<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report May 22, 1996
OUTDOOR SYSTEMS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-28256 86-0736400
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification No.)
2502 N. BLACK CANYON HIGHWAY, PHOENIX, ARIZONA 85009
---------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (602) 246-9569
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION - On May 22, 1996, Outdoor Systems, Inc. ("Company")
acquired perpetual easements on certain real property giving the
Company all of the rights to the billboard lease rental income from
approximately 2,420 billboard advertising faces located on
approximately 1,360 different sites in 17 states in the eastern U.S.
The perpetual easements were acquired in a single transaction from
RailCom, Ltd., a Georgia corporation ("RailCom"), pursuant to RailCom's
assignment of its rights under a Purchase and Sale Agreement (the
"Purchase Agreement") dated January 23, 1996, and amended March 29 and
May 21, 1996, between RailCom and CSX Realty Development Corporation, a
Georgia corporation, The Three Rivers Railway Company, a Pennsylvania
corporation, The Atlantic Land and Improvement Company, a Virginia
corporation, Winston-Salem Southbound Railway Company, a North Carolina
corporation, Gainesville Midland Railroad Company, a Georgia
corporation, and Richmond, Fredericksburg and Potomac Railway Company,
[a Virginia and Delaware corporation] (collectively, "CSX"). RailCom
entered into the Purchase Agreement with the intent of purchasing and
operating the easements, rather than acting as a broker or agent of the
Company in the acquisition.
The purchase price for the easements was $21,602,000, plus certain
future payments in an aggregate amount not to exceed $10,050,000 and
payable over a period of ten years beginning no later than the year
2006, with the exact amount and timing of such future payments to be
determined based upon the results of the Company's operations of the
easements. The $21,602,000 was paid in cash at the closing from the
proceeds of an advance under the Company's existing revolving credit
facility.
The perpetual easements are located on real property interests of CSX,
and previously were operated by CSX for the purpose of licensing rights
to operate outdoor advertising displays. CSX is a national railroad
company operating in the several states east of the Mississippi River.
None of CSX, RailCom, or their respective officers, directors or
affiliates are affiliated with or related to the Company or its
officers or directors.
The Company assumed the management and operation of the easements upon
the closing of the transaction on May 22, 1996, and intends to combine
and operate the acquired properties with its outdoor advertising
business currently conducted under its own name in Atlanta, Georgia.
2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired - The assets
acquired do not constitute a"business" as defined in Article
11 of Regulation S-X (17 CFR 210.11-01(d)), accordingly,
historical financial statements are not presented.
(b) Pro Forma Financial Statements - Unaudited Pro Forma Combined
Balance Sheet as of December 31, 1995 and Combined Statements
of Income for the Twelve Months Ended December 31, 1995 are
presented on the following page.
3
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OUTDOOR SYSTEMS, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS
---------- ----------- PRO FORMA
OSI CSX DEBIT CREDIT COMBINED
--- --- ----- ----- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assts:
Cash and cash equivalents $ 1,739 $ 1,043(a) $ 696
Accounts receivable, net 10,971 10,971
Prepaid expenses and other 2,304 2,304
Deferred income taxes 415 415
-------- --------
Total current assets 15,429 14,386
Property, Plant and Equipment, net 111,729 111,729
Long Term Intangibles $23,919(a) 23,919
Prepaid Land Leases and Other 1,525 1,525
Deferred Financing Costs 4,275 4,275
Deferred Income Taxes 5,255 5,255
-------- -------- ------- ------- --------
Total Assets $138,213 $ $23,919 $ 1,043 $161,089
======== ======== ======= ======= ========
LIABILITIES AND
STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable $ 642 $ 642
Accrued interest 4,843 4,843
Accrued expenses and other 1,173 $ 721(a) 1,894
Current maturities of long-term debt 550 550
-------- --------
Total current liabilities 7,208 7,929
Long-term Debt 141,719 20,000(a) 161,719
Other Long-term Obligations 984 2,155(a) 3,139
-------- --------
Total liabilities 149,911 174,996
Common Stock - Subject to Put Option 3,420 3,420
Redeemable Preferred Stock 13,649 13,649
Stockholders' Deficiency (28,767) (28,767)
-------- -------- ------- ------- --------
Total Liabilities and
Stockholders' Deficiency $138,213 $ $ $22,876 $161,089
======== ======== ======= ======= ========
</TABLE>
4
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OUTDOOR SYSTEMS, INC.
UNAUDITED PRO FORMA
COMBINED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS
---------- ----------- PRO FORMA
OSI CSX DEBIT CREDIT COMBINED
--- --- ----- ----- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Outdoor advertising $ 74,690 $ 74,690
Lease rental income 3,221 125(d) 3,096
Less agency commissions 10,294 10,294
---------- ------ ----------
64,396 3,221 67,492
Other income 417 417
---------- ------ ----------
Net revenues 64,813 3,221 67,909
---------- ------ ----------
Operating Expenses:
Direct advertising 30,462 125(d) 30,337
Selling, general & administrative 4,096 335 4,431
Depreciation and amortization 9,970 594(b) 10,564
---------- ------ ----------
Total operating expenses 44,528 335 45,332
---------- ------ ----------
Operating Income 20,285 2,886 22,577
Interest Expense 17,199 2,209(c) 19,408
---------- ------ ----------
Income Before Income Taxes 3,086 2,886 3,169
Income Tax Provision 318 9(e) 327
---------- ------ ------ ---- ----------
Net Income $ 2,768 $2,886 $2,937 $125 $ 2,842
========== ====== ====== ==== ==========
Less Preferred Stock Dividends
and Preferred and Common
Stock Accretion 2,461 2,461
---------- ----------
Net Income Attributable to Common
Stockholders' $ 307 $ 381
========== ==========
Net Income Per Common Share $ 0.03 $ 0.03
========== ==========
Weighted Average Number of
Common Shares 11,299,590 11,299,590
========== ==========
</TABLE>
NOTES:
1. The unaudited pro forma financial statements of Outdoor
Systems, Inc. reflect, on a pro forma basis, the assets
acquired and the rental income that will be derived from these
assets. The balance sheet as of December 31, 1995, was
prepared as if the assets had been acquired on December 31,
1995. The pro forma statement of operations for the year ended
December 31, 1995, was prepared as if the transaction occured
on January 1, 1995.
The pro forma data are not necessarily indicative of the
financial position or results of operations which would
actually have been reported had the transaction been
consummated at the date mentioned above or which may be
reported in the future.
The pro forma data should be read in conjunction with the
historical financial statements and notes thereto of Outdoor
Systems, Inc.
2. (a) Intangible assets acquired and related acquisition
indebtedness and other liabilities incurred on May
22, 1996.
(b) Annual amortization of acquired intangible asset.
(c) Annual interest expense on additional debt using the
weighted average interest rate for 1995 plus
accretion of the estimated future consideration.
(d) Elimination of lease cost and corresponding rental
income from OSI in 1995 related to acquired assets
formerly leased by the Company.
(e) Estimated income tax provision using OSI effective
tax rate for 1995.
5
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<TABLE>
<CAPTION>
(c) Exhibits:
<S> <C>
2.1 Asset Purchase Agreement between RailCom, Ltd. and Outdoor Systems,
Inc.. dated May 8, 1996
2.2.1 Purchase and Sale Agreement between CSX Realty Development
Corporation, The Three Rivers Railway Company, The Atlantic Land and
Improvement Company, Winston-Salem Southbound Railway Company,
Gainesville Midland Railroad Company, and Richmond, Fredericksburg and
Potomac Railway Company and RailCom, Ltd., dated January 23, 1996, as
amended March 29, 1996, as further amended May 21, 1996.
2.2.2 Amendment to Purchase Agreement, dated March 29, 1996.
2.2.3 Second Amendment to Purchase Agreement, dated May 21, 1996.
2.3 Grant of Easement and Agreement, dated May 21, 1996.
2.4 Assignment of License Agreements, dated May 21, 1996.
2.5 Assignment and Assumption Agreement, dated May 22, 1996
27 Financial Data Schedule
99.1 Press release announcing the transaction, dated May 22, 1996
</TABLE>
6
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OUTDOOR SYSTEMS, INC.
Date: June 5, 1996 By: /S/ Bill Beverage
------------------------------- --------------------------------------
Bill Beverage, Secretary/Treasurer
7
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
2.1 Asset Purchase Agreement between RailCom, Ltd. and Outdoor
Systems, Inc., dated May 8, 1996
2.2.1 Purchase and Sales Agreement Between CSX Realty Development
Corporation, The Three Rivers Railway Company, The Atlantic Land
and Improvement Company, Winston-Salem Southbound Railway
Company, Gainesville Midland Railroad Company, and Richmond,
Fredericksburg and Potomac Railway Company and RailCom, Ltd.,
dated January 23, 1996, as amended March 29 and
May 21, 1996
2.2.2 Amendment to Purchase Agreement, dated March 29, 1996
2.2.3 Second Amendment to Purchase Agreement, dated May 21, 1996
2.3 Grant of Easement and Agreement, dated May 21, 1996
2.4 Assignment of License Agreements, dated May 21, 1996
2.5 Assignment and Assumption Agreement, dated May 22, 1996
27 Financial Data Schedule
99.1 Press release announcing the transaction, dated May 22, 1996
</TABLE>
8
<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AGREEMENT entered into as of the 8th day of May, 1996, by and between
RailCom, Ltd., a Georgia corporation ("RailCom"), and Outdoor Systems, Inc., a
Delaware corporation ("Purchaser").
RailCom has entered into that certain Purchase and Sale Agreement
between CSX Realty Development Corporation, The Three Rivers Railway Company,
The Atlantic Land and Improvement Company, Winston-Salem Southbound Railway
Company, Gainesville Midland Railroad Company, Richmond, Fredericksburg and
Potomac Railway Company, and RailCom, Ltd., dated January 23, 1996, as amended
by that certain Amendment to Purchase Agreement, dated March 29, 1996, and that
certain Second Amendment to Purchase Agreement, dated May 8, 1996, a copy of
which is attached hereto as Exhibit A (the "CSX Purchase Agreement"). References
herein to "CSX" refer collectively to all of the parties identified as "Seller"
in the CSX Purchase Agreement (i.e., all of the parties other than RailCom,
Ltd.). All capitalized terms used in this Agreement shall have the meanings
ascribed to them by the CSX Purchase Agreement, except to the extent otherwise
defined by this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, and covenants herein contained, the parties agree
as follows:
1. Purchase and Sale of Assets. On and subject to the terms and
conditions set forth in this Agreement, within two (2) days after RailCom and
CSX consummate the transactions contemplated by the CSX Purchase Agreement,
RailCom shall sell to Purchaser, and Purchaser shall purchase from RailCom all
(but not less than all) of the assets and rights that RailCom acquires from CSX
pursuant to the CSX Purchase Agreement, including the Easement and the License
Agreement for each Outdoor Advertising Facility (the "Purchased Assets"), and
Purchaser shall assume all obligations and liabilities of RailCom under the CSX
Purchase Agreement (including the RailCom Note), the Easement and the License
Agreement.
2. Purchase Price. The purchase price for the Purchased Assets shall be
Two Million Four Hundred Thousand Dollars ($2,400,000.00) (the "Purchase
Price").
3. Payment of Purchase Price. At the Closing, Purchaser shall pay the
Purchase Price to RailCom by wire transfer of immediately available funds to
such account in the United States as is designated by RailCom prior to Closing.
4. Transfer of Assets. At the Closing, (i) RailCom shall execute and
deliver to Purchaser a limited warranty deed conveying to Purchaser the Easement
acquired by RailCom pursuant to the CSX Purchase Agreement, and (ii) RailCom and
Purchaser shall execute an assignment and assumption instrument in substantially
the form attached hereto as Exhibit B. After the Closing, RailCom shall from
time to time at the request of Purchaser and without further consideration
execute and deliver to Purchaser such additional instruments of transfer as
Purchaser may reasonably request to transfer more effectively the Purchased
Assets to Purchaser.
5. Prorations; Transfer Tax. The parties will prorate as of the Closing
Date all revenues and expenditures relating to the Purchased Assets, including
all payments from licensees and all ad valorem taxes and utility charges
(determined in the same manner as set forth in the CSX Purchase Agreement). In
particular, without limiting the generality of the preceding sentence, RailCom
shall be entitled to all payments of whatever kind due from licensees under the
various License Agreements attributable to the period through and including the
Closing Date (determined in the same manner as set forth in Paragraph 3.2 of the
CSX Purchase Agreement). RailCom shall bear the real estate transfer tax, if
any, on the transfer of the Easement from CSX to RailCom (but not from RailCom
to Purchaser). RailCom agrees to deposit with Purchaser at Closing the sum of
$20,000 to be used by Purchaser, and further agrees to promptly pay or reimburse
Purchaser for any such tax in excess of the Deposit, to satisfy RailCom's
obligation pursuant to the preceding sentence as and when the Easement is
recorded. Without diminishing RailCom's continuing obligation to bear the tax
(pursuant to the second preceding sentence), any portion of the Deposit not
expended by Purchaser by the date occurring one year after Closing shall be
refunded, without interest, to RailCom.
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6. Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Railcar, Ltd. at
1819 Peachtree Road, N.E., Suite 315, Atlanta, Georgia 30309, commencing at
11:00 a.m., Georgia time, on May 22, 1996, or at such other time and place as
RailCom and Purchaser may mutually determine. The date and time of the Closing
is referred to herein as the "Closing Date."
7. Expenses. All expenses incurred by Purchaser in connection with the
authorization, preparation, execution and performance of this Agreement and the
transactions contemplated hereby shall be paid by Purchaser. All expenses
incurred by RailCom in connection with the authorization, preparation, execution
and performance of this Agreement and the transactions contemplated hereby shall
be paid by RailCom.
8. Brokers. RailCom and Purchaser hereby represent and warrant that no
broker or finder has acted on its behalf in connection with this Agreement or
the transactions contemplated herein. Each party (the "Indemnitor") shall
indemnify the other party and hold it harmless from and against any and all
claims or demands for commissions or other compensation from any broker or other
similar agent claiming to have been employed by or on behalf of the Indemnitor.
9. Maintenance of CSX Purchase Agreement. RailCom shall take all steps
reasonable and necessary on its part to maintain the CSX Purchase Agreement in
full force and effect and to consummate the transactions contemplated by the CSX
Purchase Agreement.
10. Representations and Warranties of RailCom. RailCom represents and
warrants to Purchaser as follows:
(a) Due Authorization by RailCom. RailCom is a corporation
duly organized, validly existing and in good standing under the laws of Georgia.
RailCom has the full right, power, and authority to execute and deliver and to
perform and comply with this Agreement in accordance with its terms; this
Agreement has been duly and validly executed and delivered by RailCom and has
been duly and validly authorized by all necessary corporate action; this
Agreement constitutes the valid and legally binding obligation, subject to
general equity principles, of RailCom, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally; and neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or breach by
RailCom of its organizational and governing documents or any provision of any
contract or other instrument to which RailCom is a party or is bound.
