental or regulatory authority to which the Company or any of its
properties or assets are subject;
(iii) Violates or will violate, or conflicts with or will
conflict with, any provision of, or constitutes a default under, the Articles of
Incorporation or Bylaws of the Company; or
(iv) Except as set forth on Schedule 3.2(c), violates or
breaches or constitutes a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or give rise to a right to
terminate, any mortgage, contract, agreement, deed of trust, license, lease, or
other instrument, arrangement, commitment, obligation, understanding, or
6
<PAGE> 129
restriction of any kind to which the Company is a party or by which its
properties may be bound, or (ii) will cause, or give any person grounds to
cause, to be accelerated (with notice or lapse of time or both) the maturity of,
or will increase, any liability or obligation of the Company which violation,
breach, default, liability, or obligation, individually or in the aggregate, is
or would be material to the business or financial condition of the Company or
the Travel Centers Business taken as a whole.
SECTION 4
COVENANTS OF THE PARTIES
4.1 CONSENTS, PERMITS, ETC.
(a) BOWLIN (i) has maintained in full force and effect and
renewed, when required, all Permits, and (ii) has obtained, or will obtain at
the earliest practicable date hereafter, all consents, approvals, governmental
filings, authorizations, and Permits necessary for (A) the consummation of the
transactions contemplated by this Agreement, and (B) the continued conduct of
the Travel Centers Business by the Company after the Contribution Date as it is
presently conducted by BOWLIN, and delivers herewith, or will deliver when
obtained hereafter, to the Company copies of each such consent, approval,
governmental filing, authorization, and Permit.
(b) To the extent that any of the contracts, leases, agreements,
Permits, plans, commitments, purchase orders, or other binding arrangements
relating to the Assets cannot be assumed by or assigned to the Company without
the consent of another party, and such consent has not been obtained as of the
Contribution Date, each of the parties hereto agrees to cooperate with the other
to obtain such consents. BOWLIN will promptly pay to the Company when received
all monies received by BOWLIN under any such agreements.
4.2 EMPLOYEE MATTERS.
(a) Schedule 4.2 sets forth a list of the name, title, current
annual compensation rate (including bonus and commissions) of each employee
engaged primarily in the operation of the Bowlin Travel Centers Business (the
"Travel Centers Business Employees") as well as any employment, consulting,
employee confidentiality or similar agreements of each Travel Centers Business
Employee.
(b) The Company shall offer employment with the Company to each
of the Travel Centers Business Employees on the same terms and conditions of
employment as they currently enjoy under Bowlin. All such Travel Centers
Business Employees who are offered employment by the Company and who accept such
employment shall be collectively referred to as the "Transferred Employees."
(c) Except as specifically provided for in this Agreement, the
Company covenants and agrees to assume all responsibility and liability with
respect to the accrued benefits (including any claims with respect to any
medical benefits that were incurred but not reported prior to the Contribution
Date) of the Travel Centers Business Employees (including any beneficiary or
dependent thereof) under BOWLIN employee welfare benefit plans, employee
7
<PAGE> 130
pension benefit plans, and employee fringe benefit arrangements and any other
liabilities or obligations relating to BOWLIN employee benefits or compensation
(including accrued vacation and sick pay, if any), for periods ending on or
prior to the Contribution Date.
(d) On the Contribution Date, BOWLIN and the Company will enter into an
amendment (the "401(k) Amendment") to BOWLIN's 401(k) Plan (the "Plan") whereby
the Company will (i) expressly assume the obligation to maintain the Plan as
successor employer, (ii) after the closing of the Merger, cause the assets held
in the Plan accounts of employees who remain employed by BOWLIN to be
transferred from the Plan to The Lamar Savings and Profit Sharing Plan Trust,
(iii) report the transfer of Plan assets to any employees and regulatory
authorities as required by Applicable Law. The Company will execute any and all
documents as needed for the 401(k) Amendment to comply with IRS requirements and
will provide BOWLIN with copies of any IRS filings. The Company will provide a
list of all participating employees to BOWLIN at Closing.
SECTION 5
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
5.1 SURVIVAL. The representations, and warranties of BOWLIN contained
herein or in any certificate or other writing delivered pursuant hereto or in
connection herewith will not survive the Closing. The representations,
warranties and covenants of the Company contained herein and the obligations of
the Company arising under this Section 5, will survive indefinitely.
5.2 INDEMNIFICATION BY THE COMPANY. (a) The Company and its successors
and assigns, jointly and severally, hereby agree to indemnify and hold harmless
BOWLIN, and upon consummation of the Merger, Lamar, and each of BOWLIN's and
Lamar's directors, officers, shareholders, employees, Affiliates, successors and
assigns (each a "BOWLIN Indemnitee") and will reimburse the Bowlin Indemnitees
for, from and against:
(a) any and all losses, liabilities, claims, demands, penalties,
fines, settlements, damages, or expenses (including, without limitation,
interest, penalties, costs of preparation and investigation, and the reasonable
fees, disbursements and expenses of attorneys, accountants and professional
advisors) (collectively, "Losses") incurred by any of the Bowlin Indemnitees:
(i) arising under federal, state or local environmental laws
and arising out of or in connection with the Travel Center Business or the
ownership or operation of any of the Assets or Assumed Liabilities;
(ii) resulting from any labor or employment dispute arising
out of or in connection with the operation of the Travel Center Business or
otherwise involving a Travel Centers Business Employee; and
(iii) any attempt (whether or not successful) by any Person to
cause or require Bowlin to discharge or pay any Assumed Liability, or otherwise
arising out of or relating to any Assumed Liability.
8
<PAGE> 131
(b) any and all tax liabilities for which the Company provides
indemnification to BOWLIN as set forth in the Tax Agreement between the Company
and BOWLIN, dated as of the date of this Agreement and attached hereto as
Exhibit A.
5.3 CONTROL OF LITIGATION.
(a) The BOWLIN Indemnitees agree to give prompt notice to the
Company of the assertion of any third party claim, or the commencement of any
third party suit, action, or proceeding in respect of which indemnity may be
sought under Section 5.2 of this Agreement and of any Loss which any such
Indemnitee deems to be reimbursable under Section 5.2 of this Agreement
(specifying with reasonable particularity the basis therefore) and will give the
Company such information with respect thereto as the Company may reasonably
request; provided, however, that the failure to give such notice by the
Indemnitee shall not abrogate Indemnitee's rights hereunder unless such failure
materially impairs the rights or ability of the Company to defend the suit,
action or proceeding or to otherwise provide indemnification to the Indemnitee.
The Company may, at its own expense, participate in and, upon notice to such
Indemnitee, assume the defense of any such suit, action or proceeding, provided
that the Company's counsel is reasonably satisfactory to such Indemnitee. The
Company shall thereafter consult with such Indemnitee upon such Indemnitee's
reasonable request for such consultation from time to time with respect to such
suit, action, or proceeding, and the Company shall not, without such
Indemnitee's consent, which consent shall not be unreasonably withheld, settle
or compromise any such suit, action or claim. If the Company assumes such
defense, such Indemnitees shall have the right (but not the duty) to participate
in the defense thereof and to employ counsel, at their own expense, separate
from the counsel employed by the Company. In the event that the Company, within
ten days after the notice of any such action or claim, does not assume the
defense thereof, the Indemnitee will have the right to undertake the defense,
compromise or settlement of any action, claim or proceeding for the account of
the Company. For any period during which the Company has not assumed the defense
thereof, the Company shall be liable for the fees and expenses of counsel
employed by any Indemnitee. If the Indemnitees conduct the defense thereof, the
Indemnitees shall consult with the Company upon the Company's reasonable request
for such consultation with respect to such suit, action or proceeding and the
Indemnitees shall not, without the Company's consent, which consent shall not be
unreasonably withheld, settle or compromise any such suit, action or claim.
Whether or not the Company chooses to defend or prosecute any claim, all of the
parties hereto shall cooperate in the defense or prosecution thereof.
(b) The Company shall not be liable under Section 5.2 hereof with
respect to any Loss resulting from a claim or demand the defense of which the
Company was not offered the opportunity to assume to the extent the Company's
liability under Section 5.2 hereof is materially prejudiced as a result thereof.
No investigation by any BOWLIN Indemnitee or BOWLIN Indemnitee Affiliate prior
to the Contribution Date shall relieve the Company of any liability hereunder.
5.4 TRANSFER TAXES. The Company shall pay, or cause to be paid, all
Taxes or recording fees imposed on any transfers by BOWLIN of real property and
tangible and
9
<PAGE> 132
intangible personal property, including without limitation Intellectual
Property, applicable to the transfers of the Assets contemplated by this
Agreement and all sales and use Taxes applicable to transfers by BOWLIN of the
Assets contemplated by this Agreement.
