<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.____________________)*
Zimmerman Sign Company
-------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value per share
--------------------------------------------------
(Title of Class of Securities)
989580 10 5
--------------------------------------------------
(CUSIP Number)
Copy to:
Robert F. Perille John A. Weissenbach
Continental Illinois Venture Corporation Kirkland & Ellis
231 S. LaSalle Street 200 E. Randolph Drive
Chicago, Illinois 60697 Chicago, Illinois 60601
(312) 828-2345 (312) 861-2000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 30, 1998
------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
Page 1 of 25 Pages
<PAGE>
- ------------------------ ------------------------------
CUSIP No. 989580 10 5 13D Page 2 of 25 Pages
- ------------------------ ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
Continental Illinois Venture Corporation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
---------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,024,137 shares of Common Stock (See Item 5)
---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
---------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,024,137 shares of Common Stock (See Item 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,024,137 shares of Common Stock (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.6% (See Item 5)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
<PAGE>
13D
- ----------------------- ---------------------
CUSIP NO. 708094206 PAGE 3 OF 25 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Bank of America National Trust and Savings Association
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,024,137 shares of Common Stock (See Item 5)
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,024,137 shares of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,024,137 shares of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
35.6% (See Item 5)
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
BK
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
13D
- ----------------------- ---------------------
CUSIP NO. 708094206 PAGE 4 OF 25 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
BankAmerica Corporation
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,024,137 shares of Common Stock (See Item 5)
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,024,137 shares of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1.024,137 shares of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
35.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 708094206 PAGE 5 OF 25 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
MIG Partners VIII
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,024,137 of Common Stock (See Item 5)
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
35.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 708094206 PAGE 6 OF 25 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Sheryl E. Bartol
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,024,137 of Common Stock (See Item 5)
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
35.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 708094206 PAGE 7 OF 25 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Matthew W. Clary
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,024,137 of Common Stock (See Item 5)
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
35.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 708094206 PAGE 8 OF 25 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Andrea P. Joselit
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,024,137 of Common Stock (See Item 5)
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
35.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
13D
- ----------------------- ---------------------
CUSIP NO. 708094206 PAGE 9 OF 25 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Jeffrey M. Mann
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) or 2(E) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,024,137 of Common Stock (See Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
35.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
13D
- ----------------------- ---------------------
CUSIP NO. 708094206 PAGE 10 OF 25 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Dennis P. McCrary
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) or 2(E) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,024,137 of Common Stock (See Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
35.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
13D
- ----------------------- ---------------------
CUSIP NO. 708094206 PAGE 11 OF 25 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Jason A. Mehring
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) or 2(E) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,024,137 of Common Stock (See Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
35.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
13D
- ----------------------- ---------------------
CUSIP NO. 708094206 PAGE 12 OF 25 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1
Robert F. Perille
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) or 2(E) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,024,137 of Common Stock (See Item 5)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,024,137 of Common Stock (See Item 5)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
35.6%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D Statement (this "Statement") relates to the Common Stock
$.01 par value (the "Common Stock") of Zimmerman Sign Company, a Texas
corporation (the "Issuer"). The principal executive offices of the Issuer are
located at 9846 Highway 31 East, Tyler, Texas, 75705.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is being filed jointly by each of the following persons
pursuant to Rule 13d-1(f) promulgated by the Securities and Exchange Commission
(the "Commission") pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"): (i) Continental Illinois Venture
Corporation, a Delaware corporation ("CIVC"), by virtue of its direct beneficial
ownership of warrants currently exercisable into shares of Common Stock covered
by this Statement; (ii) Bank of America National Trust and Savings Association,
a national trust and savings association, ("BA Bank"), by virtue of its
ownership of all of the outstanding common stock of CIVC; (iii) BankAmerica
Corporation, a Delaware corporation ("BAC"), by virtue of its ownership of all
of the outstanding common stock of BA Bank; (iv) MIG Partners VIII, a Delaware
general partnership ("MIG"), by virtue of its direct beneficial ownership of
warrants currently exercisable into shares of Common Stock covered by this
Statement; (v) Sheryl E. Bartol, an individual residing in the state of Illinois
("Bartol"), by virtue of her being a general partner of MIG; (vi) Matthew W.
Clary, an individual residing in the state of Illinois ("Clary"), by virtue of
his being a general partner of MIG; (vii) Andrea P. Joselit, an individual
residing in the state of Illinois ("Joselit"), by virtue of her being a general
partner of MIG; (viii) Jeffrey M. Mann, an individual residing in the state of
Illinois ("Mann"), by virtue of his being a general partner of MIG; (ix) Dennis
P. McCrary, an individual residing in the state of Illinois ("McCrary"), by
virtue of his being a general partner of MIG; (x) Jason A. Mehring, an
individual residing in the state of Illinois ("Mehring"), by virtue of his being
a general partner of MIG; and (xi) Robert F. Perille, an individual residing in
the state of Illinois ("Perille"), by virtue of his being a general partner of
MIG. Bartol, Clary, Joselit, Mann, McCrary, Mehring and Perille are sometimes
referred to herein individually as a "General Partner" and collectively as the
"General Partners." CIVC, BA Bank, BAC, MIG and each General Partner are
sometimes referred to herein individually as a "Reporting Person" and
collectively as the "Reporting Persons."
Information with respect to each of the Reporting Persons is given solely
by such Reporting Person, and no Reporting Person assumes responsibility for the
accuracy or completeness of information given by another Reporting Person. By
their signature on this Statement, each of the Reporting Persons agrees that
this Statement is filed on behalf of such Reporting Person.
CIVC and MIG may be deemed to constitute a "group" for purposes of Section
13(d)(3) of the Exchange Act. This filing shall not be deemed an admission that
CIVC, on the one hand, or MIG, on the other, is, for purposes of Section 13(d)
or 13(g) of the Exchange Act, the beneficial owner of any securities covered in
this Statement as held by the other.
Certain information required by this Item 2 concerning the directors and
executive officers of CIVC, BA Bank and BAC is set forth on Schedule A attached
hereto, which is incorporated herein by reference. Each of the persons listed
on Schedule A is a citizen of the United States.
Page 13 of 25 Pages
<PAGE>
CIVC and MIG's principal business is providing debt and equity financing to
businesses in the United States. The address of the principal business and
principal office of CIVC and MIG is 231 S. LaSalle St., Chicago, Illinois 60697.
BA Bank is a national banking association engaged in the banking business,
with a variety of subsidiaries engaged in various activities, including consumer
banking, corporate banking, commercial real estate lending and other financial
services, middle-market banking, and private banking and investment services.
The address of the principal business and principal office of BA Bank is 555
California Street, San Francisco, California 94104.
BAC is a holding company whose subsidiaries provide diverse financial
products and services to individuals, businesses, government agencies and
financial institutions throughout the world. The address of the principal
business and principal office of BAC is NationsBank Corporate Center, 100 N.
Tryon, Charlotte, NC 28255.
During the past five years, none of the Reporting Persons nor, to the best
knowledge of the Reporting Persons, any of the persons listed on Schedule A
----------
attached hereto, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). During the past five years, none of the
Reporting Persons nor, to the best knowledge of the Reporting Persons, any of
the persons listed on Schedule A attached hereto, was a party to a civil
----------
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activity
subject to, federal or state securities laws or finding any violation with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
The Issuer, CIVC, MIG and certain other investors are parties to a Senior
Subordinated Note, Preferred Stock and Warrant Purchase Agreement, dated
September 30, 1998 (the "Purchase Agreement"). Pursuant to the Purchase
------------------
Agreement, CIVC acquired stock purchase warrants (the "Warrants") exercisable
--------
into 819,310 shares of Common Stock for an aggregate purchase price of
$68,394.71. CIVC utilized internal funds to consummate the acquisition of the
Warrants. In addition, MIG acquired Warrants exercisable into 204,827 shares of
Common Stock for an aggregate purchase price of $17,098.68. MIG utilized
internal funds and loans from BankAmerica Investment Corporation, an affiliated
corporation, to consummate the acquisition of the Warrants.
A copy of the Purchase Agreement is attached hereto as Exhibit A and is
incorporated herein by reference.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
CIVC and MIG acquired the Warrants for investment purposes. Depending on
market conditions and other factors (including evaluation of the Issuer's
businesses and prospects, availability of funds, alternative uses of funds and
general economic conditions), CIVC and MIG
Page 14 of 25 Pages
<PAGE>
may from time to time purchase additional securities of the Issuer or dispose of
all or a portion of their investment in the Issuer.
Pursuant to the Purchase Agreement, CIVC and MIG each acquired shares of
the Issuer's Series A Preferred Stock, par value $.01 per share (the "Series A
Preferred"). Under the terms of the Series A Preferred, as defined in the
Certificate of Designation, Series A Preferred (the "Certificate of
Designation"), CIVC has the right to designate two members on the Issuer's board
of directors (the "Board"), and if an Event of Noncompliance (as defined in the
Certificate of Designation) has occurred and is continuing, each of the
directors designated by CIVC shall be entitled to cast two votes with respect to
any vote taken by the Issuer's Board. In connection therewith, the Issuer, CIVC,
MIG and certain other stockholders of the Issuer are parties to a Stockholders
Agreement, dated as of September 30, 1998 (the "Stockholders Agreement")
pursuant to which each party has agreed to (i) vote all of their shares in favor
of those members of the Board designated by CIVC and (ii) vote all of their
shares in favor of removing an existing director on the Board and filling the
vacancy with a member designated by CIVC in the event that the directors
designated by CIVC are not entitled to cast two votes after the occurrence and
during the continuance of an Event of Noncompliance. In addition, pursuant to
the terms of the Stockholders Agreement, each party thereto has agreed to vote
all of its shares in favor of a Sale of the Company (as defined in the
Shareholders Agreement) proposed by CIVC. As of the date of this statement,
stockholders holding an aggregate of 1,132,825 shares of Common Stock were
parties to the Stockholders Agreement. CIVC expressly disclaims beneficial
ownership of all of the shares of Common Stock owned by the other parties to the
Shareholders Agreement. A copy of the Certificate of Designation is attached
hereto as Exhibit B and is incorporated herein by reference, and a copy of the
Stockholders Agreement is attached hereto as Exhibit C and is incorporated
herein by reference.
Pursuant to a Registration Agreement, dated as of September 30, 1998 (the
"Registration Agreement"), by and among the Issuer, CIVC, MIG and certain other
stockholders of the Issuer, CIVC, MIG and such other stockholders were granted
certain registration rights with respect to their Warrants and the underlying
Common Stock. A copy of the Registration Agreement is attached hereto as Exhibit
D and is incorporated herein by reference.
The summaries of the agreements referred to in this Item 4 and elsewhere in
this Statement are not intended to be complete and are qualified in their
entirety by reference to the detailed provisions of such agreements attached as
exhibits hereto.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
CIVC is the direct beneficial owner of Warrants currently exercisable into
819,310 shares of Common Stock and MIG is the direct beneficial owner of
Warrants currently exercisable into 204,827 shares of Common Stock. CIVC and MIG
may be deemed to constitute a "group" for purposes of Section 13(d)(3) of the
Exchange Act, and therefore each may be deemed to own beneficially warrants
currently exercisable into 1,024,137 shares of Common Stock, which, when
exercised would result in ownership of approximately 35.6% of the Issuer's
Common Stock as computed under Rule 13d-3.
Page 15 of 25 Pages
<PAGE>
This filing shall not be deemed an admission that CIVC, on the one hand, or MIG,
on the other, is, for purposes of Section 13(d) and 13(g) of the Exchange Act,
the beneficial owner of any securities covered in this Statement as held by the
other. By virtue of the relationship between BA Bank and CIVC described in Item
2, BA Bank may be deemed to possess indirect beneficial ownership of the shares
of Common Stock beneficially owned by CIVC, and by virtue of the relationship
between BAC and BA Bank described in Item 2, BAC may be deemed to possess
indirect beneficial ownership of the shares of Common Stock beneficially owned
by CIVC. By virtue of their relationship as general partners of MIG, each
General Partner may be deemed to possess indirect beneficial ownership of the
Common Stock beneficially owned by MIG. The filing of this Statement by BA Bank,
BAC and the General Partners shall not be deemed an admission that any of BA
Bank, BAC or the General Partners is, for purposes of Section 13(d) or 13(g) of
the Exchange Act, the beneficial owner of any of the securities covered by this
Statement.
The percentages of Common Stock calculated in this Item 5 are based upon
1,854,692 shares of Common Stock issued and outstanding as of July 31, 1998, as
disclosed in the Issuer's Form 10-Q filed with the Commission on July 31, 1998
for the fiscal quarter ended June 30, 1998.
Within the last 60 days, none of the Reporting Persons has been involved in
any transactions involving the Common Stock other than as described above.
No person other than the Reporting Persons has the right to receive or the
power to direct the receipt of dividends from the proceeds from the sale of the
Shares.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
---------------------------------------------------------------------
TO SECURITIES OF THE ISSUER.
---------------------------
Except as set forth in Item 4, to the best knowledge of the Reporting
Persons, no contracts, arrangements, understandings or relationships (legal or
otherwise) exist among the persons named in Item 2 or between such persons and
any other person with respect to any securities of the Issuer, including but not
limited to transfer or voting of any such securities, finder's fees, joint
venture, loan or option arrangements, puts or calls, guarantees of profits,
divisions of profits or losses, or giving or withholding of proxies.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
---------------------------------
Exhibit A: The Senior Subordinated Note, Preferred Stock and Warrant
Purchase Agreement, dated as of September 30, 1998, by
and among the Issuer, CIVC, MIG, and certain other
investors.
Page 16 of 25 Pages
<PAGE>
Exhibit B: The Certificate of Designation, Series A
Exhibit C: The Stockholders Agreement, dated September 30, 1998, by
and among the Issuer, CIVC, MIG and certain other
stockholders.
Exhibit D: The Registration Agreement, dated September 30, 1998, by
and among the Issuer, CIVC, MIG and certain other
stockholders.
Exhibit E: Agreement of Joint Filing, dated as of October 9, 1998,
among Buyer and BA Bank.
Exhibit F: Designation of Authority to Venrice R. Palmer.
Page 17 of 25 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
As to BA Bank, signing resolutions are incorporated by reference to
Schedule 13G Amendment #2 relating to Anaren Microwave, Inc. filed by BA Bank.
As to BAC, signature authority is included as Exhibit F.
Date: October 9, 1998
CONTINENTAL ILLINOIS VENTURE CORPORATION
By: /s/ Robert F. Perille
----------------------------
Print Name: Robert F. Perille
Its: Managing Director
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By: /s/ Venrice R. Palmer
----------------------------
Print Name: Venrice R. Palmer
Its: Counsel
BANKAMERICA CORPORATION
By: /s/ Venrice R. Palmer
----------------------------
Print Name: Venrice R. Palmer
Its: Counsel
MIG PARTNERS VIII
By: /s/ Robert F. Perille
----------------------------
Print Name: Robert F. Perille
Its: General Partner
/s/ Sheryl E. Bartol
--------------------------------
Sheryl E. Bartol
/s/ Matthew W. Clary
--------------------------------
Matthew W. Clary
Page 18 of 25 Pages
<PAGE>
/s/ Andrea P. Joselit
----------------------------
Andrea P. Joselit
/s/ Jeffrey M. Mann
----------------------------
Jeffrey M. Mann
/s/ Jason A. Mehring
----------------------------
Jason A. Mehring
/s/ Dennis P. McCrary
----------------------------
Dennis P. McCrary
/s/ Robert F. Perille
----------------------------
Robert F. Perille
Page 19 of 25 Pages
<PAGE>
SCHEDULE A
----------
The following table sets forth the names, addresses and principal
occupations of the directors and executive officers of Continental Illinois
Venture Corporation ("CIVC"). Each such person is a citizen of the United
----
States.
DIRECTORS AND OFFICERS
----------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME ADDRESS PRINCIPAL OCCUPATION
- --------------------------------------------------------------------------------
<S> <C> <C>
Jeremy G. Fair 231 South LaSalle Street Managing Director, Bank of
9th Floor America National Trust and
Chicago, IL 60697 Savings Association
- --------------------------------------------------------------------------------
William M. Goodyear 231 South LaSalle Street Group Executive Vice
13th Floor President, Bank of America
Chicago, IL National Trust and Savings
Association
- --------------------------------------------------------------------------------
Michael J. Murray BankAmerica Corporation President, Global Corporate
555 California Street and Investment Banking,
San Francisco, CA 94104 BankAmerica Corporation
- --------------------------------------------------------------------------------
Michael E. O'Neill BankAmerica Corporation President, Principal Investing
555 California Street and Wealth Management,
San Francisco, CA 94104 BankAmerica Corporation
- --------------------------------------------------------------------------------
Christopher J. Perry 231 South LaSalle Street President and Managing
7th Floor Director, Continental Illinois
Chicago, IL 60697 Venture Corporation
- --------------------------------------------------------------------------------
Terry E. Perucca 231 South LaSalle Street Group Executive Vice-President,
12th Floor Bank of America National
Chicago, IL 60697 Trust and Savings Association
- --------------------------------------------------------------------------------
</TABLE>
Page 20 of 25 Pages
<PAGE>
SCHEDULE A (continued)
----------------------
The following table sets forth the names, addresses and principal
occupations of the directors and executive officers of Bank of America National
Trust and Savings Association ("BA Bank"). Each such person is a citizen of the
-------
United States.
DIRECTORS
---------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME ADDRESS PRINCIPAL
OCCUPATION
- --------------------------------------------------------------------------------
<S> <C> <C>
Hugh L. McColl, Jr. BankAmerica Corporation Chairman and Chief
NationsBank Corporate Executive Officer
Center
100 N. Tryon
Charlotte, NC 28255
- --------------------------------------------------------------------------------
David A. Coulter BankAmerica Corporation President
555 California Street
San Francisco, CA 94104
- --------------------------------------------------------------------------------
James H. Hance, Jr. BankAmerica Corporation Vice Chairman and Chief
NationsBank Corporate Financial Officer
Center
100 N. Tryon
Charlotte, NC 28255
- --------------------------------------------------------------------------------
Kenneth D. Lewis BankAmerica Corporation President, Consumer and
NationsBank Corporate Commercial Banking
Center
100 N. Tryon
Charlotte, NC 28255
- --------------------------------------------------------------------------------
Michael J. Murray BankAmerica Corporation President, Global
555 California Street Corporate and Investment
San Francisco, CA 94104 Banking
- --------------------------------------------------------------------------------
Michael E. O'Neill BankAmerica Corporation President, Principal
555 California Street Investing and Wealth
San Francisco, CA 94104 Management
- --------------------------------------------------------------------------------
</TABLE>
Page 21 of 25 Pages
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C>
F. William Vandiver, Jr. BankAmerica Corporation Risk Management Executive
NationsBank Corporate
Center
100 N. Tryon
Charlotte, NC 28255
- --------------------------------------------------------------------------------
</TABLE>
EXECUTIVE OFFICERS
------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME ADDRESS PRINCIPAL OCCUPATION
- --------------------------------------------------------------------------------
<S> <C> <C>
Hugh L. McColl, Jr. BankAmerica Corporation Chairman and Chief Executive
NationsBank Corporate Officer
Center
100 N. Tryon
Charlotte, NC 28255
- -------------------------------------------------------------------------------
David A. Coulter BankAmerica Corporation President
555 California Street
San Francisco, CA 94104
- -------------------------------------------------------------------------------
James H. Hance, Jr. BankAmerica Corporation Vice Chairman and Chief
NationsBank Corporate Financial Officer
Center
100 N. Tryon
Charlotte, NC 28255
- -------------------------------------------------------------------------------
Kenneth D. Lewis BankAmerica Corporation President, Consumer and
NationsBank Corporate Commercial Banking
Center
100 N. Tryon
Charlotte, NC 28255
- -------------------------------------------------------------------------------
Michael J. Murray BankAmerica Corporation President, Global Corporate
555 California Street and Investment Banking
San Francisco, CA 94104
- -------------------------------------------------------------------------------
Michael E. O'Neill BankAmerica Corporation President, Principal
555 California Street Investing and Wealth
San Francisco, CA 94104 Management
- -------------------------------------------------------------------------------
</TABLE>
Page 22 of 25 Pages
<PAGE>
SCHEDULE A (continued)
----------------------
The following table sets forth the names, addresses and principal
occupations of the directors and executive officers of BankAmerica Corporation
("BAC"). Each such person is a citizen of the United States.
---
DIRECTORS
---------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
PRINCIPAL
NAME ADDRESS OCCUPATION
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Charles W. Coker Post Office Box 160 Chairman, Sonoco Products
Hartsville, SC 29551-0160 Company
- -----------------------------------------------------------------------------------------------------
David A. Coulter BankAmerica Corporation President, BankAmerica
555 California Street Corporation
San Francisco, CA 94104
- -----------------------------------------------------------------------------------------------------
Timm Crull c/o Hallmark Cards, Inc. Retired Chairman, Nestle
1024 E. Balboa Blvd. USA, Inc.
Newport Beach, CA 92661
- -----------------------------------------------------------------------------------------------------
Alan T. Dickson 2000 Two First Union Center Chairman of the Board,
Charlotte, NC 28282 Ruddick Corporation
- -----------------------------------------------------------------------------------------------------
Kathleen Feldstein 147 Clifton Street President, Economic
Belmont, MA 02178 Studies, Inc.
- -----------------------------------------------------------------------------------------------------
Paul Fulton First Stratford Building Chairman and CEO, Bassett
101 S. Stratford Road Furniture Industries, Inc.
Winston-Salem, NC 27104
- -----------------------------------------------------------------------------------------------------
Donald E. Guinn Pacific Telesis Center Chairman Emeritus, Pacific
130 Kearney Street, Room 3704 Telesis Group
San Francisco, CA 94108
- -----------------------------------------------------------------------------------------------------
C. Ray Holman Post Office Box 5840 Chairman and Chief
St. Louis, MO 63134 Executive Officer,
Mallinckrodt Inc.
- -----------------------------------------------------------------------------------------------------
W.W. Johnson P.O. Box 448 Chairman, Executive
SC3-240-18-17 Committee, BankAmerica
Columbia, SC 29202 Corporation
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 23 of 25 Pages
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Walter Massey Office of the President President, Morehouse
830 Westview Drive College
Atlanta, GA 30314
- -----------------------------------------------------------------------------------------------------
Hugh L. McColl, Jr. BankAmerica Corporation Chairman and Chief
NationsBank Corporate Center Executive Officer,
100 N. Tryon BankAmerica Corporation
Charlotte, NC 28255
- -----------------------------------------------------------------------------------------------------
Richard M. Rosenberg 555 California Street Retired Chairman and Chief
5th Floor Executive Officer,
San Francisco, CA 94194 BankAmerica Corporation
and Bank of America NT &
SA
- -----------------------------------------------------------------------------------------------------
O. Temple Sloan, Jr. Post Office Box 26006 Chairman, General Parts
Raleigh, NC 27611 Inc.
- -----------------------------------------------------------------------------------------------------
Meredith R. Spangler 668 Hempstead Place Chairman, C.D. Spangler
Charlotte, NC 28207-2320 Foundation
- -----------------------------------------------------------------------------------------------------
A. Michael Spence Memorial Way, Room 140 Dean of Graduate School of
Stanford, CA Business, Stanford
University
- -----------------------------------------------------------------------------------------------------
Ronald Townsend Gannett Television Communications Consultant
c/o WTLV-TV12
1070 East Adams Street
Jacksonville, FL 32202
- -----------------------------------------------------------------------------------------------------
Solomon Trujillo 1801 California Street President and Chief
52nd Floor Executive Officer, US West
Denver, CO 80202 Communications Group
- -----------------------------------------------------------------------------------------------------
Jackie M. Ward 5775 Peachtree-Dunwoody Road President and CEO,
Building G, Fourth Floor Computer Generation
Atlanta, Georgia 30342 Incorporated
- -----------------------------------------------------------------------------------------------------
Virgil R. Williams Post Office Box 105106 Chairman and CEO,
Atlanta, Georgia 30087 Williams Group
International, Inc.
- -----------------------------------------------------------------------------------------------------
Shirley Young Vice President,
General Motors
Corporation
- -----------------------------------------------------------------------------------------------------
</TABLE>
OFFICERS
--------
Page 24 of 25 Pages
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL
NAME ADDRESS OCCUPATION
- --------------------------------------------------------------------------------
<S> <C> <C>
Hugh L. McColl, Jr. BankAmerica Corporation Chairman and Chief
NationsBank Corporate Center Executive Officer
100 N. Tryon
Charlotte, NC 28255
- --------------------------------------------------------------------------------
David A. Coulter BankAmerica Corporation President
555 California Street
San Francisco, CA 94104
- --------------------------------------------------------------------------------
James H. Hance, Jr. BankAmerica Corporation Vice Chairman and Chief
NationsBank Corporate Center Financial Officer
100 N. Tryon
Charlotte, NC 28255
- --------------------------------------------------------------------------------
Kenneth D. Lewis BankAmerica Corporation President, Consumer and
NationsBank Corporate Center Commercial Banking
100 N. Tryon
Charlotte, NC 28255
- --------------------------------------------------------------------------------
Michael J. Murray BankAmerica Corporation President, Global
555 California Street Corporate
San Francisco, CA 94104 and Investment Banking
- --------------------------------------------------------------------------------
Michael E. O'Neill BankAmerica Corporation President, Principal
555 California Street Investing and Principal
San Francisco, CA 94104 Investment
- --------------------------------------------------------------------------------
</TABLE>
Page 25 of 25 Pages
<PAGE>
EXHIBIT A
SENIOR SUBORDINATED NOTE, PREFERRED STOCK AND
WARRANT PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 30, 1998
AMONG
ZIMMERMAN SIGN COMPANY
CONTINENTAL ILLINOIS VENTURE CORPORATION,
MIG PARTNERS VIII
AND
THE MANAGEMENT PURCHASERS LISTED HEREIN
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Section 1. Authorization and Closing.............................................................................1
1A. Authorization of Notes, Warrants and Series A Preferred. ......................................1
1B. Purchase and Sale of the Notes, the Warrants and Series A Preferred. ..........................2
1C. The Closing.....................................................................................2
1D. Closing Fees....................................................................................2
Section 2. Conditions of the Purchasers' Obligation at the Closing...............................................2
2A. Loan Agreement..................................................................................2
2B. Share Purchase Option Transaction. ............................................................2
2C. Stockholders Agreement and Registration Agreement...............................................3
2D. Representations and Warranties; Covenants.......................................................3
2E. Certificate of Designation......................................................................3
2F. Delivery of Notes, Warrants and Series A Preferred..............................................3
2G. Resignation of Directors........................................................................3
2H. Termination of Registration Rights Agreement....................................................4
2I. Securities Law..................................................................................4
2J. No Pending Action...............................................................................4
2K. No Materially Adverse Effect....................................................................4
2L. Indebtedness; No Default........................................................................4
2M. Environmental Reports...........................................................................4
2N. Liquidity.......................................................................................4
2O. Opinion of Counsel..............................................................................4
2P. Closing Documents...............................................................................4
2Q. The Purchasers' Fees and Expenses...............................................................6
2R. Total Transaction Fees..........................................................................6
2S. Legal Investment................................................................................6
2T. Proceedings.....................................................................................7
2U. Waiver..........................................................................................7
Section 3. Affirmative Covenants.................................................................................7
3A. Business Maintenance............................................................................7
3B. Financial Statements and Other Information......................................................8
3C. Inspection of Property.........................................................................10
3D. Compliance with Certain Agreements.............................................................10
3E. Proprietary Rights.............................................................................11
3F. Environmental Matters..........................................................................11
3G. ERISA Notices and Requests.....................................................................11
3H. SBIC Regulatory Provisions.....................................................................12
3I. Current Public Information.....................................................................14
Section 4. Financial Covenants..................................................................................14
4A. Financial Covenants When Notes Outstanding.....................................................14
</TABLE>
- i -
<PAGE>
<TABLE>
<S> <C>
4B. Financial Covenants When Series A Preferred Outstanding........................................16
Section 5. Negative Covenants...................................................................................18
5A. Acquisition; Consolidation; Reorganization.....................................................18
5B. Sale, Lease or Transfer of Assets..............................................................19
5C. Distributions..................................................................................19
5D. Investments....................................................................................19
5E. Limitations on Indebtedness....................................................................20
5F. Contingent Liabilities.........................................................................20
5G. Liens..........................................................................................20
5H. Amendment to the Company's Articles of Incorporation and Bylaws; Stock
Splits.........................................................................................20
5I. Conduct of Business............................................................................20
5J. Affiliated Transactions........................................................................21
5K. Restrictive Agreements; Conflicting Agreements.................................................21
5L. Public Disclosures.............................................................................21
5M. Use of Proceeds................................................................................21
5N. Fiscal Year....................................................................................21
5O. Amendment of Indebtedness......................................................................21
5P. Equity Issuances...............................................................................22
5Q. ERISA Compliance...............................................................................22
Section 6. Representations and Warranties of the Company........................................................23
6A. Organization and Corporate Power...............................................................23
6B. Capital Stock and Related Matters..............................................................23
6C. Subsidiaries; Partnerships.....................................................................24
6D. Authorization; No Breach.......................................................................24
6E. Financial Statements...........................................................................24
6F. Absence of Undisclosed Liabilities.............................................................25
6G. No Material Adverse Change.....................................................................25
6H. Assets.........................................................................................25
6I. Investment Company Act.........................................................................26
6J. Margin Regulations.............................................................................26
6K. Tax Matters....................................................................................26
6L. Contracts and Commitments......................................................................26
6M. Trademarks, Patents............................................................................28
6N. Litigation, etc................................................................................28
6O. No Forfeiture..................................................................................29
6P. Small Business Matters.........................................................................29
6Q. Brokerage......................................................................................29
6R. Insurance......................................................................................29
6S. Employees......................................................................................29
6T. Compliance with Laws...........................................................................30
6U. Affiliated Transactions........................................................................30
6V. Indebtedness...................................................................................30
6W. Loan Agreement.................................................................................30
6X. ERISA..........................................................................................30
</TABLE>
- ii -
<PAGE>
<TABLE>
<S> <C>
6Y. Environmental and Safety Matters...............................................................32
6Z. Real Property Holding Corporation Status.......................................................33
6AA. Certain Government Regulations.................................................................33
6BB. Closing Date...................................................................................33
Section 7. Representations and Warranties of BA Purchasers......................................................33
7A. Due Authorization..............................................................................34
7B. Consents and Approvals.........................................................................34
Section 8. Representations and Warranties and Covenants of all Purchasers.......................................34
8A. Investment Intent..............................................................................34
8B. Access: Sophistication: etc....................................................................34
Section 9. Definitions..........................................................................................35
9A. Defined Terms..................................................................................35
9B. Accounting Terms...............................................................................47
Section 10. Events of Default...................................................................................47
10A. Events of Default..............................................................................47
10B. Default Interest Rate..........................................................................50
10C. Remedy if Bankruptcy...........................................................................50
10D. Remedy if Other Event of Default...............................................................50
10E. Waivers........................................................................................51
10F. Right of Setoff................................................................................51
Section 11. Miscellaneous.......................................................................................51
11A. Expenses.......................................................................................51
11B. Remedies.......................................................................................52
11C. Indemnification................................................................................52
11D. Usury..........................................................................................53
11E. Consent to Amendments..........................................................................53
11F. Successors and Assigns.........................................................................53
11G. Severability...................................................................................54
11H. Counterparts...................................................................................54
11I. Descriptive Headings; Interpretation...........................................................54
11J. Governing Law..................................................................................54
11K. Notices........................................................................................54
11L. Survival of Agreement; Indemnities.............................................................55
11M. Taxes and Fees.................................................................................56
11N. Jurisdiction and Venue.........................................................................56
11O. Waiver of Right to Jury Trial..................................................................57
11P. Consideration for the Warrants and Warrant Stock...............................................57
11Q. No Strict Construction.........................................................................57
11R. Complete Agreement.............................................................................58
11S. Time of Essence................................................................................58
11T. No Third Party Beneficiaries...................................................................58
11U. Confidentiality of Information.................................................................58
</TABLE>
- iii -
<PAGE>
Schedules and Exhibits:
List of Exhibits
List of Disclosure Schedules
Schedule of Purchasers
- iv -
<PAGE>
SENIOR SUBORDINATED NOTE, PREFERRED STOCK AND
WARRANT PURCHASE AGREEMENT
--------------------------
THIS AGREEMENT (the "Agreement") is made as of September 30, 1998 by
---------
and among Continental Illinois Venture Corporation, a Delaware corporation
("CIVC"), MIG Partners VIII, a Delaware partnership ("MIG"), Zimmerman Sign
- ------ ---
Company, a Texas corporation (the "Company") and certain members of the
-------
Company's management listed on the signature pages hereto as the "Management
Purchasers" (the "Management Purchasers"). CIVC and MIG are referred to herein
---------------------
collectively as the "BA Purchasers" and each is referred to herein individually
-------------
as a "BA Purchaser." The BA Purchasers and the Management Purchasers are
------------
referred to herein collectively as the "Purchasers" and each is referred to
----------
herein individually as a "Purchaser." Except as otherwise indicated herein,
---------
capitalized terms used herein are defined in Section 9 hereof.