(b) Prior Commitments. Except as set forth in the CSX Purchase
Agreement, RailCom is not party nor subject to any outstanding contracts,
demands, commitments, or other agreements or arrangements under which it is or
may become obligated to sell, transfer or assign any of the Purchased Assets.
(c) Noncontravention. To the knowledge of RailCom, the sale of
the Purchased Assets contemplated hereby does not violate any law of the United
States or of any state.
(d) Litigation. RailCom is not a party to, and is not
threatened with, any legal action or other proceeding before any court or
administrative agency which might materially adversely affect RailCom's ability
to perform its obligations and consummate the transactions contemplated herein,
and, to the knowledge of RailCom, there is no basis for any such legal action or
proceeding.
(e) Contracts, Leases, Etc. There is no default, and no facts
or circumstances which with the passage of time or otherwise shall constitute or
result in a default, with respect to the CSX Purchase Agreement, and neither the
execution of this Agreement nor the consummation of the transactions
contemplated herein shall cause or result in a default or acceleration of
liability under the CSX Purchase Agreement. The execution and delivery of this
Agreement by RailCom and the consummation of the transactions contemplated
hereby do not require the consent of any party other than CSX.
2
<PAGE> 3
(f) CSX Purchase Agreement. A true, correct and complete copy
of the CSX Purchase Agreement is attached hereto as Exhibit A. The CSX Purchase
Agreement is owned by RailCom free and clear of any liens, charges or other
encumbrances of any nature whatsoever. Railcom shall not make any changes,
alterations, modifications or amendments to the CSX Purchase Agreement without
the prior written consent of Purchaser.
(g) No Suits, Etc. There are no actions, suits, complaints,
claims, counter-claims, petitions, set-offs, inquiries, investigations,
administrative proceedings, arbitrations, or private dispute resolution
proceedings, whether at law, in equity, by contract or agreement, or otherwise,
pending or threatened against, by or affecting RailCom, RailCom's assets and
properties or RailCom's business. RailCom has not been charged with, nor is it
under investigation with respect to any charge concerning, any violation of any
provision of, any federal, state, local or municipal constitutions, statutes,
rules, regulations, ordinances, acts, codes, legislation, treaties, conventions
and similar laws and legal requirements as in effect from time to time. There
are no unsatisfied judgments against RailCom for any orders, writs, judgments,
decrees, rulings and awards of any court, tribunal, agency, administrative or
governmental body to which RailCom or any of RailCom's assets and properties are
subject.
11. Representations and Warranties of Purchaser. Purchaser represents
and warrants to RailCom as follows: Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Purchaser has full corporate power and authority to make, execute and perform
this Agreement and the transactions contemplated hereby. This Agreement and all
transactions required hereunder to be performed by Purchaser have been duly and
validly authorized and approved by all necessary corporate action on the part of
Purchaser. This Agreement has been duly and validly executed and delivered on
behalf of Purchaser by its duly authorized officers, and constitutes the valid
and legally binding obligation, subject to general equity principles, of
Purchaser, enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
constitute a violation or breach of Purchaser's organizational and governing
documents, or any provision of any contract or other instrument to which
Purchaser is a party or is bound.
12. Conditions to Obligations of Purchaser. The obligations of
Purchaser under this Agreement to purchase the Shares are subject to the
fulfillment and satisfaction of each and every of the following conditions on or
prior to the Closing Date, any or all of which may be waived in writing in whole
or in part by Purchaser:
(a) The representations and warranties made by RailCom herein
shall be true and correct at the time of Closing as though they were made at
that time. In the event of any breach of the preceding sentence known to
Purchaser at Closing, unless otherwise agreed by the parties, Purchaser's sole
recourse and remedy against RailCom shall be either (1) to waive the breach and
close the transactions herein contemplated, or (2) to terminate this Agreement,
in either of which events RailCom shall have no further liability or obligations
hereunder.
(b) RailCom shall have performed and complied with all
covenants, agreements and conditions required by this Agreement to be performed
or complied with prior to or on the Closing Date.
(c) RailCom shall have delivered to Purchaser duly adopted
resolutions of the Board of Directors of RailCom, certified by the secretary or
an assistant secretary of RailCom, dated the Closing Date, authorizing and
approving the execution of this Agreement by RailCom and all other actions
necessary to enable RailCom to comply with the terms of this Agreement.
(d) No legal action shall have been commenced by any Person
seeking to enjoin or prohibit the transactions contemplated hereby.
(e) The CSX Purchase Agreement shall not have been modified
(except for any modification to which Purchaser has consented in writing).
(f) CSX shall have consented to RailCom's transfer of the
Purchased Assets as contemplated by
3
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this Agreement, in writing in an instrument or instruments reasonably
satisfactory to Purchaser.
13. Conditions to Obligations of RailCom. The obligations of RailCom
under this Agreement are subject to the fulfillment and satisfaction of each and
every of the following conditions on or prior to the Closing Date, any or all of
which may be waived in writing in whole or in part by RailCom:
(a) The representations and warranties made by Purchaser
herein shall be true and correct at the time of Closing as though they were made
at that time.
(b) Purchaser shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or complied
with by Purchaser prior to or on the Closing Date.
(c) Purchaser shall have delivered to RailCom duly adopted
resolutions of the Board of Directors of Purchaser, certified by the secretary
or an assistant secretary of Purchaser, dated the Closing Date, authorizing and
approving the execution of this Agreement by Purchaser and all other actions
necessary to enable Purchaser to comply with the terms of this Agreement.
(d) No legal action shall have been commenced by any Person
seeking to enjoin or prohibit the transactions contemplated hereby.
(e) CSX shall have consented to RailCom's transfer of the
Purchased Assets as contemplated by this Agreement and shall have agreed to
release RailCom from all obligations and liabilities of RailCom under the CSX
Purchase Agreement, in writing in an instrument or instruments reasonably
satisfactory to RailCom.
14. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their successors and
assigns. Notwithstanding anything in this Agreement to the contrary, neither
this Agreement nor any rights or benefits of Purchaser hereunder may be assigned
by Purchaser.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, without reference
to its conflicts of laws principles.
(c) Survival. All representations, warranties, covenants and
agreements made by the parties in this Agreement and pursuant to the terms
hereof shall survive the Closing (except to the extent the damaged party knew of
any misrepresentation or breach thereof at the time of the Closing) and continue
in full force and effect forever thereafter (subject to any applicable statutes
of limitations).
(d) Limitation of Liability. RailCom shall have no liability
in excess of amounts received by it hereunder for any claims, actions, suits,
demands, assessments, judgments, losses, damages, liabilities, costs and
expenses suffered or incurred by Purchaser by reason of or arising out of the
breach by RailCom of any representation, warranty, covenant or agreement
hereunder or any indemnity obligation hereunder.
(e) Headings; Including. The section and paragraph headings in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement. "Including" means including
without limitation.
(f) Gender. Where the context requires, the use of any gender
shall include any and all genders.
(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
(h) Severability. If any term or provision in this Agreement
is held to be invalid, void, illegal or
4
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unenforceable in any respect, the Agreement shall not fail, but shall be deemed
amended to delete the void or unenforceable term or provision, and the remainder
of this Agreement shall be enforceable in accordance with its terms and shall
not in any way be affected or impaired thereby.
(i) Time of Performance. Time is of the essence.
(j) Entire Agreement. This Agreement embodies the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter. This Agreement may be modified only by a written instrument
signed by each of the parties hereto.
EXECUTED, under seal, as of the date first above written.
[Signatures appear on following page]
RAILCOM:
RAILCOM, LTD.
By: /S/ Wilds L. Pierce
-------------------------------------
Name:
-----------------------------------
Title: President
----------------------------------
[CORPORATE SEAL]
PURCHASER:
OUTDOOR SYSTEMS, INC.
By: /S/ William S. Levine
-------------------------------------
Name:
-----------------------------------
Title: Chairman
----------------------------------
[CORPORATE SEAL]
5
<PAGE> 1
EXHIBIT 2.2.1
Purchase and Sale Agreement
between
CSX REALTY DEVELOPMENT CORPORATION,
THE THREE RIVERS RAILWAY COMPANY,
THE ATLANTIC LAND AND IMPROVEMENT COMPANY,
WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY,
GAINESVILLE MIDLAND RAILROAD COMPANY, AND
RICHMOND, FREDERICKSBURG AND POTOMAC
RAILWAY COMPANY
and
RAILCOM, LTD.
Dated January 23, 1996
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Paragraph Page
<S> <C>
1. Definitions................................................... 1
2. Assets to be Conveyed......................................... 2
3. Sales Price................................................... 3
4. License Fees.................................................. 4
5. New Outdoor Advertising Facilities ........................... 5
6. Certain Post-Closing Obligations.............................. 6
7. Indemnifications by RailCom................................... 6
8. Insurance..................................................... 7
9. Representations............................................... 8
10. Breach........................................................ 8
11. Closing Costs................................................. 8
12. Surviving Provisions.......................................... 8
13. Irrevocable Easement.......................................... 8
14. Miscellaneous................................................. 9
Exhibits
Exhibit A List of Outdoor Advertising Facilities and License Agreements
Exhibit B Form of License Agreement
Exhibit C Management Agreement
Exhibit D Form of Grant of Easement and Agreement
Exhibit E Form of Assignment of Management Agreement
Exhibit F Form of Assignment of License Agreements
Exhibit G Revenue Report for the Period Ending December 31, 1995
</TABLE>
i
<PAGE> 3
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of the
23rd day of January, 1996, between CSX REALTY DEVELOPMENT CORPORATION, a Georgia
corporation ("CRDC"), THE THREE RIVERS RAILWAY COMPANY, a Pennsylvania
corporation, THE ATLANTIC LAND AND IMPROVEMENT COMPANY, a Virginia corporation,
WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY, a North Carolina corporation,
GAINESVILLE MIDLAND RAILROAD COMPANY, a Georgia corporation, and RICHMOND,
FREDERICKSBURG AND POTOMAC RAILWAY COMPANY, a Virginia and Delaware corporation
(collectively, "Seller") and RAILCOM, LTD., a Georgia corporation ("RailCom").
BACKGROUND
A. Seller owns, uses or occupies certain real property underlying
certain outdoor advertising facilities located in various states in the United
States. The outdoor advertising facilities consist of signboards, painted
bulletins, and poster panels, all of which are commonly known as billboards.
Each outdoor advertising facility which is the subject of this Agreement is
listed in Exhibit A attached to this Agreement. Seller is also a party to
numerous license agreements related to the outdoor advertising facilities, and a
management agreement related to the outdoor advertising facilities.
B. RailCom wishes to purchase from Seller (i) an easement (or such
lesser right to the greatest extent Seller's interest will support) in
connection with the use and occupancy of certain structures supporting the
outdoor advertising facilities, and (ii) an assignment of Seller's interest in
the license agreements and management agreement related to those outdoor
advertising facilities. Seller is willing to sell such assets upon the terms and
conditions set forth in this Agreement.
TERMS OF AGREEMENT
In consideration of the rights and obligations described in this
Agreement, Seller and RailCom hereby agree as follows:
1. Definitions. Terms capitalized in this Agreement are defined in
parentheses in the body of this Agreement, or as follows:
1.1 "Closing Date" means the date for closing this Agreement designated
by RailCom by notice to Seller (at least five [5] business days in advance), but
no later than March 31, 1996.
1.2 "Easement" means an easement (or such lesser right to the greatest
extent Seller's interest will support) on, over and across that portion of
Seller's interest, if any, in real property (whether owned, leased, licensed or
otherwise occupied) in direct contact with that portion of a structure
supporting an Outdoor Advertising Facility where such structure contacts the
ground or a bridge, together with the airspace occupied by the Outdoor
Advertising Facility (the "Easement Property"), in accordance with the Grant of
Easement (as defined in Paragraph 2.1 of this Agreement). For example, where
there is a billboard which is twenty five (25) feet wide supported by two (2)
poles connected to the ground, the easement related to such billboard shall not
include the space between the poles, regardless of the fact that the space lies
underneath the billboard supported by such poles, but shall include only the
real property which is directly beneath the two (2) supporting poles, and the
airspace occupied by the Outdoor Advertising Facility.
1.3 "Excess Cash Flow" means the annual gross revenue from all of the
Locations beginning on the first day of the calendar month which immediately
follows the calendar month of the Closing Date, less only the sum of (i) an
assumed annual ten percent (10%) management fee, and (ii) during the ten (10)
year period beginning on the first day of the calendar month which immediately
follows the calendar month of the Closing Date, the Hypothetical Annual
Amortization Costs. Any gross revenue generated by (i) the prepayment of future
years' rentals or (ii) condemnation
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proceeds, shall be prorated over and included in gross revenue during the period
to which such gross revenue is attributable for the purpose of calculating
Excess Cash Flow.
1.4 "Hypothetical Annual Amortization Costs" means the hypothetical
debt service on the Sales Price if the Sales Price was borrowed at an interest
rate of eleven percent (11%) per annum, with payments fully amortizing the debt
over a period of ten (10) years, payable in equal monthly installments of
principal and interest due on the last day of each month, in arrears, with the
first payment due on the last day of the calendar month which immediately
follows the calendar month of the Closing Date.
1.5 "License Agreements" means all of the various License Agreements,
dated on or before December 31, 1995, which have been executed by Peterson
Enterprises of Orlando, Inc. ("Peterson"), as exclusive agent for Seller and/or
its affiliates, in connection with licensing to third parties the right to
install, construct, maintain, and repair Outdoor Advertising Facilities and to
use the same for the display of advertising copy, which License Agreements are
listed on Exhibit A to this Agreement. The form of License Agreement is attached
as Exhibit B to this Agreement.
1.6 "Location" or "Locations" means the site of one or more,
respectively, of the Outdoor Advertising Facilities described on Exhibit A to
this Agreement.
1.7 "Location Sales Price" means the pro-rata portion of the Sales
Price applicable to a Location, determined by multiplying the Net Revenue for
the Location by 7.05.
1.8 "Management Agreement" means the Agreement between Seller and/or
its affiliates and Peterson dated June 11, 1993, a copy of which is attached as
Exhibit C to this Agreement.
1.9 "Net Revenue" means the actual revenue received by Seller and/or
its affiliates from Peterson as to any one or more Locations for the twelve (12)
month period ending December 31, 1995.
1.10 "Outdoor Advertising Facility" or "Outdoor Advertising Facilities"
means one or more, respectively, of the signboards, painted bulletins and poster
panels commonly known as billboards, including their supporting structures,
which are the subject of this Agreement, and which are described on Exhibit A
attached to this Agreement.
1.11 "Sales Price" means TWENTY MILLION ONE HUNDRED THOUSAND DOLLARS
($20,100,000).