SECTION 6
ARBITRATION
If any dispute arises out of this Agreement, the Company and BOWLIN
shall, upon the request of either party, attend a meeting in Baton Rouge,
Louisiana (or, if the Merger has not been consummated, in Albuquerque, New
Mexico) to attempt a resolution of the dispute. If the Company and BOWLIN fail
to resolve all differences at the end of the meeting, they will jointly request
the American Arbitration Association to appoint an arbitrator in Baton Rouge,
Louisiana (or, if the Merger has not been consummated, in Albuquerque, New
Mexico) to settle the dispute in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect. If either party
fails to join in making a joint request for arbitration, then the other party
may make the request unilaterally after giving ten days notice to the party
refusing to join in the request for arbitration. The award rendered by the
arbitrator(s) shall be final and judgment upon the award rendered by the
arbitrator(s) may be entered upon it in any court having jurisdiction thereof.
The arbitrator(s) shall possess the powers to issue mandatory orders and
restraining orders in connection with such arbitration. The expenses of the
arbitration shall be borne by the losing party unless otherwise allocated by the
arbitrator(s); provided, however, that if the dispute is resolved by agreement
of the Company and BOWLIN following the designation of an arbitrator, the
Company and BOWLIN each will pay one-half of any costs and expenses of the
arbitrator already designated. The agreement to arbitrate shall be specifically
enforceable under the prevailing arbitration law. During the continuance of any
arbitration proceedings, the parties shall continue to perform their respective
obligations under this Agreement.
SECTION 7
MISCELLANEOUS PROVISIONS
7.1 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified
or supplemented only by written agreement of the parties hereto.
7.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party to comply
with any obligation, covenant, agreement or condition herein may be waived by
the other party; provided, however, that any such waiver may be made only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requests or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 7.2, with appropriate notice in
accordance with Section 7.7 of this Agreement.
7.3 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Any party may assign any of its
rights hereunder but only with the consent of the other
10
<PAGE> 133
party hereto, which consent shall not be unreasonably withheld, but no such
assignment shall relieve it of its obligations hereunder. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any person other than the parties, any successors and permitted assigns,
any rights, remedy, or claim under or by reason of this Agreement or any
provisions herein contained.
7.4 FURTHER ASSURANCES. From time to time, at the request of BOWLIN or
the Company and without further consideration, each party, at its own expense,
will execute and deliver such other documents, and take such other action, as
BOWLIN or the Company may reasonably request in order to consummate more
effectively the transactions contemplated hereby. BOWLIN hereby constitutes and
appoints, effective as of the Contribution Date, the Company and its successors
and permitted assigns as the true and lawful attorney of BOWLIN with full power
of substitution in the name of the Company or in the name of BOWLIN, but for the
benefit of the Company, to collect for the account of the Company any items of
Assets and to institute and prosecute all proceedings which the Company may in
its reasonable discretion deem proper in order to assert or enforce any right,
title or interest in, to or under the Assets, and to defend or compromise any
and all actions, suits, or proceedings in respect of the Assets. The Company
shall be entitled to retain for its own account any amounts collected pursuant
to the foregoing powers, including any amounts payable as interest in respect
thereof. The Company shall, in each instance, give notice to BOWLIN of its
exercise of the power of attorney granted to it under this Section 7.4.
7.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of New Mexico (without regard to its
conflicts of law doctrines).
7.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
Agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
7.7 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed by registered or certified mail (return receipt requested) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
Prior to the Merger
If to BOWLIN: BOWLIN Outdoor Advertising & Travel Centers,
Incorporated
150 Louisiana NE
Albuquerque, NM 87108
Attention: President
with a copy to: Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attention: Christopher Johnson
11
<PAGE> 134
After the Merger
If to BOWLIN Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attn: James R. McIlwain
Facsimile transmission no.: (225) 926-1005
With a copy to: Jones, Walker, Waechter, Poitevent Carrere
& Denegre, L.L.P.
Fifth Floor, Four United Plaza
8555 United Plaza Boulevard
Baton Rouge, Louisiana 70809-7000
Attn: Brad J. Axelrod
If to the Company: Bowlin Travel Centers, Inc.
150 Louisiana NE
Albuquerque, NM 87108
Attention: President
with a copy to: Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attention: Christopher Johnson
7.8 SPECIFIC PERFORMANCE. Each of the parties acknowledge that money
damages would not be a sufficient remedy for any breach of this Agreement and
that irreparable harm would result if this Agreement were not specifically
enforced. Therefore, the rights and obligations of the parties under this
Agreement shall be enforceable by a decree of specific performance issued by any
court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. A party's right to specific
performance shall be in addition to all other legal or equitable remedies
available to such party.
7.9 HEADINGS. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
7.10 ENTIRE AGREEMENT. This Agreement, the Tax Agreement, and the
exhibits, schedules and other documents and instruments referred to herein and
therein, embody the entire agreement and understanding of the parties hereto in
respect of the subject matter contained
12
<PAGE> 135
herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
7.11 SEVERABILITY. If any one or more provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.
7.12 EXHIBITS. All Exhibits and Schedules attached hereto are hereby
incorporated in and made a part as if set forth in full herein.
[Remainder of page intentionally left blank]
13
<PAGE> 136
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BOWLIN OUTDOOR ADVERTISING & TRAVEL
CENTERS, INCORPORATED, a Nevada
corporation
/s/ MICHAEL L. BOWLIN
--------------------------------------------
By: Michael L. Bowlin
Title: President and Chief Executive Officer
BOWLIN TRAVEL CENTERS, INC., a Nevada
corporation
/s/ MICHAEL L. BOWLIN
--------------------------------------------
By: Michael L. Bowlin
Its: President and Chief Executive Officer
14
<PAGE> 137
APPENDIX A
DEFINITIONS
For the purpose of this Agreement, the following terms have the
following meanings:
"Affiliate" means, with respect to any person, any person directly or
indirectly controlling, controlled by, or under common control with such other
person .
"Assets" has the meaning ascribed to it in Section 1.1(a) of the
Agreement.
"Assumed Liabilities" has the meaning ascribed to it in Section 1.3 of
the Agreement.
"Claims" means all rights, claims, credits, causes of action, or rights
of setoff against third parties relating solely to the Assets, including,
without limitation, unliquidated rights under manufacturers' and vendors'
warranties and the Travel Centers Business.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contribution Date" means the date on which BOWLIN contributes the
Assets to the Company and the Company assumes the Assumed Liabilities under the
Agreement.
"Contributed Business Balance Sheet" means the balance sheet of BOWLIN,
setting forth the assets, liabilities and shareholder's equity of the Travel
Centers Business, dated as of the Contribution Date.
"Conveyance Instruments" means all documents or instruments of
assignment, transfer, or conveyance, in each case dated as of the Contribution
Date as the parties and their respective counsel shall reasonably deem necessary
or appropriate to vest in or confirm title to the Assets to the Company.
"Equipment" means the machinery, equipment, furniture, vehicles, and
other tangible property (including, without limitation, maintenance and
operating supplies, fuel, and spare parts for such machinery and equipment) used
in connection with the Travel Centers Business.
"Excluded Liabilities" means all liabilities and obligations of BOWLIN
(or any predecessor owner of all or part of its business and assets) of whatever
nature whether presently in existence or arising after the Contribution date,
that are not Assumed Liabilities.
"Faces" means the outdoor advertising faces and underlying structures
owned or leased by BOWLIN on the Contribution Date and used solely in the Travel
Centers Business.
"Files and Records" means originals or copies of all books, records,
files, and papers, whether in hard copy or computer format, used in the Travel
Centers Business, including without
A-1
<PAGE> 138
limitation, engineering information, manuals and data, sales and advertising
materials, sales and purchase correspondence, lists of present and former
suppliers, and personnel and employment records and, with respect to information
relating to any Tax, only information that is necessary for the preparation of
Tax returns to be filed by the Company after the Contribution Date or the
determination of the tax basis of the Assets.
"Indemnitor" means the Company, as obligated pursuant to Section 5.2.
"Intangible Property" means those patents, copyrights, trademarks,
trade names, technology, know-how, processes, trade secrets, inventions,
proprietary data, formulae, research and development data, computer software
programs, and other intangible property, and any applications for the same, used
primarily in the Travel Centers Business (including use of and any right in and
to the name "BOWLIN") and all goodwill associated with such intangible property.
"Inventory" means the raw materials, finished goods, work-in-process,
supplies, and inventories, with respect to the Travel Centers Business.
"Leased Property" means real property leased by BOWLIN and used
primarily in the Travel Centers Business, together with all fixtures, office
equipment, furnishings, furniture, and other tangible property located at such
property.
"Leases" means all leases for the Leased Properties.
"Merger Agreement" means the Agreement and Plan of Merger by and among
BOWLIN, Lamar Advertising Company, and Lamar Southwest Acquisition Corporation,
dated as of October 3, 2000.