---------
The Company is initiating a plan to recapitalize its existing debt and
equity structure through a series of transactions including, but not limited to,
refinancing of funded debt, repurchase of stock from certain shareholders,
issuance of capital stock and restructuring certain rights held by certain
stockholders of the Company (the "Recapitalization"). The Purchasers are
----------------
entering into this Agreement to provide financing for the Company's
Recapitalization.
In connection with the Recapitalization, the Company is entering into
a Second Amended and Restated Revolving Credit and Term Agreement, dated as of
the date hereof (the "Loan Agreement"), with Comerica Bank-Texas, a Texas
--------------
banking association (the "Bank"), pursuant to which the Bank has agreed to make
----
available to the Company a revolving credit facility of $17,000,000 (the
"Revolver") and a term loan facility in the amount of $2,000,000 (the "Term A
- --------- ------
Loan"), a term loan facility in the amount of $1,000,000 (the "Term B Loan") and
- ---- -----------
a term loan facility in the amount of $3,500,000 (the "Term C Loan," and
-----------
together with the Term A Loan and Term B Loan, the "Term Loans").
----------
In consideration of the mutual covenants and promises contained herein
and for the good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
Section 1. Authorization and Closing.
1A. Authorization of Notes, Warrants and Series A Preferred. The
-------------------------------------------------------
Company shall authorize the issuance and sale to the Purchasers of (i) 12.00%
Senior Subordinated Notes, in the form attached hereto as Exhibit A (any such
---------
note, a "Note" and all notes issued hereunder or in respect of any Note,
----
collectively, the "Notes"), in the aggregate principal amount of $4,000,000,
-----
(ii) stock purchase warrants, in the form attached hereto as Exhibit B (any such
---------
warrant, a "Warrant" and all warrants issued pursuant to this clause (ii), or in
------- -----------
respect of any such Warrant, collectively, the "Warrants") initially exercisable
--------
to 1,197,194 shares of Common Stock and (iii) 52,500 shares of the Company's
Series A Preferred Stock, par value $0.01 per share (the "Series A Preferred"),
------------------
having the rights and preferences set forth in Exhibit C attached hereto. The
---------
Notes, Series A Preferred, the Warrants and Warrant Stock sometimes are referred
to herein collectively as the "Securities."
----------
-1-
<PAGE>
1B. Purchase and Sale of the Notes, the Warrants and Series A
---------------------------------------------------------
Preferred. At the Closing (as defined in Section 1C below) the Company shall
- --------- ----------
issue to each of the Purchasers and, subject to the terms and conditions set
forth herein, each of the Purchasers shall severally and independently (and not
jointly) purchase from the Company, (i) Notes in the aggregate principal amount
set forth opposite such Purchaser's name on the attached Schedule of Purchasers,
----------------------
in each case, at a purchase price equal to the price set forth opposite such
Purchaser's name on the attached Schedule of Purchasers, (ii) Warrants initially
----------------------
exercisable to acquire the aggregate number of shares of Common Stock set forth
opposite such Purchaser's name on the attached Schedule of Purchasers, in each
----------------------
case, at a purchase price equal to the price set forth opposite such Purchaser's
name on the attached Schedule of Purchasers, and (iii) the number of shares of
----------------------
Series A Preferred set forth opposite such Purchaser's name on the attached
Schedule of Purchasers, in each case, at a purchase price equal to the price set
- ----------------------
forth opposite such Purchaser's name on the attached Schedule of Purchasers.
----------------------
1C. The Closing. The sale of the Notes, the Series A Preferred and
-----------
the Warrants to each Purchaser hereunder shall constitute separate sales
hereunder. The closing of the purchase and sale of the Securities (the
"Closing") shall take place on September 30, 1998 (the "Closing Date") at the
------- ------------
offices of Kirkland & Ellis or at such other place or on such other date as may
be mutually agreeable to the Company and the Purchasers. At the Closing, the
Company shall deliver to each of the Purchasers instruments and certificates for
the Notes, Series A Preferred and the Warrants to be purchased by such
Purchaser, issued to such Purchaser, registered in such Purchaser's or its
nominee's name, upon payment of the purchase price therefor by wire transfer of
immediately available funds, to accounts designated by the Company in the amount
set forth opposite such Purchaser's name on the attached Schedule of Purchasers.
----------------------
1D. Closing Fees. On the Closing Date, the Company shall pay to the
------------
BA Purchasers for their own account a closing fee (the "Closing Fee") in an
-----------
aggregate amount of $200,000, by wire transfer of immediately available funds to
accounts specified by the BA Purchasers in the respective amounts set forth
opposite each BA Purchaser's name on the attached Schedule of Purchasers.
----------------------
Section 2. Conditions of the Purchasers' Obligation at the Closing.
-------------------------------------------------------
The obligation of each Purchaser to purchase and pay for Securities issued
hereunder at the Closing is subject to the satisfaction as of the Closing of the
following conditions to such Purchaser's satisfaction in its sole discretion:
2A. Loan Agreement. The Loan Agreement and all other documents and
--------------
agreements contemplated thereby shall be in form and substance satisfactory to
the Purchasers and their counsel, without amendment or modification thereof, and
shall be in full force and effect, all conditions to the obligations of the
Banks to make loans thereunder shall have been satisfied, and the Banks shall
have agreed to advance to the Company immediately following the Closing or
simultaneously therewith all amounts under the Term Loans and up to $17,000,000
under the Revolver (excluding the aggregate amount of unused availability
thereunder).
2B. Share Purchase Option Transaction. (i) Each of the Company and
---------------------------------
David Anderson shall have entered into a share purchase option agreement in the
form of Exhibit D
---------
-2-
<PAGE>
attached hereto (the "Share Purchase Option Agreement") with Geneve Securities
Holding Corp. ("GSH"), Southern Investors Corp. ("SIC"), Southern Mortgage
--- ---
Holding Corporation ("SMHC"), Geneve Securities Portfolio Corp. ("Geneve") and
---- ------
First International Reinsurance Company, Inc. ("FIRC") and such Share Purchase
----
Option Agreement shall not have been amended or modified and shall be in full
force and effect as of the Closing, (ii) the Company and David Anderson shall
have entered in a share purchase agreement in the form of Exhibit E attached
---------
hereto (the "Anderson Purchase Agreement") and such Anderson Purchase Agreement
---------------------------
shall not have been amended or modified and shall be in full force and effect as
of the Closing, and (iii) the Company and Anderson shall have entered into the
side agreement in the form of Exhibit F attached hereto (the "Anderson Side
--------- -------------
Agreement") and such Anderson Side Agreement shall not have been amended or
- ---------
modified and shall be in full force and effect as of the Closing.
2C. Stockholders Agreement and Registration Agreement. The
-------------------------------------------------
Stockholders Agreement in the form of Exhibit G hereto and the Registration
---------
Agreement in the form of Exhibit H hereto shall have been duly authorized,
---------
executed and delivered by each other party thereto and shall be in full force
and effect as of the Closing.
2D. Representations and Warranties; Covenants. The representations
-----------------------------------------
and warranties contained in Section 6 hereof shall be true and correct at and as
---------
of the Closing as though then made, the Company shall have performed prior to
the Closing all of the covenants required to be performed by it hereunder and
under the other documents, agreements and instruments executed in connection
herewith that are to be complied with or performed by the Company prior to the
Closing.
2E. Certificate of Designation. The Company shall have duly adopted,
--------------------------
executed and filed with the Secretary of State of Texas a Certificate of
Designation establishing the terms and the relative rights and preferences of
each of (i) the Series A Preferred in the form set forth in Exhibit C attached
---------
hereto (the "Series A Certificate of Designation"), (ii) the Series B Preferred
-----------------------------------
in the form set forth on Exhibit I attached hereto (the "Series B Certificate of
--------- -----------------------
Designation"), and (iii) the Series C Preferred in the form set forth in Exhibit
- ----------- -------
J attached hereto (the "Series C Certificate of Designation," and together with
- - -----------------------------------
the Series A Certificate of Designation and the Series B Certificate of
Designation, the "Certificates of Designation"), and the Company shall not have
---------------------------
adopted or filed any other document designating terms, relative rights or
preferences of its preferred stock. The Certificates of Designation shall be in
full force and effect as of the Closing under the laws of Texas and shall not
have been amended or modified.
2F. Delivery of Notes, Warrants and Series A Preferred. The Company
--------------------------------------------------
shall have simultaneously sold to each Purchaser the Notes, Series A Preferred
and the Warrants to be purchased by such Purchaser hereunder at the Closing and
shall have received payment therefor in full.
2G. Resignation of Directors. The Company shall have received
------------------------
resignations effective as of the Closing of Steve Lapin and Roy T.K. Thung as
members of the Company's board of directors (the "Board"), and Robert F. Perille
-----
and Andrea P. Joselit shall have been elected to the Board.
-3-
<PAGE>
2H. Termination of Registration Rights Agreement. The Registration
--------------------------------------------
Rights Agreement, dated as of December 1, 1996 (the "Rights Agreement"), among
----------------
the Company, GSH, SIC, SMHC, Geneve, and FIRC shall have been terminated without
any liability to the Company.
2I. Securities Law. The Company shall have made all filings under
--------------
any applicable Securities Laws necessary to consummate, in compliance with such
Laws, all issuances of the Notes, Series A Preferred, and the Warrants and other
securities pursuant to this Agreement, the Share Purchase Option Agreements, or
as contemplated hereby or thereby and the issuance of the Common Stock upon
exercise of the Warrants.
2J. No Pending Action. No action, suit, proceeding or governmental
-----------------
investigation shall be pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its stockholders which (a) if
adversely determined could have a Materially Adverse Effect or (b) seeks to or
could restrain, prevent or, in the judgment of the Purchasers, impose any
adverse condition upon the financing contemplated herein.
2K. No Materially Adverse Effect. Since December 31, 1997, there
----------------------------
shall not have occurred a Materially Adverse Effect.
2L. Indebtedness; No Default. The Company shall be free from all
------------------------
Indebtedness, except for the Senior Indebtedness and the Notes issued hereby.
The consummation of the transactions contemplated by this Agreement will not
result in, nor shall there exist any Event of Default or event which, with the
giving of notice or lapse of time or both, would be an Event of Default or
breach under or with respect to any Indebtedness of the Company, after giving
effect to the transactions contemplated by this Agreement, the Share Purchase
Option Agreements or the Loan Agreement, and there shall not exist any failure
by the Company to observe or perform in any material respect any covenant,
condition or agreement to be observed or performed pursuant to the terms of any
of the foregoing.
2M. Environmental Reports. The environmental reviews and audits
---------------------
delivered by the Company to the Purchasers shall be in form, scope and substance
satisfactory to the Purchasers with respect to all of the real estate and
businesses of the Company.
2N. Liquidity. After giving effect to the Recapitalization, the
---------
receipt by the Company of proceeds of the issuance of the Securities hereunder
and payment of all estimated legal, investment banking, accounting and other
fees related to the financing contemplated herein, the Company shall have
unused availability under the Loan Agreement of at least $1,500,000.
2O. Opinion of Counsel. The Purchasers shall have received from
------------------
Jackson Walker L.L.P., counsel for the Company, opinions with respect to the
matters set forth in Exhibit K attached hereto, which shall be addressed to the
---------
Purchasers, dated the date of the Closing and in form and substance reasonably
satisfactory to the Purchasers and their counsel.
2P. Closing Documents. The Company shall have delivered to the
-----------------
Purchasers all of the following documents:
-4-
<PAGE>
(a) an Officer's Certificate of the Company, dated the date of
the Closing, stating that (i) the conditions specified in Section 2 have
---------
been fully satisfied; (ii) since December 31, 1997 there has been no
Materially Adverse Effect or event, development, circumstance or other
matter which may impose any materially adverse condition upon the
consummation of the financing contemplated hereby and (iii) such Person has
delivered to the Purchasers at least one day prior to the Closing all
environmental reviews and audits with respect to all of the real estate and
businesses of such entity;
(b) copies of the resolutions duly adopted by the board of
directors of the Company authorizing the execution, delivery and
performance of this Agreement, the issuance of the Securities, the Share
Purchase Option Agreement, the Anderson Purchase Agreement, the Anderson
Side Letter, the Stockholders Agreement, the Registration Agreement and
each of the other agreements contemplated hereby or thereby to which the
Company is a party, the reservation of 1,197,194 shares of Common Stock for
issuance upon exercise of the Warrants, and the filing of the Certificates
of Designation contemplated by Section 2E above accompanied by an Officer's
----------
Certificate of the Company certifying that the same are in full force and
effect without modification or amendment, accompanied by a certification of
the incumbency of each individual executing any agreement or document
contemplated hereby in the name of the Company;
(c) copies of the Articles of Incorporation and bylaws of the
Company as in effect as of the Closing, certified by an officer of the
Company together with a certificate of status or similar evidence from the
State of Texas and each jurisdiction in which the Company is then qualified
to do business as a foreign corporation or in which the ownership of its
assets or the conduct of its business would reasonably require it to so
qualify, in each case dated a recent date prior to the Closing Date;
(d) copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of the
transactions contemplated hereunder (including all environmental
disclosures, blue sky filings and waivers of preemptive rights and rights
of first refusal);
(e) copies of the Loan Agreement and the Share Purchase Option
Agreements, each as in effect at the Closing, in each case certified by an
officer of the Company;
(f) the Stockholders Agreement and the Registration Agreement,
executed by the Company;
(g) evidence satisfactory to the Purchasers of the payment in
full of all Indebtedness and related obligations owing or owed by the
Company (other than pursuant to the Loan Agreement and the Notes), the
entire amount of which will be paid contemporaneously with the Closing;
-5-
<PAGE>
(h) evidence of insurance coverage regarding the Company
reasonably satisfactory in terms, amount and scope and provided by insurers
all reasonably satisfactory to the Purchasers;
(i) the audited consolidated balance sheet of the Company as of
December 31, 1997 and December 31, 1996 and the related consolidated and
consolidating statements of earnings and cash flows as of and for the
Fiscal Years then ended;
(j) for each Purchaser which is an SBIC, duly completed and
executed SBA Forms 480, 652, and 1031 (Part A) together with a five-year
business plan showing the Company's financial projections (including
balance sheets and income and cash flows statements) for each five-year
period and a written statement from the Company regarding its intended use
of the proceeds from the financing;
(k) the Stockholders Schedule, which shall include a list of each
---------------------
of the following after giving effect to the transactions contemplated by
this Agreement: (a) the name of each of the Company's directors, (b) the
name and title of each of the Company's officers, (c) a list from the
Company's transfer agent setting forth the name of each record holder of
the Company's Common Stock and the number of shares held by such holder as
of the record date of the May 23, 1998 shareholders meeting and (d) the
name of each of the Company's other stockholders setting forth the number
and class of shares held; and
(l) such other documents relating to the transactions
contemplated by this Agreement as either the BA Purchasers or Kirkland &
Ellis, as special counsel to the Purchasers, may reasonably request.
2Q. The Purchasers' Fees and Expenses. The Company shall have paid
---------------------------------
the Closing Fee to the BA Purchasers as contemplated by Section 1D above and
----------
shall have reimbursed them for expenses incurred in connection with the
transactions contemplated herein, as contemplated by Section 11A below.
-----------
2R. Total Transaction Fees. The total amount of transaction fees and
----------------------
expenses payable by the Company in connection with the transactions contemplated
hereby shall in no event exceed the fees set forth on the Transaction Fees
----------------
Schedule attached hereto.
- --------
2S. Legal Investment. Each Purchaser shall be satisfied that this
----------------
Agreement and the Securities shall be in full compliance with all Laws, and all
necessary governmental and third-party approvals will have been obtained which
are applicable to the transactions contemplated hereby. The issuance by the
Company and the purchase by the Purchasers, of the Securities shall not be
prohibited by any applicable Laws and shall not adversely impact or subject the
Company or any BA Purchaser to any penalty or liability pursuant to any
applicable Laws.
-6-
<PAGE>
2T. Proceedings. All corporate and other proceedings taken or
-----------
required to be taken by the Company in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto shall be satisfactory in form and substance to the
Purchasers and Kirkland & Ellis, as special counsel to the BA Purchasers.
2U. Waiver. Any condition specified in this Section 2 may be waived
------ ---------
by the Purchasers if consented to by the Purchasers; provided that no such
--------
waiver shall be effective against the Purchasers unless it is set forth in a
writing executed by each Purchaser.
Section 3. Affirmative Covenants. For so long as any Notes or Series
---------------------
A Preferred are outstanding, unless otherwise indicated in this Section 3, the
---------
Company will comply at all times with the following affirmative covenants and
will cause each of its Subsidiaries to comply at all times with the following
affirmative covenants:
3A. Business Maintenance.
--------------------
(a) at all times cause to be done all things necessary to
maintain, preserve and renew its corporate existence and good standing in
the jurisdiction of its incorporation, to qualify and to remain qualified
as a foreign corporation in each jurisdiction in which such qualification
is required, except where the failure to be so qualified would not have a
Materially Adverse Effect, and use its reasonable efforts to maintain,
preserve and renew all material contracts, licenses, authorizations and
permits necessary to the conduct of its businesses;
(b) maintain and keep its properties that are used in, or that
are useful to and material to, its businesses in good repair, working order
and condition, and from time to time make all such repairs, renewals and
replacements, so that its businesses may be properly and advantageously
conducted in all respects at all times in a manner consistent with the
Company's past practices;
(c) continue in force insurance policies (including self-
insurance retention plans consistent with past practices) with financially
sound and reputable insurance companies covering risks of such types and
covering casualties, risks and contingencies of such types and in amounts
not less than as are customary for prudent corporations of similar size
engaged in similar lines of business under similar circumstances;
(d) pay and discharge when payable all Taxes, assessments and
governmental charges imposed upon its properties or upon the income or
profits therefrom (in each case before the same becomes delinquent and
before penalties accrue thereon) and all material claims for labor,
materials or supplies that if unpaid might by law become a lien upon any of
its property, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings and adequate reserves (as
determined in accordance with GAAP) have been established on its books with
respect thereto;
-7-
<PAGE>
(e) comply with all other obligations that it incurs pursuant to
any material contract or agreement, whether oral or written, express or
implied, as such obligations become due, unless and to the extent that the
same are being contested in good faith and by appropriate proceedings and
adequate reserves (as determined in accordance with GAAP) have been
established on its books with respect thereto;
(f) comply in all material respects with all applicable Laws; and
(g) maintain true and proper books of record and account that
fairly present its financial condition and results of operations and make
provisions on its financial statements for all such proper reserves as in
each case are required in accordance with GAAP.
3B. Financial Statements and Other Information. Deliver to a
------------------------------------------
representative or representatives designated by the Majority Holders (or, in the
absence of any such designation, the BA Purchasers):
(a) as soon as available, but in any event within 30 days after
the end of each fiscal month (except for months which end a fiscal quarter,
in which case within 45 days of such quarter end and except for months
which end the fiscal year, in which case within 90 days of such year end),
(i) a copy of the unaudited consolidated and consolidating balance sheets
of the Company and its Subsidiaries as of the end of such month and the
related consolidated and consolidating statements of earnings, retained
earnings and cash flows for such month and for the portion of the Fiscal
Year ending as of the end of such month, all in reasonable detail and
prepared in accordance with GAAP (subject to normal year-end adjustments
and the exclusion of such footnotes as may be required in accordance with
GAAP) accompanied in each case by comparisons to the corresponding periods
in the preceding Fiscal Year (other than for the Fiscal Year ending
December 31, 1998) and (ii) so long as any Notes or Series A Preferred are
outstanding, an Officer's Certificate executed by the Chief Financial
Officer of the Company certifying that to such officer's knowledge no
Default or Event of Default, or default or event of default with respect to
the Loan Agreement or any other material Contract to which the Company or
any of its Subsidiaries is subject has occurred during the period in
question or is continuing or, if a Default or Event of Default or any such
default or event of default under the Loan Agreement has so occurred or is
continuing, a statement as to the nature thereof and any action which has
been taken or is proposed to be taken with respect thereto;
(b) as soon as available, but in any event within 90 days after
the close of each Fiscal Year, a copy of the audited consolidated and
consolidating financial statements of the Company and its Subsidiaries,
consisting of an audited consolidated and consolidating balance sheet as at
the end of such Fiscal Year and audited consolidated and consolidating
statements of earnings, retained earnings and cash flows for such Fiscal
Year, setting forth in comparative form in each case the audited
consolidated and consolidating figures for the previous Fiscal Year, which
financial statements shall be
-8-
<PAGE>
prepared in accordance with GAAP, certified without qualification by a
nationally recognized firm of independent certified public accountants;
(c) simultaneously with the delivery of the financial statements
referred to in Section 3B(a) prepared with respect to or as of the end of
-------------
any month included in any Fiscal Year, an Officer's Certificate executed by
the Chief Financial Officer of the Company (a) setting forth in reasonable
detail, and certifying to such officer's knowledge the accuracy of,
computations demonstrating compliance with the covenants set forth in
Section 4 or Section 5E, and (b) certifying that all such financial
--------- ----------
statements are complete and correct in all material respects and present
fairly in accordance with GAAP (subject to normal year-end adjustments and
the exclusion of such footnotes as may be required in accordance with GAAP)
the consolidated and consolidating financial position, the consolidated and
consolidating results of operations and cash flows and changes in
stockholders' equity of the Company and its Subsidiaries as of the end of
such period and for the period then ended;
(d) as soon as practicable, but in any event within (a) two
Business Days after the Company becomes aware of the existence of any Event
of Default or any Default, or default or event of default under the Loan
Agreement, or any development (including litigation) or other information
which could reasonably be expected to have a Materially Adverse Effect or
(b) two Business Days after the Company receives notice of the existence of
any default or event of default with respect to any other material
agreement to which the Company or any of its Subsidiaries is subject,
telephonic notice specifying the nature of such condition, event,
development or information, including the anticipated effect thereof, which
notice shall be promptly confirmed in writing within two days, which
writing shall set forth the details of such condition, event, development
or information and the action which is proposed to be taken by the Company
and its Subsidiaries with respect thereto;
(e) promptly upon receipt thereof, copies of any reports
submitted to the Company or any of its Subsidiaries by its independent
auditor in connection with the examination of the financial statements of
the Company or any of its Subsidiaries made by such auditor, including
reports arising out of any separate audit or other accounting or financial
review of the Company or any Subsidiary of the Company;
(f) promptly after the commencement thereof, notice of all
actions, suits, and proceedings before any Government Entity affecting the
Company or any of its Subsidiaries which the Company believes, if adversely
determined, could have a Materially Adverse Effect;
(g) promptly after the commencement thereof or promptly after the
Company or any Subsidiary of the Company becomes aware of the commencement
or threat thereof, notice of any Forfeiture Proceeding;
(h) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which the Company sends
to its stockholders,
-9-
<PAGE>
and copies of all regular, periodic or special reports, and all
registration statements, which the Company files with the Securities and
Exchange Commission or any other securities exchange or securities market;
(i) promptly after the furnishing thereof, copies of any
statement or report furnished to any holder of Senior Indebtedness pursuant
to the terms of the Loan Agreement (or any refining of or substitution
thereof), and not otherwise required to be furnished to the Majority
Holders pursuant to any other paragraph of this Section 3B;
----------
(j) promptly after the receipt thereof, a copy of any notice,
summons, or citation concerning any liabilities or investigatory, remedial
or corrective obligations arising under Environmental and Safety
Requirements and any subsequent material correspondence or other document
relating thereto which could have a Materially Adverse Effect; and
(k) such other information respecting the Company's or its
Subsidiaries' business or financial condition as any Majority Holder may,
from time to time, request in writing.
Each of the financial statements referred to in Sections 3B(a) or 3B(b)
-------------- -----
(including the notes thereto, if any) shall be accurate and complete in all
material respects, consistent with the books and records of the Company and its
Subsidiaries (which, in turn, are accurate and complete in all material
respects), present fairly the consolidated financial position, results of
operations and cash flows of the Company and its Subsidiaries, and prepared in
accordance with GAAP, consistently applied, as of the dates and for the periods
set forth therein, subject in the case of the unaudited financial statements to
the lack of footnote disclosure and changes resulting from normal year-end audit
adjustments (none of which would, alone or in the aggregate, have a Materially
Adverse Effect), and except as disclosed on the Financial Statements Schedule,
-----------------------------
such financial statements shall be complete and correct in all material respects
and shall be prepared on a basis consistent with the basis on which the
financial statements referenced in Section 6E were prepared.
----------
3C. Inspection of Property. Permit any Majority Holder or any of
----------------------
their representatives, upon reasonable prior notice, during normal business
hours and at such party's expense to (i) visit and inspect any of the properties
of the Company and any of its Subsidiaries, and (ii) examine the corporate and
financial records of the Company and any of its Subsidiaries and make copies
thereof or extracts therefrom.
3D. Compliance with Certain Agreements. (i) Perform and observe all
----------------------------------
of its obligations to each Securityholder and each holder of Registrable
Securities (as defined in the Registration Agreement) pursuant to this
Agreement, the Notes, the Warrants, the Registration Agreement, the Stockholders
Agreement, the Company's Articles of Incorporation and each other agreement or
document executed and delivered to the Purchasers or any Securityholder pursuant
hereto and (ii) subject to the terms and conditions set forth therein, perform
and observe all of its rights and obligations under the Share Option Purchase
Agreement, including without limitation, the exercise of each of the options to
purchase the shares pursuant to the terms thereof,
-10-
<PAGE>
and perform and observe all of its rights and obligations under the Anderson
Purchase Agreement.
3E. Proprietary Rights. Possess and maintain all material
------------------
Proprietary Rights necessary to the conduct of its business and own all right,
title and interest in and to, or have a valid license for, all material
Proprietary Rights used by the Company and/or its Subsidiaries, in the conduct
of their respective businesses. None of the Company or any of its Subsidiaries
shall take any action, or fail to take any action, which would result in the
invalidity, abuse, misuse or unenforceability of any of such material
Proprietary Rights.
3F. Environmental Matters. Comply in all material respects with all
---------------------
Environmental and Safety Requirements and all material permits, licenses or
other authorizations issued thereunder; respond immediately to any Release or
threatened Release of any Hazardous Material at any of the properties of the
Company or any of its Subsidiaries or related to the operations of the Company
or any of its Subsidiaries in a manner which complies in all material respects
with all Environmental and Safety Requirements and reasonably mitigates any risk
to human health or the environment; and provide such documents or information
relating to matters arising under the Environmental and Safety Requirements as
any Purchaser may reasonably request.
3G. ERISA Notices and Requests.
--------------------------
(a) Provide written notice to the Securityholders as soon as
practicable, and in any event within five Business Days, in the event that
(i) the Company or any of its ERISA Affiliates discovers that any of them
fails to comply in all material respects with any applicable Laws with
respect to any Plan which could reasonably be expected to result in
liability to the Company or any of its ERISA Affiliates in excess of
$250,000, (ii) the Company or any member of its Controlled Group receives
notice from the IRS or the DOL that the Company or any ERISA Affiliate
failed to meet the minimum funding requirements of any Plan, and include
therewith a copy of such notice, (iii) the Company or any member of its
Controlled Group gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Title IV of ERISA) in respect of any Plan
or Multiemployer Plan which might constitute grounds for a partial or
complete termination of such Plan or Multiemployer Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan or Multiemployer
Plan has given or is required to give notice of any such reportable event,
(iv) a notice of intent to terminate any Plan is filed with the PBGC, (v)
proceedings are instituted by the PBGC under Section 4042 of ERISA to
terminate or to appoint a trustee to administer any Plan or the Company or
any member of its Controlled Group receives a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan, (vi) the Company or any member of its Controlled Group
withdraws in a complete or partial withdrawal from any Multiemployer Plan
or any Plan which is a "multiple employer plan" within the meaning of
Section 4063 of ERISA, or incurs any withdrawal liability under Section
4204 of ERISA, (vii) any prohibited transaction occurs to the knowledge of
the Company after due inquiry involving the assets of any Plan for which
the Company could reasonably be expected to incur liability in excess of
$250,000, (viii) the Company or any member of
-11-
<PAGE>
its Controlled Group receives a notice from a Multiemployer Plan that such
Plan is in reorganization or insolvent pursuant to Sections 4241 or 4245 of
ERISA or that such Plan intends to terminate or has terminated under
Section 4041A of ERISA, (ix) the Company or any member of its Controlled
Group receives a notice from a Multiemployer Plan of the institution of a
proceeding by a fiduciary of a Multiemployer Plan against the Company or
any member of its Controlled Group to enforce Section 515 of ERISA, (x) the
adoption of an amendment to any Plan of the Company or any member of its
Controlled Group that could result in the termination of such Plan pursuant
to Section 4041(e) of ERISA or require the Company or any member of its
Controlled Group to provide security to such Plan pursuant to Section
401(a)(29) of the IRC or Section 307 of ERISA, (xi) the Company or any
member of its Controlled Group fails to make a required installment or
other payment to any Plan if such failure would result in the imposition of
a Lien upon the property of the Company pursuant to Section 412(n) of the
IRC, or (xii) the incurrence of any increase in the contingent liability of
the Company or a member of its Controlled Group with respect to any Plan
determined in accordance with GAAP.
(b) Deliver to each Securityholder copies of any request for a
waiver of the funding standards or any extension of the amortization
periods required by Sections 303 and 304 of ERISA or Section 412 of the IRC
with respect to any Plan as soon as practicable but in any event within
five Business Days after the submission of such request with the DOL and/or
IRS in the case of a Plan of the Company and within five Business Days
after the Company knows or has reason to know that such request has been
submitted to the DOL and/or IRS in the case of a Plan of the Company's
ERISA Affiliates.