2. Assets to be Conveyed.
At the closing of the transaction described in this Agreement, Seller
shall convey the following assets (the "Assets") to RailCom:
2.1 Easement. The Easement shall be conveyed by the execution and
delivery by both parties of the Grant of Easement and Agreement attached as
Exhibit D to this Agreement (the "Grant of Easement"). The parties understand
and agree that the descriptions of Locations attached to the Grant of Easement
(the "Original Description") may not be legally sufficient, and the Grant of
Easement shall not be recorded. A Short-Form Notice of the Grant of Easement, in
the form attached as Exhibit B to the Grant of Easement (the "Short-Form
Notice") may be recorded in accordance with the following procedures set forth
in this Paragraph 2.1:
2.1.1 A legal description for each Location for which RailCom
wishes to record a Short-Form Notice shall be prepared by RailCom at its sole
expense, which description does not necessarily have to be prepared by a
licensed surveyor (a "Proposed Description"), and such Proposed Description
shall be submitted to Seller for its approval, at Seller's reasonable
discretion. Seller must respond to a Proposed Description provided to it by
RailCom within thirty (30) days of Seller's receipt of such Proposed
Description.
2.1.2 Upon approval of such description (an "Approved
Description"), CRDC shall cause, if necessary,
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its affiliates (including CSX Transportation, Inc., a Virginia corporation
["CSXT"]) to convey by deed to CRDC such interests as are necessary for CRDC to
grant the Easement to RailCom (the "CSXT Deed"), which deed shall be recorded,
at CRDC's expense, and Seller and RailCom shall execute a Short-Form Notice for
such Location, which may be recorded at RailCom's sole expense. The Approved
Description shall also be attached to the Grant of Easement, in replacement of
the previous description for such Location which shall be deleted from the Grant
of Easement. RailCom, and its successors and assigns, shall reconvey to Seller
all of its right, title and interest in the Original Description for such
Location.
2.1.3 In the event Seller does not approve a Proposed
Description, and in the event RailCom and Seller, acting in a reasonable,
diligent and cooperative manner, cannot agree upon a legal description for a
Location within thirty (30) days after Seller's disapproval of a Proposed
Description, Seller shall provide to RailCom, if applicable, an original CSXT
Deed of the Location from CSXT to CRDC, containing a description acceptable to
Seller (the "Interim Description") along with a Short-Form Notice executed by
Seller using the Interim Description. RailCom may then execute the Short-Form
Notice, and record such Short-Form Notice (at its sole expense) and a CSXT Deed,
if any, and Seller agrees to cooperate, or cause its affiliates to cooperate, in
connection with same. Seller shall promptly reimburse RailCom for the cost of
recording the CSXT Deed and recording taxes related to the CSXT Deed. Such
documents shall state that they include an Interim Description and that it is
intended that such description shall be reconveyed within sixty (60) days and a
final description attached.
2.1.4 If documents containing the Interim Description are
delivered to RailCom, the matter shall then be submitted to binding arbitration.
Within twenty (20) days after providing such documents, Seller shall provide to
RailCom a list of three (3) independent (i.e., not employees of Seller)
surveyors licensed in the state where such Location is located, and RailCom
shall select one (1) of these three (3) surveyors to act as a binding arbitrator
concerning such Location. The Proposed Description shall be submitted to the
arbitrator, who, within thirty (30) days thereafter, shall determine whether the
Proposed Description is sufficient, meaning that a surveyor can reasonably
accurately locate the Easement Property for such Location. If the Proposed
Description meets this requirement, Seller shall pay the arbitrator's fees. If
the Proposed Description does not meet this requirement, the arbitrator shall,
within the same thirty (30) day period, prepare a sufficient description (the
"Sufficient Description"), and all fees of the arbitrator shall be paid by
RailCom. In either case, RailCom, and its successors and assigns, shall
reconvey, at its sole expense, all interest in the property described in the
Interim Description to Seller, and Seller shall execute and cause its affiliates
to execute appropriate documents to allow a CSXT Deed, if applicable, and the
Short-Form Notice to be executed and recorded as to such Location containing the
Sufficient Description. The Sufficient Description shall also be attached to the
Grant of Easement, in replacement of the previous description for such Location,
which shall be deleted from the Grant of Easement.
2.2 Management Agreement. The Management Agreement shall be conveyed by
the execution and delivery of the Assignment of Management Agreement attached as
Exhibit E to this Agreement, as well as the execution and delivery by RailCom of
the acceptance of the assignment included therein, subject to the execution and
delivery by Peterson of the consent to assignment attached thereto.
2.3 License Agreements. The License Agreements shall be conveyed by the
execution and delivery of the Assignment of License Agreements attached as
Exhibit F to this Agreement, as well as the execution and delivery by RailCom of
the acceptance of the assignment included therein. It is intended that only
Locations with an existing License Agreement shall be conveyed to RailCom.
RailCom recognizes that the License Agreements may be terminated by the
licensees after closing, and RailCom shall have no remedy against Seller upon
any such termination of License Agreements.
3. Sales Price.
3.1 Payment of Sales Price. The Sales Price shall be paid in the
following manner:
3.1.1 Upon the execution and delivery of this Agreement by
RailCom, RailCom shall deliver Fifty
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Thousand Dollars ($50,000) to Seller, as a deposit on this Agreement (the
"Deposit"). Such deposit shall be non-refundable, unless Seller breaches this
Agreement by failing to close in accordance with the terms hereof.
3.1.2 At closing, and prior to the delivery by Seller of the
closing documents referred to in Paragraph 2 hereof, RailCom shall deliver the
Sales Price, less the Deposit, to Seller.
3.1.3 Delivery of all sums due pursuant to this Paragraph 3.1
shall be evidenced by the receipt by Seller of such sums sent by Federal Reserve
wire to an account designated by Seller.
3.2 Proration of Payments from Licensees. Seller and RailCom agree that
Seller shall be entitled to all payments of whatever kind due from licensees
under the various License Agreements attributable to the period through and
including the Closing Date. Some of the License Agreements include percentage
clauses requiring payments based upon revenue generated by the licensee, which
payment is not due until the annual anniversary of the License Agreements. All
such amounts attributable to the period through and including the Closing Date
shall be the property of Seller, and shall upon receipt by RailCom immediately
be paid to Seller, even though such payments may be received a year or more
after the Closing Date. Similarly, any amounts prepaid to Seller (or its
predecessor-in-interest) under the License Agreements shall be paid by Seller to
RailCom, to the extent such amounts are attributable to the period after the
Closing Date, within sixty (60) days after the Closing Date. In addition to the
parties' other remedies, such amounts shall bear interest at the rate of twelve
percent (12%) per annum if not paid when due.
3.3 Ad Valorem Taxes. Since there is no separate ad valorem tax
assessment for the Assets, there shall be no proration of such taxes at closing.
To the extent the Easement granted pursuant to the Purchase Agreement or the
Outdoor Advertising Facilities located thereon are separately assessed or taxed,
or to the extent Seller's taxes reflect the existence of the Easement or the
Outdoor Advertising Facilities, RailCom shall pay or cause to be paid all
resulting taxes accruing after the Closing Date.
4. License Fees.
4.1 Computation of License Fees. In addition to the Sales Price, after
the Closing Date RailCom shall pay to Seller one-third (1/3) of any Excess Cash
Flow within forty-five (45) days after the end of each calendar year, as a
license fee (the "License Fee"), until the total License Fee payments equal TEN
MILLION FIFTY THOUSAND DOLLARS ($10,050,000). If any payment of License Fees is
not paid when due, in addition to Seller's other remedies, such payments shall
bear interest at the rate of twelve percent (12%) per annum.
4.2 Seller's Right to Audit. At all times prior to the payment in full
of the License Fees due pursuant to Paragraph 4.1 and until the expiration of
three (3) years thereafter, Seller shall have the right to audit all books and
records of RailCom related to the gross revenue generated by each Location, and
to also review all licenses and other documents and correspondence between
RailCom and any licensee or user of each Location. All such books and records
shall be kept by RailCom in accordance with generally accepted accounting
principles. In the event any such audit reflects additional License Fees are due
from RailCom to Seller, such amounts shall be immediately due and payable, and
in addition to Seller's other remedies, such additional License Fees shall bear
interest at the rate of twelve percent (12%) per annum if not paid in full
within thirty (30) days notice from Seller to RailCom that such sums are due. In
addition, if any such audit reflects that additional License Fees are due in
excess of five percent (5%) of the amount actually paid by RailCom for the
period in question (which period must be at least one [1] calendar year), the
cost of such audit shall be paid by RailCom, and such cost shall bear interest
at the rate of twelve percent (12%) per annum if not paid within thirty (30)
days after the invoice for such audit is mailed to RailCom.
4.3 Transfers of Locations. The rights of Seller set forth in this
Paragraph 4 shall specifically survive any transfer of a Location by RailCom and
shall be binding upon the transferee and any subsequent transferee. Upon any
transfer of an easement for a Location, and/or an interest in a Location and/or
any interest therein, the obligation to pay License Fees shall run with such
Location, and shall be binding upon RailCom and the new owner(s) of rights in
such Location. "Gross revenue" after such transfer shall include all advertising
revenue generated by such Location
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to the new owner(s) of rights in such Location, and any advertising revenue to
any subsequent owner(s) of rights in such Location. However, in all events
RailCom shall be responsible for making the initial calculation of the amount of
Excess Cash Flow from all of the Locations, including Locations sold or
transferred by RailCom, and in addition to its other obligations, RailCom shall
be responsible for collecting and paying such amounts to Seller.
4.4 In the event any one or more Locations are reconveyed to Seller
pursuant to Paragraph 10.1 hereof or Paragraphs 2.5 or 4.2 of the Grant of
Easement, the formula for computation of License Fees, including the amount of
the Sales Price and the total amount of License Fees to be paid, shall be
equitably adjusted to reflect the reduction in the number of Locations.
5. New Outdoor Advertising Facilities.
5.1 Seller's Right to Develop New Outdoor Advertising Facilities. This
Agreement reflects the sale of only the Assets from Seller to RailCom. Subject
to Railcom's right of first offer as provided in Paragraph 5.2 of this
Agreement, nothing herein shall prohibit Seller from owning, developing, or
licensing additional billboards or other outdoor advertising facilities.
5.2 RailCom's Right of First Offer. For a period of twenty (20) years
after the Closing Date, Seller hereby grants to RailCom the exclusive right of
first offer to purchase an easement for and assignment of license, if any,
related to any additional outdoor advertising facilities owned or licensed by
Seller after December 31, 1995 and located on real property interests owned,
leased, licensed or occupied by Seller or its affiliates in the continental
United States (the "New Assets"), on the terms and in accordance with the
procedures set forth below:
5.2.1 Notwithstanding anything to the contrary contained in
this Paragraph 5, Railcom's rights are limited as follows: (i) if Seller or its
affiliates sells real estate (as to which any outdoor advertising facilities
located thereon are merely incidental thereto) or a rail line to an unaffiliated
third party in a bona fide, arms-length transaction, Railcom's right of first
offer shall have no application to outdoor advertising facilities included in
such sale or later developed by that third party, (ii) if RailCom assigns its
rights under this Paragraph 5 to a third party as permitted by Paragraph 14.3,
only one person or entity shall be entitled to exercise such rights at any time
and RailCom (or its designee) shall designate such person or entity by notice to
Seller, and such person or entity must be the owner of the Easement for at least
one (1) Location, and (iii) Railcom's right of first offer shall only apply to
the real property owned by Seller and CSX Transportation, Inc. ("CSXT") as of
December 31, 1995. For example, if Seller purchases real property or an entity
owning real property after December 31, 1995 (in which it or CSXT or its
affiliates theretofore had no possessory interest), RailCom's right of first
offer shall have no application to outdoor advertising facilities located on
such real property or later added thereto.
5.2.2 RailCom shall have the exclusive right to purchase New
Assets, and Seller shall give RailCom written notice (the "Offering Notice") of
the New Assets which are available for purchase by RailCom within sixty (60)
days after Seller's or its affiliates receipt of license revenue for such New
Assets. The Offering Notice shall describe the New Assets in reasonable
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detail, by reference to the facilities comprising the New Assets, the
approximate location thereof, and the license revenue reasonably projected by
Seller (including percentage fees) attributable to the first twelve months of
operation of such facilities (the "Annual Revenue").
5.2.3 RailCom shall have a period of sixty (60) days from the
date of the Offering Notice to inform Seller in writing whether it wishes to
purchase such New Assets. If RailCom does wish to purchase such New Assets,
RailCom shall have thirty (30) days after it notifies Seller that it wishes to
purchase such New Assets to close such purchase.
5.2.4 If RailCom fails to notify Seller within sixty (60) days
after the date of the Offering Notice that RailCom wishes to purchase the New
Assets, or if RailCom has timely notified Seller it wishes to purchase the New
Assets but fails to close within thirty (30) days thereafter, all rights of
RailCom shall terminate as to such New Assets, and Seller may operate for its
own account or sell such New Assets to any third party at any price and on any
terms without any obligation whatsoever to RailCom.
5.2.5 If RailCom timely exercises its right of first offer,
the closing of the sale of such New Assets shall be substantially on the same
terms as the Assets are conveyed to RailCom in accordance with this Agreement,
with license payments prorated on an accrual basis as of the closing of the sale
of New Assets, and RailCom shall pay to Seller a sales price for the New Assets
equal to ten (10) times the Annual Revenue generated by such New Assets, less an
assumed ten percent (10%) annual management fee (the "New Assets Sales Price").
5.2.6 Upon the purchase of New Assets by RailCom pursuant to
Paragraph 5.2, the site of each facility comprising such New Assets shall
constitute a "Location" for the purposes of this Agreement, including Paragraphs
6, 7, and 8 hereof, except as otherwise provided by this Paragraph 5.2, but
excluding Paragraph 4.
5.2.7 The provisions of Paragraph 5.2 shall not apply to any
replacement Location obtained by RailCom pursuant to Paragraph 2.5 of the Grant
of Easement.
6. Certain Post-Closing Obligations.
6.1 Post-Closing Cooperation of Seller. Seller agrees to reasonably
assist and cooperate with RailCom, at RailCom's sole expense, and to timely
respond to RailCom, after the Closing Date with respect to any and all matters
affecting the Locations, including dealing with governmental authorities
(including contesting any legislative or other action that might impair
RailCom's use of, or interest or rights in, the Assets). Seller shall furnish to
RailCom, upon RailCom's request and after payment of reasonable copying and
similar costs by RailCom, copies of valuation maps ("Val Maps") which Seller
then possesses, for the property on which specific Locations are located
(giving, if provided on such Val Maps, dimensions of Seller's underlying real
property interests and other information to facilitate management of and access
to such Locations). Seller agrees to update, in the ordinary course of its
business, Val Maps to reflect any change to Seller's rights to such property
interests.