"Permits" means all certificates of occupancy and other transferable
licenses, permits, registrations, authorizations, use agreements, orders, or
approvals of governmental or quasi-governmental agencies and authorities
(whether federal, state, local, municipal, or foreign) or private parties
relating solely to the construction, use, operation, or enjoyment of the Travel
Centers Business.
"Person" or "person" means an individual, firm, corporation, general or
limited partnership, limited liability company, limited liability partnership,
joint venture, trust, governmental authority or body, association,
unincorporated organization or other entity.
"Real Property" means the 15 travel centers owned by BOWLIN and the
real property listed and described in Schedule 1.1(a)(i)
"Receivables" means all accounts receivable arising out of sales in the
ordinary and usual course of the operation of the Travel Centers Business prior
to the close of business on the Contribution Date.
A-2
<PAGE> 139
"Rights" means those contracts, agreements, leases, licenses, and other
instruments, arrangements and commitments being assumed by the Company with
respect to the Assets pursuant to Section 1.3 of this Agreement.
"Spin-Off" means the distribution by BOWLIN of its shares of the
Company's common stock to the shareholders of BOWLIN.
"Tax" means (i) any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, franchise, capital,
paid-up capital, profits, greenmail, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty, or other tax, governmental fee, or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax, or additional amount imposed by any governmental
authority responsible for the imposition of any such tax (domestic or foreign),
and (ii) liability for the payment of any amounts of the type described in (i)
as a result of any express obligations to indemnify any other person.
"Tax Return" i.e. means any return, declaration, report, claim for
refund, or information return or statement relating to any Tax, including any
schedule or attachment thereto, and including any amendment thereof.
"Travel Centers Business Employees" means each employee engaged
primarily in the operation of the Bowlin Travel Centers Business and set forth
on Schedule 4.2.
"Transferred Employees" means all Travel Centers Business Employees who
are offered employment by the Company and who accept such employment.
A-3
<PAGE> 140
SCHEDULE 1.1(a)(i) REAL PROPERTY
1. See attached (including location of travel centers)
SCHEDULE 1.1(a)(ii) FACES
1. See attached.
SCHEDULE 1.1(a)(iii) EQUIPMENT
1. See attached.
SCHEDULE 1.1(a)(v) INTANGIBLE PROPERTY
1. The trademarks and trade name "The Thing", "Trails West" and "Bowlin's
Running Indian", as well as the trademarks Dairy Queen, Dairy Queen/Brazier,
Stuckey's, CITGO and EXXON, which are owned by third parties and licensed to
BOWLIN, and any and all rights in and to, and use of, the name "BOWLIN".
SCHEDULE 1.1(a)(vi) LEASED PROPERTY
SCHEDULE 1.3 ASSUMED LIABILITIES
1. All liabilities represented by, or set forth on Contributed Business Balance
Sheet.
2. Pursuant to Section 5.12 of the Merger Agreement, if the Merger is
consummated, Lamar will pay or will cause the Surviving Corporation (as defined
in the Merger Agreement) to pay, up to $1,250,000 of BOWLIN's aggregate costs
and expenses associated with the consummation of the Merger and the other
transactions contemplated by the Merger Agreement, including financial advisory
fees, a fairness opinion, legal fees and accounting fees (the "Closing Costs").
The Company expressly assumes the obligation under the Merger Agreement to pay
any Closing Costs in excess of $1,250,000.
3. All liabilities and obligations arising under or in connection with any of
the following agreements:
<PAGE> 141
o Management Services Agreement, between Bowlin Outdoor Advertising and
Travel Centers Incorporated and Bowlin Travel Centers, Inc. dated
August 1, 2000.
o Distributor Franchise Agreement, dated as of July 19, 1995, between
Bowlin Outdoor Advertising and Travel Centers Incorporated and CITGO
Petroleum Corporation.
o Distributor Sales Agreement, dated as of April 1, 1999, between Bowlin
Outdoor Advertising and Travel Centers Incorporated and Exxon Company,
U.S.A. (a division of Exxon Corporation).
o Lease, dated as of January 12, 1987, between Janet Prince and Bowlin
Outdoor Advertising and Travel Centers Incorporated.
o Commercial Lease, dated as of September 21, 1996, between the State of
Arizona and Bowlin Outdoor Advertising and Travel Centers Incorporated,
as amended.
o Commercial Lease, dated as of March 16, 2000, between the New Mexico
Commissioner of Public Lands and Bowlin Outdoor Advertising and Travel
Centers Incorporated, as amended.
o Lease Agreement, dated as of June 23, 1989, between Bowlin Outdoor
Advertising and Travel Centers Incorporated and Rex Kipp, Jr., as
amended.
o Lease, dated as of September 29, 1983, between J.T. and Ida M. Turner
and Bowlin Outdoor Advertising and Travel Centers Incorporated.
o Business Lease, dated as of October 1, 1996, between Bowlin Outdoor
Advertising and Travel Centers Incorporated and the New Mexico
Commission of Public Lands.
o Commercial Lease, dated as of September 21, 1996, between Bowlin
Outdoor Advertising and Travel Centers Incorporated and the State of
Arizona, as amended.
o Profit-Sharing 401(k) Plan and Trust.
o "Dairy Queen" Operating Agreement, dated as of March 10, 1983, between
Interstate Dairy Queen Corporation and Bowlin Outdoor Advertising and
Travel Centers Incorporated d/b/a DQ/B of Edgewood, NM, together with
amendments and ancillary agreements related thereto.
o "Dairy Queen" Operating Agreement, dated as of May 1, 1982, between
Interstate Dairy Queen Corporation and Bowlin Outdoor Advertising and
Travel Centers Incorporated d/b/a DQ/B of Flying C, New Mexico,
together with amendments and ancillary agreements related thereto.
o "Dairy Queen" Store Operating Agreement, dated as of November 18, 1986,
between Dairy Queen of Southern Arizona, Inc. and Bowlin Outdoor
Advertising and Travel Centers Incorporated , together with amendments
and ancillary agreements related thereto.
o "Dairy Queen" Operating Agreement, dated as of September 1, 1982,
between Interstate Dairy Queen Corporation and Bowlin Outdoor
Advertising and Travel Centers Incorporated d/b/a DQ of Bluewater, New
Mexico, together with amendments and ancillary agreements related
thereto.
o "Dairy Queen" Store Operating Agreement, dated as of February 1, 1984,
between Dairy Queen of Arizona, Inc. and Bowlin Outdoor Advertising and
Travel Centers Incorporated , together with amendments and ancillary
agreements related thereto.
o "Dairy Queen" Operating Agreement, dated as of October 30, 1985,
between Interstate Dairy Queen Corporation and Bowlin Outdoor
Advertising and Travel Centers Incorporated , as amended.
<PAGE> 142
o "Dairy Queen" Operating Agreement, dated as of June 7, 1989, between
Interstate Dairy Queen Corporation and Bowlin Outdoor Advertising and
Travel Centers Incorporated d/b/a "DQ" at Butterfield Station, together
with amendments and ancillary agreements related thereto.
o Letter of Agreement, dated as of March 1, 1987, between Stuckey's
Corporation and Bowlin Outdoor Advertising and Travel Centers
Incorporated confirming franchise of Benson, AZ Stuckey's Pecan Shoppe.
o Franchise Agreement, dated as of February 22, 1982, between Stuckey's,
Inc. and Bowlin Outdoor Advertising and Travel Centers Incorporated ,
together with a related Personal Guaranty and Indemnity.
o Credit Agreement with First Security Bank, dated as of November ___,
2000 granting Bowlin Travel Centers, Inc. funds available in the
aggregate amount of $_________.
o Lease Agreement between Bowlin Travel Centers, Inc. and Bowlin Outdoor
Advertising and Travel Centers Incorporated , dated August 1, 2000.
o Tax Agreement, dated as of November 1, 2000, between the Company and
Bowlin.
o Confidentiality Agreement, dated as of September 6, 2000, between
Bowlin and Lamar Advertising Company.
4. All liabilities and obligations arising with respect to benefits under, or
the operation and maintenance of, (i) the Bowlin Outdoor Advertising and Travel
Center Incorporated 401(k) Profit Sharing Plan, (ii) any successor plan thereto,
and (iii) any other employee pension plan or welfare benefit plan, maintained by
Bowlin or the Company in each case for any period prior to the consummation of
the Merger, including without limitation, liabilities and obligations involving
deficiencies in reporting for IRS or Department of Labor purposes, tax
penalties, and attorney or use fees associated with the use of the IRS voluntary
compliance program.
5. Severance obligations under any agreement, whether written or oral, between
Bowlin and the Company on the one hand, and any employee of Bowlin or the
Company on the other hand, entered into or executed prior to the consummation of
the Merger.