3H. SBIC Regulatory Provisions.
--------------------------
(a) Number of Stockholders. As long as an SBIC Holder holds in excess
----------------------
of 5% of the outstanding shares of Common Stock on a fully-diluted basis, the
Company shall notify each SBIC Holder (i) at least 15 days prior to taking any
action after which members of the Company's management would cease to own at
least 25% of the outstanding voting securities of the Company and (ii) of any
other action or occurrence after which members of the Company's management would
cease to own at least 25% of the outstanding voting securities of the Company,
as soon as practicable after the Company becomes aware that such other action or
occurrence has occurred or is proposed to occur.
(b) Use of Proceeds. At such time as any SBIC Holder reasonably
---------------
requests, the Company shall deliver to each SBIC Holder a written statement
certified by the Company's president or Chief Financial Officer describing in
reasonable detail the use of the proceeds of the Financing hereunder by the
Company and its Subsidiaries. In addition to any other rights granted
hereunder, the Company shall grant each SBIC Holder and the SBA access to the
Company's books and records upon reasonable notice during normal business hours
for the purposes of (i) verifying the use of such proceeds from the Financing,
(ii) verifying the certifications made by the Company in SBA Forms 480 and 652
delivered pursuant to Section 2O(j) herein and (iii)
-------------
-12-
<PAGE>
determining whether the Company has become "ineligible by reason of a change in
its business activity" as set forth in Section 107.760(b)(i) of the SBIC
Regulations.
(c) Regulatory Violation.
--------------------
(1) Upon the occurrence of a Regulatory Violation (as defined
below), in addition to any other rights and remedies to which it may be
entitled (whether under this Agreement or any other agreement, the Articles
of Incorporation or otherwise), such SBIC Holder shall have the right, to
the extent required under Section 107.760(b) of the SBIC Regulations, to
demand the immediate repurchase of all of the outstanding Securities owned
by such SBIC Holder at a price equal to, with respect to the Notes, the
aggregate unpaid principal amount (plus all accrued and unpaid interest
thereon), with respect to the Series A Preferred, the aggregate liquidation
preference thereon (plus all accrued and unpaid dividends thereon, whether
or not declared) and with respect to the Warrants and the Warrant Stock,
the purchase price paid by such SBIC Holder for such Warrants and Warrant
Stock, by delivering written notice of such demand to the Company. The
Company shall pay the purchase price for such Securities by a cashier's or
certified check or by wire transfer of immediately available funds to such
SBIC Holder within 30 days after the Company's receipt of the demand
notice, and, upon such payment, such SBIC Holder shall deliver the
certificates evidencing the Securities being repurchased duly endorsed for
transfer or accompanied by duly executed forms of assignment.
(2) In addition to the foregoing, upon the occurrence of a
Regulatory Violation of the type described in clause (iii) of the
definition thereof, the SBIC Holder shall have the right to transfer all
(or any portion of) the outstanding Equity Interests owned by such SBIC
Holder to a transferee without regard to any restriction on transfer set
forth in this Agreement or any other agreement executed pursuant to this
Agreement or in the Stockholders Agreement or any other agreements
delivered pursuant hereto or thereto (provided that the transferee agrees
to become a party to this Agreement, the Stockholders Agreement and the
Registration Agreement), and the Company shall take all such actions as are
reasonably requested by the SBIC Holder in order to (i) effectuate and
facilitate any transfer by the SBIC Holder of any Equity Interests then
held by the SBIC Holder to any Person designated by the SBIC Holder, (ii)
permit the SBIC Holder (or any of its Affiliates) to exchange all or any
portion of any Equity Interests that are voting securities then held by it
on a share-for-share basis for shares of a nonvoting security of the
Company, which nonvoting security shall be identical in all respects to the
voting security exchanged for it, except that it shall be nonvoting and
shall be convertible into a voting security on such terms as are requested
by the SBIC Holder in light of regulatory considerations then prevailing,
(iii) continue and preserve the respective allocations of the voting
interests with respect to the Company arising out of the SBIC's ownership
of voting securities and provided in the Stockholders Agreement before the
transfers and amendments referred to above (including entering into such
additional agreements as are requested by the SBIC Holder to permit any
Person(s) designated by the SBIC Holder to exercise any voting power which
is relinquished by the SBIC Holder) and (iv) amend this
-13-
<PAGE>
Agreement, the Articles of Incorporation, the Bylaws and related agreements
and instruments to effectuate and reflect the foregoing. The Company will
obtain the written agreement of each of its stockholders to vote their
shares of Company voting stock in favor of such amendments and actions.
(3) For purposes of this Agreement, "Regulatory Violation" means
--------------------
(i) a diversion of the proceeds of such Financing from the reported use
thereof on the use of proceeds statement delivered by the Company, (ii) a
change in the "business activity" of the Company and its Subsidiaries as
described in Section 107.760(b) of the SBIC Regulations, such that the
Company and its Subsidiaries become "ineligible for financing" as such term
is used in Section 107.720 of the SBIC Regulations, if such change occurs
within one year after the date of the initial Financing hereunder, or (iii)
any set of facts or circumstances wherein it has been asserted by any
governmental regulatory agency that the SBIC Holder is not entitled to
hold, or exercise any significant right with respect to, the Notes, the
Warrants, Series A Preferred or the Warrant Stock; and "Financing" shall
---------
have the meaning set forth in Section 107.50 of the SBIC Regulations.
(d) Economic Impact Information. At such time as any SBIC Holder
---------------------------
reasonably requests, the Company shall deliver to each SBIC Holder a written
assessment of the economic impact of such SBIC Holder's investment in the
Company, specifying the full-time equivalent jobs created or retained in
connection with the investment, the impact of such SBIC Holder's Financing on
the revenues and profits of the Company and its Subsidiaries and on taxes paid
by the Company and its employees.
3I. Current Public Information. The Company shall file all reports
--------------------------
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission
thereunder and shall take such further action as any holder or holders of Common
Stock may reasonably request, all to the extent required to enable such holders
to sell Common Stock pursuant to (i) Rule 144 or Rule 144A adopted by the
Securities and Exchange Commission under the Securities Act (as such rule may be
amended from time to time) or any similar rule or regulation hereafter adopted
by the Securities and Exchange Commission or (ii) a registration statement on
Form S-2 or S-3 or any similar registration form hereafter adopted by the
Securities and Exchange Commission. Upon request, the Company shall deliver to
any holder of Common Stock a written statement as to whether it has complied
with such requirements.
Section 4. Financial Covenants.
-------------------
4A. Financial Covenants When Notes Outstanding. So long as any Notes
------------------------------------------
are outstanding, or any Obligations with respect to the Notes have not been
indefeasibly paid in full in cash, the Company will comply with all of the
provisions of this Section 4A:
----------
(a) Maximum Capital Expenditures and Leases. The Company shall
---------------------------------------
ensure that neither the Company nor any of its Subsidiaries shall make or
commit to make any Capital Expenditure, or commit to any obligation under
any Operating Lease, with respect to any Fiscal Year if the sum (without
duplication) of (i) the aggregate amount of all
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<PAGE>
Capital Expenditure, or commit to any obligation under any Operating Lease,
with respect to any Fiscal Year if the sum (without duplication) of (i) the
aggregate amount of all Capital Expenditures for such Fiscal Year, plus
(ii) the aggregate value (as evidenced by an invoice or other evidence
satisfactory to the Purchasers) of any assets delivered to, or made
available for use by, any of the Company and its Subsidiaries under any
Operating Leases with respect to such Fiscal Year (such sum of (i) and
(ii), the "Expended Amount"), shall exceed the amount set forth below for
such period:
Fiscal Year Ending Maximum Permissible Amount
------------------ --------------------------
December 31, 1998 $1,000,000
December 31, 1999 $1,800,000
December 31, 2000 $2,400,000
December 31, 2001 and thereafter $1,200,000
provided, however, that if the Expended Amount for any Fiscal Year is less than
- -----------------
the amount set forth above as permitted pursuant to this Section 4A for such
----------
Fiscal Year (the "Scheduled Amount"), then in addition to the amounts authorized
----------------
for the next Fiscal Year, the Company may make Capital Expenditures or commit to
obligations under Operating Leases during the first six months of the next
Fiscal Year, to the extent the Scheduled Amount for such prior Fiscal Year
exceeded the Expended Amount in such prior Fiscal Year.
(b) Interest Coverage Ratio. The Company's Interest Coverage
-----------------------
Ratio, calculated as of the last day of any fiscal quarter, for the
Measurement Period ending on that date, shall not be less than:
(i) 1.75 to 1.0 for the Measurement Period ending on December
31, 1998 or any date thereafter through September 30, 1999;
(ii) 2.00 to 1.0 for the Measurement Period ending on December
31, 1999 or any date thereafter through September 30, 2000;
(iii) 2.25 to 1.0 for the Measurement Period ending on
December 31, 2000 or any date thereafter through September 30,
2001;
(iv) 2.50 to 1.0 for the Measurement Period ending on December
31, 2001 or any date thereafter through September 30, 2002; and
(v) 2.75 to 1.0 for the Measurement Period ending on December
31, 2002 and thereafter.
(c) Maximum Cash Flow Leverage Ratio. The Company's Cash Flow
--------------------------------
Leverage Ratio as of the end of each fiscal quarter for the Measurement
Period ending on that date will not be greater than:
(i) 5.50 to 1.0 for the Measurement Period ending on December
31, 1998;
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<PAGE>
(ii) 5.0 to 1.0 for the Measurement Period ending on March 31,
1999 or any date thereafter through September 30, 1999;
(iii) 4.50 to 1.0 for the Measurement Period ending on
December 31, 1999 or any date thereafter through September 30,
2000;
(iv) 4.00 to 1.0 for the Measurement Period ending on December
31, 2000 or any date thereafter through September 30, 2001;
(v) 3.25 to 1.0 for the Measurement Period ending on December
31, 2001 or any date thereafter through September 30, 2002;
(vi) 2.75 to 1.0 for the Measurement Period ending on December
31, 2002 and thereafter.
(d) Net Worth. The Company shall maintain a Net Worth not less
---------
than:
(i) negative $5,000,000 during the fiscal quarter ending on
December 31, 1998 and on each date thereafter through September
30, 1999;
(ii) negative $4,500,000 during the fiscal quarter ending on
December 31, 1999 and on each date thereafter through September
30, 2000;
(iii) negative $2,000,000 during the fiscal quarter ending on
December 31, 2000 and on each date thereafter through September
30, 2001;
(iv) $1,000,000 during the fiscal quarter ending on December 31,
2001 and on each date thereafter through September 30, 2002;
(v) $4,000,000 during the fiscal quarter ending on December 31,
2002; and
(vi) on each date after December 31, 2002, $4,000,000 plus 50%
of the cumulative amount of the Company's consolidated net income
computed in accordance with GAAP, determined without taking into
account any net losses for any period.
4B. Financial Covenants When Series A Preferred Outstanding. So long
-------------------------------------------------------
as any Series A Preferred is outstanding, or any Obligations with respect to the
Series A Preferred have not been indefeasibly paid in full in cash, the Company
will comply with all of the provisions of this Section 4B.
----------
(a) Maximum Capital Expenditures and Leases. The Company shall
---------------------------------------
ensure that neither the Company nor any of its Subsidiaries shall make or
commit to make any Capital Expenditure, or commit to any obligation under
any Operating Lease, with respect to any Fiscal Year if the sum (without
duplication) of (i) the aggregate amount of all
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<PAGE>
Capital Expenditures for such Fiscal Year, plus (ii) the aggregate value
(as evidenced by an invoice or other evidence satisfactory to the
Purchasers) of any assets delivered to, or made available for use by, any
of the Company and its Subsidiaries under any Operating Leases with respect
to such Fiscal Year (such sum of (i) and (ii), the "Expended Amount"),
shall exceed the amount set forth below for such period:
Fiscal Year Ending Maximum Permissible Amount
------------------ --------------------------
December 31, 1998 (partial) $1,200,000
December 31, 1999 $2,000,000
December 31, 2000 $2,700,000
December 31, 2001 and thereafter $1,400,000
provided, however, that if the Expended Amount for any Fiscal Year is less than
- -----------------
the amount set forth above as permitted pursuant to this Section 4B for such
----------
Fiscal Year (the "Scheduled Amount"), then in addition to the amounts authorized
----------------
for the next Fiscal Year, the Company may make Capital Expenditures or commit to
obligations under Operating Leases during the first six months of the next
Fiscal Year, to the extent the Scheduled Amount for such prior Fiscal Year
exceeded the Expended Amount in such prior Fiscal Year.
(b) Interest Coverage Ratio. The Company's Interest Coverage
-----------------------
Ratio, calculated as of the last day of any fiscal quarter, for the
Measurement Period ending on that date, shall not be less than:
(i) 1.50 to 1.0 for the Measurement Period ending on December
31, 1998 or any date thereafter through September 30, 1999;
(ii) 1.75 to 1.0 for the Measurement Period ending on December
31, 1999 or any date thereafter through September 30, 2000;
(iii) 2.00 to 1.0 for the Measurement Period ending on
December 31, 2000 or any date thereafter through September 30,
2001;
(iv) 2.25 to 1.0 for the Measurement Period ending on December
31, 2001 or any date thereafter through September 30, 2002; and
(v) 2.50 to 1.0 for the Measurement Period ending on December
31, 2002 and thereafter.
(c) Maximum Cash Flow Leverage Ratio. The Company's Cash Flow
--------------------------------
Leverage Ratio as of the end of each fiscal quarter for the Measurement
Period ending on that date will not be greater than:
(i) 6.50 to 1.0 for the Measurement Period ending on December
31, 1998;
-17-
<PAGE>
(ii) 6.0 to 1.0 for the Measurement Period ending on March 31,
1999 or any date thereafter through September 30, 1999;
(iii) 5.50 to 1.0 for the Measurement Period ending on
December 31, 1999 or any date thereafter through September 30,
2000;
(iv) 4.50 to 1.0 for the Measurement Period ending on December
31, 2000 or any date thereafter through September 30, 2001;
(v) 3.75 to 1.0 for the Measurement Period ending on December
31, 2001 or any date thereafter through September 30, 2002;
(vi) 3.25 to 1.0 for the Measurement Period ending on December
31, 2002 and thereafter.
(d) Net Worth. The Company shall maintain a Net Worth not less
---------
than:
(i) negative $7,000,000 during the fiscal quarter ending on
December 31, 1998 and on each date thereafter through September
30, 1999;
(ii) negative $6,500,000 during the fiscal quarter ending on
December 31, 1999 and on each date thereafter through September
30, 2000;
(iii) negative $4,000,000 during the fiscal quarter ending on
December 31, 2000 and on each date thereafter through September
30, 2001;
(iv) negative $1,000,000 during the fiscal quarter ending on
December 31, 2001 and on each date thereafter through September
30, 2002;
(v) $2,000,000 during the fiscal quarter ending on December 31,
2002; and
(vi) on each date after December 31, 2002, $2,000,000 plus 50%
of the cumulative consolidated net income computed in accordance
with GAAP, determined without taking into account any net loss
for any period.
Section 5. Negative Covenants. Until such time as all Obligations
------------------
with respect to the Notes and the Series A Preferred have been indefeasibly paid
in full in cash without the prior consent of the Majority Holders the Company
shall not, and shall ensure that each of its Subsidiaries shall not:
5A. Acquisition; Consolidation; Reorganization. (i) Merge or
------------------------------------------
consolidate with any Person (except for the merger of any Wholly-Owned
Subsidiary of the Company with the Company, with the Company surviving, or with
another Wholly-Owned Subsidiary of the Company, so long as after giving effect
to such merger or consolidation, no Default or Event of Default would exist),
(ii) subject to the proviso following clause (iv) of this Section 5A, acquire,
----------
-18-
<PAGE>
directly or indirectly, in any transaction or series of transactions, all or
substantially all of the stock, equity interests, or (other than as permitted
pursuant to Sections 4A and 4B) assets or business of any Person; (iii) subject
----------- --
to the proviso following clause (iv) of this Section 5A, except as permitted
----------
pursuant to Sections 4A and 4B, acquire, directly or indirectly through
----------- --
Subsidiaries, assets (other than current assets in the ordinary course of
business); or (iv) liquidate, dissolve or effect a reorganization in any form of
transaction (including, without limitation, any reorganization into partnership
form), except for a liquidation of a Wholly-Owned Subsidiary of the Company;
provided however, that subject to the limitations set forth in Section 4, the
- -------- ------- ---------
Company may acquire assets and may make Investments so long as the aggregate
purchase price amount thereof does not exceed $250,000 in cash in any twelve-
month period or $500,000 in cash in total from and after the Closing.
5B. Sale, Lease or Transfer of Assets. Sell, lease, transfer or
---------------------------------
otherwise dispose of any of its properties or assets, except (i) sales of
inventory and accounts receivable in the ordinary course of business consistent
with past practice, (ii) sales of other assets so long as (a) the proceeds from
such sales by any of the Company and its Subsidiaries of the assets sold in each
period of 12 consecutive months is less than $200,000, and (b) within 90 days of
the receipt of the proceeds of such sales, (x) it has used or entered into a
binding commitment to use such proceeds to purchase replacement assets or (y)
such proceeds are used to repay Senior Indebtedness or (iii) any transactions
contemplated by the Net Lease between the Company and Penn Silver Fund related
to the Kodak Road property; provided, further, that, if any such proceeds are
-------- -------
not used to purchase replacement assets, then if and to the extent that the
Senior Indebtedness has been paid in full, the Company shall offer to apply such
proceeds to repay the Obligations with respect to the Notes and, unless the
Majority Note Holders shall decline such repayment by written notice, shall pay
such proceeds to holders of the Notes pro rata according to the principal amount
of Notes held.
5C. Distributions. Directly or indirectly pay, make or set apart any
-------------
Restricted Payment; provided that, notwithstanding the foregoing, the Company
-------- ----
may (i) repurchase Common Stock from any employee of the Company and/or any of
its Subsidiaries; provided that (a) no Default or Event of Default is in
-------- ----
existence immediately prior to or immediately after such repurchase or payment,
(b) the purchase price paid in such repurchase or the amount of such payment
does not exceed the fair market value of the stock repurchased or is in an
amount calculated pursuant to the terms of a repurchase or employment agreement
between the Company and such employee entered into in connection with the
commencement of such employee's employment, (c) such purchase occurs after the
first anniversary of the Closing and (d) the aggregate amount paid or payable in
any Fiscal Year in respect of all such purchases from employees does not exceed
$250,000 in cash and (ii) after all Obligations with respect to the Notes and
the Series A Preferred have been indefeasibly paid in full in cash, pay cash
dividends pro rata to the holders of Common Stock of the Company; and provided
that Subsidiaries may make distributions to the Company.
5D. Investments. Make or hold any loans or advances to, Guarantees
-----------
for the benefit of, or any other Investment in, any Person, except as provided
in Section 5A and except for (a) extensions of trade credit made in the ordinary
----------
course of business consistent with past custom and practice, (b) Investments
having a stated maturity no greater than one year in (i)
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<PAGE>
readily marketable direct obligations of the United States government or any
agency thereof or obligations guaranteed by the United States government, (ii)
certificates of deposit of U.S. commercial banks having combined capital and
surplus of at least $100,000,000 (iii) commercial paper with a rating from a
nationally recognized credit rating agency in such agency's highest rating
category, (iv) repurchase agreements relating to securities issued or guaranteed
as to principal and interest by the United States of America or (v) other
readily marketable investments in debt securities which are satisfactory to the
Majority Holders, and (c) travel and other expense advances to management
personnel and employees in the ordinary course of business.
5E. Limitations on Indebtedness. Create, incur, issue, assume,
---------------------------
suffer to exist, become liable with respect to or extend the maturity of any
Indebtedness, except:
(a) the Senior Indebtedness;
(b) the Obligations with respect to the Notes;
(c) Capitalized Lease Obligations; provided that the principal
amount of such Capitalized Lease Obligations of the Company and its
Subsidiaries does not exceed $200,000 in the aggregate outstanding at any
time;
(d) deferred Taxes; and
(e) other Indebtedness of the Company or its Subsidiaries with
principal amount not in excess of $500,000 in the aggregate outstanding at
any time.
5F. Contingent Liabilities. Become liable for any Guarantees, except
----------------------
for (a) the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business, (b) Guarantees existing
as of the date hereof and described on the attached Guarantees Schedule, and (c)
-------------------
Guarantees of Indebtedness which is permitted under Section 5E hereof.
----------
5G. Liens. Create, incur, assume or suffer to exist any Liens
-----
(except Permitted Liens) upon or with respect to any of its property or assets,
whether now owned or hereafter acquired, or on any income or profits thereof, or
assign or otherwise convey any right to receive income or other property.
5H. Amendment to the Company's Articles of Incorporation and Bylaws;
----------------------------------------------------------------
Stock Splits. Make any amendment to the terms of the Company's Articles of
- ------------
Incorporation or By-laws in any manner which adversely affects the rights,
powers or relative priorities of the holders of Series A Preferred or Warrant
Stock.
5I. Conduct of Business. Enter into the ownership, active management
-------------------
or operation of any business other than the business conducted by the Company on
the Closing Date, including without limitation the manufacturing of outdoor
corporate identification products and reasonable extensions thereto, or engage
in any activity which could result in a Forfeiture Proceeding.
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<PAGE>
5J. Affiliated Transactions. Except as set forth on the Affiliated
----------------------- ----------
Transactions Schedule, enter into any agreement or transaction, including the
- ---------------------
purchase, sale or exchange of property or the rendering of any service, with any
of its, or any Subsidiary's, officers, directors or Affiliates or any individual
related by blood or marriage to any such Person, or any entity in which any such
Person or individual owns a material beneficial interest, except for
transactions entered into after the Closing Date upon fair and reasonable terms
no less favorable to the Company or its Subsidiaries than the terms the Company
or its Subsidiaries would obtain in a comparable arm's-length transaction with a
Person not an Affiliate and approved in advance by the board of directors of the
Company.
5K. Restrictive Agreements; Conflicting Agreements. Either (a)
----------------------------------------------
create, permit or otherwise cause or suffer to exist (except pursuant to the
Senior Indebtedness and any refinancing of the Senior Indebtedness) any
encumbrance or restriction on the ability of any Subsidiary of the Company (i)
(A) to make loans or advances to the Company or any other Subsidiary of the
Company or (B) to transfer any of its properties or assets to the Company, or
(ii) to pay dividends or make any other distributions in respect of any of its
Stock or any other interest or participation in, or measured by, its profits, or
pay any Indebtedness owed to, the Company or any other Subsidiary of the
Company, in each case other than encumbrances or restrictions existing under the
Notes or the Loan Agreement and any refinancing thereof, or (b) enter into any
agreement, or propose or commit to take any action or engage in any omission
which would constitute a violation of any covenant or agreement in any of this
Agreement, the Notes, the Warrants, the Registration Agreement, the Stockholders
Agreement or the Company's Articles of Incorporation or bylaws and any of the
agreements contemplated hereby or thereby.
5L. Public Disclosures. Subject to the Company's obligations under
------------------
the federal securities laws, disclose any Purchaser's name or identity as an
investor in the Company in any press release or other public announcement or in
any document or material filed with any Government Entity, without prior written
notice to such Purchaser describing in reasonable detail the proposed content of
such disclosure and permitting such Purchaser to review and comment upon the
form and substance of such disclosure and make reasonable changes thereto.
5M. Use of Proceeds. Use any proceeds from the sale of any
---------------
Securities hereunder, or permit any of its Subsidiaries to use any of such
proceeds, directly or indirectly, (a) for the purposes of purchasing or carrying
any "margin securities" within the meaning of Regulation T, U or X promulgated
by the Board of Governors of the Federal Reserve Board, (b) for the purpose of
arranging for the extension of credit secured, directly or indirectly, in whole
or in part by collateral that includes any "margin securities" or (c) for any
other purpose other than to effect the Recapitalization.
5N. Fiscal Year. Change its fiscal year from the year ending on
-----------
December 31.
5O. Amendment of Indebtedness. Directly or indirectly amend,
-------------------------
supplement, extend, terminate, or permit to be amended, supplemented or
terminated, or waive any of the following terms which are applicable to any
Senior Indebtedness: (i) the amount or the date of any scheduled or mandatory
payment of principal or interest thereunder, except that (A) the Company may
borrow and reborrow from time to time under the Revolver and the Term B Loan and
the
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<PAGE>
Revolver may be renewed from time to time providing for a new maturity date,
provided that in connection with any such renewal the Loan Agreement shall be
amended in a manner so as not to be on terms more restrictive in any manner than
the terms being renewed; provided further that such new maturity date shall not,
in the case of the Term B Loan, be after the original maturity date of the Term
B Loan, (B) any scheduled or mandatory principal payment under the Term A Loan
or the Term C Loan may be extended so long as the weighted average life to
maturity of the Term A Loan and the Term C Loan, measured from the date of
Closing and taking into account all repayments of principal previously made in
respect thereof as of the time of such determination, if any, is not increased
by more than six months from that in effect at the Closing, and (C) such
amendment may increase the principal amount of Senior Indebtedness so long as
the aggregate of all such increases pursuant to this clause (C) from and after
the date of the Closing shall not exceed $2,000,000 in the aggregate, (ii) the
rate or rates at which interest accrues or the methods of calculation thereof
(including without limitation by amending any provisions (including definitions)
used in calculating such interest rates such that a higher rate or margin may
apply), (iii) any fees, indemnities, expense reimbursements or other charges
payable to the lenders thereunder, or (iv) any representation, covenant or
default or any other term or provision in a manner which is more onerous or more
restrictive on the holders of the Notes or the Company or change any of the
restrictions in the Loan Agreement or other agreements delivered in connection
therewith or relating to performance by the Company of the Note Obligations
(including restrictions which prohibit or limit the payment or prepayment of any
amount with respect to the Notes or the Note Obligations).
5P. Equity Issuances. Except as expressly contemplated by this
----------------
Agreement, authorize, issue or enter into any agreement providing for the
issuance (contingent or otherwise) of, (a) any capital stock or other equity
securities (or any securities convertible into or exchangeable for any capital
stock or other equity securities) or (b) any notes or debt securities containing
equity features (including, without limitation, any notes or debt securities
convertible into or exchangeable for capital stock or other equity securities,
issued in connection with the issuance of capital stock or other equity
securities or containing profit participation features); provided that this
Section 5P shall not limit the ability of the Board (or Compensation Committee)
- ----------
to authorize the issuance of incentive based equity under the Company's 1996
Stock Option Agreement, in effect as of the date hereof.
5Q. ERISA Compliance. Either (a) incur, or permit any ERISA
----------------
Affiliate to incur, any liability to the IRS, the DOL or PBGC (other than for
premiums due PBGC which will be paid when due) with respect to any Plan which
equals or exceeds $250,000 (b) withdraw (either partially or completely) from
any Multiemployer Plan, if the liabilities exceed the assets under such Plan, or
upon the complete or partial withdrawal from such Multiemployer Plan, would
equal or exceed $250,000, (c) provide, or permit any ERISA Affiliate to provide,
medical or life insurance benefits to former employees of the Company or its
Subsidiaries (other than in accordance with Section 601 of ERISA or 4980B of the
IRC or as may hereafter be required by law) or (d) with respect to any Pension
Plan, incur, or permit any ERISA Affiliate to incur, a reporting obligation for
any Reportable Event which could constitute grounds for partial termination of
any Pension Plan or termination by the PBGC of any Pension Plan or for the
appointment by the appropriate United States District Court of a trustee to
administer any Pension Plan.
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<PAGE>
Section 6. Representations and Warranties of the Company. To induce
---------------------------------------------
the Purchasers to purchase the Securities as herein provided, the Company
represents and warrants to the Purchasers that each and all of the following
statements are true, correct and complete as of the date of execution and
delivery of this Agreement and will be true, correct and complete as of the
Closing after giving effect to the transactions contemplated hereby to occur on
or prior to the Closing Date:
6A. Organization and Corporate Power. The Company is a corporation
--------------------------------
duly organized, validly existing and in good standing under the Laws of the
state of Texas, is qualified to do business in every jurisdiction in which its
ownership of property or conduct of business requires it to qualify except where
failure to so qualify would not have a Materially Adverse Effect; and has the
requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease, and to conduct its business as now, heretofore and
proposed to be conducted and to carry out the transactions contemplated by this
Agreement. The Company possesses all material licenses, permits, consents and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted. The stock
certificate books and the stock record books of the Company are correct and
complete in all material respects. The Company is in compliance with its
Articles of Incorporation and bylaws, each as amended, and the copies of the
Company's Articles of Incorporation and bylaws of the Company which have been
furnished to Kirkland & Ellis, as special counsel to the Purchasers, reflect all
amendments made thereto at any time prior to the date of this Agreement and are
correct and complete and in compliance with all applicable provisions of law.
6B. Capital Stock and Related Matters.
---------------------------------
(a) As of the Closing, the authorized capital stock of the
Company shall consist of (i) 15,000,000 shares of Common Stock, of which
1,854,692 shares shall be issued and outstanding, and 1,197,914 shares
shall be reserved for issuance upon exercise of the Warrants, (ii) 52,500
shares of Series A Preferred, all of which shall be issued and outstanding,
(iii) 7,000 shares of Series B Junior Preferred, all of which shall be
reserved for issuance to David Anderson pursuant to the Anderson Purchase
Agreement, and (iv) 6,250 shares of Series C Preferred, all of which shall
be reserved for issuance to GHI, SIC, SMHC, Geneve, and FIRC pursuant to
the Share Option Purchase Agreement. As of the Closing, all of the
outstanding shares of the Company's Common Stock shall be validly issued,
fully paid and nonassessable, and upon payment for the Series A Preferred
and the Closing hereunder, all of the outstanding shares of the Series A
Preferred shall be validly issued, fully paid and nonassessable.
(b) As of the Closing, and except as set forth on the attached
Capitalization Schedule, the Company shall not have outstanding any Stock
-----------------------
or any stock appreciation or phantom stock rights or plans and shall not be
subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its Stock, except pursuant to the
Stockholders Agreement and the Warrants.
-23-
<PAGE>
(c) There are no statutory or contractual stockholders'
preemptive rights or rights of first offer or refusal with respect to the
issuance of the Notes, Series A Preferred and the Warrants hereunder, the
issuance of Common Stock upon exercise of the Warrants or with respect to
any other issuance of Stock of the Company or, except as provided in the
Stockholder Agreement. The Company has not violated any applicable
Securities Laws in connection with the offer, sale or issuance of any of
its Stock; and the offer, sale and issuance of the Notes, Series A
Preferred and the Warrants hereunder, and the offer, sale and issuance of
the Common Stock upon exercise of the Warrants do not and will not require
registration under any applicable Securities Laws. There are no proxies or
agreements among the stockholders of the Company with respect to the voting
or transfer of the Stock or with respect to any other aspect of Company's
affairs, except this Agreement, the Stockholders Agreement and the
Registration Agreement.
6C. Subsidiaries; Partnerships. Except as described on the attached
--------------------------
Subsidiaries Schedule, the Company has no Subsidiaries, is not a partner in any
- ---------------------
partnership and holds no Stock in any other Person.