6.2 Post-Closing Drawings to be Provided by RailCom. RailCom agrees
that it shall provide to Seller, at no cost to Seller, "as-built" drawings of
all Outdoor Advertising Structures at each Location, if and when such drawings
are available, provided that RailCom shall have no obligation to prepare such
drawings.
7. Indemnification by RailCom. RailCom hereby agrees to protect,
indemnify, and save harmless Seller, its affiliates, and their directors,
shareholders, officers and employees, from and against any and all liability,
claims, demands, suits or liens, including reasonable attorneys' fees and
expenses, made or brought by reason of RailCom's or its contractors' or
licensees' acts or omissions, or the acts or omissions of RailCom's or its
contractors' or licensees' agents, servants, or employees, or arising from or
related to, in any way, the exercise by RailCom or its licensees of the rights
granted to RailCom in accordance with this Agreement. RailCom's indemnity shall
cover, by way of example and not limitation, the death of or an injury to any
person or persons, including the death of or an injury to an agent, servant, or
employee of RailCom, or its contractors or licensees or Seller, and damage to
any property.
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8. Insurance. RailCom agrees to maintain appropriate insurance policies
(including, but not limited to, commercial general liability insurance), having
limits reasonably acceptable to Seller (in its reasonable discretion), naming
Seller and its affiliates as additional insureds and subject to such other terms
and conditions as Seller may reasonably request from time to time in accordance
with its customary risk management practices. Seller shall have the right to
designate by written notice to RailCom the insurance policies required by
RailCom under this Agreement. At a minimum, the following policies of insurance
shall be required to be maintained by RailCom:
8.1 Commercial General Liability Insurance. Commercial General
Liability Insurance with a limit of no less than Three Million Dollars
($3,000,000) combined single limit per occurrence for all bodily injury and
property damage, which may be provided by one policy or a base policy with an
umbrella.
8.2 Railroad Protective Liability Insurance. RailCom shall provide, or
cause the applicable licensee to provide, Railroad Protective Liability
Insurance, in the event of and during the course of any construction and
demolition work done within fifty (50) feet of any railroad track, with a limit
of no less than Three Million Dollars ($3,000,000) combined single limit per
occurrence for all bodily injury and property damage.
8.3 Automotive Liability Insurance. RailCom shall provide, or cause the
applicable licensee to provide, automotive liability insurance with a limit no
less than One Million Dollars ($1,000,000) combined single limit per occurrence,
for all bodily injury and property damage.
All such policies shall name Seller and its affiliates as additional
insureds, and shall provide for at least thirty (30) days prior notice to Seller
of any cancellation or modification of such policies. The form of such policies
and the companies issuing such policies must be reasonably acceptable to Seller.
Upon request, RailCom shall provide Seller with a certified copy of all policies
of insurance maintained by RailCom pursuant to this Paragraph. In addition, at
all times RailCom and its contractors and licensees shall maintain workers
compensation insurance as required by law and such workers compensation
insurance shall contain a waiver of subrogation against Seller and its
affiliates. Securing such insurance shall not limit RailCom's liability to
Seller under this Agreement, but shall be additional security therefor.
9. Representations.
9.1 Representations of Seller.
9.1.1 Seller is comprised of corporations, duly existing and
in good standing, with full power and authority to consummate the transaction
contemplated in this Agreement.
9.1.2 The individuals executing this Agreement on behalf of
Seller are fully authorized to do so and thereby bind Seller.
9.1.3 The report attached as Exhibit G to this Agreement,
which lists the historical revenue (net of management fees only) received by
Seller (or its predecessor-in-interest) for the thirty-six (36) months ending
December 31, 1995 for the Locations which were active from time to time
(including the Locations active as of the Closing Date), is materially complete
and accurate.
9.1.4 To Seller's knowledge, Seller having made no
investigation or inquiry whatsoever, and without imputation to Seller of the
knowledge of Peterson, as of the Closing Date, Seller has not furnished to
RailCom any information that was untrue in any material respect, nor has Seller
omitted to disclose information known by Seller that would materially adversely
affect RailCom's rights as contemplated in this Agreement (including, without
limitation, materially adversely affect the longevity of the Easement). For the
purposes of this Paragraph 9.1.4, information known by RailCom or Peterson as of
the Closing Date shall be deemed to have been disclosed by Seller to RailCom.
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9.2 Representations of RailCom.
9.2.1 RailCom is a Georgia corporation, duly existing and in
good standing, with full power and authority to consummate the transaction
contemplated in this Agreement.
9.2.2 The individuals executing this Agreement on behalf of
RailCom are fully authorized to do so and thereby bind RailCom.
10. Breach.
10.1 Breach of Certain Representations by Seller. If Seller breaches
any of the representations set forth in Paragraphs 9.1.3 and 9.1.4 of this
Agreement, Seller's liability shall be limited to any Location which has its
revenue partially or entirely affected by such breach, and Seller's liability as
to such Location shall be the then hypothetical unamortized balance of the
Location Sales Price, assuming the Location Sales Price was financed at an
interest rate of eleven percent (11%) per annum, fully amortized over a period
of ten [10] years, payable in equal monthly payments of principal and interest
due on the last day of each month, in arrears, with the first payment due on the
last day of the calendar month which immediately follows the calendar month of
the Closing Date) (the "Hypothetical Unamortized Balance"). For example, if a
Location generated Net Revenue of $900, its Location Sales Price would be $6,345
($900 x 7.05). If that Location was terminated 50 months after the Closing Date
due to a breach of a representation by Seller, the Hypothetical Unamortized
Balance for the Location would be $4,501 ($6,345 amortized at an interest rate
of 11% per annum, providing equal monthly payments of principal and interest of
$87.40, with principal "paid" of $1,844). Prior to the payment by Seller of
damages related to any Location, RailCom and its successors and assigns shall
reconvey to Seller all of their right, title and interest in such Location and
the Easement therefor and assign to Seller any applicable license agreement
related to the Location (all free of any management agreement). Any advertising
revenues or license fees generated by any reconveyed Location shall be prorated
on an accrual basis as of the date of the reconveyance. RailCom agrees that the
remedy set forth in this Paragraph 10.1 is RailCom's sole remedy for Seller's
breach of any of the representations set forth in Paragraphs 9.1.3 and 9.1.4 of
this Agreement.
10.2 Other Breach. In the event of any breach of obligations under this
Agreement by a party, except as provided in Paragraphs 10.1 and 13, the other
party shall be entitled to all remedies available at law and at equity. However,
in no event shall either party be entitled to punitive, consequential,
incidental or special damages.
10.3 Prevailing Party. In the event of any litigation arising out of
this Agreement between Seller and RailCom, the prevailing party shall be
entitled to all costs and reasonable attorneys' and legal assistants' fees, at
all trial, appellate and bankruptcy levels.
11. Closing Costs. RailCom shall, at closing, pay all transfer and
recordation taxes and fees (however named or styled) and the cost of all
documentary stamp taxes and similar taxes concerning the transfer of the Assets
imposed by all jurisdictions in which the Assets are located, including, without
limitation, the Florida documentary stamp tax due on the Easement.
12. Surviving Provisions. All provisions of this Agreement shall survive
the closing of this Agreement.
13. Irrevocable Easement. Except as expressly provided in the Grant of
Easement, the Easement and any other easement granted pursuant to this Agreement
shall be irrevocable, it being understood that should RailCom default in the
performance of any obligation hereunder, Seller may not revoke the Easement or
any easement; provided, however, Seller's recourse and remedies shall not
otherwise be limited, and Seller shall be free to pursue any other recourse or
remedy available at law or in equity, including, without limitation, the right
to pursue a judgment for damages against RailCom and obtain satisfaction thereof
from any and all assets of RailCom (including, without limitation, the
Easement).
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14. Miscellaneous.
14.1 Entire Agreement. This Agreement sets forth and constitutes the
entire agreement and understanding between the parties with respect to the
subject matter hereof (other than any agreements executed concurrent herewith or
in connection with the closing), and supersedes any and all prior agreements,
understandings, promises and representations, whether oral or written, between
the parties with respect to the subject matter hereof. This Agreement may not be
released, discharged, amended or modified in any manner except by an instrument
in writing, making specific reference to this Agreement, and signed by the duly
authorized representatives of both parties.
14.2 Relationship of the Parties. This Agreement shall not create an
agency, partnership, joint venture, or employer/employee relationship between
the parties, and nothing in this Agreement shall be deemed to authorize either
party to act for, represent or bind the other.
14.3 Assignment. Seller may assign its rights and obligations under
this Agreement, provided that Seller shall remain liable for all obligations
hereunder unless expressly released by RailCom. RailCom may assign or pledge its
rights under this Agreement provided, in the case of such assignment or pledge
(including, without limitation, the conveyance of any interest in the Easement),
(i) the assignee expressly assumes by an instrument reasonably acceptable to
Seller, RailCom's obligations under this Agreement, (ii) Seller's rights under
this Agreement are not diminished thereby, and (iii) RailCom is not released
from its liabilities and obligations hereunder, and remains fully liable
therefor.
14.4 Choice of Law. This Agreement shall be deemed to have been entered
into in the State of Florida, and its interpretation, construction, and the
remedies for its enforcement and breach are to be applied pursuant to and in
accordance with the laws of the State of Florida without regard to its conflicts
of law rules. The venue for any litigation arising out of this Agreement shall
be Duval County, Florida.
14.5 No Waiver. No waiver of any right under this Agreement shall be
deemed effective unless contained in writing and signed on behalf of the party
charged with such waiver, and no waiver of any right shall be deemed to be a
waiver of any future right or any other right arising under this Agreement.
Except as expressly provided herein, all rights, remedies, undertaking,
obligations, and agreements contained in this Agreement shall be cumulative and
none of them shall be a limitation of any other remedy, right, undertaking,
obligation, or agreement.
14.6 Headings. Headings in this Agreement are included for ease of
reference only and shall have no legal effect.
14.7 No Interpretation Against Drafter. Each party has participated
fully in the negotiation and drafting of this Agreement, and any ambiguities in
this Agreement shall not be interpreted against either party.
14.8 Notices. Any notices permitted or required under this Agreement
shall be in writing and shall be deemed delivered upon personal delivery, or
upon the expiration of three (3) business days following sent by registered or
certified mail, postage pre-paid; or upon the expiration of one (1) business day
following deposit with overnight courier; to the addresses set forth below or to
such other address in the United States that the party may hereafter specify:
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<PAGE> 12
(a) To Seller:
William P. Coffing, Jr.
Assistant Vice President
CSX Real Property, Inc.
Suite 100
6737 Southpoint Drive, S.
Jacksonville, Florida 32216
with a copy to:
Mark S. Hoffmann, Esquire
General Counsel
Law Department
CSX Transportation, Inc.
500 Water Street
Jacksonville, Florida 32202
(b) To RailCom:
Eugene Martini, Executive Vice President
RailCom, Ltd.
1819 Peachtree Road, Suite 315
Atlanta, Georgia 30309
with a copy to:
Kevin R. Armbruster, Esquire
Cushing, Morris, Armbruster & Jones
2110 Peachtree Center
Cain Tower
229 Peachtree Street Northeast
Atlanta, Georgia 30303
14.9 Counterparts. This Agreement may be executed in two (2) or more
counterpart originals, and will be deemed binding when each of the parties has
executed a counterpart original and delivered it to the other party. Signatures
transmitted by facsimile shall be deemed to be originals and binding upon the
party who has so executed this Agreement and all documents attached hereto or
given in connection with the closing.
14.10 Adjustment of Sales Price. It is intended that the Sales Price be
determined by multiplying the Net Revenue for all of the Locations by 7.05.
Seller and RailCom agree that Seller may delete Locations from Exhibit A prior
to closing if Seller determines it does not have good title to the Locations or
otherwise is constrained from conveying such Locations. Seller believes that
such deletions shall not exceed three percent (3%) of the total number of
Locations. In addition, Locations for which the applicable License Agreement is
terminated prior to closing shall be deleted from the conveyance to RailCom.
The Sales Price shall be adjusted, either before or after
closing, so that the Sales Price shall be the Net Revenue for all of the
Locations multiplied by 7.05. Furthermore, the dollar amount set forth in
Paragraph 4.1 of the Agreement ($10,050,000) shall be changed to fifty percent
(50%) of the actual Sales Price. Prorations of revenue for the Locations may be
finalized after the closing.
The parties have executed this Agreement as of the date first written
above.
CSX REALTY DEVELOPMENT CORPORATION, a Georgia
corporation
By: /S/ Stephen D. Beck
--------------------------------------
, President
--------------- ---------
10
<PAGE> 13
THE THREE RIVERS RAILWAY COMPANY, a Pennsylvania
corporation
By: /S/ Gerald L. Nichols
--------------------------------------
, President
--------------- ---------
THE ATLANTIC LAND AND IMPROVEMENT COMPANY, a Virginia
corporation
By: /S/ Gerald L. Nichols
--------------------------------------
, President
--------------- ---------
WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY, a North
Carolina corporation
By: /S/ Gerald L. Nichols
--------------------------------------
, President
--------------- ---------
GAINESVILLE MIDLAND RAILROAD COMPANY, a Georgia
corporation
By: /S/ Gerald L. Nichols
--------------------------------------
, President
--------------- ---------
RICHMOND, FREDERICKSBURG AND POTOMAC RAILWAY COMPANY,
a Virginia and Delaware corporation
By: /S/ Gerald L. Nichols
--------------------------------------
, President
--------------- ---------
RAILCOM, LTD., a Georgia corporation
By: /S/ Wilds L. Pierce
--------------------------------------
, President
--------------- ---------
11
<PAGE> 14
JOINDER OF CSXT
CSX Transportation, Inc., a Virginia corporation, its successors and
assigns ("CSXT"), in consideration of the benefits to be derived by CSXT and its
affiliates pursuant to this Agreement, hereby agrees with RailCom as follows:
(a) CSXT (to the extent it owns the affected real property or any
rights therein) shall convey its interest, if any, by corrective and other deeds
to CRDC, and shall take such other actions as are required to assist and enable
Seller to convey the Assets and fulfill its obligations to RailCom in accordance
with Paragraph 2 of the Purchase Agreement.
(b) CSXT (to the extent CSXT owns the New Assets or any interest
therein) shall convey its interest, if any, in New Assets to CRDC and take such
other actions as are required to assist and enable Seller to meet its
obligations under Paragraph 5 of the Purchase Agreement.
(c) CSXT shall assist Seller and take such actions as are required to
enable Seller to perform its obligations under Paragraph 6.1 of the Purchase
Agreement.
(d) CSXT hereby makes the same representations that Seller makes in
Paragraph 9.1.3 and 9.1.4 of the Purchase Agreement, provided that the
representations by CSXT are limited to the knowledge of the Board of Directors
of CSXT, and William P. Coffing, Jr., as agent for CSXT.