SCHEDULE 3.1(c) NO VIOLATIONS
SCHEDULE 4.2 EMPLOYEE MATTERS
<PAGE> 143
EXHIBIT A
TAX SHARING AND DISAFFILIATION AGREEMENT
TAX SHARING AND DISAFFILIATION AGREEMENT dated as of November 1, 2000,
by and between BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS, INC., a Nevada
corporation ("Bowlin"), and BOWLIN TRAVEL CENTERS, INC., a Nevada corporation
("Travel Centers").
RECITALS
A. Pursuant to the Contribution Agreement dated as of the date hereof,
by and between Bowlin and Travel Centers (the "Contribution Agreement"), Bowlin
has contributed to Travel Centers the assets used in the Travel Centers Business
and Travel Centers has assumed the Assumed Liabilities (as more fully described
in the Contribution Agreement, the "Contribution"), and Bowlin plans to
distribute to the holders of Bowlin Common Stock all of the outstanding shares
of Travel Centers Common Stock owned by Bowlin (the "Distribution").
B. Bowlin and Travel Centers intend that the Contribution will qualify
as a transfer to a controlled corporation within the meaning of Section 351 of
the Code and/or a reorganization within the meaning of Section 368(a)(1)(D) of
the Code, and the Distribution will qualify as a distribution described in
Section 355 of the Code and will not result in the recognition of any taxable
gain or income to any shareholder of Bowlin.
C. Prior to the Distribution Date, Travel Centers will be a member of
the Bowlin Affiliated Group and after the Distribution Date Travel Centers will
cease to be a member of the Bowlin Affiliated Group for federal income tax
purposes.
D. Travel Centers and Bowlin desire on behalf of themselves and their
successors to set forth their rights and obligations with respect to Taxes due
for periods before, on and after the Distribution Date.
E. Capitalized terms used but not defined herein have the meanings set
forth in the Contribution Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.01 FOR THE PURPOSES OF THIS AGREEMENT:
"ACQUIRER" shall have the meaning set forth in Section 2.01(f)
of this Agreement.
"ACQUISITION" shall have the meaning set forth in Section
2.01(f) of this Agreement.
<PAGE> 144
"AGREEMENT" shall mean this Tax Sharing and Disaffiliation
Agreement as the same may be amended from time to time.
"APPLICABLE FEDERAL RATE" shall have the meaning set forth in
Section 1274(d) of the Code, compounded quarterly.
"BOWLIN" shall have the meaning set forth in the preamble to
this Agreement.
"BOWLIN AFFILIATED GROUP" shall mean the corporations included
in the affiliated group, as defined in Section 1504 of the Code, of which Bowlin
is the common parent, and any successor group.
"BOWLIN TAXES" shall mean any Taxes (excluding Restructuring
Taxes and Transaction Taxes) that are attributable to the Outdoor Advertising
Business. For purposes of the foregoing, Taxes shall be deemed attributable to
the Outdoor Advertising Business to the extent such Taxes are imposed as a
result of Tax Items of Bowlin or Travel Centers directly related to the Outdoor
Advertising Business; provided, however, that net losses (if any) incurred with
respect to the Travel Centers Business on or before the Distribution Date shall
be used to offset the income of Bowlin for purposes of determining Bowlin Taxes.
"CLAIM" shall have the meaning set forth in Section 5.03(a) of
this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTRIBUTION" shall have the same meaning set forth in the
first recital.
"CONTRIBUTION AGREEMENT" shall have the meaning set forth in
the first recital.
"CONTROLLING PARTY" shall have the meaning set forth in
Section 5.01 of this Agreement.
"DISTRIBUTION" shall have the meaning set forth in the first
recital.
"DISTRIBUTION DATE" means the date on which the Distribution
takes place.
"FILING PARTY" shall have the meaning set forth in Section
4.01 of this Agreement.
"FINAL DETERMINATION" shall mean with respect to any issue (a)
a decision, judgment, decree or other order by any court of competent
jurisdiction, which decision, judgment, decree or other order has become final
and not subject to further appeal, (b) a closing agreement (whether or not
entered into under Section 7121 of the Code) or any other binding settlement
agreement (whether or not with the IRS) entered into in connection with or in
contemplation of an administrative or judicial proceeding, or (c) the completion
of the highest level of administrative proceedings if a judicial contest is not
or is no longer available.
"INDEMNITOR" shall have the meaning set forth in Section 5.02
of this Agreement.
2
<PAGE> 145
"IRS" means the Internal Revenue Service.
"LIABLE PARTY" shall have the meaning set forth in Section
4.01 of this Agreement.
"OUTDOOR ADVERTISING BUSINESS" means those portions of the
business of Bowlin that are not part of the Travel Centers Business.
"RESTRUCTURING TAXES" shall mean any Taxes imposed as a result
of the Contribution or Distribution. For purposes of filing Bowlin's Tax Return
only, Restructuring Taxes shall mean any Tax imposed as a result of any stock or
securities of Travel Centers failing to qualify as "qualified property" within
the meaning of Section 355(c)(2) of the Code because of the application of
Section 355(e) of the Code (or similar state statute) to the Distribution;
provided, however, that Restructuring Taxes shall be calculated by assuming that
the aggregate fair market value of the Travel Centers' stock distributed by
Bowlin in the Distribution is equal to (a) the product of (i) the mean between
the high bid and low asked prices for Travel Centers' stock on its first trading
day (as reported in The Wall Street Journal or such other source as Travel
Centers deems reliable) and (ii) the total number of outstanding shares of
Travel Centers stock immediately after the Distribution, or (b) such other
amount as determined by Travel Centers in its reasonable discretion. Travel
Centers shall provide Bowlin with written notification of this valuation within
five (5) days after the Distribution Date. Notwithstanding any provision of this
Agreement to the contrary, if a Claim is successfully asserted by the IRS with
respect to Restructuring Taxes, Restructuring Taxes shall be determined in
accordance with the Final Determination in connection with such Claim.
"TAX" (and with correlative meaning, "Taxes" and "Taxable")
means any federal, state, local or foreign net income, gross income, gross
receipts, windfall profit, severance, property, production, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorum, value-added, transfer, stamp, or environmental tax, or any
other tax, custom, duty, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest or penalty, addition to tax or
additional amount imposed by any governmental or regulatory authority.
"TAX ITEM" means any item of income, gain, loss, deduction,
credit, provisions for reserves, recapture of credit, receipt, proceeds or any
other item or event that increases or decreases Taxes paid or payable, including
an adjustment under Section 481 of the Code resulting from a change in
accounting method.
"TAX RETURN" shall mean any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
"TRANSACTION TAXES" shall have the meaning set forth in
Section 3.03(c) of this Agreement.
"TRAVEL CENTERS" shall have the meaning set forth in the
preamble to this Agreement.
3
<PAGE> 146
"TRAVEL CENTERS TAXES" shall mean any Taxes that are
attributable or allocable to the Travel Centers Business, Transaction Taxes and
Restructuring Taxes; provided, however, that notwithstanding any provision of
this Agreement to the contrary, any Restructuring Taxes that are primarily
attributable to Bowlin's breach of its representations and warranties under
Sections 2.01(i), (j) or (k) shall be regarded as Bowlin Taxes. For purposes of
the foregoing, Taxes shall be deemed attributable to the Travel Centers Business
to the extent such Taxes are imposed as a result of Tax Items of Bowlin or
Travel Centers directly related to the Travel Centers Business; provided,
however, that net losses (if any) incurred with respect to the Outdoor
Advertising Business on or before the Distribution Date shall be used to offset
the income of Travel Centers for purposes of determining Travel Centers Taxes
and (to the extent available) shall be used to offset gain in determining the
amount of Restructuring Taxes.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01 BOWLIN. Bowlin hereby represents and warrants as follows:
(a) The Distribution will consist of Bowlin distributing to
its shareholders all of its stock in Travel Centers, which will represent 100%
of the outstanding shares of Travel Centers. No securities of Travel Centers
other than its stock will be distributed to the Bowlin shareholders in the
Distribution.
(b) Bowlin has engaged in both the Travel Centers Business and
Outdoor Advertising Business on an active basis for more than five years prior
to the Distribution Date.
(c) No intercorporate debt will exist between Bowlin and
Travel Centers at the time of, or subsequent to, the Distribution.
(d) No part of the consideration to be distributed by Bowlin
pursuant to the Distribution will be received by a Bowlin shareholder as a
creditor, employee, or in any capacity other than that of a shareholder of
Bowlin.
(e) The Distribution is being carried out for the corporate
business purpose of facilitating a subsequent tax-free acquisition (the
"Acquisition") of Bowlin by another corporation ("Acquirer") and such
acquisition (i) will not be completed unless Bowlin and Travel Centers are
separated, (ii) cannot be accomplished by an alternative non-taxable transaction
that does not involve the distribution of Travel Centers' stock in a manner that
is not impractical or unduly expensive, (iii) will be by an Acquirer that is not
related to Bowlin or Travel Centers, and (iv) will be completed within one year
of the Distribution.