6D. Authorization; No Breach. The Company has duly authorized the
------------------------
execution, delivery and performance of this Agreement, the Notes, the Warrants,
the Share Purchase Option Agreements, the Anderson Purchase Agreement, the
Anderson Side Letter, the Stockholders Agreement and the Registration Agreement,
and each other agreement, contemplated hereby or thereby to which it is a party.
This Agreement, the Notes, the Warrants, the Share Purchase Option Agreements,
the Anderson Purchase Agreement, the Anderson Side Letter, the Stockholders
Agreement, the Registration Agreement, the Company's Articles of Incorporation
and each other agreement contemplated hereby and thereby to which the Company is
a party constitutes a valid and binding obligation of the Company enforceable
against it in accordance with its terms. Except as set forth on the attached
Restrictions Schedule, the execution and delivery by the Company of this
- ---------------------
Agreement, the Notes, the Warrants, Share Option Purchase Agreement, the
Anderson Purchase Agreement, the Anderson Side Letter, the Stockholders
Agreement, the Registration Agreement and all other agreements contemplated
hereby and thereby to which it is a party, the offering, sale and issuance of
the Notes, Warrants and Series A Preferred hereunder, the issuance of the Common
Stock upon exercise of the Warrants and the fulfillment of and compliance with
the respective terms hereof and thereof by the Company does not and will not (a)
conflict with or result in a breach of the terms, conditions or provisions of,
(b) constitute a default under, (c) result in the creation of any Lien upon the
stock or assets of the Company pursuant to, (d) give any third party the right
to modify, terminate or accelerate any obligation under, (e) result in a
violation of, or (f) require any authorization, consent, approval, exemption or
other action by or notice to any Government Entity pursuant to, the Articles of
Incorporation or bylaws of the Company, or any Law, statute, rule or regulation
to which the Company is subject, or any material agreement, instrument, order,
judgment or decree to which the Company is subject.
6E. Financial Statements.
--------------------
(a) Attached hereto as the Financial Statements Schedule are (i)
-----------------------------
the unaudited balance sheet of the Company as at August 30, 1998 and the
related statement
-24-
<PAGE>
of income for the eight-month period then ended (such balance sheet, the
"Latest Balance Sheet"); (ii) the audited consolidated balance sheets of
--------------------
the Company as of December 31, 1995, December 31, 1996 and December 31,
1997 (the balance sheet for December 31, 1997 being referred to as the
"Latest Audited Statement") and the related audited consolidated statement
------------------------
of earnings and cash flows for each of the Fiscal Years then ended, and
(iii) the estimated pro forma balance sheet of the Company as of the
Closing Date, reflecting the assets, liabilities and stockholders' equity
of the Company as of the Closing Date, adjusted to reflect, as applicable,
the effect of the Senior Indebtedness incurred on the Closing Date, the
issuance of the Notes and Series A Preferred, and the costs and expenses
related to the foregoing.
(b) Except as set forth on the attached Financial Statements
--------------------
Schedule, each of the foregoing financial statements (including the notes
--------
thereto, if any), presents fairly the consolidated financial position,
results of operations and cash flows of the Company, and is prepared in
accordance with GAAP, consistently applied, as of the dates and for the
periods set forth therein, subject in the case of the unaudited financial
statements to the lack of footnote disclosure and changes resulting from
normal year-end adjustments.
6F. Absence of Undisclosed Liabilities. Except as set forth on the
----------------------------------
attached Liabilities Schedule, the Company has no obligation or liability
--------------------
(whether accrued, absolute, con tingent, unliquidated or otherwise, whether due
or to become due and regardless of when asserted) arising out of transactions
entered into at or prior to the Closing, or any action or inaction at or prior
to the Closing, or any state of facts existing at or prior to the Closing other
than: (a) liabilities fully disclosed and adequately provided for in the Latest
Balance Sheet, and (b) current liabilities which have arisen, and obligations
under agreements entered into, after the date of the Latest Balance Sheet in the
ordinary course of business (none of which is a liability resulting from breach
of contract, breach of warranty, tort, infringement, claim or lawsuit).
6G. No Material Adverse Change. There has been no material adverse
--------------------------
change in the business, assets, operations, financial condition, operating
results, earnings, customer and supplier relations or employee and sales
representative relations of the Company since the date of the Latest Audited
Statement.
6H. Assets. Except as set forth on the attached Assets Schedule, the
------ ---------------
Company has good and indefeasible title to, or a valid leasehold interest in,
the properties and assets it uses, the properties and assets shown on the Latest
Balance Sheet or acquired thereafter and all assets necessary for the conduct of
its businesses as presently conducted and as presently proposed to be conducted,
free and clear of all Liens, except for properties and assets disposed of in the
ordinary course of business since the date of the Latest Balance Sheet and
except for Liens disclosed on the Latest Balance Sheet (including any notes
thereto). Except as described on the attached Assets Schedule, buildings,
---------------
equipment and other tangible assets of the Company are in good operating
condition other than ordinary wear and tear and are fit for use in the ordinary
course of business.
-25-
<PAGE>
6I. Investment Company Act. Neither the Company nor the Company is
----------------------
an "investment company" or an "Affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended.
6J. Margin Regulations. The Company does not own any "margin
------------------
security" as such term is defined in Regulation U of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board"), and none of the
---------------------
proceeds of the Notes or Warrants will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the securities purchased under this Agreement to be considered "purpose credit"
within the meaning of Regulations T, U or X of the Federal Reserve Board. The
Company has not taken or permitted, and will not permit any agent acting on its
behalf to take, any action which might cause this Agreement or any document or
instrument delivered hereunder to violate such Regulation T, U or X, any other
regulation of the Federal Reserve Board, or Section 8 of the Exchange Act or any
rule or regulation thereunder. No proceeds of the issuance of Restricted
Securities will be used to acquire any security in any transaction which is
subject to Section 13 or 14 of the Exchange Act, including Sections 13(d) and
14(d) thereof. The purchase of the Notes will not constitute a violation of
such Regulations T, U or X.
6K. Tax Matters. Except as set forth on the Tax Schedule attached
----------- ------------
hereto, the Company has filed all Tax returns and other reports which it is
required to file under applicable Laws and regulations; all such returns and
reports are complete and correct in all material respects; the Company has paid
all Taxes due and owing by it and has withheld and paid over all Taxes which it
is obligated to withhold from amounts paid or owing to any employee,
stockholder, creditor or other third party, and has not waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency; no foreign, federal, state,
provincial or local Tax audits are pending or being conducted with respect to
the Company, no information related to Tax matters has been requested by any
foreign, federal, state, provincial or local Tax authority and no notice
indicating an intent to open an audit or other review has been received by the
Company from any foreign, federal, state, provincial or local Tax authority; and
there are no unresolved questions or claims concerning Tax liability of the
Company. Except as set forth on the Tax Schedule, The Company has not made an
------------
election under (S)341(f) of the IRC, is not a party to any Tax sharing or
allocation agreement, and has no liability for the Taxes of any Person under
Section 1.1502-6 of the Treasury Regulations (or any similar provision of state,
local or foreign law), as a transferee or successor, by contract, or otherwise.
The accrual for current Taxes on the Latest Balance Sheet would be adequate to
pay all of the current Tax liabilities of the Company, if the current Tax year
were treated as having ended on the date of the Latest Balance Sheet consistent
with past practices.
6L. Contracts and Commitments. Except as expressly contemplated by
-------------------------
this Agreement or as set forth on the attached Contracts Schedule, the Company
------------------
is not a party (including after giving effect to the Company) to any written or
oral:
-26-
<PAGE>
(a) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit plan or
arrangement, or any contract with any labor union, or any severance
agreements;
(b) contract for the employment of any officer, individual
employee or other Person on a full-time, part-time, consulting or other
basis providing annual compensation in excess of $25,000 or contract
relating to loans to officers, directors or affiliates;
(c) contract under which the Company has advanced or loaned any
other Persons amounts in the aggregate exceeding $25,000;
(d) agreement or indenture relating to the borrowing of money or
the mortgaging, pledging or otherwise placing a Lien on any material asset
or group of assets of the Company;
(e) Guarantee of any obligation (other than by the Company of a
wholly-owned Subsidiary's debts or a guarantee by a Subsidiary of the
Company's debts or another Subsidiary's debts);
(f) lease or agreement under which the Company or any Subsidiary
is lessee of or holds or operates any property, real or personal, owned by
any other party, except for any lease of real or personal property under
which the aggregate annual rental payments do not exceed $25,000;
(g) lease or agreement under which the Company or any Subsidiary
is lessor of or permits any third party to hold or operate any property,
real or personal, owned or controlled by the Company or any Subsidiary;
(h) contract or group of related contracts with the same party or
group of affiliated parties the performance of which involves aggregate
annual consideration in excess of $25,000 except purchase orders from
existing customers or to existing vendors, in either case in the ordinary
course of business;
(i) assignment, license, indemnification or agreement with
respect to any intangible property (including, without limitation, any
patent, trademark, trade name, copyright, know-how, trade secret or
confidential information);
(j) warranty agreement with respect to its services rendered or
its products sold or leased;
(k) agreement under which it has granted any Person any
registration rights (including piggyback rights);
-27-
<PAGE>
(l) contract, agreement or other arrangement with any officer,
director, employee or Affiliate, or any Affiliate of any officer, director
or employee;
(m) contract or agreement prohibiting it from freely engaging in
any business or competing anywhere in the world; or
(n) any other agreement which is material to its operations and
business prospects or which involves a consideration in excess of $25,000
annually.
Except as set forth on the Contracts Schedule, all of the contracts,
------------------
agreements and instruments required to be listed thereon are valid, binding
and enforceable in accordance with their respective terms. Except as set
forth on the Contracts Schedule, the Company and its Subsidiaries are not
------------------
in default or breach under any such contract, agreement or instrument; no
event has occurred which with the passage of time or the giving of notice
or both would result in a default, breach or event of noncompliance under
any such contract, agreement or instrument listed on the Contracts
---------
Schedule; none of the Company and its Subsidiaries has any present
--------
expectation or intention of not fully performing all such obligations; none
of the Company and its Subsidiaries has any knowledge of any breach or
anticipated breach by the other parties to any such contract or commitment;
and none of the Company and its Subsidiaries is a party to any contract or
commitment the performance of which would have a Materially Adverse Effect.
6M. Trademarks, Patents. Except as set forth on the Intellectual
------------------- ------------
Property Schedule attached hereto the Company possesses or has the right to use
- -----------------
all of the patents, trademarks, trade names, service marks and copyrights, and
applications therefor, and all technology, know-how, processes, methods and
designs used in or necessary for the conduct of its business, without known
conflict with the rights of others; there have been no written claims made upon
the Company against the Company asserting the invalidity, misuse or
unenforceability of any Proprietary Right, and there are no grounds for the
same; the Company has not received a notice of conflict with the asserted rights
of others within the last five years; and to the knowledge of the Company the
conduct of the business of the Company has not infringed or misappropriated nor
infringes or misappropriates any Proprietary Right of other Persons, nor would
any future conduct as presently contemplated infringe any Proprietary Right of
other Persons and, to the Company's knowledge, the Proprietary Rights owned by
the Company have not been infringed or misappropriated by other Persons.
6N. Litigation, etc. Except as set forth on the attached Litigation
---------------- ----------
Schedule, (i) there are no actions, suits, proceedings, orders, investigations
- --------
or claims pending or, to the Company's knowledge, threatened against or
affecting the Company or pending or threatened against or affecting any of the
officers, directors or employees of the Company with respect to any of the
Company's businesses or proposed business activities, at law or in equity, or
before or by any Government Entity which if adversely determined, could have a
Materially Adverse Effect, including any Litigation with respect to the
transactions contemplated by the Recapitalization, the Loan Agreement or this
Agreement; (ii) the Company is not subject to any arbitration proceedings under
collective bargaining agreements or otherwise or, to the Company's knowledge,
any governmental investigations or inquiries; and (iii) to the best of the
Company's
-28-
<PAGE>
knowledge, there is no reasonable basis for any of the foregoing. The Company is
not subject to any judgment, order or decree of any court or other governmental
agency, and the Company has not received any opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which in any of such cases may have
a Materially Adverse Effect (including after giving effect to the
Recapitalization.
6O. No Forfeiture. The Company is not engaged in or proposes to be
-------------
engaged in the conduct of any business or activity which could result in a
Forfeiture Proceeding, and no Forfeiture Proceeding against any of them is
pending or, to the knowledge of the Company, is threatened.
6P. Small Business Matters. The Company, together with its
----------------------
"affiliates" (as that term is defined in (S)121.401 of the SBIC Regulations), is
a "small business concern" within the meaning of the SBIC Act and SBIC
Regulations, including (S)121.802 of the SBIC Regulations. The information
regarding the Company and its affiliates set forth in the Small Business
Administration Form 480, Form 652 and Part A of Form 1031 delivered at the
Closing is accurate and complete. Copies of such forms shall have been completed
and executed by the Company and delivered to each Purchaser that is an SBIC at
the Closing together with a written statement of the Company regarding its
planned use of the proceeds from the sale of the Notes, the Series A Preferred
and the Warrants. Neither the Company nor any Subsidiary presently engages in,
and it shall not hereafter engage in, any activities, nor shall the Company or
any Subsidiary use directly or indirectly the proceeds from the sale of the
Notes, the Series A Preferred and the Warrants hereunder for any purpose, for
which a SBIC is prohibited from providing funds by the SBIC Act and the SBIC
Regulations (including (S)107.804 and (S)107.901 of the SBIC Regulations).
6Q. Brokerage. Except as set forth on the Brokerage Schedule
--------- ------------------
attached hereto, there are no claims for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by the
Recapitalization, the Loan Agreement or this Agreement based on any arrangement
or agreement binding upon the Company. The Company shall pay, and hold the
Purchasers harmless against, any and all liability, loss or expense (including,
without limitation, reasonable attorneys' fees and out-of-pocket expenses)
arising in connection with any such claims.
6R. Insurance. The Company is not in default with respect to its
---------
obligations under any insurance policy maintained by it. The insurance coverage
of the Company is of customary type and covers casualties, risks and
contingencies of such types and in amounts not less than as are customary for
prudent corporations of similar size engaged in similar lines of business under
similar circumstances.
6S. Employees. Except as set forth on the attached Employees
--------- ---------
Schedule, (i) the Company is not aware that any executive or key employee of the
- --------
Company or any group of employees of the Company has any plans to terminate
employment with the Company; (ii) the Company has complied and is compliance in
all material respects with all Laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of any Taxes, and the Company does not
have any labor relations problems (including, without limitation, any union
organization activities, threatened or
-29-
<PAGE>
actual strikes or work stoppages or material grievances); and (iii) the Company
is not, and none of the employees of the Company is, subject to any noncompete,
nondisclosure, confidentiality, employment, consulting or similar agreement
relating to, affecting or in conflict with, the present or proposed business
activities of the Company.
6T. Compliance with Laws. The Company has not violated any Laws
--------------------
which violation has had or would reasonably be expected to have a Materially
Adverse Effect, and the Company has not received notice of any such violation.
No payments for political contributions or bribes, kickback payments or other
illegal payments have been made by the Company at any time.
6U. Affiliated Transactions. Except as set forth on the attached
-----------------------
Affiliated Transactions Schedule, no Affiliate of the Company or any officer,
- --------------------------------
director, stockholder or employee of any such Affiliate (other than any such as
are also officers, directors or employees of the Company), any individual
related by blood or marriage to any such Person, or any entity in which any such
Person, directly or indirectly, owns any beneficial interest, is a party to any
agreement, contract, commitment, transaction or proposed transaction with the
Company or has any interest in any property used by the Company.
6V. Indebtedness. The attached Indebtedness Schedule sets forth all
------------ ---------------------
outstanding Indebtedness of the Company owing to any Person or group of
affiliated Persons, or issued in any one transaction or series of related
transactions. The Company has no outstanding Indebtedness or is a guarantor or
otherwise contingently liable for any Indebtedness except as disclosed on the
attached Indebtedness Schedule. There exists no default under the provisions of
---------------------
any instrument evidencing such Indebtedness or of any agreement relating
thereto.
6W. Loan Agreement. No "default" or "event of default" under the
--------------
Loan Agreement is in existence or will result from the transactions contemplated
by this Agreement.
6X. ERISA. Except as set forth on the Employee Benefits Schedule:
----- --------------------------
(a) Multiemployer Plans. The Company has no obligation to
-------------------
contribute to (or any other liability, including current or potential
Withdrawal Liability, with respect to) any Multiemployer Plan. To the
extent that any Multiemployer Plan is set forth on the Employee Benefits
Schedule, the Company has no current or potential withdrawal liability
under such Multiemployer Plan.
(b) Retiree Welfare Plans. The Company does not maintain or
---------------------
have any obligation to contribute to (or any other liability with respect
to) any plan or arrangement whether or not terminated, which provides
medical, health, life insurance or other welfare-type benefits for current
or future retired or terminated employees, their spouses or dependents
(except for continued medical benefit coverage required to be provided
under Section 4980B of the IRC or as required under applicable state Laws).
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<PAGE>
(c) Defined Benefit Plans. The Company does not maintain,
---------------------
contribute to or have any liability under (or with respect to) any employee
plan which is a "defined benefit plan" (as defined in Section 3(35) of
ERISA), whether or not terminated.
(d) Defined Contribution Plans. The Company does not maintain,
--------------------------
contribute to or have any liability under (or with respect to) any employee
plan which is a "defined contribution plan" (as defined in Section 3(34) of
ERISA), whether or not terminated.
(e) Other Plans. The Company does not maintain, contribute to
-----------
or have any liability under (or with respect to) any plan or arrangement
providing benefits to current or former employees, including, without
limitation, any bonus plan, plan for deferred compensation, severance,
employee health or other welfare benefit plan or other arrangement, whether
or not terminated and whether or not subject to ERISA including, but not
limited to "employee welfare benefit plans" as defined in Section 3(1) of
ERISA.
(f) The Company. For purposes of this Section 6X (other than
----------- ----------
subsection (e) or (h), the terms "the Company" includes all organizations
under common control with the Company pursuant to Section 414 of the IRC.
For purposes of liability under Title IV of ERISA, the terms "the Company"
shall include any member of its Controlled Group.
(g) Unfunded Liability. No plan maintained by the Company or to
------------------
which the Company has an obligation to contribute, or with respect to which
the Company has any other liability, has unfunded benefit obligations or
any unfunded liability. All contributions, premiums or payments under or
with respect to a each plan which is set forth on the attached Employee
Benefits Schedule which are due on or before the Closing Date have been
paid.
(h) Plan Qualification and Compliance. Each employee benefit
---------------------------------
plan set forth on the attached Employee Benefits Schedule that is or has
--------------------------
been maintained for the benefit of employees of the Company that is
intended to be qualified under Section 401(a) of the IRC has received a
favorable determination letter from the IRS as to the qualification of such
plan and, to the best knowledge of the Company after due inquiry, nothing
has occurred since the date of such determination letter that could
reasonably be expected to adversely affect the qualification of such plan.
Each employee benefit plan set forth on the attached Employee Benefits
-----------------
Schedule that is or has been maintained for the benefit of employees of the
--------
Company and all related trusts, insurance contracts and funds have been
maintained, funded and administered in compliance in all material respects
with their respective terms and with all applicable Laws.
(i) The Company has not incurred and has no reason to expect
that it will incur, any liability to the Pension Benefit Guaranty
Corporation (other than premium payments) or otherwise under Title IV of
ERISA (including any withdrawal liability) or under the Code with respect
to any employee pension benefit plan that the Company or
-31-
<PAGE>
any ERISA Affiliate maintains or ever has maintained or to which any of
them contributes, ever has contributed, or ever has been required to
contribute.
6Y. Environmental and Safety Matters.
--------------------------------
(a) Except as set forth in Section (i) of the Environmental
-------------
Schedule, the Company has complied with and is currently in compliance in
--------
all material respects with all Environmental and Safety Requirements the
non-compliance with which will or threatens to impose a material liability
on the Company, and the Company has not received any oral or written
notice, report or information regarding any liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) or any corrective,
investigatory or remedial obligations arising under Environmental and
Safety Requirements which relate to the Company or any of its properties or
facilities.
(b) Except as set forth in Section (ii) of the Environmental
-------------
Schedule, without limiting the generality of the foregoing, the Company has
--------
obtained and complied with, and is currently in compliance in all material
respects with, all material permits, licenses and other authorizations that
are required pursuant to any Environmental and Safety Requirements for the
occupancy of its properties or facilities or the operation of its
businesses.
(c) Except as set forth in Section (iii) of the Environmental
-------------
Schedule, neither this Agreement nor the consummation of the transactions
--------
contemplated by this Agreement shall impose any obligations on the Company
for site investigation or cleanup, or notification to or consent of any
government agencies or third parties under any Environmental and Safety
Requirements (including, without limitation, any so called "transaction-
triggered" or "responsible property transfer" laws and regulations).
(d) Except as set forth in Section (iv) of the Environmental
-------------
Schedule, none of the following exists at any property or facility owned,
--------
occupied or operated by the Company:
(1) underground storage tanks or surface impoundments;
(2) asbestos-containing materials friable; or
(3) materials or equipment containing friable
polychlorinated biphenyls.
(e) Except as set forth in Section (v) of the Environmental
-------------
Schedule, the Company has not treated, stored, disposed of, arranged for or
--------
permitted the disposal of, transported, handled or Released any Hazardous
Materials, or owned, occupied or operated any facility or property, so as
to give rise to liabilities of the Company for response costs, natural
resource damages or attorneys fees pursuant to CERCLA or any other
Environmental and Safety Requirements.
-32-
<PAGE>
(f) Without limiting the generality of the foregoing, to the
knowledge of the Company, no facts, events or conditions relating to the
past or present properties, facilities or operations of the Company shall
prevent, hinder or limit in any material respect continued compliance with
Environmental and Safety Requirements, give rise to any corrective,
investigatory or remedial obligations pursuant to Environmental and Safety
Requirements or give rise to any other liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to Environmental
and Safety Requirements (including, without limitation, those liabilities
relating to onsite or offsite Releases or threatened Releases of Hazardous
Materials, substances or wastes, personal injury, property damage or
natural resources damage).
(g) Except as set forth in Section (vii) of the Environmental
-------------
Schedule, the Company has not, either expressly or by operation of law,
--------
assumed or undertaken any liability or corrective, investigatory or
remedial obligation of any other Person relating to any Environmental and
Safety Requirements.
(h) No Environmental Lien has attached to any property owned,
leased or operated by the Company.
6Z. Real Property Holding Corporation Status. Since its date of
----------------------------------------
incorporation, the Company has not been, and as of the date of the Closing shall
not be, a "United States Real Property Holding Corporation," as defined in
Section 897(c)(2) of the IRC and in Section 1.897-2(b) of the Treasury
Regulations issued thereunder. The Company has no current plans or intentions
which would cause it to become a "United States Real Property Holding Company,"
and the Company has filed with the IRS all statements, if any, with its United
States income Tax returns which are required under Section 1.897-2(h) of the
Treasury Regulations.
6AA Certain Government Regulations. The Company is not subject to
------------------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any other Law which regulates the incurring of Indebtedness by any
of them, including Laws relating to common contract carriers or the sale of
electricity, gas, steam, water or other public utility services.
6BB Closing Date. The representations and warranties of the Company
------------
contained in this Section 6 and elsewhere in this Agreement and all information
---------
contained in any exhibit, schedule or attachment hereto or in any certificate or
other writing delivered by, or on behalf of, the Company to any of the
Purchasers shall be correct and complete on the date of the Closing as though
made after giving effect to the transactions contemplated hereby to occur on the
Closing Date.
Section 7. Representations and Warranties of BA Purchasers. Each BA
-----------------------------------------------
Purchaser hereby represents and warrants severally, as to itself, to the Company
that each and all of the following statements are true and correct and complete
as of the date of execution and delivery of this Agreement and will be true,
correct and complete as of the Closing after giving effect to the transactions
contemplated hereby to occur on or prior to the Closing Date.
-33-
<PAGE>
7A. Due Authorization. Such BA Purchaser has all requisite power and
-----------------
authority to enter into this Agreement and the agreements contemplated hereby
and to consummate the transaction contemplated hereby and thereby. The
execution and delivery hereof and of each of the agreements contemplated hereby,
the performance by such BA Purchaser of its obligations hereunder and thereunder
and the consummation by such BA Purchaser of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary action
on the part of such BA Purchaser. No other proceeding on the part of such BA
Purchaser is necessary to authorize the execution and delivery of this Agreement
and the other agreements contemplated hereby by such BA Purchaser or the
performance by such BA Purchaser of its obligations hereunder or thereunder or
the consummation by such BA Purchaser of the transactions contemplated hereby
and thereby. Each of this Agreement and the agreements contemplated hereby
constitute, or when executed and delivered will constitute, a valid and legally
binding obligation of such BA Purchaser enforceable against such BA Purchaser in
accordance with its terms.
7B. Consents and Approvals. Each BA Purchaser has obtained all
----------------------
consents, approvals or authorizations from each Governmental Entity or other
Persons prescribed by any Law, contract or agreement which may be required for
the execution, delivery and performance of this Agreement and the other
agreements contemplated hereby by each BA Purchaser or the consummation by each
BA Purchaser of the transactions contemplated hereby and thereby.
Section 8. Representations and Warranties and Covenants of all
---------------------------------------------------
Purchasers. Each of the Purchasers represents and warrants severally, as to
- ----------
itself, to the Company that each and all of the following statements are true,
correct and complete as of the date of execution and delivery of this Agreement
and will be true, correct and complete as of the Closing after giving effect to
the transactions contemplated hereby to occur on or prior to the Closing Date.
8A. Investment Intent. Such Purchaser represents and warrants that
-----------------
acquiring the Securities purchased hereunder or acquired pursuant hereto for its
own account with the present intention of holding such securities for purposes
of investment and without a view of making a distribution thereof within the
meaning if the Securities Act of 1933, as amended (the "Securities Act"), and
--------------
that such Purchaser has no intention of selling such Securities in violation of
applicable Securities Laws; provided that (i) the disposition of any Securities
--------
held by such Purchaser shall at all times be within such Purchaser's control and
(ii) nothing contained herein shall prevent such Purchaser and subsequent
holders of Securities from transferring such securities in compliance with the
provisions hereof. Each of the Purchasers hereby agrees that none of such
Securities, or any shares of Common Stock issued upon the exercise of the
Warrants shall be sold or transferred by such Purchaser in violation in the
Securities Laws. Each of the Purchasers is aware that none of the Securities
have been registered under the Securities Act or any other Securities Laws and
that the Company is not obligated to register such Securities except in
accordance with the provisions of the Registration Agreement, and that such
Securities must be held indefinitely unless subsequently registered or an
exemption from such registration is available.
8B. Access: Sophistication: etc.. Such Purchaser is an "accredited
----------------------------
investor" as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act. Each
-34-
<PAGE>
Purchaser and its agents and representatives have such knowledge and experience
in financial and business matters as to enable them to utilize the information
made available to them in connection with the purchases contemplated hereby, to
evaluate the merits and risks of an investment in the Company and to make an
informed decision with respect thereto and such an evaluation and informed
decision has been made. Such Purchaser represents that it has had an opportunity
to ask questions and receive answers from the Company, and examine such
documents, agreements and instruments, regarding the terms and conditions of the
offering of the Securities and the shares of Common Stock issuable upon exercise
of the Warrants, the Company's business plan and results of operation, this
Agreement, and the Agreements contemplated hereby, all certificates delivered in
connection therewith, and the business, properties, prospects and financial
condition of the Company. Such Purchaser represents that each Purchaser is
experienced in evaluating and investing in private placement transactions of
securities of companies in stages of development similar to that of the Company,
and that it has not been formed for the purpose of acquiring the Securities.
Such Purchaser acknowledges that it can bear the economic risk of loss of all of
its investment in the Company. Notwithstanding the provision of this Section 8B,
----------
however, such Purchaser is relying upon the representations and warranties of
the Company contained in this Agreement in connection with the decision of such
Purchaser to enter into this Agreement and consummate the transactions
contemplated hereby.
Section 9. Definitions.
-----------
9A. Defined Terms. For the purposes of this Agreement, the following
-------------
terms have the meanings set forth below:
"Affiliate" shall mean, with respect to any Person, (i) each Person
---------
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 10% or more of the Stock having ordinary
voting power in the election of directors of, or 10% or more of the common
equity of, such Person, (ii) each Person that controls, is controlled by or is
under common control with, such Person or any Affiliate of such Person, and
(iii) each of such Person's officers, directors, joint venturers and partners.
For the purpose of this definition, "control" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" has the meaning set forth in the Recitals.
-----
"Agreement" has the meaning set forth in the Recitals.
---------
"Articles of Incorporation" of any Person means the articles or
-------------------------
certificate of incorporation of such Person, as applicable, as in effect at the
Closing or as amended thereafter as permitted under this Agreement.
"BA Purchasers" has the meaning set forth in the Recitals.
-------------
"Bank" has the meaning set forth in the Recitals.
----
-35-
<PAGE>
"Business Day" shall mean any day that is not a Saturday, a Sunday or
------------
a day on which banks are required or permitted by Law or other action by a
Government Entity to be closed in the State of Illinois.
"Capital Expenditures" means for any period, the sum of all amounts
--------------------
that would, in accordance with GAAP, be included as additions to property, plant
and equipment on a consolidated statement of cash flows for the Company during
such period, in respect of (a) the acquisition, construction, improvement,
replacement or betterment of land, buildings, machinery, equipment or of any
other fixed assets or leaseholds, (b) to the extent related to and not included
in (a) above, materials, contract labor (excluding expenditures properly
chargeable to repairs or maintenance in accordance with GAAP), and (c) other
capital expenditures (including without limitation Capitalized Leases) and other
uses recorded as capital expenditures or similar terms having substantially the
same effect (including expenditures for nonrecurrent tangible assets such as
software).
"Capitalized Lease" means a lease of (or other agreement conveying the
-----------------
right to use) real or personal property with respect to which at least a portion
of the rent or other amounts thereon constitute Capitalized Lease Obligations.
"Capitalized Lease Obligations" of a Person shall mean all monetary
-----------------------------
obligations of such Person or any Subsidiary of such Person under a lease or
similar arrangement, which obligations would be classified and accounted for as
capital obligations on a consolidated balance sheet of such Person under GAAP
taken at the amount thereof accounted for as indebtedness (net of interest
expense) in accordance with such principles.
"Cash Flow Leverage Ratio" means, for any period of determination, the
------------------------
ratio of (a) Interest-bearing Indebtedness of the Company and its Subsidiaries
(including but not limited to the aggregate principal amount of all outstanding
Capitalized Lease Obligations of the Company and its Subsidiaries), all
determined as of the last day of that period, to (b) EBITDA for that period, in
each case determined in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980, as amended.
"Certificates of Designation" has the meaning set forth in Section 2E
--------------------------- ----------
hereof.
"Change of Ownership" means any Management Purchaser ceases to hold,
-------------------
beneficially and of record, at least 85% of the issued and issuable capital
stock of the Corporation that such Management Purchaser holds at Closing (as
adjusted for any subsequent stock splits, stock dividends, combinations of
shares or similar recapitalizations), other than Tom Boner in respect of sales
of capital stock to David Anderson.
"Chief Financial Officer" of any entity means the highest ranking
-----------------------
officer of such entity who is then in charge of the financial matters of such
entity.
"CIVC" has the meaning set forth in the Recitals.