(e) CSXT (to the extent CSXT owns the affected real property or any
interest therein) shall convey its rights, if any, to CRDC to assist and enable
Seller to comply with its obligations to provide access to the Easement Property
to RailCom, as provided in Paragraph 2.2.1 of the Grant of Easement.
(f) CSXT shall take no actions which cause Grantor to breach its
obligations under Paragraph 2.3 of the Grant of Easement.
(g) CSXT (to the extent CSXT owns the affected real property or any
interest therein) shall convey its interest, if any, to Grantor to assist and
enable Grantor to provide substitute locations to RailCom, as provided in
Paragraph 2.5 of the Grant of Easement.
(h) CSXT shall not take any actions which shall cause Grantor to
breach its obligations under Paragraphs 2.7 and 2.8 of the Grant of Easement or
Paragraph 13 of the Purchase and Sale Agreement.
(i) CSXT (to the extent CSXT owns the affected real property or any
interest therein) shall convey its interest, if any, to Grantor to assist and
enable Grantor to convey additional or replacement easement property to RailCom
due to an approved modification of an existing Outdoor Advertising Facility, as
provided in Paragraph 3.3 of the Grant of Easement.
(j) CSXT (to the extent CSXT owns the affected real property or any
interest therein) shall convey its rights, if any, to CRDC to assist and enable
Grantor to comply with its obligations to provide utility licenses for electric
utilities to the Outdoor Advertising Facilities.
For the purposes of this Joinder, "affected real property" means
CSXT's real property interests as of the date hereof to the same extent as if
owned by CRDC, and any obligation of CRDC involving its interests in real
property shall extend to CSXT's real property interests as of the date hereof,
to the same extent as if owned by CRDC.
Nothing herein shall increase the rights of RailCom as to Seller under
the Purchase and Sale Agreement or the Grant of Easement, but rather, CSXT's
intent is to assist Seller in meeting its obligations created in such
12
<PAGE> 15
agreements. Nothing herein shall require CSXT to acquire interests in real
property it does not have as of the date hereof, nor shall it require CSXT to
engage in litigation with third parties to secure the rights necessary to comply
with its obligations hereunder. If CSXT is required to convey any additional
real property interests pursuant to these provisions, it may do so directly or
through a subsidiary or an affiliate. RailCom shall have the right of specific
performance against CSXT if CSXT fails to perform its obligations under this
joinder. Paragraphs (a), (e), (f), (g), (h), (i), and (j) of this Joinder, but
only such paragraphs, shall be binding upon a transferee of real property by
CSXT in the immediate vicinity of Outdoor Advertising Facilities conveyed to
RailCom pursuant to the Purchase and Sale Agreement. CSXT represents that it is
in good standing under the laws of the state of Virginia. The individual
executing this Joinder on behalf of CSXT represents that he is authorized to do
so.
CSX TRANSPORTATION, INC., a Virginia corporation
By: /S/ Gerald L. Nichols
------------------------------------------------
__________________, Vice President
13
<PAGE> 1
EXHIBIT 2.2.2
AMENDMENT TO PURCHASE AGREEMENT
This AMENDMENT TO PURCHASE AGREEMENT (this "Amendment") is made this
29th day of March, 1996, by and between CSX REALTY DEVELOPMENT CORPORATION, THE
THREE RIVERS RAILWAY COMPANY, THE ATLANTIC LAND AND IMPROVEMENT COMPANY,
WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY, GAINESVILLE MIDLAND RAILROAD COMPANY,
AND RICHMOND, FREDERICKSBURG AND POTOMAC RAILWAY COMPANY (collectively,
"Seller"), and RAILCOM, LTD. ("RailCom").
EXPLANATORY STATEMENT
By this Amendment, Seller and RailCom wish to amend the Purchase
Agreement dated January 23, 1996, between Seller and RailCom (the "Purchase
Agreement"), to provide for an extension of the date of closing under such
Purchase Agreement and the payment of an additional deposit. All capitalized
terms used in this Amendment shall have the meanings ascribed to them by the
Purchase Agreement, except to the extent otherwise defined by this Amendment.
NOW, THEREFORE, in consideration of the foregoing Explanatory
Statement and other good and valuable consideration, the receipt and sufficiency
of which are acknowledged by the parties, it is agreed as follows:
1. Closing Date. Section 1.1 of the Purchase Agreement is hereby
amended by replacing "March 31, 1996" with "May 31, 1996."
2. Deposit. Upon the execution and delivery of this Amendment by
Seller and RailCom, RailCom shall deliver to Seller the sum of One Hundred
Thousand Dollars ($100,000), as an additional Deposit pursuant to Section 3.11
of the Purchase Agreement. Hence, for all purposes of the Purchase Agreement, as
hereby amended, the term "Deposit" shall mean the amount of $150,000. Such
$150,000 Deposit shall be non-refundable, unless Seller breaches the Purchase
Agreement by failing to close in accordance with the terms thereof, and shall be
applied against the Purchase Price and otherwise be subject to the same terms
and conditions as the original $50,000 Deposit under the Purchase Agreement
(without regard to this Amendment).
3. Ratification of Purchase Agreement. Except as expressly amended by
this Amendment, the Purchase Agreement remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
CSX REALTY DEVELOPMENT
CORPORATION
By: /S/ Stephen D. Beck
--------------------------------
Its: President
--------------------------------
THE THREE RIVERS RAILWAY COMPANY
By: Gerald L. Nichols
--------------------------------
Its: President
--------------------------------
1
<PAGE> 2
THE ATLANTIC LAND AND IMPROVEMENT
COMPANY
By: Gerald L. Nichols
--------------------------------
Its: President
--------------------------------
WINSTON-SALEM SOUTHBOUND RAILWAY
COMPANY
By: Gerald L. Nichols
--------------------------------
Its: President
--------------------------------
GAINESVILLE MIDLAND RAILROAD
COMPANY
By: Gerald L. Nichols
--------------------------------
Its: President
--------------------------------
RICHMOND, FREDERICKSBURG AND
POTOMAC RAILWAY COMPANY
By: Gerald L. Nichols
--------------------------------
Its: President
--------------------------------
RAILCOM, LTD.
By: Wilds L. Pierce
--------------------------------
Its: President
--------------------------------
2
<PAGE> 1
EXHIBIT 2.2.3
SECOND AMENDMENT TO PURCHASE AGREEMENT
This SECOND AMENDMENT TO PURCHASE AGREEMENT (this "Amendment") is made
this 21st day of May, 1996, by and between CSX REALTY DEVELOPMENT CORPORATION,
THE THREE RIVERS RAILWAY COMPANY, THE ATLANTIC LAND AND IMPROVEMENT COMPANY,
WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY, GAINESVILLE MIDLAND RAILROAD COMPANY,
and RICHMOND, FREDERICKSBURG AND POTOMAC RAILWAY COMPANY (collectively,
"Seller"), and RAILCOM, LTD. ("RailCom").
EXPLANATORY STATEMENT
By this Amendment, Seller and RailCom wish to amend the Purchase
Agreement dated January 23, 1996, between Seller and RailCom, as amended by the
Amendment to Purchase Agreement dated March 29, 1996 (the "Purchase Agreement"),
to modify the manner in which the sales price is to be paid and to make certain
other modifications. All capitalized terms used in this Amendment shall have the
meanings ascribed to them by the Purchase Agreement, except to the extent
otherwise defined by this Amendment.
TERMS OF AMENDMENT
NOW, THEREFORE, in consideration of the foregoing Explanatory
Statement and other good and valuable consideration, the receipt and sufficiency
of which are acknowledged by the parties, it is agreed as follows:
1. Payment of Sales Price at Closing. Paragraph 3.1.2 of the Purchase
Agreement is hereby amended to read as follows:
3.1.2 At closing, and prior to the delivery by Seller
of the closing documents referred to in Paragraph 2
hereof, RailCom shall (i) deliver to Seller an
additional $500,000, plus any amount due from RailCom
for closing costs and prorations, in cash (by wire
transfer of immediately available funds to such
account as is designated by Seller prior to closing),
and (ii) execute and deliver to Seller's designee
RailCom's promissory note due and payable in full on
May 22, 1996, in substantially the form attached
hereto as Exhibit 1 (the "RailCom Note") in the
original principal amount equal to the Sales Price
less the Deposit ($150,000) and less the $500,000 sum
paid pursuant to clause (i) above, and (iii) execute
or cause the execution of all documents required by
Seller to secure the RailCom Note as follows:
A. A Security Agreement in the form attached hereto as Exhibit 2,
granting to Seller's designee a first security interest in all
proceeds, contracts, rights, and certain other property of
RailCom,
B. A UCC-1 in the form attached hereto as Exhibit 3, perfecting
the security interest described in Paragraph A above,
C. Pledge Agreements in the form attached hereto as Composite
Exhibit 4, granting Seller's designee a first, perfected
security interest in all of the stock of RailCom, and Stock
Transfers, made in association with the Pledge Agreements,
D. An Unconditional Guaranty of Wilds L. Pierce in the form
attached hereto as Exhibit 5, and
E. Such other documents required by Seller.
2. Post-Closing Transfer by RailCom. Notwithstanding anything in the
Purchase Agreement to the
1
<PAGE> 2
contrary, if (i) Seller and RailCom consummate the transaction contemplated by
the Purchase Agreement, (ii) RailCom transfers all (but not less than all) of
the Assets, and all other property and rights that Railcom has acquired from
Seller pursuant to the Purchase Agreement, to any third party, (iii) the third
party expressly assumes all of RailCom's outstanding obligations under the
Purchase Agreement and the closing documents, by an instrument reasonably
acceptable to Seller, (iv) RailCom remains fully liable for all of its
obligations under the Purchase Agreement and the closing documents, and (v) the
RailCom Note is paid in full, then all of Seller's representations and
warranties made in the Purchase Agreement which survive closing and all other
rights acquired by RailCom pursuant to the Purchase Agreement shall inure to the
benefit of the transferee and shall be enforceable by the transferee directly
against Seller. Furthermore, Seller may enforce all obligations of RailCom under
the Purchase Agreement and the closing documents directly against such
transferee.
3. Liquidated Damages, Etc. If RailCom fails to pay the Railcom Note
when due, RailCom shall immediately retransfer and reassign to Seller all of the
Assets and all other property and rights that RailCom has acquired from Seller
pursuant to the Purchase Agreement free and clear of any liens or claims,
whatsoever, and Seller shall retain the Deposit already paid to Seller (in the
amount of $150,000) and the $500,000 paid at closing (pursuant to Paragraph
3.1.2 of the Purchase Agreement) as liquidated damages.
4. Amendment to Section 5.2.5. Paragraph 5.2.5 of the Purchase
Agreement is hereby amended by the insertion of the following sentence to the
end of the existing paragraph:
Notwithstanding the above, the sales price for the
first Seventy-Two Thousand Three Hundred Seventy-One
Dollars ($72,371) of Annual Revenue generated by New
Assets shall be multiplied by eight (8) times, rather
than ten (10) times, to determine the New Assets Sales
Price for such assets.
5. Insertion to Closing Documents. To secure RailCom's obligation to
repay the RailCom Note, the following paragraph shall be inserted in the Grant
of Easement, Assignment of Management Agreement, and the Assignment of License
Agreements at closing:
This [Agreement] [Assignment] and the conveyance
described herein is subject to a vendor's lien to
secure RailCom's repayment of a promissory note from
RailCom to CSX Realty Development Corporation (as
designee for [Grantor] [CSX]) of even date herewith in
the principal amount of $________ (the "Note"). Such
vendor's lien shall remain in full force and effect
until the Note is paid in full.
6. Additional Expenses. RailCom shall pay in cash all costs of
recording documents securing the RailCom Note, and within sixty (60) days after
closing, all state taxes and expenses whatsoever related to the RailCom Note and
the documents securing it, including Florida intangible tax, and all interest
and penalties, if any. All such known costs shall be paid by RailCom at closing.
This provision shall survive closing.
7. Additional Amendments to Purchase Agreement. The parties hereby
amend the Purchase Agreement as follows:
(a) The Closing Date shall be May 21, 1996.
(b) All known costs required by RailCom to be paid at closing
pursuant to Paragraph 11 of the Purchase Agreement shall be paid at closing.
Since all of the costs required to be paid by RailCom at closing may not be
known at closing, RailCom agrees that it shall pay all such other costs within
sixty (60) days following closing, including all interest and penalties related
thereto, if any. This provision shall survive closing.
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<PAGE> 3
(c) RailCom represents and warrants that RailCom's debts do not
exceed $250,000, that RailCom shall incur no additional debt (other than
ordinary operating expenses) until the RailCom Note is paid in full, that
RailCom shall not convey or encumber any of the Assets until the RailCom Note is
paid in full, that RailCom is solvent, and that there is no matter pending or
threatened against RailCom which could cause a lien to be filed against the
assets of RailCom. This provision shall survive closing.
(d) RailCom agrees that until the RailCom Note is paid in full,
RailCom shall not issue any additional stock, and that it shall take no action
to dilute the interest of the stockholders of the Company. This provision shall
survive closing.
7a. Assignment Agreement. RailCom intends, after closing and
concurrent with the repayment of the RailCom Note, to assign the Assets and the
Purchase Agreement to Outdoor Systems, Inc. Seller agrees to the form of
Assignment attached hereto as Exhibit 6, so long as all obligations of RailCom
are performed.
8. Ratification of Purchase Agreement. Except as expressly amended by
this Amendment, the Purchase Agreement remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
CSX REALTY DEVELOPMENT CORPORATION, a Georgia corporation
By: /S/ Patricia J. Aftoora
------------------------------------------------
______________, Vice President
THE THREE RIVERS RAILWAY COMPANY, a Pennsylvania corporation
By: /S/ Patricia J. Aftoora
------------------------------------------------
______________, Vice President
THE ATLANTIC LAND AND IMPROVEMENT
COMPANY, a Virginia corporation
By: /S/ Patricia J. Aftoora
------------------------------------------------
______________, Vice President
WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY, a North Carolina
corporation
By: /S/ Patricia J. Aftoora
------------------------------------------------
______________, Vice President
3
<PAGE> 4
GAINESVILLE MIDLAND RAILROAD COMPANY, a Georgia corporation
By: /S/ Patricia J. Aftoora
------------------------------------------------
______________, Vice President
RICHMOND, FREDERICKSBURG AND POTOMAC RAILWAY COMPANY,
a Virginia and Delaware corporation
By: /S/ Patricia J. Aftoora
------------------------------------------------
______________, Vice President
RAILCOM, LTD., a Georgia corporation
By: /S/ Wilds L. Pierce
------------------------------------------------
______________, ________Vice President
4
<PAGE> 1
EXHIBIT 2.3
GRANT OF EASEMENT AND AGREEMENT
THIS GRANT OF EASEMENT AND AGREEMENT (this "Agreement") is made as of
the 21st day of May, 1996, between CSX REALTY DEVELOPMENT CORPORATION, a Georgia
corporation, THE THREE RIVERS RAILWAY COMPANY, a Pennsylvania corporation, THE
ATLANTIC LAND AND IMPROVEMENT COMPANY, a Virginia corporation, WINSTON-SALEM
SOUTHBOUND RAILWAY COMPANY, a North Carolina corporation, GAINESVILLE MIDLAND
RAILROAD COMPANY, a Georgia corporation and RICHMOND, FREDERICKSBURG AND POTOMAC
RAILWAY COMPANY, a Virginia and Delaware corporation (collectively, "Grantor"),
having an address of 500 Water Street, Jacksonville, Florida 32202, and RAILCOM,
LTD., a Georgia corporation ("RailCom"), having an address of 1819 Peachtree
Road, Suite 315, Atlanta, Georgia 30309.