(f) The total adjusted basis and the fair market value of the
assets transferred to Travel Centers by Bowlin pursuant to the Contribution each
equals or exceeds the sum of the liabilities assumed by Travel Centers plus any
liabilities to which the transferred assets are subject and the liabilities
assumed in the Contribution and the liabilities to which the transferred assets
are subject were incurred in the ordinary course of business and are associated
with the assets being transferred.
4
<PAGE> 147
(g) Payments made in connection with all continuing
transactions, if any, between Bowlin and Travel Centers, will be for fair market
value based on terms and conditions arrived at by the parties bargaining at
arms' length.
(h) To the best knowledge of Bowlin, there is no plan or
intention by any shareholder who owns 5% or more of the stock of Bowlin to sell,
exchange, transfer by gift, or otherwise dispose of any stock in, or securities
of, either Bowlin or Travel Centers after the Distribution, other than the
merger of Bowlin with a subsidiary of Acquirer in a non-taxable transaction
under which the shareholders of Bowlin will exchange their Bowlin shares for
shares of Acquirer.
(i) Following the Distribution, Bowlin will continue the
active conduct of its business, independently and with its separate employees.
(j) There is no plan or intention by Bowlin, directly or
through any subsidiary corporation, to purchase any of its outstanding stock
after the Distribution.
(k) There is no plan or intention to liquidate Bowlin or to
sell or otherwise dispose of the assets of Bowlin after the Distribution, except
in the ordinary course of business; provided, however, that there is a plan and
intention to merge Bowlin with a subsidiary of Acquirer in a non-taxable
transaction under which the shareholders of Bowlin will exchange their Bowlin
shares for shares of Acquirer.
2.02 TRAVEL CENTERS. Travel Centers hereby represents and
warrants as follows:
(a) Following the Distribution, Travel Centers will continue
the active conduct of its business, independently and with its separate
employees.
(b) There is no plan or intention by Travel Centers, directly
or through any subsidiary corporation, to purchase any of its outstanding stock
after the Distribution.
(c) There is no plan or intention to liquidate Travel Centers,
to merge Travel Centers with any other corporation, or to sell or otherwise
dispose of the assets of Travel Centers after the Distribution, except in the
ordinary course of business.
(d) Payments made in connection with all continuing
transactions, if any, between Bowlin and Travel Centers, will be for fair market
value based on terms and conditions arrived at by the parties bargaining at
arms' length.
ARTICLE III
TAX RETURNS, TAX PAYMENTS AND TAX SHARING OBLIGATIONS
3.01 OBLIGATIONS TO FILE TAX RETURNS
(a) Bowlin shall timely file or cause to be filed all Tax
Returns with respect to the Bowlin Affiliated Group, which shall include Travel
Centers, for the period beginning prior
5
<PAGE> 148
to the Distribution; provided, however, that Travel Centers shall prepare and
forward to Bowlin all federal and state income Tax Returns with respect to the
Bowlin Affiliated Group for the period ending January 31, 2001.
(b) Travel Centers shall timely file or cause to be timely
filed all Tax Returns with respect to the Travel Centers for all periods
beginning after the Distribution Date.
3.02 OBLIGATION TO REMIT TAXES. Bowlin and Travel Centers
shall each remit or cause to be remitted any Taxes due in respect of any Tax
Return it is required to file or cause to be filed pursuant to Section 3.01, and
shall be entitled to reimbursement for such payments to the extent provided in
Section 3.03.
3.03 TAX SHARING OBLIGATIONS AND PRIOR AGREEMENTS
(a) Travel Centers shall be liable for and pay, and shall
defend and hold harmless Bowlin and any other Bowlin Indemnitee for, from and
against, any and all Losses incurred or suffered by Bowlin or one or more of the
Bowlin Indemnitees in connection with (i) any Travel Centers Taxes, (ii) any
inaccuracy or breach of any warranty, representation or covenant that is made by
Travel Centers pursuant to this Agreement, and (iii) any amount determined to be
Travel Centers' liability under Section 3.03(c). In the event that Bowlin
receives any refund of or credit for Taxes for which Travel Centers is
responsible under this Section 3.03(a), Bowlin shall pay Travel Centers an
amount equal to such refund or credit within five business days of Bowlin's
receipt of such refund or credit.
(b) Bowlin shall be liable for and pay, and shall indemnify,
defend, and hold harmless Travel Centers and any other Travel Centers Indemnitee
for, from and against, any and all Losses incurred or suffered by Travel Centers
or one or more of the Travel Centers Indemnitees in connection with (i) any
Bowlin Taxes and (ii) any inaccuracy or breach of any warranty, representation
or covenant that is made by Bowlin pursuant to this Agreement; provided,
however, that subsequent to the Acquisition, Bowlin shall not be liable with
respect to any representation and warranty set forth in Sections 2.01(a) through
2.01(h). In the event that Travel Centers receives any refund of or credit for
Taxes for which Bowlin is responsible under this Section 3.03(b), Travel Centers
shall pay Bowlin an amount equal to such refund or credit within five business
days of Travel Centers' receipt of such refund or credit.
(c) Bowlin and Travel Centers will determine the amount of
sales, transfer or other similar taxes or fees (including, without limitation,
all real estate, patent, copyright and trademark transfer taxes and real estate
recording fees, but excluding Restructuring Taxes) payable in connection with
the transactions contemplated by the Contribution Agreement (the "Transaction
Taxes"). Bowlin and Travel Centers shall each file promptly and timely the Tax
Returns for such Transaction Taxes with the appropriate taxing authorities and
remit payment of the Transaction Taxes. Travel Centers shall be liable for
Transaction Taxes.
(d) Except as set forth in this Agreement and in consideration
of the mutual indemnities and other obligations of this Agreement, any and all
prior Tax sharing agreements or practices between any member of the Bowlin
Affiliated Group (other than Travel Centers) and Travel Centers shall be
terminated with respect to the Travel Centers as of the Distribution Date.
6
<PAGE> 149
3.04 PERIOD THAT INCLUDES THE DATE OF DISTRIBUTION. To the
extent permitted by law or administrative practice, the taxable year of Travel
Centers shall be treated as closing at the close of the Distribution Date. If it
is necessary for purposes of this Agreement to determine Travel Centers Taxes or
Bowlin Taxes for a taxable year that begins on or before and ends after the
Distribution Date and is not treated under this Section 3.04 as closing at the
close of the Distribution Date, the determination shall be made by assuming that
such taxable year ended on a "closing of the books" basis at the close of the
Distribution Date, except that exemptions, allowances or deductions that are
calculated on an annual basis shall be apportioned on a time basis.
ARTICLE IV
PAYMENTS
4.01 GENERAL TAX PAYMENTS. With respect to any Taxes for which
one party (the "Liable Party") is liable under Section 3.03 and that are to be
remitted in connection with Tax Returns to be filed by the other party (the
"Filing Party") after the Distribution Date pursuant to Sections 3.01 and 3.02,
(a) upon the request of the Filing Party, the Liable Party shall promptly
provide to the Filing Party all information necessary to enable the Filing Party
to file such Tax Returns and (b) assuming compliance by the Liable Party with
the Liable Party's obligations under clause (a) (or written waiver by the Filing
Party of such compliance), the Filing Party shall, not later than ten (10) days
prior to the due date for remitting such Taxes (or, if the due date is within
forty-five (45) days after the Distribution Date, as promptly following the
Distribution Date as possible) provide the Liable Party with a written request
showing in reasonable detail the calculation of the amount of such Liable
Party's Taxes (and any other amounts) owing by the Liable Party to the Filing
Party pursuant to this Agreement. The Liable Party shall have the right to
object in writing to such calculation on or before thirty (30) days after the
date on which such request is provided to the Liable Party, on the grounds that
there is substantial authority that such calculation is incorrect; provided that
if the Liable Party so objects, (i) the Filing Party and the Liable Party shall
promptly submit the dispute to an independent accounting or law firm acceptable
to both the Filing Party and the Liable Party for prompt resolution, whose
decision shall be final and binding on the Filing Party and the Liable Party,
and (ii) the party that such accounting or law firm determines has lost the
dispute shall pay all of the fees and expenses incurred in connection with
submitting such dispute. The Liable Party shall pay to the Filing Party any
amount not in dispute on or before the tenth (10th) day following the receipt of
such request by the Liable Party, with additional amounts to be paid by the
Liable Party (together with interest at the Applicable Federal Rate accruing
from the date on which the Tax in issue is due) promptly upon resolution of any
objection. Payment under this Section 4.01 of an amount determined by an
independent accounting or law firm will not negate any liability of a Liable
Party pursuant to this Agreement by reason of a Final Determination.
4.02 OTHER PAYMENTS. Other payments due to a party under
Section 3.03 shall be due not later than twenty (20) days after the receipt of
notice of a Final Determination to the effect that the indemnified party is
liable for an indemnified cost, together with interest at a rate equal to the
Applicable Federal Rate from the date on which the indemnifying party receives
such receipt, credit or notice.