----
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<PAGE>
"Closing" has the meaning set forth in Section 1C hereof.
------- ----------
"Closing Date" has the meaning set forth in Section 1C hereof.
------------ ----------
"Closing Fee" has the meaning set forth in Section 1D hereof.
----------- ----------
"Common Stock" means, collectively, the Company's common stock, and
------------
any shares of any class of the Company's capital stock hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect of the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Company.
"Company" means Zimmerman Sign Company, a Texas corporation.
-------
"Controlled Group" of any Person means all members of a controlled
----------------
group of corporations and all members of a controlled group of trades or
businesses (whether or not incorporated) which at the relevant time are under
common control which, together with such Person, as the case may be, are treated
as a single employer under Section 414(b), (c), (m) or (o) of the IRC or Section
4001 of ERISA.
"Default" means an event or condition the occurrence of which is, or
-------
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"DOL" shall mean the United States Department of Labor, or any
---
successor thereof.
"EBITDA" means, for any period of determination, an amount equal to
------
the consolidated net income of the Company before deductions for income taxes,
Interest Expense, depreciation and amortization.
"Environmental and Safety Requirements" means all federal, state or
-------------------------------------
local Laws, all contractual obligations and all common law, in each case
concerning public health and safety, pollution or protection of the environment
(including, without limitation, all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distri bution, labeling, testing, processing, discharge, Release, threatened
Release, control or cleanup of any Hazardous Materials, noise or radiation).
"Environmental Lien" means any Lien, whether recorded or unrecorded,
------------------
in favor of any Government Entity, relating to any liability of the Company or
any of its Subsidiaries arising under any Environmental and Safety Requirements.
"Equity Interests" means, collectively, the Series A Preferred, the
----------------
Warrants and Warrant Stock purchased hereunder and any securities issued or
issuable in respect thereof.
-37-
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
-----
any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Person, any trade or
---------------
business (whether or not incorporated) which at the relevant time is under
common control with such Person and which, together with such Person, are
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the IRC.
"ERISA Event" means, with respect to any Person or any member of its
-----------
Controlled Group (except with respect to clause (vi) of this paragraph which
shall be with respect to such Person or any of its ERISA Affiliates) (i) a
Reportable Event with respect to a Title IV Plan or a Multiemployer Plan, (ii)
the withdrawal of such Person, any of its Subsidiaries or any Controlled Group
member from a Title IV Plan subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA, (iii) the complete or partial withdrawal of such Person, any of its
Subsidiaries or any Controlled Group member from any Multiemployer Plan, (iv)
the filing of a notice of intent to terminate a Title IV Plan or the treatment
of a plan amendment as a termination under Section 4041 of ERISA, (v) the
institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by
the PBGC, (vi) the failure to make required contributions to a Title IV Plan or
(vii) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA.
"Event of Default" has the meaning set forth in Section 10 hereof.
---------------- ----------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any similar federal law then in force.
"Expended Amount" has the meaning set forth in Section 4A hereof.
--------------- ----------
"Federal Reserve Board" has the meaning set forth in Section 6J
--------------------- ----------
hereof.
"Financing" has the meaning set forth in Section 3H hereof.
--------- ----------
"FIRC" has the meaning set forth in Section 2B hereof.
---- ----------
"Fiscal Year" means the fiscal year of the Company ending on December
-----------
31.
"Forfeiture Proceeding" means any action or proceeding affecting the
---------------------
Company or any of its Subsidiaries before any Government Entity which may result
in the forced disposition (by the exercise of the power of eminent domain,
expropriation or otherwise), seizure, expropriation or forfeiture of any
property necessary for use in its business, or payment of a penalty, or
revocation, termination or suspension of a license or approval necessary for use
in its
-38-
<PAGE>
business which action or proceeding, if determined adversely to the Company or
its Subsidiaries, would reasonably be expected to have a Materially Adverse
Effect.
"GAAP" means generally accepted accounting principles in the United
----
States as in effect from time to time.
"Geneve" has the meaning set forth in Section 2B hereof.
------ ----------
"Government Entity" means the United States of America or any other
-----------------
nation, any state, province or other political subdivision thereof, or any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of government, including any Tribunal.
"GSH" has the meaning set forth in Section 2B hereof.
--- ----------
"Guarantee" by a Person shall include any guarantee of the payment or
---------
performance of any Indebtedness or other obligation and any other arrangement
whereby credit is extended to one obligor on the basis of any promise of such
Person, whether that promise is expressed in terms of an obligation to pay the
Indebtedness of such obligor, to provide reimbursement, or to purchase an
obligation owed by such obligor, or to purchase goods and services from such
obligor pursuant to a take-or-pay contract, or to maintain the capital, working
capital, solvency or general financial condition of such obligor, whether or not
any such arrangement is listed in the balance sheet of such Person, or referred
to in a footnote thereto, but shall not include endorsements of items for
collection in the ordinary course of business.
"Hazardous Materials" means anything that is a "hazardous substance"
-------------------
pursuant to CERCLA, anything that is a "hazardous waste" or "solid waste"
pursuant to RCRA, and any other pollutant, contaminant, toxic chemical,
petroleum product or by-product, asbestos or polychlorinated biphenyl.
"Indebtedness" with respect to any Person shall mean, without
------------
duplication, (a) all indebtedness of such Person or any Subsidiary of such
Person in respect of money borrowed (including, without limitation, indebtedness
which represents the unpaid amount of the purchase price of any property) and
not constituting an account payable or expense accrual incurred or assumed in
the ordinary course of business of such Person or any of its Subsidiaries, (b)
all indebtedness of such Person or any Subsidiary of such Person evidenced by a
promissory note, bond or similar written obligation to pay money, (c) all
obligations of such Person upon which interest charges are customarily paid or
accrued, other than trade debt, (d) all such indebtedness guaranteed by such
Person or any Subsidiary of such Person (including pursuant to any Guarantee) or
for which such Person or any Subsidiary of such Person is otherwise contingently
liable, including, without limitation, Guarantees in the form of an agreement to
repurchase or reimburse, and any commitment by which such Person or any
Subsidiary of such Person assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit, (e) all obligations
secured by a Lien on property of such Person or any of its Subsidiaries (but
shall not include operating leases), (f) Capitalized Lease Obligations, (g) all
obligations of such Person in respect of interest rate protection agreements,
(h) all obligations of such Person, actual or contingent, as an account party in
respect of letters of credit or bankers' acceptances,
-39-
<PAGE>
(i) all obligations of any partnership or joint venture as to which such Person
is or may become personally liable, and (j) all Contingent Obligations of such
Person.
"Indemnified Liabilities" has the meaning set forth in Section 11C
----------------------- -----------
hereof.
"Indemnitee" has the meaning set forth in Section 11C hereof.
---------- -----------
"Interest-bearing Indebtedness" means Indebtedness with respect to
-----------------------------
which the Company or any of its subsidiaries is obliged to make interest
payments from time to time, irrespective of whether such payments are paid,
accrued or waived from time to time (including without limitation Capitalized
Lease Obligations).
"Interest Coverage Ratio" means, for any period of determination, the
-----------------------
ratio of (a) EBITDA to (b) Interest Expense, in each case determined for said
period in accordance with GAAP.
"Interest Expense" means, for any period of determination, that
----------------
aggregate amount, without duplication, of interest paid, accrued or scheduled to
be paid in respect of any Indebtedness of the Company or any of its Subsidiaries
for such period, including (a) all but the principal component of payments in
respect of conditional sale contracts, Capitalized Leases and other title
retention agreements, (b) commissions, discounts and other fees and charges with
respect to letters of credit and bankers' acceptance financings and (c)
dividends and distributions paid in respect of the Series A Preferred, the
Series B Preferred and the Series C Preferred, in each case determined in
accordance with GAAP.
"Investment" as applied to any Person means (i) any direct or indirect
----------
purchase or other acquisition by such Person of any notes, obligations,
instruments, Stock, securities or ownership interest (including partnership
interests, limited liability company interests and joint venture interests) of,
or any loan by such Person to, any other Person and (ii) any capital
contribution by such Person to any other Person.
"IRC" means the Internal Revenue Code of 1986, as amended.
---
"IRS" shall mean the Internal Revenue Service.
---
"Latest Audited Statement" has the meaning set forth in Section 6E(a)
------------------------ -------------
hereof.
"Latest Balance Sheet" has the meaning set forth in Section 6E(a)
-------------------- -------------
hereof.
"Laws" means all statutes, laws, ordinances, regulations, rules,
----
orders, judgments, writs, injunctions, acts or decrees of any Government Entity
(including Environmental and Safety Requirements).
"Lien" means any mortgage, pledge, security interest, encumbrance,
----
lien or charge of any kind, including, without limitation, any conditional sale
or other title retention agreement, any lease in the nature thereof and
including any lien or charge arising by statute or other Laws,
-40-
<PAGE>
which secures the payment of a debt (including, without limitation, any Tax) or
the performance of an obligation.
"Litigation" means any action, proceeding, claim, order, lawsuit
----------
and/or investigation conducted by or before any Government Entity.
"Loan Agreement" has the meaning set forth in the Recitals.
--------------
"Management Purchasers" has the meaning set forth in the Recitals.
---------------------
"Majority Holders" at any time means the Majority Note Holders or, at
----------------
such time as the Notes are no longer outstanding, the Majority Equity Holders.
"Majority Note Holders" at any time means the holders of Notes
---------------------
representing a majority of the aggregate principal amount of all Notes then
outstanding.
"Majority Equity Holders" at any time means the holders of a majority
-----------------------
of the Equity Interests in existence at such time.
"Majority Warrant Holders" at any time means holders of a majority of
------------------------
the Warrant Stock in existence at such time.
"Materially Adverse Effect" means an effect, resulting, or which could
-------------------------
result, from any occurrence or omission of whatever nature (including any
adverse determination in any litigation, arbitration or governmental
investigation or proceeding), materially adverse to the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole.
"Measurement Period" means, as of the last day of any fiscal quarter,
------------------
the four fiscal quarters ending on such date.
"MIG" has the meaning set forth in the Recitals.
---
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA, and to which any Person or any member of such
Person's Controlled Group is making, is obligated to make, has made or been
obligated to make, contributions on behalf of participants who are or were
employed by any of them.
"Net Worth" means as of any date of determination, the sum of the
---------
amounts set forth on the balance sheet of the Company and its Subsidiaries,
prepared in accordance with GAAP, for common stock, preferred stock, additional
paid-in capital and retained earnings of the Company and its Subsidiaries
(excluding treasury stock)
"Noteholder" at any time means the record holder of any Note, as
----------
reflected on the records of the Company in accordance with the Notes.
-41-
<PAGE>
"Notes" has the meaning set forth in Section 1A hereof.
----- ----------
"Obligation" means any obligation of the Company or its Subsidiaries
----------
with respect to the repayment or performance of any obligation (monetary or
otherwise) of such party arising under or in connection with this Agreement, the
Notes, the Series A Preferred, the Warrants, the Warrant Stock or any other
document delivered in connection herewith, and "Obligations" means all of such
-----------
Obligations collectively.
"Officer's Certificate" of any Person means a certificate signed on
---------------------
behalf of such Person by the chief executive officer, chief operating officer or
Chief Financial Officer (without any personal liability) of such Person stating
that (i) the officer signing such certificate has made or has caused to be made
such investigations as are reasonably necessary in order to permit such officer
to verify the accuracy of the information set forth in such certificate, and
(ii) to the best of such officer's knowledge, such certificate does not misstate
any material fact and does not omit to state any fact necessary to make the
certificate not misleading.
"Operating Lease" means any lease of personal property other than a
---------------
Capitalized Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
----
successor thereto.
"Pension Plan" means a "pension plan," as such term is defined in
------------
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which the
Company or any corporation, trade or business that is, along with the Company, a
member of its respective Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within the meaning of
Section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under Section 4069 of ERISA.
"Permitted Liens" means (i) the security interests held by the holders
---------------
of the Senior Indebtedness under the Loan Agreement to secure the repayment of
Senior Indebtedness, (ii) Liens for Taxes or assessments and similar charges,
which either are (A) not delinquent or (B) being contested diligently and in
good faith by appropriate proceedings, and as to which the Company has set aside
reserves on its books in accordance with GAAP, (iii) carriers', warehousemen's,
mechanics', materialmen's or contractors' Liens or any similar Liens for amounts
not yet due and payable, (iv) Permitted Purchase Money Liens, (v) Liens to
secure the obligations of the Company under the Rate Protection Agreements (as
defined in the Note), (vi) Liens existing on the date of this Agreement and
disclosed on the Lien Schedule attached hereto, (vii) deposits or pledges to
-------------
secure payment of workers' compensation, unemployment insurance, old age
pensions or other social security obligations, in the ordinary course of
business of the Company and its Subsidiaries, (viii) Liens incurred or deposits
or pledges made or given in connection with, or to secure payment of, indemnity,
performance or other similar bonds in the ordinary course of business, and (ix)
Liens arising solely by virtue of any statutory or common law provision relating
to bankers' liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a creditor depository
institution, provided
-42-
<PAGE>
that (A) such deposit account is not a dedicated cash collateral account and is
not subject to restriction against access by the Company in excess of those set
forth by regulations promulgated by the Board of Governors of the Federal
Reserve System, and (B) such deposit account is not intended by the Company to
provide collateral to the depository institution.
"Permitted Purchase Money Liens" means any purchase money Lien on real
------------------------------
property or equipment or other goods acquired (including any acquisition
pursuant to a Capitalized Lease) by the Company or any of its Subsidiaries (a
"Purchase Money Lien") in the ordinary course of its business so long as: (i)
-------------------
the transaction in which such Purchase Money Lien is proposed to be created is
not prohibited by this Agreement; (ii) such Purchase Money Lien attaches only to
the asset acquired (and to the extent applicable, any insurance thereon) in such
transaction and does not extend to or cover any other assets of the Company or
any of its Subsidiaries; (iii) the Indebtedness secured or covered by such
Purchase Money Lien does not exceed 100% of the cost to the Company and its
Subsidiaries of the asset acquired; and (iv) such Indebtedness is either (x)
incurred on the date of acquisition of the asset acquired or (y) incurred for
the purpose of refinancing or refunding any Indebtedness secured by a Permitted
Purchase Money Lien, so long as the unpaid balance thereof following such
refinancing does not exceed the amount thereof prior to such refinancing.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a Government Entity or any
department, agency or political subdivision thereof.
"Plan" means, with respect to any Person or either any member of its
----
Controlled Group or any ERISA Affiliate, as required by the context at any time,
an employee benefit plan, as defined in Section 3(3) of ERISA, which any Person
or any of its Subsidiaries maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.
"Proprietary Rights" means all (i) patents, patent applications,
------------------
patent disclosures and inventions, (ii) trademarks, service marks, trade dress,
trade names and corporate names and registrations and applications for
registration thereof, (iii) copyrights and registrations and applications for
registration thereof, (iv) mask works and registrations and applications for
registration thereof, (v) computer software, data and documentation, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vii) other intellectual property rights and (viii) copies and tangible
embodiments of any of the foregoing (in whatever form or medium).
"Purchaser" has the meaning set forth in the Recitals.
---------
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<PAGE>
"Qualified Plan" means an employee pension benefit plan, as defined in
--------------
Section 3(2) of ERISA, which is intended to be tax-qualified under Section
401(a) of the IRC, and which the Company, any of its Subsidiaries or any ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"RCRA" means the federal Resource Conservation and Recovery Act, as
----
amended.
"Recapitalization" has the meaning set forth in the Recitals.
----------------
"Registration Agreement" means the Registration Agreement, dated as of
----------------------
the date hereof, among the Company and the Purchasers.
"Regulatory Violation" has the meaning set forth in Section 3H hereof.
-------------------- ----------
"Release" has the meaning set forth in CERCLA.
-------
"Reportable Event" means any of the events listed in Section 4043 of
----------------
ERISA.
"Restricted Payment" means (i) any dividend or other distribution,
------------------
direct or indirect, on account of or with respect to any Stock of the Company or
any of its Subsidiaries (other than dividends and distributions on the Series A
Preferred, Series B Preferred or Series C Preferred), (ii) loans, advances or
other payments in respect of or in any way related to any such Stock, including,
without limitation, any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of all or any
portion of any such Stock, and (iii) any prepayment of principal, optional
redemption, purchase, retirement prior to stated maturity, defeasance, or
similar optional payment with respect to any Indebtedness of the Company or any
of its Subsidiaries (other than payments in respect of Senior Indebtedness or
the Notes).
"Restricted Securities" means (i) the Notes issued hereunder, (ii) the
---------------------
Series A Preferred issued hereunder, (iii) the Warrants issued hereunder, (iv)
the Common Stock issued or issuable upon exercise of the Warrants and (v) any
securities issued with respect to the securities referred to in clauses (i)
through (v) inclusive, above by way of a stock dividend or stock split or in
connection with a combination of stock, recapitalization, merger, consolidation
or other reorganization. As to any particular Restricted Securities, such
securities shall cease to be Restricted Securities when they have (a) been
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (b) become eligible for sale
pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act or (c) been otherwise transferred and new certificates for them
not bearing a Securities Act legend have been delivered by the Company.
Whenever any particular securities cease to be Restricted Securities, the holder
thereof shall be entitled to receive from the Company, without expense, new
securities of like tenor not bearing a Securities Act legend.
"Revolver" has the meaning given such term in the Recitals.
--------
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<PAGE>
"SBA" means the United States Small Business Administration, and any
---
successor agency performing the functions thereof.
"SBIC" means a Small Business Investment Company licensed by an SBA
----
under the SBIC Act.
"SBIC Act" means the Small Business Investment Act of 1958, as
--------
amended.
"SBIC Holder" means any SBIC holding any securities of the Company.
-----------
"SBIC Regulations" means the SBIC Act and the regulations issued by
----------------
the SBA thereunder, codified at Title 13 of the Code of Federal Regulations ("13
--
CFR"), Parts 107 and 121.
- ---
"Scheduled Amount" has the meaning set forth in Section 4A hereof.
---------------- ----------
"Securities" has the meaning set forth in Section 1A hereof.
---------- ----------
"Securities Act" means the United States Securities Act of 1933, as
--------------
amended.
"Securities Laws" at any time means the Securities Act, Exchange Act
---------------
and any similar securities laws of the United States or any state thereof which
are then in force.
"Securityholder" means any holder of a Security.
--------------
"Senior Indebtedness" has the meaning given to such term in the Notes.
-------------------
"Series A Preferred" has the meaning set forth in Section 1A hereof.
------------------ ----------
"Series B Preferred" means the Company's Series B Preferred Stock, par
------------------
value $0.01 per share.
"Series C Preferred" means the Company's Series C Preferred Stock, par
------------------
value $0.01 per share.
"Share Purchase Option Agreements" has the meaning set forth in
--------------------------------
Section 2B hereof.
----------
"SIC" has the meaning set forth in Section 2B hereof.
--- ----------
"SMHC" has the meaning set forth in Section 2B hereof.
---- ----------
"Stock" of any Person means any stock, equity or profits interests,
-----
participations or other equivalents (however designated) of stock, whether
voting or nonvoting, including any notes or securities with profit participation
features, and any rights, warrants, options or other securities directly or
indirectly convertible into or exercisable or exchangeable for any such stock,
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<PAGE>
equity or profits interests, participations or other equivalents, or such other
securities, (or any equivalent ownership interests, in the case of a Person
which is not a corporation).
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of stock entitled (irrespective of whether,
at the time, shares of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person or a combination thereof or (ii) if a
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be or
control the managing director or general partner of such partnership,
association or other business entity.
"Tax" means any federal, state, local, provincial, or foreign income,
---
gross receipts, license, payroll, employment, excise, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, unemployment, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
or other tax, fee, assessment or charge of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Term Loans" has the meaning given such term in the Recitals.
----------
"Title IV Plan" means a Pension Plan, other than a Multiemployer Plan,
-------------
which is covered by Title IV of ERISA.
"Treasury Regulations" means the United States Treasury Regulations
--------------------
promulgated under the IRC, and any reference to any particular Treasury
Regulation section shall be interpreted to include any final or temporary
revision of or successor to that section regardless of how numbered or
classified.
"Tribunal" means any government, arbitration panel, court or
--------
governmental department, commission, board, bureau, agency or instrumentality of
the United States of America, Canada or any state, province, commonwealth,
nation, territory, possession, county, parish, town, township, village,
municipality or other governmental entity, whether now or hereafter constituted
and/or existing.
"Warrants" has the meaning given such term in Section 1A hereof.
-------- ----------
"Warrant Stock" means (i) the Common Stock issued or issuable upon
-------------
exercise of or with respect to the Warrants, (ii) any shares of Stock issued or
issuable with respect to the securities referred to in clause (i) above by way
of stock dividend or stock split or in connection
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<PAGE>
with a combination of stock, recapitalization, merger, consolidation or other
reorganization or otherwise pursuant to the Warrants. Any Person who holds
Warrants shall be deemed to be the holder of the Warrant Stock obtainable upon
exercise of the Warrants in connection with the transfer thereof or otherwise
regardless of any restriction or limitation on the exercise of the Warrants.
"Withdrawal Liability" means, at any time, the aggregate amount of the
--------------------
liabilities, if any, pursuant to Section 4021 of ERISA, and any increase in
contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
"Wholly-Owned Subsidiary" of any Person means any corporation,
-----------------------
partnership, association or other business entity of which (i) if a corporation,
100% of the stock and of the total voting power of stock entitled (irrespective
of whether, at the time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a partnership, limited liability company, association or other
business entity, 100% of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof.
9B. Accounting Terms. Any accounting term used in this Agreement
----------------
shall have, unless otherwise specifically provided herein, the meaning
customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise specifically provided
herein, in accordance with GAAP consistently applied. That certain terms or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. Financial statements and
other information furnished pursuant to this Agreement shall be prepared in
accordance with GAAP as in effect at the time of such preparation. To the extent
any change in GAAP affects any computation or determination required to be made
pursuant to this Agreement, such computation or determination shall be made as
if such change in GAAP had not occurred unless the Company and the Majority
Holders agree in writing on an adjustment to such computation or determination
to account for such change in GAAP.
Section 10. Events of Default.
-----------------
10A.Events of Default. The term "Event of Default" shall mean any of
----------------- ----------------
the following events:
(a) Non-Payment of Principal or Interest. The Company shall (i)
------------------------------------
fail to pay when due any interest on any Note or any monetary Obligation
with respect to the Notes other than payment of unpaid principal and the
same shall continue unremedied for a period of 2 days, or (ii) fail to pay
when due all or any portion of the unpaid principal on any Note.
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<PAGE>
(b) Breach of Warranty. Any representation or warranty of the
------------------
Company or any Subsidiary of the Company hereunder or under any Security,
certificate, report, financial statement or other writing furnished by or
on behalf of the Company or any Subsidiary of the Company to any of the
Purchasers or any other Securityholder for the purposes of or in connection
with this Agreement or any such other document is or shall be incorrect in
any material respect when made or deemed made; provided, that for purposes
--------
of this Section 8A(b) each such representation or warranty shall be deemed
-------------
to have been amended to delete each materiality standard included therein
(including without limitation to delete the words "material" and all
references to "Materially Adverse Effect").
(c) Non-Performance of Other Obligations.
------------------------------------
(1) The Company or any of its Subsidiaries shall default in
the due performance and observance of or otherwise neglect or fail to
perform, keep or observe any agreement contained in any of the
financial covenants contained in Section 4 or any of the negative
---------
covenants of Section 5 hereof.
---------
(2) The Company or any of its Subsidiaries shall default in
the due performance or observance of or otherwise neglect or fail to
perform, keep or observe any other agreement contained herein or in
any of the Notes, the Warrants, the Stockholders Agreement and the
Registration Agreement, and the same shall continue unremedied for a
period of 20 days (5 days in the case of Section 3B(d)) after a senior
-------------
officer of the Company shall have first become aware thereof.
(d) Acceleration of Other Indebtedness. A default shall occur in
----------------------------------
the performance or observance of any obligation or condition relating to
any Indebtedness in an aggregate amount exceeding $250,000 (whether under
any mortgage, indenture or instrument or agreement securing or relating to
any such indentures or otherwise) of the Company or any of its Subsidiaries
and the effect of such default is to accelerate the maturity or require the
prepayment, redemption, repurchase or defeasance of any such Indebtedness
or to cause an offer to repay, redeem, purchase or defease such
Indebtedness to be required to be made, or to require the making of any
deposits in respect of any such Indebtedness, prior to its expressed
maturity, or a holder of such Indebtedness otherwise applies or sets off
assets of the Company or any of its Subsidiaries held in such holder's
possession, or exercises any right to deposit and retain in an account,
amounts to satisfy contingent or unmatured obligations of the Company or
any of its Subsidiaries to such holder.
(e) Bankruptcy, Insolvency, etc. Any of the Company or its
----------------------------
Subsidiaries shall:
(1) become insolvent or generally fail to pay, or admit in
writing its inability to pay, debts as they become due;
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<PAGE>
(2) apply for, consent to, or acquiesce in, the appointment
of a trustee, receiver, administrator, or other custodian for the
Company or any of its Subsidiaries or any property thereof or make a
general assignment for the benefit of creditors;
(3) in the absence of such application, consent or
acquiescence, permit, or suffer to exist the appointment of a trustee,
receiver, administrator, liquidator, assignee, custodian, or other
similar official for the Company or any of its Subsidiaries or
property of any thereof for a period of 60 days;
(4) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency Laws or any other Laws
for the benefit of the debtors, or any dissolution, winding up or
liquidation proceeding, in respect of the Company or any of its
Subsidiaries and, if such case or proceeding is not commenced by the
Company or any such Subsidiary, such case or proceeding shall be
consented to or acquiesced in by the Company or any such Subsidiary or
shall result in the entry of an order for relief or shall remain for
60 days undismissed;
(5) have concealed, removed or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them or made or suffered a transfer of
any of its property or the incurring of an obligation which may be
fraudulent under any bankruptcy, fraudulent conveyance or other
similar Laws; or
(6) take any corporate action authorizing, or in furtherance
of, any of the foregoing.
(f) Dissolution. Entry, rendering or filing of any order, final
-----------
judgment or decree decreeing the dissolution or split up of the Company or
any of its Subsidiaries, if such order remains in effect for a period of
more than 45 days without being vacated, discharged, satisfied or stayed or
bonded pending appeal.
(g) Judgments. A judgment or order, the uninsured portion of
---------
which is in excess of $250,000, shall be rendered against the Company or
any of its Subsidiaries and, within 30 days after entry thereof, such
judgment or order shall not have been discharged or execution thereof
stayed pending appeal, or, within 30 days after the expiration of any such
stay, such judgment or order shall not have been discharged in full.
(h) Pension Plans. The institution of any steps by the Company
-------------
or any member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Company or any such
member of its Controlled Group could be required to make a contribution to
such Pension Plan, or could reasonably expect to incur a liability or
obligation to such Pension Plan in excess of $250,000.
-49-
<PAGE>
(i) ERISA. (i) With respect to any Plan, a prohibited
-----
transaction within the meaning of Section 4975 of the IRC or Section 406 of
ERISA occurs which in the reasonable determination of the Majority
Noteholders could result in liability in excess of $50,000 to the Company
or any of its Subsidiaries; (ii) with respect to any Title IV Plan, the
filing of a notice to voluntarily terminate any such plan in a distress
termination; (iii) with respect to any Multiemployer Plan, the Company or
any of its Subsidiaries or any ERISA Affiliate shall incur any Withdrawal
Liability and, in the opinion of the Majority Noteholders, such Withdrawal
Liability would reasonably be expected to have a Materially Adverse Effect;
(iv) with respect to any Qualified Plan, the Company or any of its
Subsidiaries or any ERISA Affiliate shall incur an accumulated funding
deficiency or request a funding waiver from the IRS; or (v) with respect to
any Title IV Plan or Multiemployer Plan which has an ERISA Event not
described in (ii) - (iv) hereof, in the reasonable determination of the
Majority Note Holders there is a reasonable likelihood for termination of
any such plan by the PBGC; provided, however, that the events listed in
-----------------
clauses (i) - (v) hereof shall constitute Events of Default only if the
liability, deficiency or waiver request of the Company or any of its
Subsidiaries or any ERISA Affiliate, whether or not assessed, exceeds
$250,000 in any case set forth in (i) - (v) above, or exceeds $250,000 in
the aggregate for all such cases.
(j) Forfeiture Proceeding. The commencement of any Forfeiture
---------------------
Proceeding, if such Forfeiture Proceeding continues for a period of more
than 30 days without being vacated, discharged, satisfied or stayed or
bonded pending appeal or there is an adverse decision in such proceeding.
(k) Validity of Agreements. Any material provision of this
----------------------
Agreement, the Notes, the Warrants, the Stockholders Agreement and the
Registration Agreement shall, for any reason, cease to be valid and binding
on the Company or the Company shall so claim in writing to any
Securityholder.
(l) Change of Ownership. If prior to repayment in full of the
-------------------
Notes, a Change of Ownership shall occur.
10B. Default Interest Rate. Upon any Event of Default, the interest
---------------------
rate per annum on the Notes shall increase immediately by an increment of three
percentage points (3%) to the extent permitted by law. Any increase of the
interest rate resulting from the operation of this section shall terminate as of
the close of business on the date on which no Event of Default exists (subject
to subsequent increases pursuant to this section).
10C. Remedy if Bankruptcy. If any Event of Default described in any
--------------------
of clause(s) (1) through (6) of Section 10A(e) shall occur, the outstanding
--------------
principal amount of all outstanding Notes and all other Obligations to
Noteholders or with respect to the Notes shall automatically be and become
immediately due and payable, without declaration, notice or demand.
10D. Remedy if Other Event of Default. If any Event of Default (other
--------------------------------
than any Event of Default described in any of clauses (1) through (6) of Section
-------
10A(e)) shall occur for
- -------
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<PAGE>
any reason, whether voluntary or involuntary, and be continuing, the Majority
Note Holders may, upon notice or demand, declare all or any portion of the
outstanding principal amount of the Notes to be due and payable and any or all
other Obligations with respect to the Notes to be due and payable, whereupon the
full unpaid amount of such Notes and any and all other Obligations with respect
to the Notes which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand, protest or
presentment (all of which are expressly waived by the Company).
10E. Waivers. Except as otherwise provided for in this Agreement and
-------
applicable law, the Company waives (a) presentment, demand and protest and
notice of presentment, dishonor, notice of intent to accelerate and notice of
acceleration, (b) all rights to notice and a hearing prior to any Noteholder's
taking possession or control of, or to Noteholder's replevy, attachment or levy
upon, any bond or security which might be required by any court prior to
allowing any Noteholder to exercise any of its remedies and (c) the benefit of
all valuation, appraisal and exemption laws. The Company acknowledges that it
has been advised by counsel of its choice with respect to this Agreement, the
other documents contemplated hereby and the transactions evidenced by this
Agreement and the other documents contemplated hereby.
10F. Right of Setoff.
---------------
(a) In the case that an Event of Default shall occur and be
continuing or shall exist, each Purchaser shall have the right, in addition
to all other rights and remedies available to them, upon 3 business days
prior written notice to the Company, to Setoff against and to appropriate
and apply to the unpaid balance of the Notes, all accrued interest thereon
and all other obligations of the Company under and with respect to the
Notes, any debt owing to, and any other funds held in any manner for the
account of the Company or any of its Subsidiaries by such Purchaser,
including, without limitation, all funds in all deposit accounts (general
or special) now or hereafter maintained by the Company or any of its
Subsidiaries for their own accounts with such Purchaser.