BACKGROUND
A. Grantor owns, uses, or occupies certain real property underlying
certain outdoor advertising facilities located in various states within the
United States, which facilities are generally listed in Exhibit A attached to
this Agreement (the "Outdoor Advertising Facilities").
B. Pursuant to the Purchase and Sale Agreement dated January 23, 1996,
as amended, between RailCom and Grantor (the "Purchase and Sale Agreement"),
Grantor wishes to grant to RailCom certain easement rights (or such lesser
rights to the greatest extent Seller's interest will support) related to the
Outdoor Advertising Facilities, and RailCom wishes to obtain such easements,
subject to the terms and conditions contained in this Agreement.
TERMS OF AGREEMENT
In consideration of Ten Dollars ($10) and other good and valuable
consideration, the receipt and sufficiency are hereby acknowledged, the parties
agree as follows:
1. Definitions. Terms capitalized in this Agreement are defined in
parentheses in the body of this Agreement, by the Purchase and Sale Agreement,
or as follows:
1.1 "Location" or "Locations" means the site of one or more,
respectively, of the Outdoor Advertising Facilities described on Exhibit A to
this Agreement.
1.2 "Location Sales Price" means the pro-rata portion of the Sales
Price applicable to a Location, determined by multiplying the Net Revenue for
the Location by 7.05.
1.3 "Net Revenue" means the actual revenue received by Grantor and/or
its affiliates from Peterson Enterprises of Orlando, Inc. ("Peterson") as to any
one or more Locations for the twelve (12) month period ending December 31, 1995.
1.4 "Outdoor Advertising Facility" or "Outdoor Advertising Facilities"
means one or more, respectively, of the signboards, painted bulletins and poster
panels commonly known as billboards, including their supporting structures,
which are the subject of this Agreement, and which are described on Exhibit A
attached to this Agreement.
2. Grant of Easement.
2.1 Description of Easement and Easement Property. Grantor hereby
grants to RailCom, in so far as the quality of its title and the limits of its
possessory interests enable it to do so, an easement on, over and across that
portion of Grantor's interest, if any, in real property (whether owned, leased,
licensed or otherwise occupied) in direct contact with that portion of a
structure supporting an Outdoor Advertising Facility where such structure
contacts the
1
<PAGE> 2
ground or a bridge, together with the air space occupied by the Outdoor
Advertising Facility (the "Easement Property"). For example, where there is a
billboard which is twenty-five (25) feet wide supported by two (2) poles
connected to the ground, the Easement Property related to such billboard shall
not include the space between the poles, regardless of the fact that the space
lies underneath the billboard supported by such poles, but shall include only
the real property which is directly beneath the two (2) supporting poles, and
the airspace occupied by the Outdoor Advertising Facility.
2.2 Grant of Additional Rights. In addition to the Easement described
in Paragraph 2.1 of this Agreement, Grantor grants the following additional
rights to RailCom:
2.2.1 The right of access to the Easement Property across adjacent
property in which Grantor has a real property interest allowing access to the
extent reasonably necessary and at a location reasonably designated by Grantor
from time to time to permit the activities described in this Agreement at the
Easement Property.
2.2.2 The right to all advertising revenue derived from the
display of advertising copy on Outdoor Advertising Facilities, but not the right
to any other revenue which such facilities may generate.
2.3 Purpose of Easement. The easement and other rights granted in this
Agreement are for the sole purpose of allowing RailCom or its licensees to
install, construct, maintain, repair, and replace the Outdoor Advertising
Facilities, and use such facilities for the display of advertising copy.
Concerning the Outdoor Advertising Facilities and the Easement Property, Grantor
shall not grant rights to third parties, or exercise any rights on its own
behalf, to install, construct, maintain, repair or replace billboards or to use
the same for outdoor advertising or derive outdoor advertising revenue
therefrom, it being understood that such rights shall be held exclusively by
RailCom for the Outdoor Advertising Facilities supported by structures located
on the Easement Property. Nothing herein shall constitute a conveyance of the
Outdoor Advertising Facilities themselves, it being understood that Grantor does
not own such facilities, but has granted a license to construct such facilities
to third parties, and the third parties own the Outdoor Advertising Facilities.
2.4 Duration and Quality of Easement Rights. The duration of the
easement and other rights granted herein shall be: (i) perpetual, where Grantor
owns fee simple title to the applicable Easement Property; (ii) for the
remaining term of the applicable leasehold, where Grantor is a tenant of the
applicable Easement Property, and (iii) for the remaining term of the applicable
easement or license, where Grantor holds an easement or license to the
applicable Easement Property. The easement and other rights granted herein shall
continue for any renewal or extension of a lease, easement or license underlying
the Easement Property (including, without limitation, any amendment or new
agreement, the effect of which is the continuation of rights of Grantor or its
assignees sufficient to continue the easement, but Grantor and its assignees
shall have no obligation to enter into any such renewal or extension). For the
purposes of this Agreement, the term "easement" shall mean: (i) with regard to
any portion of the Easement Property which is owned by Grantor in fee simple
absolute, an easement; (ii) with regard to any portion of the Easement Property
owned, occupied, used or controlled by Grantor in less than fee simple absolute,
merely a right of occupancy commensurate with the term and extent of Grantor's
and its assignees' rights; and (iii) with regard to any portion of the Easement
Property occupied, used or controlled by Grantor under any other facts or
rights, merely a license or right to occupy commensurate with the term and
extent of Grantor's and its assignees' rights. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, SUBJECT TO PARAGRAPH 2.5 OF THIS
AGREEMENT, GRANTOR MAY CANCEL THE EASEMENT AND OTHER RIGHTS GRANTED HEREIN AS TO
ANY ONE OR MORE LOCATIONS TO ACCOMMODATE (AS GRANTOR DEEMS APPROPRIATE IN ITS
SOLE DISCRETION) THE PRESENT AND/OR FUTURE BUSINESS PURPOSES OR OPERATIONS OF
GRANTOR OR ITS AFFILIATES, OR THEIR RESPECTIVE CUSTOMERS AND OTHER THIRD
PARTIES, INCLUDING, WITHOUT LIMITATION, THE INSTALLATION, CONSTRUCTION,
OPERATION, MAINTENANCE, RELOCATION, OR MODIFICATION OF TRACK OR OTHER RAILROAD
FACILITIES, AS WELL AS ANY OTHER FACILITIES OR UTILITIES (WHETHER OR NOT RELATED
TO RAILROAD OPERATIONS, SUCH AS PIPELINES, WIRE LINES, CABLE, MICROWAVE AND
RADIO TOWERS [AND LINE OF SIGHT BETWEEN THEM]), EXCLUDING THE OPERATION OF
OUTDOOR ADVERTISING FACILITIES. THIS PARAGRAPH 2.4 IS GRANTOR'S EXCLUSIVE METHOD
TO CANCEL, WHETHER TEMPORARILY OR PERMANENTLY, THE EASEMENT.
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<PAGE> 3
2.5 Termination of Location(s) by Grantor. If, prior to March 31, 2026
(which time certain shall not change if this Agreement is used in relation to
New Assets), the easement and other rights set forth herein as to any one or
more Locations are terminated permanently in the manner expressly provided for
in Paragraph 2.4 of this Agreement, or if the use of a Location on real property
leased or licensed or otherwise occupied by Grantor permanently terminates by
reason of the termination of such lease or license or possessory right, then at
no cost to RailCom Grantor shall use reasonable efforts to substitute as soon as
is feasible a comparable (in terms of revenue- generating potential),
replacement Location on real property owned or occupied by Grantor or CSXT (if
reasonably possible, in the immediate vicinity of the terminated Location),
provided, however, that RailCom shall have the responsibility to identify
potential replacement locations, for the review and reasonable approval of
Grantor in good faith. Any location substituted for another shall be placed in
the pool for the original Location for the purpose of RailCom's payment of
License Fees pursuant to Paragraph 4 of the Purchase and Sale Agreement, and
shall for all purposes of this Agreement and the Purchase and Sale Agreement be
deemed a "Location". If Grantor, in the exercise of reasonable efforts, fails to
approve a substitute location within one hundred twenty (120) days following
delivery of notice by RailCom of potential locations, then Grantor shall pay to
RailCom the then (as of the date such Easement and other rights are terminated)
"Hypothetical Unamortized Balance" for such Location, as such term is defined in
Paragraph 4.2 hereof, which shall be RailCom's sole remedy for such termination.
Prior to Grantor providing a substitute location or the payment by Grantor to
RailCom, RailCom and its successors and assigns, shall reconvey to Grantor all
of their right, title and interest in the Location and the easement and all
other rights therefor, and, if no substitute location is agreed upon, shall
assign to Grantor any applicable license agreement related to such Location (all
free of any management agreement). Any advertising revenues or license fees
generated by any reconveyed Location shall be prorated on an accrual basis as of
the date of reconveyance, in the same manner provided by Paragraph 3.2 of the
Purchase and Sale Agreement. Grantor shall cause all reconveyance documents to
be prepared and shall pay all recording costs and transfer taxes related to such
reconveyance. Furthermore, if a substitute location is agreed upon, such
location shall replace the description of the original location attached hereto,
and such location may be reflected in a Short-Form Notice, as described in
Paragraph 2.1 of the Purchase and Sale Agreement.
2.6 Termination of Location(s) Beyond Grantor's Control. If for any
reason not encompassed by Paragraph 2.4 or 2.5 of this Agreement, the easement
for a Location is temporarily or permanently terminated, RailCom shall have no
recourse whatsoever against Grantor, provided that RailCom shall be entitled to
make claim for and receive such consideration, if any, as is provided by law for
such termination, from third parties.
2.7 Irrevocable Easement. Notwithstanding anything in this Agreement
to the contrary, but expressly subject to Paragraphs 2.4, 2.5 and 2.6 of this
Agreement, the easement and other rights granted pursuant to this Agreement
shall run with the land and be irrevocable, it being understood that should
RailCom default in the performance of any obligation hereunder, Grantor may not
revoke the easement granted herein or any easement; provided, however, Grantor's
recourse and remedies shall not otherwise be limited, and Grantor shall be free
to pursue any other recourse or remedy available at law or in equity, including,
without limitation, the right to pursue a judgment for damages against RailCom
and obtain satisfaction thereof from any and all assets of RailCom (including,
without limitation, the easement granted herein).
2.8 Visual Impairment of Location. If the view of the advertising copy
located on an Outdoor Advertising Facility is materially impaired by a man-made
facility constructed on real property owned or controlled by Grantor or its
affiliates, and such material impairment causes the revenue generated by such
facility to be reduced, RailCom may deem that such Location has been terminated
by Grantor pursuant to Paragraph 2.4 of this Agreement, and the disposition of
such Location shall be governed by Paragraph 2.5 of this Agreement.
3. Limitations on Easement.
3.1 General Limitations. In addition to the other limitations
contained herein, including, without limitation, Paragraph 2.4 hereof, the
easement and other rights granted herein are subject to: (i) the generally
applicable operating rules and practices of Grantor and its affiliates,
including, without limitation, the insurance and indemnification requirements as
they exist from time to time generally applicable to rights of entry on real
property
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in which Grantor and its affiliates have an interest; (ii) Grantor's and its
affiliates' track clearance standards in effect from time to time; (iii)
existing railroad facilities, public utilities, and other cable, wire, pipeline
and utility facilities currently located in, on, over, under, or across the
Easement Property and to all instruments, agreements, easements and rights
therefor, whether recorded or not; and (iv) such other conditions and
limitations as the parties may mutually agree upon. Furthermore, RailCom agrees
that the easement and other rights granted herein permit the Outdoor Advertising
Facilities to be used only for the lawful display of advertising copy, and not
for any other purpose. For example, no bullhorns, loudspeakers, transmitters,
antennae or dishes may be placed on the Outdoor Advertising Structures by
RailCom and/or its assignees or licensees.
3.2 Reserved Rights, Generally. Subject to Paragraphs 2.4, 2.5, 2.6,
2.7 and 2.8 of this Agreement, Grantor reserves for itself (and its successors
and assigns): (i) the paramount right to occupy, possess and use the Easement
Property for any and all railroad and other purposes of Grantor and its
affiliates consistent with Grantor's and its affiliates' present or future
operations and needs, including but not limited to the right to construct,
reconstruct, relocate, operate, maintain, repair, renew, replace and remove
tracks, signals, wires, and other railroad or other facilities as now exist or
which may in the future be located in, upon, over, or across the Easement
Property; and (ii) the right to grant other easements, licenses and/or rights in
the Easement Property (other than for outdoor advertising at the Locations).
3.3 Modifications of Existing Outdoor Advertising Facilities. Any
replacement, changes or modification of the existing Outdoor Advertising
Facilities (including, without limitation, upgrades of boards or supporting
structures that may occupy more ground or airspace at the Location) shall be
subject to Grantor's approval, which approval shall not be withheld, unless
Grantor determines, in Grantor's and its affiliates' sole discretion, that such
replacement, change or modification may adversely affect the rail or other
operations (as such operations exist at the time of such proposed replacement,
modification, or change, or as reasonably anticipated by Grantor or its
affiliates in the future) of Grantor, its affiliates or their customers or any
other third parties (including the operations of parties with whom Grantor or
its affiliates enter into contracts for any purpose or activity, other than
contracts which allow outdoor advertising outside of the immediate vicinity of
the Locations) or impose obligations or liability on Grantor or its affiliates
which otherwise would not be imposed. RailCom agrees that all work permitted in
this Paragraph shall be done in a good and workmanlike manner, in compliance
with all laws and American Railway Engineering Association standards, without
interference with other structures in place. Prior to initiating any such work,
RailCom shall furnish Grantor with a copy of plans for the same, for Grantor's
review and approval, and all work must be done in accordance with the approved
plans. The parties agree that the specific manner and timing of such work shall
be determined jointly by RailCom and Grantor's or its affiliates' division
engineer (or such other individual designated by Grantor). Grantor and RailCom
agree to cooperate in good faith with respect to any proposed replacement,
modification or change. Nothing herein shall constitute an agreement on the part
of Grantor to allow additional Locations pursuant to this Paragraph 3.3. If any
approved modification causes the Easement Property to change, RailCom, and its
successors and assigns agree to reconvey to Grantor or its affiliates all of the
Easement Property which is no longer in direct contact with a structure
supporting an Outdoor Advertising Facility and any unused airspace, and
Grantor's interest in any additional Easement Property shall be conveyed by
Grantor to RailCom. RailCom shall pay all recording costs and transfer taxes
related to such conveyances, but no additional purchase price or license fees
shall be due from RailCom to Grantor as to such modified Location.