7
<PAGE> 150
4.03 NOTICE. Bowlin and Travel Centers shall give each other
prompt written notice of any payment that may be due under this Agreement.
8
<PAGE> 151
ARTICLE V
TAX AUDITS
5.01 GENERAL. Except as otherwise provided in this Agreement,
each of Travel Centers and Bowlin (as the case may be, the "Controlling Party")
shall have sole responsibility for all audits or other proceedings with respect
to Tax Returns that it is required to file under Section 3.01. Except as
provided in Section 5.03, the Controlling Party shall have the sole right to
contest the audit or proceeding and to employ advisors of its choice.
5.02 INDEMNIFIED CLAIMS IN GENERAL. Bowlin or Travel Centers
shall promptly notify the other in writing upon the receipt of an actual notice
of assessment by the relevant Taxing authority of any proposed adjustment to a
Tax Return that may result in liability of the other party (the "Indemnitor")
under this Agreement. If the Indemnitor is not also the Controlling Party, the
Controlling Party shall provide the Indemnitor with information about the nature
and amounts of the proposed adjustments and, subject to additional rights of the
Indemnitor in certain circumstances under Section 5.03 of this Agreement, shall
permit the Indemnitor to participate in the proceeding at the Indemnitor's own
expense. The Indemnitor shall pay all reasonable expenses (including, but not
limited to, legal and accounting fees) incurred by the Controlling Party in
connection with the assessment or adjustment within seven (7) days after a
written request by the Controlling Party.
5.03 CERTAIN FEDERAL INCOME TAX CLAIMS
(a) Any issues raised by the IRS in any Tax inquiry, audit,
examination, investigation, dispute, litigation or other proceeding that would
result in liability to the Indemnitor under this Agreement are defined as a
Claim (a "Claim"). Except as provided in Section 5.03(d) and notwithstanding any
other provision of this Agreement that may be construed to the contrary, the
Controlling Party agrees to contest any Claim and not to settle any Claim
without prior written consent of the Indemnitor, provided that (i) the
Controlling Party shall provide notice to Indemnitor pursuant to Section 5.02 of
any Claim, and (ii) within thirty (30) days after such notice is received by the
Indemnitor, the Indemnitor shall request in writing that such Claim be
contested. If the Indemnitor requests that the Claim be contested in accordance
with the preceding sentence and such Claim does not materially prejudice any
other IRS claim with respect to matters unrelated to the Claim (other than the
Tax calculation), the Indemnitor shall have the right, upon written notice to
the Controlling Party and to the extent permitted under applicable law (assuming
cooperation of the Controlling Party), to assume the defense of such Claim,
including employment of counsel reasonably satisfactory to the Controlling Party
and the payment of the fees and disbursements of such counsel. In the event,
however, that the Indemnitor declines, fails or is otherwise unable to assume
the defense of such Claim, the Controlling Party may employ counsel to defend
such Claim and the Indemnitor shall agree to pay (and shall pay) on demand all
out-of-pocket costs, losses and expenses (including, but not limited to, legal
and accounting fees) paid or incurred by the Controlling Party in connection
with contesting such Claim. The party that has assumed defense of a Claim, after
reasonable consultation with the other party, shall determine the nature of all
actions to be taken to contest such Claim (assuming such determination does not
negatively impact any other claim that the IRS may have with respect to matters
unrelated to the Claim), including (A) whether any
9
<PAGE> 152
action to contest such Claim shall initially be by way of judicial or
administrative proceeding, or both, (B) whether any such Claim shall be
contested by resisting payment thereof or by paying the same and seeking a
refund thereof, and (C) the court or other judicial body before which judicial
action, if any, shall be commenced. To the extent the Indemnitor is not
participating, the Controlling Party shall keep the Indemnitor (and, upon
request by the Indemnitor, its counsel) informed as to the progress of the
contest.
(b) If the Indemnitor requests that the Controlling Party
accept a settlement of a Claim offered by the IRS and if such Claim may, in the
reasonable discretion of the Controlling Party, be settled without prejudicing
any claims the IRS may have with respect to matters unrelated to the Claim, the
Controlling Party shall either accept such settlement offer or agree with the
Indemnitor that the Indemnitor's liability with respect to such Claim shall be
limited to the lesser of (i) an amount calculated on the basis of such
settlement offer plus interest owed to the IRS on the date that is no more than
45 days after the date of the Indemnitor's request that the Controlling Party
accept such Settlement, or (ii) the amount calculated on the basis of a Final
Determination.
(c) If the Indemnitor elects to have the Controlling Party pay
the Tax claimed and seek a refund, the Indemnitor shall lend sufficient funds on
an interest-free basis to the Controlling Party (with no net after-tax cost to
the Controlling Party), to cover any applicable indemnity obligations of the
Indemnitor. To the extent such refund claim is ultimately disallowed, the loan
or portion thereof equal to the amount of the refund claim so disallowed shall
be applied against the Indemnitor's obligation to make indemnity payments
pursuant to this Agreement. To the extent such refund claim is allowed, the
Controlling Party shall pay to the Indemnitor all amounts advanced to the
Controlling Party with respect to the indemnity obligation within ten (10) days
of the receipt of such refund (or if the Controlling Party would have received
such refund but for the existence of a counterclaim or other claim not
indemnified by the Indemnitor under this Agreement, within ten (10) days of the
final resolution of the contest), plus an amount equal to any interest received
(or that would have been received) from the IRS that is properly attributable to
such amount.
(d) Except as provided below, the Controlling Party shall not
settle a Claim that the Indemnitor is entitled to require the Controlling Party
to contest under Section 5.03(a) without the prior written consent of the
Indemnitor. At any time, whether before or after commencing to take any action
pursuant to this Section 5.03 with respect to any Claim, the Controlling Party
may decline to take action with respect to such Claim and may settle such Claim
without the prior written consent of the Indemnitor by notifying the Indemnitor
in writing that the Indemnitor is released from its obligations to indemnify the
Controlling Party with respect to such Claim (which notification shall release
the Indemnitor from such obligations except to the extent the Indemnitor has
agreed in writing that it would be willing to have its liability calculated on
the basis of a settlement offer, as provided in Section 5.03(b), at that point
in the contest) and with respect to any Claim related to such Claim or based on
the outcome of such Claim. If the Controlling Party settles any Claim or
otherwise takes or declines to take any action pursuant to this paragraph, the
Controlling Party shall pay to the Indemnitor any amounts paid or advanced by
the Indemnitor with respect to such Claim (other than amounts payable by the
Indemnitor in connection with a settlement offer pursuant to Section 5.03(b)),
plus interest attributable to such amounts.
10
<PAGE> 153
ARTICLE VI
COOPERATION
6.01 GENERAL. Bowlin and Travel Centers shall cooperate with
each other in the filing of any Tax Returns and the conduct of any audit or
other proceeding and each shall execute and deliver such powers of attorney and
make available such other documents as are reasonably necessary to carry out the
intent of this Agreement. Each party agrees to notify the other party in writing
of any audit adjustments that do not result in Tax liability but can be
reasonably expected to affect Tax Returns of the other party or any of its
subsidiaries. Each party agrees to treat the Contribution and Distribution for
all income Tax purposes as not causing the recognition of any income, gain or
loss (except for Restructuring Taxes).
6.02 COOPERATION WITH RESPECT TO TAX RETURN FILINGS,
EXAMINATIONS AND TAX RELATED CONTROVERSIES. Each party shall fully cooperate
with the other party and its representatives, in a prompt and timely manner, in
connection with the preparation and filing of, and any inquiry, audit,
examination, investigation, dispute, or litigation involving, any Tax Return
required to be filed by any party pursuant to this Agreement. Such cooperation
shall include, but not be limited to, (a) the execution and delivery of any
power of attorney required to allow each party and its counsel to participate in
or control any inquiry, audit or other administrative proceeding and to assume
the defense or prosecution, as the case may be, of any suit, action or
proceeding pursuant to the terms of and subject to the conditions set forth in
Article V of this Agreement, and (b) making available to the other party, during
normal business hours, and within fifteen (15) days of any written request
therefor, all books, records and information, and the assistance of all officers
and employees, necessary or useful in connection with any Tax inquiry, audit,
examination, investigation, dispute, litigation or any other matter.
ARTICLE VII
RETENTION OF RECORDS; ACCESS
Bowlin and Travel Centers shall:
(a) retain (for a minimum of five (5) years) records,
documents, accounting data and other information (including computer data)
necessary for the preparation and filing of all Tax Returns in respect of Taxes
of the Bowlin Affiliated Group or Travel Centers or for the audit of such Tax
Returns; and
(b) give to the other reasonable access to such records,
documents, accounting data and other information (including computer data) and
to its personnel (insuring their cooperation) and premises, for the purpose of
the current or potential review or audit of such Tax Returns to the extent
relevant to an obligation or liability of a party under this Agreement or
applicable law. At any time after the Distribution Date that a party proposes to
destroy such records, documents, accounting data or other information, such
party shall first notify the other party in writing and such other party shall
be entitled to receive such records, documents, accounting data or other
information proposed to be destroyed.