(b) Such right shall exist whether or not such Purchaser shall
have made any demand under this Agreement, the Notes or the Warrants and
whether or not the Notes, the Warrants and such other obligations are
matured or unmatured, and shall be in addition to any other rights and
remedies which the Noteholder possess.
(c) The Company hereby confirms each Purchaser's (and such other
holder's) right of banker's lien and setoff and nothing in this Agreement
shall be deemed to be any waiver or prohibition of such Purchaser's right
of banker's lien and setoff.
Section 11. Miscellaneous.
-------------
11A. Expenses. The Company shall pay, and hold the BA Purchasers and
--------
each Noteholder or holder of any Securities harmless against liability for the
payment of (a) the reasonable fees and expenses of Kirkland & Ellis arising in
connection with the negotiation and execution of this Agreement, any Securities,
the Registration Agreement, each of the agreements contemplated hereby or
thereby and the consummation of the transactions contemplated by this
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<PAGE>
Agreement, in the amount set forth in an invoice delivered to the Company by
Kirkland & Ellis (which amounts shall be payable at the Closing), (b) the fees
and expenses reasonably incurred with respect to any amendments or waivers
(whether or not the same become effective) under or in respect of any of this
Agreement, the Stockholders Agreement, the Registration Agreement, the Warrants,
the Notes and the other agreements contemplated hereby or thereby and the
Company's Articles of Incorporation (including in connection with any proposed
merger, consolidation, sale or recapitalization of the Company), and (c) the
fees and expenses incurred with respect to the enforcement of the rights granted
under any of this Agreement, the Notes, the Warrants, the Stockholders
Agreement, the Registration Agreement, the Company's Articles of Incorporation
and the other agreements contemplated hereby or thereby.
11B. Remedies. Each Noteholder, each holder of Series A Preferred and
--------
each holder of Warrants and Warrant Stock shall have all rights and remedies of
Noteholders, holders of Series A Preferred and holders of Warrants and Warrant
Stock, respectively, set forth in this Agreement (including, without limitation,
Sections 10B and 10C above), the Notes, the Warrants, the Stockholders
- ------------ ---
Agreement, the Company's Articles of Incorporation and all rights and remedies
which such holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any Laws. Any
Person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by Laws. All such rights and remedies
shall be cumulative and non-exclusive, and may be exercised singularly or
concurrently. One or more successive actions may be brought against the
Company, either in the same action or in separate actions, as often as any of
the Securityholders deems advisable, until all of the Obligations are paid and
performed in full.
11C. Indemnification. In consideration of the execution and delivery
---------------
of this Agreement by the Purchasers, the Company will indemnify, exonerate and
hold harmless each of the Purchasers and each other Noteholder, holder of Series
A Preferred or holder of Warrant Stock, and each of their respective officers,
directors, employees, partners and agents (collectively, the "Indemnitees") from
-----------
and against any and all actions, causes of action, suits, losses, costs,
liabilities and damages and expenses incurred in connection therewith
(irrespective of whether such Indemnitee is a party to the action for which
indemnification hereunder is sought), including reasonable attorney's fees and
disbursements including, without limitation, any arising under or relating to
Environmental and Safety Requirements or relating to Hazardous Materials
(collectively, the "Indemnified Liabilities") incurred by any Indemnitee as a
-----------------------
result of such Indemnitee's purchase of the Notes, Warrants or Series A
Preferred hereunder, arising out of or relating to the operations of the
Company's or any of its Subsidiaries' businesses (other than on account of or
relating to such Indemnitee's service as an employee of the Company or any of
its Subsidiaries) or the entering into and performance of this Agreement, any of
the Notes, any of the Warrants, the Stockholders Agreement or the Registration
Agreement. Notwithstanding the foregoing, "Indemnified Liabilities" will not
include as to any Indemnitee any liabilities to the extent arising by reason of
such Indemnitee's gross negligence or willful misconduct. Further, if and to the
extent that the covenant included in this Section 11C may be unenforceable for
-----------
any reason, the Company hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable
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<PAGE>
Laws.; provided that no Indemnitee shall be entitled to indemnification under
this Section 11C with respect to any Indemnified Liability arising solely with
-----------
respect breaches of the representations and warranties of the Company set forth
in Section 6 (other than Sections 6A, 6B, 6D and 6Q) of this Agreement, unless
--------- ----------- -- -- --
such Indemnified Liability, together will all other such Indemnified
Liabilities, exceeds $250,0000, in which case such Indemnitee shall be entitled
to indemnification only for the amount of such excess; it being understood,
however, that the foregoing limitation applies only to Indemnified Liabilities
arising out of breaches of representations and warranties contained in Section 6
---------
(other than Sections 6A, 6B, 6D and 6Q) and no other Liability for which
----------- -- -- --
indemnification may be sought hereunder.
11D. Usury. Anything herein, in the Notes or in any agreement,
-----
certificate, instrument or other documents contemplated by this Agreement to the
contrary notwithstanding, the obligations of the Company under this Agreement
and the Notes will be subject to the limitation that payments of interest will
not be required to the extent that receipt thereof would be contrary to
provisions of law applicable to the Noteholder in question limiting rates of
interest which may be charged or collected by such Noteholder.
11E. Consent to Amendments. Except as otherwise expressly provided
---------------------
herein, commencing on and after the Closing the provisions of this Agreement may
be amended or waived, and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if such
Person has obtained the written consent of the Majority Holders; provided that
(x) any provision of the Notes (other than Section 2 of the Notes, the
---------
Redemption Premium Amount (as defined in the Notes), rate of interest, maturity
or principal amount, which may be amended with respect to any Note only upon the
written consent of the holders of such Note) may be amended if and only if the
Company has obtained the written consent of the Majority Note Holders and only
if the provisions of all outstanding Notes are amended in the same manner; (y)
any provisions of the Warrants (other than Section 7 or 8 of the Warrants, the
--------- -
number of shares obtainable upon exercise thereof and the exercise price thereof
or the term thereof, which may be amended with respect to any Warrant only with
the prior written consent of the holders of such Warrant) may be amended if and
only if the Company has obtained the written consent of the Majority Warrant
Holders and only if the provisions of all Warrants are amended in the same
manner and (z) any provision of this Agreement which would continue to apply
after the Notes and Series A Preferred are paid in full may be amended if and
only if the Company has obtained the written consent of the Majority Warrant
Holders. No other course of dealing between the Company and any Securityholder
or any delay in exercising any rights hereunder, under any of the Securities,
under any other agreement contemplated hereby or the Company's Articles of
Incorporation shall operate as a waiver of any rights of any such holders. For
purposes of this Agreement, the Notes and Warrant Stock held by the Company or
any of its Subsidiaries shall not be deemed to be outstanding or in existence.
If the Company directly or indirectly pays any consideration to any
Securityholder for such holder's consent to any amendment, modification or
waiver hereunder, the Company shall also pay each other holder of the same type
of Securities granting its consent hereunder equivalent consideration computed
on a pro rata basis.
11F. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties
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<PAGE>
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. In addition, and
whether or not any express assignment has been made, the provisions of this
Agreement which are for the benefit of the Purchasers as purchasers or
Securityholders are also for the benefit of, and enforceable by, any subsequent
Securityholder.
11G. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable Laws, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable Laws, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
11H. Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement.
11I. Descriptive Headings; Interpretation. The descriptive headings
------------------------------------
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. Whenever the term "including" is used in
this Agreement, (whether or not that term is followed by the phrase "without
limitation" or words of similar effect) it will be interpreted to be
illustrative only and will not be interpreted as a limitation on, or an
exclusive listing. The "knowledge" or "awareness" of a Person means the actual
knowledge of such Person (which includes the actual knowledge of all officers,
directors and executive employees of such Person after reasonable inquiry).
11J. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF TEXAS SHALL
-------------
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS AND OBLIGATIONS
OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
11K. Notices. All notices, demands and other communications given or
-------
delivered under this Agreement shall be in writing and shall be deemed to have
been given upon receipt when delivered personally or by telecopy, one Business
Day after being deposited with a reputable overnight courier service or three
Business Days after being deposited in the U.S. Mail. Notices, demands and
communications to the Purchasers and the Company, unless another address is
specified in writing, shall be sent to the address or telecopy number indicated
below and to the attention of such other persons indicated below or to such
other address or to the attention of such other person as the recipient party
has specified by prior written notice to the sending party:
If to the Purchasers:
--------------------
Bank of America National Trust and
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<PAGE>
Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Robert Perille
Andrea P. Joselit
Telecopier: 312/828-6298
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: John A. Weissenbach
Wendy L. Chronister
Telecopier: 312/861-2200
If to the Company:
-----------------
Zimmerman Sign Company
9846 Hwy 31 East
Tyler, Texas 75705
Attn: Chief Executive Officer
Telecopier: 903/535-7420
with a copy to:
Jackson Walker L.L.P.
901 Main Street
Suite 6000
Dallas, Texas 75705
Attn: Bryan C. Birkeland
Telecopier: 214/953-5822
11L. Survival of Agreement; Indemnities. All covenants, agreements,
----------------------------------
representations and warranties made in this Agreement and in the certificates
delivered pursuant hereto shall survive the Closing hereunder and the execution
and delivery to the Purchasers of this Agreement, the Notes, the Warrants, the
Registration Agreement, the Stockholders Agreement and all other documents
delivered hereunder or contemplated hereby regardless of any investigation made
by any of the Purchasers or on behalf of any of the Purchasers and, except as
otherwise expressly provided herein, shall continue in full force and effect so
long as any of the Securities or other Obligations remain outstanding,
unperformed or unpaid, except that the representations and warranties made
herein shall continue only until the first anniversary of the Closing Date.
Notwithstanding anything to the contrary contained herein, the Company and their
Subsidiaries to indemnify the Purchasers (and the Indemnitees) with respect to
the expenses, damages, losses, costs and liabilities described in Sections 11A
------------
and 11D shall survive until all
---
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<PAGE>
applicable statute of limitations periods with respect to actions which may be
brought against the Purchasers (or Indemnitee) have run.
11M. Taxes and Fees. Should any recording or filing fees, stamp Taxes
--------------
or comparable filings or fees become payable in respect of any of this
Agreement, the Notes, the Warrants, or any other document delivered hereunder,
or any amendment, modification or supplement thereof requested by the Company,
the Company agrees to pay the same on demand, together with any interest or
penalties thereon attributable to any delay by the Company in meeting the
Purchaser's demand, and agrees to hold the Purchasers harmless with respect
thereto.
11N. Jurisdiction and Venue. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
----------------------
THE COMPANY OR ANY OF ITS SUBSIDIARIES WITH RESPECT TO THIS AGREEMENT, ANY NOTE,
ANY NOTE WARRANT, ANY SERIES A WARRANT, THE WARRANT STOCK, THE STOCKHOLDERS
AGREEMENT, THE REGISTRATION AGREEMENT OR ANY OTHER AGREEMENT CONTEMPLATED HEREBY
OR THEREBY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN COOK COUNTY ILLINOIS, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT AND THE COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION
OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. THE COMPANY HEREBY WAIVES
ANY CLAIM THAT COOK COUNTY ILLINOIS IS AN INCONVENIENT FORUM OR AN IMPROPER
FORUM BASED ON LACK OF VENUE. THE COMPANY DESIGNATES AND APPOINTS CT CORPORATION
SYSTEM, INC. (AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY THE COMPANY
WITH THE CONSENT OF THE MAJORITY HOLDERS) TO RECEIVE ON ITS BEHALF, SERVICE OF
ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY THE COMPANY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. A COPY OF SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO
THE COMPANY AT ITS ADDRESS PROVIDED HEREIN, EXCEPT THAT UNLESS OTHERWISE
PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE
VALIDITY OF SERVICE OF PROCESS. TO THE EXTENT PERMITTED BY LAW, IF ANY AGENT
APPOINTED BY THE COMPANY REFUSES TO ACCEPT SERVICE, THE COMPANY HEREBY AGREES
THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN
SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF ANY OF THE PURCHASERS OR NOTEHOLDERS OR HOLDERS OF
WARRANT STOCK TO BRING PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY
OTHER JURISDICTION. To the extent provided by law, should the Company, after
being so served, fail to appear or answer to any summons, complaint, process or
papers so served within the number of days prescribed by law after the mailing
thereof, the Company shall be deemed in default and an order and/or judgment may
be entered by the court against the Company as demanded or prayed for in such
summons, complaint, process or papers. The exclusive choice of forum for the
Company set forth in this Section 11N shall not be deemed
-----------
-56-
<PAGE>
to preclude the enforcement by the Purchasers of any judgment obtained in any
other forum or the taking by the Purchasers of any action to enforce the same in
any other appropriate jurisdiction, and the Company each hereby waives the right
to collaterally attack any such judgment or action.
11O. Waiver of Right to Jury Trial. THE COMPANY AND ITS SUBSIDIARIES
-----------------------------
EACH ON BEHALF OF ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY in any litigation in any court
with respect to, in connection with, or arising out of this Agreement, any Note,
any Warrant, the Warrant Stock, the Stockholders Agreement, the Registration
Agreement, the Company's Articles of Incorporation or any other agreement
contemplated hereby or thereby or the validity, protection, interpretation,
collection or enforcement thereof. Notwithstanding anything contained in this
Agreement to the contrary, no claim may be made by the Company against the
Purchasers for any lost profits or any special, indirect or consequential
damages in respect of any breach or wrongful conduct (other than willful
misconduct constituting actual fraud) in connection with, arising out of or in
any way related this Agreement, to the transactions contemplated hereunder, the
Notes, the Warrants, the Warrant Stock, the Stockholders Agreement, the
Registration Agreement, the Company's Articles of Incorporation or any act,
omission or event occurring in connection therewith; and the Company and its
Subsidiaries each hereby waives, releases and agrees not to sue upon any such
claim for any such damages. THE COMPANY AND ITS SUBSIDIARIES EACH AGREES THAT
THIS SECTION 11O IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND
-----------
ACKNOWLEDGES THAT THE PURCHASER WOULD NOT PURCHASE THE NOTES OR WARRANTS
HEREUNDER IF THIS SECTION 11O WERE NOT PART OF THIS AGREEMENT.
-----------
11P. Consideration for the Warrants and Warrant Stock. Each of the
------------------------------------------------
Company and the Purchasers acknowledge and agree that the fair market value of
the Notes, Warrants, and Series A Preferred issued hereunder shall be as set
forth on the Schedule of Purchasers attached hereto, and that, for all purposes
----------------------
(including tax and accounting), the consideration for the issuance of the
Warrants shall be allocated as set forth on the Schedule of Purchasers attached
----------------------
hereto. Each of the Company and the Purchasers agree that all fees payable to
the Purchasers, as provided in Section 11A hereof, shall be reported for all tax
-----------
purposes as a reduction in the issue price of the debt issued to the Purchasers,
pro rata according to the principal treated by the parties as original issue
discount and reported as interest income and interest expense in accordance with
the applicable provisions of the Internal Revenue Code and the regulations
promulgated thereunder. The Company, its Subsidiaries and the Purchasers shall
file their respective federal, state and local tax returns in a manner which is
consistent with such valuation and allocation and shall not take any action or
position (whether in preparation of tax returns, financial statements or
otherwise) which is inconsistent with any of the above.
11Q. No Strict Construction. The parties hereto have participated
----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
-57-
<PAGE>
11R. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith, embody the
complete agreement and understanding among the parties and supersede any prior
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
11S. Time of Essence. Time is of the essence for the performance by
---------------
the Company and the Company of the obligations set forth in this Agreement, the
Notes, the Warrant, the Registration Agreement, the Stockholders Agreement, the
Company's Articles of Incorporation or any document delivered hereunder.
11T. No Third Party Beneficiaries. This Agreement shall not confer
----------------------------
any rights or remedies upon any Person other than the parties hereto and their
respective successors and assigns, as specified herein and to the extent
explicitly set forth herein, the holders of Senior Indebtedness.
11U. Confidentiality of Information. Each of the Purchasers shall use
------------------------------
reasonable efforts, consistent with such Purchaser's customary practices, to
assure that information about the Company and its operations, affairs and
financial condition not generally disclosed to the public or to trade and other
creditors, which is furnished to such Purchaser pursuant to the provisions
hereof is used only for the purposes of this Agreement and shall not be divulged
to any Person other than their Affiliates and their respective officers,
directors, employees and agents, except: (a) to their attorneys and accountants,
(b) in connection with the enforcement of the rights of such Purchaser hereunder
and under the Notes, the Warrants, the Stockholders Agreement or the
Registration Agreement or otherwise in connection with applicable litigation,
(c) in connection with the sale of securities so long as the prospective
purchasers thereof have agreed to be bound by the provisions of this Section 11U
-----------
as if they were a "Purchaser"), (d) as may otherwise be required or requested by
any regulatory authority having jurisdiction over such Purchaser or by any
applicable law, rule, regulation or judicial process, reasonably believed by
such Purchaser to be binding on the Purchaser.
* * * * *
-58-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
ZIMMERMAN SIGN COMPANY
By: /s/ Jeffrey Johnson
--------------------------
Name: Jeffrey Johnson
Its: Vice-President/CFO
CONTINENTAL ILLINOIS
VENTURE CORPORATION
By: /s/ Robert Perille
---------------------------
Name: Robert Perille
Its: Managing Director
MIG PARTNERS VIII
By: /s/ Robert Perille
--------------------------
Name: Robert Perille
Its: General Partner
MANAGEMENT PURCHASERS:
---------------------
/s/ David Anderson
------------------------------
David Anderson
/s/ Tom Boner
------------------------------
Tom Boner
/s/ Michael Coppinger
------------------------------
Michael Coppinger
/s/ Michael St. Onge
------------------------------
Michael St. Onge
/s/ Jeff Johnson
------------------------------
Jeff Johnson
/s/ John Griggs
------------------------------
John Griggs
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit A - Form of Note
Exhibit B - Form of Warrant
Exhibit C - Certificates of Designation, Series A
Exhibit D - Form of Share Purchase Option Agreement
Exhibit E - Form of Anderson Purchase Agreement
Exhibit F - Form of Anderson Side Letter
Exhibit G - Form of Stockholders Agreement
Exhibit H - Form of Registration Agreement
Exhibit I - Certificates of Designation, Series B
Exhibit J - Certificates of Designation, Series C
Exhibit K - Form of Opinion of Company Counsel
<PAGE>
LIST OF DISCLOSURE SCHEDULES
----------------------------
Schedule of Purchasers
Indebtedness Schedule
Stockholders Schedule
Transaction Fees Schedule
Financial Statements Schedule
Guarantees Schedule
Affiliated Transaction Schedule
Capitalization Schedule
Subsidiaries Schedule
Restrictions Schedule
Liabilities Schedule
Assets Schedule
Tax Schedule
Contracts Schedule
Intellectual Property Schedule
Litigation Schedule
Brokerage Schedule
Employees Schedule
Employee Benefits Schedule
Environmental Schedule
Lien Schedule
<PAGE>
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
Note Purchase Purchase Price
Principal Purchase Price Price of Series A of Series A
Purchasers Amount of Notes Warrants Warrants Preferred Preferred Closing Fee
---------- ---------- -------------- -------- -------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CIVC $ 2,898,700 $2,889,995.14 819,310 $68,394.71 40,763 $4,016,610.16 $180,000
MIG $ 322,100 $ 319,923.76 204,827 $17,096.68 4,529 $ 437,977.54 $ 20,000
David Anderson $236,133.33 $ 235,335.58 75,113 $ 6,270.28 3,322 $ 326,727.46
Tom Boner $ 166,200 $ 165,638.51 52,864 $ 4,413.02 2,338 $ 229,948.47
Mike Coppinger $ 68,600 $ 68,368.24 21,800 $ 1,819.81 964 $ 94,811.94
Mike St. Onge $ 41,600 $ 41,459.46 13,208 $ 1,102.60 584 $ 57,437.94
Jeff Johnson $133,333.33 $ 132,882.88 5,396 $ 450.45 0 $ 0
John Griggs $133,333.33 $ 132,882.88 5,396 $ 450.45 0 $ 0
---------- ------------- --------- ---------- ------ ------------- --------
TOTAL $ 4,000,000 $3,986,486.48 1,197,914 $ 100,000 52,500 $5,163,513.51 $200,000
</TABLE>
<PAGE>
EXHIBIT B
ZIMMERMAN SIGN COMPANY
----------------------
CERTIFICATE OF DESIGNATION OF
PREFERRED STOCK, SERIES A
Zimmerman Sign Company, a Texas corporation (the "Corporation")
-----------
certifies that pursuant to Article IV of its Amended and Restated Certificate of
Incorporation (the "Certificate") and in accordance with the provisions of
-----------
Section 2.13 of the Texas Business Corporation Act its Board of Directors
adopted the following resolution on September 29, 1998 creating a series of
preferred shares.
RESOLVED, that a series of authorized preferred shares of the
Corporation is hereby created, having the designation, par value, voting,
participation and other rights and restrictions set out below. All capitalized
terms used herein and not defined shall have the meanings ascribed to them in
the Certificate.
1. Designation and Number. The shares of such class shall be
----------------------
designated "Preferred Stock, Series A" (the "Series A Preferred Stock"). The
------------------------
number of shares initially constituting the Series A Preferred Stock shall be
52,500 which number may be decreased (but not increased) by the Board of
Directors without a vote of stockholders; provided that such number may not be
--------
decreased below the number of then outstanding shares of Series A Preferred
Stock.
2. Dividends.
---------
(a) General Obligation. When and as declared by the Corporation's
------------------
Board of Directors and to the extent permitted under the Texas Business
Corporation Act and other applicable law, the Corporation shall pay preferential
dividends in cash to the holders of the Series A Preferred Stock as provided in
this Section 2. Dividends on each share of the Series A Preferred Stock (a
---------
"Series A Preferred Share") shall accrue on a daily basis at the rate of 8.0%
- -------------------------
per annum of the sum of $100.00 (the "Liquidation Value") plus all accumulated
-----------------
and unpaid dividends thereon from and including the date of issuance of such
Series A Preferred Share to and including the first to occur of (i) the date on
which the Liquidation Value of such Series A Preferred Share (plus all accrued
and unpaid dividends thereon) is paid to the holder thereof in connection with
the liquidation of the Corporation or the redemption of such Series A Preferred
Share by the Corporation or (ii) the date on which such share is otherwise
acquired by the Corporation. Such dividends shall accrue whether or not they
have been declared and whether or not there are profits, surplus or other funds
of the Corporation legally available for the payment of dividends (other than
dividends on capital stock of the Corporation paid with shares of stock of the
same class), and such dividends shall be cumulative such that all accrued and
unpaid dividends shall be fully paid or declared with funds irrevocably set
apart for payment before any dividends, distributions, redemptions or other
payments may be made with respect to the Common Stock, the Series B Preferred
Stock, the Series C
<PAGE>
Preferred or any capital stock or other equity securities of the Corporation
(collectively, the "Junior Securities"). The date on which the Corporation
-----------------
initially issues any Series A Preferred Share shall be deemed to be its "date of
issuance" regardless of the number of times transfer of such Series A Preferred
Share is made on the stock records maintained by or for the Corporation and
regardless of the number of certificates which may be issued to evidence such
Series A Preferred Share.
(b) Dividend Reference Dates. To the extent not paid on March 15,
------------------------
June 15, September 15, and December 15 of each year, beginning December 31, 1998
(the "Dividend Reference Dates"), all dividends which have accrued on each
------------------------
Series A Preferred Share outstanding during the three-month period (or other
period in the case of the initial Dividend Reference Date) ending upon each such
Dividend Reference Date shall be accumulated and shall remain accumulated
dividends with respect to such Series A Preferred Share until paid to the holder
thereof.
(c) Distribution of Partial Dividend Payments. Except as otherwise
-----------------------------------------
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Series A Preferred Stock, such
payment shall be distributed pro rata among the holders thereof based upon the
aggregate accrued but unpaid dividends on the Series A Preferred Shares held by
each such holder.
3. Liquidation. Upon any liquidation, dissolution or winding up of
-----------
the Corporation (whether voluntary or involuntary), each holder of Series A
Preferred Stock shall be entitled to be paid, before any distribution or payment
is made upon any Junior Securities, an amount in cash equal to the aggregate
Liquidation Value of all Series A Preferred Shares held by such holder (plus all
accrued and unpaid dividends thereon), and the holders of Series A Preferred
Stock shall not be entitled to any further payment. If upon any such
liquidation, dissolution or winding up of the Corporation the Corporation's
assets to be distributed among the holders of the Series A Preferred Stock are
insufficient to permit payment to such holders of the aggregate amount which
they are entitled to be paid under this Section 3, then the entire assets
---------
available to be distributed to the Corporation's stockholders shall be
distributed pro rata among such holders based upon the aggregate Liquidation
Value (plus all accrued and unpaid dividends) of the Series A Preferred Stock
held by each such holder. Prior to the liquidation, dissolution or winding up
of the Corporation, the Corporation shall declare for payment all accrued and
unpaid dividends with respect to the Series A Preferred Stock, but only to the
extent of funds of the Corporation legally available for the payment of
dividends. Not more than 60 nor less than 30 days prior to the payment date
stated therein, the Corporation shall mail written notice of any such
liquidation, dissolution or winding up to each record holder of Series A
Preferred Stock, setting forth in reasonable detail the amount of proceeds to be
paid with respect to each share of capital stock of the Corporation, including
each Series A Preferred Share, each share of Series B Preferred Stock, each
share of Series C Preferred Stock and each share of Common Stock in connection
with such liquidation, dissolution or winding up.
4. Priority on Dividends and Redemptions. So long as any Series A
-------------------------------------
Preferred Stock remains outstanding, without the prior written consent of the
holders of a majority of the
-2-
<PAGE>
outstanding shares of Series A Preferred Stock, the Corporation shall not, nor
shall it permit any Subsidiary to, redeem, purchase or otherwise acquire
directly or indirectly any Junior Securities, nor shall the Corporation directly
or indirectly pay or declare any dividend or make any distribution upon any
Junior Securities, other than (i) repurchases of Common Stock from any employee
of the Corporation provided that (A) no Default or Event of Default (as defined
in the Senior Subordinated Note, Preferred Stock and Warrant Purchase Agreement,
dated as of September 30, 1998, by and among the Corporation, and certain
investors (the "Purchase Agreement")) is in existence immediately prior to or
------------------
immediately after such repurchase or payment, (B) the purchase price paid in
such repurchase or the amount of such payment does not exceed the fair market
value of the stock repurchased or is in an amount calculated pursuant to the
terms of a repurchase or employment agreement between the Corporation and such
employee entered into in connection with the commencement of such employee's
employment, (C) such purchase occurs after September 30, 1999 and (D) the
aggregate amount paid or payable in any fiscal year in respect of all such
purchases from employees does not exceed $250,000, (ii) dividends paid in
accordance with the terms of the Series B Preferred and the terms of the Series
C Preferred; provided that no Default or Event of Default (as defined in the
Purchase Agreement) or an Event of Noncompliance is in existence immediately
prior to or immediately after such dividend and (iii) dividends on capital stock
of the Corporation paid with shares of stock of the same class.
5. Redemptions. To the extent permitted under the Texas Business
-----------
Corporation Act and other applicable law:
(a) Scheduled Redemption. On the earlier of (i) September 30, 2006
--------------------
and (ii) 90 days following the payment in full of the obligations under the
Notes (the "Scheduled Redemption Date"), the Corporation shall redeem all
-------------------------
outstanding shares of Series A Preferred Stock at a price per Series A Preferred
Share equal to the Liquidation Value thereof (plus accrued and unpaid dividends
thereon).
(b) Optional Redemptions. The Corporation may at any time and from
--------------------
time to time redeem all or any portion of the shares of Series A Preferred Stock
then outstanding. Upon any such redemption, the Corporation shall pay a price
per Series A Preferred Share equal to the Liquidation Value thereof (plus all
accrued and unpaid dividends thereon), plus an amount equal to the Redemption
----
Premium Amount calculated with respect thereto (if any).
The term "Redemption Premium Amount" means:
-------------------------
(i) with respect to any redemption of shares of Series A Preferred made on
or prior to the first anniversary of the Closing Date (as defined in the
Purchase Agreement), 5.0% multiplied by the aggregate Liquidation Value of the
Series A Preferred Shares so redeemed;
-3-
<PAGE>
(ii) with respect to any redemption of shares of Series A Preferred made
after the first anniversary of the Closing Date and on or prior to the second
anniversary of the Closing Date; 4.0% multiplied by the aggregate Liquidation
Value of the Series A Preferred Shares so redeemed;
(iii) with respect to any redemption of shares of Series A Preferred made
after the second first anniversary of the Closing Date and on or prior to the
third anniversary of the Closing Date; 3.0% multiplied by the aggregate
Liquidation Value of the Series A Preferred Shares so redeemed;
(iv) with respect to any redemption of shares of Series A Preferred made
after the third anniversary of the Closing Date and on or prior to the fourth
anniversary of the Closing Date; 2.0% multiplied by the aggregate Liquidation
Value of the Series A Preferred Shares so redeemed;
(v) with respect to any redemption of shares of Series A Preferred made
after the fourth first anniversary of the Closing Date and on or prior to the
fifth anniversary of the Closing Date; 1.0% multiplied by the aggregate
Liquidation Value of the Series A Preferred Shares so redeemed; and
(vi) with respect to any redemption of the Series A Preferred Shares made
after the fifth anniversary of the Closing Date; zero;
notwithstanding the foregoing, if, and to the extent, any such redemption
-----------------------------
is funded with net proceeds from a Public Offering (after deduction of all
discounts, underwriters' commissions and other reasonable expenses), the
Redemption Premium Amount payable in connection therewith shall be 50% of the
amount otherwise calculated pursuant to clauses (i) through (vi) above.
(c) Mandatory Redemptions.
---------------------
i. Redemption After Public Offering. At any time after the fifth
--------------------------------
anniversary of the Closing Date (as defined in the Purchase Agreement), the
Corporation shall apply the net cash proceeds from any Public Offering remaining
after deduction of all discounts, underwriters' commissions and other
reasonable expenses to redeem shares of Series A Preferred Stock at a price per
Series A Preferred Share equal to the Liquidation Value thereof (plus all
accrued and unpaid dividends thereon). Such redemption shall take place on a
date fixed by the Corporation, which date shall be not more than five days after
the Corporation's receipt of such proceeds.
The term "Public Offering" means any offering by the Corporation of
---------------
any securities to the public pursuant to an effective registration statement
under the Securities Act of 1933, as then in effect, or any comparable statement
under any similar federal statute then in force.
ii. Redemption upon Change in Ownership. If a Change in Ownership
-----------------------------------
has occurred or the Corporation obtains knowledge that a Change in Ownership is
proposed to occur, the Corporation shall give prompt written notice of such
Change in Ownership describing in reasonable detail the material terms and date
of consummation thereof to each holder of Series A
-4-
<PAGE>
Preferred Stock, but in any event such notice shall not be given later than five
days after the occurrence of such Change in Ownership, and the Corporation shall
give each holder of Series A Preferred Stock prompt written notice of any
material change in the terms or timing of such transaction. The holder or
holders of a majority of the Series A Preferred Stock then outstanding may
require the Corporation to redeem all or any portion of the Series A Preferred
Stock owned by such holders at a price per Series A Preferred Share equal to the
Liquidation Value thereof (plus all accrued and unpaid dividends thereon), plus
----
an amount equal to the Redemption Premium Amount calculated with respect thereto
(if any), by giving written notice to the Corporation of such election prior to
the later of (a) 21 days after receipt of the Corporation's notice and (b) five
days prior to the consummation of the Change in Ownership (the "Expiration
----------
Date"). The Corporation shall give prompt written notice of any such election to
- ----
all other holders of Series A Preferred Stock within five days after the receipt
thereof, and each such holder shall have until the later of (a) the Expiration
Date or (b) ten days after receipt of such second notice to request redemption
hereunder (by giving written notice to the Corporation) of all or any portion of
the Series A Preferred Stock owned by such holder.