4. Title to the Easement Property.
4.1 Title Subject to All Matters. The conveyance of the easement and
all other rights granted herein are subject to all existing covenants,
restrictions, easements, licenses, mortgages, deeds of trust, security
instruments, and all other documents and agreements whatsoever affecting title
to the Easement Property.
4.2 Title Indemnity. Without limiting the express obligations of
Grantor set forth in this Paragraph 4.2, and in Paragraph 9 of the Purchase and
Sale Agreement, the conveyance of the easement and other rights granted herein
is without any warranty whatsoever (without limitation, Grantor specifically
makes no warranty as to the accuracy or legal sufficiency of the description of
any Location contained in Exhibit A). Grantor agrees to defend, indemnify and
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<PAGE> 5
hold harmless RailCom from and against any damages, costs, lost revenue,
liabilities, claims, actions, and expenses (including reasonable attorneys'
fees) RailCom suffers or incurs by reason of third party claims against title or
rights to the easement granted to RailCom hereunder as to any Location which
adversely affects the revenue generated by such Location; provided, however,
that Grantor's liability to RailCom under this Agreement shall be limited, as to
each affected Location, to the then hypothetical unamortized balance of the
Location Sales Price (assuming the Location Sales Price was financed at an
interest rate of eleven percent (11%) per annum, fully amortized over a term of
ten (10) years, payable in equal payments of principal and interest due on the
last day of each month, in arrears, with the first payment due on the last day
of the calendar month which immediately follows the calendar month of the
Closing Date) (the "Hypothetical Unamortized Balance"). For example, if a
Location generated Net Revenue of $900, its Location Sales Price would be $6,345
($900 x 7.05). If that Location was terminated 50 months after the Closing Date
due to a breach of the title indemnity contained in Paragraph 4.2 by Grantor,
the hypothetical unamortized balance for the Location would be $4,501 ($6,345
amortized at an interest rate of 11% per annum, providing equal monthly payments
of principal and interest of $87.40, with principal "paid" of $1,844). Prior to
the payment by Grantor of damages related to any Location, RailCom and its
successors and assigns shall reconvey to Grantor all of their right, title and
interest in such Location and the easement
therefor and assign to Grantor any license agreement related to such Location
(all free of any management agreement). Any advertising revenues or license fees
generated by any reconveyed Location shall be prorated on an accrual basis as of
the date of reconveyance, in accordance with Paragraph 3.2 of the Purchase and
Sale Agreement. The remedy granted in this Paragraph 4.2 shall be RailCom's sole
remedy for any breach of the title indemnity contained in this Paragraph 4.2.
Grantor shall cause all reconveyance documents to be prepared and shall pay all
recording costs and transfer taxes related to the reconveyance.
5. License Fees and Other Obligations. Pursuant to the Purchase and Sale
Agreement, additional sums called License Fees shall be due from RailCom to
Grantor in consideration of the easement and other rights granted herein. Upon
any transfer of a Location by RailCom and/or the transfer of the easement and
other rights granted herein as to any Location or the transfer of any interest
therein as permitted by Paragraph 10.3 hereof, the obligation to pay License
Fees and all other obligations hereunder shall continue to be an obligation of
RailCom, but shall also run with the Location and the easement and the land, and
shall be binding upon the new owner of such interests and all future owners
until all such obligations are satisfied.
6. Indemnification by RailCom. RailCom hereby agrees to protect,
indemnify, and save harmless Grantor, its affiliates, and their directors,
shareholders, officers and employees, from and against any and all liability,
claims, demands, suits or liens, including reasonable attorneys' fees and
expenses, made or brought by reason of RailCom's or its contractors' or
licensees' acts or omissions, or the acts or omissions of RailCom's or its
contractors' or licensees' agents, servants, or employees, or arising from or
related to, in any way, the exercise by RailCom or its licensees of the rights
granted to RailCom in accordance with this Agreement. RailCom's indemnity shall
cover, by way of example and not limitation, the death of or an injury to any
person or persons, including the death of or an injury to an agent, servant, or
employee of RailCom or its contractors or licensees or Grantor, and damage to
any property.
7. Insurance. RailCom further agrees to maintain appropriate insurance
policies (including, but not limited to, commercial general liability
insurance), having limits reasonably acceptable to Grantor (in its reasonable
discretion), naming Grantor and its affiliates as an additional insureds, and
subject to such other terms and conditions as Grantor may reasonably request
from time to time in accordance with its customary risk management practices.
Grantor shall have the right to designate by written notice to RailCom the
insurance policies required by RailCom under this Agreement. At a minimum, the
following policies of insurance shall be required to be maintained by RailCom:
7.1 Commercial General Liability Insurance. Commercial General
Liability Insurance with a limit of no less than Three Million Dollars
($3,000,000) combined single limit per occurrence for all bodily injury and
property damage, which may be provided by one policy or a base policy with an
umbrella.
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7.2 Railroad Protection Liability Insurance. RailCom shall provide, or
cause the applicable licensee to provide, Railroad Protective Liability
Insurance, in the event of and during the course of any construction and
demolition work done within fifty (50) feet of any railroad track, with a limit
of no less than Three Million Dollars ($3,000,000) combined single limit per
occurrence for all bodily injury and property damage.
7.3 Automotive Liability Insurance. RailCom shall provide, or cause
the applicable licensee to provide, automotive liability insurance with a limit
no less than One Million Dollars ($1,000,000) combined single limit per
occurrence, for all bodily injury and property damage.
All such policies shall name Grantor and its affiliates as additional
insureds, and shall provide for at least thirty (30) days prior notice to
Grantor of any cancellation or modification of such policies. The form of such
policies and the companies issuing such policies must be acceptable to Grantor,
in Grantor's reasonable discretion. Upon request, RailCom shall provide Grantor
with a certified copy of all policies of insurance maintained by RailCom
pursuant to this Paragraph. In addition, at all times RailCom and its
contractors and licensees shall maintain workers compensation insurance as
required by law and such workers compensation insurance shall contain a waiver
of subrogation in favor of Grantor and its affiliates. Securing such insurance
shall not limit RailCom's liability to Grantor under this Agreement, but shall
be additional security therefor.
8. Use of Easement.
8.1 Compliance with Laws. RailCom agrees that it shall comply with all
statutes, laws, ordinance, rules, regulations and requirements of all
governmental entities concerning the Outdoor Advertising Facilities.
8.2 Maintenance of Outdoor Advertising Facilities. RailCom shall cause
the Outdoor Advertising Facilities to at all times be maintained in a
first-class, safe condition. In the event RailCom fails to do so, Grantor may
undertake such maintenance, the cost of which shall immediately be due from
RailCom to Grantor, and, in addition to Grantor's other rights, such cost shall
bear interest at the rate of twelve percent (12%) per annum if not paid by
RailCom to Grantor within thirty (30) days after notice of such amount from
Grantor to RailCom.
8.3 Utilities. RailCom shall be solely responsible for all utilities
used by or for the Outdoor Advertising Facilities. Upon the reasonable written
request of RailCom, Grantor shall grant licenses for electric utilities to
provide electricity to the Outdoor Advertising Facilities, using the standard
form of Grantor's utility license agreement.
8.4 No Construction or Other Liens. RailCom shall cause all work done
in relation to the Outdoor Advertising Facilities to promptly be paid for in
full. RailCom shall indemnify, protect and defend Grantor, including reasonable
attorneys' fees and costs, from and against any potential construction liens
attributable to RailCom and its licensees affecting the Easement Property and
Grantor's interest in the real property underlying and adjacent to the Easement
Property.
8.5 Approval of License and Management Forms. Prior to RailCom's
entering into any new license, management, or any other agreement concerning any
of the Locations, Grantor must approve the contents of the form of such
agreements, which approval shall not be unreasonably withheld. Grantor shall not
require approval of each individual license, management or other agreement, but
only the form thereof. Upon such approval, RailCom may use such agreements until
it receives written notice from Grantor that additional changes are required to
the form, in Grantor's reasonable discretion.
8.6 Removal of Objectional Advertising Matter. At all times, RailCom
shall cause to be removed, within thirty (30) days of written notice from
Grantor to RailCom, any advertising matter or copy on an Outdoor Advertising
Facility which is objectionable to Grantor, in Grantor's reasonable discretion.
8.7 Enforcement of License Agreements. RailCom agrees that it shall
enforce compliance by its licensees with each of the terms and conditions of the
License Agreements (and all modifications and renewals thereof) and all
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new license agreements concerning the Locations, provided, that in the
reasonable judgment of RailCom, such enforcement shall cause an economic benefit
to RailCom or the Grantor.
9. Successors and Assigns. This Agreement shall run with the land, and
shall be binding upon the parties hereto, and their successors and assigns.
10. Miscellaneous.
10.1 Entire Agreement. This Agreement and the Purchase and Sale
Agreement set forth and constitute the entire agreement and understanding
between the parties with respect to the subject matter hereof, and supersede any
and all prior agreements, understandings, promises and representations, whether
oral or written, between the parties with respect to the subject matter hereof.
This Agreement may not be released, discharged, amended or modified in any
manner except by an instrument in writing, making specific reference to this
Agreement, and signed by the duly authorized representatives of both parties.
10.2 Relationship of the Parties. This Agreement shall not create an
agency, partnership, joint venture, or employer/employee relationship between
the parties, and nothing in this Agreement shall be deemed to authorize either
party to act for, represent or bind the other.
10.3 Assignment. Grantor may assign its rights and obligations under
this Agreement, provided that Grantor shall remain liable for all obligations
hereunder unless expressly released by RailCom. RailCom may assign or pledge its
rights under this Agreement provided, in the case of such assignment or pledge
(including, without limitation, the conveyance of any interest in the easement
granted herein), (i) the assignee expressly assumes RailCom's obligations under
this Agreement, (ii) Grantor's rights under this Agreement are not diminished
thereby, and (iii) RailCom is not released from its liabilities and obligations
hereunder, and remains fully liable therefor.
10.4 Choice of Law. This Agreement shall be deemed to have been
entered into in the State of Florida, and its interpretation, construction, and
the remedies for its enforcement and breach are to be applied pursuant to and in
accordance with the laws of the State of Florida. The venue for any litigation
arising out of this Agreement shall be Duval County, Florida without regard to
its conflicts of law rules.
10.5 No Waiver. No waiver of any right under this Agreement shall be
deemed effective unless contained in writing and signed on behalf of the party
charged with such waiver, and no waiver of any right shall be deemed to be a
waiver of any future right or any other right arising under this Agreement.
Except as expressly provided herein and in the Purchase and Sale Agreement, all
rights, remedies, undertaking, obligations, and agreements contained in this
Agreement shall be cumulative and none of them shall be a limitation of any
other remedy, right, undertaking, obligation, or agreement.
10.6 Headings. Headings in this Agreement are included for ease of
reference only and shall have no legal effect.
10.7 No Interpretation Against Drafter. Each party has participated
fully in the negotiation and drafting of this Agreement,and any ambiguities in
this Agreement shall not be interpreted against either party.
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<PAGE> 8
10.8 Notices. Any notices permitted or required under this Agreement
shall be in writing and shall be deemed delivered upon personal delivery, or
upon the expiration of three (3) business days following sent by registered or
certified mail, postage pre-paid; or upon the expiration of one (1) business day
following deposit with overnight courier; to the addresses set forth below or to
such other address in the United States that the party may hereafter specify:
(a) To Grantor:
William P. Coffing, Jr.
Assistant Vice President
CSX Real Property, Inc.
Suite 100
6737 Southpoint Drive, S.
Jacksonville, Florida 32216
with a copy to:
Mark S. Hoffmann, Esquire
General Counsel
Law Department
CSX Transportation, Inc.
500 Water Street
Jacksonville, Florida 32202
(b) To RailCom:
Eugene Martini, Executive Vice President
RailCom, Ltd.
1819 Peachtree Road, Suite 315
Atlanta, Georgia 30309
with a copy to:
Kevin R. Armbruster, Esquire
Cushing, Morris, Armbruster & Jones
2110 Peachtree Center
Cain Tower
229 Peachtree Street Northeast
Atlanta, Georgia 30303
10.9 Recordable Documents. If requested by RailCom, at RailCom's sole
cost, Grantor agrees to execute a separate, recordable Short-Form Notice of
Easement, in the form attached hereto as Exhibit B, as to each Location, subject
to there being a legal description approved by Grantor for each such Location,
as more fully provided in Paragraph 2.1 of the Purchase and Sale Agreement.
10.10 Vendor's Lien. This Agreement and the conveyance described
herein is subject to a vendor's lien to secure RailCom's repayment of a
promissory note from RailCom to CSX Realty Development Corporation (as designee
for Grantor) of even date herewith in the principal amount of $18,480,655 (the
"Note"). Such vendor's lien shall remain in full force and effect until the Note
is paid in full.
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<PAGE> 9
The parties have executed this Agreement as of the date first written
above.
Witnesses: CSX REALTY DEVELOPMENT CORPORATION,
a Georgia corporation
_____________________________
Printed Name: By: /S/ Patricia J. Aftoora
---------------------------------------
_____________________________ _______________, Vice President
Printed Name:
(CORPORATE SEAL)
THE THREE RIVERS RAILWAY COMPANY,
a Pennsylvania corporation
_____________________________
Printed Name: By: /S/ Patricia J. Aftoora
---------------------------------------
_____________________________ _______________, Vice President
Printed Name:
(CORPORATE SEAL)
THE ATLANTIC LAND AND IMPROVEMENT COMPANY,
a Virginia corporation
_____________________________
Printed Name: By: /S/ Patricia J. Aftoora
---------------------------------------
_____________________________ _______________, Vice President
Printed Name:
(CORPORATE SEAL)
WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY,
a North Carolina corporation
_____________________________
Printed Name: By: /S/ Patricia J. Aftoora
---------------------------------------
_____________________________ _______________, Vice President
Printed Name:
(CORPORATE SEAL)
GAINESVILLE MIDLAND RAILROAD COMPANY,
a Georgia corporation
_____________________________
Printed Name: By: /S/ Patricia J. Aftoora
---------------------------------------
_____________________________ _______________, Vice President
Printed Name:
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<PAGE> 10
(CORPORATE SEAL)
RICHMOND, FREDERICKSBURG AND POTOMAC RAILWAY
COMPANY, a Virginia and Delaware corporation
_____________________________
Printed Name: By: /S/ Patricia J. Aftoora
----------------------------------------
_____________________________ ____________, Vice President
Printed Name:
(CORPORATE SEAL)
RAILCOM, LTD., a Georgia corporation
_____________________________
Printed Name: By: /S/ Wilds L. Pierce
----------------------------------------
_____________________________ ____________, President
Printed Name:
(CORPORATE SEAL)
10
<PAGE> 11
STATE OF _________________
COUNTY OF ___________________
The foregoing instrument was signed, sealed and delivered in my
presence this _________ day of _______ ____, 1996 by___________________________,
the __________________ President of CSX REALTY DEVELOPMENT CORPORATION, a
Virginia corporation, on behalf of the corporation. He/She / / is personally
known to me or / / has produced______________________________ as identification.