11
<PAGE> 154
ARTICLE VIII
DISPUTES
If Bowlin and Travel Centers cannot agree on any calculation
of any liabilities under this Agreement, such calculation shall be made by any
independent public accounting firm acceptable to both Bowlin and Travel Centers.
The decision of such firm shall be final and binding. The fees and expenses
incurred in connection with such calculation shall be borne by the party that
such independent public accounting firm determines has lost the dispute.
ARTICLE IX
TERMINATION OF LIABILITIES
Notwithstanding any other provision in this Agreement, any
liabilities determined under this Agreement shall survive indefinitely.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.01 AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified or supplemented only by written agreement of the parties
hereto.
10.02 WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party
to comply with any obligation, covenant, agreement or condition herein may be
waived by the other party; provided, however, that any such waiver may be made
only by a written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requests or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 10.02, with appropriate notice
in accordance with Section 10.06 of this Agreement.
10.03 ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Any party may assign any of
its rights hereunder but only with the consent of the other party hereto, which
consent shall not be unreasonably withheld, but no such assignment shall relieve
it of its obligations hereunder. Nothing in this Agreement, expressed or
implied, is intended or shall be construed to confer upon any person other than
the parties, any successors and permitted assigns, any rights, remedy, or claim
under or by reason of this Agreement or any provisions herein contained.
10.04 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New Mexico (without regard
to its conflicts of law doctrines).
10.05 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute
12
<PAGE> 155
one and the same instrument and shall become a binding Agreement when one or
more of the counterparts have been signed by each of the parties and delivered
to the other party.
10.06 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered by
hand or mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
Prior to the Acquisition
If to Bowlin: Bowlin Outdoor Advertising & Travel Centers,
Incorporated
150 Louisiana NE
Albuquerque, NM 87108
Attention: President
with a copy to: Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attention: Christopher Johnson
After the Acquisition
If to Bowlin: Lamar Advertising Company
5551 Corporate Boulevard
Baton Rouge, Louisiana 70808
Attn: James R. McIlwain
Facsimile transmission no.: (225) 926-1005
With a copy to: Jones, Walker, Waechter, Poitevent Carrere
& Denegre, L.L.P.
Fifth Floor, Four United Plaza
8555 United Plaza Boulevard
Baton Rouge, Louisiana 70809-7000
Attn: Brad J. Axelrod
If to the Company: Bowlin Travel Centers, Inc.
150 Louisiana NE
Albuquerque, NM 87108
Attention: President
with a copy to: Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attention: Christopher Johnson
13
<PAGE> 156
10.07 HEADINGS. The article and section headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
10.08 ENTIRE AGREEMENT. This Agreement and the Contribution
Agreement (including the exhibits, schedules and other documents and instruments
referred to therein) embody the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
10.09 SEVERABILITY. If any one or more provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.
[Remainder of page intentionally left blank]
14
<PAGE> 157
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BOWLIN OUTDOOR ADVERTISING &
TRAVEL CENTERS, INCORPORATED,
a Nevada corporation
--------------------------------------------
By: Michael L. Bowlin
Title: President and Chief Executive Officer
BOWLIN TRAVEL CENTERS, INC., a Nevada
corporation
--------------------------------------------
By: Michael L. Bowlin
Its: President and Chief Executive Officer
15
<PAGE> 158
ANNEX C
PERSONAL AND CONFIDENTIAL
October 2, 2000
Board of Directors
BOWLIN Outdoor Advertising & Travel
Centers, Incorporated
c/o Rudy Miller
Miller Capital Corporation
4909 East McDowell Road
Phoenix, AZ 85008
Attention: Mr. Michael Bowlin
Chief Executive Officer
Gentlemen:
You have advised Sanders Morris Harris, Inc. ("SMH") that Lamar Advertising
Company ("Lamar") has proposed to acquire via a merger 100% of the outstanding
common stock of BOWLIN Outdoor Advertising & Travel Centers, Incorporated
("BOWLIN") pursuant to an Agreement and Plan of Merger (the "Agreement"). Under
the Agreement, Lamar proposes to pay a price in the range of approximately $6.30
to $8.00 per share in stock based on the average price of Lamar's common stock
for the 30 days prior to Closing (estimated to be in December, 2000). The
transaction is expected to involve Lamar issuing 725,000 shares of Lamar common
stock. Prior to Closing, certain assets, liabilities and operations of BOWLIN's
corporate offices and travel center business will be "spun off" into a new
public entity. The terms of the transaction are set forth in the September 20,
2000 draft of the Agreement.
You have requested that SMH act as financial advisor to the Board of Directors
of BOWLIN and issue an opinion ("Opinion") as to the fairness, from a financial
point of view, to the public shareholders of BOWLIN of the terms of the proposed
transaction.
SMH, as part of its investment banking business, is frequently engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes.
In arriving at our Opinion, we have, among other things:
<PAGE> 159
BOWLIN
October 2, 2000
Page 2
1. Reviewed a draft of the Agreement and Plan of Merger dated September
20, 2000 (from which we have assumed there will be no material changes
in the final Agreement);
2. Reviewed a Letter of Intent from Lamar dated June 15, 2000;
3. Reviewed BOWLIN audited financials and annual reports for the years
ended January 31, 2000 and January 31, 1999;
4. Reviewed BOWLIN unaudited financial statements for the quarters ended
July 31, 2000 and April 30, 2000;
5. Reviewed Lamar audited financial statements for the year ended December
31, 1999;
6. Reviewed Lamar unaudited financial statements for the six months ended
June 30, 2000;
7. Reviewed Lamar Form S-3 (i.e., prospectus relating to the sale of 26.2
million shares of Lamar by Clear Channel Communications) dated
September 8, 2000;
8. Reviewed BOWLIN Form 10 (i.e., registration statement for the travel
centers spin-off) draft dated September 14, 2000;
9. Reviewed BOWLIN management's outdoor advertising segment budget for the
year ending January 31, 2001;
10. Reviewed historical market prices and trading volume for common stocks
of both BOWLIN and Lamar;
11. Reviewed recent Lamar equity research reports provided by Lamar
management;
12. Reviewed a 1999 Confidential Memorandum prepared by Miller Capital
Corporation regarding the sale of BOWLIN's travel center segment;
13. Reviewed BOWLIN's December 17, 1996 Prospectus prepared by HD Brous &
Co., Inc.;
14. Discussed various assets, liabilities and operations of BOWLIN involved
in the Transaction; and
15. Reviewed such other financial studies and analyses and performed such
other investigations as we deemed appropriate.
<PAGE> 160
BOWLIN
October 2, 2000
Page 3
With your permission, we have assumed and relied upon, without assuming any
responsibility for verification, the accuracy and completeness of all of the
financial and other information provided to, discussed with, or reviewed by or
for us, or publicly available, for purposes of this Opinion, and have further
relied upon the assurances of management of BOWLIN that it is not aware of any
facts that will make such information inaccurate or misleading in any respect
material to our analysis. We have neither made nor obtained any independent
evaluations or appraisals of the assets or liabilities of BOWLIN, nor have we
conducted a physical inspection of the properties and facilities of BOWLIN. We
have assumed that the financial forecasts provided to us by BOWLIN have been
reasonably determined on bases reflecting the best currently available estimates
and judgment of BOWLIN's management as to BOWLIN's future financial performance.
We have further assumed in our analyses that, in, all material respects, such
forecasts and projections will be realized in the amounts and times indicated
thereby. We express no view as to such forecasts or the assumptions on which
they were based. We have relied as to all legal, accounting and tax matters with
respect to the transaction (i.e., the merger and spin-off) on legal counsel,
accountants and other financial advisors of BOWLIN. We were not authorized to
negotiate the terms of the transaction, and we have based our opinion solely
upon the proposed Agreement as negotiated by others. We were not asked to, and
we did not, solicit third party offers to acquire all or part of BOWLIN.
For purposes of rendering our Opinion, we have assumed, in all respects material
to our analysis, that the representations and warranties of each party contained
in the Agreement are true and correct, that each party will perform all of the
covenants and agreements required to be performed by it under the Agreement and
that all conditions to the consummation of the transaction will be satisfied
without waiver thereof. We have also assumed that all material governmental,
regulatory or other consents and approvals will be obtained and that in the
course of obtaining any necessary governmental, regulatory or other consents and
approvals, or any amendments, modifications or waivers to any documents to which
either BOWLIN or Lamar are party, as contemplated by the Agreement, no
restrictions will be imposed or amendments, modifications or waivers made that
would have any material adverse effect on the consideration to be received by
the public shareholders or the time of such receipt.