Upon receipt of such election(s), the Corporation shall be obligated
to redeem the aggregate number of Series A Preferred Shares specified therein on
the later of (a) the occurrence of the Change in Ownership or (b) five days
after the Corporation's receipt of such election(s). If any proposed Change in
Ownership does not occur, all requests for redemption in connection therewith
shall be automatically rescinded. Any holder of Series A Preferred Stock may
rescind such holder's request for redemption by delivering written notice
thereof to the Corporation prior to the consummation of the transaction.
The term "Change in Ownership" means an event which results in any
-------------------
Management Purchaser (as defined in the Purchase Agreement) ceasing to hold,
beneficially and of record, at least 85% of the issued and issuable capital
stock of the Corporation that such Management Purchaser holds at Closing (as
adjusted for any subsequent stock splits, stock dividends, combinations of
shares or similar recapitalizations), other than Tom Boner in respect of sales
of capital stock to David Anderson.
iii Redemption upon Fundamental Change. If a Fundamental Change is
----------------------------------
proposed to occur, the Corporation shall give written notice of such Fundamental
Change describing in reasonable detail the material terms and date of
consummation thereof to each holder of Series A Preferred Stock not more than 45
days nor less than 20 days prior to the consummation of such Fundamental Change,
and the Corporation shall give each holder of Series A Preferred Stock prompt
written notice of any material change in the terms or timing of such
transaction. The holder or holders of a majority of the Series A Preferred
Shares then outstanding, may require the Corporation to redeem all or any
portion of the Series A Preferred Stock owned by such holders at a price per
Series A Preferred Share equal to the Liquidation Value thereof (plus all
accrued and unpaid dividends thereon), plus an amount equal to the Redemption
----
Premium Amount calculated with respect thereto (if any), by giving written
notice to the Corporation of such election prior to the later of (a) ten days
prior to the consummation of the Fundamental Change or (b) ten days after
receipt
-5-
<PAGE>
of notice from the Corporation. The Corporation shall give prompt written notice
of such election to all other holders of Series A Preferred Stock (but in any
event within five days prior to the consummation of the Fundamental Change), and
each such holder shall have until five business days after the receipt of such
notice to request redemption (by written notice given to the Corporation) of all
or any portion of the Series A Preferred Stock owned by such holder.
Upon receipt of such election(s), the Corporation shall be obligated
to redeem the aggregate number of Series A Preferred Shares specified therein
upon the consummation of such Fundamental Change. If any proposed Fundamental
Change does not occur, all requests for redemption in connection therewith shall
be automatically rescinded, or if there has been a material change in the terms
or the timing of the transaction, any holder of Series A Preferred Stock may
rescind such holder's request for redemption by delivering written notice
thereof to the Corporation prior to the consummation of the transaction.
The term "Fundamental Change" means (a) any sale or transfer of more
------------------
than 50% of the assets of the Corporation and its Subsidiaries on a consolidated
basis (measured either by book value in accordance with generally accepted
accounting principles consistently applied or by fair market value determined in
the reasonable good faith judgment of the Corporation's Board of Directors) in
any transaction or series of transactions (other than sales in the ordinary
course of business) and (b) any merger or consolidation to which the Corporation
is a party, except for a merger in which the Corporation is the surviving
corporation or the holders of the Corporation's voting common stock immediately
prior to such merger or consolidation shall represent at least 80% of the
combined voting power of the voting securities after such merger or
consolidation, the terms of the Series A Preferred Stock are not changed in any
material respect or are assumed and the Series A Preferred Stock is not
exchanged for cash, securities or other property, and after giving effect to
such merger, the holders of the Corporation's outstanding capital stock
possessing a majority of the voting power (under ordinary circumstances) to
elect a majority of the Corporation's Board of Directors immediately prior to
the merger shall continue to own the Corporation's outstanding capital stock
possessing the voting power (under ordinary circumstances) to elect a majority
of the Corporation's Board of Directors.
(d) Redemption Payments. For each Series A Preferred Share which is
-------------------
to be redeemed hereunder, the Corporation shall be obligated on the Redemption
Date to pay to the holder thereof (upon surrender by such holder at the
Corporation's principal office of the certificate representing such Series A
Preferred Share) an amount in immediately available funds equal to the
Liquidation Value of such Series A Preferred Share (plus all accrued and unpaid
dividends thereon), plus, the Redemption Premium Amount calculated with respect
----
thereto (if any). If the funds of the Corporation legally available for
redemption of Series A Preferred Shares on any Redemption Date are insufficient
to redeem the total number of Series A Preferred Shares to be redeemed on such
date, those funds which are legally available shall be used to redeem the
maximum possible number of Series A Preferred Shares pro rata among the holders
of the Series A Preferred Shares to be redeemed based upon the aggregate
Liquidation Value of such Series A Preferred Shares held by each such holder
(plus all accrued and unpaid dividends thereon). The Series A Preferred Shares
not
-6-
<PAGE>
redeemed shall remain outstanding and entitled to all of the rights and
preferences hereunder. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of Series A Preferred
Shares, such funds shall immediately be used to redeem the balance of the Series
A Preferred Shares which the Corporation has become obligated to redeem on any
Redemption Date but which it has not redeemed.
The term "Redemption Date," as to any Series A Preferred Share, means
---------------
the Scheduled Redemption Date or the date specified in the notice of any
redemption at the Corporation's option or at the holder's option or the
applicable date specified herein in the case of any other redemption.
(e) Notice of Redemption. Except as otherwise provided herein, the
--------------------
Corporation shall mail written notice of each redemption of any Series A
Preferred Stock to each record holder thereof not more than 60 nor less than 30
days prior to the date on which such redemption is to be made. In case fewer
than the total number of Series A Preferred Shares represented by any
certificate are redeemed, a new certificate representing the number of
unredeemed Series A Preferred Shares shall be issued to the holder thereof
without cost to such holder within five business days after surrender of the
certificate representing the redeemed Series A Preferred Shares.
(f) Determination of the Number of Each Holder's Series A Preferred
---------------------------------------------------------------
Shares to be Redeemed. The number of Series A Preferred Shares to be redeemed
- ---------------------
from each holder thereof in redemptions hereunder shall be the number of Series
A Preferred Shares determined by multiplying the total number of Series A
Preferred Shares to be redeemed times a fraction, the numerator of which shall
be the total number of Series A Preferred Shares then held by such holder and
the denominator of which shall be the total number of Series A Preferred Shares
then outstanding.
(g) Dividends After Redemption Date. No Series A Preferred Share
-------------------------------
shall be entitled to any dividends accruing after the Redemption Date of such
Series A Preferred Share if the Liquidation Value (plus all accrued and unpaid
dividends thereon) is paid to the holder of such Series A Preferred Share on the
Redemption Date. On such date, all rights of the holder of such Series A
Preferred Share shall cease, and such Series A Preferred Share shall no longer
be deemed to be issued and outstanding.
(h) Redeemed or Otherwise Acquired Series A Preferred Shares. Any
--------------------------------------------------------
Series A Preferred Shares which are redeemed or otherwise acquired by the
Corporation shall be canceled and retired to authorized but unissued shares and
shall not be reissued, sold or transferred.
(i) Other Redemptions or Acquisitions. The Corporation shall not, nor
---------------------------------
shall it permit any Subsidiary to, redeem or otherwise acquire any shares of
Series A Preferred Stock, except as expressly authorized herein.
-7-
<PAGE>
6. Voting Rights. Subject to the following sentence, except as
-------------
otherwise provided herein, in the Purchase Agreement or otherwise required by
applicable law, the holders of Series A Preferred Stock shall have no voting
rights; provided that each holder of Series A Preferred Stock shall be entitled
to notice of all stockholders meetings at the same time and in the same manner
as notice is given to all stockholders entitled to vote at such meetings. The
foregoing notwithstanding, the holders of the Series A Preferred shall be
entitled to designate two directors to serve on the board of directors of the
Corporation at all times, such directors to be elected by a holders of a
majority the Series A Preferred.
7. Events of Noncompliance.
-----------------------
(a) Definition. An Event of Noncompliance shall be deemed to have
----------
occurred if:
i. the Corporation fails to pay on any Dividend Reference Date the
full amount of dividends then accrued on the Series A Preferred Stock, whether
or not such payment is legally permissible or is prohibited by any agreement to
which the Corporation is subject;
ii. the Corporation fails to make any redemption payment with respect
to the Series A Preferred Stock which it is obligated to make hereunder, whether
or not such payment is legally permissible or is prohibited by any agreement to
which the Corporation is subject;
iii. upon the occurrence a Default or Event of Default as defined in
the Purchase Agreement;
iv. any representation or warranty contained in the Purchase
Agreement or required to be furnished to any holder of Series A Preferred Stock
pursuant to the Purchase Agreement, or any information contained in writing
required to be furnished by the Corporation or any Subsidiary to any holder of
Series A Preferred Stock, is false or misleading in any material respect on the
date made or furnished; or
v. the Corporation or any Subsidiary makes an assignment for the
benefit of creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is entered
adjudicating the Corporation or any Subsidiary bankrupt or insolvent; or any
order for relief with respect to the Corporation or any Subsidiary is entered
under the Federal Bankruptcy Code; or the Corporation or any Subsidiary
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Corporation or any Subsidiary or of any
substantial part of the assets of the Corporation or any Subsidiary, or
commences any proceeding (other than a proceeding for the voluntary liquidation
and dissolution of a Subsidiary) relating to the Corporation or any Subsidiary
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction; or any such petition
or application is filed, or any such proceeding is commenced, against the
Corporation or any Subsidiary and either (a) the Corporation or any such
Subsidiary by any act indicates its approval
-8-
<PAGE>
thereof, consent thereto or acquiescence therein or (b) such petition,
application or proceeding is not dismissed within 60 days.
(b) Consequences of Certain Events of Noncompliance.
-----------------------------------------------
i. If an Event of Noncompliance has occurred, the dividend rate per
annum on the Series A Preferred Stock shall increase immediately by an increment
of 3.0 percentage points i.e. the dividend rate will increase from 8.0% to 11.0%
per annum. If such Event of Noncompliance remains uncured for a period of 180
days, the dividend rate per annum on the Series A Preferred Stock shall increase
at the end of such 180 day period from 11.0% to 13.0%. Any increase of the
dividend rate resulting from the operation of this paragraph shall terminate as
of the close of business on the date on which no Event of Noncompliance exists,
subject to subsequent increases pursuant to this paragraph.
ii. If an Event of Noncompliance has occurred, the holder or holders
of a majority of the Series A Preferred Stock then outstanding may demand (by
written notice delivered to the Corporation) immediate redemption of all or any
portion of the Series A Preferred Stock owned by such holder or holders at a
price per Series A Preferred Share equal to the Liquidation Value thereof (plus
all accrued and unpaid dividends thereon). The Corporation shall give prompt
written notice of such election to the other holders of Series A Preferred Stock
(but in any event within five days after receipt of the initial demand for
redemption), and each such other holder may demand immediate redemption of all
or any portion of such holder's Series A Preferred Stock by giving written
notice thereof to the Corporation within seven days after receipt of the
Corporation's notice. The Corporation shall redeem all Series A Preferred Stock
as to which rights under this paragraph have been exercised within 15 days after
receipt of the initial demand for redemption.
iii. If any Event of Noncompliance has occurred each Series A Director
shall automatically be entitled to cast two votes with respect to any matter
submitted to a vote of the board of directors. Each Series A Director may
exercise its right to cast two votes in accordance with the preceding sentence
with respect to any matter, including any matter at any annual or other special
meeting of directors, and to the extent and in the manner permitted by
applicable law, pursuant to a written consent in lieu of a meeting of the board
of directors. Such special right shall continue until such time as there is no
longer any Event of Noncompliance in existence, at which time such special right
shall terminate subject to revesting upon the occurrence and continuation of any
Event of Noncompliance which gives rise to such special right hereunder.
iv. If any Event of Noncompliance exists, each holder of Series A
Preferred Stock shall also have any other rights which such holder is entitled
to under any contract or agreement at any time and any other rights which such
holder may have pursuant to applicable law.
8. Registration of Transfer. The Corporation shall keep at its
------------------------
principal office a register for the registration of Series A Preferred Stock.
Upon the surrender of any certificate
-9-
<PAGE>
representing Series A Preferred Stock at such place, the Corporation shall, at
the request of the record holder of such certificate, execute and deliver (at
the Corporation's expense) a new certificate or certificates in exchange
therefor representing in the aggregate the number of Series A Preferred Shares
represented by the surrendered certificate. Each such new certificate shall be
registered in such name and shall represent such number of Series A Preferred
Shares as is requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate, and dividends
shall accrue on the Series A Preferred Stock represented by such new certificate
from the date to which dividends have been fully paid on such Series A Preferred
Stock represented by the surrendered certificate.
9. Replacement. Upon receipt of evidence reasonably satisfactory to
-----------
the Corporation (an affidavit of the registered holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of Series A Preferred Stock, and in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor or a Purchaser as defined in the Purchase Agreement, its
own agreement shall be satisfactory), or, in the case of any such mutilation
upon surrender of such certificate, the Corporation shall (at its expense)
execute and deliver in lieu of such certificate a new certificate of like kind
representing the number of Series A Preferred Shares of such class represented
by such lost, stolen, destroyed or mutilated certificate and dated the date of
such lost, stolen, destroyed or mutilated certificate, and dividends shall
accrue on the Series A Preferred Stock represented by such new certificate from
the date to which dividends have been fully paid on such lost, stolen, destroyed
or mutilated certificate.
10. Amendment and Waiver. No amendment, modification or waiver shall
--------------------
be binding or effective with respect to any provision hereof, without the prior
written consent of the holders of a majority of the Series A Preferred Stock
outstanding at the time such action is taken.
11. Notices. Except as otherwise expressly provided hereunder, all
-------
notices referred to herein shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier service, charges prepaid, and shall be deemed to
have been given when so mailed or sent (i) to the Corporation, at its principal
executive offices and (ii) to any stockholder, at such holder's address as it
appears in the stock records of the Corporation (unless otherwise indicated by
any such holder).
* * * * * * * * * *
-10-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed this 30th day of September, 1998.
ZIMMERMAN SIGN COMPANY
/s/ Jeffrey Johnson
-------------------------
By: Jeffrey Johnson
Its: Vice President/CFO
<PAGE>
EXHIBIT C
ZIMMERMAN SIGN COMPANY
STOCKHOLDERS AGREEMENT
----------------------
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made as of September
---------
30, 1998 between Zimmerman Sign Company, a Texas corporation (the "Company"),
-------
each of the investors listed on the Schedule of Investors attached hereto (the
---------------------
"Investors"), each of the executives listed on the Schedule of Executives
- ---------- ----------------------
attached hereto (the "Executives") and each of the other stockholders listed on
----------
the Schedule of Other Stockholders attached hereto (the "Other Stockholders" and
------------------------------ ------------------
collectively, with the Investors and the Executives, the "Stockholders"; each, a
------------
"Stockholder".) Capitalized terms used and not otherwise defined herein are
-----------
defined in Section 9 hereof.
The Investors are entering into a Senior Subordinated Note, Preferred
Stock and Warrant Purchase Agreement, dated as of the date hereof (the "Purchase
--------
Agreement"), pursuant to which the Investors are purchasing 12.0% Senior
- ---------
Subordinated Notes (the "Notes"), shares of Series A Preferred Stock and the
-----
Investor Warrants. As of the date hereof, each of the Executives and each of
the Other Stockholders owns shares of Common Stock in the amounts set forth
opposite such Executive's name and such Other Stockholder's name, respectively,
on the Schedule of Executives and the Schedule of Other Stockholders.
---------------------- ------------------------------
The Company and the Stockholders desire to enter into this Agreement
for the purposes, among others, of (i) establishing the composition of the
Company's board of directors (the "Board"), (ii) assuring continuity in the
-----
management of the Company and (iii) limiting the manner and terms by which the
Common Stock may be transferred. The execution and delivery of this Agreement
is a condition to the Investors' obligations under the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Board of Directors.
------------------
(a) From and after the Closing (as defined in the Purchase Agreement)
and until the provisions of this Section 1 cease to be effective, each
Stockholder shall vote all of his or its Stockholder Shares which are voting
shares and any other voting securities of the Company over which such
Stockholder has voting control and shall take all other necessary or desirable
actions within his or its control (whether in his or its capacity as a
stockholder, director, member of a Board committee or officer of the Company or
otherwise, and including, without limitation, attendance at meetings in person
or by proxy for purposes of obtaining a quorum and execution of written
<PAGE>
consents in lieu of meetings), and the Company shall take all necessary or
desirable actions within its control (including, without limitation, calling
special board and stockholder meetings), so that:
(i) subject to Section 1(e) below, the authorized number of
directors on the Board shall be established at five (5) directors,
(ii) the following individuals shall be elected to the Board:
(A) two (2) representatives (the "Investor Directors")
-------------------
designated by holders of a majority of the Investor Shares (the
"Majority Investor Holders"); provided that the designation of the
--------------------------
Investor Directors pursuant to this subparagraph (ii) (A) shall be in
lieu of, and operative only to the extent that, (i) the holders of the
Series A Preferred have failed to designate (or for any reason, have
been prevented from designating) in accordance with Section 6 of the
Certificate of Designation, Series A, two (2) representatives to serve
on the Board, or (ii) the Investors do not hold a majority of the
Series A Preferred;
(B) two (2) members of the Company's management designated
by the Executives, determined by a vote of the Executives owning a
majority of the Stockholder Shares held by all Executives (the
"Executive Directors"), provided that the initial Executive Directors
---------------------
shall be David E. Anderson and Tom E. Boner; and
(C) one (1) representative designated by the Executives
(determined on the basis of a vote of a majority of the Stockholder
Shares held by all Executives) and acceptable to the Majority Investor
Holders, provided that the person so designated is not a member of the
Company's management or an employee or officer of the Company or its
subsidiaries of an Affiliate, or related by blood or marriage to any
affiliate, of any of the Executives or any other member of the
Company=s management (the "Outside Director"); provided, further, that
----------------
the Outside Director initially shall be Carl A. Goldman;
(iii) the composition of the board of directors of each of the
Company's Subsidiaries, if any (a "Sub Board"), shall be the same as that
---------
of the Board;
(iv) the removal from the Board or a Sub Board (with or without
cause) of any representative designated (x) under subparagraph (ii)(A),
shall be at the written request of the Majority Investor Holders, (y) under
subparagraph (ii)(B), shall be at the written request of the Executives or
(z) under subparagraph (ii)(C), shall be at the written request of the
Majority Investor Holders, the Executives or the Majority Investor Holders
and the Executives, collectively, but only upon such written request and
under no other circumstances (in each case, determined on the basis of a
vote of the holders of a majority of the Stockholder Shares held by such
Persons), provided that if any director elected pursuant to subparagraph
(ii)(B) above ceases to be an employee of the Company and its Subsidiaries,
he shall be removed as a director promptly after his employment ceases and
shall have no right to designate any representative pursuant to this
Section 1(a), except that,
-2-
<PAGE>
the foregoing not withstanding, David Anderson shall be permitted to serve
as an Executive Director designated pursuant to Section 1(a)(ii)(B) for so
long as he continue to hold not less than 5% of the aggregate outstanding
shares of the Company's Common Stock, whether or not he is employed by the
Company; and
(v) in the event that any representative designated hereunder
by the Majority Investor Holders or by the Executives, or by the Executives
with the approval of the Majority Investor Holders, ceases to serve as a
member of the Board or a Sub Board during his term of office, the resulting
vacancy on the Board or the Sub Board shall be filled by a representative
designated and/or approved by the Majority Investor Holders or the
Executives, or by a representative designated and/or approved by the
Majority Investor Holders or the Executives, as the case may be, as
provided hereunder.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the
Board, any Sub Board and any committee thereof. So long as any Investor Director
serves on the Board and for 4 years thereafter, the Company shall, at the
request of such Investor Director, maintain directors and officers indemnity
insurance coverage satisfactory to the Investors.
(c) The rights of each Executive under this Section 1 shall terminate
upon such Executive ceasing to be employed by the Company or, if earlier, at
such time as the Executives and their Permitted Transferees (as defined in
Section 4(c) hereof), for any reason, hold in the aggregate less than 75% of the
Stockholder Shares held by the Executives on the date hereof; provided that, the
foregoing not withstanding, David Anderson shall be permitted to serve as an
Executive Director designated pursuant to Section 1(a)(ii)(B) for so long as he
continue to hold not less than 5% of the aggregate outstanding shares of the
Company's Common Stock, whether or not he is employed by the Company.
(d) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this Section 1, the individual previously
holding such directorship shall be elected to such position, or if such
individual fails or declines to serve, the election of an individual to such
directorship shall be accomplished in accordance with the Company's Bylaws and
applicable law; provided that the Stockholders shall vote to remove such
individual if the party which failed to designate such directorship so directs.
(e) Notwithstanding anything to the contrary contained in this
Section 1, upon the occurrence of an Event of Noncompliance of the type
described in Section 7 of the Certificate of Designation and so long as any such
Event of Noncompliance continues uncured and unwaived, each holder of
Stockholder Shares shall vote all of his or its Stockholder Shares and any other
voting securities of the Company over which it has voting control and take all
other necessary or desirable actions within his or its control, and the Company
shall take all necessary and desirable actions within its control, in order to
cause, at the option of and as directed by Majority Investor Holders, the
removal from the Board of one of the representatives designated pursuant to
paragraph 1(a)(ii)(B) and the election to the Board of a replacement
representative designated by the Majority Investor Holders; provided that, the
foregoing notwithstanding, upon the occurrence of an Event of
-3-
<PAGE>
Noncompliance, the Stockholders shall not be required to vote their Stockholder
Shares to effect the removal and replacement of a representative in accordance
with this Section 1(e) so long as (i) each of two directors designated to the
Board by holders of the Series A Preferred is entitled, in accordance with
Section 7(b)(iii) of the Certificate of Designation, to cast with respect to
each resolution or other matter presented to the Board for approval, two times
the number of votes that each other director is entitled to cast in with respect
to approval of such resolution or other matter, and (ii) the Investors hold a
majority of the Series A Preferred.
(f) Notwithstanding any other provision of this Section 1, the
holders of Series A Preferred shall not be obligated to vote such shares to
elect any person to the Board other than the Investor Directors.
(g) The provisions set forth in Section 1 shall terminate at such
time when the Investors no longer own at least 20% of the Investor Shares
acquired by the Investors under the Purchase Agreement.
2. Representations and Warranties. Each Stockholder represents and
------------------------------
warrants that (i) such Stockholder is the record owner of the number of
Stockholder Shares set forth opposite its name on the schedule attached hereto,
(ii) this Agreement has been duly authorized, executed and delivered by such
Stockholder and constitutes the valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, and (iii) such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement other than this Agreement. No holder of Stockholder Shares shall
grant any proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
3. [Intentionally deleted.]
4. Restrictions on Transfer of Stockholder Shares.
----------------------------------------------
(a) Transfer of Stockholder Shares. No Executive or Other Stockholder
------------------------------
shall sell, transfer, assign, pledge or otherwise dispose of (whether with or
without consideration and whether voluntarily or involuntarily or by operation
of law) any interest in his or its Stockholder Shares (a "Transfer"), except
--------
pursuant to the provisions of Section 6, in connection with a Public Sale,
pursuant to the Stock Purchase Option Agreements (as defined in the Purchase
Agreement) or with the prior written approval of the Majority Investor Holders
or, in the case of the Executives, pursuant to the provisions of this Section 4.
(b) Tag-Along Rights. At least thirty 30 days prior to any Transfer
----------------
of Stockholder Shares (other than a Public Sale), the Executive making such
Transfer (the "Transferring Stockholder") shall deliver a written notice (the
------------------------
"Sale Notice") to the holders of Investor Shares, specifying in reasonable
- ------------
detail the identity of the prospective transferee(s), the number of shares to be
transferred and the terms and conditions of the contemplated Transfer. Each
holder of Investor Shares may elect to participate in the contemplated Transfer
at the same price per share (whether voting or non-voting stock) and on the same
terms by delivering written notice to the Transferring Stockholder within 30
days after delivery of the Sale Notice. If any holder of Investor
-4-
<PAGE>
Shares has elected to participate in such contemplated Transfer, the
Transferring Stockholder and each such electing holder shall be entitled to sell
in the contemplated Transfer, at the same price and on the same terms, a number
of Stockholder Shares equal to the product of (i) the quotient determined by
dividing the percentage of Stockholder Shares owned by such Person by the
aggregate percentage of Stockholder Shares owned by the Transferring Stockholder
and the holders of Investor Shares participating in such sale and (ii) the
number of Stockholder Shares to be sold in the contemplated Transfer.
Each Executive shall use its best efforts to obtain the agreement of
the prospective transferee(s) to the participation of the holders of Investor
Shares in any contemplated Transfer and to the inclusion of the Investor
Warrants and Series A Preferred in the contemplated Transfer, and no Executive
shall transfer any of its Stockholder Shares to any prospective transferee if
such prospective transferee(s) declines to allow the participation of the
holders of Investor Shares or the inclusion of the Warrants or Series A
Preferred. If any portion of the Investor Warrants is included in any Transfer
of Stockholder Shares under this Section 4(b), the purchase price for the
Investor Warrants shall be equal to the full purchase price determined hereunder
for the Stockholder Shares covered by the portion of the Investor Warrants to be
transferred, reduced by the aggregate exercise price for such shares.
(c) Permitted Transfers. The restrictions set forth in this Section
-------------------
4 shall not apply with respect to any Transfer of Stockholder Shares by any
Executive pursuant to applicable laws of descent and distribution or among such
Executive's Family Group (collectively referred to herein as "Permitted
---------
Transferees"); provided that the restrictions contained in this Section 4 shall
- -----------
continue to be applicable to the Stockholder Shares after any such Transfer and
provided further that such transferees of such Stockholder Shares shall have
agreed in writing to be bound by the provisions of this Agreement affecting the
Stockholder Shares so transferred to the same extent and in the same manner as
the transferor thereof was so bound (e.g., any transferee of Stockholder Shares
in a Transfer from an Executive shall be subject to the obligations of an
Executive hereunder).
(d) Termination of Restrictions. The restrictions on the Transfer of
---------------------------
Stockholder Shares set forth in this Section 4 shall continue with respect to
each Stockholder Share until the date on which such Stockholder Share has been
transferred in a Public Sale or a Sale of the Company in accordance with Section
6.
5. Legend. Each certificate evidencing Stockholder Shares and each
------
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented by this certificate are subject
to a Stockholders Agreement dated as of September 30, 1998
among the issuer of such securities (the "Company") and
certain of the Company's stockholders, as amended and
modified from time to time. A copy of such Stockholders
Agreement shall be furnished without charge by the Company
to the holder hereof upon written request."
-5-
<PAGE>
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding as of the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with paragraph 9 hereof.
6. Drag-Along Rights.
-----------------
(a) Simultaneous with or at any time following exercise of the
Investor Warrants, the Majority Investor Holders shall have the right to seek a
Sale of the Company and identify a third party or parties to acquire (i) all of
the issued and outstanding capital stock of the Company (whether by merger,
consolidation or sale or transfer of stock) or (ii) all or substantially all of
the Company's assets on a consolidated basis. The holder or holders proposing a
Sale of the Company (the "Proposing Stockholders") shall notify the Company and
----------------------
the other Stockholders (the "Non-Proposing Stockholders") prior to initiating
--------------------------
contact with any prospective third party purchaser in connection with such
transaction.
(b) Election. The Proposing Stockholders shall deliver written
--------
notice to the Company and the Non-Proposing Stockholders setting forth in
reasonable detail the terms of the proposed Sale of the Company (the "Sale
----
Notice"). Within 20 days following receipt of the Sale Notice (the "Election
- ------ --------
Period"), the Non-Proposing Stockholders shall deliver to the Company and the
- ------
Proposing Stockholders written notice setting forth such holders' election (i)
to consent to and raise no objections against proposed Sale of the Company, and
if the Sale of the Company is structured as a sale of stock, to sell their
Stockholder Shares on the terms and conditions set forth in the Sale Notice, or
(ii) if such Non-Proposing Stockholders hold more than 20% of the Stockholder
Shares, to deliver a written offer (a "Stockholder Offer"), upon substantially
-----------------
the same terms as described in the Sale Notice, to acquire the Company (a
"Stockholder Transaction"). If the Non-Proposing Stockholders have not
-----------------------
delivered a Stockholder Offer within such 20-day period, the Proposing
Stockholders shall have 180 days after the expiration of the Election Period to
consummate the Sale of the Company, or during which the Company may enter into
an agreement providing for such a sale, on the terms specified in the Sale
Notice. If the Sale of the Company is not consummated or the Company fails to
enter into such an agreement within such 180-day period, the Proposing
Stockholders shall again comply with the provisions of this Section 6. If the
Non-Proposing Stockholders have delivered a Stockholder Offer within the
Election Period, the Non-Proposing Stockholders must (A) obtain an executed
definitive and binding agreement to consummate the Stockholder Transaction and
obtain binding commitments regarding the financing thereof satisfactory in all
respects to the Proposing Stockholders both within 30 days after receipt by the
Proposing Stockholders of the Stockholder Offer and (B) must consummate the
Stockholder Transaction within 120 days after receipt by the Proposing
Stockholders of the Stockholder Offer. If any of the conditions set forth in (A)
or (B) of the preceding sentence is not fulfilled, the Other Stockholders must
again comply with the provisions of this Section 6. The consummation of a Sale
of the Company or a Stockholder Transaction pursuant to this Section 6(b) shall
be in accordance with the provisions of the Texas Business Corporation Act.
(c) Upon consummation of the Sale of the Company hereunder, all
holders of Common Stock shall receive the same form and amount of consideration
per share of Common
-6-
<PAGE>
Stock, or if any holders of Common Stock as such holders are given an option as
to the form and consideration to be received, all holders shall be given the
same option.
7. Put Arrangements.
----------------
(a) At any time following the fifth anniversary of the date hereof
each holder of Investor Shares shall have the right to require the Company to
repurchase all or any portion of the such holder's Investor Shares at the Put
Price (the "Put") by delivering a written notice to the Company and each other
---
holder of Investor Shares specifying the amount thereof to be purchased (the
"Put Notice"). The right to exercise the Put shall inure to the benefit of all
----------
transferees of the Investor Shares (other than transferees in a Public Sale).