(type of identification)
_____________________________
Print Name:
Notary Public, State of ______ Commission Number: ________________ My
Commission expires: ______________
STATE OF _____________
COUNTY OF _______________
The foregoing instrument was signed, sealed and delivered in my
presence this ________ day of ________, 1996 by ________________________,
the ________ President of THE THREE RIVERS RAILWAY COMPANY, a Pennsylvania
corporation, on behalf of the corporation. He/She / / is personally known to
me or / / has produced ________________________________ as identification.
(type of identification)
_____________________________
Print Name:
Notary Public, State of ________ Commission Number: ______________ My
Commission expires: ______________
STATE OF _____________
COUNTY OF _______________
The foregoing instrument was signed, sealed and delivered in my
presence this ________ day of _______, 1996 by ________________________________,
the ________ President of THE ATLANTIC LAND AND IMPROVEMENT COMPANY, a Virginia
corporation, on behalf of the corporation. He/She / / is personally known to me
or / / has produced __________________________________________as identification.
(type of identification)
_____________________________
Print Name:
Notary Public, State of ________ Commission Number: ______________ My
Commission expires: ______________
STATE OF _____________
COUNTY OF _______________
The foregoing instrument was signed, sealed and delivered in my
presence this ________ day of ________, 1996 by _______________________________,
the ________ President of WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY, a North
Carolina corporation, on behalf of the corporation. He/She / / is personally
known to me or / / has produced ______________________________as identification.
(type of identification)
_____________________________
Print Name:
Notary Public, State of ________ Commission Number: ______________ My
Commission expires: ______________
11
<PAGE> 12
STATE OF _____________
COUNTY OF _______________
The foregoing instrument was signed, sealed and delivered in my
presence this ________ day of ________, 1996 by ______________________________,
the ________ President of GAINESVILLE MIDLAND RAILROAD COMPANY, a Georgia
corporation, on behalf of the corporation. He/She / / is personally known to me
or / / has produced ____________________________ as identification.
(type of identification)
_____________________________
Print Name:
Notary Public, State of ________ Commission Number: ______________ My
Commission expires: ______________
STATE OF _____________
COUNTY OF _______________
The foregoing instrument was signed, sealed and delivered in my
presence this ________ day of ________, 1996 by _____________________________,
the ________ President of RICHMOND, FREDERICKSBURG AND POTOMAC RAILWAY COMPANY,
a Virginia and Delaware corporation, on behalf of the corporation. He/She / / is
personally known to me or / / has produced ____________________________________
as identification.
(type of identification)
_____________________________
Print Name:
Notary Public, State of ________ Commission Number: ______________ My
Commission expires: ______________
STATE OF ______________
COUNTY OF _____________
The foregoing instrument was signed, sealed and delivered in my
presence this ________ day of ________, 1996 by _____________________________,
the _______ President of RAILCOM, LTD., a Georgia corporation, on behalf of the
corporation. He/She / / is personally known to me or / / has produced __________
as identification.
(type of identification)
_____________________________
Print Name:
Notary Public, State of ________ Commission Number: ______________ My
Commission expires: ______________
12
<PAGE> 1
EXHIBIT 2.4
ASSIGNMENT OF LICENSE AGREEMENTS
THIS ASSIGNMENT is made as of the 21st day of May, 1996, by CSX REALTY
DEVELOPMENT CORPORATION, a Georgia corporation, THE THREE RIVERS RAILWAY
COMPANY, a Pennsylvania corporation, THE ATLANTIC LAND AND IMPROVEMENT COMPANY,
a Virginia corporation, WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY, a North
Carolina corporation, GAINESVILLE MIDLAND RAILROAD COMPANY, a Georgia
corporation, and RICHMOND, FREDERICKSBURG AND POTOMAC RAILWAY COMPANY, a
Virginia and Delaware corporation (collectively, "CSX"), to RAILCOM, LTD., a
Georgia corporation ("RailCom").
BACKGROUND
A. Pursuant to a Purchase and Sale Agreement dated January 23, 1996,
as amended, between the parties hereto (the "Purchase and Sale Agreement"), CSX
has conveyed to RailCom an easement over various interests in real property
underlying certain support structures for certain outdoor advertising
facilities.
B. In connection with the transfer of the easement, CSX wishes to
assign to RailCom all right, title and interest in various license agreements
between CSX and third parties, all of which are listed on Exhibit A attached
hereto (the "Licenses").
C. All capitalized terms used herein shall have the meaning ascribed
to them in the Purchase and Sale Agreement.
TERMS OF ASSIGNMENT
NOW THEREFORE, in consideration of the sum of Ten Dollars ($10) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CSX and RailCom do hereby agree as follows:
1. CSX hereby assigns to RailCom all of CSX's right, title and
interest in the Licenses. Notwithstanding anything to the contrary set forth
herein, CSX hereby retains its rights in the Licenses, including the right to
all payments to CSX thereunder, through the effective date of this Agreement.
2. CSX is entitled to all revenue generated by the Licenses through
the date of this Agreement. If any such revenue is delivered to RailCom, RailCom
shall immediately pay all such amounts to CSX. RailCom is entitled to all
revenue from the Licenses accruing after the effective date hereof.
3. CSX represents and warrants that it has made no prior assignment of
the Licenses.
4. As of the effective date of this Assignment, RailCom assumes all
obligations of CSX under the Licenses (except for obligations or liabilities
accrued prior to the effective date hereof). RailCom hereby indemnifies, defends
and holds CSX harmless from all claims whatsoever arising out of the Licenses as
of the effective date of this Assignment, including all costs and reasonable
attorneys' fees. CSX hereby indemnifies, defends, and hold harmless RailCom from
all claims whatsoever arising out of the Licenses before the effective date of
this Assignment.
5. This Assignment is subject to CSX's right to terminate the easement
granted to RailCom to the extent provided in a separate Grant of Easement and
Agreement between CSX and RailCom of even date herewith (the "Grant of
Easement").
1
<PAGE> 2
6. This Assignment and the conveyance described herein is subject to a
vendor's lien to secure RailCom's repayment of a promissory note from RailCom to
CSX Realty Development Corporation (as designee for CSX) of even date herewith
in the principal amount of $18,480,655 (the "Note"). Such vendor's lien shall
remain in full force and effect until the Note is paid in full.
IN WITNESS WHEREOF, CSX and RailCom have executed this Assignment as
of the day and year first written above.
CSX REALTY DEVELOPMENT CORPORATION, a Georgia corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
__________________________________, Vice President
THE THREE RIVERS RAILWAY COMPANY, a Pennsylvania corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
__________________________________, Vice President
THE ATLANTIC LAND AND IMPROVEMENT COMPANY, a Virginia
corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
__________________________________, Vice President
WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY, a North Carolina
corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
__________________________________, Vice President
GAINESVILLE MIDLAND RAILROAD COMPANY, a Georgia corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
__________________________________, Vice President
RICHMOND, FREDERICKSBURG AND POTOMAC RAILWAY COMPANY,
a Virginia and Delaware corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
__________________________________, Vice President
--------------------------------------------------
RAILCOM, LTD, a Georgia corporation
By: /S/ Eugene N. Martini
--------------------------------------------------------
__________________________, Executive Vice President
2
<PAGE> 1
EXHIBIT 2.5
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 22nd day of May, 1996,
by and between RAILCOM, LTD., a Georgia corporation (hereafter called
"Assignor"), and OUTDOOR SYSTEMS, INC., a Delaware corporation (hereinafter
called "Assignee").
W I T N E S S E T H:
WHEREAS, Assignor purchased certain assets (the "Assets") pursuant to
that certain Purchase Agreement between CSX Realty Development Corporation, The
Three Rivers Railway Company, The Atlantic Land and Improvement Company,
Winston-Salem Southbound Railway Company, Gainesville Midland Railroad Company,
and Richmond, Fredericksburg and Potomac Railway Company (collectively,
"Seller") and Assignor, dated January 23, 1996, as amended by the Amendment to
Purchase Agreement dated March 29, 1996, and as further amended by Second
Amendment to Purchase Agreement dated May 21st, 1996 (collectively, the
"Purchase Agreement"); and
WHEREAS, Assignor and Assignee are parties to that certain Asset
Purchase Agreement dated as of the 8th day of May, 1996, for the purchase and
sale of certain assets (hereinafter called the "Agreement"); and
WHEREAS, in accordance with the terms of the Agreement, the parties
hereto desire to effect the assignment to and assumption by Assignee of each of
the rights, obligations, contracts and agreements identified in Exhibit A and
incorporated by this reference herein (hereinafter called the "Agreements").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions and promises hereinafter set forth and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto hereby covenant and agree as follows:
1. Assignor hereby assigns, conveys, transfers and sets over unto
Assignee the Agreements, to have and to hold together with any and all rights,
duties, obligations and appurtenances relating thereto.
2. Assignee hereby accepts the aforesaid assignment and transfer of
the Agreements and hereby assumes any and all duties, obligations and
commitments thereunder to stand in the name, place and stead of Assignor.
3. Assignor acknowledges and agrees that it remains liable to Seller
for all obligations under the Agreements, notwithstanding the assignment
reflected herein, except that since Assignor is assigning all of the Assets
shortly after acquiring them, Assignor, Seller (by consenting hereto) and
Assignee agree that:
(a) Assignor shall not have the primary obligation under the
last sentence of Paragraph 4.3 of the Purchase Agreement to make the initial
calculation of Excess Cash Flow and collect such amount from the owner(s) of the
Locations, and Assignee shall be primarily responsible for that obligation;
provided, however, in the event Assignee fails to perform any of these
obligations, Assignor shall do so; and provided, however, that nothing herein
shall affect Assignor's obligation to pay one-third (1/3) of Excess Cash Flow in
the event Assignee fails to do so.
(b) Provided that the owner(s) of the Assets obtains required
insurance coverage, Assignor shall not be required to provide duplicate
coverage.
(c) All capitalized terms used in this Paragraph 3 and not
defined in this Agreement shall have the meanings attributed to them in the
Purchase Agreement.
4. Assignee agrees to indemnify and hold harmless Assignor against any
obligations of Assignee under the Purchase Agreement and the Agreements on and
after the date of this Agreement.
1
<PAGE> 2
5. Assignor hereby warrants and will forever defend the right and
title to the Agreements unto Assignee against the claims of all persons owning,
holding or claiming by, through or under Assignor.
6. By consenting hereto, Seller agrees that all of Seller's
representations and warranties made in the Purchase Agreement which survive
closing and all other rights acquired by Assignee by and through this Assignment
shall inure to the benefit of Assignee and shall be enforceable by Assignee
directly against Seller.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement, under seal, on the date and year first above written.
ASSIGNOR:
RAILCOM, LTD., a Georgia corporation
By: /S/ Wilds L. Pierce
--------------------------------------------------------
Wilds L. Pierce, President
Attest: /S/ Eugene N. Martini
----------------------------------------------------
Eugene N. Martini, Secretary
[CORPORATE SEAL]
ASSIGNEE:
OUTDOOR SYSTEMS, INC., a Delaware corporation
By: /S/ William S. Levine
--------------------------------------------------------
_________________, Chairman
[CORPORATE SEAL]
Consented to and accepted this 22nd day of May, 1996. The
undersigned further acknowledge and agree that all notices to Assignee (in lieu
of to RailCom and its counsel) pursuant to Paragraph 10.8 of the Grant of
Easement (identified in Exhibit A) shall be directed to: Outdoor Systems, Inc.,
1702 East Highland, Suite 130, Phoenix, Arizona 85016, Attention: President;
with a copy to: Mark W. Forsling, Esq., Schreeder, Wheeler & Flynt, 1600 Candler
Building, 127 Peachtree Street, N.E., Atlanta, Georgia 30303.
CSX REALTY DEVELOPMENT CORPORATION, a Georgia corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
____________________, Vice President
THE THREE RIVERS RAILWAY COMPANY, a Pennsylvania corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
____________________, Vice President
2
<PAGE> 3
THE ATLANTIC LAND AND IMPROVEMENT COMPANY, a Virginia
corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
____________________, Vice President
WINSTON-SALEM SOUTHBOUND RAILWAY COMPANY, a North Carolina
corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
____________________, Vice President
GAINESVILLE MIDLAND RAILROAD COMPANY, a Georgia corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
____________________, Vice President
RICHMOND, FREDERICKSBURG AND POTOMAC RAILWAY COMPANY,
a Virginia and Delaware corporation
By: /S/ Patricia J. Aftoora
--------------------------------------------------------
____________________, Vice President
3
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 696
<SECURITIES> 0
<RECEIVABLES> 10,971
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,719
<PP&E> 111,729
<DEPRECIATION> 0
<TOTAL-ASSETS> 161,089
<CURRENT-LIABILITIES> 7,929
<BONDS> 0
13,649
0
<COMMON> 3,420
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 161,089
<SALES> 67,492
<TOTAL-REVENUES> 67,909
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 45,332
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,408
<INCOME-PRETAX> 3,169
<INCOME-TAX> 327
<INCOME-CONTINUING> 2,842
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,842
<EPS-PRIMARY> .03
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT: Arte Moreno
(602)246-9569
OUTDOOR SYSTEMS, INC. ANNOUNCES
ACQUISITION OF BILLBOARD EASEMENTS FROM CSX CORPORATION
Phoenix, May 22, 1996 - Outdoor Systems, Inc. (NASDAQ: OSIA) announced today
that it acquired a perpetual easement on certain real property of CSX
Corporation (a national railroad company operating east of the Mississippi
River), upon which there are currently approximately 2,420 billboard advertising
faces located on approximately 1,360 different sites in 17 states. The perpetual
easement grants to Outdoor Systems the rights to the billboard lease rental
income from these sites, which are licensed under agreements with approximately
130 outdoor advertising companies. The acquisition price was approximately $21.8
million and future consideration estimated to be payable beginning in 2006.
Arte Moreno, President and CEO of Outdoor Systems, stated that, "with this
acquisition, Outdoor Systems is acquiring a long term revenue stream with
opportunity for growth which will be consolidated with our Atlanta property".