Our Opinion is limited to the fairness, from a financial point of view, of the
proposed transaction to BOWLIN's public shareholders, and we express no opinion
as to the merits of the underlying decision by BOWLIN to engage in the
transaction. We are not expressing an opinion herein as to the prices as which
the Lamar common stock or any other security will trade following the
announcement or consummation of the merger, which may vary depending on any
number of factors, many of which are beyond the control of Lamar. We also
express no opinion with respect to the price per share or market for the
securities to be received by BOWLIN shareholders in the spin-off. This Opinion
does not constitute a recommendation to any shareholder of BOWLIN as to how such
shareholder should vote with respect to the transaction. Our Opinion necessarily
is based upon market, economic and other conditions as they exist and can be
evaluated on the date hereof, and we assume no responsibility to update or
revise our Opinion based upon circumstances or events occurring after the date
hereof.
We have acted as financial advisor to the Board of Directors of BOWLIN in
connection with the transaction and will receive a fee for our services,
including for rendering this Opinion. In
<PAGE> 161
BOWLIN
October 2, 2000
Page 4
addition, BOWLIN has agreed to indemnify us for certain liabilities arising out
of our engagement. As we have previously advised you, in the ordinary course of
business, we or our affiliates may trade in BOWLIN's or Lamar's common stock for
our own accounts and for the accounts of our customers and, accordingly, may at
any time hold a long or short position in such securities.
Based upon and subject to the foregoing, it is our Opinion that, as of the date
hereof, the financial terms of the proposed transaction are fair to the public
shareholders of BOWLIN from a financial point of view.
SANDERS MORRIS HARRIS INC.
By: /s/ G. Clyde Buck
----------------------
G. Clyde Buck
Managing Director
<PAGE> 162
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") grants
Lamar the power to indemnify each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that he is or was a director, officer, employee or agent of Lamar,
or is or was serving at the request of Lamar as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with any such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
Lamar, and with to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful, provided, however, no indemnification shall be
made in connection with any proceeding brought by or in the right of Lamar where
the person involved is adjudged to be liable to Lamar except to the extent
approved by a court.
Lamar's By-laws provide that any person who is made a party to any
action or proceeding because such person is or was a director or officer of
Lamar will be indemnified and held harmless against all claims, liabilities and
expenses, including those expenses incurred in defending a claim and amounts
paid or agreed to be paid in connection with reasonable settlements made before
final adjudication with the approval of the board of directors, if such person
has not acted, or in the judgment or the stockholders or directors of Lamar has
not acted, with willful or intentional misconduct. The indemnification provided
for in Lamar's By-laws is expressly not exclusive of any other rights to which
those seeking indemnification may be entitled as a matter of law.
Lamar's Certificate of Incorporation provides that directors of Lamar
will not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, whether or not an individual
continues to be a director at the time such liability is asserted, except for
liability (i) for any breach of the director's duty of loyalty to Lamar or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL, relating to prohibited dividends or distributions or the repurchase or
redemption of stock, or (iv) for any transaction from which the director derives
an improper personal benefit.
The Company carries Directors' and Officers' insurance which covers its
directors and officers against certain liabilities they may incur when acting in
their capacity as directors or officers of the Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) See Exhibit Index immediately following the signature page.
(b) Not applicable.
(c) (1) Opinion of Sanders Morris Harris Inc. (included as
Annex C to the proxy statement/prospectus which is a part
of this registration statement).
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a
new
II-1
<PAGE> 163
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(b) (1) The undersigned registrant hereby undertakes as follows:
that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is
a part of this registration statement, by any person or
party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called
for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items
of the applicable form.
(2) The registrant undertakes that every prospectus (i) that
is filed pursuant to paragraph (c)(1) immediately
preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject
to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until
such amendment is effective, and that, for 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 that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant 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
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to items 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.
(e) The undersigned registrant hereby undertakes 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-2
<PAGE> 164
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Baton Rouge, State of Louisiana, on November
13, 2000.
LAMAR ADVERTISING COMPANY
By: /s/ Kevin P. Reilly, Jr.
---------------------------------------
Kevin P. Reilly, Jr.
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Lamar Advertising
Company, hereby severally constitute and appoint Kevin P. Reilly, Jr. and Keith
A. Istre and each of them singly, our true and lawful attorneys, with full
power to them in any and all capacitates, to sign any amendments to this
Registration Statement on Form S-4 (including Pre- and Post-Effective
Amendments), and any related Rule 462(b) registration statement or amendment
thereto, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact may do or
cause to be done by virtue hereof.
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director and Principal November 13, 2000
/s/ Kevin P. Reilly, Jr. Executive Officer
------------------------------------
Kevin P. Reilly, Jr.
Director and Principal
/s/ Keith A. Istre Financial and Accounting Officer November 13, 2000
------------------------------------
Keith A. Istre
/s/ Charles W. Lamar Director November 13, 2000
------------------------------------
Charles W. Lamar
/s/ Gerald H. Marchand Director November 13, 2000
------------------------------------
Gerald H. Marchand
Director November __, 2000
------------------------------------
Wendell Reilly
Director November __, 2000
------------------------------------
Stephen Mumblow
/s/ T. Everett Stewart, Jr. Director November 13, 2000
------------------------------------
T. Everett Stewart, Jr.
/s/ Sean Reilly Director November 13, 2000
------------------------------------
Sean Reilly
Director November __, 2000
------------------------------------
John Maxwell Hamilton
Director November __, 2000
------------------------------------
Thomas Reifenheiser
</TABLE>
II-3
<PAGE> 165
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
2.1 Agreement and Plan of Merger by and among Lamar Advertising
Company, Lamar Southwest Acquisition Corporation and Bowlin
Outdoor Advertising & Travel Centers Incorporated dated
October 3, 2000 (attached as Annex A to the proxy
statement/prospectus contained in this registration
statement).
3.1 Certificate of Incorporation of Lamar New Holding Co., as
amended. Previously filed as Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1999 (File No. 0-20833) and incorporated herein by reference.
3.2 Certificate of Amendment to the Certificate of Incorporation
of Lamar New Holding Co. (whereby the name of Lamar New
Holding Co. was changed to Lamar Advertising Company).
Previously filed as Exhibit 3.2 to the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1999 (File
No. 0-20833) and incorporated herein by reference.
3.3 Certificate of Amendment to the Certificate of Incorporation
of the Company. Previously filed as Exhibit 3.3 to the
Company's Quarterly Report on Form 10-Q for the period ended
June 30, 2000 (File No. 0-30242) and incorporated herein by
reference.
3.4 By-Laws. Previously filed as Exhibit 3.3 to the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1999 (File No. 0-20833) and incorporated herein by reference.
4.2 Specimen certificate for shares of the Class A common stock of
Lamar Advertising Company. Previously filed as Exhibit 4.1 to
the Company's Registration Statement on Form S-1 (File No.
333-05479), and incorporated herein by reference.
5.1 Opinion of Palmer & Dodge LLP. Filed herewith.
8.1 Opinion of Squire, Sanders & Dempsey, L.L.P. regarding certain
United States federal income tax consequences of the merger.
To be filed by amendment.
23.1 Consent of Palmer & Dodge LLP (included as part of their
opinion listed as Exhibit 5.1). Filed herewith.
23.2 Consent of KPMG LLP, independent auditors of Lamar Advertising
Company and Lamar Media Corp. Filed herewith.
23.3 Consent of Arthur Andersen LLP, independent public accountants
of Martin Media (a California limited partnership) and Martin
& MacFarlane, Inc. Filed herewith.
23.4 Consent of Barbich Longcrier Hooper & King, Accounting
Corporation, independent accountants of Martin & MacFarlane,
Inc. Filed herewith.
23.5 Consent of BDO Seidman LLP, independent certified public
accountants of The Outdoor Advertising Division of Whiteco
Industries, Inc. Filed herewith.
23.6 Consent of PricewaterhouseCoopers LLP, independent accountants
of Chancellor Media Outdoor Corporation, The Outdoor Division
of Whiteco Industries, Inc., Martin Media, L.P. and Martin &
MacFarlane, Inc. Filed herewith.
23.7 Consent of KPMG LLP, independent auditors of Bowlin Outdoor
Advertising and Travel Centers Incorporated. Filed herewith.
24.1 Powers of Attorney (included on signature pages). Filed herewith.
99.1 Form of Proxy Card for holders of Bowlin stock. Filed herewith.
99.2 Opinion of Sanders Morris Harris Inc. (attached as Annex C to
the proxy statement/prospectus contained in this registration
statement).
99.3 Consent of Sanders Morris Harris Inc., financial advisor of
Bowlin Outdoor Advertising and Travel Centers Incorporated.
Filed herewith.
</TABLE>