(b) Upon the delivery of the Put Notice, the Company and the holder
or holders of Investor Shares delivering the Put Notice (including those
specified in the last sentence of this Section 7(b), the "Requesting Holders")
------------------
shall in good faith promptly determine the Put Price as provided hereunder, and
subject to the provisions hereof, within twenty (20) days after the
determination of the Put Price, the Company shall purchase and the Requesting
Holders shall sell the amount of such Requesting Holder's Investor Shares
specified in the Put Notice at a mutually agreeable time and place (the "Put
---
Closing"). Upon receipt of any Put Notice, any other holder of Investor Shares
- -------
may, by written notice delivered to the Company within five (5) business days
after receiving such Put Notice specifying the number of Investor Shares that
such holder elects to include in such Put, elect to participate in such Put, and
upon delivery of such written notice each such other holder shall be deemed to
be a Requesting Holder.
(c) At the Put Closing, the Requesting Holders shall deliver to the
Company certificates and other instruments (if any) representing the Investor
Shares to be repurchased by the Company, and the Company shall deliver to the
Requesting Holders the Put Price by cashier's or certified check payable to the
Requesting Holders or by wire transfer of immediately available funds to an
account designated by the Requesting Holders; provided that if, as the result of
the payment in cash of the Put Price in accordance with this Section 7(c), there
will exist an Event of Default (as defined in each of the Purchase Agreement and
the Loan Agreement) and the Company shall have used its best efforts to obtain
financing from an outside source for payment of the Put Price, then the Company
may pay the Put Price by delivery (i) of cash (as provided above) up to the
maximum portion of the Put Price, the payment of which will not result in the
occurrence or existence of an Event of Default and (ii) a promissory note in a
principal amount equal to that portion of the Put Price not being paid pursuant
to the foregoing clause (i), payable in three successive annual installments,
with the first installment due on the first anniversary of the delivery of the
Put Notice, and otherwise containing terms substantially similar to the terms
set forth in the Company's 12% Senior Subordinated Notes. If the Requesting
Holder deliver to the Company all or any portion of the Investor Warrants in
satisfaction of the sale of the Investor's Stockholder Shares hereunder, the Put
Price shall be reduced by the aggregate exercise price of such portion of the
Warrants.
(d) The "Put Price", as of any date, of any Requesting Holder's
---------
Investor Shares to be repurchased hereunder shall be determined based on a value
of the Company=s common stock equal to the greater of (i) the product of 6.25,
multiplied by the Company's EBITDA for the trailing
-7-
<PAGE>
12-month period (as defined in the Purchase Agreement) for its most recently
completed fiscal year as reflected on the Company's audited consolidated income
statement for such fiscal year, minus the Company's aggregate principal amount
of, plus accrued and unpaid interest on, outstanding indebtedness as of such
date minus the liquidation value of, plus accrued and unpaid dividends, if any,
on, the then outstanding preferred stock of the Company, and (ii) the Market
Value as of such date. The aggregate Put Price payable to each Requesting Holder
shall be equal to the amount which such holder would receive with respect to the
Investor Shares specified by such holder in such holder's Put Notice in the
event of a Sale of the Company for an aggregate purchase price equal to the
value attributable to the Company in accordance with the foregoing sentence.
In calculating the Put Price, all accounting determinations shall be
made in accordance with generally accepted accounting principles consistently
applied.
(e) The Investors' right to exercise the Put hereunder shall
terminate upon the first to occur of (i) the 10th anniversary of the date of
this Agreement and (ii) a Sale of the Company.
8. Transfer. Prior to transferring any Stockholder Shares (other
--------
than in a Public Sale or a Sale of the Company) to any Person, the transferring
Stockholder shall cause the prospective transferee to be bound by this Agreement
and to execute and deliver to the Company and the other Stockholders a
counterpart of this Agreement.
9. Definitions.
-----------
"Certificate of Designation, Series A" means the Certification of
------------------------------------
Designation, Series A, as approved by the Company's Board of Directors and filed
with the Secretary of the State of Texas as of September 30, 1998.
"Common Stock" means the Company's Common Stock, par value $.01 per
------------
share.
"Family Group" means an Executive's spouse and descendants (whether
------------
natural or adopted) and any trust solely for the benefit of the Executive and/or
the Executive's spouse and/or descendants.
"Independent Third Party" means any Person who, immediately prior to
-----------------------
the contemplated transaction, does not own in excess of 5% of the Common Stock
on a fully-diluted basis (a "5% Owner)", who is not controlling, controlled by
--------
or under common control with any such 5% Owner and who is not the spouse or
descendent (by birth or adoption) of any such 5% Owner or a trust for the
benefit of such 5% Owner and/or such other Persons.
"Investor Shares" means the Stockholder Shares issued to, or issuable
---------------
in respect of securities issued to, Continental Illinois Venture Corporation or
MIG Partners VIII at the Closing or thereafter.
"Investor Warrants" means the stock purchase warrants issued to the
-----------------
Investors under the Purchase Agreement exercisable into shares of Common Stock.
-8-
<PAGE>
"Loan Agreement" means the Second Amended and Restated Revolving
--------------
Credit and Loan Agreement, dated as of the date hereof, by and between the
Company and Comerica Bank-Texas, a Texas banking association.
"Market Value" means the fair market value of the Company's entire
------------
common equity determined on a going concern basis as between a willing buyer and
a willing seller and taking into account all relevant factors determinative of
value. In determining the Market Value as of any date, the Company and the
Investors first shall use their respective reasonable best efforts to agree on
such Market Value. In the event that the Company and the Investors are unable
to agree on the Market Value as of such date within 15 days after delivery of
the Put Notice, such Market Value shall be determined by an investment banking
firm selected by the Company and acceptable to the Majority Investor Holders,
which firm shall submit to the Company and the Majority Investor Holders a
written report setting forth such determination. If the parties are unable to
agree on an investment banking firm within 20 days after delivery of a Put
Notice, a firm shall be selected by lot, after the Company and the Majority
Investor Holders have each eliminated one such firm. The expenses of such firm
shall be borne by the Company, and the determination of such firm shall be final
and binding upon all parties, except that after the determination of Market
Value following the exercise of the Put, any Requesting Holder may rescind its
exercise of such Put.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Sale" means any sale of Stockholder Shares to the public
-----------
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
"Sale of the Company" means the sale of the Company to an Independent
-------------------
Third Party or group of Independent Third Parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's board of
directors (whether by merger, consolidation or sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Stockholder Shares" means (i) any Common Stock purchased or otherwise
------------------
acquired by any Stockholder, (ii) any Common Stock issued or issuable directly
or indirectly upon exercise of the Investor Warrants, (iii) any Common Stock
issued or issuable with respect to the securities referred to in clauses (i) and
(ii) above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization and (iv) any other shares of any class or series of capital stock
of the Company held by a Stockholder. For purposes of this Agreement, any
Person who holds Investor Warrants shall be deemed to be the holder of the
Stockholder Shares issuable directly or indirectly upon exercise of the Investor
Warrants in connection with the transfer thereof or otherwise and regardless of
any restriction or
-9-
<PAGE>
limitation on the exercise thereof. As to any particular Stockholder Shares,
such shares shall cease to be Stockholder Shares when they have been (a)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them or (b) distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 under the
Securities Act (or any similar provision then in force).
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the limited liability company, partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such limited liability company, partnership, association or other business
entity.
10. Certain Participation Rights. At least 10 days prior to any
----------------------------
repurchase by the Company of any Investor Shares, the Company will deliver a
written notice to the Executives holding Stockholder Shares specifying in
reasonable detail the terms and conditions of the contemplated repurchase
transaction (a ACompany Repurchase Notice@). Any Executive may elect to
participate in the contemplated repurchase transaction with respect to his or
her Stockholder Shares by delivering written notice to the Company within 10
days after delivery of the Company Repurchase Notice. If any Executive elects
to participate in the repurchase transaction, the Company will repurchase from
the holders of the Investor Shares and each electing Executive, at the same
price and on the same terms, a number of Stockholder Shares equal to the product
of (i) the quotient determined by dividing the number of Stockholders Shares
owned by the electing Executive(s) or the holder of Investor Shares, as the case
may be, by the aggregate number of outstanding Stockholder Shares then owned,
collectively, by the Investors and the Executives, multiplied by (ii) the
aggregate number of Stockholder Shares to be repurchased by the Company in the
proposed transaction.
11. Transfers in Violation of Agreement. Any Transfer or attempted
-----------------------------------
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Stockholder Shares as the owner
of such shares for any purpose.
12. Amendment and Waiver. Except as otherwise provided herein, no
--------------------
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company or the holders of at
least a majority of the Stockholder Shares, respectively.
-10-
<PAGE>
The failure of any party to enforce any of the provisions of this Agreement
shall in no way be construed as a waiver of such provisions and shall not affect
the right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
13. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
14. Entire Agreement. Except as otherwise expressly set forth
----------------
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
15. Successors and Assigns. Except as otherwise provided herein,
----------------------
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares; provided that the rights of
the Investors under paragraph 1 hereof may not be assigned without the prior
written approval of any Executive or Other Stockholder.
16. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
17. Remedies. The Company and the Stockholders shall be entitled to
--------
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company and any Stockholder may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
18. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior
-11-
<PAGE>
written notice to the sending party. Notices shall be deemed to have been given
hereunder when delivered personally, three business days after deposit in the
U.S. mail and one business day after deposit with a reputable overnight courier
service prepaid for next-business day delivery. The Company's address is:
Zimmerman Sign Company
9846 Hwy 31 East
Tyler, Texas 75705
19. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF TEXAS SHALL
-------------
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY
AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEABILITY OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
20. Business Days. If any time period for giving notice or taking
-------------
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the state in which the Company's chief-executive office is located, the time
period shall automatically be extended to the business day immediately following
such Saturday, Sunday or legal holiday.
21. Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * *
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
ZIMMERMAN SIGN COMPANY
By /s/ Jeffrey Johnson
------------------------------------
Its Vice-President/CFO
CONTINENTAL ILLINOIS VENTURE CORPORATION
By /s/ Robert F. Perille
------------------------------------
Its Managing Director
MIG PARTNERS VIII
By /s/ Robert F. Perille
------------------------------------
Its General Partner
/s/ David E. Anderson
---------------------------------------
David E. Anderson
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
<PAGE>
/s/ Tom E. Boner
----------------------------------------
Tom E. Boner
SOUTHERN INVESTORS CORP.
By /s/ Steve Lapin
--------------------------------------
Its_____________________________________
SOUTHERN MORTGAGE HOLDING CORPORATION
By /s/ Steve Lapin
--------------------------------------
Its_____________________________________
GENEVE SECURITIES PORTFOLIO CORP.
By /s/ Steve Lapin
---------------------------------------
Its______________________________________
GENEVE SECURITIES HOLDING CORP.
By /s/ Steve Lapin
--------------------------------------
Its_____________________________________
CHAPARRAL INTERNATIONAL RE.
By /s/ Steve Lapin
--------------------------------------
Its_____________________________________
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
<PAGE>
SCHEDULE OF INVESTORS
---------------------
Name and Address Number of Stockholder Shares
- ---------------- ----------------------------
Continental Illinois Venture Corporation
231 South LaSalle Street
Chicago, IL 60697
MIG PARTNERS VIII
231 South LaSalle Street
Chicago, IL 60697
<PAGE>
SCHEDULE OF EXECUTIVES
----------------------
Name and Address Number of Stockholder Shares
- ---------------- ----------------------------
David E. Andersen 252,243 shares of Common
Stock
8350 N. Central Expressway
Suite 600
Dallas, TX 75206
Tom E. Boner 61,823 shares of Common
Stock
9846 Highway 31 East
Tyler, TX 75705
<PAGE>
SCHEDULE OF OTHER STOCKHOLDERS
Name and Address Number of Stockholder Shares
- ---------------- ----------------------------
Geneve Holdings, Inc. 818,579 shares of Common
Stock
96 Cummings Point Road
Stamford, CT 06902
<PAGE>
EXHIBIT D
ZIMMERMAN SIGN COMPANY
REGISTRATION AGREEMENT
----------------------
THIS AGREEMENT is made as of September 30, 1998, between Zimmerman
Sign Company, a Texas corporation (the "Company"), Continental Illinois Venture
-------
Corporation, a Delaware corporation ("CIVC"), MIG Partners VIII, a Delaware
----
partnership ("MIG"), and each of the other persons identified on the signature
---
pages hereto (collectively, the "Other Stockholders" and each, an "Other
------------------ -----
Stockholder"). CIVC and MIG are referred to herein collectively as the
- -----------
"Investors" and each is referred to herein individually as an "Investor." The
--------- --------
Investors and the Other Stockholders are referred to herein collectively as the
"Stockholders" and individually as a "Stockholder".
------------ -----------
The Company, the Investors and certain of the Other Stockholders are
parties to a Senior Subordinated Note, Preferred Stock and Warrant Purchase
Agreement of even date herewith (the "Purchase Agreement"). In order to induce
------------------
the Investors to enter into the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the Closing under the Purchase
Agreement. Unless otherwise provided in this Agreement, capitalized terms used
herein shall have the meanings set forth in Section 9 hereof.
---------
The parties hereto agree as follows:
1. Demand Registrations.
--------------------
(a) Requests for Registration. At any time after the date hereof the
-------------------------
holders of a majority of the Investor Registrable Securities (the "Majority
--------
Investor Holders") may request registration under the Securities Act of 1933,
- ----------------
as amended (the "Securities Act") of all or any portion of their Registrable
--------------
Securities on Form S-1 or any similar long-form registration ("Long-Form
---------
Registrations") or on Form S-2 or S-3 or any similar short-form registration
- -------------
("Short-Form Registrations") if available. All registrations requested pursuant
------------------------
to this paragraph l(a) are referred to herein as "Demand Registrations." Each
--------------------
request for a Demand Registration shall specify the approximate number of
Registrable Securities requested to be registered, the anticipated per share
price range for such offering and the intended method of disposition. Within ten
(10) days after receipt of any such request, the Company shall give written
notice of such requested registration to all other holders of Registrable
Securities and shall include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within 15 days after the receipt of the Company's notice.
(b) Long-Form Registrations. The Majority Investor Holders shall be
-----------------------
entitled to request two (2) Long-Form Registrations in which the Company shall
pay all Registration
<PAGE>
Expenses (as defined in Section 6(a)) associated with the public offering of the
------------
Company's equity securities Investor Holders. A registration shall not count as
one of the permitted Long-Form Registrations until it has become effective and
neither the last nor any subsequent Long-Form Registration shall count as one of
the permitted Long-Form Registrations unless the holders of Registrable
Securities are able to register and sell all of the Registrable Securities
requested to be included in such registration; provided that in any event the
Company shall pay all Registration Expenses in connection with any registration
initiated as a Long-Form Registration whether or not it has become effective and
whether or not such registration has counted as one of the Long-Form
Registrations.
(c) Short-Form Registrations. In addition to the Long-Form
------------------------
Registrations provided pursuant to Section l(b), the Majority Investor Holders
------------
shall be entitled to request five (5) Short-Form Registrations in which the
Company shall pay all Registration Expenses; provided that in each such Short-
Form Registration the holders of Registrable Securities shall request to include
in such registration at least 25% of the Registrable Securities held by them in
the aggregate as of the date hereof (or such lesser amount if less than 25% are
unregistered as of such demand). Demand Registrations shall be Short-Form
Registrations whenever the Company is permitted to use any applicable short
form.
(d) Restrictions on Demand Registrations. The Company shall not be
------------------------------------
obligated to effect any Demand Registration within 180 days after the effective
date of a previous Demand Registration or a previous registration in which the
holders of Registrable Securities were given piggyback rights pursuant to
Section 2 and in which there was no reduction in the number of Registrable
- ---------
Securities requested to be included. The Company may postpone for up to 180 days
(from the date of the request) the filing or the effectiveness of a registration
statement for a Demand Registration if the Company's board of directors
determines in its reasonable good faith judgment that such Demand Registration
would reasonably be expected to have a material adverse effect on any proposal
or plan by the Company or any of its Subsidiaries to engage in any acquisition
of assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer, reorganization or similar transaction; provided
that in such event, the holders of Registrable Securities initially requesting
such Demand Registration shall be entitled to withdraw such request and, if such
request is withdrawn, such Demand Registration shall not count as one of the
permitted Demand Registrations hereunder and the Company shall pay all
Registration Expenses in connection with such registration. The Company may
delay a Demand Registration hereunder only once in any twelve-month period.
(e) Selection of Underwriters. In any Demand Registration, the
-------------------------
Company shall have the right to select the investment banker(s) and manager(s)
to administer the offering, provided that the investment banker(s) and
manager(s) so selected are reasonably satisfactory to the Majority Investor
Holders.
-2-
<PAGE>
2. Piggyback Registrations.
-----------------------
(a) Right to Piggyback. Whenever the Company proposes to register
------------------
any of its securities under the Securities Act (other than pursuant to (i) a
Demand Registration or (ii) pursuant to a registration on Form S-4 or S-8 or any
successor or similar forms) and the registration form to be used may be used for
the registration of Registrable Securities (a "Piggyback Registration"), the
----------------------
Company shall give prompt written notice (in any event within ten (10) days
after its receipt of notice of any exercise of demand registration rights other
than under this Agreement) to all holders of Registrable Securities of its
intention to effect such a registration and shall include in such registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within 15 days after the receipt of the
Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the holders of
------------------
Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
(c) Priority on Piggyback Registrations. If a Piggyback Registration
-----------------------------------
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, and (ii) second, the
----- ------
Registrable Securities requested to be included in such registration pro rata
among the holders thereof on the basis of the number of shares of Registrable
Securities owned by each such holder, and (iii) third, other securities
-----
requested to be included in such registration pro rata among the holders of such
securities and any other securities held by others requested to be included in
such registration, pro rata among the holders thereof on the basis of the number
of shares requested to be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration
-----------------------------------
is an underwritten secondary registration on behalf of holders of the Company's
securities (other than the parties hereto) who have been granted contractual
demand registration rights, and the managing underwriters advise the company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company will
include in such registration (i) first, the securities requested to be included
-----
therein by the holders requesting such registration, pro rata among the holders
of such securities on the basis of the number of shares owned by each such
holder, (ii) second, the Registrable Securities requested to be included in such
------
registration, pro rata among the holders thereof on the basis of the number of
shares of Registrable Securities owned by each such holder, and (iii) third,
-----
other securities requested to be included in such registration pro rata among
the holders of such securities.
(e) Selection of Underwriters. In any Piggyback Registration, the
-------------------------
Company shall have the right to select the investment banker(s) and manager(s)
to administer the offering.
-3-
<PAGE>
3. Holdback Agreements.
-------------------
(a) The Company shall not effect any public sale or other
distribution (including sales pursuant to Rule 144) of its equity securities, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven (7) days prior to and during the 180-day period
beginning on the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or any successor form),
unless the underwriters managing the registered public offering otherwise agree.
(b) Each holder of Registrable Securities shall not effect any public
sale or other distribution (including sales pursuant to Rule 144) of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities during the seven days prior to and during the
180-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are eligible for inclusion (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or any successor form),
unless the underwriters managing the registered public offering otherwise agree.
4. Registration Procedures. Whenever the holders of Registrable
-----------------------
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company shall use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof (including the registration of the
Warrants held by a holder of Registrable Securities requesting registration as
to which the Company has received reasonable assurances that only Common Stock
shall be distributed to the public), and pursuant thereto the Company shall as
expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to the counsel selected by the
holders of a majority of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed, which documents
shall be subject to the review and comment of such counsel);
(b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 180 days and comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
-4-
<PAGE>
(c) furnish to each seller of Registrable Securities such number of
requested copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading; provided that upon
such notification by the Company, each seller of such Registrable Securities
will not offer or sell such Registrable Securities until the Company has
notified such seller that it has prepared a supplement or amendment to such
prospectus and delivered copies of such supplement or amendment to such seller;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing
that, to secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Securities
with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate
-5-
<PAGE>
the disposition of such Registrable Securities (including effecting a stock
split or a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter (in each case after reasonable prior notice), all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors, employees and independent
accountants to supply, on a confidential basis, all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order; and
(m) obtain a comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by comfort letters as the holders of a majority of the Registrable
Securities being sold reasonably request (provided that such Registrable
Securities constitute at least 10% of the securities covered by such
registration statement).
Each seller of Registrable Securities, upon receipt of any notice from the
Company of the happening of any event of the kind described in subsection (e) of
this Section 4, will forthwith discontinue disposition of the Registrable
Securities until receipt by the seller of Registrable Securities of the copies
of the supplemented or amended prospectus contemplated by subsection (e) of this
Section 4 or until it is advised in writing (the "Advice") by the Company that
the use of the prospectus may be resumed and has received copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus, and if so directed by the Company, such seller of Registrable
Securities will, or will request the managing underwriter or underwriters, if
any, to deliver to the Company (at the Company's expense) all copies (other than
permanent file copies)
-6-
<PAGE>
then in the possession of such seller of Registrable Securities and of any
underwriter or underwriters, of he prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the time periods mentioned in subsection (b)
of this Section 4 shall be extended by the number of days during the period from
and including the date of the giving of such notice to and including the date
when each seller of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by subsection (e) of this Section 4 hereof or the
Advice.
5. Cooperation by Holders of Registrable Securities
------------------------------------------------
(a) Each seller of Registrable Securities will furnish to the Company
in writing such information as the Company may reasonably require from time to
time from such seller, and otherwise reasonably cooperate with the Company in
connection with any registration with respect to such holder's Registrable
Securities.
(b) The failure of any prospective seller of Registrable Securities
to furnish any information or documents in accordance with any provision
contained in this Agreement shall not affect the obligations of the Company
hereunder to any remaining sellers who furnish such information and documents
unless, in the reasonable opinion of counsel to the Company or the underwriters,
such failure impairs or may impair the viability of the or the legality of any
registration statement in connection therewith.
(c) At the end of any period during which the Company is obligated to
keep any registration statement current and effective as provided in Section 4,
---------
the holders of Registrable Securities included in such registration statement
shall discontinue sales of shares pursuant to such registration statement upon
receipt of notice from the Company of its intention to remove from registration
the shares covered by such registration statement which remain unsold and such
holders shall notify the Company of the number of shares registered which remain
unsold promptly after receipt of such notice from the Company.
6. Registration Expenses.
----------------------
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts,
commissions, and undocumented expense allowances) and other Persons (as defined
in the Purchase Agreement) retained by the Company (all such expenses being
herein called "Registration Expenses"), shall be borne as provided in this
---------------------
Agreement, except that the Company shall, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any liability insurance and
the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system.
-7-
<PAGE>
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Investor Registrable
Securities included in such registration for the reasonable fees and
disbursements of one counsel chosen by the holders of a majority of the Investor
Registrable Securities initially requesting such registration. The Company
shall not be required to pay or obtain reimbursement for excessive discounted
fees and commissions attributable to a sale of the Company and fees and/or
expenses of other experts retained by the holders of Registrable Securities.
(c) To the extent Registration Expenses are not required to be paid
by the Company, each holder of securities included in any registration hereunder
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
shall be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
(d) The Company will not bear the cost of or pay for any stock
transfer tax imposed in respect of the transfer of any Registrable Securities to
any purchaser thereof by any holder of Registrable Securities in connection with
any registration of Registrable Securities pursuant to this Agreement.
7. Indemnification.
---------------
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities (requesting or joining in a registration
hereunder), its officers and directors and each Person who controls (within the
meaning of the Securities Act) such holder against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such holder expressly for use therein or by such holder's failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same. In connection with an underwritten
offering the Company shall indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder shall furnish to
the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls (within the meaning of the
Securities Act) the Company against any losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement of material fact
contained in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged
-8-
<PAGE>
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so furnished
in writing by such holder; provided that the obligation to indemnify shall be
limited to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement. In connection
with an underwritten offering in which a holder of Registrable Securities is
participating, each such holder shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Company.
(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
shall not impair any Person's right to indemnification hereunder to the extent
such failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and shall survive the transfer of securities. The
parties hereto also agree to make such provisions, as are reasonably requested
by any indemnified party, for contribution to such party in the event such
party's indemnification is unavailable for any reason.
8. Participation in Underwritten Registrations. No Person may
-------------------------------------------
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that no
holder of Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding such holder
and such holder's intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in Section 7 hereof.
---------
-9-
<PAGE>
9. Definitions.
------------
(a) "Investor Registrable Securities" means (i) any Common Stock
-------------------------------
issued to CIVC or MIG, (ii) any Common Stock issued or issuable upon the
exercise or otherwise in respect of the Warrants issued pursuant to the Purchase
Agreement, (iii) any Common Stock issued or issuable with respect to the
securities referred to in clauses (i) and (ii) above by way of a stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization, and (iv) any other shares of
Common Stock held by the Investors holding securities described in clauses (i),
(ii) and (iii), inclusive, above. As to any particular Investor Registrable
Securities, such securities shall cease to be Investor Registrable Securities
when they have been distributed to the public pursuant to a offering registered
under the Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act (or any
similar rule then in force) or repurchased by the Company or any Subsidiary. For
purposes of this Agreement, a Person shall be deemed to be a holder of Investor
Registrable Securities, and the Registrable Securities shall be deemed to be in
existence, whenever such Person has the right to acquire directly or indirectly
such Registrable Securities (upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such night), whether or not such acquisition
has actually been effected, and such Person shall be entitled to exercise the
rights of a holder of Investor Registrable Securities hereunder.
(b) "Other Registrable Securities" means (i) any Common Stock held by
----------------------------
or issued to any Other Stockholder, (ii) any Common Stock issued or issuable
with respect to the securities referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Other Registrable Securities, such securities shall cease to be Other
Registrable Securities when they have been distributed to the public pursuant to
a offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the Securities
Act (or any similar rule then in force) or repurchased by the Company or any
Subsidiary. For purposes of this Agreement, a Person shall be deemed to be a
holder of Other Registrable Securities, and the Other Registrable Securities
shall be deemed to be in existence, whenever such Person has the right to
acquire directly or indirectly such Other Registrable Securities (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
night), whether or not such acquisition has actually been effected, and such
Person shall be entitled to exercise the rights of a holder of Other Registrable
Securities hereunder.
(c) "Registrable Securities" means, collectively, the Investor
----------------------
Registrable Securities and the Other Registrable Securities.
(d) Unless otherwise stated, other capitalized terms contained herein
have the meanings set forth in the Purchase Agreement.
-10-
<PAGE>
10. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company shall not hereafter
--------------------------
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Securities in
this Agreement.
(b) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of a majority of the Registrable
Securities.
(c) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
(d) Successors and Assigns. All covenants and agreements in this
----------------------
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not; in addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(e) Entire Agreement. Except as otherwise expressly set forth
----------------
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(f) Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement.
(g) Remedies. Any Person having rights under any provision of this
--------
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
-11-
<PAGE>
(h) Governing Law. The corporate law of the State of Texas shall
-------------
govern all issues and questions concerning the relative rights of the Company
and its stockholders and other issues and questions concerning the construction,
validity, interpretation and enforcement of this Agreement and the exhibits and
schedules hereto without giving effect to any choice of law or conflict of law
rules or provisions.
(i) Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, sent by telecopy, mailed first
class mail (postage prepaid) or sent by reputable overnight courier service
(charges prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Underlying Stock subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices shall be deemed to have been given hereunder upon
receipt when delivered personally or by telecopy, three business days after
deposit in the U.S. mail and on the first business day after deposit with a
reputable overnight courier service (postage provided for and with instructions
for overnight delivery). The Company's address is:
Zimmerman Sign Company
9846 Hwy 31 East
Tyler, Texas 75705
(j) Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ZIMMERMAN SIGN COMPANY
By: /s/ Jeffrey Johnson
------------------------------
Name: Jeffrey Johnson
Its: Vice-President/CFO
INVESTORS:
---------
CONTINENTAL ILLINOIS VENTURE
CORPORATION
By: /s/ Robert Perille
------------------------------
Name: Robert Perille
Its: Managing Director
MIG PARTNERS VIII
By: /s/ Robert Perille
------------------------------
Name: Robert Perille
Its: General Partner
OTHER STOCKHOLDERS:
------------------
/s/ David E. Anderson
------------------------------
David E. Anderson
SIGNATURE PAGE TO REGISTRATION AGREEMENT
<PAGE>
/s/ Tom Boner
___________________________________
Tom Boner
SOUTHERN INVESTORS CORP.
/s/ Steven Lapin
By _______________________________
Its _______________________________
SOUTHERN MORTGAGE HOLDING
CORPORATION
/s/ Steven Lapin
By _______________________________
Its _______________________________
GENEVE SECURITIES PORTFOLIO CORP.
/s/ Steven Lapin
By _______________________________
Its _______________________________
GENEVE SECURITIES HOLDING CORP.
/s/ Steven Lapin
By _______________________________
Its _______________________________
CHAPARRAL INTERNATIONAL RE.
/s/ Steven Lapin
By _______________________________
Its _______________________________
SIGNATURE PAGE TO REGISTRATION AGREEMENT
<PAGE>
EXHIBIT E
AGREEMENT RE JOINT FILING OF
SCHEDULE 13D
------------
The undersigned hereby agrees as follows:
(i) Each of them is individually eligible to use the Schedule 13D to
which this Exhibit is attached, and such Schedule 13D is filed on behalf of each
of them; and
(ii) Each of them is responsible for the timely filing of such
Schedule 13D and any amendments thereto, and for the completeness and accuracy
of the information concerning such person contained therein; but none of them is
responsible for the completeness or accuracy of the information concerning the
other persons making the filing, unless such person knows or has reason to
believe that such information is inaccurate.
As to BA Bank, signing resolutions are incorporated by reference to
Schedule 13G Amendment #2 relating to Anaren Microwave, Inc. filed by BA Bank.
As to BAC, signature authority is included as Exhibit F.
Dated: October 8, 1998
CONTINENTAL ILLINOIS VENTURE CORPORATION
By: /s/ Robert F. Perille
---------------------
Print Name: Robert F. Perille
Its: Managing Director
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By: /s/ Vernice R. Palmer
---------------------
Print Name: Vernice R. Palmer
Its: Counsel
BANKAMERICA CORPORATION
By: /s/ Vernice R. Palmer
---------------------
Print Name: Vernice R. Palmer
Its: Counsel
<PAGE>
MIG PARTNERS VIII
By: /s/ Robert F. Perille
---------------------
Print Name: Robert F. Perille
Its: General Partner
/s/ Sheryl E. Bartol
--------------------
Sheryl E. Bartol
/s/ Matthew W. Clary
--------------------
Matthew W. Clary
/s/ Andrea P. Joselit
---------------------
Andrea P. Joselit
/s/ Jeffery M. Mann
-------------------
Jeffrey M. Mann
/s/ Jason A. Mehring
--------------------
Jason A. Mehring
/s/ Dennis P. McCrary
---------------------
Dennis P. McCrary
/s/ Robert F. Perille
---------------------
Robert F. Perille
<PAGE>
EXHIBIT F
BankAmerica Corporation
Delegation of Authority
The undersigned delegates to any attorney in the Legal Department of Bank
of America the authority to sign registrations, reports, certificates,
applications and other writings on behalf of BankAmerica Corporation, and any of
its subsidiaries for which I am authorized to delegate such authority, for
submission to or filing with any federal, state, local or foreign regulatory
authorities, and any amendments, withdrawals, or terminations thereof, as are
deemed desirable by such attorney in connection with the Corporation's
activities or affairs.
October 7, 1998 /s/ Gerald P. Hurst
-------------------------------
Gerald P. Hurst
Associate General Counsel
BankAmerica Corporation
